|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2004
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
|
|
Delaware
|
36-3161171
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
One Dauch Drive, Detroit, Michigan
|
48211-1198
|
(Address of principal executive offices)
|
(Zip Code)
|
· | adverse changes in the economic conditions or political stability of our principal markets (particularly North America, Europe, South America and Asia); |
· | reduced demand for our customers products (particularly light trucks and sport-utility vehicles produced by General Motors Corporation and DaimlerChrysler Corporation); |
· | reduced purchases of our products by General Motors Corporation, DaimlerChrysler Corporation or other customers; |
· | our ability and our customers ability to successfully launch new product programs; |
· | our ability to respond to changes in technology or increased competition; |
· | supply shortages or price fluctuations in raw materials, utilities or other operating supplies; |
· | our ability to attract and retain key associates; |
· | our ability to maintain satisfactory labor relations and avoid work stoppages; |
· | our customers ability to maintain satisfactory labor relations and avoid work stoppages; |
· | risks of noncompliance with environmental regulations or risks of environmental issues that could result in unforeseen costs at our facilities; |
· | liabilities arising from legal proceedings to which we are or may become a party or claims against us or our products; |
· | availability of financing for working capital, capital expenditures, research and development or other general corporate purposes; |
· | adverse changes in laws, government regulations or market conditions affecting our products or our customers products (including the Corporate Average Fuel Economy regulations); |
· | other unanticipated events and conditions that hinder our ability to compete. |
Three months ended
|
Nine months ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
(In millions, except per share data)
|
|||||||||||||
Net sales
|
$
|
841.6
|
$
|
867.7
|
$
|
2,724.0
|
$
|
2,756.6
|
|||||
Cost of goods sold
|
733.7
|
748.3
|
2,346.3
|
2,354.7
|
|||||||||
Gross profit
|
107.9
|
119.4
|
377.7
|
401.9
|
|||||||||
Selling, general and administrative
|
|||||||||||||
expenses
|
47.0
|
49.7
|
140.7
|
147.1
|
|||||||||
|
|
|
|
||||||||||
Operating income
|
60.9
|
69.7
|
237.0
|
254.8
|
|||||||||
Net interest expense
|
(5.9
|
)
|
(11.2
|
)
|
(20.2
|
)
|
(35.7
|
)
|
|||||
Debt refinancing and redemption costs
|
-
|
-
|
(23.5
|
)
|
-
|
||||||||
Other income (expense), net
|
(0.9
|
)
|
1.0
|
1.0
|
1.9
|
||||||||
Income before income taxes
|
54.1
|
59.5
|
194.3
|
221.0
|
|||||||||
Income taxes
|
17.7
|
20.8
|
66.1
|
77.3
|
|||||||||
Net income
|
$
|
36.4
|
$
|
38.7
|
$
|
128.2
|
$
|
143.7
|
|||||
Basic earnings per share
|
$
|
0.71
|
$
|
0.74
|
$
|
2.46
|
$
|
2.83
|
|||||
Diluted earnings per share
|
$
|
0.68
|
$
|
0.71
|
$
|
2.37
|
$
|
2.71
|
September 30,
|
December 31,
|
||||||
2004
|
2003
|
||||||
(Unaudited)
|
|||||||
(In millions)
|
|||||||
ASSETS
|
|||||||
Current assets:
|
|||||||
