DETROIT, July 25 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the
NYSE, today reported its financial results for the second quarter
of 2008. Second Quarter 2008 results -- Second quarter sales of
$490.5 million -- Net loss of $644.3 million, or $12.49 per share
-- AAM's quarterly results reflect the adverse impact of a strike
called by the International UAW at AAM's original U.S. locations in
Michigan and New York; AAM estimates the reduction in sales and
operating income resulting from the strike to be $274.9 million and
$86.6 million (or $1.73 per share), respectively -- AAM's quarterly
results also reflect the adverse impact of special charges, asset
impairments and other non-recurring operating costs of $575.6
million, or $11.16 per share; these charges, substantially all of
which were non-cash in the period, relate to the new labor
agreements and hourly and salaried attrition program activity,
plant closures and other actions to rationalize underutilized
capacity and align AAM's business to current and projected market
requirements -- 51% year-over-year decline in total light truck
production volumes as compared to the second quarter of 2007 --
Content-per-vehicle of $1,312, approximately the same as the
previous year AAM's results in the second quarter of 2008 were a
net loss of $644.3 million or $12.49 per share. This compares to
net earnings of $34.6 million, or $0.66 per share, in the second
quarter of 2007. AAM's results in the second quarter of 2008 were
severely impacted by an 87 day strike called by the International
UAW at AAM's original U.S. locations. AAM estimates the reduction
in sales and operating income resulting from the strike in the
second quarter of 2008 to be $274.9 million and $86.6 million
($1.73 per share), respectively. In the second quarter of 2008, AAM
recorded special charges and non- recurring operating costs of
$575.6 million, or $11.16 per share. Of this total, approximately
95% of these charges and costs were non-cash in the period. These
charges and costs are summarized in the following table: in
millions EPS Impact Lump-sum signing bonus paid to UAW associates
at original U.S. locations $19.1 $0.37 Accrual for Supplemental
Unemployment Benefits (SUB) 18.0 0.35 Attrition programs and
benefit reductions for hourly and salaried associates 146.8 2.85
Asset impairments, lease accruals and indirect inventory
write-downs 329.9 6.39 Valuation allowance for U.S. deferred tax
assets 54.4 1.06 Other (primarily plant closure accruals and asset
redeployment costs) 7.4 0.14 ------ ------ Total special charges
and non-recurring operating costs $575.6 $11.16 ====== ====== --
Special charge of $19.1 million, or $0.37 per share related to the
lump-sum signing bonus of $5,000 paid to approximately 3,650 UAW-
represented associates in May 2008 upon ratification of the new
labor agreements at AAM's original U.S. locations. -- Special
charge of $18.0 million, or $0.35 per share for Supplemental
Unemployment Benefits (SUB) estimated to be payable to
UAW-represented associates during the term of the new labor
agreements at AAM's original U.S. locations. -- Special charges of
$146.8 million, or $2.85 per share relating to hourly and salaried
attrition programs and benefit reductions, including pension and
other postretirement benefit curtailments and special and
contractual termination benefits. Included in this activity are
charges relating to plant closing agreements, early voluntary
elections under the Special Separation Program (SSP) offered to
UAW-represented associates at AAM's original U.S. locations and
salaried workforce reductions. -- Asset impairment charges,
operating lease accruals and indirect inventory write-downs, of
$329.9 million, or $6.39 per share. Approximately half of these
charges relate to the planned closure of three of AAM's original
U.S. locations (including the previously idled driveline assembly
facility in Buffalo, New York and two forging facilities: one in
Tonawanda, New York and the other in Detroit, Michigan) and idling
of portions of AAM's driveline assembly facility in Detroit,
Michigan. The remaining portion of the asset impairment charges
results from the impact of structural changes in the level of
market demand and reductions in customer production volumes
anticipated for the major North American light truck and SUV
product programs AAM currently supports for GM in the Detroit and
Three Rivers, Michigan driveline assembly facilities. -- Special
charge of $54.4 million, or $1.06 per share to establish a
valuation allowance on AAM's U.S. deferred tax assets as required
under SFAS No. 109, Accounting for Income Taxes. -- Other special
charges and non-operating costs of $7.4 million, or $0.14 per share
primarily relating to liabilities incurred in relation to plant
closings, including costs to redeploy machinery and equipment.
