<PAGE> 1
================================================================================
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 MARCH 31, 2000
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.)
1840 HOLBROOK AVENUE, DETROIT, MICHIGAN 48212-3488
--------------------------------------- ----------
(Address of principal executive offices (Zip Code)
(313) 974-2000
------------------------------
(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
--- ---
The number of shares of the registrant's Common Stock, $.01 par value,
outstanding as of May 4, 2000, the latest practicable date, was 46,357,012
shares.
================================================================================
<PAGE> 2
-2-
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1. Financial Statements
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- ------------------
ASSETS (IN MILLIONS)
------
<S> <C> <C>
Current assets:
Cash and equivalents $ 33.8 $ 140.2
Accounts receivable, net 320.4 194.0
Inventories 132.5 133.3
Prepaid expenses and other 24.0 22.3
Deferred income taxes 21.8 19.7
---------- ----------
Total current assets 532.5 509.5
Property, plant and equipment, net 994.2 929.0
Deferred income taxes 41.2 50.5
Goodwill and other assets 186.9 188.1
---------- ----------
TOTAL ASSETS $ 1,754.8 $ 1,677.1
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 296.5 $ 269.1
Accrued compensation and benefits 115.4 129.7
Other accrued expenses 60.5 47.9
---------- ----------
Total current liabilities 472.4 446.7
Long-term debt and capital lease obligations 766.2 774.9
Postretirement benefits and other long-term liabilities 212.5 191.8
---------- ----------
TOTAL LIABILITIES 1,451.1 1,413.4
Stockholders' equity
Common stock, par value $.01 per share 0.5 0.5
Paid-in capital 199.8 199.8
Retained earnings 104.2 64.1
Cumulative translation adjustment (0.8) (0.7)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 303.7 263.7
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,754.8 $ 1,677.1
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 3
-3-
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------------
2000 1999
----------------- ----------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Net sales $ 835.9 $ 697.7
Cost of goods sold 716.2 605.6
-------- -------
Gross profit 119.7 92.1
Selling, general and
administrative expenses 42.2 34.0
Goodwill amortization 1.0 0.1
-------- -------
Operating income 76.5 58.0
Net interest expense (13.2) (12.0)
Other income, net 0.3 -
-------- -------
Income before income taxes 63.6 46.0
Income taxes 23.5 17.0
-------- -------
Net income $ 40.1 $ 29.0
======== ======
Basic earnings per share $ 0.86 $ 0.78
======== ======
Diluted earnings per share $ 0.80 $ 0.61
======== ======
Average shares outstanding:
Basic earnings per share 46.4 36.9
======== ======
Diluted earnings per share 50.1 47.4
======== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
-4-
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------------
2000 1999
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 40.1 $ 29.0
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 24.6 20.9
Deferred income taxes 11.5 5.9
Pensions and other postretirement benefits, net of
contributions 10.5 10.8
Loss on disposal of equipment 1.0 0.2
Changes in operating assets and liabilities:
Accounts receivable (126.2) (69.1)
Inventories (0.4) 21.0
Current liabilities 22.0 24.9
Other assets and liabilities 8.9 5.9
----------------- -----------------
Net cash (used in) provided by operating activities (8.0) 49.5
----------------- -----------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net (90.2) (47.8)
Proceeds from sale-leaseback of equipment - 49.0
----------------- -----------------
Net cash (used in) provided by investing activities (90.2) 1.2
----------------- -----------------
FINANCING ACTIVITIES
Issuance of 9.75% Senior Subordinated Notes Due 2009 - 288.7
Payments on long-term debt (8.2) (274.4)
Debt issuance costs - (9.4)
Proceeds from issuance of common stock, net - 107.7
----------------- -----------------
Net cash (used in) provided by financing activities (8.2) 112.6
----------------- -----------------
Effect of exchange rate changes on cash - -
----------------- -----------------
Net (decrease) increase in cash and equivalents (106.4) 163.3
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 140.2 4.5
----------------- -----------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 33.8 $ 167.8
================= =================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
-5-
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
American Axle & Manufacturing Holdings, Inc. ("Holdings") and its
subsidiaries (collectively, the "Company"), operates in one reportable
segment as a Tier 1 supplier to the automotive industry and is a world
leader in the manufacturing, engineering and design of driveline
systems (including forged products) for trucks, buses, sport-utility
vehicles, and passenger cars.
Basis of Presentation
The accompanying interim condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q
under the Securities Exchange Act of 1934, as amended. The statements
are unaudited but include all adjustments, consisting only of recurring
items, except as noted, which the Company considers necessary for a
fair presentation of the information set forth herein. Results of
operations for the periods presented are not necessarily indicative of
the results for the full fiscal year. Certain reclassifications have
been made to the 1999 statements to conform with the 2000 statement
presentation.
The balance sheet at December 31, 1999 has been derived from the
audited consolidated financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. For
further information, refer to the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
<PAGE> 6
-6-
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. AMERICAN AXLE & MANUFACTURING, INC.
