NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
1.
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
ORGANIZATION
American Axle & Manufacturing Holdings, Inc. (Holdings) and its subsidiaries (collectively, we, our, us or AAM) is a Tier I supplier to the automotive industry. We manufacture, engineer, design and validate driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles (SUVs), passenger cars, crossover vehicles and commercial vehicles. Driveline and drivetrain systems include components that transfer power from the transmission and deliver it to the drive wheels. Our driveline, drivetrain and related products include axles, chassis modules, driveshafts, power transfer units, transfer cases, chassis and steering components, driveheads, transmission parts and metal-formed products. In addition to locations in the United States (U.S.) (Michigan, Ohio, Indiana and Pennsylvania), we also have offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand.
PRINCIPLES OF CONSOLIDATION
We include the accounts of Holdings and its subsidiaries in our consolidated financial statements. We eliminate the effects of all intercompany transactions, balances and profits in our consolidation.
REVENUE RECOGNITION
We recognize revenue when products are shipped to our customers and title transfers under standard commercial terms or when realizable in accordance with our commercial agreements. If we are uncertain as to whether we will be successful collecting a balance in accordance with our understanding of a commercial agreement, we do not recognize the revenue or cost recovery until such time as the uncertainty is removed.
In the third quarter of 2009, we entered into a settlement and commercial agreement (2009 Settlement and Commercial Agreement) with General Motors Company (GM). As part of this agreement, we received
$110.0 million
from GM, of which we recorded
$79.7 million
as deferred revenue. As of
December 31, 2012
, our deferred revenue related to the 2009 Settlement and Commercial Agreement is
$53.4 million
,
$8.0 million
of which is classified as a current liability and
$45.4 million
of which is recorded as a noncurrent liability on our Consolidated Balance Sheet. We recognize this deferred revenue into revenue on a straight-line basis over 120 months, which ends September 2019 and is the period that we expect GM to benefit under the 2009 Settlement and Commercial Agreement. We recognized revenue of
$8.0 million
, in 2012, 2011 and 2010 related to this agreement.
In the second quarter of 2008, we entered into an agreement with GM to provide financial assistance to support the transition of our United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) represented legacy labor at our original U.S. locations upon the resolution of the strike called by the International UAW (2008 AAM - GM Agreement). Pursuant to this agreement, GM provided us
$115.0 million
in 2008 and
$60.0 million
in 2009. In total, we recorded deferred revenue of
$213.7 million
as a result of the 2008 AAM - GM Agreement, which included
$38.7 million
related to the fair value of the liability GM assumed for postretirement healthcare and life insurance coverage provided to UAW represented transitioned associates with earned credited service from AAM that have or will retire under plans operated by GM. We recognized this deferred revenue into revenue on a straight-line basis over a 45 month period, which ended February 2012 and was consistent with the period that we expected GM to benefit from the payments provided to us under the 2008 AAM - GM Agreement. We recognized
$9.5 million
of revenue in 2012 and
$57.0 million
of revenue in both 2011 and 2010 related to the 2008 AAM - GM Agreement. As of December 31, 2012, we have fully recognized the deferred revenue related to the 2008 AAM - GM Agreement.
As of
December 31, 2012
, the majority of the remaining deferred revenue primarily relates to customer payments to implement capacity programs, which is generally recognized into revenue over the life of these programs. We recognized
$13.1 million
,
$15.6 million
and
$12.5 million
of revenue for these programs in
2012
,
2011
and
2010
, respectively.
BUYDOWN PROGRAM
In 2008, an involuntary Buydown Program (BDP) was initiated for associates that did not elect to participate in the Special Separation Program (SSP) and continued employment with AAM. Under the BDP, we agreed to make three annual lump-sum payments to associates in connection with, among other things, a base wage decrease. We made the third and final lump-sum BDP payment of
$19.7 million
in 2010.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
We recorded
$2.3 million
,
$15.0 million
and
$15.6 million
of expense in
2012
,
2011
and
2010
, respectively, for the amortization of this prepaid asset, which we had been amortizing over the period that we estimated that AAM would benefit from these payments, which ended in February 2012. As of December 31, 2012, we have fully amortized the asset related to these BDP payments.
RESEARCH AND DEVELOPMENT (R&D) COSTS
We expense R&D, as incurred, in selling, general and administrative expenses on our Consolidated Statement of Income. R&D spending was
$123.4 million
,
$113.6 million
and
$82.5 million
in
2012
,
2011
and
2010
, respectively.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all cash balances and highly liquid investments in money market funds with maturities of 90 days or less at the time of purchase.
ACCOUNTS RECEIVABLE
The majority of our accounts receivable are due from original equipment m
anufacturers (OEMs) in the automotive industry and are past due when payment is not received within the stated terms. In 2012, we continued the transition of our payment terms with our largest customer, GM, to GM standard weekly payment terms of approximately 50 days.
Amounts due from customers are stated net of allowances for doubtful accounts. We determine our allowances by considering factors such as the length of time accounts are past due, our previous loss history, the customer's ability to pay its obligation to us, and the condition of the general economy and the industry as a whole. The allowance for doubtful accounts was
$6.5 million
and
$5.5 million
as of
December 31, 2012
and
2011
, respectively. We write-off accounts receivable when they become uncollectible.
CUSTOMER TOOLING AND PRE-PRODUCTION COSTS RELATED TO LONG-TERM SUPPLY AGREEMENTS
Engineering, R&D, and other pre-production design and development costs for products sold on long-term supply arrangements are expensed as incurred unless we have a contractual guarantee for reimbursement from the customer. Costs for tooling used to make products sold on long-term supply arrangements for which we have either title to the assets or the non-cancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment. Capitalized items and customer receipts in excess of tooling costs specifically related to a supply arrangement are amortized over the shorter of the term of the arrangement or over the estimated useful lives of the related assets.
INVENTORIES
We state our inventories at the lower of cost or market. The cost of our inventories is determined using the FIFO method. When we determine that our gross inventories exceed usage requirements, or if inventories become obsolete or otherwise not saleable, we record a provision for such loss as a component of our inventory accounts.
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Raw materials and work-in-progress
|
$
|
220.3
|
|
|
$
|
177.0
|
|
Finished goods
|
25.0
|
|
|
26.9
|
|
Gross inventories
|
245.3
|
|
|
203.9
|
|
Inventory valuation reserves
|
(21.0
|
)
|
|
(26.7
|
)
|
Inventories, net
|
$
|
224.3
|
|
|
$
|
177.2
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
We state property, plant and equipment, including amortizable tooling, at historical cost, as adjusted for impairments. Construction in progress includes costs incurred for the construction of buildings and building improvements, and machinery and equipment in process. Repair and maintenance costs that do not extend the useful life or otherwise improve the utility of the asset beyond its existing useful state are expensed in the period incurred.
We record depreciation and tooling amortization on the straight-line method over the estimated useful lives of the depreciable assets. Depreciation and tooling amortization amounted to
$130.9 million
,
$123.7 million
and
$122.2 million
in
2012
,
2011
and
2010
, respectively.
Property, plant and equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
December 31,
|
|
Useful Lives
|
|
2012
|
|
2011
|
|
(years)
|
|
(in millions)
|
Land
|
|
|
$
|
27.8
|
|
|
$
|
30.6
|
|
Land improvements
|
10-15
|
|
17.8
|
|
|
17.4
|
|
Buildings and building improvements
|
15-40
|
|
293.3
|
|
|
273.5
|
|
Machinery and equipment
|
3-12
|
|
1,512.6
|
|
|
1,405.5
|
|
Construction in progress
|
|
|
123.1
|
|
|
138.2
|
|
|
|
|
1,974.6
|
|
|
1,865.2
|
|
Accumulated depreciation and amortization
|
|
|
(964.9
|
)
|
|
(894.0
|
)
|
Property, plant and equipment, net
|
|
|
$
|
1,009.7
|
|
|
$
|
971.2
|
|
IMPAIRMENT OF LONG-LIVED ASSETS
When impairment indicators exist, we evaluate the carrying value of long-lived assets for potential impairment. We consider projected future undiscounted cash flows, trends and other circumstances in making such estimates and evaluations. If impairment is deemed to exist, the carrying amount of the asset is adjusted based on its fair value. Recoverability of assets “held for use” is determined by comparing the forecasted undiscounted cash flows of the operations to which the assets relate to their carrying amount. When the carrying value of an asset group exceeds its fair value and is therefore nonrecoverable, those assets are written down to fair value. Fair value is determined based on market prices, when available, or a discounted cash flow analysis performed using management estimates. See
Note 2
-
Restructuring Actions
for detail on our 2012 and 2011 asset impairments.
GOODWILL
We record goodwill when the purchase price of acquired businesses exceeds the value of their identifiable net tangible and intangible assets acquired. We periodically evaluate goodwill for impairment in accordance with the accounting guidance for goodwill and other indefinite-lived intangibles. We completed impairment tests in
2012
and
2011
and concluded that there was no impairment of our goodwill. The following table provides a reconciliation of changes in goodwill:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Beginning balance
|
$
|
155.9
|
|
|
$
|
155.8
|
|
Foreign currency translation and other
|
0.5
|
|
|
0.1
|
|
Ending balance
|
$
|
156.4
|
|
|
$
|
155.9
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTANGIBLE ASSETS
As part of the formation of e-AAM, we recorded intangible assets of
$8.7 million
in 2010, which represented the fair value of a GM license agreement for technology developed by Saab Automobile AB (Saab) when it was a subsidiary of GM, in-process research and development technology and a long-term supply agreement with Saab acquired as part of the joint venture formation in 2010. In 2011, Saab, our former partner in the e-AAM joint venture, filed for bankruptcy and entered into liquidation status. As a result, in 2011, we recorded a
$1.6 million
impairment charge to selling, general and administrative expenses to write off the intangible asset associated with the long-term supply agreement with Saab. These intangible assets are classified as other assets and deferred charges on our Consolidated Balance Sheet and we expect to begin amortizing the assets on a straight-line basis over their estimated useful lives once development of the related technology is complete and we begin utilizing these assets.
We recorded an intangible asset of
$9.6 million
as of December 31, 2008 which represents the fair value of the customer relationships acquired as part of an asset purchase agreement with FormTech Industries LLC. We recorded
$1.9 million
of expense for the amortization of this intangible asset in each of the years
2012
,
2011
and 2010, and the balance is
$1.9 million
as of
December 31, 2012
. This intangible asset is classified as other assets and deferred charges on our Consolidated Balance Sheet and is being amortized on a straight-line basis over its estimated useful life of five years.
DEBT ISSUANCE COSTS
The costs related to the issuance or modification of long-term debt are deferred and amortized into interest expense over the life of each debt issue. As of
December 31, 2012
and
December 31, 2011
, our unamortized debt issuance costs were
$33.0 million
and
$31.5 million
, respectively. Deferred amounts associated with the extinguishment of debt are expensed and classified as debt refinancing and redemption costs on our Consolidated Statement of Income.
DERIVATIVES
We recognize all derivatives on the balance sheet at fair value. If a derivative qualifies under the accounting guidance as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged asset, liability or firm commitment through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value, and changes in the fair value of derivatives that do not qualify as hedges, are immediately recognized in earnings. See
Note 4
-
Derivatives and Risk Management
, for more detail on our derivatives.
CURRENCY TRANSLATION
We translate the assets and liabilities of our foreign subsidiaries to U.S. dollars at end-of-period exchange rates. We translate the income statement elements of our foreign subsidiaries to U.S. dollars at average-period exchange rates. We report the effect of translation for our foreign subsidiaries that use the local currency as their functional currency as a separate component of stockholders' deficit. Gains and losses resulting from the remeasurement of assets and liabilities in a currency other than the functional currency of a subsidiary are reported in current period income. We also report any gains and losses arising from transactions denominated in a currency other than the functional currency of a subsidiary in current period income.
USE OF ESTIMATES
In order to prepare consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), we are required to make estimates and assumptions that affect the reported amounts and disclosures in our consolidated financial statements. Actual results could differ from those estimates.
EFFECT OF NEW ACCOUNTING STANDARDS
On January 1, 2012, we adopted new accounting guidance on the presentation of comprehensive income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. We have elected to present the components of other comprehensive income in a separate statement immediately following the statement of income. The guidance eliminates the previous option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. Other than the change in presentation, the adoption of this new guidance has had no impact on our consolidated financial statements.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On January 1, 2012, we also adopted new accounting guidance on testing goodwill for impairment. This new guidance allows us the option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under this guidance, we are not required to calculate the fair value of a reporting unit unless we determine, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The guidance includes a number of events and circumstances to consider in conducting the qualitative assessment. The adoption of this new accounting guidance did not have an effect on our 2012 goodwill impairment assessment.
On July 27, 2012, the FASB issued new accounting guidance, which amends the previous accounting guidance on testing indefinite-lived intangible assets, other than goodwill, for impairment. This new guidance allows us the option to first assess qualitative factors to determine whether it is necessary to calculate the fair value of the asset being tested. This new guidance will be effective for us as of January 1, 2013, with early adoption permitted. We do not believe that the adoption of this new accounting guidance will have a significant effect on our indefinite-lived intangible asset impairment assessments in the future.