"AAM's results in the second quarter of 2008 were severely impacted
by the brutal combination of the International UAW strike and steep
declines in light truck and SUV production volumes resulting from a
weakening domestic economy, rapidly escalating fuel prices,
deteriorating credit market conditions and historically low
consumer confidence," said AAM Co-Founder, Chairman of the Board
& Chief Executive Officer Richard E. Dauch. "AAM has a
comprehensive restructuring plan to transition the business to
successfully adapt to new market realities. AAM has the financial
resources, management expertise and determination necessary to
execute the plan. The permanent and transformational improvement in
our cost structure and operating flexibility generated from the new
labor agreements, along with our accelerated capacity
rationalization initiatives, position AAM for future profitability,
as we continue to diversify and expand AAM's customer base, product
portfolio, served markets and global footprint." Net sales in the
second quarter of 2008 were $490.5 million as compared to $916.5
million in the second quarter of 2007. AAM estimates that
approximately $274.9 million of this decrease was attributable to
the International UAW strike. Customer production volumes for the
major light truck and SUV product programs AAM currently supports
for GM and Chrysler were down approximately 51% in the second
quarter of 2008 as compared to the prior year. Non-GM sales
represented 29% of total sales in the second quarter of 2008. AAM's
content-per-vehicle is measured by the dollar value of its product
sales supporting GM's North American truck and SUV platforms and
Chrysler's heavy duty Dodge Ram pickup trucks. For the second
quarter 2008, AAM's content-per-vehicle of $1,312 was approximately
the same as the second quarter of 2007. Net sales in the first half
of 2008 were $1.1 billion as compared to $1.7 billion in the first
half of 2007. The company's operating loss in the first half of
2008 was $609.5 million as compared to operating income of $95.9
million or 5.6% of sales for the first half of 2007. For the first
half of 2008, AAM estimates the reduction in sales and operating
income resulting from the International UAW strike to be $414.0
million and $129.4 million ($2.57 per share), respectively. AAM's
SG&A spending for the second quarter of 2008 was $44.9 million
as compared to $54.2 million in the second quarter of 2007. In the
first half of 2008, AAM's SG&A spending was $94.3 million as
compared to $103.1 million in the first half of 2007. AAM's R&D
spending for the first half of 2008 was approximately $42.1 million
as compared to $39.7 million in the first half of 2007. AAM defines
free cash flow to be net cash provided by (or used in) operating
activities less capital expenditures and dividends paid. Net cash
used in operating activities in first half of 2008 was $75.9
million as compared to net cash provided by operating activities of
$234.6 million in the first half of 2007. Capital spending for the
first half of 2008 was $66.9 million as compared to $75.5 million
in the first half of 2007. Reflecting the impact of this activity
and dividend payments of $16.2 million, AAM's free cash flow use of
$156.7 million in the first half of 2008 compared to $143.3 million
of positive free cash flow in the first half of 2007. A conference
call to review AAM's second quarter of 2008 results is scheduled
today at 10:00 a.m. ET. Interested participants may listen to the
live conference call by logging onto AAM's investor web site at
http://investor.aam.com/ or calling (877) 278-1452 from the United
States or (706) 643-3736 from outside the United States. A replay
will be available from 5:00 p.m. ET on July 25, 2008 until 5:00
p.m. ET August 1, 2008 by dialing (800) 642-1687 from the United
States or (706) 645-9291 from outside the United States. When
prompted, callers should enter conference reservation number
52458557. Non-GAAP Financial Information In addition to the results
reported in accordance with accounting principles generally
accepted in the United States of America (GAAP) included within
this press release, AAM has provided certain information, which
includes non-GAAP financial measures. Such information is
reconciled to its closest GAAP measure in accordance with the
Securities and Exchange Commission rules and is included in the
attached supplemental data. Management believes that these non-GAAP
financial measures are useful to both management and its
