Announces Updated 2010 Outlook DETROIT, Feb. 5
/PRNewswire-FirstCall/ -- American Axle & Manufacturing
Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today
reported its financial results for the fourth quarter and full year
2009. Fourth Quarter 2009 Highlights -- Fourth quarter sales of
$464.0 million were 13% higher than the third quarter of 2009 --
Operating income of $29.0 million, or 6.3% of sales -- Net income
of $48.6 million, or $0.80 per share, marks AAM's second
consecutive profitable quarter -- AAM's quarterly results reflect
the favorable impact of a U.S. tax refund claim of $48.8 million
(or $0.80 per share) related to newly enacted legislation providing
for a special 5-year net operating loss carryback election -- AAM
incurred a net charge for special items in the quarter of $8.5
million (or $0.14 per share) -- Net cash provided by operating
activities of $37.0 million reflects year-over-year improvement of
$102.8 million -- AAM's 2009 year-end liquidity position of $481
million is $110 million higher than September 30, 2009 and reflects
the impact of AAM's successful debt and equity financing
transactions completed in the quarter AAM's results in the fourth
quarter of 2009 were net earnings of $48.6 million or $0.80 per
share. This compares to a net loss of $112.1 million, or $2.17 per
share, in the fourth quarter of 2008. In the fourth quarter of
2009, AAM recorded a tax gain of $48.8 million (or $0.80 per share)
to recognize the benefit of a special U.S. tax refund claim related
to newly enacted legislation providing for a special 5-year net
operating loss carryback election. AAM's results in the fourth
quarter of 2008 included a tax expense provision of $69.5 million,
primarily relating to non-cash charges to establish and adjust
valuation allowances on AAM's U.S. and U.K. deferred tax assets.
AAM's results in the fourth quarter of 2009 also include a net
charge for special items of $8.5 million (or $0.14 per share). This
includes a $7.7 million non-cash write-off of unamortized debt
issuance costs related to the prepayment of the $250 million Term
Loan due 2012. AAM also recorded pension and postretirement benefit
curtailment gains of $4.3 million and other charges of $5.1
million, primarily relating to attrition programs and related
statutory benefits. "In 2009, AAM successfully navigated through
one of the most difficult periods in the history of the global
automotive industry. We achieved transformational improvements in
our cost structure, operating flexibility and capacity utilization.
We stabilized AAM's capital structure by securing new financing
arrangements and ended the year with positive momentum by returning
to profitability in the third and fourth quarters of 2009. This is
powerful validation of our progress in positioning AAM for
continued profitability, stable free cash flow generation and
further diversification of the business," said AAM Co-Founder,
Chairman of the Board & Chief Executive Officer Richard E.
Dauch. AAM's net loss for the full year 2009 was $253.1 million, or
$4.81 per share. This compares to a net loss of $1.2 billion, or
$23.73 per share, in 2008. In 2008 and 2009, AAM incurred special
charges, asset impairments and other non-recurring operating costs
related to the implementation of new labor agreements, hourly and
salaried attrition program activity, plant closures and other
actions to rationalize capacity, redeploy underutilized assets and
align AAM's business to current and projected market requirements.
In total, AAM's 2009 results reflect the impact of charges
amounting to $169.3 million (or $3.22 per share) relating to these
items, including pension and other postretirement benefit
curtailments and special termination benefits. This compares to
$985.4 million (or $19.10 per share) of such charges in 2008. AAM's
full year 2009 results also reflect restructuring costs and other
special items of $17.8 million (or $0.34 per share), primarily
relating to the successful closing of a settlement and commercial
agreement with General Motors Company (GM), the amendment of AAM's
senior secured credit facilities and the write-off of unamortized
debt issuance costs related to the prepayment of the $250 million
Term Loan due 2012. Net sales in the fourth quarter of 2009 were
$464.0 million as compared to $503.0 million in the fourth quarter
of 2008. Customer production volumes for the North American light
truck and SUV programs AAM currently supports for GM and Chrysler
were down approximately 7% in the fourth quarter of 2009 as
compared to the fourth quarter of 2008, substantially all of which
is attributable to lower customer production of mid-sized light
truck programs. Net sales for the full year 2009 were $1.5 billion
as compared to $2.1 billion in 2008. Customer production volumes
for the North American light truck and SUV programs AAM currently
supports for GM and Chrysler were down approximately 30% in 2009 as
compared to the prior year. AAM's results in 2009 were adversely
impacted by the extended production shutdowns of GM and Chrysler.