In 2012, we incurred restructuring charges related to termination benefits and other ongoing restructuring actions. In addition, we continue to make payments and accrual adjustments related to charges incurred for restructuring actions taken in prior years. A summary of this activity for 2012 and 2011 is shown below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time Termination Benefits
|
Asset Impairment Charges
|
Indirect Inventory Obsolescence
|
Asset Retirement Obligations
|
Contract Related Costs
|
Other Restructuring Actions
|
Total
|
|
(in millions)
|
Accrual as of January 1, 2011
|
$
|
1.2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1.4
|
|
$
|
12.2
|
|
$
|
—
|
|
$
|
14.8
|
|
Charges
|
0.1
|
|
8.1
|
|
0.6
|
|
0.1
|
|
—
|
|
6.9
|
|
15.8
|
|
Cash utilization
|
(0.9
|
)
|
—
|
|
—
|
|
(1.0
|
)
|
(7.2
|
)
|
(6.9
|
)
|
(16.0
|
)
|
Non-cash utilization
|
—
|
|
(8.1
|
)
|
(0.6
|
)
|
—
|
|
—
|
|
—
|
|
(8.7
|
)
|
Accrual adjustments
|
(0.1
|
)
|
—
|
|
—
|
|
0.1
|
|
(5.0
|
)
|
—
|
|
(5.0
|
)
|
Accrual as of December 31, 2011
|
$
|
0.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.9
|
|
Charges
|
1.7
|
|
5.8
|
|
—
|
|
—
|
|
—
|
|
23.2
|
|
30.7
|
|
Cash utilization
|
(1.6
|
)
|
—
|
|
—
|
|
(0.1
|
)
|
—
|
|
(23.2
|
)
|
(24.9
|
)
|
Non-cash utilization
|
—
|
|
(5.8
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(5.8
|
)
|
Accrual adjustments
|
(0.4
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.4
|
)
|
Accrual as of December 31, 2012
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.5
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.5
|
|
ONE-TIME TERMINATION BENEFITS
We expensed
$1.7 million
in 2012 primarily related to the continuation of healthcare for certain associates as a result of the Detroit Manufacturing Complex (DMC) and Cheektowaga Manufacturing Facility (CKMF) plant closures, of which we paid
$1.6 million
. We paid
$0.9 million
in
2011
related to one-time termination benefits which were initiated and expensed prior to 2011.
We also recorded accrual adjustments related to changes in previous estimates and currency translation adjustments.
ASSET IMPAIRMENTS
We recorded asset impairment charges of
$5.8 million
in 2012 associated with previously leased assets at DMC that we had elected to buyout in 2011, as we no longer have a use for these assets. In 2011, we recorded asset impairment charges of
$8.1 million
associated with the announced closure of CKMF.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 indirect inventory were determined to be obsolete. We recorded a charge of
$0.6 million
in 2011 related to the write down of the net book value of these assets to their estimated net realizable value.
ASSET RETIREMENT OBLIGATIONS
As a result of announced plant closures, idling and consolidation of facilities, the methods and timing of certain asset retirement obligations, including 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
$0.1 million
in 2011. We paid
$0.1 million
and
$1.0 million
related to these asset retirement obligations in 2012 and 2011, respectively.
CONTRACT RELATED COSTS
In 2011, as a result of the announced closure of DMC, we elected to buy out leased assets that were previously determined to be permanently idled. In 2011, we paid
$18.6 million
to purchase these leased assets, along with others that are being utilized. As a result, we recorded a reduction of cost of goods sold of
$5.0 million
to write-off the remaining accrual that was originally recorded when these assets were idled. See
Note 5
-
Fair Value
for more detail on this lease buyout.
OTHER RESTRUCTURING ACTIONS
We incurred charges related to the redeployment of assets to support capacity utilization initiatives and other related activities as a result of our DMC and CKMF plant closures. We expensed and paid
$23.2 million
in 2012 and
$6.9 million
in 2011 related to these actions.
We expect to make payments of
$0.5 million
in 2013 related to the remaining restructuring accrual.
|
|
3.
|
LONG-TERM DEBT AND LEASE OBLIGATIONS
|
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Amended Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
9.25% Notes, net of discount
|
337.5
|
|
|
379.0
|
|
7.875% Notes
|
300.0
|
|
|
300.0
|
|
7.75% Notes
|
200.0
|
|
|
200.0
|
|
6.625% Notes
|
550.0
|
|
|
—
|
|
5.25% Notes, net of discount
|
—
|
|
|
249.9
|
|
Foreign credit facilities
|
61.0
|
|
|
45.2
|
|
Capital lease obligations
|
5.6
|
|
|
6.1
|
|
Long-term debt
|
$
|
1,454.1
|
|
|
$
|
1,180.2
|
|
AMENDED REVOLVING CREDIT FACILITY
On August 31, 2012, we amended and restated the Credit Agreement dated as of January 9, 2004 (as amended and restated, the “Amended and Restated Revolving Credit Agreement” and the facility thereunder, the “Amended Revolving Credit Facility”). As of
December 31, 2012
, the Amended Revolving Credit Facility provided up to
$72.8 million
of revolving bank financing commitments through June 2013 and
$365.0 million
of revolving bank financing commitments through June 30, 2016. At
December 31, 2012
,
$414.6 million
was available under the Amended Revolving Credit Facility, which reflected a reduction of
$23.2 million
for standby letters of credit issued against the facility.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Amended and Restated Revolving Credit Agreement, among other things, increased the aggregate commitments by approximately
$116.0 million
and increased the commitments maturing on June 30, 2016 (the class D facility) to
$365.0 million
. The class D facility includes loans held by lenders that agreed to extend and/or increase their respective commitments and new lenders to the facility. The Amended and Restated Revolving Credit Agreement also includes a class C loan facility of approximately
$72.8 million
, which matures on June 30, 2013. We expensed
$0.3 million
for the write-off of a proportionate amount of unamortized debt issuance costs related to the class C facility. We had been amortizing the debt issuance costs over the expected life of the borrowing. We paid debt issuance costs of
$1.7 million
,
$5.9 million
and
$1.6 million
associated with the amendments and restatements of our Revolving Credit Facility in 2012, 2011 and 2010, respectively.
Borrowings under the Amended Revolving Credit Facility bear interest at rates based on adjusted LIBOR or an alternate base rate, plus an applicable margin. The applicable margin for the class C and class D facilities remains unchanged.
Under the Amended Revolving Credit Facility, certain negative covenants were revised to provide increased flexibility. In the event AAM achieves investment grade corporate credit ratings from S&P and Moody's, AAM may elect to release all of the collateral from the liens granted pursuant to the Collateral Agreement, subject to notice requirements and other conditions.
The Amended Revolving Credit Facility is secured on a first priority basis by all or substantially all of the assets of AAM and each guarantor under the Collateral Agreement dated as of November 7, 2008, as amended and restated as of December 18, 2009 and as further amended on June 30, 2011, among AAM and its domestic subsidiaries and JPMorgan Chase Bank, N.A., as collateral agent for the lenders under the Amended and Restated Revolving Credit Agreement and the secured noteholders under the Indenture dated as of December 18, 2009, among AAM, as issuer, the guarantors and U.S. Bank National Association, as trustee.
The Amended Revolving Credit Facility provides back-up liquidity for our foreign credit facilities. We intend to use the availability of long-term financing under the Amended Revolving Credit Facility to refinance any current maturities related to such debt agreements that are not otherwise refinanced on a long-term basis in their local markets.
9.25% NOTES
In 2009, we issued
$425.0 million
of
9.25%
senior secured notes due 2017 (
9.25%
Notes). The notes were issued at a discount of
$5.5 million
. Net proceeds from these notes were used for the repayment of certain indebtedness. In 2010, we paid debt issuance costs of
$0.3 million
related to the
9.25%
Notes.
In 2012 and 2011, we elected to exercise an option to redeem
10%
of the original amount of our
9.25%
Notes outstanding at a redemption price of
103%
of the principal amount. This resulted in principal payments of
$42.5 million
and
$1.3 million
for the redemption premiums, as well as payments of accrued interest in both 2012 and 2011. We expensed
$1.0 million
in 2012 and
$1.4 million
in 2011 for the write-off of a proportional amount of unamortized debt discount and issuance costs related to this debt. We had been amortizing the debt discount and debt issuance costs over the expected life of the borrowing. Pursuant to the terms of our
9.25%
Notes, we have the right to voluntarily redeem an additional
10%
in October 2013. In addition, we have the right to redeem any remaining
9.25%
Notes outstanding in January 2014.
The
9.25%
Notes share the collateral package equally and ratably with the Amended Revolving Credit Facility as described above. The indenture governing the
9.25%
Notes limits 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, transact with affiliates or merge, make acquisitions and sell assets.
7.875% NOTES
In 2007, we issued
$300.0 million
of
7.875%
senior unsecured notes due 2017 (
7.875%
Notes). Net proceeds from these notes were used for general corporate purposes, including payment of amounts outstanding under our Revolving Credit Facility. Pursuant to the terms of our
7.875%
Notes, we may voluntarily redeem any or all of the outstanding
7.875%
Notes at any time.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.75% NOTES
In 2011, we issued
$200.0 million
of
7.75%
senior unsecured notes due 2019 (
7.75%
Notes). Net proceeds from these notes were used for general corporate purposes, including the repayment of certain amounts outstanding under our Revolving Credit Facility. In 2011, we paid debt issuance costs of
$5.0 million
related to the
7.75%
Notes.
6.625% NOTES
In the third quarter of 2012, we issued
$550.0 million
of
6.625%
senior unsecured notes due 2022 (
6.625%
Notes). Concurrently with the offering of the
6.625%
Notes, we made a tender offer to purchase our
5.25%
Notes, of which the aggregate principal amount outstanding at the time of the tender offer was
$250.0
million. Net proceeds from the
6.625%
Notes were used to fund the purchase of
$137.8 million
of the outstanding
5.25%
Notes pursuant to the tender offer, certain pension obligations and for other general corporate purposes. We also used the net proceeds to fund the redemption of the remaining
5.25%
Notes, including the payment of interest, and to redeem
$42.5 million
aggregate principal amount of our
9.25%
Notes. We paid debt issuance costs of
$8.9
million related to the
6.625%
Notes in 2012.
5.25% NOTES
On September 18, 2012, in connection with the cash tender offer, we purchased
$137.8 million
aggregate principal amount of the
5.25%
Notes, and paid accrued interest. Upon purchase, we expensed
$9.2 million
related to a tender premium,
$0.5 million
of professional fees and unamortized debt issuance costs of
$0.1 million
related to this debt. We had been amortizing the debt issuance costs over the expected life of the borrowing.
On October 3, 2012, we voluntarily redeemed the remaining
5.25%
Notes outstanding. This resulted in a principal payment of
$112.2 million
, a payment of
$7.3 million
related to a make-whole premium, as well as payment of accrued interest. Upon redemption, we expensed
$0.1 million
of unamortized debt discount and issuance costs related to this debt. We had been amortizing the debt issuance costs over the expected life of the borrowing.
LEASES
We lease certain facilities under capital leases expiring at various dates. The gross asset cost of our capital leases was
$6.7 million
at
December 31, 2012
and
$16.1 million
at
December 31, 2011
. The net book value included in property, plant and equipment, net on the balance sheet was
$5.6 million
and
$6.0 million
at
December 31, 2012
and
2011
, respectively. The weighted-average interest rate on these capital lease obligations at
December 31, 2012
was
8.9%
.
We also lease certain manufacturing machinery and equipment, commercial office and production facilities, vehicles and other assets under operating leases expiring at various dates. In the fourth quarter of 2012, we entered into a sale-leaseback transaction for
$13.2 million
of equipment to be used in production starting in 2013. We received proceeds of
$12.1 million
in 2012 as a result of this transaction. Future minimum payments under noncancelable operating leases are as follows:
$9.6 million
in 2013,
$8.3 million
in 2014,
$7.1 million
in 2015,
$5.8 million
in 2016 and
$4.1 million
in 2017. Our total expense relating to operating leases was
$9.0 million
,
$6.8 million
and
$5.3 million
in
2012
,
2011
and
2010
, respectively. This includes a reduction to cost of goods sold of
$0.5 million
and
$2.3 million
related to the purchase of previously idled leased assets in 2011 and 2010, respectively. See
Note 2
-
Restructuring Actions
for more detail on these charges.
FOREIGN CREDIT FACILITIES
We utilize local currency credit facilities to finance the operations of certain foreign subsidiaries. These credit facilities, some of which are guaranteed by Holdings and/or AAM, Inc., expire at various dates through January 2015. At
December 31, 2012
,
$61.0 million
was outstanding under these facilities and an additional
$15.1 million
was available.
DEBT MATURITIES
Aggregate maturities of long-term debt are as follows
(in millions)
:
|
|
|
|
|
2013
|
$
|
55.5
|
|
2014
|
2.4
|
|
2015
|
4.2
|
|
2016
|
0.4
|
|
2017
|
638.0
|
|
Thereafter
|
753.6
|
|
Total
|
$
|
1,454.1
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTEREST EXPENSE AND INVESTMENT INCOME
Interest expense was
$101.6 million
in
2012
,
$83.9 million
in
2011
and
$89.0 million
in
2010
. The increase in interest expense in 2012 reflects higher average outstanding borrowings as compared to 2011. The decrease in interest expense in 2011 as compared to 2010 relates primarily to higher capitalized interest as a result of increased capital expenditures to support our significant global program launches. We capitalized interest of
$8.2 million
in
2012
,
$8.3 million
in
2011
and
$4.0 million
in
2010
. The weighted-average interest rate of our long-term debt outstanding at
December 31, 2012
was
7.9%
as compared to
8.0%
and
8.2%
at December 31,
2011
and
2010
, respectively. The amount of accrued interest included in other accrued expenses on our Consolidated Balance Sheet was
$35.1 million
and
$32.0 million
as of
December 31, 2012
and
2011
, respectively.
Investment income was
$0.6 million
in
2012
,
$1.2 million
in
2011
and
$3.8 million
in
2010
. Investment income includes interest and dividends earned on cash and cash equivalents and realized and unrealized gains and losses on our short-term investments during the period. In 2008, redemptions were temporarily suspended for certain money-market and other similar funds in which we invest. We recorded a gain of
$0.1 million
and
$2.3 million
in 2011 and 2010, respectively, related to distributions of our short-term investments, from which distributions were previously suspended.
|
|
4.
|
DERIVATIVES AND RISK MANAGEMENT
|
DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, we are exposed to market risk associated with changes in foreign currency exchange rates and interest rates. To manage a portion of these inherent risks, we may purchase certain types of derivative financial instruments based on management's judgment of the trade-off between risk, opportunity and cost. We do not hold or issue derivative financial instruments for trading or speculative purposes. The ineffective portion of any hedge is included in current earnings. The impact of hedge ineffectiveness was not significant in any of the periods presented.
