DETROIT, Oct. 31 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the
NYSE, today reported its financial results for the third quarter of
2008. Third Quarter 2008 results -- Third quarter sales of $528.1
million -- Net loss of $440.9 million, or $8.54 per share -- AAM's
quarterly results reflect the adverse impact of special charges,
asset impairments and other non-recurring operating costs of $398.0
million, or $7.71 per share; these charges, the majority of which
were non-cash in the period, relate to 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 -- 44% year-over-year
decline in total light truck production volumes as compared to the
third quarter of 2007 -- Content-per-vehicle of $1,453,
approximately 12% higher than the previous year AAM's results in
the third quarter of 2008 were a net loss of $440.9 million or
$8.54 per share. This compares to net earnings of $13.5 million, or
$0.25 per share, in the third quarter of 2007. In the third quarter
of 2008, AAM recorded special charges and non-recurring operating
costs of $398.0 million, or $7.71 per share. The majority 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
Attrition programs and benefit reductions for U.S. hourly and
salaried associates $ 85.2 $ 1.65 Buydown Program payments 51.9
1.01 Asset impairments, lease accruals and indirect inventory
write-downs 255.9 4.95 Other (primarily plant closure accruals and
asset redeployment costs) 5.0 0.10 Total special charges and
non-recurring operating costs $ 398.0 $ 7.71 -- Special charges of
$85.2 million, or $1.65 per share relating to U.S. 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 voluntary elections under the Special
Separation Program (SSP) offered to UAW-represented associates at
AAM's original U.S. locations and salaried workforce reductions. --
Special charges of $51.9 million, or $1.01 per share relating to
the total estimated Buydown Program (BDP) payments to those
associates who are expected to be permanently idled throughout the
new labor agreement. The BDP was initiated for associates that did
not elect to participate in the SSP. Under the BDP, AAM will make
three annual lump-sum payments to associates in connection with,
among other things, a base wage decrease. -- Asset impairment
charges and indirect inventory write-downs, of $255.9 million, or
$4.95 per share. Most of these charges result from the impact of
recent customer decisions adversely affecting AAM's future
production requirements at AAM's Colfor Manufacturing subsidiary
and further structural changes in the level of market demand and
accelerated 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, Michigan driveline
assembly facility. -- Other special charges and non-operating costs
of $5.0 million, or $0.10 per share primarily relating to costs
incurred in relation to plant closings, including costs to redeploy
machinery and equipment. "AAM's results in the third quarter of
2008 were adversely impacted by customer decisions to restrict
production and reduce inventories of unsold vehicles. This created
a significant imbalance between our production schedules in the
quarter and the selling rates of the major product programs AAM
currently supports for GM and Chrysler in North America," said AAM
Co-Founder, Chairman of the Board & Chief Executive Officer
Richard E. Dauch. "Rapid deterioration in the domestic economy,
pervasive weakness in the credit markets and historically low
consumer confidence compounded these challenges for the entire
domestic automotive industry. "As we adapt to these new and
challenging market conditions, AAM remains focused on the execution
of its comprehensive restructuring plan to align AAM's global
production capacity with current and projected market requirements.
