Back to GetFilings.com
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended December 31, 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 |
|
38-3161171 |
|
(State
or Other Jurisdiction of Incorporation or
Organization) |
|
(I.R.S.
Employer Identification
No.) |
|
ONE
DAUCH DRIVE, DETROIT, MICHIGAN |
|
48211-1198 |
|
(Address
of Principal Executive Offices) |
|
(Zip
Code) |
Registrant’s
Telephone Number, Including Area Code
313-758-2000
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of Each Class |
|
Name
of Each Exchange on Which Registered |
|
COMMON
STOCK, PAR VALUE $0.01 PER SHARE |
|
NEW
YORK STOCK EXCHANGE |
|
PREFERRED
SHARE PURCHASE RIGHTS, PAR VALUE $0.01 PER SHARE |
|
NEW
YORK STOCK EXCHANGE |
Securities
registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. 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
The
closing price of the Common Stock on June 30, 2004 as reported on the New York
Stock Exchange was $36.36 per share and the aggregate market value of the
registrant’s Common Stock held by non-affiliates was approximately $1,614.1
million.
As of
February 21, 2005, the number of shares of the registrant’s Common Stock, $0.01
par value, outstanding was 49,877,188
shares.
Documents
Incorporated By Reference
Portions
of the registrant's Annual Report to Stockholders for the year ended December
31, 2004 and Proxy Statement for use in connection with its Annual Meeting of
Stockholders to be held on April 28, 2005, to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A not later than 120 days after
December 31, 2004, are incorporated by reference in Part I (Items 1, 3 and 4),
Part II (Items 5, 6, 7, 7A, 8 and 9A), Part III (Items 10, 11, 12, 13 and 14)
and Part IV (Item 15) of this Report.
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(a) 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. The Securities and Exchange Commission also maintains a website at
www.sec.gov that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
Year
Ended December 31, 2004
| |
|
|
|
Page
Number |
|
|
|
|
1 |
|
|
|
Business |
|
2 |
| |
|
Properties |
|
6 |
| |
|
Legal
Proceedings |
|
7 |
| |
|
Submission
of Matters to a Vote of Security Holders |
|
7 |
| |
|
Supplemental
Item – Executive Officers and Directors of the Registrant |
|
7 |
| |
|
|
|
|
|
|
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities |
|
11 |
| |
|
Selected
Financial Data |
|
12 |
| |
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation |
|
12 |
| |
|
Quantitative
and Qualitative Disclosures About Market Risk |
|
12 |
| |
|
Financial
Statements and Supplementary Data |
|
12 |
| |
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure |
|
12 |
| |
|
Controls
and Procedures |
|
12 |
| |
|
Other
Information |
|
12 |
| |
|
|
|
|
|
|
|
Directors
and Executive Officers of the Registrant |
|
13 |
| |
|
Executive
Compensation |
|
13 |
| |
|
Security
Ownership of Certain Beneficial Owners and Management |
|
13 |
| |
|
Certain
Relationships and Related Transactions |
|
13 |
| |
|
Principal
Accounting Fees and Services |
|
13 |
| |
|
|
|
|
|
|
|
Exhibits
and Financial Statement Schedules |
|
14 |
| |
|
|
|
|
|
|
|
|
|
20 |
| |
|
|
|
|
| |
|
|
|
|
|
|
|
Valuation
and Qualifying Accounts |
|
21 |
| |
|
|
|
|
| |
|
|
|
|
|
|
22 |
| |
|
|
|
|
|
|
|
Computation
of Ratio of Earnings to Fixed Charges |
|
23 |
|
|
|
Subsidiaries
of our Company |
|
24 |
|
|
|
Consent
of Independent Registered Public Accounting Firm |
|
25 |
|
|
|
Certification
of Richard E. Dauch, Co-Founder, Chairman of the Board & Chief
Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange
Act |
|
26 |
|
|
|
Certification
of Thomas L. Martin, Vice President – Finance & Chief Financial
Officer Pursuant to Rule 13a-14(a) of the Securities Exchange
Act |
|
27 |
|
|
|
Certifications
of Richard E. Dauch, Co-Founder, Chairman of the Board & Chief
Executive Officer and Thomas L. Martin, Vice President – Finance &
Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
28 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain
statements in this Annual Report on Form 10-K 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 Annual 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:
| · |
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; |
| · |
supply
shortages or price fluctuations in raw materials, utilities or other
operating supplies; |
| · |
our
ability to maintain satisfactory labor relations and avoid work stoppages;
|
| · |
our
customers’ ability to maintain satisfactory labor relations and avoid work
stoppages; |
| · |
our
ability to attract and retain key
associates; |
| · |
our
ability and our customers’ ability to successfully launch new product
programs; |
| · |
our
ability to respond to changes in technology or increased
competition; |
| · |
adverse
changes in laws, government regulations or market conditions affecting our
products or our customers’ products (including 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 legal proceedings to which we are or may become a party or
claims against us or our products; |
| · |
risks
of noncompliance with environmental regulations or risks of environmental
issues that could result in unforeseen costs at our
facilities; |
| · |
availability
of financing for working capital, capital expenditures, research and
development or other general corporate purposes;
|
| · |
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.