CURRENCY FORWARD CONTRACTS
From time to time, we use foreign currency forward contracts to reduce the effects of fluctuations in exchange rates, primarily relating to the Mexican Peso, Euro and Pound Sterling. We had forward contracts with a notional amount of
$31.9 million
and
$68.6 million
outstanding at December 31,
2012
and
2011
, respectively.
The following table summarizes the reclassification of pre-tax derivative gains (losses) into net income from accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Gain (Loss) Reclassified into Net Income
|
|
Gain (loss) Reclassified During the Twelve Months Ended December 31,
|
|
Gain Expected to be Reclassified During the Next 12 Months
|
|
2012
|
|
2011
|
|
|
|
|
(in millions)
|
Currency forward contracts
|
Cost of Goods Sold
|
|
$
|
(1.8
|
)
|
|
$
|
1.9
|
|
|
$
|
2.3
|
|
CONCENTRATIONS OF CREDIT RISK
In the normal course of business, we provide credit to customers. We periodically evaluate the creditworthiness of our customers and we maintain reserves for potential credit losses.
Sales to GM were approximately
73%
of our total net sales in
2012
and
2011
, and
75%
of our total net sales in
2010
. Accounts and other receivables due from GM were
$325.8 million
at year-end
2012
and
$234.7 million
at year-end
2011
. Sales to Chrysler Group LLC (Chrysler) were approximately
10%
of our total net sales in
2012
,
8%
in
2011
and
9%
in
2010
. Accounts receivable due from Chrysler were
$43.5 million
at year-end
2012
and
$29.1 million
at year-end
2011
. No other single customer accounted for more than 10% of our consolidated net sales in any year presented.
In addition, our total GM postretirement cost sharing asset was
$273.0 million
as of
December 31, 2012
and
$270.6 million
as of
December 31, 2011
. See Note 6 -
Employee Benefit Plans
for more detail on this cost sharing asset.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
We diversify the concentration of invested cash and cash equivalents among different financial institutions and we monitor the selection of counterparties to other financial instruments to avoid unnecessary concentrations of credit risk.
The fair value accounting guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset. This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows:
|
|
•
|
Level 1: Observable inputs such as quoted prices in active markets;
|
|
|
•
|
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
|
|
•
|
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
FINANCIAL INSTRUMENTS
The estimated fair values of our financial assets and liabilities that are recognized at fair value on a recurring basis, using available market information and other observable data are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|
Input
|
|
(in millions)
|
|
(in millions)
|
|
|
Balance Sheet Classification
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
6.5
|
|
|
$
|
6.5
|
|
|
$
|
36.0
|
|
|
$
|
36.0
|
|
|
Level 1
|
Prepaid expenses and other
|
|
|
|
|
|
|
|
|
|
Currency forward contracts
|
2.3
|
|
|
2.3
|
|
|
0.1
|
|
|
0.1
|
|
|
Level 2
|
Other assets and deferred charges
|
|
|
|
|
|
|
|
|
|
Currency forward contracts
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
Level 2
|
Other accrued expenses
|
|
|
|
|
|
|
|
|
|
Currency forward contracts
|
—
|
|
|
—
|
|
|
5.6
|
|
|
5.6
|
|
|
Level 2
|
The carrying values of our cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments. The carrying values of our borrowings under the foreign credit facilities approximate their fair value due to the frequent resetting of the interest rates. We estimated the fair value of our outstanding debt using available market information and other observable data to be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|
Input
|
|
(in millions)
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amended Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Level 2
|
9.25% Notes
|
337.5
|
|
|
377.4
|
|
|
379.0
|
|
|
415.0
|
|
|
Level 2
|
7.875% Notes
|
300.0
|
|
|
310.1
|
|
|
300.0
|
|
|
295.5
|
|
|
Level 2
|
7.75% Notes
|
200.0
|
|
|
216.5
|
|
|
200.0
|
|
|
195.0
|
|
|
Level 2
|
6.625% Notes
|
550.0
|
|
|
555.5
|
|
|
—
|
|
|
—
|
|
|
Level 2
|
5.25% Notes
|
—
|
|
|
—
|
|
|
249.9
|
|
|
243.8
|
|
|
Level 2
|
Investments in our defined benefit plans are stated at fair value. See Note 6 -
Employee Benefit Plans
for additional fair value disclosures of our pension plan assets as of
December 31, 2012
and
December 31, 2011
.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LONG-LIVED ASSETS
In 2012 and 2011, as part of our impairment analysis, we were required to measure the fair value of certain long-lived assets. In 2012, we considered the expected future use of certain long-lived assets remaining at our Detroit Manufacturing Complex. In 2011, we considered the expected future use of the long-lived assets located at our Cheektowaga Manufacturing Facility. Assets that will not be redeployed to other AAM facilities were determined to be fully impaired.
The following table summarizes impairments of long-lived assets measured at fair value on a nonrecurring basis subsequent to initial recognition:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Classification
|
|
Fair Value Measurements using Level 3 Inputs
|
|
Asset Impairment Recorded in Twelve Months ended December 31, 2012
|
|
Fair Value Measurements using Level 3 Inputs
|
|
Asset Impairment Recorded in Twelve Months ended December 31, 2011
|
|
|
(in millions)
|
Property, plant and equipment, net
|
|
$
|
—
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
8.1
|
|
Other assets and deferred charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
In the fourth quarter of 2012, we reassessed the expected future use of certain assets remaining at DMC that were previously leased assets that had been purchased in 2011 for
$18.6 million
. As a result, we recorded an impairment charge of
$5.8 million
related to the assets that we no longer intend to redeploy and use at another AAM facility. In 2011, at the time we elected to buyout the leases we considered the expected future use of these long-lived assets as part of our fair value measurement and recorded them at their estimated fair value. Assets that were not to be redeployed to other AAM facilities were written down to their estimated net realizable value, which resulted in a net charge to cost of goods sold of
$5.3 million
in 2011.
Finite-lived Intangibles
In 2011, Saab, our former partner in the e-AAM joint venture, filed for bankruptcy and entered into liquidation status. As a result, in 2011, we recorded a
$1.6 million
impairment charge to selling, general and administrative expenses to write off the intangible asset associated with the long-term supply agreement with Saab acquired as part of our joint venture formation in 2010. The following table summarizes the impairment of finite-lived intangible assets measured at fair value on a nonrecurring basis subsequent to initial recognition:
|
|
|
|
|
|
|
|
|
|
Balance Sheet Classification
|
|
Fair Value Measurement Using Level 3 Inputs
|
|
Impairment Recorded in the Twelve Months Ended December 31, 2011
|
|
|
(in millions)
|
Other assets and deferred charges
|
|
$
|
—
|
|
|
$
|
1.6
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
6.
|
EMPLOYEE BENEFIT PLANS
|
PENSION AND OTHER POSTRETIREMENT DEFINED BENEFIT PLANS
We sponsor various qualified and non-qualified defined benefit pension plans for our eligible associates. We also maintain hourly and salaried benefit plans that provide postretirement medical, dental, vision, legal and life insurance benefits (OPEB) to our eligible retirees and their dependents in the U.S.
As part of the 2009 Settlement and Commercial Agreement, GM confirmed its obligation to share proportionally in the cost of OPEB for eligible retirees based on the length of service an employee had with AAM and GM. We have included in our OPEB obligation the amounts expected to be received pursuant to this agreement of
$273.0 million
and
$270.6 million
at
December 31, 2012
and
December 31, 2011
, respectively. We have also recorded a corresponding asset for these amounts on our Consolidated Balance Sheet,
$13.3 million
that is classified as a current asset and
$259.7 million
that is classified as a noncurrent asset as of
December 31, 2012
.
Actuarial valuations of our benefit plans were made as of
December 31, 2012
and
2011
. The principal weighted-average assumptions used in the year-end valuation of our U.S. and U.K. plans appear in the following table. The U.S. discount rates are based on an actuarial review of a hypothetical portfolio of long-term, high quality corporate bonds matched against the expected payment stream for each of our plans. The U.K. discount rate is based on a review of long-term bonds, in consideration of the average duration of plan liabilities. The assumptions for expected return on plan assets are based on future capital market expectations for the asset classes represented within our portfolios and a review of long-term historical returns. The rates of increase in compensation and health care costs are based on current market conditions, inflationary expectations and historical information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
OPEB
|
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
U.S.
|
|
U.K
|
|
U.S.
|
|
U.K
|
|
U.S.
|
|
U.K.
|
|
|
|
|
|
|
Discount rate
|
4.01
|
%
|
|
4.30
|
%
|
|
5.10
|
%
|
|
4.65
|
%
|
|
5.70
|
%
|
|
5.35
|
%
|
|
4.05
|
%
|
|
5.10
|
%
|
|
5.70
|
%
|
Expected return on plan assets
|
7.50
|
%
|
|
4.35
|
%
|
|
8.00
|
%
|
|
4.60
|
%
|
|
8.00
|
%
|
|
6.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase
|
4.00
|
%
|
|
3.15
|
%
|
|
4.00
|
%
|
|
3.25
|
%
|
|
3.75
|
%
|
|
3.65
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.75
|
%
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The accumulated benefit obligation for all defined benefit pension plans was
$828.4 million
and
$706.2 million
at
December 31, 2012
and
December 31, 2011
, respectively. The following table summarizes the changes in projected benefit obligations and plan assets and reconciles the funded status of the benefit plans, which is the net benefit plan liability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
OPEB
|
|
December 31,
|
|
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(in millions)
|
|
(in millions)
|
Change in benefit obligation
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
$
|
716.7
|
|
|
$
|
665.4
|
|
|
$
|
588.4
|
|
|
$
|
564.3
|
|
Service cost
|
3.1
|
|
|
4.8
|
|
|
0.4
|
|
|
0.9
|
|
Interest cost
|
35.1
|
|
|
37.1
|
|
|
15.1
|
|
|
17.1
|
|
Plan amendments
|
6.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Actuarial loss (gain)
|
97.3
|
|
|
45.5
|
|
|
(7.1
|
)
|
|
11.4
|
|
Change in GM portion of OPEB obligation
|
—
|
|
|
—
|
|
|
2.4
|
|
|
16.2
|
|
Participant contributions
|
0.5
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
Special and contractual termination benefits
|
12.8
|
|
|
—
|
|
|
18.3
|
|
|
—
|
|
Curtailments
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
(10.0
|
)
|
Settlements
|
—
|
|
|
—
|
|
|
(4.7
|
)
|
|
—
|
|
Benefit payments
|
(34.2
|
)
|
|
(33.7
|
)
|
|
(11.5
|
)
|
|
(11.5
|
)
|
Currency fluctuations
|
5.4
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
Net change
|
126.1
|
|
|
51.3
|
|
|
12.9
|
|
|
24.1
|
|
Benefit obligation at end of year
|
$
|
842.8
|
|
|
$
|
716.7
|
|
|
$
|
601.3
|
|
|
$
|
588.4
|
|
|
|
|
|
|
|
|
|
Change in plan assets
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
$
|
441.7
|
|
|
$
|
412.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
57.3
|
|
|
11.0
|
|
|
—
|
|
|
—
|
|
Employer contributions
|
225.4
|
|
|
52.0
|
|
|
11.5
|
|
|
11.5
|
|
Participant contributions
|
0.5
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
Benefit payments
|
(34.2
|
)
|
|
(33.7
|
)
|
|
(11.5
|
)
|
|
(11.5
|
)
|
Currency fluctuations
|
4.7
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
Net change
|
253.7
|
|
|
29.3
|
|
|
—
|
|
|
—
|
|
Fair value of plan assets at end of year
|
$
|
695.4
|
|
|
$
|
441.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Amounts recognized in our balance sheets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
OPEB
|
|
December 31,
|
|
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(in millions)
|
|
(in millions)
|
Noncurrent Assets
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
|
(1.3
|
)
|
|
(1.2
|
)
|
|
(28.6
|
)
|
|
(29.4
|
)
|
Noncurrent liabilities
|
(157.9
|
)
|
|
(273.8
|
)
|
|
(572.7
|
)
|
|
(559.0
|
)
|
Net liability
|
$
|
(147.4
|
)
|
|
$
|
(275.0
|
)
|
|
$
|
(601.3
|
)
|
|
$
|
(588.4
|
)
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pre-tax amounts recorded in accumulated other comprehensive income (AOCI), not yet recognized in net periodic benefit cost as of
December 31, 2012
and
2011
, consists of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
OPEB
|
|
December 31,
|
|
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(in millions)
|
|
(in millions)
|
Net actuarial gain (loss)
|
$
|
(298.6
|
)
|
|
$
|
(230.3
|
)
|
|
$
|
3.3
|
|
|
$
|
(1.8
|
)
|
Net prior service credit (cost)
|
(4.7
|
)
|
|
0.9
|
|
|
11.8
|
|
|
13.6
|
|
Deferred curtailment gain
|
—
|
|
|
—
|
|
|
—
|
|
|
22.0
|
|
Total amounts recorded
|
$
|
(303.3
|
)
|
|
$
|
(229.4
|
)
|
|
$
|
15.1
|
|
|
$
|
33.8
|
|
The components of net periodic benefit cost are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
OPEB
|
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
(in millions)
|
|
(in millions)
|
Service cost
|
$
|
3.1
|
|
|
$
|
4.8
|
|
|
$
|
4.9
|
|
|
$
|
0.4
|
|
|
$
|
0.9
|
|
|
$
|
1.0
|
|
Interest cost
|
35.1
|
|
|
37.1
|
|
|
36.8
|
|
|
15.1
|
|
|
17.1
|
|
|
16.1
|
|
Expected asset return
|
(34.7
|
)
|
|
(31.9
|
)
|
|
(31.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortized actuarial loss (gain)
|
7.8
|
|
|
4.5
|
|
|
2.5
|
|
|
0.6
|
|
|
0.4
|
|
|
(1.4
|
)
|
Amortized prior service cost (credit)
|
0.5
|
|
|
(0.1
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
(3.2
|
)
|
|
(3.1
|
)
|
Special and contractual
|
|
|
|
|
|
|
|
|
|
|
|
termination benefits
|
12.8
|
|
|
—
|
|
|
—
|
|
|
16.2
|
|
|
—
|
|
|
—
|
|
Curtailments
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(21.8
|
)
|
|
—
|
|
|
—
|
|
Settlement
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(5.2
|
)
|
|
—
|
|
|
—
|
|
Net periodic benefit cost
|
$
|
24.6
|
|
|
$
|
14.5
|
|
|
$
|
12.6
|
|
|
$
|
3.3
|
|
|
$
|
15.2
|
|
|
$
|
12.6
|
|
Our postretirement cost sharing asset from GM is measured on the same basis as the portion of the obligation to which it relates. The actuarial gains and losses related to the GM portion of the OPEB obligation are recognized immediately in the Consolidated Statement of Income as an offset against the gains and losses related to the change in the corresponding GM postretirement cost sharing asset. These items are presented net in the change in benefit obligation and net periodic benefit cost components disclosed above. Remaining actuarial gains and losses are deferred and amortized over the expected future service periods of the active participants.