Cash and cash equivalents
|
$
|
4.5
|
$
|
12.4
|
|||
Accounts receivable, net
|
431.7
|
339.2
|
|||||
Inventories, net
|
176.1
|
171.8
|
|||||
Prepaid expenses and other
|
37.0
|
24.0
|
|||||
Deferred income taxes
|
13.8
|
16.3
|
|||||
Total current assets
|
663.1
|
563.7
|
|||||
Property, plant and equipment, net
|
1,674.1
|
1,629.5
|
|||||
Deferred income taxes
|
6.8
|
6.9
|
|||||
Goodwill
|
147.8
|
147.8
|
|||||
Other assets and deferred charges
|
67.4
|
49.9
|
|||||
Total assets
|
$
|
2,559.2
|
$
|
2,397.8
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||
Current liabilities:
|
|||||||
Accounts payable
|
$
|
319.8
|
$
|
333.6
|
|||
Trade payable program liability
|
53.7
|
2.1
|
|||||
Accrued compensation and benefits
|
119.2
|
164.8
|
|||||
Other accrued expenses
|
59.3
|
53.7
|
|||||
Total current liabilities
|
552.0
|
554.2
|
|||||
Long-term debt
|
533.0
|
449.7
|
|||||
Deferred income taxes
|
105.8
|
73.0
|
|||||
Postretirement benefits and other long-term liabilities
|
412.4
|
366.2
|
|||||
Total liabilities
|
1,603.2
|
1,443.1
|
|||||
Stockholders' equity:
|
|||||||
Common stock, par value $0.01 per share
|
0.5
|
0.5
|
|||||
Paid-in capital
|
355.1
|
336.2
|
|||||
Retained earnings
|
794.1
|
681.4
|
|||||
Treasury stock at cost, 3.7 million and 0.1 million shares
|
|||||||
in 2004 and 2003, respectively
|
(131.7
|
)
|
(0.7
|
)
|
|||
Accumulated other comprehensive loss, net of tax:
|
|||||||
Minimum pension liability adjustments
|
(56.1
|
)
|
(56.1
|
)
|
|||
Foreign currency translation adjustments
|
(6.0
|
)
|
(6.1
|
)
|
|||
Unrecognized gain (loss) on derivatives
|
0.1
|
(0.5
|
)
|
||||
Total stockholders' equity
|
956.0
|
954.7
|
|||||
Total liabilities and stockholders' equity
|
$
|
2,559.2
|
$
|
2,397.8
|
Nine months ended
|
|||||||
September 30,
|
|||||||
2004
|
2003
|
||||||
(In millions)
|
|||||||
Operating activities:
|
|||||||
Net income
|
$
|
128.2
|
$
|
143.7
|
|||
Adjustments to reconcile net income to net cash
|
|||||||
provided by operating activities:
|
|||||||
Depreciation and amortization
|
125.4
|
121.0
|
|||||
Deferred income taxes
|
35.2
|
28.2
|
|||||
Pensions and other postretirement benefits, net of contributions
|
48.7
|
35.7
|
|||||
Loss on retirement of equipment
|
2.0
|
1.1
|
|||||
Debt refinancing and redemption costs
|
23.5
|
-
|
|||||
Changes in operating assets and liabilities:
|
|||||||
Accounts receivable
|
(91.2
|
)
|
(86.0
|
)
|
|||
Inventories
|
(4.1
|
)
|
18.8
|
||||
Accounts payable and accrued expenses
|
(16.1
|
)
|
33.6
|
||||
Other assets and liabilities
|
(23.5
|
)
|
29.9
|
||||
Net cash provided by operating activities
|
228.1
|
326.0
|
|||||
Investing activities:
|
|||||||
Purchases of property, plant and equipment
|
(158.8
|
)
|
(172.9
|
)
|
|||
Purchase buyouts of leased equipment
|
-
|
(3.0
|
)
|
||||
Net cash used in investing activities
|
(158.8
|
)
|
(175.9
|
)
|
|||
Financing activities:
|
|||||||
Net repayments under revolving credit facilities
|
(2.2
|
)
|
(25.2
|
)
|
|||
Proceeds from issuance of long-term debt
|
399.7
|
-
|
|||||
Redemption of 9.75% Notes
|
(314.6
|
)
|
-
|
||||
Payments of long-term debt and capital lease obligations
