Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - AMERICAN AXLE & MANUFACTURING HOLDINGS INC | ss160319_8k.htm |
| EX-99.1 - PRESS RELEASE - AMERICAN AXLE & MANUFACTURING HOLDINGS INC | ss160319_ex9901.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
On December 16, 2019, American Axle & Manufacturing Holdings, Inc., a Delaware corporation (“AAM”), completed the previously announced sale (the “Sale”) of the entities that operate AAM’s U.S. iron casting operations (the “Grede Business”) pursuant to the terms of a Unit Purchase Agreement, dated as of September 18, 2019, by and among AAM, Grede AcquisitionCo, Inc., a Delaware corporation, and, for certain limited purposes, Grede TopCo, Inc., a Delaware corporation (“TopCo”). AAM received net proceeds of approximately $141.2 million in cash from the Sale, which are subject to customary post-closing adjustments, as well as a $60.0 million deferred payment obligation.
The following unaudited pro forma condensed financial statements (the “Pro Forma Financial Statements”) have been prepared to illustrate the effect of the Sale on AAM’s historical consolidated financial statements.
The Pro Forma Financial Statements are for informational purposes only. They do not purport to indicate the results that would actually have been obtained had the Sale been completed on the assumed date or for the periods presented, or to indicate the results that may be realized in the future.
The Pro Forma Financial Statements are subject to the assumptions and adjustments described in the accompanying notes below. The assumptions and adjustments are based on information presently available. Actual adjustments may differ materially from the information presented. Additionally, the Pro Forma Financial Statements should be read in conjunction with:
| • | AAM’s unaudited condensed consolidated financial statements and accompanying notes for the nine months ended September 30, 2019 included in its Quarterly Report on Form 10-Q for the period ended September 30, 2019; and |
| • | AAM’s audited consolidated financial statements and accompanying notes for the year ended December 31, 2018 included in its Annual Report on Form 10-K for the year ended December 31, 2018. |
| 1 |
American Axle & Manufacturing Holdings, Inc.
PRO FORMA CONDENSED BALANCE SHEET
As of September 30, 2019
| Historical | ||||||||||||
| (in millions) | AAM | Pro Forma Adjustments | Adjusted AAM | |||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 375.1 | $ | 135.5 | A1 | $ | 510.6 | |||||
| Accounts receivable, net | 976.9 | — | 976.9 | |||||||||
| Inventories, net | 403.1 | — | 403.1 | |||||||||
| Prepaid expenses and other | 130.9 | — | 130.9 | |||||||||
| Current assets held-for-sale | 312.2 | (312.2 | ) | A2 | — | |||||||
| Total current assets | 2,198.2 | (176.7 | ) | 2,021.5 | ||||||||
| Property, plant and equipment, net | 2,326.4 | — | 2,326.4 | |||||||||
| Deferred income taxes | 61.9 | — | 61.9 | |||||||||
| Goodwill | 1,127.5 | — | 1,127.5 | |||||||||
| Other intangible assets, net | 881.5 | — | 881.5 | |||||||||
| GM postretirement cost sharing asset | 223.1 | — | 223.1 | |||||||||
| Other assets and deferred charges | 497.7 | 60.0 | A3 | 557.7 | ||||||||
| Total assets | 7,316.3 | (116.7 | ) | 7,199.6 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Current portion of long-term debt | 23.8 | — | 23.8 | |||||||||
| Accounts payable | 703.7 | — | 703.7 | |||||||||
| Accrued compensation and benefits | 165.1 | — | 165.1 | |||||||||
| Deferred revenue | 22.6 | — | 22.6 | |||||||||
| Accrued expenses and other | 220.2 | — | 220.2 | |||||||||
| Current liabilities held-for-sale | 101.7 | (101.7 | ) | A2 | — | |||||||
| Total current liabilities | 1,237.1 | (101.7 | ) | 1,135.4 | ||||||||
| Long-term debt, net | 3,673.3 | — | 3,673.3 | |||||||||
| Deferred revenue | 83.1 | — | 83.1 | |||||||||
| Deferred income taxes | 21.6 | — | 21.6 | |||||||||
| Postretirement benefits and other long-term liabilities | 891.6 | — | 891.6 | |||||||||
| Total liabilities | 5,906.7 | (101.7 | ) | 5,805.0 | ||||||||
| Stockholders’ Equity | ||||||||||||
| Common stock, par value | 1.2 | — | 1.2 | |||||||||
| Paid-in capital | 1,310.1 | — | 1,310.1 | |||||||||
| Retained earnings | 703.0 | (12.9 | ) | A4 | 690.1 | |||||||
| Treasury stock | (209.3 | ) | — | (209.3 | ) | |||||||
| Accumulated other comprehensive income (loss) | ||||||||||||
| Defined benefit plans, net of tax | (241.1 | ) | (2.1 | ) | A5 | (243.2 | ) | |||||