The actions AAM is taking to improve the operating flexibility and
market cost competitiveness of its U.S. operations position AAM to
sustain its leadership position in the North American driveline
market segment. At the same time, the recent groundbreaking for
AAM's new Rayong, Thailand manufacturing facility demonstrates our
commitment to the continued diversification and expansion of AAM's
global manufacturing and sourcing footprint. These initiatives
position AAM for a return to profitability." Net sales in the third
quarter of 2008 were $528.1 million as compared to $774.3 million
in the third quarter of 2007. Customer production volumes for the
major light truck and SUV product programs AAM currently supports
for GM and Chrysler were down approximately 44% in the third
quarter of 2008 as compared to the prior year. Non-GM sales
represented 26% of total sales in the third quarter of 2008 as
compared to 24% in the third quarter of 2007. 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. In the third quarter
2008, AAM's content-per-vehicle increased approximately 12% to
$1,453 as compared to $1,303 in the third quarter of 2007. Net
sales in the first three quarters of 2008 were $1.6 billion as
compared to $2.5 billion in the first three quarters of 2007. The
company's operating loss in the first three quarters of 2008 was
$1.0 billion as compared to operating income of $125.1 million or
5.0% of sales for the first three quarters of 2007. AAM's SG&A
spending for the third quarter of 2008 was $43.0 million as
compared to $52.0 million in the third quarter of 2007. In the
first three quarters of 2008, AAM's SG&A spending was $137.3
million as compared to $155.1 million in the first three quarters
of 2007. AAM's R&D spending for the first three quarters of
2008 was approximately $63.4 million as compared to $61.9 million
in the first three quarters of 2007. AAM defines free cash flow to
be net cash provided by (or used in) operating activities less
capital expenditures net of proceeds from the sales of equipment
and dividends paid. Net cash used in operating activities in the
first three quarters of 2008 was $97.3 million as compared to net
cash provided by operating activities of $331.6 million in the
first three quarters of 2007. Capital spending net of proceeds from
the sales of equipment for the first three quarters of 2008 was
$100.5 million as compared to $132.9 million in the first three
quarters of 2007. Reflecting the impact of this activity and
dividend payments of $17.3 million, AAM's free cash flow use of
$215.1 million in the first three quarters of 2008 compared to
$174.9 million of positive free cash flow in the first three
quarters of 2007. A conference call to review AAM's third 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 October 31, 2008 until 5:00 p.m. ET November 7, 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 65769084. 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: global economic conditions, 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
customers' and suppliers' availability of financing for working
capital, capital expenditures, R&D or other general corporate
purposes; 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; adverse changes in the
economic conditions or political stability of our principal markets
(particularly North America, Europe, South America and Asia);
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); 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 at
http://www.aam.com/ AMERICAN AXLE & MANUFACTURING HOLDINGS,
INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended Nine months ended September 30, September 30,
-------------------- -------------------- 2008 2007 2008 2007
---------- --------- --------- ---------- (In millions, except (In
millions, except per share data) per share data) Net sales $528.1
$774.3 $1,606.2 $2,493.0 Cost of goods sold 906.5 693.1 2,499.8
2,212.8 -------- -------- --------- --------- Gross profit (loss)
(378.4) 81.2 (893.6) 280.2 Selling, general and administrative
expenses 43.0 52.0 137.3 155.1 -------- -------- ---------
--------- Operating income (loss) (421.4) 29.2 (1,030.9) 125.1
Interest expense (18.0) (14.6) (48.4) (46.8) Investment income
(loss) (3.7) 3.1 0.5 6.0 Other income (expense), net Debt
refinancing cost - - - (5.5) Other, net (1.2) (1.2) 0.4 0.1
-------- -------- --------- --------- Income (loss) before income
taxes (444.3) 16.5 (1,078.4) 78.9 Income tax expense (benefit)
(3.4) 3.0 33.8 15.1 -------- -------- --------- --------- Net
income (loss) $(440.9) $13.5 $(1,112.2) $63.8 ======== ========
========= ========= Diluted earnings (loss) per share $(8.54) $0.25
$(21.55) $1.21 ======== ======== ========= ========= Diluted shares
outstanding 51.6 53.0 51.6 52.6 ======== ======== =========
========= AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30,
December 31, 2008 2007 -------------- -------------- (In millions)
ASSETS Current assets Cash and cash equivalents $454.2 $343.6
Short-term investments 117.2 - Accounts receivable, net 256.2 264.0
AAM/GM agreement receivable 60.0 - Inventories, net 183.8 242.8
Prepaid expenses and other 70.8 73.4 Deferred income taxes 5.3 19.5