The estimated net actuarial loss and prior service cost for the defined benefit pension plans that is expected to be amortized from AOCI into net periodic benefit cost in
2013
are
$9.5 million
and
$1.3 million
, respectively. The estimated net actuarial loss and prior service credit for the other defined benefit postretirement plans that is expected to be amortized from AOCI into net periodic benefit cost in
2013
are
$0.8 million
and
$1.8 million
, respectively.
For
measurement purposes, a weighted average annual increase in the per-capita cost of covered health care benefits of
8.0%
was assumed for
2013
. The rate was assumed to decrease gradually to
5.0%
by
2019
and to remain at that level thereafter. Health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1.0% increase in the assumed health care cost trend rate would have increased total service and interest cost in
2012
and the postretirement obligation, net of GM cost sharing, at
December 31, 2012
by
$1.6 million
and
$35.9 million
, respectively. A 1.0% decrease in the assumed health care cost trend rate would have decreased total service and interest cost in
2012
and the postretirement obligation, net of GM cost sharing, at
December 31, 2012
by
$1.3 million
and
$29.9 million
, respectively.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The expected future pension and other postretirement benefits to be paid, net of GM cost sharing, for each of the next five years and in the aggregate for the succeeding five years thereafter are as follows:
$53.0 million
in 2013;
$54.1 million
in 2014;
$55.5 million
in 2015;
$56.2 million
in 2016;
$58.4 million
in 2017 and
$306.2 million
for 2018 through 2022. These amounts were estimated using the same assumptions to measure our
2012
year-end pension and OPEB obligations and include an estimate of future employee service.
Contributions
On September 27, 2012, AAM and the Pension Benefit Guaranty Corporation entered into an agreement regarding any liability that may have arisen under the Employee Retirement Income Security Act of 1974 in connection with the closures of DMC and CKMF. As part of this agreement, in the third quarter of 2012, we contributed
$114.7 million
in excess of our statutory minimum to our U.S. hourly pension plan.
Due to our significant pension contributions made in 2012, we do not expect to make any cash payments in 2013 to satisfy our regulatory funding requirements. We expect our cash outlay, net of GM cost sharing, for OPEB to be approximately
$15 million
in 2013.
Labor relations
In the first quarter of 2012, we recorded a gain of
$21.8 million
in cost of goods sold for the curtailment of certain other postretirement benefits (OPEB). This resulted primarily from the reduction in expected future OPEB related to the DMC and CKMF hourly associates who have terminated employment from AAM as a result of our plant closures. These curtailment gains resulted in an increase in our accumulated other comprehensive loss of
$21.8 million
pre-tax.
In the second quarter of 2012, we notified hourly associates of the termination of a benefit plan, which provided legal services to certain eligible hourly associates represented by the International UAW. As a result of terminating this plan, we recorded a settlement gain of
$5.2 million
in cost of goods sold in 2012. Recognition of this settlement gain reduced postretirement benefits and other long-term liabilities by
$4.7 million
and also reduced our accumulated other comprehensive loss by
$0.5 million
pre-tax.
Amendments to pension and OPEB plans and contractual termination benefits
As a result of our election to apply the provisions of Moving Ahead for Progress in the 21st Century Act (MAP-21), in addition to certain actions we took during the third quarter of 2012, we agreed to provide pension and postretirement benefits to certain eligible UAW associates whose employment had been terminated in connection with the DMC and CKMF plant closures. In 2012, we recorded
$28.7 million
in cost of goods sold, for these pension and postretirement benefits. These incremental pension and postretirement benefits were also agreed to in connection with the lawsuit filed by the International UAW against AAM. See Note 12 - Commitments and Contingencies for more detail on this lawsuit.
Effective August 1, 2012, we amended our AAM Supplemental Executive Retirement Plan (SERP) to include an actuarial increase provision for participants that work past the age of 65, among other things. As a result of these plan amendments, we increased our pension liability by
$6.1 million
in 2012. This adjustment was recorded to AOCI and will be amortized over future periods.
Pension plan assets
The weighted-average asset allocations of our pension plan assets at
December 31, 2012
and
2011
appear in the following table. The asset allocation for our plans is developed in consideration of the demographics of the plan participants and expected payment stream of the benefit obligation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
U.K.
|
|
|
|
Target
|
|
|
|
Target
|
|
2012
|
|
2011
|
|
Allocation
|
|
2012
|
|
2011
|
|
Allocation
|
Equity securities
|
38.3
|
%
|
|
50.8
|
%
|
|
35% - 65%
|
|
34.8
|
%
|
|
44.5
|
%
|
|
30% - 40%
|
Fixed income securities
|
52.3
|
|
|
35.5
|
|
|
35% - 50%
|
|
55.1
|
|
|
47.9
|
|
|
50% - 60%
|
Hedge funds
|
8.5
|
|
|
13.5
|
|
|
0% - 15%
|
|
—
|
|
|
—
|
|
|
0% - 10%
|
Cash
|
0.9
|
|
|
0.2
|
|
|
0% - 5%
|
|
10.1
|
|
|
7.6
|
|
|
0% - 10%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The primary objective of our pension plan assets is to provide a source of retirement income for participants and beneficiaries. Our primary financial objectives for the pension plan assets have been established in conjunction with a comprehensive review of our current and projected financial requirements. These objectives include having the ability to pay all future benefits and expenses when due, maintaining flexibility and minimizing volatility. These objectives are based on a long-term investment horizon.
Postretirement Benefit Plan Assets
Investments in our defined benefit plans are stated at fair value. Level 1 assets are valued using quoted market prices that represent the asset value of the shares held by the trusts. The level 2 assets are investments in pooled funds, which are valued using a model to reflect the valuation of their underlying assets that are publicly traded with observable values. The fair value of our level 3 postretirement benefit plan assets are measured by compiling the portfolio holdings and independently valuing the securities in those portfolios. The fair values of our pension plan assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
Asset Categories
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
(in millions)
|
Cash & Cash Equivalents
|
|
$
|
18.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18.5
|
|
Equity
|
|
|
|
|
|
|
|
|
U.S. Large Cap
|
|
104.0
|
|
|
—
|
|
|
—
|
|
|
104.0
|
|
U.S. Small/Mid Cap
|
|
46.9
|
|
|
—
|
|
|
—
|
|
|
46.9
|
|
World Equity
|
|
111.2
|
|
|
—
|
|
|
—
|
|
|
111.2
|
|
Fixed Income Securities
|
|
|
|
|
|
|
|
|
Government & Agencies
|
|
100.4
|
|
|
—
|
|
|
—
|
|
|
100.4
|
|
Corporate Bonds - Investment Grade
|
|
204.9
|
|
|
—
|
|
|
—
|
|
|
204.9
|
|
Corporate Bonds - Non-investment Grade
|
|
26.4
|
|
|
—
|
|
|
—
|
|
|
26.4
|
|
Emerging Market Debt
|
|
20.5
|
|
|
—
|
|
|
—
|
|
|
20.5
|
|
Other
|
|
15.0
|
|
|
—
|
|
|
—
|
|
|
15.0
|
|
Hedge Funds
|
|
|
|
|
|
|
|
|
Multi Strategy Hedge Fund
|
|
—
|
|
|
—
|
|
|
47.6
|
|
|
47.6
|
|
Total Plan Assets
|
|
$
|
647.8
|
|
|
$
|
—
|
|
|
$
|
47.6
|
|
|
$
|
695.4
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
Asset Categories
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
(in millions)
|
Cash & Cash Equivalents
|
|
$
|
8.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.0
|
|
Equity
|
|
|
|
|
|
|
|
|
U.S. Large Cap
|
|
88.6
|
|
|
—
|
|
|
—
|
|
|
88.6
|
|
U.S. Small/Mid Cap
|
|
43.5
|
|
|
—
|
|
|
—
|
|
|
43.5
|
|
World Equity
|
|
65.3
|
|
|
20.6
|
|
|
—
|
|
|
85.9
|
|
Fixed Income Securities
|
|
|
|
|
|
|
|
|
Government & Agencies
|
|
56.6
|
|
|
—
|
|
|
—
|
|
|
56.6
|
|
Corporate Bonds - Investment Grade
|
|
68.5
|
|
|
—
|
|
|
—
|
|
|
68.5
|
|
Corporate Bonds - Non-investment Grade
|
|
25.3
|
|
|
—
|
|
|
—
|
|
|
25.3
|
|
Emerging Market Debt
|
|
11.8
|
|
|
—
|
|
|
—
|
|
|
11.8
|
|
Other
|
|
7.0
|
|
|
—
|
|
|
—
|
|
|
7.0
|
|
Hedge Funds
|
|
|
|
|
|
|
|
|
Multi Strategy Hedge Fund
|
|
—
|
|
|
—
|
|
|
46.5
|
|
|
46.5
|
|
Total Plan Assets
|
|
$
|
374.6
|
|
|
$
|
20.6
|
|
|
$
|
46.5
|
|
|
$
|
441.7
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The changes in the fair value of our level 3 assets in the Multi Strategy Hedge Fund are as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Beginning balance
|
$
|
46.5
|
|
|
$
|
35.7
|
|
Actual return on plan assets:
|
|
|
|
Relating to assets still held at the reporting date
|
1.1
|
|
|
(0.5
|
)
|
Purchases, sales and settlements, net
|
—
|
|
|
11.3
|
|
Ending balance
|
$
|
47.6
|
|
|
$
|
46.5
|
|
DEFINED CONTRIBUTION PLANS
Most of our salaried U.S. associates are eligible to participate in voluntary savings plans. Our maximum match is
50%
of eligible salaried associates' contribution up to
10%
of their eligible salary. Matching contributions amounted to
$3.3 million
in
2012
,
$3.2 million
in
2011
and
$3.1 million
in
2010
. U.S. salaried associates are eligible to receive an additional annual retirement contribution (ARC) benefit between
3%
to
5%
of eligible salary, depending on years of service. We made contributions of
$4.4 million
,
$3.6 million
and
$3.5 million
in
2012
,
2011
and
2010
, respectively, for the ARC.
As part of the 2008 labor agreements, certain UAW represented associates at our original U.S. locations are eligible for a Company match on associate contributions made to the voluntary savings plans, which began in 2009. Our maximum match will be
25%
of hourly associates' contribution up to the first
6%
of their contributions. Matching contributions amounted to
$0.1 million
in
2012
and
$0.2 million
in both
2011
and
2010
. Certain UAW represented associates are also eligible to receive an ARC benefit of
5%
of eligible wages, which also began in 2009. We made contributions of
$1.6 million
in
2012
,
$1.9 million
in
2011
and
$1.8 million
in
2010
for the ARC related to these associates.
DEFERRED COMPENSATION PLAN
Certain U.S. associates are eligible to participate in a non-qualified deferred compensation plan. Payments of
$0.8 million
,
$1.1 million
and
$1.6 million
have been made in
2012
,
2011
and
2010
, respectively, to eligible associates that have elected distributions. At
December 31, 2012
and
2011
, our deferred compensation liability was
$11.3 million
and
$10.6 million
, respectively. Due to the changes in the value of this deferred compensation plan we increased our liability by
$1.3 million
,
$0.3 million
, and
$1.1 million
in 2012, 2011 and 2010, respectively.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
7.
|
INVESTMENT IN JOINT VENTURES
|
In 2009, we formed a joint venture with Hefei Automobile Axle Co, Ltd. (HAAC), a subsidiary of Anhui Jianghuai Automobile Group Co, Ltd. (JV). In 2011, we made an additional investment of
$16.5 million
in this JV to expand into HAAC's light commercial axle business. Each party continues to own
50 percent
of the JV, which we account for under the equity method of accounting. We recorded both our initial investment of
$10.2 million
in 2009, as well as our additional investment in the JV in 2011 at cost, and adjusted the carrying amount of the investment to recognize our proportionate share of the earnings of the JV. Our investment is classified as other assets and deferred charges on our Consolidated Balance Sheet.