| Foreign currency translation adjustments | (131.3 | ) | — | (131.3 | ) | |||||||
| Unrecognized loss on cash flow hedges, net of tax | (25.8 | ) | — | (25.8 | ) | |||||||
| Total AAM stockholders’ equity | 1,406.8 | (15.0 | ) | 1,391.8 | ||||||||
| Noncontrolling interests in subsidiaries | 2.8 | — | 2.8 | |||||||||
| Total stockholders’ equity | 1,409.6 | (15.0 | ) | 1,394.6 | ||||||||
| Total liabilities and stockholders’ equity | $ | 7,316.3 | $ | (116.7 | ) | $ | 7,199.6 | |||||
| 2 |
American Axle & Manufacturing Holdings, Inc.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2019
| Historical | |||||||||||||||
| (in millions) | AAM | Pro Forma Adjustments | Adjusted AAM | ||||||||||||
| Net sales | $ | 5,100.9 | $ | (509.2 | ) | A6 | $ | 4,591.7 | |||||||
| Cost of goods sold | 4,381.7 | (492.1 | ) | A6 | 3,889.6 | ||||||||||
| Gross profit | 719.2 | (17.1 | ) | 702.1 | |||||||||||
| Selling, general and administrative expenses | 274.7 | (9.9 | ) | A6 | 264.8 | ||||||||||
| Amortization of intangible assets | 73.6 | (8.8 | ) | A6 | 64.8 | ||||||||||
| Impairment charge | 225.0 | (225.0 | ) | A6 | — | ||||||||||
| Restructuring and acquisition-related costs | 36.0 | (1.4 | ) | A6 | 34.6 | ||||||||||
| Operating income | 109.9 | 228.0 | 337.9 | ||||||||||||
| Interest expense | (163.9 | ) | (0.6 | ) | A6 | (164.5 | ) | ||||||||
| Investment income | 3.4 | 2.7 | A7 | 6.1 | |||||||||||
| Other expense, net | |||||||||||||||
| Debt refinancing and redemption costs | (7.5 | ) | — | (7.5 | ) | ||||||||||
| Other, net | (9.0 | ) | (0.4 | ) | A6 | (9.4 | ) | ||||||||
| Income (loss) before income taxes | (67.1 | ) | 229.7 | 162.6 | |||||||||||
| Income tax expense (benefit) | (37.4 | ) | 48.2 | A8 | 10.8 | ||||||||||
| Net income (loss) | $ | (29.7 | ) | $ | 181.5 | $ | 151.8 | ||||||||
| Net income attributable to noncontrolling interests | (0.4 | ) | — | (0.4 | ) | ||||||||||
| Net income (loss) attributable to AAM | $ | (30.1 | ) | $ | 181.5 | $ | 151.4 | ||||||||
| Basic earnings (loss) per share | $ | (0.27 | ) | $ | 1.57 | A9 | $ | 1.30 | |||||||
| Diluted earnings (loss) per share | $ | (0.27 | ) | $ | 1.56 | A9 | $ | 1.29 | |||||||
| 3 |
American Axle & Manufacturing Holdings, Inc.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2018
| Historical | |||||||||||||||
| (in millions) | AAM | Pro Forma Adjustments | Adjusted AAM | ||||||||||||
| Net sales | $ | 7,270.4 | $ | (741.3 | ) | A6 | $ | 6,529.1 | |||||||
| Cost of goods sold | 6,130.0 | (724.9 | ) | A6 | 5,405.1 | ||||||||||
| Gross profit | 1,140.4 | (16.4 | ) | 1,124.0 | |||||||||||
| Selling, general and administrative expenses | 385.7 | (15.9 | ) | A6 | 369.8 | ||||||||||
| Amortization of intangible assets | 99.4 | (13.2 | ) | A6 | 86.2 | ||||||||||
| Goodwill impairment | 485.5 | (313.4 | ) | A6 | 172.1 | ||||||||||
| Restructuring and acquisition-related costs | 78.9 | (1.3 | ) | A6 | 77.6 | ||||||||||
| Gain on sale of business | (15.5 | ) | — | (15.5 | ) | ||||||||||
| Operating income | 106.4 | 327.4 | 433.8 | ||||||||||||
| Interest expense | (216.3 | ) | (1.2 | ) | A6 | (217.5 | ) | ||||||||
| Investment income | 2.0 | 3.6 | A7 | 5.6 | |||||||||||
| Other income (expense) | |||||||||||||||
| Debt refinancing and redemption costs | (19.4 | ) | — | (19.4 | ) | ||||||||||
| Gain on settlement of capital lease | 15.6 | — | 15.6 | ||||||||||||
| Other, net | (2.2 | ) | (1.6 | ) | A6 | (3.8 | ) | ||||||||
| Income (loss) before income taxes | (113.9 | ) | 328.2 | 214.3 | |||||||||||
| Income tax expense (benefit) | (57.1 | ) | 68.9 | A8 | 11.8 | ||||||||||
| Net income (loss) | $ | (56.8 | ) | $ | 259.3 | $ | 202.5 | ||||||||
| Net income attributable to noncontrolling interests | (0.7 | ) | — | (0.7 | ) | ||||||||||
| Net income (loss) attributable to AAM | $ | (57.5 | ) | $ | 259.3 | $ | 201.8 | ||||||||
| Basic earnings (loss) per share | $ | (0.51 | ) | $ | 2.25 | A9 | $ | 1.74 | |||||||
| Diluted earnings (loss) per share | $ | (0.51 | ) | $ | 2.24 | A9 | $ | 1.73 | |||||||
| 4 |
NOTES TO PRO FORMA FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