stockholders in their analysis of the Company's business and
operating performance. Management also uses this information for
operational planning and decision-making purposes. Non-GAAP
financial measures are not and should not be considered a
substitute for any GAAP measure. Additionally, non-GAAP financial
measures as presented by AAM may not be comparable to similarly
titled measures reported by other companies. AAM is a world leader
in the manufacture, engineering, design and validation of driveline
and drivetrain systems and related components and modules, chassis
systems and metal-formed products for trucks, sport utility
vehicles, passenger cars and crossover utility vehicles. In
addition to locations in the United States (Michigan, New York,
Ohio and Indiana), AAM also has offices or facilities in Brazil,
China, Germany, India, Japan, Luxembourg, Mexico, Poland, South
Korea, Thailand and the United Kingdom. Certain statements
contained in this press release are "forward-looking statements"
and relate to the Company's plans, projections, strategies or
future performance. Such statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995 and are based on our current expectations, are inherently
uncertain, are subject to risks and should be viewed with caution.
Actual results and experience may differ materially from the
forward-looking statements as a result of many factors, including
but not limited to: reduced purchases of our products by General
Motors Corporation (GM), Chrysler LLC (Chrysler) or other
customers; reduced demand for our customers' products (particularly
light trucks and SUVs produced by GM and Chrysler); availability of
financing for working capital, capital expenditures, R&D or
other general corporate purposes, including our ability to comply
with financial covenants; our ability to achieve cost reductions
through ongoing restructuring actions; additional restructuring
items that may occur; our ability to achieve the level of cost
reductions required to sustain global cost competitiveness;
additional restructuring actions that may occur; our ability to
maintain satisfactory labor relations and avoid future work
stoppages; our suppliers' ability to maintain satisfactory labor
relations and avoid work stoppages; our customers' and their
suppliers' ability to maintain satisfactory labor relations and
avoid work stoppages; our ability to improve our U.S. labor cost
structure; our ability to consummate and integrate acquisitions;
supply shortages or price increases in raw materials, utilities or
other operating supplies; our ability or our customers' and
suppliers' ability to successfully launch new product programs on a
timely basis; our ability to realize the expected revenues from our
new and incremental business backlog; our ability to attract new
customers and programs for new products; our ability to develop and
produce new products that reflect market demand;
lower-than-anticipated market acceptance of new or existing
products; our ability to respond to changes in technology,
increased competition or pricing pressures; continued or increased
high prices for or reduced availability of fuel; adverse changes in
laws, government regulations or market conditions affecting our
products or our customers' products (such as the Corporate Average
Fuel Economy regulations); adverse changes in the economic
conditions or political stability of our principal markets
(particularly North America, Europe, South America and Asia);
liabilities arising from warranty claims, product liability and
legal proceedings to which we are or may become a party; changes in
liabilities arising from pension and other postretirement benefit
obligations; risks of noncompliance with environmental regulations
or risks of environmental issues that could result in unforeseen
costs at our facilities; our ability to attract and retain key
associates; other unanticipated events and conditions that may
hinder our ability to compete. It is not possible to foresee or
identify all such factors and we make no commitment to update any
forward-looking statement or to disclose any facts, events or
circumstances after the date hereof that may affect the accuracy of
any forward-looking statement. For additional information: Media
relations contact: Renee B. Rogers Manager, Corporate
Communications and Media Relations (313) 758-4882 Investor
relations contact: Jamie M. Little Director, Investor Relations
(313) 758-4831 Or visit the AAM website as http://www.aam.com/ .