Holdings has no material assets, liabilities or operations other than
those that result from its ownership of 100% of the outstanding common
stock of American Axle & Manufacturing, Inc. ("AAM Inc."). Separate
consolidated financial statements of AAM Inc. are not presented because
they would not be materially different than the accompanying unaudited
interim condensed consolidated financial statements. The following is a
summary of the consolidated assets and liabilities of AAM Inc. and its
subsidiaries and their consolidated results of operations:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------------------------------
(In millions)
<S> <C> <C>
Assets:
Current assets $ 532.5 $ 509.5
Noncurrent assets 1,222.3 1,167.6
---------------------------------------
Total assets $ 1,754.8 $ 1,677.1
=======================================
Liabilities:
Current liabilities $ 472.4 $ 446.7
Noncurrent liabilities 978.7 966.7
---------------------------------------
Total liabilities $ 1,451.1 $ 1,413.4
=======================================
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
---------------------------------------
(In millions)
<S> <C> <C>
Net sales $ 835.9 $ 697.7
Gross profit 119.7 92.1
Net income 40.1 29.0
</TABLE>
3. INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined principally using the last-in first-out method (LIFO).
Non-productive inventories consist of materials consumed in the
manufacturing process but not incorporated in the finished products.
Inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------------------------------
(In millions)
<S> <C> <C>
Raw materials and work-in-process $ 107.7 $ 105.3
Finished goods 20.5 22.6
---------------------------------------
Gross inventories at average cost 128.2 127.9
Excess of average cost over LIFO cost (7.7) (7.8)
---------------------------------------
Net productive inventories 120.5 120.1
Non-productive inventories 12.0 13.2
---------------------------------------
Total inventories $ 132.5 $ 133.3
=======================================
</TABLE>
<PAGE> 7
-7-
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
-------------------------------------
(In millions)
<S> <C> <C>
Credit Facilities:
Revolver $ - $ -
Tranche A Term Loan - -
Tranche B Term Loan 374.5 375.0
-------- -------
Total Credit Facilities 374.5 375.0
Receivables Facility 65.0 70.0
9.75% Senior Subordinated Notes Due 2009,
net of discount 297.9 297.9
Capital lease obligations and other 28.8 32.0
-------- -------
Total long-term debt $ 766.2 $ 774.9
======== =======
</TABLE>
5. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
------------------------------------
(In millions, except per share data)
<S> <C> <C>
Numerators for Basic and Diluted earnings per share:
Net income available to common stockholders $ 40.1 $ 29.0
Denominators:
Basic earnings per share - weighted-average
shares outstanding 46.4 36.9
Effect of dilutive securities:
Dilutive stock options outstanding 3.7 10.5
------ ------
Diluted earnings per share - weighted-average
shares plus assumed conversion 50.1 47.4
====== ======
Basic earnings per share $ 0.86 $ 0.78
====== ======
Diluted earnings per share $ 0.80 $ 0.61
====== ======
</TABLE>
<PAGE> 8
-8-
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. COMPREHENSIVE INCOME
Comprehensive income was $40.0 million and $28.5 million for the three
months ended March 31, 2000 and 1999, respectively. Foreign currency
translation is the only reconciling difference between comprehensive
income and net income for the periods presented.
<PAGE> 9
-9-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis presents the factors that had a material effect on
our results of operations and cash flows during the three months ended March 31,
2000, and our financial position at March 31, 2000. Trends of a material nature
are discussed to the extent known and considered relevant. The analysis of
results compares the three months ended March 31, 2000 with the corresponding
period in 1999.
This discussion and analysis should be read in conjunction with the Unaudited
Condensed Consolidated Financial Statements and notes thereto appearing
elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and the
Company's Annual Report on Form 10-K for the year ended December 31, 1999. As
used in this Quarterly Report, unless the context otherwise requires, references
to "we", "us" or "American Axle" shall mean collectively (i) American Axle &
Manufacturing, Inc. ("AAM Inc."), a Delaware corporation, and its direct and
indirect subsidiaries, and (ii) American Axle & Manufacturing Holdings, Inc. and
its predecessor ("Holdings"), a Delaware corporation and the direct parent
corporation of AAM, Inc.
COMPANY OVERVIEW
We are a Tier I supplier to the automotive industry and a worldwide leader in
the manufacture, engineering and design of driveline systems for trucks, buses,
sport utility vehicles ("SUVs") and passenger cars. A driveline system includes
all of the components that transfer power from the transmission and deliver it
to the drive wheels. The driveline products produced by us include axles,
propeller shafts, chassis components and forged products. We sell most of our
products under long-term contracts at fixed prices. Some of our contracts
require us to reduce our prices in subsequent years and all of our contracts
allow us to negotiate price increases for engineering changes.
We are the principal supplier of driveline components to General Motors
Corporation ("GM") for its light trucks, SUVs and rear-wheel drive ("RWD")
passenger cars. Other customers include Ford Motor Company, DaimlerChrysler,
Nissan, Renault, Visteon Automotive, Delphi Automotive and PACCAR. In addition
to 13 locations in the United States (in Michigan, Ohio and New York), we have
offices and facilities in Japan, England, Germany, Scotland, Mexico and Brazil.
As a result of our 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 an LPC. Sales to GM were
approximately 84% of our total sales in the three months ended March 31, 2000.
Substantially all of our sales to GM are made pursuant to the LPCs. The LPCs
establish pricing for products sold to GM and require us to remain competitive
with respect to technology, design and quality. The LPCs have terms equal to
the lives of the relevant vehicle programs of typically 6 to 12 years. We will
have to compete for future GM business upon the termination of the LPCs.
Blackstone Capital Partners II Merchant Banking Fund L.P. and certain of its
affiliates (collectively, "Blackstone") acquired a controlling interest in the
Company in a leveraged recapitalization transaction consummated in October 1997
(the "Recapitalization"). In February 1999, we completed an initial public
offering and issued 7 million shares of common stock.