(a)
General Development of Business
General
As used
in this report, except as otherwise indicated in information incorporated by
reference, references to “our Company,” "we," "our," "us" or “AAM” mean American
Axle & Manufacturing Holdings, Inc. (Holdings) and its subsidiaries and
predecessors, collectively.
We are a
premier Tier I supplier to the automotive industry and a worldwide leader in the
manufacture, engineering, design and validation of driveline systems and related
powertrain components and chassis modules for light trucks, sport utility
vehicles (SUVs), passenger cars and crossover vehicles. Driveline systems
include components that transfer power from the transmission and deliver it to
the drive wheels. Our driveline and related powertrain products include axles,
chassis modules, driveshafts, chassis and steering components, driving heads,
crankshafts, transmission parts and metal formed products.
In March
1994, we were formed by a private investor group led by Richard E. Dauch, our
Co-Founder, Chairman of the Board & Chief Executive Officer, that
purchased the Final Drive and Forge Business Unit of the Saginaw Division of
General Motors Corporation (GM). In connection with this acquisition and under
subsequent additional binding agreements we have entered into with GM, we are
the principal supplier of driveline components to GM for its rear-wheel drive
(RWD) light trucks and SUVs manufactured in North America, supplying
substantially all of GM’s rear axle and front four-wheel drive/all-wheel drive
(4WD/AWD) axle requirements for these vehicle platforms in 2004.
In
October 1997, Blackstone Capital Partners II Merchant Banking Fund L.P. and
certain of its affiliates (Blackstone) acquired a majority ownership position of
our Company in a leveraged recapitalization. From 1999 through 2003, Blackstone
executed an orderly exit strategy of its ownership position culminating in
December 2003 when Blackstone completed a secondary offering of approximately
6.5 million shares to outside investors. As a result, Blackstone no longer has
an ownership interest in our Company.
Initial
Public Offering (IPO)
Holdings
is the survivor of a migratory merger with American Axle & Manufacturing of
Michigan, Inc. (AAMM) and has no significant assets other than its 100%
ownership of American Axle & Manufacturing, Inc. (AAM, Inc.) and its
subsidiaries. Pursuant to this merger, which was effected in January 1999 in
connection with our IPO, each share of AAMM's common stock was converted into
3,945 shares of Holdings' common stock. Holdings has no subsidiaries other than
AAM, Inc. In February 1999, Holdings completed an IPO and issued 7.0 million
shares of its common stock.
Acquisitions
In 1999,
we acquired two domestic automotive forging companies, Colfor Manufacturing Inc.
(Colfor) and MSP Industries Corporation (MSP), and a majority interest in a
joint venture in Brazil which machines forging and driveline components for
automotive original equipment manufacturers (OEMs) for an aggregate cash
purchase consideration of approximately $239 million.
In 1998,
we acquired Albion Automotive (Holdings) Limited (referred to as Albion) for a
cash purchase price of approximately $42 million plus $30 million of assumed
debt and capital lease obligations. Albion supplies front steerable and rear
axles, driving heads, crankshafts, chassis components and transmission parts
used primarily in medium and heavy-duty trucks and buses for customers
located in the United Kingdom and elsewhere in Europe.
(b)
Financial Information About Segments
Incorporated
by reference from Exhibit 13 to this Form 10-K, Annual Report to Stockholders
(Annual Report), section entitled “Financials - Notes to Consolidated Financial
Statements, Note 13 - Segment and Geographic Information.”