|
(16.0
|
)
|
(137.9
|
)
|
|||
Debt issuance costs
|
(9.7
|
)
|
-
|
||||
Employee stock option exercises
|
12.0
|
17.4
|
|||||
Dividends paid
|
(15.5
|
)
|
-
|
||||
Purchase of treasury stock
|
(131.0
|
)
|
-
|
||||
Net cash used in financing activities
|
(77.3
|
)
|
(145.7
|
)
|
|||
|
|||||||
Effect of exchange rate changes on cash
|
0.1
|
0.5
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(7.9
|
)
|
4.9
|
||||
Cash and cash equivalents at beginning of period
|
12.4
|
9.4
|
|||||
Cash and cash equivalents at end of period
|
$
|
4.5
|
$
|
14.3
|
|||
Supplemental cash flow information:
|
|||||||
Interest paid
|
$
|
31.5
|
$
|
46.4
|
|||
Income taxes paid, net of refunds
|
$
|
25.9
|
$
|
22.8
|
September 30,
|
December 31,
|
||||||
2004
|
2003
|
||||||
(Dollars in millions)
|
|||||||
Raw materials and work-in-progress
|
$
|
171.5
|
$
|
161.4
|
|||
Finished goods
|
32.7
|
35.6
|
|||||
Gross inventories
|
204.2
|
197.0
|
|||||
LIFO reserve
|
(12.2
|
)
|
(10.4
|
)
|
|||
Other inventory valuation reserves
|
(15.9
|
)
|
(14.8
|
)
|
|||
Inventories, net
|
$
|
176.1
|
$
|
171.8
|
Call premium on 9.75% Notes
|
$
|
14.6
|
||
Write-off of unamortized discount and debt issuance costs:
|
||||
9.75% Notes
|
5.7
|
|||
1997 Bank Credit Facilities
|
3.2
|
|||
$
|
23.5
|
September 30,
|
December 31,
|
||||||
2004
|
2003
|
||||||
(Dollars in millions)
|
|||||||
Revolving credit facilities
|
$
|
50.0
|
$
|
60.0
|
|||
9.75% Notes, net of discount
|
-
|
298.8
|
|||||
5.25% Notes, net of discount
|
249.7
|
-
|
|||||
2.00% Convertible Notes
|
150.0
|
-
|
|||||
Capital lease obligations
|
4.5
|
6.3
|
|||||
Foreign credit facilities and other
|
78.8
|
84.6
|
|||||
Long-term debt
|
$
|
533.0
|
$
|
449.7
|
Pension Benefits
|
Other Benefits
|
||||||||||||
Three months ended
|
Three months ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
(Dollars in millions)
|
|||||||||||||
Service cost
|
$
|
8.3
|
$
|
7.0
|
$
|
9.5
|
$
|
8.1
|
|||||
Interest cost
|
7.1
|
5.9
|
6.3
|
5.2
|
|||||||||
Expected asset return
|
(6.6
|
)
|
(5.9
|
)
|
-
|
-
|
|||||||
Amortized loss
|
1.0
|
0.5
|
1.3
|
0.6
|
|||||||||
Amortized prior service cost
|
0.8
|
0.4
|
(0.2
|
)
|
-
|
||||||||
Net periodic benefit cost
|
$
|
10.6
|
$
|
7.9
|
$
|
16.9
|
$
|
13.9
|
Three months ended
|
Nine months ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
(Dollars in millions)
|
|||||||||||||
Net income
|
$
|
36.4
|
$
|
38.7
|
$
|
128.2
|
$
|
143.7
|
|||||
Unrecognized gain (loss) on derivatives, net of tax
|
0.2
|
(0.3
|
)
|
0.6
|
0.6
|
||||||||
Foreign currency translation adjustments, net of tax
|
2.9
|
0.3
|
0.1
|
1.7
|
|||||||||
Comprehensive income
|
$
|
39.5
|
$
|
38.7
|
$
|
128.9
|
$
|
146.0
|
Three months ended
|
Nine months ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
(In millions, except per share data)
|
|||||||||||||
Numerator:
|
|||||||||||||
Net income
|
$
|
36.4
|
$
|
38.7
|
$
|
128.2
|
$
|
143.7
|
|||||
Denominators:
|
|||||||||||||
Basic shares outstanding -
|
|||||||||||||
Weighted-average shares outstanding
|
51.6
|
52.1
|
52.2
|
50.8
|
|||||||||
Effect of dilutive securities:
|
|||||||||||||
Dilutive stock options
|
1.8
|
2.5
|
