AMERICAN AXLE & MANUFACTURING HOLDINGS INC - 10-Q Quarterly Report

Certain statements in this Quarterly Report on Form 10-Q (Quarterly Report) are forward-looking in nature and relate to trends and events that may affect our future financial position and operating results. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms “will,” “expect,” “anticipate,” “intend,” “project” and similar words or expressions are intended to identify forward-looking statements. These statements speak only as of the date of this Quarterly Report. The statements 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:< /DIV>

adverse changes in the economic conditions or political stability of our principal markets (particularly North America, Europe, South America and Asia);
reduced demand for our customers’ products (particularly light trucks and sport-utility vehicles produced by General Motors Corporation and DaimlerChrysler Corporation);
reduced purchases of our products by General Motors Corporation, DaimlerChrysler Corporation or other customers;
our ability and our customers’ ability to successfully launch new product programs;
our ability to respond to changes in technology or increased competition;
supply shortages or price fluctuations in raw materials, utilities or other operating supplies;
our ability to attract and retain key associates;
our ability to maintain satisfactory labor relations and avoid work stoppages;
our customers’ ability to maintain satisfactory labor relations and avoid work stoppages;
risks of noncompliance with environmental regulations or risks of environmental issues that could result in unforeseen costs at our facilities;
liabilities arising from legal proceedings to which we are or may become a party or claims against us or our products;
availability of financing for working capital, capital expenditures, research and development or other general corporate purposes;
adverse changes in laws, government regulations or market conditions affecting our products or our customers’ products (including the Corporate Average Fuel Economy regulations);
other unanticipated events and conditions that hinder our ability to compete.

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.


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Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three months ended						Six months ended
	June 30,						June 30,

	2004			2003			2004			2003

	*(In millions, except per share data)*

Net sales	$	929.6		$	913.6		$	1,882.4		$	1,888.9

Cost of goods sold		796.2			775.8			1,612.6			1,606.4


Gross profit		133.4			137.8			269.8			282.5

Selling, general and administrative expenses		44.2			48.5			93.7			97.4


Operating income		89.2			89.3			176.1			185.1

Net interest expense		(5.9	)		(12.0	)		(14.3	)		(24.5	)
Debt refinancing and redemption costs		-			-			(23.5	)		-
Other income, net		1.2			1.2			1.9			0.9


Income before income taxes		84.5			78.5			140.2			161.5

Income taxes		29.2			27.5			48.4			56.5


Net income	$	55.3		$	51.0		$	91.8		$	105.0


Basic earnings per share	$	1.06		$	1.01		$	1.75		$	2.09


Diluted earnings per share	$	1.02		$	0.97		$	1.68		$	2.00

See accompanying notes to condensed consolidated financial statements.


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Table of Contents

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2004			2003

	*(Unaudited)*
	*(In millions)*
ASSETS
Current assets:
Cash and cash equivalents	$	6.6		$	12.4
Accounts receivable, net		404.9			339.2
Inventories, net		176.0			171.8
Prepaid expenses and other		37.7			24.0
Deferred income taxes		17.0			16.3

Total current assets		642.2			563.7

Property, plant and equipment, net		1,647.6			1,629.5
Deferred income taxes		6.8			6.9
Goodwill		147.8			147.8
Other assets and deferred charges		70.3			49.9

Total assets	$	2,514.7		$	2,397.8

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	320.4		$	333.6
Trade payable program liability		33.2			2.1
Accrued compensation and benefits		122.3			164.8
Other accrued expenses		63.1			53.7

Total current liabilities		539.0			554.2

Long-term debt		521.0			449.7
Deferred income taxes		88.9			73.0
Postretirement benefits and other long-term liabilities		397.0			366.2

Total liabilities		1,545.9			1,443.1

Stockholders' equity:
Common stock, par value $0.01 per share		0.5			0.5
Paid-in capital		352.4			336.2
Retained earnings		765.4			681.4
Treasury stock at cost, 2.3 million and 0.1 million shares
in 2004 and 2003, respectively		(84.4	)		(0.7	)
Accumulated other comprehensive loss, net of tax:
Minimum pension liability adjustments		(56.1	)		(56.1	)
Foreign currency translation adjustments		(8.9	)		(6.1	)
Unrecognized loss on derivatives		(0.1	)		(0.5	)

Total stockholders' equity		968.8			954.7

Total liabilities and stockholders' equity	$	2,514.7		$	2,397.8

See accompanying notes to condensed consolidated financial statements.


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Table of Contents

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended
	June 30,

	2004			2003

	*(In millions)*
Operating activities:
Net income	$	91.8		$	105.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		82.0			80.4
Deferred income taxes		15.0			20.5
Pensions and other postretirement benefits, net of contributions		33.3			17.0
Loss on retirement of equipment		1.4			0.5
Debt refinancing and redemption costs		23.5			-
Changes in operating assets and liabilities:
Accounts receivable		(65.3	)		(54.8	)
Inventories

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2004

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _____________ to _____________

Delaware		36-3161171

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

One Dauch Drive, Detroit, Michigan		48211-1198

(Address of principal executive offices)		(Zip Code)