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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarterly period ended September 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                         
   
Commission File Number: 1-14303
 

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

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)

(313) 758-2000
(Registrant's telephone number,
including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x       No  o
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes  x      No  o
 
As of October 25, 2004, the latest practicable date, the number of shares of the registrant's Common Stock, par value $0.01 per share, outstanding was 49,629,138 shares.
Internet Website Access to Reports

The website for American Axle & Manufacturing Holdings, Inc. is www.aam.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.
 
     
 
TABLE OF CONTENTS
 
CAUTIONARY STATEMENTS
PART I. FINANCIAL INFORMATION
    Item 1. Financial Statements
        CONDENSED CONSOLIDATED STATEMENTS OF INCOME
        CONDENSED CONSOLIDATED BALANCE SHEETS
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
     Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Item 4. Controls and Procedures
PART II. OTHER INFORMATION
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Item 6. Exhibits
SIGNATURES
EXHIBIT INDEX
Ex. 10.44 Forms of Stock Option Agreement
Ex. 10.45 Forms of Restricted Stock Agreement
Ex. 31.1 Certification - CEO - Rule 13a-14(a)
Ex. 31.2 Certification - CFO - Rule 13a-14(a)
Ex. 32 Section 906 Certifications
 

 
     
 
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CAUTIONARY STATEMENTS

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:

·   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
  
Nine months ended
  
   
September 30,
  
September 30,
  
   
2004
  
2003
  
2004
  
2003
  
   
(In millions, except per share data)
 
                           
Net sales
  
$
841.6
  
$
867.7
  
$
2,724.0
  
$
2,756.6
  
                           
Cost of goods sold
    
733.7
    
748.3
   
2,346.3
   
2,354.7
 
                           
Gross profit
    
107.9
    
119.4
   
377.7
    
401.9
 
                           
Selling, general and administrative
                          
expenses
    
47.0
   
49.7
   
140.7
   
147.1
 
     
   
   
   
 
Operating income
    
60.9
    
69.7
   
237.0
    
254.8
 
                           
Net interest expense
    
(5.9
)
  
(11.2
)
  
(20.2
)
  
(35.7
)
Debt refinancing and redemption costs
    
-
   
-
   
(23.5
)
  
-
 
Other income (expense), net
    
(0.9
)
  
1.0
   
1.0
   
1.9
 
                           
Income before income taxes
    
54.1
    
59.5
   
194.3
    
221.0
 
                           
Income taxes
    
17.7
   
20.8
   
66.1
   
77.3
 
                           
Net income
  
$
36.4
  
$
38.7
  
$
128.2
  
$
143.7
  
                           
Basic earnings per share
  
$
0.71
  
$
0.74
  
$
2.46
  
$
2.83
  
                           
Diluted earnings per share
  
$
0.68
  
$
0.71
  
$
2.37
  
$
2.71
  

 
See accompanying notes to condensed consolidated financial statements.
 
 
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

   
September 30,
  
December 31,
 
   
2004
  
2003
  
   
(Unaudited)
      
   
(In millions)
  
ASSETS
          
Current assets:
              
Cash and cash equivalents
  
$
4.5
  
$
12.4
  
Accounts receivable, net
    
431.7
    
339.2
 
Inventories, net
    
176.1
   
171.8
 
Prepaid expenses and other
    
37.0
    
24.0
 
Deferred income taxes
    
13.8
   
16.3
 
Total current assets
    
663.1
    
563.7
 
               
Property, plant and equipment, net
    
1,674.1
    
1,629.5
 
Deferred income taxes
    
6.8
   
6.9
 
Goodwill
    
147.8
    
147.8
 
Other assets and deferred charges
    
67.4
   
49.9
 
Total assets
  
$
2,559.2
  
$
2,397.8
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Accounts payable
  
$
319.8
 
$
333.6
  
Trade payable program liability
    
53.7
   
2.1
 
Accrued compensation and benefits
    
119.2
    
164.8
 
Other accrued expenses
    
59.3
   
53.7
 
Total current liabilities
    
552.0
   
554.2
 
               
Long-term debt
    
533.0
   
449.7
 
Deferred income taxes
    
105.8
    
73.0
 
Postretirement benefits and other long-term liabilities
    
412.4
    
366.2
 
Total liabilities
    
1,603.2
    
1,443.1
 
               
Stockholders' equity:
              
Common stock, par value $0.01 per share
    
0.5
    
0.5