<PAGE> 10
-10-
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data expressed as
a percentage of net sales:
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
-----------------------------------
<S> <C> <C>
STATEMENT OF INCOME DATA
Net sales 100.0% 100.0%
Cost of goods sold 85.7 86.8
-----------------------------------
Gross margin 14.3 13.2
Selling, general and administrative expenses 5.0 4.9
Goodwill amortization 0.1 0.0
-----------------------------------
Operating margin 9.2 8.3
Net interest (expense) (1.6) (1.7)
-----------------------------------
Income before income taxes 7.6 6.6
Income tax expense 2.8 2.4
-----------------------------------
Net income 4.8% 4.2%
===================================
</TABLE>
RESULTS OF OPERATIONS--THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1999
Net Sales. Net sales increased approximately 20% to $835.9 million for the three
months ended March 31, 2000 as compared to $697.7 million for the three months
ended March 31, 1999. This increase was primarily due to strong demand for our
products for light trucks and SUVs, the fastest growing segment of the U.S.
light vehicle market, and increased sales related to GM's new full-size truck
and SUV programs (GMT-800 series), on which the Company receives a higher
average dollar content per vehicle than their predecessors (GMT-400 series).
Our sales also increased in 2000 due to shipments from Colfor Manufacturing,
Inc. ("Colfor") and MSP Industries Corporation ("MSP"), which we acquired on
April 1, 1999; the start-up of our new manufacturing facility in Guanajuato,
Mexico; and our joint venture in Brazil, which we acquired in the fourth quarter
of 1999. Excluding sales from these acquisitions, our sales increased by
approximately 13% in 2000 as compared to 1999.
Sales to customers other than GM increased $56.3 million to $131.6 million for
the three months ended March 31, 2000 as compared to $75.3 million for the three
months ended March 31, 1999. The increase in sales to customers other than GM is
principally due to Colfor and MSP sales in 2000 and additional non-GM business
we have obtained.
Gross Profit. Gross profit increased to $119.7 million for the three months
ended March 31, 2000 as compared to $92.1 million for the three months ended
March 31, 1999. Gross margin increased to 14.3% in the three months ended March
31, 2000 as compared to 13.2% for the three months ended March 31, 1999. The
increases in gross profit and gross margin in 2000 were primarily due to the
impact of higher production volumes, productivity improvements and increased
sales of next generation products, which carry higher average selling prices.
<PAGE> 11
-11-
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (including research and development) increased 24.1% to
$42.2 million for the three months ended March 31, 2000 as compared to $34.0
million for the three months ended March 31, 1999. The increase in SG&A spending
was primarily due to our continued increasing investment in R&D and increases in
support required for our expanding operations, including the addition of Colfor,
MSP and our joint venture in Brazil. SG&A also increased in 2000 due to
increased profit-sharing accruals resulting from increased profitability.
Research and development ("R&D") expenses were $10.4 million for the three
months ended March 31, 2000 as compared to $8.4 million for the three months
ended March 31, 1999. The increase in R&D expenses in the three months ended
March 31, 2000 as compared to the three months ended March 31, 1999 was
primarily due to the increased costs of supporting new product programs
currently under development, as well as the addition of Colfor and MSP spending
in 2000.
Operating Income. Operating income increased 32% to $76.5 million for the three
months ended March 31, 2000 as compared to $58.0 million for the three months
ended March 31, 1999. Operating margin increased to 9.2% for the three months
ended March 31, 2000 as compared to an operating margin of 8.3% for the three
months ended March 31, 1999. The increase in operating income and operating
margin was primarily due to the factors discussed above relating to the increase
in Gross Profit, partially offset by increased R&D and other SG&A costs and
goodwill amortization related to Colfor, MSP and our joint venture in Brazil.
Net Interest Expense. Net interest expense was $13.2 million for the three
months ended March 31, 2000 as compared to $12.0 million for the three months
ended March 31, 1999. The increase in net interest expense was primarily due to
higher average outstanding debt levels and higher average interest rates in 2000
primarily associated with the 9.75% Senior Subordinated Notes we issued in March
1999. This increase was partially offset by interest income related to a higher
amount of cash on-hand and a higher amount of interest capitalized on
construction in progress.
Income Tax Expense. Income tax expense was $23.5 million for the three months
ended March 31, 2000 as compared to $17.0 million for the three months ended
March 31, 1999. Our effective income tax rate was approximately 37.0% for both
of these periods.
Net Income and Earnings Per Share. Diluted earnings per share increased
approximately 31% to $0.80 in the three months ended March 31, 2000 as compared
to $0.61 in the three months ended March 31, 1999. Net income increased
approximately 38% to $40.1 million for the three months ended March 31, 2000
compared to net income of $29.0 million for the three months ended March 31,
1999.
LIQUIDITY AND CAPITAL RESOURCES
We rely primarily on cash flow from operations and borrowings under our Credit
Facilities and receivables financing facility to finance operations and capital
expenditures.
Cash Flow from Operations. As part of our commercial arrangements with GM,
payment terms for products shipped to GM will continue to steadily lengthen
during the three-year period beginning March 1, 1999. This planned change in
payment terms has resulted in an expected increase in accounts receivable
balances and a related increase in interest expense related to our funding of
working capital. Our accounts receivable balances increased approximately $80
million in March 2000 due to the transition from net 10 days payment terms to
net 20 days with
<PAGE> 12
-12-
GM effective March 1, 1999. This current year increase in accounts receivable
compares to an increase of approximately $62 million in March 1999 due to the
transition from next day payment terms to net 10 days with GM effective March 1,
1999. One additional increase in payment terms with GM to net 25th proximo is
scheduled to begin on March 1, 2001.