2.0
|
2.2
|
|||||||||
Diluted shares outstanding -
|
|||||||||||||
Adjusted weighted-average shares after assumed conversions
|
53.4
|
54.6
|
54.2
|
53.0
|
|||||||||
Basic EPS
|
$
|
0.71
|
$
|
0.74
|
$
|
2.46
|
$
|
2.83
|
|||||
Diluted EPS
|
$
|
0.68
|
$
|
0.71
|
$
|
2.37
|
$
|
2.71
|
Three months ended
|
Nine months ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
(In millions, except per share data)
|
|||||||||||||
Net income, as reported
|
$
|
36.4
|
$
|
38.7
|
$
|
128.2
|
$
|
143.7
|
|||||
Deduct: Total employee stock option
|
|||||||||||||
expense determined under the fair value method, net of tax
|
(4.4
|
)
|
(3.2
|
)
|
(12.4
|
)
|
(10.0
|
)
|
|||||
Pro forma net income
|
$
|
32.0
|
$
|
35.5
|
$
|
115.8
|
$
|
133.7
|
|||||
Basic EPS, as reported
|
$
|
0.71
|
$
|
0.74
|
$
|
2.46
|
$
|
2.83
|
|||||
Basic EPS, pro forma
|
$
|
0.62
|
$
|
0.68
|
$
|
2.22
|
$
|
2.63
|
|||||
Diluted EPS, as reported
|
$
|
0.68
|
$
|
0.71
|
$
|
2.37
|
$
|
2.71
|
|||||
Diluted EPS, pro forma
|
$
|
0.60
|
$
|
0.66
|
$
|
2.15
|
$
|
2.56
|
Call premium on 9.75% Notes
|
$
|
14.6
|
||
Write-off of unamortized discount and debt issuance costs:
|
||||
9.75% Notes
|
5.7
|
|||
1997 Bank Credit Facilities
|
3.2
|
|||
$
|
23.5
|
Three months ended
|
Nine months ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
(Dollars in millions)
|
|||||||||||||
Net income
|
$
|
36.4
|
$
|
38.7
|
$
|
128.2
|
$
|
143.7
|
|||||
Interest expense
|
5.9
|
11.3
|
20.5
|
36.2
|
|||||||||
Income taxes
|
17.7
|
20.8
|
66.1
|
77.3
|
|||||||||
Depreciation and amortization
|
43.4
|
40.6
|
125.4
|
121.0
|
|||||||||
EBITDA
|
$
|
103.4
|
$
|
111.4
|
$
|
340.2
|
$
|
378.2
|
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, 2004
|
325,900
|
$34.07
|
325,900
|
-
|
August, 2004
|
799,487
|
$33.34
|
799,487
|
2,200,513
|
September, 2004
|
313,040
|
$30.48
|
313,040
|
1,887,473
|
(a) | Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index. |
|
|
|
By: | /s/ Thomas L. Martin | |
|
||
Thomas L. Martin | ||
Vice President - Finance & | ||
Chief Financial Officer | ||
(also in the capacity of Chief Accounting Officer) | ||
November 1, 2004 |
Number
|
Description of Exhibit
|
|
*10.44
|
Forms of Stock Option Agreement under 1999 Stock Incentive Plan**
|
|
*10.45
|
Forms of Restricted Stock Agreement under 1999 Stock Incentive Plan**
|
|
*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 Thomas L. Martin, 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 Thomas L. Martin, 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
|
|
|
|
|
|
|
|
|
1. | I have reviewed this Quarterly Report on Form 10-Q of American Axle & Manufacturing Holdings, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
1. | I have reviewed this Quarterly Report on Form 10-Q of American Axle & Manufacturing Holdings, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
By: /s/ Richard E. Dauch | By: /s/ Thomas L. Martin | ||
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Richard E. Dauch | Thomas L. Martin | ||
Co-Founder, Chairman of the Board & | Vice President - Finance & | ||
Chief Executive Officer | Chief Financial Officer | ||
November 1, 2004 | November 1, 2004 |