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months
ended Six months ended June 30, June 30, --------------------
------------------- 2008 2007 2008 2007 ---- ---- ---- ---- (In
millions, except (In millions, except per share data) per share
data) Net sales $490.5 $916.5 $1,078.1 $1,718.7 Cost of goods sold
1,018.4 802.8 1,593.3 1,519.7 ------- ------- ------- ------- Gross
profit (loss) (527.9) 113.7 (515.2) 199.0 Selling, general and
administrative expenses 44.9 54.2 94.3 103.1 ------- -------
------- ------- Operating income (loss) (572.8) 59.5 (609.5) 95.9
Interest expense (15.1) (17.7) (30.4) (32.3) Interest income 1.6
2.4 4.2 3.0 Other income (expense), net Debt refinancing cost -
(5.5) - (5.5) Other, net 1.1 1.2 1.6 1.3 ------- ------- -------
------- Income (loss) before income taxes (585.2) 39.9 (634.1) 62.4
Income tax expense (benefit) 59.1 5.3 37.2 12.1 ------- -------
------- ------- Net income (loss) $(644.3) $34.6 $(671.3) $50.3
======= ======= ======= ======= Diluted earnings (loss) per share
$(12.49) $0.66 $(13.01) $0.96 ======= ======= ======= =======
Diluted shares outstanding 51.6 52.8 51.6 52.5 ======= =======
======= ======= AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December
31, 2008 2007 ----------- ----------- (In millions) ASSETS Current
assets Cash and cash equivalents $196.1 $343.6 Accounts receivable,
net 271.8 264.0 AAM/GM agreement receivable 175.0 - Inventories,
net 238.7 242.8 Prepaid expenses and other 55.5 73.4 Deferred
income taxes 15.0 19.5 ------- ------- Total current assets 952.1
943.3 Property, plant and equipment, net 1,368.7 1,696.2 Deferred
income taxes 4.4 78.7 Goodwill 147.8 147.8 Other assets and
deferred charges 53.3 57.4 ------- ------- Total assets $2,526.3
$2,923.4 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Accounts payable $299.4 $313.8 Other accrued
expenses 372.5 197.8 ------- ------- Total current liabilities
671.9 511.6 Long-term debt 869.2 858.1 Deferred income taxes 4.0
6.6 Postretirement benefits and other long-term liabilities 665.9
647.7 ------- ------- Total liabilities 2,211.0 2,024.0
Stockholders' equity 315.3 899.4 ------- ------- Total liabilities
and stockholders' equity $2,526.3 $2,923.4 ======= ======= AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) Three months ended Six months
ended June 30, June 30, ------------------ ------------------ 2008
2007 2008 2007 ---- ---- ---- ---- (In millions) (In millions)
Operating activities Net income (loss) $(644.3) $34.6 $(671.3)
$50.3 Depreciation and amortization 56.0 57.1 112.6 113.4 Other
504.1 133.1 482.8 70.9 ----- ----- ----- ----- Net cash flow
provided by operating activities (84.2) 224.8 (75.9) 234.6
Purchases of property, plant & equipment (33.6) (33.0) (66.9)
(75.5) Proceeds from sales of equipment 2.3 - 2.3 - ----- -----
----- ----- Net cash flow after purchases of property, plant &
equipment (115.5) 191.8 (140.5) 159.1 ----- ----- ----- ----- Net
cash flow provided by (used in) operations (115.5) 191.8 (140.5)
159.1 Net increase (decrease) in long-term debt 3.1 (0.1) 7.9 169.4
Debt issuance costs - (2.3) - (7.5) Repurchase of treasury stock -
- (0.1) - Employee stock option exercises 0.6 7.0 0.9 11.3
Dividends paid (8.2) (8.0) (16.2) (15.8) ----- ----- ----- -----
Net cash flow provided by (used in) financing activities (4.5)
(3.4) (7.5) 157.4 Effect of exchange rate changes on cash 0.5 1.0
0.5 1.3 ----- ----- ----- ----- Net increase in cash and cash
equivalents (119.5) 189.4 (147.5) 317.8 Cash and cash equivalents