At March 31, 2000, we had working capital of $60.1 million as compared to
working capital of $62.8 million at December 31, 1999. Cash flow used in
operating activities for the three months ended March 31, 2000, including the
impact of the change in payment terms with GM on March 1, 2000, was $8.0
million as compared to cash flow provided by operating activities of $49.5
million in the three months ended March 31, 1999. In addition to the impact of
the change in payment terms with GM, our increased levels of business activity
in 2000 resulted in higher uses of cash related to increased accounts
receivable balances and higher inventories as compared to the three months
ended March 31, 1999.
Capital Expenditures. Capital expenditures were $90.2 million in the three
months ended March 31, 2000 as compared to $47.8 million in the three months
ended March 31, 1999. Our largest capital projects in 2000 are related to the
launch of new product programs, including the GM M-SUV Program (compact SUVs,
including the Jimmy, Blazer and Bravada) and the GM MST Program (mid-sized
pick-up trucks, including the S-10 pick-up and Sonoma), and to support
additional capacity, including the construction and expansion of our new
manufacturing facilities in Guanajuato, Mexico. We are also continuing to make
investments to reduce labor-intensive operations and to support numerous cost
reduction programs, including upgrades in equipment technology and quality
standards. We estimate that we will invest approximately $360 - $380 million in
capital expenditures during the year ending December 31, 2000, which we intend
to fund from available sources, including cash on-hand, cash flow provided by
operations, and borrowings under the Credit Facilities or the receivables
financing facility.
Debt Availability. At March 31, 2000, we had borrowing capacity of approximately
$440.2 million under the Credit Facilities and the receivables financing
facility. Our total borrowing under the Credit facilities at March 31, 2000
consisted solely of the $374.5 million Tranche B Term Loan facility.
Availability under the Credit Facilities' consisted of $102.2 million under the
delayed draw Tranche A Term Loan facility and $250 million under the Revolving
Credit Facility. The Tranche A Term Loan facility will expire on July 31, 2000
if not used. Borrowings under the receivables financing facility amounted to $65
million at March 31, 2000 of a total availability of $153 million.
The weighted average interest rate of our long-term debt outstanding was
unchanged at 8.6% as of March 31, 2000 as compared to December 31, 1999.
On an overall basis, we believe that our current capital resources will continue
to be sufficient to support ongoing operational requirements. We also believe
that we have sufficient financial flexibility to attract long-term funding on
acceptable terms as may be needed to support our growth objectives.
SEASONALITY
Our business is moderately seasonal as our major OEM customers historically have
a two-week shutdown of operations in July and approximately a one-week shutdown
in December. In addition, OEM customers have historically incurred lower
production rates in the third quarter as model changes enter production.
Accordingly, our third quarter and fourth quarter results may reflect these
trends.
<PAGE> 13
-13-
FINANCIAL INSTRUMENTS MARKET RISK
Our business and financial results are affected by fluctuations in world
financial markets, including interest rates and currency exchange rates. Our
hedging policy has been developed to manage these risks to an acceptable level
based on management's judgment of the appropriate trade-off between risk,
opportunity and costs. We do not hold financial instruments for trading or
speculative purposes.
Interest Rate Risk. We hedge our interest rate risks by utilizing swaps and
collars. Our Credit Facilities require us to enter into interest rate hedging
arrangements with a notional value of $112.5 million. Accordingly, we have
entered into such hedging arrangements, which terminate in December 2000 and
which require us to pay a floating rate of interest based on three-month LIBOR
with a cap rate of 6.5% and a floor rate of 5.5%.
As part of a comprehensive risk-management program, we perform sensitivity
analyses to assess potential gains and losses in earnings and changes in fair
value relating to hypothetical movements in interest rates. A 100 basis-point
increase in interest rates (approximately 12% of our weighted average interest
rate at December 31, 1999) affecting our debt obligations, and related interest
rate swaps and collars, would have impacted our 1999 pretax earnings by
approximately $3.5 million based on December 31, 1999 debt levels.
Currency Risk. Because most of our business is denominated in U.S. dollars, we
do not currently have significant exposures relating to currency risks and have
only a nominal amount of currency hedges in place at March 31, 2000. Future
business operations and opportunities, including the expansion of our business
outside North America, may expose us to the risk that cash flow resulting from
these activities may be adversely affected by changes in currency exchange
rates. We intend to manage these risks by using local currency funding of these
expansions and by utilizing various types of foreign exchange contracts.
LITIGATION AND ENVIRONMENTAL REGULATIONS
We are involved in various legal proceedings incidental to our business.
Although the outcome of these matters cannot be predicted with certainty,
management believes that none of these matters, individually or in the
aggregate, will have a material adverse effect on the financial condition,
results of operations or cash flow.
GM has agreed to indemnify and hold harmless AAM, Inc. from certain
environmental issues identified as potential areas of environmental concern at
the time of the 1994 Acquisition. GM has also agreed to indemnify AAM, Inc.,
under certain circumstances, for up to ten years from the date of closing of the
1994 acquisition with respect to certain pre-closing environmental conditions.