(c) Narrative
Description of Business
Company
Overview
We are
the principal supplier of driveline components to GM for its RWD light trucks
and SUVs manufactured in North America, supplying substantially all of GM’s rear
axle and front 4WD/AWD axle requirements for these vehicle platforms. Sales to
GM were approximately 80% of our total net sales in 2004, 82% in 2003 and 86% in
2002.
As a
result of our Component Supply Agreement (CSA) and Lifetime Program Contracts
with GM (LPCs), we are the sole-source supplier to GM for certain axles and
other driveline products for the life of each GM vehicle program covered by a
LPC. Substantially all of our sales to GM are made pursuant to the LPCs. The
LPCs have terms equal to the lives of the relevant vehicle programs or their
respective derivatives, which typically run 6 to 12 years, and require us to
remain competitive with respect to technology, design and quality. We will
compete for future GM business upon the expiration of the LPCs or the
CSA.
We are
also the principal supplier of driveline system products for the Chrysler
Group’s heavy-duty Dodge Ram full-size pickup trucks (Dodge Ram program) and its
derivatives. As part of this program, we have commenced supply of a fully
integrated computer-controlled chassis system for the 2005 Dodge Ram Power Wagon
in the fourth quarter of 2004. Sales to DaimlerChrysler Corporation
(DaimlerChrysler) were 11% of our total net sales in 2004, 9% in 2003 and 4% in
2002.
We
continue to diversify our customer base. In addition to GM and DaimlerChrysler,
we supply driveline systems and other related components to PACCAR Inc., Volvo
Group, Ford Motor Company, and other OEMs and Tier I supplier companies such as
Delphi Corporation, New Venture Gear, Inc. and The Timken Company. Our sales to
customers other than GM increased 8% to $728.0 million in 2004 as compared to
$674.0 million in 2003 and $498.5 million in 2002. In 2005, we will launch rear
drive modules (RDMs) and independent front drive axles (IFDAs) for South Korean
automaker Ssangyong Motor Corporation.
We
compete in an $8 billion served market in North America that consists of drive
axles and driveshafts for light trucks and SUVs. Our definition of our served
market excludes passenger cars and front-wheel drive minivans.
The
following chart sets forth the percentage of total revenues attributable to our
products for the periods indicated:
| |
|
Year
ended December 31, |
|
| |
|
2004 |
|
2003 |
|
2002 |
|
|
Axles
and driveshafts |
|
|
84.9 |
% |
|
86.0 |
% |
|
84.3 |
% |
|
Chassis
components, forged products and other |
|
|
15.1 |
|
|
14.0 |
|
|
15.7 |
|
|
Total |
|
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
Industry
Trends and Competition
Incorporated
by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled
“Financials - Management’s Discussion and Analysis - Industry Trends and
Competition.”
Productive
Materials
We
believe that we have adequate sources of supply of productive materials and
components for our manufacturing needs. Most raw materials (such as steel) and
semi-processed or finished items (such as castings) are available within the
geographical regions of our operating facilities from numerous qualified sources
in quantities sufficient for our needs.
For
further information regarding productive materials, see Exhibit 13 to this Form
10-K, Annual Report, section entitled “Financials - Management’s Discussion and
Analysis - Industry Trends and Competition.”
Research
and Development (R&D)
Since
March 1, 1994, we have spent approximately $445 million in R&D focusing on
new product and process development. We plan to continue to invest in the
development of new product, process and systems technologies to improve
productive efficiency and flexibility in our operations and continue to deliver
innovative new products, chassis modules and integrated driveline systems to our
customers.
In 2004,
R&D spending in product, process and systems increased 13% to $68.6 million
as compared to $60.7 million in 2003 and $54.0 million in 2002. The
focus of this increasing investment is to develop innovative driveline and
powertrain system solutions for passenger cars, light trucks and SUVs in the
global marketplace. New products under development in this area include power
transfer units, transfer cases, driveline and transmission differentials,
multi-piece driveshafts, RDMs and IFDAs. We also continue to focus on
electronic integration in our existing products. The most recent examples of
these initiatives are the electronic SmartBarTM
stabilizer based roll-control system, TracRite®
GTL
electronic differentials and TracRite®
EL
electronic locking differentials all featured in the 2005 Dodge Ram Power Wagon.
In addition, we continue to support the development of hybrid vehicle systems.
Our efforts in these areas have resulted in the development of prototypes and
various configurations of these driveline systems for several OEMs throughout
the world.