AAM estimates the reduction in sales and operating income resulting
from these shutdowns to be approximately $304 million and
approximately $95 million (or $1.81 per share), respectively. AAM's
content-per-vehicle is measured by the dollar value of its product
sales supporting GM's North American light truck and SUV programs
and Chrysler's Heavy Duty Dodge Ram pickup trucks. For the full
year 2009, AAM's content-per-vehicle was $1,403 as compared to
$1,391 in 2008. AAM's SG&A spending for the full year 2009 was
$172.7 million as compared to $185.4 million in 2008. AAM's R&D
spending for the full year 2009 was $67.0 million as compared to
$85.0 million in 2008. AAM defines free cash flow to be net cash
provided by (or used in) operating activities and proceeds from the
issuance of GM warrants, less capital expenditures net of proceeds
from the sales of equipment and dividends paid. Net cash provided
by operating activities for the fourth quarter of 2009 was $37.0
million as compared to net cash used by operating activities of
$65.8 in 2008. Capital spending, net of deposits for acquisition of
property and equipment and proceeds from the sale of equipment in
the fourth quarter of 2009, was $21.0 million as compared to $43.4
million in the fourth quarter of 2008. Reflecting the impact of
this activity, AAM generated $16.0 million of positive free cash
flow for the fourth quarter of 2009 as compared to a use of $110.2
million in 2008. Net cash provided by operating activities for the
full year 2009 was $17.3 million as compared to net cash used by
operating activities of $163.1 in 2008. In conjunction with the
settlement and commercial agreement with GM, AAM received a $110
million cash payment from GM in 2009, $79.7 million of which was
recorded in operating activities and $30.3 million of which was
recognized as a financing activity. For purposes of measuring free
cash flow in 2009, AAM includes the entire $110 million cash
payment. Capital spending, net of deposits for acquisition of
property and equipment and proceeds from the sales of equipment for
the full year 2009 was $136.0 million as compared to $143.9 million
in 2008. Reflecting the impact of this activity, AAM's free cash
flow was a use of $88.4 million in 2009 compared to a use of $325.3
million in 2008. AAM's Updated 2010 Outlook AAM also announced an
updated sales, profitability and free cash flow outlook for 2010.
AAM's updated 2010 outlook is based on the assumption that the U.S.
Seasonally Adjusted Annual Rate ("SAAR") of light vehicle sales
increases from approximately 10.4 million vehicle units in 2009 to
a range of 11.0 million -- 11.5 million vehicle units in 2010.
Based on this industry sales assumption and the anticipated timing
of new programs launching in AAM's $1.0 billion new and incremental
business backlog, AAM expects full year 2010 sales to range from
$1.9 billion to $2.1 billion. This represents annual sales growth
of approximately 25% - 40% on a year-over-year basis as compared to
the full year 2009. AAM expects to be profitable and generate
EBITDA in the range of 12% to 15% of sales in 2010. AAM expects
cash payments for restructuring costs to range from $40 million --
$50 million in 2010. These payments relate primarily to AAM's
remaining obligations under hourly and salaried attrition programs
and the Buydown Program (BDP) for UAW represented associates at
AAM's Detroit, Michigan; Three Rivers, Michigan; and Cheektowaga,
New York manufacturing facilities. Reflecting AAM's outlook for
sales, profitability and restructuring payments in 2010, the
expected receipt of the $48.8 million U.S. tax refund related to
the special 5-year net operating loss carryback election, and
capital spending in the range of 4% -- 5% of sales, AAM expects to
generate positive free cash flow for the full year 2010. A
conference call to review AAM's fourth quarter and full year 2009
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 (973) 200-3383 from
outside the United States. A replay will be available from 5:00
p.m. ET on February 5, 2010 until 5:00 p.m. ET February 12, 2010 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 51582206. 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, Pennsylvania 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, made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, are based on our current expectations, are
inherently uncertain, are subject to risks and should be viewed
with caution. Forward-looking statements should not be read as a
guarantee of future performance or results, and will not
necessarily be accurate indications of the times at, or by, which
such performance or results will be achieved. Forward-looking
statements are based on information available at the time those
statements are made and/or management's good faith belief as of
that time with respect to future events and are subject to risks
and may differ materially from those expressed in or suggested by
the forward-looking statements. Important factors that could cause
such differences include, but are not limited to: global economic
conditions; our ability to comply with the definitive terms and
conditions of various commercial and financing arrangements with
GM; reduced purchases of our products by GM, 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; the
impact on us and our customers of requirements imposed on, or
actions taken by, our customers in response to the U.S.