at beginning of period 315.6 141.9 343.6 13.5 ----- ----- -----
----- Cash and cash equivalents at end of period $196.1 $331.3
$196.1 $331.3 ===== ===== ===== ===== AMERICAN AXLE &
MANUFACTURING HOLDINGS, INC. SUPPLEMENTAL DATA (Unaudited) The
supplemental data presented below is a reconciliation of certain
financial measures which is intended to facilitate analysis of
American Axle & Manufacturing Holdings, Inc. business and
operating performance. Earnings before interest expense, income
taxes and depreciation and amortization (EBITDA)(a) Three months
ended Six months ended June 30, June 30, ------------------
------------------ 2008 2007 2008 2007 ---- ---- ---- ---- (In
millions) (In millions) Net income (loss) $(644.3) $34.6 $(671.3)
$50.3 Interest expense 15.1 17.7 30.4 32.3 Income taxes 59.1 5.3
37.2 12.1 Depreciation and amortization 56.0 57.1 112.6 113.4 -----
----- ----- ----- EBITDA $(514.1) $114.7 $(491.1) $208.1 =====
===== ===== ===== Net debt(b) to capital June 30, December 31, 2008
2007 ----------- ----------- (In millions, except percentages)
Total debt $869.2 $858.1 Less: cash and cash equivalents 196.1
343.6 ------- ------- Net debt at end of period 673.1 514.5
Stockholders' equity 315.3 899.4 ------- ------- Total invested
capital at end of period $988.4 $1,413.9 ======= ======= Net debt
to capital(c) 68.1% 36.4% ======= ======= Net Operating Cash Flow
and Free Cash Flow(d) Three months ended Six months ended June 30,
June 30, ------------------ ------------------ 2008 2007 2008 2007
---- ---- ---- ---- (In millions) (In millions) Net cash provided
by operating activities $(84.2) $224.8 $(75.9) $234.6 Less:
purchases of property, plant & equipment and proceeds from sale
of equipment (31.3) (33.0) (64.6) (75.5) ----- ----- ----- -----
Net operating cash flow (115.5) 191.8 (140.5) 159.1 Less: dividends
paid (8.2) (8.0) (16.2) (15.8) ----- ----- ----- ----- Free cash
flow $(123.7) $183.8 $(156.7) $143.3 ===== ===== ===== ===== (a) We
believe that EBITDA is a meaningful measure of performance as it is
commonly utilized by management and investors to analyze operating
performance and entity valuation. Our management, the investment
community and the banking institutions routine (b) Net debt is
equal to total debt less cash and cash equivalents. (c) Net debt to
capital is equal to net debt divided by the sum of stockholders'
equity and net debt. We believe that net debt to capital is a
meaningful measure of financial condition as it is commonly
utilized by management, investors and creditors to (d) We define
net operating cash flow as net cash provided by operating
activities less purchases of property and equipment net of proceeds
from sale of equipment. Free cash flow is defined as net operating
cash flow less dividends paid. We believe net operating cash flow
and free cash flow are meaningful measures as they are commonly
utilized by management and investors to assess our ability to
generate cash flow from business operations to repay debt and
return capital to our stockholders. Net operating cash flow is also
a key metric used in our calculation of incentive compensation.
Other companies may calculate net operating cash flow and free cash
flow differently. DATASOURCE: American Axle & Manufacturing
Holdings, Inc. CONTACT: Media relations, Renee B. Rogers, Manager,
Corporate Communications and Media Relations, +1-313-758-4882, ;
Investor relations, Jamie M. Little, Director, Investor Relations,
+1-313-758-4831, Web site: http://www.aam.com/ Company News
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