Backlog
We
typically enter into agreements with our customers to provide certain axles and
driveline products for the life of our customers’ vehicle programs. Our backlog
includes formally awarded
programs and incremental content and volume including customer requested
engineering changes. Our backlog may be impacted by various assumptions such as
production volume estimates, changes in program launch timing and fluctuation in
foreign currency exchange rates.
Our
backlog was approximately $1 billion at December 31, 2004 as compared to
approximately $560 million at December 31, 2003. As of December 31, 2004, our
sales backlog includes approximately $100 million for orders to be executed in
2005.
Patents
and Trademarks
We
maintain and have pending various U.S. and foreign patents and trademarks and
other rights to intellectual property relating to our business, which we believe
are appropriate to protect our interest in existing products, new inventions,
manufacturing processes and product developments. We do not believe that any
single patent or trademark is material to our business nor would expiration or
invalidity of any patent or trademark have a material adverse effect on our
business or our ability to compete.
Cyclicality
and Seasonality
Incorporated
by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled
“Financials - Management’s Discussion and Analysis - Cyclicality and
Seasonality.”
Environmental Matters
Incorporated by reference from Exhibit 13 to this Form
10-K, Annual Report, section entitled "Financials - Management's Discussion and
Analysis - Litigation and Environmental Matters."
Associates
We
believe that one of our most important assets is our workforce. Since 1994, we
have focused on making significant improvements in our labor relations through
improving working conditions, incentive programs and town hall meetings with our
hourly and salaried associates. We have also implemented a program of continuous
training whereby associates develop their skill sets using the latest
manufacturing technology to produce products of precision quality. Our workforce
has committed to assist us in achieving both quality and productivity gains over
the life of our contracts. We believe our relationships with our associates are
positive.
As of
December 31, 2004, we employed approximately 10,900 associates, approximately
8,400 of which are employed in the United States. Approximately 6,900 associates
are represented by the United Automobile, Aerospace and Agricultural Implement
Workers of America (UAW). Approximately 6,200 associates represented by the UAW
are subject to a collective bargaining agreement that expires February 25, 2008;
approximately 700 associates at MSP and Colfor are also represented by the UAW
under collective bargaining agreements that expire April 18, 2005 and June 3,
2005, respectively. Approximately 200 associates are represented by the
International Association of Machinists (IAM) under a collective bargaining
agreement, which runs through May 4, 2008. In addition, approximately 500
associates at Albion, approximately 1,400 associates at our Silao, Mexico
facility (Guanajuato Gear & Axle and Guanajuato Forge) and approximately 300
associates at our Brazilian majority-owned subsidiary are represented by labor
unions that are subject to collective bargaining agreements. The collective
bargaining agreements at Albion, certain of which may be terminated upon
six-months notice, expire in 2006 and the agreements in Mexico and Brazil expire
annually.
Credit
and Working Capital Practices
Incorporated
by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled
“Financials - Management’s Discussion and Analysis - Liquidity and Capital
Resources.”
(d)
Financial Information About Geographic Areas
International
operations are subject to certain additional risks inherent in conducting
business outside the United States, such as changes in currency exchange rates,
price and currency exchange controls, import restrictions, nationalization,
expropriation and other governmental action.
For
further financial information regarding foreign and domestic sales and export
sales, see Exhibit 13 to this Form 10-K, Annual Report, section entitled
“Financials - Notes to Consolidated Financial Statements, Note 13 - Segment and
Geographic Information.”
The
following is a summary of our principal facilities:
| |
|
|
Approx. |
|
Type
|
|
|
|
Name |
|
Sq.
Feet |
|
of
Interest |
|
Function |
|
Detroit
Gear & Axle
Detroit, MI |
|
1,795,000
|
|
Owned |
|
Rear
and front axles |
|
Buffalo
Gear, Axle & Linkage
Buffalo, NY |
|
1,199,000
|
|
Owned |
|
Rear
axles and steering linkages |
|
Three
Rivers Driveline
Three Rivers, MI |
|
850,000
|
|
Owned |
|
Rear
axles and driveshafts, front auxiliary driveshafts and universal
joints |
|
Guanajuato
Gear & Axle
Guanajuato, Mexico |
|
839,000
|
|
Owned |
|
Rear
axles and driveshafts and front axles and auxiliary
driveshafts |
|
Guanajuato
Forge
Guanajuato, Mexico |
|
111,000
|
|
Owned |
|
Forged
products |
|
Scotstoun
Plant
Glasgow, Scotland |
|
|