Based on our assessment of costs associated with our environmental
responsibilities, including recurring administrative costs, capital expenditures
and other compliance costs, we do not expect such costs to have a material
effect on our financial condition, results of operations, cash flow or
competitive position in the foreseeable future.
EFFECT OF NEW ACCOUNTING STANDARDS
In June 1998, FASB Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities", was issued. FASB Statement No. 133 establishes standards
for the recognition and measurement of derivatives and hedging activities. This
statement is effective for us on January 1, 2001. We are currently analyzing the
impact this statement will have on our financial statements.
<PAGE> 14
-14-
FORWARD-LOOKING INFORMATION
Certain statements in this Section and elsewhere in this Quarterly Report are
forward-looking in nature and relate to trends and events that may affect the
Company's 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 "expect", "anticipate", "intend", and "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 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 reduced sales by the Company's customers, changes in
economic conditions in the markets served by the Company, increasing
competition, fluctuations in raw materials and energy prices, and other
unanticipated events and conditions. It is not possible to foresee or identify
all such factors.
The Company makes 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.
<PAGE> 15
-15-
- --------------------------------------------------------------------------------
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 5. Other Information.
On January 26, 2000 AAM Inc. executed Amendment No. 3 dated as of December 11,
1999 to the AAM/GMCL Supply Agreement dated February 17, 1994 between AAM Inc.
and General Motors of Canada Limited ("GCML"), as amended. This agreement
amends certain terms contained in the AAM/GCML Supply Agreement dated February
17, 1994 between AAM Inc. and General Motors of Canada Limited, as amended. This
agreement is filed herewith as Exhibit 10.02. Portions were omitted and filed
separately with the Secretary of the Securities and Exchange Commission with an
application for confidential treatment pursuant to Rule 406 under the Securities
Act of 1933, as amended.
On February 24, 2000 AAM Inc. executed an agreement with GM. This agreement
amends certain terms contained in the Lifetime Program Contract dated June 19,
1998 between General Motors Corporation North American Operations and AAM Inc.
This agreement is filed herewith as Exhibit 10.03. Certain portions were omitted
and filed separately with the Secretary of the Securities and Exchange
Commission with an application for confidential treatment pursuant to Rule 406
under the Securities Act of 1933, as amended.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit
Index hereto.
(b) Report on Form 8-K
During the quarter ended March 31, 2000, we did not file a Current Report
on Form 8-K.
<PAGE> 16
-16-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
(Registrant)
Date: May 15, 2000 By: /s/ Robin J. Adams
------------------
Robin J. Adams
Executive Vice President - Finance &
Chief Financial Officer
<PAGE> 17
-17-
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
*10.01 Letter Agreement, dated as of December 15, 1998,
as amended January 11, 2000, between
B.G. Mathis and the Company
*10.02+ Amendment No. 3 to AAM/GMCL Supply Agreement between
American Axle & Manufacturing, Inc. ("AAM") and
General Motors of Canada Limited ("GMCL") dated
February 17, 1994, as amended (the "Supply
Agreement")
*10.03+ Agreement dated as of February 24, 2000, by and between
American Axle & Manufacturing, Inc. and General Motors
Corporation
*12.01 Statement of Computation of Ratio of Earnings to Fixed
Charges
*27 Financial Data Schedule
(All other exhibits are not applicable.)
</TABLE>
- ----------------------
* Filed herewith
+ Certain portions of the identified Exhibit have been omitted and
separately filed with the Securities and Exchange Commission based upon a
request for confidential treatment
<PAGE> 1
EXHIBIT 10.01
(AMERICAN AXLE & MANUFACTURING, INC. LETTERHEAD APPEARS HERE)
CONFIDENTIAL
December 15, 1998, as amended January 11, 2000
Mr. B.G. Mathis
1840 Holbrook Avenue
Detroit, Michigan 48212
Dear Mr. Mathis:
This letter will confirm our understanding regarding the conditions applicable
to your retirement from American Axle & Manufacturing, Inc. (the "Company") at
such future date as shall be established.
This understanding takes into account and is in recognition of your significant
contributions to the process of acquiring the Company's assets from General
Motors and the subsequent success of the Company.
Upon your retirement, the following shall apply:
1. You will be treated as having 10 years of service for all benefit
eligibility and calculation purposes and shall receive retirement benefits
supplemented by the Company's Supplemental Executive Retirement Plan equal
to a total amount of $150,000 per full calendar year at the time of your
retirement.
2. You will continue to be provided a company car while serving on the
Company's Board of Directors.
3. Other terms and conditions of retirement shall be in accordance with those
generally applicable to other senior executives of the Company.
The above items have been approved by the Board of Directors of the Company and
of AAMM.
Very truly yours,
By: /s/ Richard E. Dauch
----------------
Title: Chairman, Chief Executive
Officer and President
<PAGE> 1
EXHIBIT 10.02
AMENDMENT NO. 3 TO
AAM/GMCL SUPPLY AGREEMENT BETWEEN AMERICAN AXLE & MANUFACTURING, INC. ("AAM")
AND GENERAL MOTORS OF CANADA LIMITED ("GMCL") DATED FEBRUARY 17,1994,
AS AMENDED, (THE "SUPPLY AGREEMENT")
WHEREAS GMCL entered into the Supply Agreement with AAM whereby AAM agreed
to source from GMCL for supply to GMCL and General Motors Corporation ("GMC")
those products described in the Supply Agreement;
AND WHEREAS GMCL and AAM entered into Amendment No. 1, dated as of October
22, 1996, to extend the expiration of the Supply Agreement to September 21,
1999;
AND WHEREAS GMCL and AAM entered into Amendment No. 2, an agreement dated
as of August 31, 1999, which amends the Supply Agreement to extend the
expiration of its term from September 21, 1999 to the later of (i) June 30,
2000, or (ii) the buildout of the C/K 400 series at the GMC Arlington Assembly
Plant;
AND WHEREAS GMCL and AAM now wish to amend the Supply Agreement to extend
the term of the Agreement as set forth below.