In 2010, we formed a joint venture with Saab. The new company, e-AAM Driveline Systems AB (e-AAM), engineers and develops electric and hybrid driveline systems to be commercialized for passenger cars and crossover vehicles. In 2012, we paid
$4.0 million
to acquire the remaining shares of e-AAM from Saab. e-AAM is now a wholly-owned subsidiary of AAM and continues to be a fully consolidated entity.
|
|
8.
|
STOCKHOLDER RIGHTS PLAN
|
In September 2003, our Board of Directors adopted a Stockholder Rights Plan (the Rights Plan) and declared a dividend of one preferred share purchase right for each outstanding share of common stock for stockholders of record on September 25, 2003. The Rights Plan provides a reasonable means of safeguarding the interests of all stockholders against unsolicited takeover attempts at a price not reflective of the Company's fair value. The Rights Plan is designed to give the Board of Directors sufficient time to evaluate and respond to an unsolicited takeover attempt and to encourage anyone or group considering such action to negotiate first with the Board of Directors.
On October 30, 2009, we amended the Rights Plan in order to preserve the long-term value and availability of our net operating loss (NOL) carryforwards and related tax benefits (“Amended Rights Plan”). The Amended Rights Plan, among other things, reduced the beneficial ownership threshold at which a person or group becomes an “Acquiring Person” under the plan from
15%
of our then-outstanding shares of common stock to
4.99%
of our then-outstanding shares of common stock. The Amended Rights Plan also expanded the scope of the definition of “Acquiring Person” to include persons or groups that would be considered “5-percent shareholders” under Section 382 of the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder. Stockholders who beneficially owned
5%
or more of our outstanding shares of common stock at the time of the amendment were exempt from the
4.99%
threshold, subject to certain restrictions set forth in the Amended Rights Plan.
On February 8, 2011, AAM's Board of Directors approved a second amended and restated rights plan (Second Amended Rights Plan) to remove certain provisions that were added as part of the October 2009 amendment. The Second Amended Rights Plan, among other things, increases the beneficial ownership threshold at which a person or group becomes an “Acquiring Person” under the plan from
4.99%
of the Company's then-outstanding shares of common stock, par value
$0.01
per share, to
15%
of the Company's then-outstanding shares of Common Stock. The Second Amended Rights Plan also narrows the scope of the definition of “Acquiring Person” to exclude the reference to persons or groups that would be considered “5-percent shareholders” under Section 382 of the Internal Revenue Code of 1986, as amended, and the related treasury regulations promulgated thereunder.
The Second Amended Rights Plan will automatically expire by its terms on September 15, 2013.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
9.
|
STOCK-BASED COMPENSATION
|
In April 2012, the stockholders approved the 2012 Omnibus Incentive Plan. At
December 31, 2012
, we have grants outstanding under stock incentive compensation plans approved by our stockholders. Under these plans, a total of
18.5 million
shares have been authorized for issuance to our directors, officers and certain other associates in the form of options, unvested restricted stock or other awards that are based on the value of our common stock. Shares available for future grants at
December 31, 2012
were
3.8 million
. The current stock plan will expire in April 2022.
STOCK OPTIONS
Under the terms of the plans, stock options are granted at the market price of the stock on the grant date. The contractual term of outstanding stock options is
10 years
. We issue new shares to satisfy stock-based awards.
Stock option awards become exercisable in three approximately equal annual installments beginning one year from the date of grant.
The following table summarizes activity relating to our stock options:
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
Number of
|
|
Average Exercise
|
|
Shares
|
|
Price Per Share
|
|
(in millions, except per share data)
|
Outstanding at January 1, 2010
|
5.6
|
|
|
$
|
23.96
|
|
Options granted
|
—
|
|
|
—
|
|
Options exercised
|
(0.2
|
)
|
|
6.94
|
|
Options canceled
|
(0.4
|
)
|
|
17.37
|
|
Outstanding at December 31, 2010
|
5.0
|
|
|
$
|
25.01
|
|
Options granted
|
—
|
|
|
—
|
|
Options exercised
|
(0.5
|
)
|
|
8.69
|
|
Options canceled
|
(0.6
|
)
|
|
26.96
|
|
Outstanding at December 31, 2011
|
3.9
|
|
|
$
|
26.95
|
|
Options granted
|
0.2
|
|
|
9.19
|
|
Options exercised
|
(0.1
|
)
|
|
2.81
|
|
Options canceled
|
(1.0
|
)
|
|
25.12
|
|
Outstanding at December 31, 2012
|
3.0
|
|
|
$
|
27.08
|
|
|
|
|
|
Exercisable at December 31, 2010
|
4.8
|
|
|
$
|
25.75
|
|
Exercisable at December 31, 2011
|
3.8
|
|
|
$
|
27.25
|
|
Exercisable at December 31, 2012
|
2.8
|
|
|
$
|
28.02
|
|
As of
December 31, 2012
, unrecognized compensation cost related to unvested stock options totaled
$0.5 million
. The weighted average period over which this cost is expected to be recognized is approximately
two years
. The total intrinsic value of options outstanding as of
December 31, 2012
was
$0.4 million
. The total intrinsic value of options exercisable as of
December 31, 2012
was
$0.1 million
. The total intrinsic value of stock options exercised was
$0.5 million
in 2012 and
$3.0 million
in 2011.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at
December 31, 2012
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
Weighted-
|
Range of
|
|
Stock Options
|
|
Average Exercise
|
|
Weighted-Average
|
|
Stock Options
|
|
Average Exercise
|
Exercise Prices
|
|
Outstanding
|
|
Price Per Share
|
|
Contractual Life
|
|
Exercisable
|
|
Price Per Share
|
|
|
(in millions, except per share data)
|
|
|
(in years)
|
|
(in millions, except per share data)
|
$9.19 - $15.58
|
|
0.5
|
|
|
$
|
12.82
|
|
|
5.3
|
|
0.3
|
|
|
$
|
14.15
|
|
$19.54 - $23.73
|
|
0.9
|
|
|
23.63
|
|
|
0.1
|
|
0.9
|
|
|
23.63
|
|
$24.70 - $26.65
|
|
0.6
|
|
|
26.23
|
|
|
3.2
|
|
0.6
|
|
|
26.23
|
|
$33.71 - $40.83
|
|
1.0
|
|
|
38.54
|
|
|
1.1
|
|
1.0
|
|
|
38.54
|
|
|
|
3.0
|
|
|
$
|
27.08
|
|
|
2.0
|
|
2.8
|
|
|
$
|
28.02
|
|
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:
|
|
|
|
|
|
2012
|
Expected volatility
|
47.00
|
%
|
Risk-free interest rate
|
1.17
|
%
|
Dividend yield
|
—
|
%
|
Expected life of options
|
6 years
|
|
Weighted-average grant-date fair value
|
$
|
4.18
|
|
Expected volatility was based on the daily changes in our historical common stock prices over a period equal to the expected life of the award. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant corresponding to the expected life of the options. Our dividend yield is based on the dividend at the time of grant. The expected life of options is based on historical stock option exercise patterns and the terms of the options.
OTHER STOCK-BASED COMPENSATION
We awarded performance accelerated restricted stock, restricted stock and restricted stock units (PARS, RS and RSUs, respectively). The total amount of compensation expense associated with the RSUs settled in cash is recorded as an accrued liability when incurred while the total amount of compensation expense associated with PARS, RS and RSUs settled in stock is recorded to paid-in-capital. The PARS and RSUs vest over three years contingent upon the satisfaction of future financial performance targets specified by the plan and the RS vests over three years. The unearned compensation is expensed over the expected vesting period.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes activity relating to our PARS, RS and RSUs:
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
Number of
|
|
Grant Date Fair
|
|
Shares/Units
|
|
Value per Share/Unit
|
|
(in millions, except per share data)
|
Outstanding at January 1, 2010
|
3.3
|
|
|
$
|
14.77
|
|
Granted
|
—
|
|
|
—
|
|
Vested
|
(0.4
|
)
|
|
23.42
|
|
Canceled
|
(0.1
|
)
|
|
14.54
|
|
Outstanding at December 31, 2010
|
2.8
|
|
|
$
|
13.48
|
|
Granted
|
—
|
|
|
—
|
|
Vested
|
(1.1
|
)
|
|
17.41
|
|
Canceled
|
(0.1
|
)
|
|
10.68
|
|
Outstanding at December 31, 2011
|
1.6
|
|
|
$
|
10.74
|
|
Granted
|
1.0
|
|
|
10.31
|
|
Vested
|
(1.4
|
)
|
|
10.19
|
|
Canceled
|
(0.1
|
)
|
|
26.02
|
|
Outstanding at December 31, 2012
|
1.1
|
|
|
$
|
11.08
|
|
As of
December 31, 2012
, unrecognized compensation cost related to unvested RSUs totaled
$8.7 million
. The weighted average period over which this cost is expected to be recognized is approximately
two years
. In
2012
and
2011
, the total fair market value of PARS, RS and RSUs vested was
$17.6 million
and
$15.5 million
, respectively.
We made cash payments of
$0.2 million
,
$0.4 million
and
$1.2 million
related to vested RSUs in
2012
,
2011
and
2010
, respectively.
PERFORMANCE AWARDS
As of
December 31, 2012
, we have performance awards outstanding under our AAM 2009 long-term incentive plan, as well as our 2012 Omnibus Incentive Plan. We granted performance awards payable in cash to our officers and executives which vest in full over a three year performance period. The payout of these awards is based on a total shareholder return (TSR) measure that compares our TSR over the three-year performance period relative to the TSR of our pre-defined competitor peer group. Share price appreciation and dividends paid is measured over the performance period to determine TSR.
According to the applicable accounting guidance, these awards are considered to be stock-based compensation because the final payout amount is based “at least in part” on the price of our shares. As these awards are settled in cash, they are determined to be liability awards and will be remeasured at the end of each reporting period until settlement. The fair value of the performance awards is calculated on a quarterly basis using the Monte Carlo simulation approach and the liability is adjusted accordingly based on changes to the fair value and the percentage of time vested. The Monte Carlo simulation approach utilizes inputs on volatility assumptions, risk free rates, the price of the Company’s and our peer group's common stock and their correlation as of each valuation date. Volatility assumptions are based on historical and implied volatility measurements.
We recognized compensation expense associated with the performance awards of approximately
$3.0 million
in 2012,
$3.5 million
in 2011 and
$1.6 million
in 2010. We have a liability of
$4.5 million
recorded as of
December 31, 2012
. Based on the current fair value, the estimated unrecognized compensation cost related to the performance awards totaled
$2.5 million
, as of
December 31, 2012
. The weighted average period over which this cost is expected to be recognized is approximately eighteen months.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income before income taxes for U.S. and non-U.S. operations was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
(in millions)
|
U.S. income (loss)
|
$
|
(6.0
|
)
|
|
$
|
20.3
|
|
|
$
|
(13.4
|
)
|
Non - U.S. income
|
37.5
|
|
|
117.8
|
|
|
132.2
|
|
Total income before income taxes
|
$
|
31.5
|
|
|
$
|
138.1
|
|
|
$
|
118.8
|
|
The following is a summary of the components of our provisions for income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
(in millions)
|
Current
|
|
|
|
|
|
Federal
|
$
|
(3.3
|
)
|
|
$
|
(24.7
|
)
|
|
$
|
6.0
|
|
Other state and local
|
1.1
|
|
|
(0.2
|
)
|
|
1.4
|
|
Foreign
|
10.2
|
|
|
9.9
|
|
|
5.5
|
|
Total current
|
$
|
8.0
|
|
|
$
|
(15.0
|
)
|
|
$
|
12.9
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
Federal
|
$
|
(347.1
|
)
|
|
$
|
22.3
|
|
|
$
|
(6.0
|
)
|
Other state and local
|
—
|
|
|
(1.4
|
)
|
|
0.5
|
|
Foreign
|
3.9
|
|
|
(4.9
|
)
|
|
(3.1
|
)
|
Total deferred
|
(343.2
|
)
|
|
16.0
|
|
|
(8.6
|
)
|
Total income tax expense (benefit)
|
$
|
(335.2
|
)
|
|
$
|
1.0
|
|
|
$
|
4.3
|
|
The following is a reconciliation of our provision for income taxes to the expected amounts using statutory rates:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
Federal statutory
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Foreign income taxes
|
(85.0
|
)
|
|
(34.6
|
)
|
|
(42.9
|
)
|
State and local
|
3.5
|
|
|
(1.2
|
)
|
|
1.6
|
|
Valuation allowance
|
(985.0
|
)
|
|
(30.7
|
)
|
|
(39.3
|
)
|
U.S. tax on unremitted foreign earnings
|
(29.5
|
)
|
|
26.3
|
|
|
49.6
|
|
Other
|
(3.2
|
)
|
|
5.9
|
|
|
(0.4
|
)
|
Effective income tax rate
|
(1,064.2
|
)%
|
|
0.7
|
%
|
|
3.6
|
%
|
During 2012, our business returned to a position of cumulative profitability on a pre-tax basis, considering our operating results for the current year (2012) and the previous two years (2011 and 2010). We concluded that this record of cumulative profitability in recent years, in addition to the restructuring of our U.S. operations and our long range forecast showing continued profitability, has provided sufficient positive evidence that our net U.S. federal tax benefits more likely than not will be realized. Accordingly, in the fourth quarter of 2012, we released the valuation allowance against our net federal deferred assets for entities in the U.S., resulting in a
$337.5 million
benefit in our 2012 provision for income taxes. Our income tax benefit and effective tax rate in 2012 reflect the impact of this valuation allowance reversal.
Our income tax expense and effective tax rate for 2012 also reflect a net tax expense of
$1.3 million
related to the amendment of state income tax returns as a result of the settlement of federal income tax audits for the tax years 2004 through 2007.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Our income tax expense and effective tax rate for 2011 reflect the effect of recognizing a net operating loss (NOL) benefit against our taxable income in the U.S. Our income tax expense for 2011 also reflects net tax benefits of
$4.5 million
relating to the favorable resolution of income tax audits in the U.S. and the impacts of changes in tax laws in Michigan and Brazil.