-------------- -------------- Total current assets 1,147.5 943.3
Property, plant and equipment, net 1,093.0 1,696.2 Deferred income
taxes 16.0 78.7 Goodwill 147.8 147.8 Other assets and deferred
charges 51.5 57.4 -------------- -------------- Total assets
$2,455.8 $2,923.4 ============== ============== LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable
$287.2 $313.8 Other accrued expenses 374.3 197.8 --------------
-------------- Total current liabilities 661.5 511.6 Long-term debt
1,300.8 858.1 Deferred income taxes 5.4 6.6 Deferred revenue 195.8
66.0 Postretirement benefits and other long-term liabilities 429.6
581.7 -------------- -------------- Total liabilities 2,593.1
2,024.0 Stockholders' equity (deficit) (137.3) 899.4 --------------
-------------- Total liabilities and stockholders' equity (deficit)
$2,455.8 $2,923.4 ============== ============== AMERICAN AXLE &
MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) Three months ended Nine months ended
September 30, September 30, ------------------- ------------------
2008 2007 2008 2007 --------- --------- --------- -------- (In
millions) (In millions) Operating activities Net income (loss)
$(440.9) $13.5 $(1,112.2) $63.8 Depreciation and amortization 52.6
57.6 165.2 171.0 Other 366.9 25.9 849.7 96.8 --------- ---------
--------- -------- Net cash flow provided by operating activities
(21.4) 97.0 (97.3) 331.6 Purchases of property, plant &
equipment (35.9) (57.4) (102.8) (132.9) Proceeds from sales of
assets - - 2.3 - Reclass of short-term investments (117.2) -
(117.2) - --------- --------- --------- -------- Net cash flow
provided by (used in) operations (174.5) 39.6 (315.0) 198.7 Net
increase (decrease) in long-term debt 435.0 (2.1) 442.9 167.3 Debt
issuance costs - - - (7.5) Repurchase of treasury stock - (1.9)
(0.1) (1.9) Employee stock option exercises - 3.9 0.9 15.2
Dividends paid (1.1) (8.0) (17.3) (23.8) --------- ---------
--------- -------- Net cash flow provided by (used in) financing
activities 433.9 (8.1) 426.4 149.3 Effect of exchange rate changes
on cash (1.3) (0.7) (0.8) 0.6 --------- --------- ---------
-------- Net increase in cash and cash equivalents 258.1 30.8 110.6
348.6 Cash and cash equivalents at beginning of period 196.1 331.3
343.6 13.5 --------- --------- --------- -------- Cash and cash
equivalents at end of period $454.2 $362.1 $454.2 $362.1 =========
========= ========= ======== 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 Nine months ended
September 30, September 30, ------------------ ------------------
2008 2007 2008 2007 -------- -------- ------- --------- (In
millions) (In millions) Net income (loss) $(440.9) $13.5 $(1,112.2)
$63.8 Interest expense 18.0 14.6 48.4 46.8 Income taxes (3.4) 3.0
33.8 15.1 Depreciation and amortization 52.6 57.6 165.2 171.0
-------- -------- ------- --------- EBITDA $(373.7) $88.7 $(864.8)
$296.7 ======== ======== ======== ========= Net debt(b) to capital
September 30, December 31, 2008 2007
--------------------------------- (In millions, except percentages)
Total debt $1,300.8 $858.1 Less: cash and cash equivalents 454.2
343.6 -------- -------- Net debt at end of period 846.6 514.5
Stockholders' equity (deficit) (137.3) 899.4 -------- --------
Total invested capital at end of period $709.3 $1,413.9 ========
======== Net debt to capital(c) 119.4% 36.4% ======== ======== Net
Operating Cash Flow and Free Cash Flow(d) Three months ended Nine
months ended September 30, September 30, ------------------
------------------ 2008 2007 2008 2007 ------------------
------------------ (In millions) (In millions) Net cash provided by
operating activities $(21.4) $97.0 $(97.3) $331.6 Less: purchases
of property, plant & equipment and proceeds from sale of
equipment (35.9) (57.4) (100.5) (132.9) -------- ------- --------
------- Net operating cash flow (57.3) 39.6 (197.8) 198.7 Less:
dividends paid (1.1) (8.0) (17.3) (23.8) -------- ------- --------
------- Free cash flow $(58.4) $31.6 $(215.1) $174.9 ========
======= ======== ======= (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 routinely use EBITDA, together with other measures, to
measure our operating performance relative to other Tier 1
automotive suppliers. EBITDA should not be construed as income from
operations, net income or cash flow from operating activities as
determined under GAAP. Other companies may calculate EBITDA
differently. (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 (deficit) 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 assess relative capital structure risk.
Other companies may calculate net debt to capital differently. (d)
We define net operating cash flow as net cash provided by operating
activities less purchases of property and equipment net of proceeds
from sales of assets. 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, Renee B. Rogers, Manager, Corporate
Communications and Media Relations, +1-313-758-4882, , or
Investors, Jamie M. Little, Director, Investor Relations,
+1-313-758-4831, , both of American Axle & Manufacturing
Holdings, Inc. Web site: http://www.aam.com/
http://investor.aam.com/ Company News On-Call:
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