The parties hereto agree as follows:
1. The term of the Supply Agreement is extended such that it will remain
in force and effect until September 17, 2002, unless earlier terminated pursuant
to Section 12 thereof. This agreement to extend the term of the Supply Agreement
amends and supersedes the expiration date set forth in Amendment No. 2 to the
Supply Agreement.
2. AAM will transfer to GMCL, as a product to be supplied pursuant to the
Supply Agreement (and hereinafter be referred to as a "GMCL Axle" under the
Supply Agreement), all of AAM's requirements for the manufacturer of 8.6 inch
axles required by GMC for use in both the GMT 600 program and the portion of the
GMT 325/330 program referred to as the "Hi-Wider." AAM will also allocate and
GMCL will supply pursuant to the Supply Agreement, approximately *** axles per
day of 7 5/8 rear axles based on the present level of existing GMT 325/330
assembly plant utilization. It is understood that the scheduling of such GMCL
supplied 7 5/8 rear axles will be as specified by AAM and that such schedules
may be changed from time to time.
3. Notwithstanding the Unit Prices set forth in Exhibit B to the Supply
Agreement, effective upon the execution of this agreement ("Amendment No. 3) the
price for each GMCL Axle manufactured by GMCL for AAM pursuant to the Supply
Agreement as amended, other than for GMT 400 series axles will be such that the
difference between the amount paid by AAM to GMCL for that GMCL Axle and the
*** for that GMCL Axle received by AAM from
1
<PAGE> 2
GMCL and/or GMC will be *** from ***, calculated in U.S. funds.
This price increase will not apply to GMT 400 series axles, which shall remain
at *** (U.S. funds).
4. GMCL will be responsible for all costs, such as the costs for capital
expenditures, tooling and facilities, required for GMCL to manufacture the
products for which GMCL is not facilitized.
5. GMCL/GMC will pay *** million (U.S. Funds) to AAM upon the execution of
this Amendment No. 3, which AAM will use to purchase and install equipment such
as that shown in Exhibit A. All right, title and interest in such equipment will
belong to AAM. Purchase of this equipment is required by AAM due to the delayed
availability of similar equipment that AAM had intended to purchase in
accordance with the Option to Purchase Equipment Agreement dated February
18, 1994, between AAM and GMC but which now will be utilized by GMCL to
manufacture products during the term of this Amendment No. 3
6. This Amendment No. 3 shall be effective upon execution by the parties.
7. Except as expressly provided herein, all terms and conditions of the
Supply Agreement shall remain in full force and effect.
8. This agreement may be executed by the parties in separate counterparts
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
Dated as of December 11, 1999
American Axle & Manufacturing, Inc. General Motors of Canada Limited
By: /s/ B.G. Mathis By: /s/ L. Worrall
--------------- --------------
Title: Executive Vice President Title: Vice President-Purchasing &
------------------------ ----------------------------
Administration & Chief 0perations
Administrative Officer
General Motors Corporation
By: /s/ Barbara Whittaker
---------------------
Title: Executive Director - Metallic
-----------------------------
2
Executed on January 26, 2000.
<PAGE> 3
EXHIBIT A
---------
Pinion Flange (Three Rivers)
- Core Drill
- (2) Breaches
- Lathe
- Transfer Line
- Assembly Machine
- Material Handling
- In-Process Gaging
S.S Stiff Shaft (Detroit G&A)
- Transfer Line
- (5) Lathes
- Spline Roller
- Induction Temperer
- Straightening Press
- (3) Grinders
- (2) Drills
- Mill, Chamfer, & Polisher
- Stud Press
- Current Tester
- Induction Heat Scanner
- Exhaust & Coolant System
- Parts Washer
Pinion Cell (Detroit G & A)
- (3) Gear Cutter - Roughers
- (5) Gear Cutter - Finishers
- Gear Chamferer
Flange Weld (Detroit G & A)
- (2) Welders
GMT360/370/355 (Buffalo G & A)
- (7) Lathes
- (2) Stampers
- (2) Dials
- (2) Spline Rollers
- (2) Chamferers
- Storage & Hdlg. System
- Gear Tester
- Coordinate Measuring Machine
Axis Shaft (Buffalo G & A)
- Temper/Draw
- Induction Temper
- (2) Induction Heat Scanners
- Drill
- Mill, Chamfer, Polish
Heat Treat (Buffalo G & A)
- Induction Temper
<PAGE> 4
EXHIBIT B
UPDATED 12/20/99
PAGE 1 OF 2
- --------------------------------------------------------------------------------
ST. CATHARINES PART NUMBERS
- --------------------------------------------------------------------------------
PART LATEST SELLING
NUMBER PRICE TO GM CONTRACT#
- --------------------------------------------------------------------------------
S-TRUCK
- --------------------------------------------------------------------------------
15161265 *** L6X0002N 000
- --------------------------------------------------------------------------------
15161266 *** L6X0002P 000
- --------------------------------------------------------------------------------
15161267 *** L6X0002R 000
- --------------------------------------------------------------------------------
15161268 *** L6X0002T 000
- --------------------------------------------------------------------------------
15161269 *** L6X0002V 000
- --------------------------------------------------------------------------------
15161270 *** L6X0002W 000
- --------------------------------------------------------------------------------
15755859 *** L6T000NJ 001
- --------------------------------------------------------------------------------
15755860 *** L6T000NK 001
- --------------------------------------------------------------------------------
26052402 CANCELED
- --------------------------------------------------------------------------------
26052403 CANCELED
- --------------------------------------------------------------------------------
26052404 *** L6X0003B 000
- --------------------------------------------------------------------------------
26052405 *** L6X0003C 000