Our income tax expense and effective tax rate for 2010 reflect the effect of recognizing a net operating loss (NOL) benefit against our taxable income in the U.S. In conjunction with the filing of our 2009 federal tax return, under provisions contained in the American Recovery and Reinvestment Act of 2009, we recorded a tax benefit of
$1.4 million
in 2010 attributable to the monetization of alternative minimum tax and research and development credits. We received this tax refund during the fourth quarter of 2010.
As of
December 31, 2012
and
2011
, we have refundable income taxes of
$4.7 million
and
$3.5 million
, respectively, classified as prepaid expenses and other on our Consolidated Balance Sheet. We also have income taxes payable of
$0.5 million
and
$4.1 million
classified as other accrued expenses on our Consolidated Balance Sheet as of
December 31, 2012
and
2011
, respectively.
The following is a summary of the significant components of our deferred tax assets and liabilities:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Current deferred tax assets
|
|
|
|
Employee benefits
|
$
|
16.9
|
|
|
$
|
15.3
|
|
Inventory
|
12.6
|
|
|
6.4
|
|
Prepaid taxes and other
|
15.5
|
|
|
11.8
|
|
Valuation allowance
|
(10.1
|
)
|
|
(21.9
|
)
|
Total current deferred tax assets
|
$
|
34.9
|
|
|
$
|
11.6
|
|
|
|
|
|
Current deferred tax liabilities
|
|
|
|
Unrealized foreign exchange gain and other
|
(1.4
|
)
|
|
(10.2
|
)
|
Current deferred tax asset, net
|
$
|
33.5
|
|
|
$
|
1.4
|
|
Current deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
|
|
|
|
U.S. federal and state deferred tax asset, net
|
$
|
23.0
|
|
|
$
|
—
|
|
Other foreign deferred tax asset, net
|
10.5
|
|
|
1.4
|
|
Current deferred tax asset, net
|
$
|
33.5
|
|
|
$
|
1.4
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a summary of the significant components of our noncurrent deferred tax assets and liabilities:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Noncurrent deferred tax assets
|
|
|
|
Employee benefits
|
$
|
200.7
|
|
|
$
|
222.0
|
|
NOL carryforwards
|
177.4
|
|
|
109.0
|
|
Tax credit carryforwards
|
79.0
|
|
|
60.0
|
|
Capital allowance carryforwards
|
17.9
|
|
|
21.1
|
|
Fixed assets
|
9.0
|
|
|
—
|
|
Deferred revenue
|
20.0
|
|
|
30.1
|
|
Capitalized expenditures
|
99.3
|
|
|
78.8
|
|
Other
|
4.0
|
|
|
11.7
|
|
Valuation allowances
|
(156.0
|
)
|
|
(405.0
|
)
|
Noncurrent deferred tax assets
|
451.3
|
|
|
127.7
|
|
Noncurrent deferred tax liabilities
|
|
|
|
U.S. tax on unremitted foreign earnings
|
(85.2
|
)
|
|
(105.6
|
)
|
Fixed assets and other
|
(9.5
|
)
|
|
(9.7
|
)
|
Noncurrent deferred tax asset, net
|
$
|
356.6
|
|
|
$
|
12.4
|
|
Noncurrent deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
U.S. federal and state deferred tax asset, net
|
$
|
363.3
|
|
|
$
|
6.9
|
|
Other foreign deferred tax asset (liability), net
|
(6.7
|
)
|
|
5.5
|
|
Noncurrent deferred tax asset, net
|
$
|
356.6
|
|
|
$
|
12.4
|
|
DEFERRED INCOME TAX ASSETS AND LIABILITIES AND VALUATION ALLOWANCES
The deferred income tax assets and liabilities previously summarized reflect the impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws. As of
December 31, 2012
and
December 31, 2011
, we had deferred tax assets from domestic and foreign NOL and tax credit carryforwards of
$274.3 million
and
$190.1 million
, respectively. Approximately
$82.6 million
of the deferred tax assets at
December 31, 2012
relate to NOL carryforwards or tax credits that can be carried forward indefinitely with the remainder having carryover periods of 5 to 20 years.
Accounting guidance for income taxes requires a deferred tax liability be established for the U.S. tax impact of undistributed earnings of foreign subsidiaries unless it can be shown that these earnings will be permanently reinvested outside the U.S. We believe a portion of these accumulated foreign earnings in certain jurisdictions are likely to be remitted to the U.S. as dividends or intercompany loans and have established a deferred tax liability of
$85.2 million
and
$105.6 million
as of
December 31, 2012
and
2011
, respectively, which represents the estimated tax impact of the undistributed earnings of certain foreign subsidiaries. The remittance of these undistributed earnings may subject us to U.S. income taxes and certain foreign withholding taxes at the time of remittance.
In accordance with the accounting guidance for income taxes,
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.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As described above, in the fourth quarter of 2012, we released the valuation allowance against our net federal deferred assets for entities in the United States, resulting in a
$337.5 million
benefit in our 2012 provision for income taxes. As of December 31, 2012, we have retained a valuation allowance of approximately
$166.1 million
related to net deferred tax assets in several foreign jurisdictions and U.S. state and local jurisdictions. At
December 31, 2011
, our valuation allowance was
$426.9 million
.
UNRECOGNIZED INCOME TAX BENEFITS
To the extent our uncertain tax positions do not meet the “more likely than not” threshold, we have derecognized such positions. To the extent our uncertain tax positions meet the “more likely than not” threshold, we have measured and recorded the highest probable benefit, and have established appropriate reserves for benefits that exceed the amount likely to be sustained upon examination.
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
Unrecognized Income Tax
|
|
Interest and
|
|
Benefits
|
|
Penalties
|
|
(in millions)
|
Balance at January 1, 2010
|
$
|
40.6
|
|
|
$
|
15.3
|
|
Increase in prior year tax positions
|
6.2
|
|
|
6.1
|
|
Decrease in prior year tax positions
|
(0.2
|
)
|
|
—
|
|
Increase in current year tax positions
|
1.0
|
|
|
0.3
|
|
Settlement
|
—
|
|
|
(0.3
|
)
|
Balance at December 31, 2010
|
$
|
47.6
|
|
|
$
|
21.4
|
|
Increase in prior year tax positions
|
—
|
|
|
1.0
|
|
Decrease in prior year tax positions
|
(0.8
|
)
|
|
(2.3
|
)
|
Increase in current year tax positions
|
1.3
|
|
|
—
|
|
Settlement
|
(22.3
|
)
|
|
(12.7
|
)
|
Balance at December 31, 2011
|
$
|
25.8
|
|
|
$
|
7.4
|
|
Increase in prior year tax positions
|
—
|
|
|
2.8
|
|
Decrease in prior year tax positions
|
(1.1
|
)
|
|
—
|
|
Increase in current year tax positions
|
0.4
|
|
|
—
|
|
Settlement
|
(4.4
|
)
|
|
—
|
|
Balance at December 31, 2012
|
$
|
20.7
|
|
|
$
|
10.2
|
|
At
December 31, 2012
and
December 31, 2011
, we had
$20.7 million
and
$25.8 million
of net unrecognized income tax benefits, respectively. Included in the balance at
December 31, 2011
was
$17.4 million
for which the ultimate deductibility was highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
In
2012
,
2011
and
2010
, we recognized expense of
$2.8 million
, a benefit of
$1.3 million
and expense of
$6.4 million
, respectively, of interest and penalties in income tax expense on our Consolidated Statement of Income. We have a liability of
$10.2 million
and
$7.4 million
related to the estimated future payment of interest and penalties at
December 31, 2012
and
2011
, respectively.
We file income tax returns in the U.S. federal jurisdiction, as well as various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2006. The 2004 through 2007 U.S. federal income tax return audits were completed during 2010 and all related appeals were resolved in 2011. This settlement resulted in a reduction of our liability for unrecognized income tax benefits of
$28.7 million
and a cash payment of
$4.1 million
, which was paid in 2012. The Internal Revenue Service (IRS) commenced an examination of our U.S. income tax returns for 2008 and 2009 in 2010. In 2011, we settled the outstanding items related to the 2006 audit with the Mexican tax authorities for
$9.5 million
. The Mexican authorities commenced a transfer pricing examination of the income tax returns for 2006 and 2007 during 2012. We are no longer subject to tax examinations by the Mexican tax authorities for tax years before 2006. At this time, we are also under audit in several other foreign jurisdictions.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Based on the status of the IRS audits and audits outside the U.S. and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. However, as of
December 31, 2012
, the IRS and other foreign tax authorities have proposed certain adjustments to our taxable income that would impact our liability for unrecognized tax benefits. Although it is not possible to predict the timing of the conclusion of all ongoing audits with certainty, we anticipate that the current 2006 and 2007 audits with the Mexican tax authorities will be completed during 2013 and 2014, respectively. We anticipate that the current U.S. IRS audits will be completed during 2013. It is possible that a reduction in the unrecognized tax benefits may occur; however, quantification of an estimated range cannot be made at this time.
|
|
11.
|
EARNINGS PER SHARE (EPS)
|
The following table sets forth the computation of our basic and diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
(in millions, except per share data)
|
Numerator
|
|
|
|
|
|
Net income attributable to AAM
|
$
|
367.7
|
|
|
$
|
142.8
|
|
|
$
|
115.4
|
|
|
|
|
|
|
|
Denominators
|
|
|
|
|
|
Basic shares outstanding -
|
|
|
|
|
|
Weighted-average shares outstanding
|
75.3
|
|
|
74.9
|
|
|
71.5
|
|
|
|
|
|
|
|
Effect of dilutive securities -
|
|
|
|
|
|
Dilutive stock options
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
Dilutive warrants
|
—
|
|
|
0.4
|
|
|
2.9
|
|
|
|
|
|
|
|
Diluted shares outstanding -
|
|
|
|
|
|
Adjusted weighted-average shares after assumed conversions
|
75.4
|
|
|
75.4
|
|
|
74.5
|
|
|
|
|
|
|
|
Basic EPS
|
$
|
4.88
|
|
|
$
|
1.91
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
Diluted EPS
|
$
|
4.87
|
|
|
$
|
1.89
|
|
|
$
|
1.55
|
|
Certain exercisable stock options were excluded in the computations of diluted EPS because the exercise price of these options was greater than the average annual market prices of our stock. The number of stock options outstanding excluded from the calculation of diluted EPS was
3.3 million
at year-end
2012
,
4.0 million
at year-end
2011
and
4.8 million
at year-end
2010
. The ranges of exercise prices related to these stock options were
$15.58
-
$40.83
at year-end
2012
,
$15.56
-
$40.83
at year-end
2011
and
$10.08
-
$40.83
at year-end
2010
.
As part of the 2009 Settlement and Commercial Agreement, we issued to GM five year warrants, which entitled GM to purchase
4.1 million
shares of AAM's common stock at an exercise price of
$2.76
per share. In 2011, GM exercised these warrants. In accordance with the cashless exercise option available in the agreement, we issued
3.3 million
net shares of common stock to GM.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS AND CONTINGENCIES
PURCHASE COMMITMENTS
Obligated
purchase commitments for capital expenditures and related project expenses were approximately
$231.9 million
at
December 31, 2012
and
$127.5 million
at
December 31, 2011
.
LEGAL PROCEEDINGS
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 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. We have made, and will continue to make, capital and other expenditures to comply with environmental requirements, including recurring administrative costs. Such expenditures were not significant during
2012
,
2011
and
2010
.
In February 2012, the International UAW filed suit in the United States District Court for the Eastern District of Michigan, alleging that AAM violated certain provisions of the collective bargaining agreement covering represented hourly associates at the Detroit Manufacturing Complex and Cheektowaga Manufacturing Facility related to pension and postretirement benefits. In 2012, we recorded
$28.7 million
in cost of goods sold related to pension and postretirement benefits to be provided to certain eligible UAW associates as a result of our election to apply MAP-21 and the subsequent recertification of our U.S. hourly pension plan. In December 2012, we settled this matter with the International UAW. This settlement had no further impact on our operating results in 2012.
ENVIRONMENTAL OBLIGATIONS
Due to the nature of our manufacturing operations, we have legal obligations to perform asset retirement activities pursuant to federal, state, and local requirements. The process of estimating environmental liabilities is complex. Significant uncertainty may exist related to the timing and method of the settlement of these obligations. Therefore, these liabilities are not reasonably estimable until a triggering event occurs that allows us to estimate a range and assess the probabilities of potential settlement dates and the potential methods of settlement. As a result of the plant idling and consolidations in 2011 and 2010, the methods and timing of certain environmental liabilities related to these facilities became reasonably estimable. See
Note 2
-
Restructuring Actions
for more detail on our environmental liabilities, included in asset retirement obligations.
In the future, we will update our estimated costs and potential settlement dates and methods and their associated probabilities based on available information. Any update may change our estimate and could result in a material adjustment to this liability.
PRODUCT WARRANTIES
We record a liability for estimated warranty obligations at the dates our products are sold. Our estimated warranty obligations for products sold are based on management estimates. For products and customers with actual warranty payment experience, we estimate warranty costs principally based on past claims history. For certain products and customers, actual warranty payment experience does not exist or is not mature. In these cases, we estimate our costs based on our analysis of the contractual arrangements with individual customers, existing customer warranty programs, sales history and internal and external warranty data. The following table provides a reconciliation of changes in the product warranty liability:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
(in millions)
|
Beginning balance
|
$
|
13.4
|
|
|
$
|
2.3
|
|
Accruals
|
23.0
|
|
|
12.0
|
|
Settlements
|
(0.9
|
)
|
|
(0.7
|
)
|
Adjustments to prior period accruals
|
(6.4
|
)
|
|
(0.1
|
)
|
Foreign currency translation and other
|
—
|
|
|
(0.1
|
)
|
Ending balance
|
$
|
29.1
|
|
|
$
|
13.4
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As part of the 2009 Settlement and Commercial Agreement, we agreed to expanded warranty cost sharing with GM, which began on January 1, 2011.