government's ownership interest, the Troubled Asset Relief Program
or similar programs; our ability to achieve cost reductions through
ongoing restructuring actions; additional restructuring actions
that may occur; our ability to achieve the level of cost reductions
required to sustain global cost competitiveness; our ability to
maintain satisfactory labor relations and avoid future work
stoppages; our suppliers', our customers' and their suppliers'
ability to maintain satisfactory labor relations and avoid work
stoppages; our ability to continue to implement improvements in our
U.S. labor cost structure; supply shortages or price increases in
raw materials, utilities or other operating supplies; currency rate
fluctuations; 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; price volatility in, 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 ("CAFE") regulations);
adverse changes in the 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. For additional discussion, see "Risk
factors related to our business" in our most recent prospectus
filed pursuant to Rule 424 on Form 424B2. It is not possible to
foresee or identify all such factors and we assume no obligation to
update any forward-looking statements or to disclose any subsequent
facts, events or circumstances that may affect their accuracy. For
more information... Christopher M. Son David Tworek Director,
Investor Relations and Manager, Communications Corporate
Communications (313) 758-4883 (313) 758-4814 Or visit the AAM
website at http://www.aam.com/. AMERICAN AXLE & MANUFACTURING
HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three months ended Twelve months ended December 31,
December 31, ------------ ------------ 2009 2008 2009 2008 ----
---- ---- ---- (In millions, (In millions, except per except per
share data) share data) Net sales $464.0 $503.0 $1,521.6 $2,109.2
Cost of goods sold 395.6 474.6 1,552.7 2,974.4 ----- ----- -------
------- Gross profit (loss) 68.4 28.4 (31.1) (865.2) Selling,
general and administrative expenses 39.4 48.1 172.7 185.4 ---- ----
----- ----- Operating income (loss) 29.0 (19.7) (203.8) (1,050.6)
Interest expense (24.1) (22.0) (84.5) (70.4) Investment income
(loss) (0.8) 2.0 2.0 2.5 Debt refinancing cost (7.7) - (7.7) -
Other income (expense), net 0.5 (3.0) (3.1) (2.8) --- ---- ----
---- Loss before income taxes (3.1) (42.7) (297.1) (1,121.3) Income
tax expense (benefit) (51.6) 69.5 (43.8) 103.3 ----- ---- -----
----- Net income (loss) 48.5 (112.2) (253.3) (1,224.6) Net loss
attributable to noncontrolling interest 0.1 0.1 0.2 0.3 --- --- ---
--- Net income (loss) attributable to AAM $48.6 $(112.1) $(253.1)
$(1,224.3) ===== ======= ======= ========= Diluted earnings (loss)
per share $0.80 $(2.17) $(4.81) $(23.73) ===== ====== ======
======= Diluted shares outstanding 61.0 51.6 52.6 51.6 ==== ====
==== ==== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31,
December 31, 2009 2008 ---- ---- (In millions) ASSETS ------
Current assets Cash and cash equivalents $178.1 $198.8 Short-term
investments 4.2 77.1 Accounts receivable, net 129.7 186.9 2008
AAM/GM agreement receivable - 60.0 Inventories, net 90.6 111.4
Prepaid expenses and other 114.0 61.1 ----- ---- Total current
assets 516.6 695.3 Property, plant and equipment, net 946.7 1,064.2
GM postretirement cost sharing asset 219.9 221.2 Goodwill 147.8
147.8 Other assets and deferred charges 155.8 119.2 ----- -----
Total assets $1,986.8 $2,247.7 ======== ======== LIABILITIES AND
STOCKHOLDERS' DEFICIT ------------------------------------- Current
liabilities Accounts payable $200.9 $250.9 Accrued expenses and
other 244.6 266.8 ----- ----- Total current liabilities 445.5 517.7
Long-term debt 1,071.4 1,139.9 Deferred revenue 189.7 178.2
Postretirement benefits and other long-term liabilities 840.1 847.4
----- ----- Total liabilities 2,546.7 2,683.2 Stockholders' deficit
(559.9) (435.5) ------ ------ Total liabilities and stockholders'
deficit $1,986.8 $2,247.7 ======== ======== AMERICAN AXLE &
MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) Three months ended Twelve months ended
December 31, December 31, ------------ ------------ 2009 2008 2009
2008 ---- ---- ---- ---- (In millions) (In millions) Operating
activities Net income (loss) $48.5 $(112.2) $(253.3) $(1,224.6)
Depreciation and amortization 31.9 34.3 134.7 199.5 Other (43.4)
12.1 135.9 862.0 ----- ---- ----- ----- Net cash flow provided by
(used in) operating activities 37.0 (65.8) 17.3 (163.1) Purchases
of property, plant & equipment (29.5) (37.4) (141.5) (140.2)
Decrease (increase) in deposits for acquisition of property and
equipment 7.3 (7.1) 3.8 (7.1) Acquisition, net - (10.7) (10.2)
(10.7) Proceeds from sales of property, plant & equipment 1.2
1.1 1.7 3.4 Redemption (reclass) of short-term investments 4.9 40.1
72.9 (77.1) --- ---- ---- ----- Net cash flow used in investing
activities (16.1) (14.0) (73.3) (231.7) Net increase (decrease) in
debt (107.9) (157.5) (75.1) 285.4 Debt issuance costs (17.4) (13.4)
(35.6) (13.4) Proceeds from the issuance of Common Stock, net 109.7
- 109.7 - Repurchase of treasury stock (0.6) - (0.9) (0.1) Employee
stock option exercises, including tax benefit - - 1.0 0.9 Proceeds
from the issuance of warrants to GM - - 30.3 - Dividends paid -
(1.0) - (18.3) --- ---- --- ----- Net cash flow provided by (used
in) financing activities (16.2) (171.9) 29.4 254.5 Effect of
exchange rate changes on cash 0.3 (3.7) 5.9 (4.5) --- ---- --- ----
Net increase (decrease) in cash and cash equivalents 5.0 (255.4)
(20.7) (144.8) Cash and cash equivalents at beginning of period
173.1 454.2 198.8 343.6 ----- ----- ----- ----- Cash and cash
equivalents at end of period $178.1 $198.8 $178.1 $198.8 ======
====== ====== ====== 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 (loss) before interest expense, income taxes and
depreciation and amortization (EBITDA)(a) Three months ended Twelve
months ended December 31, December 31, ------------ ------------
2009 2008 2009 2008 ---- ---- ---- ---- (In millions) (In millions)
Net income (loss) attributable to AAM $48.6 $(112.1) $(253.1)
$(1,224.3) Interest expense 24.1 22.0 84.5 70.4 Income taxes (51.6)
69.5 (43.8) 103.3 Depreciation and amortization 31.9 34.3 134.7
199.5 ---- ---- ----- ----- EBITDA $53.0 $13.7 $(77.7) $(851.1)
===== ===== ====== ======= Net debt(b) to capital December 31,
December 31, 2009 2008 ---- ---- (In millions, except percentages)
Total debt $1,071.4 $1,139.9 Less: cash and cash equivalents 178.1
198.8 ----- ----- Net debt at end of period 893.3 941.1
Stockholders' deficit (559.9) (435.5) ------ ------ Total invested
capital at end of period $333.4 $505.6 ====== ====== Net debt to
capital(c) 267.9% 186.1% ===== ===== Net Operating Cash Flow and
Free Cash Flow(d) Three months ended Twelve months ended December
31, December 31, ------------ ------------ 2009 2008 2009 2008 ----
---- ---- ---- (In millions) (In millions) Net cash provided by
(used in) operating activities $37.0 $(65.8) $17.3 $(163.1) Add:
Proceeds from the issuance of warrants to GM - - 30.3 - Less:
Purchases of property, plant & equipment, net of proceeds from
sale of equipment (28.3) (36.3) (139.8) (136.8) Decrease (increase)
in deposits for acquisition of property and equipment 7.3 (7.1) 3.8
(7.1) --- ---- --- ---- Net operating cash flow 16.0 (109.2) (88.4)
(307.0) Less: dividends paid - (1.0) - (18.3) ---- ---- ---- -----
Free cash flow $16.0 $(110.2) $(88.4) $(325.3) ===== ======= ======
======= (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
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' 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 (used in) operating
activities and proceeds from the issuance of warrants to GM, 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 CONTACT: Christopher
M. Son, Director, Investor Relations and Corporate Communications,
+1-313-758-4814, ; David Tworek, Manager, Communications,
+1-313-758-4883, Web Site: http://www.aam.com/
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