- --------------------------------------------------------------------------------
26052407 *** L6X0003D 000
- --------------------------------------------------------------------------------
26052409 *** L6X0000L 002
- --------------------------------------------------------------------------------
26052410 *** L6X0003F 000
- --------------------------------------------------------------------------------
26052411 *** L6X0003G 000
- --------------------------------------------------------------------------------
S/T HIWIDER/HYBRID
- --------------------------------------------------------------------------------
15007251 *** L6T000HG 002
- --------------------------------------------------------------------------------
15051682 Replaced by 15765093
- --------------------------------------------------------------------------------
15051683 Replaced by 15765094
- --------------------------------------------------------------------------------
15755996 *** L6T000P6 000
- --------------------------------------------------------------------------------
15755997 *** L6T000P7 000
- --------------------------------------------------------------------------------
15755998 CANCELED
- --------------------------------------------------------------------------------
15755999 CANCELED
- --------------------------------------------------------------------------------
15756000 CANCELED
- --------------------------------------------------------------------------------
15756001 *** L6T000PC 000
- --------------------------------------------------------------------------------
15756002 *** L6T000PD 000
- --------------------------------------------------------------------------------
15756003 CANCELED
- --------------------------------------------------------------------------------
15756004 CANCELED
- --------------------------------------------------------------------------------
15756005 *** L6T000PH 000
- --------------------------------------------------------------------------------
15756006 *** L6T000PJ 000
- --------------------------------------------------------------------------------
15758372 *** L6T000PZ 000
- --------------------------------------------------------------------------------
15760809 *** L6T000TM 000
- --------------------------------------------------------------------------------
15760810 *** L6T000TN 000
- --------------------------------------------------------------------------------
15760811 *** L6T000TP 000
- --------------------------------------------------------------------------------
15760812 *** L6T000TR 000
- --------------------------------------------------------------------------------
15765091 *** L6T000TT 000
- --------------------------------------------------------------------------------
15765092 *** L6T000TV 000
- --------------------------------------------------------------------------------
15765093 *** L6T000TW 000
- --------------------------------------------------------------------------------
15765094 *** 16T000T3 000
- --------------------------------------------------------------------------------
<PAGE> 5
EXHIBIT B
UPDATED 12/20/99
PAGE 2 OF 2
- --------------------------------------------------------------------------------
ST. CATHARINES PART NUMBERS
- --------------------------------------------------------------------------------
PART LATEST SELLING
NUMBERS PRICE TO GM CONTRACT 3
- --------------------------------------------------------------------------------
GMT 600
- --------------------------------------------------------------------------------
15753535 *** L6T000N7 000
- --------------------------------------------------------------------------------
15753536 *** L6T000N8 000
- --------------------------------------------------------------------------------
15759175 *** L6T000Nl 000
- --------------------------------------------------------------------------------
15759176 *** L6T000N2 000
- --------------------------------------------------------------------------------
GMT420/425
- --------------------------------------------------------------------------------
15035035 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15035036 *** HXT00012-000
- --------------------------------------------------------------------------------
15035045 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15035051 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15035052 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15035057 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15048487 *** HXT00012-000
- --------------------------------------------------------------------------------
15159151 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15159153 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15159165 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
15159167 NO FUTURE REQUIREMENTS (PHASED OUT)
- --------------------------------------------------------------------------------
* Portions of this Exhibit 10.02 were omitted and filed separately with the
Secretary of the Securities and Exchange Commission (the "Commission")
pursuant to an application for confidential treatment filed with the
Commission pursuant to Rule 406 under the Securities Act of 1933, as
amended. Such portions are marked by the symbol "***".
<PAGE> 1
EXHIBIT 10.03
*** AGREEMENT *
THIS *** AGREEMENT dated as of the 24th day of February, 2000,
by and between American Axle & Manufacturing, Inc. ("AAM") and General Motors
Corporation ("Customer").
WHEREAS, AAM and the Customer have entered into various
commercial agreements providing for certain *** on components manufactured by
AAM and sold to the Customer, and
WHEREAS, the Customer has agreed with AAM to ***.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. *** that have been previously agreed to by AAM and GM
for various GM programs for model years 2001 through
2005 approximate ***, which is subject to change
based on ***, as shown on Exhibit I.