13. SEGMENT AND GEOGRAPHIC INFORMATION
We operate in one reportable segment: the manufacture, engineer, design and validation of driveline systems and related components and chassis modules for light trucks, SUVs, passenger cars, crossover vehicles and commercial vehicles. Financial information relating to our operations by geographic area is presented in the following table. Net sales are attributed to countries based upon location of customer. Long-lived assets exclude deferred income taxes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2012
|
|
2011
|
|
2010
|
|
(in millions)
|
Net sales
|
|
|
|
|
|
United States
|
$
|
1,576.6
|
|
|
$
|
1,587.3
|
|
|
$
|
1,396.7
|
|
Canada
|
75.0
|
|
|
60.8
|
|
|
50.1
|
|
Mexico
|
755.1
|
|
|
678.5
|
|
|
638.0
|
|
South America
|
216.4
|
|
|
134.8
|
|
|
99.5
|
|
Asia
|
214.5
|
|
|
33.2
|
|
|
19.0
|
|
Europe and other
|
93.3
|
|
|
90.4
|
|
|
79.7
|
|
Total net sales
|
$
|
2,930.9
|
|
|
$
|
2,585.0
|
|
|
$
|
2,283.0
|
|
|
|
|
|
|
|
Long-lived assets
|
|
|
|
|
|
United States
|
$
|
865.3
|
|
|
$
|
845.7
|
|
|
$
|
816.2
|
|
Mexico
|
417.7
|
|
|
384.9
|
|
|
381.8
|
|
South America
|
113.3
|
|
|
131.9
|
|
|
124.4
|
|
Asia
|
159.0
|
|
|
131.7
|
|
|
101.2
|
|
Europe
|
72.5
|
|
|
51.3
|
|
|
50.4
|
|
Total long-lived assets
|
$
|
1,627.8
|
|
|
$
|
1,545.5
|
|
|
$
|
1,474.0
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. UNAUDITED QUARTERLY FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended,
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
(in millions, except per share data)
|
2012
|
|
|
|
|
|
|
|
Net sales
|
$
|
751.5
|
|
|
$
|
739.8
|
|
|
$
|
702.9
|
|
|
$
|
736.7
|
|
Gross profit
|
139.2
|
|
|
85.8
|
|
|
90.7
|
|
|
84.0
|
|
Net income (loss)
|
50.3
|
|
|
4.7
|
|
|
(8.2
|
)
|
|
319.9
|
|
Net income (loss) attributable to AAM
|
51.2
|
|
|
4.7
|
|
|
(8.1
|
)
|
|
319.9
|
|
Basic EPS
(1)
|
$
|
0.68
|
|
|
$
|
0.06
|
|
|
$
|
(0.11
|
)
|
|
$
|
4.21
|
|
Diluted EPS
(1)
|
$
|
0.68
|
|
|
$
|
0.06
|
|
|
$
|
(0.11
|
)
|
|
$
|
4.21
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
Net sales
|
$
|
645.6
|
|
|
$
|
686.2
|
|
|
$
|
647.6
|
|
|
$
|
605.6
|
|
Gross profit
|
115.4
|
|
|
130.5
|
|
|
103.5
|
|
|
105.7
|
|
Net income
|
36.6
|
|
|
47.9
|
|
|
22.6
|
|
|
30.0
|
|
Net income attributable to AAM
|
37.7
|
|
|
49.2
|
|
|
24.8
|
|
|
31.1
|
|
Basic EPS
(1)
|
$
|
0.51
|
|
|
$
|
0.65
|
|
|
$
|
0.33
|
|
|
$
|
0.41
|
|
Diluted EPS
(1)
|
$
|
0.50
|
|
|
$
|
0.65
|
|
|
$
|
0.33
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
(1) Full year basic and diluted EPS will not necessarily agree to the sum of the four quarters because each quarter is a separate calculation.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Holdings has no significant asset other than its 100% ownership in AAM, Inc. and no direct subsidiaries other than AAM, Inc. Holdings fully and unconditionally guarantees the
7.875%
Notes, which are senior unsecured obligations of AAM, Inc. The
9.25%
Notes are senior secured obligations of AAM Inc. and the
7.75%
Notes and
6.625%
Notes are senior unsecured obligations of AAM Inc.; all of which are fully and unconditionally guaranteed by Holdings and all domestic subsidiaries of 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 Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
|
(in millions)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
External
|
$
|
—
|
|
|
$
|
704.8
|
|
|
$
|
214.4
|
|
|
$
|
2,011.7
|
|
|
$
|
—
|
|
|
$
|
2,930.9
|
|
Intercompany
|
—
|
|
|
18.6
|
|
|
226.8
|
|
|
25.2
|
|
|
(270.6
|
)
|
|
—
|
|
Total net sales
|
—
|
|
|
723.4
|
|
|
441.2
|
|
|
2,036.9
|
|
|
(270.6
|
)
|
|
2,930.9
|
|
Cost of goods sold
|
—
|
|
|
709.8
|
|
|
389.8
|
|
|
1,702.2
|
|
|
(270.6
|
)
|
|
2,531.2
|
|
Gross profit
|
—
|
|
|
13.6
|
|
|
51.4
|
|
|
334.7
|
|
|
—
|
|
|
399.7
|
|
Selling, general and administrative expenses
|
—
|
|
|
186.5
|
|
|
—
|
|
|
56.8
|
|
|
—
|
|
|
243.3
|
|
Operating income (loss)
|
—
|
|
|
(172.9
|
)
|
|
51.4
|
|
|
277.9
|
|
|
—
|
|
|
156.4
|
|
Non-operating income (expense), net
|
—
|
|
|
(135.2
|
)
|
|
(2.2
|
)
|
|
12.5
|
|
|
—
|
|
|
(124.9
|
)
|
Income (loss) before income taxes
|
—
|
|
|
(308.1
|
)
|
|
49.2
|
|
|
290.4
|
|
|
—
|
|
|
31.5
|
|
Income tax expense (benefit)
|
—
|
|
|
(343.9
|
)
|
|
(5.5
|
)
|
|
14.2
|
|
|
—
|
|
|
(335.2
|
)
|
Earnings (loss) from equity in subsidiaries
|
367.7
|
|
|
79.0
|
|
|
(49.2
|
)
|
|
—
|
|
|
(397.5
|
)
|
|
—
|
|
Net income before royalties and dividends
|
367.7
|
|
|
114.8
|
|
|
5.5
|
|
|
276.2
|
|
|
(397.5
|
)
|
|
366.7
|
|
Royalties and dividends
|
—
|
|
|
252.9
|
|
|
—
|
|
|
(252.9
|
)
|
|
—
|
|
|
—
|
|
Net income after royalties and dividends
|
367.7
|
|
|
367.7
|
|
|
5.5
|
|
|
23.3
|
|
|
(397.5
|
)
|
|
366.7
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
Net income attributable to AAM
|
$
|
367.7
|
|
|
$
|
367.7
|
|
|
$
|
5.5
|
|
|
$
|
24.3
|
|
|
$
|
(397.5
|
)
|
|
$
|
367.7
|
|
Other comprehensive loss, net of tax
|
(60.5
|
)
|
|
(60.5
|
)
|
|
(10.1
|
)
|
|
(3.6
|
)
|
|
74.2
|
|
|
(60.5
|
)
|
Foreign currency translation adjustments attributable to noncontrolling interests
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
(0.6
|
)
|
|
0.3
|
|
Comprehensive income attributable to AAM
|
$
|
306.9
|
|
|
$
|
306.9
|
|
|
$
|
(4.6
|
)
|
|
$
|
20.4
|
|
|
$
|
(322.7
|
)
|
|
$
|
306.9
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
External
|
$
|
—
|
|
|
$
|
777.7
|
|
|
$
|
195.3
|
|
|
$
|
1,612.0
|
|
|
$
|
—
|
|
|
$
|
2,585.0
|
|
Intercompany
|
—
|
|
|
25.1
|
|
|
189.8
|
|
|
12.7
|
|
|
(227.6
|
)
|
|
—
|
|
Total net sales
|
—
|
|
|
802.8
|
|
|
385.1
|
|
|
1,624.7
|
|
|
(227.6
|
)
|
|
2,585.0
|
|
Cost of goods sold
|
—
|
|
|
727.0
|
|
|
334.2
|
|
|
1,296.3
|
|
|
(227.6
|
)
|
|
2,129.9
|
|
Gross profit
|
—
|
|
|
75.8
|
|
|
50.9
|
|
|
328.4
|
|
|
—
|
|
|
455.1
|
|
Selling, general and administrative expenses
|
—
|
|
|
192.0
|
|
|
—
|
|
|
39.7
|
|
|
—
|
|
|
231.7
|
|
Operating income (loss)
|
—
|
|
|
(116.2
|
)
|
|
50.9
|
|
|
288.7
|
|
|
—
|
|
|
223.4
|
|
Non-operating income (expense), net
|
—
|
|
|
(91.8
|
)
|
|
1.0
|
|
|
5.5
|
|
|
—
|
|
|
(85.3
|
)
|
Income (loss) before income taxes
|
—
|
|
|
(208.0
|
)
|
|
51.9
|
|
|
294.2
|
|
|
—
|
|
|
138.1
|
|
Income tax expense (benefit)
|
—
|
|
|
(5.2
|
)
|
|
1.2
|
|
|
5.0
|
|
|
—
|
|
|
1.0
|
|
Earnings (loss) from equity in subsidiaries
|
142.8
|
|
|
165.5
|
|
|
(37.7
|
)
|
|
—
|
|
|
(270.6
|
)
|
|
—
|
|
Net income (loss) before royalties and dividends
|
142.8
|
|
|
(37.3
|
)
|
|
13.0
|
|
|
289.2
|
|
|
(270.6
|
)
|
|
137.1
|
|
Royalties and dividends
|
—
|
|
|
180.1
|
|
|
—
|
|
|
(180.1
|
)
|
|
—
|
|
|
—
|
|
Net income after royalties and dividends
|
142.8
|
|
|
142.8
|
|
|
13.0
|
|
|
109.1
|
|
|
(270.6
|
)
|
|
137.1
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
|
5.7
|
|
Net income attributable to AAM
|
$
|
142.8
|
|
|
$
|
142.8
|
|
|
$
|
13.0
|
|
|
$
|
114.8
|
|
|
$
|
(270.6
|
)
|
|
$
|
142.8
|
|
Other comprehensive loss
|
(97.6
|
)
|
|
(97.6
|
)
|
|
(29.0
|
)
|
|
(35.6
|
)
|
|
162.2
|
|
|
(97.6
|
)
|
Foreign currency translation adjustments attributable to noncontrolling interests
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
(0.4
|
)
|
|
0.2
|
|
Comprehensive income (loss) attributable to AAM
|
$
|
45.0
|
|
|
$
|
45.0
|
|
|
$
|
(16.0
|
)
|
|
$
|
79.0
|
|
|
$
|
(108.0
|
)
|
|
$
|
45.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
External
|
$
|
—
|
|
|
$
|
623.6
|
|
|
$
|
186.7
|
|
|
$
|
1,472.7
|
|
|
$
|
—
|
|
|
$
|
2,283.0
|
|
Intercompany
|
—
|
|
|
26.0
|
|
|
160.9
|
|
|
14.8
|
|
|
(201.7
|
)
|
|
—
|
|
Total net sales
|
—
|
|
|
649.6
|
|
|
347.6
|
|
|
1,487.5
|
|
|
(201.7
|
)
|
|
2,283.0
|
|
Cost of goods sold
|
—
|
|
|
601.1
|
|
|
323.9
|
|
|
1,158.0
|
|
|
(201.7
|
)
|
|
1,881.3
|
|
Gross profit
|
—
|
|
|
48.5
|
|
|
23.7
|
|
|
329.5
|
|
|
—
|
|
|
401.7
|
|
Selling, general and administrative expenses
|
—
|
|
|
177.8
|
|
|
—
|
|
|
19.8
|
|
|
—
|
|
|
197.6
|
|
Operating income (loss)
|
—
|
|
|
(129.3
|
)
|
|
23.7
|
|
|
309.7
|
|
|
—
|
|
|
204.1
|
|
Non-operating income (expense), net
|
—
|
|
|
(88.6
|
)
|
|
0.3
|
|
|
3.0
|
|
|
—
|
|
|
(85.3
|
)
|
Income (loss) before income taxes
|
—
|
|
|
(217.9
|
)
|
|
24.0
|
|
|
312.7
|
|
|
—
|
|
|
118.8
|
|
Income tax expense
|
—
|
|
|
1.5
|
|
|
0.3
|
|
|
2.5
|
|
|
—
|
|
|
4.3
|
|
Earnings (loss) from equity in subsidiaries
|
115.4
|
|
|
152.5
|
|
|
(26.8
|
)
|
|
—
|
|
|
(241.1
|
)
|
|
—
|
|
Net income (loss) before royalties and dividends
|
115.4
|
|
|
(66.9
|
)
|
|
(3.1
|
)
|
|
310.2
|
|
|
(241.1
|
)
|
|
114.5
|
|
Royalties and dividends
|
—
|
|
|
182.3
|
|
|
—
|
|
|
(182.3
|
)
|
|
—
|
|
|
—
|
|
Net income (loss) after royalties and dividends
|
115.4
|
|
|
115.4
|
|
|
(3.1
|
)
|
|
127.9
|
|
|
(241.1
|
)
|
|
114.5
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
Net income (loss) attributable to AAM
|
$
|
115.4
|
|
|
$
|
115.4
|
|
|
$
|
(3.1
|
)
|
|
$
|
128.8
|
|
|
$
|
(241.1
|
)
|
|
$
|
115.4
|
|
Other comprehensive income (loss)
|
(41.7
|
)
|
|
(41.7
|
)
|
|
12.1
|
|
|
14.5
|
|
|
15.1
|
|
|
(41.7
|
)
|
Foreign currency translation adjustments attributable to noncontrolling interests
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
(0.1
|
)
|
Comprehensive income attributable to AAM
|
$
|
73.8
|
|
|
$
|
73.8
|
|
|
$
|
9.0
|
|
|
$
|
143.4
|
|
|
$
|
(226.2
|
)
|
|
$
|
73.8
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
Assets
|
(in millions)
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
10.6
|
|
|
$
|
—
|
|
|
$
|
51.8
|
|
|
$
|
—
|
|
|
$
|
62.4
|