AAM’s historical consolidated financial statements have been adjusted in the Pro Forma Financial Statements to give effect to pro forma events that are (1) directly attributable to the Sale, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed statements of operations (the “Pro Forma Statements of Operations”), expected to have a continuing impact on the results of AAM. The unaudited pro forma condensed balance sheet as of September 30, 2019 (the “Pro Forma Balance Sheet”) is based on the historical unaudited consolidated balance sheet of AAM and the internally-prepared unaudited balance sheet of the Grede Business, and has been prepared to reflect the Sale as if it occurred on September 30, 2019. The Pro Forma Statement of Operations for the nine months ended September 30, 2019 is based on the historical unaudited consolidated statement of operations of AAM and the internally-prepared unaudited statement of operations of the Grede Business for this period. The Pro Forma Statement of Operations for the year ended December 31, 2018 is based on the historical audited consolidated statement of operations of AAM and the internally-prepared unaudited statement of operations of the Grede Business for this period. The Pro Forma Statements of Operations give effect to the Sale as if it occurred on January 1, 2018, the beginning of the earliest period presented.
| 5 |
2. PRO FORMA ADJUSTMENTS
Adjustments related to the Sale and the derecognition of balances of the Grede Business from the AAM consolidated financial statements are reflected in the “Pro Forma Adjustments” columns in the Pro Forma Financial Statements and are as follows:
Pro Forma Balance Sheet:
A1 The following represents the calculation of the preliminary adjustment to cash and cash equivalents:
September 30, 2019 (in millions) | ||||
| Cash proceeds from the Sale subsequent to customary closing adjustments | $ | 141.2 | ||
| Payment of transaction costs | (5.7 | ) | ||
| Adjustment to cash and cash equivalents | $ | 135.5 | ||
A2 The following represents the assets and liabilities of the Grede Business that were classified as held-for-sale in the September 30, 2019 historical balance sheet of AAM:
September 30, 2019 (in millions) | ||||
| Accounts receivable, net | $ | 89.1 | ||
| Inventories | 32.8 | |||
| Prepaid expenses and other | 1.5 | |||
| Property, plant and equipment, net | 184.6 | |||
| Intangible assets, net | 158.2 | |||
| Other assets and deferred charges | 71.0 | |||
| Impairment of carrying value | (225.0 | ) | ||
| Total assets held-for-sale | $ | 312.2 | ||
| Accounts payable | 71.3 | |||
| Accrued compensation and benefits | 6.8 | |||
| Accrued expenses and other | 3.4 | |||
| Postretirement benefits and other long-term liabilities | 20.2 | |||
| Total liabilities held-for-sale | $ | 101.7 | ||
A3 A portion of the consideration to be received by AAM for the Sale is in the form of a deferred payment obligation of $60.0 million. Except in the case of certain acceleration events, TopCo will have twelve years after the closing of the Sale to pay (or cause to be paid) the deferred payment of $60.0 million, which will accrue interest at the rate of 6% per annum from January 1, 2020.
A4 This represents the estimated loss on the Sale that is included as an adjustment to Retained earnings but is not included in the Pro Forma Statement of Operations for the year ended December 31, 2018 because it will not have a continuing impact on AAM after the Sale is completed.
A5 The Sale will result in the derecognition of approximately $2.1 million of net deferred actuarial gains in accumulated other comprehensive income (loss) associated with the Grede Business’s pension and other postretirement benefit plans.
| 6 |
Pro Forma Statements of Operations
A6 This represents the adjustments to derecognize the Grede Business activity from the historical AAM consolidated statements of operations for the nine months ended September 30, 2019 and the year ended December 31, 2018.
A7 As noted in adjustment A3, $60.0 million of the consideration received is in the form of a deferred payment obligation which will accrue interest at an annual rate of 6%, resulting in increased Investment income of $2.7 million for the nine months ended September 30, 2019 and $3.6 million for the year ended December 31, 2018.
A8 This represents adjustments to income tax expense (benefit) at the statutory rate of 21% in the United States.
A9 The adjustments to basic and diluted earnings (loss) per share are calculated using weighted-average shares of 115.6 million and 116.0 million, respectively, for the nine months ended September 30, 2019 and 115.0 million and 115.8 million, respectively, for the year ended December 31, 2018.
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