|
Accounts receivable, net
|
—
|
|
|
94.4
|
|
|
25.3
|
|
|
343.7
|
|
|
—
|
|
|
463.4
|
|
Inventories, net
|
—
|
|
|
48.7
|
|
|
31.6
|
|
|
144.0
|
|
|
—
|
|
|
224.3
|
|
Other current assets
|
—
|
|
|
48.8
|
|
|
3.5
|
|
|
69.7
|
|
|
—
|
|
|
122.0
|
|
Total current assets
|
—
|
|
|
202.5
|
|
|
60.4
|
|
|
609.2
|
|
|
—
|
|
|
872.1
|
|
Property, plant and equipment, net
|
—
|
|
|
250.4
|
|
|
84.2
|
|
|
675.1
|
|
|
—
|
|
|
1,009.7
|
|
Goodwill
|
—
|
|
|
—
|
|
|
147.8
|
|
|
8.6
|
|
|
—
|
|
|
156.4
|
|
Other assets and deferred charges
|
—
|
|
|
706.1
|
|
|
40.0
|
|
|
81.7
|
|
|
—
|
|
|
827.8
|
|
Investment in subsidiaries
|
202.9
|
|
|
1,094.6
|
|
|
—
|
|
|
—
|
|
|
(1,297.5
|
)
|
|
—
|
|
Total assets
|
$
|
202.9
|
|
|
$
|
2,253.6
|
|
|
$
|
332.4
|
|
|
$
|
1,374.6
|
|
|
$
|
(1,297.5
|
)
|
|
$
|
2,866.0
|
|
Liabilities and stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
91.4
|
|
|
$
|
37.3
|
|
|
267.4
|
|
|
$
|
—
|
|
|
$
|
396.1
|
|
Other current liabilities
|
—
|
|
|
124.5
|
|
|
3.8
|
|
|
76.4
|
|
|
—
|
|
|
204.7
|
|
Total current liabilities
|
—
|
|
|
215.9
|
|
|
41.1
|
|
|
343.8
|
|
|
—
|
|
|
600.8
|
|
Intercompany payable (receivable)
|
323.7
|
|
|
(420.6
|
)
|
|
(188.7
|
)
|
|
285.6
|
|
|
—
|
|
|
—
|
|
Long-term debt
|
—
|
|
|
1,387.5
|
|
|
5.6
|
|
|
61.0
|
|
|
—
|
|
|
1,454.1
|
|
Investment in subsidiaries obligation
|
—
|
|
|
—
|
|
|
7.6
|
|
|
—
|
|
|
(7.6
|
)
|
|
—
|
|
Other long-term liabilities
|
—
|
|
|
867.9
|
|
|
1.2
|
|
|
62.8
|
|
|
—
|
|
|
931.9
|
|
Total liabilities
|
323.7
|
|
|
2,050.7
|
|
|
(133.2
|
)
|
|
753.2
|
|
|
(7.6
|
)
|
|
2,986.8
|
|
Total AAM Stockholders' equity (deficit)
|
(120.8
|
)
|
|
202.9
|
|
|
465.6
|
|
|
621.4
|
|
|
(1,289.9
|
)
|
|
(120.8
|
)
|
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total stockholders' equity (deficit)
|
(120.8
|
)
|
|
202.9
|
|
|
465.6
|
|
|
621.4
|
|
|
(1,289.9
|
)
|
|
(120.8
|
)
|
Total liabilities and stockholders' equity (deficit)
|
$
|
202.9
|
|
|
$
|
2,253.6
|
|
|
$
|
332.4
|
|
|
$
|
1,374.6
|
|
|
$
|
(1,297.5
|
)
|
|
$
|
2,866.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
83.7
|
|
|
$
|
—
|
|
|
$
|
85.5
|
|
|
$
|
—
|
|
|
$
|
169.2
|
|
Accounts receivable, net
|
—
|
|
|
77.1
|
|
|
23.3
|
|
|
232.9
|
|
|
—
|
|
|
333.3
|
|
Inventories, net
|
—
|
|
|
48.2
|
|
|
35.3
|
|
|
93.7
|
|
|
—
|
|
|
177.2
|
|
Other current assets
|
—
|
|
|
26.5
|
|
|
1.7
|
|
|
55.2
|
|
|
—
|
|
|
83.4
|
|
Total current assets
|
—
|
|
|
235.5
|
|
|
60.3
|
|
|
467.3
|
|
|
—
|
|
|
763.1
|
|
Property, plant and equipment, net
|
—
|
|
|
260.4
|
|
|
84.6
|
|
|
626.2
|
|
|
—
|
|
|
971.2
|
|
Goodwill
|
—
|
|
|
—
|
|
|
147.8
|
|
|
8.1
|
|
|
—
|
|
|
155.9
|
|
Other assets and deferred charges
|
—
|
|
|
327.2
|
|
|
35.8
|
|
|
75.5
|
|
|
—
|
|
|
438.5
|
|
Investment in subsidiaries
|
—
|
|
|
1,015.2
|
|
|
26.6
|
|
|
—
|
|
|
(1,041.8
|
)
|
|
—
|
|
Total assets
|
$
|
—
|
|
|
$
|
1,838.3
|
|
|
$
|
355.1
|
|
|
$
|
1,177.1
|
|
|
$
|
(1,041.8
|
)
|
|
$
|
2,328.7
|
|
Liabilities and stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
96.3
|
|
|
$
|
41.0
|
|
|
$
|
199.8
|
|
|
$
|
—
|
|
|
$
|
337.1
|
|
Other current liabilities
|
—
|
|
|
155.1
|
|
|
3.0
|
|
|
80.9
|
|
|
—
|
|
|
239.0
|
|
Total current liabilities
|
—
|
|
|
251.4
|
|
|
44.0
|
|
|
280.7
|
|
|
—
|
|
|
576.1
|
|
Intercompany payable (receivable)
|
320.7
|
|
|
(368.6
|
)
|
|
289.0
|
|
|
(241.1
|
)
|
|
—
|
|
|
—
|
|
Long-term debt
|
—
|
|
|
1,128.9
|
|
|
5.9
|
|
|
45.4
|
|
|
—
|
|
|
1,180.2
|
|
Investment in subsidiaries obligation
|
104.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104.8
|
)
|
|
—
|
|
Other long-term liabilities
|
—
|
|
|
931.4
|
|
|
3.6
|
|
|
57.0
|
|
|
—
|
|
|
992.0
|
|
Total liabilities
|
425.5
|
|
|
1,943.1
|
|
|
342.5
|
|
|
142.0
|
|
|
(104.8
|
)
|
|
2,748.3
|
|
Total AAM Stockholders' equity (deficit)
|
(425.5
|
)
|
|
(104.8
|
)
|
|
12.6
|
|
|
1,029.2
|
|
|
(937.0
|
)
|
|
(425.5
|
)
|
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
|
—
|
|
|
5.9
|
|
Total stockholders' equity (deficit)
|
(425.5
|
)
|
|
(104.8
|
)
|
|
12.6
|
|
|
1,035.1
|
|
|
(937.0
|
)
|
|
(419.6
|
)
|
Total liabilities and stockholders' equity (deficit)
|
$
|
—
|
|
|
$
|
1,838.3
|
|
|
$
|
355.1
|
|
|
$
|
1,177.1
|
|
|
$
|
(1,041.8
|
)
|
|
$
|
2,328.7
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
|
(in millions)
|
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(228.2
|
)
|
|
$
|
56.8
|
|
|
$
|
(4.1
|
)
|
|
$
|
—
|
|
|
$
|
(175.5
|
)
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
—
|
|
|
(59.4
|
)
|
|
(9.0
|
)
|
|
(139.2
|
)
|
|
—
|
|
|
(207.6
|
)
|
Proceeds from sale of property, plant and equipment
|
—
|
|
|
7.0
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
|
10.1
|
|
Proceeds from sale-leaseback of equipment
|
—
|
|
|
12.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.1
|
|
Net cash used in investing activities
|
—
|
|
|
(40.3
|
)
|
|
(9.0
|
)
|
|
(136.1
|
)
|
|
—
|
|
|
(185.4
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Net debt activity
|
—
|
|
|
257.9
|
|
|
(0.2
|
)
|
|
16.2
|
|
|
—
|
|
|
273.9
|
|
Intercompany activity
|
5.9
|
|
|
(52.0
|
)
|
|
(47.6
|
)
|
|
93.7
|
|
|
—
|
|
|
—
|
|
Debt issuance costs
|
—
|
|
|
(10.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.6
|
)
|
Purchase of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
|
(4.0
|
)
|
Employee stock option exercises
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Purchase of treasury stock
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
Net cash provided by (used in) financing activities
|
—
|
|
|
195.4
|
|
|
(47.8
|
)
|
|
105.9
|
|
|
—
|
|
|
253.5
|
|
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
Net decrease in cash and cash equivalents
|
—
|
|
|
(73.1
|
)
|
|
—
|
|
|
(33.7
|
)
|
|
—
|
|
|
(106.8
|
)
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
83.7
|
|
|
—
|
|
|
85.5
|
|
|
—
|
|
|
169.2
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
10.6
|
|
|
$
|
—
|
|
|
$
|
51.8
|
|
|
$
|
—
|
|
|
$
|
62.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(119.3
|
)
|
|
$
|
40.1
|
|
|
$
|
22.9
|
|
|
$
|
—
|
|
|
$
|
(56.3
|
)
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
—
|
|
|
(43.9
|
)
|
|
(4.9
|
)
|
|
(114.3
|
)
|
|
—
|
|
|
(163.1
|
)
|
Proceeds from sale of property, plant and equipment
|
—
|
|
|
1.5
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
8.9
|
|
Purchase buyouts of leased equipment
|
—
|
|
|
(13.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.4
|
)
|
Acquisition, net
|
—
|
|
|
—
|
|
|
(16.5
|
)
|
|
—
|
|
|
—
|
|
|
(16.5
|
)
|
Net cash used in investing activities
|
—
|
|
|
(55.8
|
)
|
|
(21.4
|
)
|
|
(106.9
|
)
|
|
—
|
|
|
(184.1
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Net debt activity
|
—
|
|
|
159.6
|
|
|
(0.2
|
)
|
|
14.2
|
|
|
—
|
|
|
173.6
|
|
Intercompany activity
|
0.1
|
|
|
37.9
|
|
|
(18.5
|
)
|
|
(19.5
|
)
|
|
—
|
|
|
—
|
|
Debt issuance costs
|
—
|
|
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.9
|
)
|
Employee stock option exercises
|
—
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
Purchase of treasury stock
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
Net cash provided by (used in) financing activities
|
—
|
|
|
191.2
|
|
|
(18.7
|
)
|
|
(5.3
|
)
|
|
—
|
|
|
167.2
|
|
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
16.1
|
|
|
—
|
|
|
(91.5
|
)
|
|
—
|
|
|
(75.4
|
)
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
67.6
|
|
|
—
|
|
|
177.0
|
|
|
—
|
|
|
244.6
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
83.7
|
|
|
$
|
—
|
|
|
$
|
85.5
|
|
|
$
|
—
|
|
|
$
|
169.2
|
|
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
Holdings
|
|
AAM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Elims
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(5.9
|
)
|
|
$
|
40.3
|
|
|
$
|
205.9
|
|
|
$
|
—
|
|
|
$
|
240.3
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
—
|
|
|
(30.8
|
)
|
|
(6.2
|
)
|
|
(71.3
|
)
|
|
—
|
|
|
(108.3
|
)
|
Proceeds from sale of property, plant and equipment
|
—
|
|
|
1.7
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
|
4.9
|
|
Redemption of short-term investments
|
—
|
|
|
1.6
|
|
|
—
|
|
|
4.8
|
|
|
—
|
|
|
6.4
|
|
Acquisition, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
Purchase buyouts of leased equipment
|
—
|
|
|
(7.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.8
|
)
|
Net cash used in investing activities
|
—
|
|
|
(35.3
|
)
|
|
(6.2
|
)
|
|
(65.5
|
)
|
|
—
|
|
|
(107.0
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Net debt activity
|
—
|
|
|
(59.2
|
)
|
|
(0.2
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
(61.9
|
)
|
Intercompany activity
|
1.3
|
|
|
88.5
|
|
|
(33.7
|
)
|
|
(56.1
|
)
|
|
—
|
|
|
—
|
|
Debt issuance costs
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
Purchase of noncontrolling interest
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
Employee stock option exercises, including tax benefit
|
—
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
Purchase of treasury stock
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
Net cash provided by (used in) financing activities
|
—
|
|
|
28.2
|
|
|
(36.0
|
)
|
|
(58.6
|
)
|
|
—
|
|
|
(66.4
|
)
|
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
(13.0
|
)
|
|
(1.9
|
)
|
|
81.4
|
|
|
—
|
|
|
66.5
|
|
Cash and cash equivalents at beginning of period
|
—
|
|
|
80.6
|
|
|
1.9
|
|
|
95.6
|
|
|
—
|
|
|
178.1
|
|
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
67.6
|
|
|
$
|
—
|
|
|
$
|
177.0
|
|
|
$
|
—
|
|
|
$
|
244.6
|
|