2. Commencing March 1, 2000, GM shall *** and AAM shall
*** the *** of these parts by *** in model year 2001
without further ***, until such time as AAM receives
the *** set forth below. The projected *** to GM
based on the foregoing is *** (*** per year for ***
years) as shown in the following table and the
agreed upon *** benefit to AAM is expected to equal
***:
<TABLE>
<CAPTION>
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
8/1/2000 - 8/1/2001 - 8/1/2002 - 8/1/2003 - 8/1/2003 - Total
7/31/2001 7/31/2002 7/31/2003 7/31/2004 7/31/2005
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
*** *** *** *** *** ***
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
</TABLE>
The resulting *** to AAM during the period is agreed to be ***
(*** less *** based on projected volume). After *** have yielded *** to AAM's
*** during the period of time covered by this agreement will be resumed in
accordance with the schedules set forth in the
<PAGE> 2
2
various applicable AAM/Customer agreements. For example: In the year following
the year in which the *** to AAM equals ***, *** scheduled for year 2000, but
not yet implemented, will be made in the months originally scheduled. In the
second year *** previously scheduled for year 2001 will be made in the months
originally scheduled, etc.
IN WITNESS WHEREOF, and intending to be legally bound, the
parties hereto have executed this agreement as of the date first set forth
above.
GENERAL MOTORS AMERICAN AXLE &
CORPORATION ("CUSTOMER") MANUFACTURING, INC. ("AAM")
BY: /S/ JOHN L. STILES BY: /S/ B.G. MATHIS
-------------------- -----------------
<PAGE> 3
<TABLE>
<CAPTION>
Exhibit I
DAILY LCR RED. 02/25/00-
AXLES 2000 2001 2002 2003 2004 $/PC. 05/24/2000
<S> <C> <C> <C> <C> <C> <C> <C>
8.25 *** *** *** *** ***
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002 ***
LT 08/01/2003 ***
8.25 *** *** *** *** ***
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002 ***
LT 08/01/2003 ***
8.6 LEAF *** *** *** *** ***
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002 ***
LT 08/01/2003 ***
8.6 MULTI-LINK *** *** *** *** ***
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002 ***
LT 08/01/2003 ***
9.5 *** *** *** *** ***
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002 ***
LT 08/01/2003 ***
10.5 *** *** *** *** ***
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002 ***
LT 08/01/2003 ***
11.5 *** *** *** ***
08/01/2003 ***
PROPS
97-01 03/01/2001 ***
(GPS)
LT 08/01/2003
LINKAGE & ***
PITMAN
LT 08/01/2003 ***
TOTAL 800 *** *** *** ***
GMT600/610 * *** *** *** ***
REARS
LT 08/01/2002 ***
LT 08/01/2003 ***
PROPS
LT 08/01/2002 ***
LT 08/01/2003 ***
LINKAGE
LT 08/01/2002 ***
LT 08/01/2003 ***
STAB BAR
LT 08/01/2002 ***
LT 08/01/2003 ***
TOTAL PER YEAR
</TABLE>
<TABLE>
<CAPTION>
05/25/00- 02/25/00- 03/01/01- 05/25/01-
12/31/2000 12/31/2000 12/31/2001 12/31/2001
<S> <C> <C> <C> <C>
8.25
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002
LT 08/01/2003
8.25
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002
LT 08/01/2003
8.6 LEAF
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002
LT 08/01/2003
8.6 MULTI-LINK
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002
LT 08/01/2003
9.5
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002
LT 08/01/2003
10.5
97-01 05/25/2000 *** ***
97-01 05/25/2001 ***
97-01 05/25/2002
LT 08/01/2003
11.5
08/01/2003
PROPS
97-01 03/01/2001 ***
(GPS)
LT 08/01/2003
LINKAGE &
PITMAN
LT 08/01/2003
TOTAL 800
GMT600/610 *
REARS
LT 08/01/2002
LT 08/01/2003
PROPS
LT 08/01/2002
LT 08/01/2003
LINKAGE
LT 08/01/2002
LT 08/01/2003
STAB BAR
LT 08/01/2002
LT 08/01/2003
TOTAL PER YEAR ***
</TABLE>
*Assumes that AAM is awarded 610 axle and propshaft
LT = Lifetime agreement reductions
97-01 = Red action due to GMT 800 capital
<PAGE> 4
LT = Lifetime agreement reductions
97-01 = Red action due to GMT 800 capital
<TABLE>
<CAPTION>
AXLES 01/01/01-12/31/2001 05/25/02-12/31/2002 08/01/02-12/31/2002 01/01/02-12/31/2002 08/01/03-12/31/2003
<S> <C> <C> <C> <C> <C>
8.25
97-01 05/25/2000 *** ***
97-01 05/25/2001 *** ***
97-01 05/25/2002 *** ***
LT 08/01/2003 ***
8.25
97-01 05/25/2000 *** ***
97-01 05/25/2001 *** ***
97-01 05/25/2002 *** ***
LT 08/01/2003 ***
8.6 LEAF
97-01 05/25/2000 *** ***
97-01 05/25/2001 *** ***
97-01 05/25/2002 *** ***
LT 08/01/2003 ***
8.6 MULTI-LINK
97-01 05/25/2000 *** ***
97-01 05/25/2001 *** ***
97-01 05/25/2002 *** ***
LT 08/01/2003 ***
9.5
97-01 05/25/2000 *** ***
97-01 05/25/2001 *** ***
97-01 05/25/2002 *** ***
LT 08/01/2003 ***
10.5
97-01 05/25/2000 *** ***
97-01 05/25/2001 *** ***
97-01 05/25/2002 *** ***
LT 08/01/2003 ***
11.5
08/01/2003 ***
PROPS
97-01 03/01/2001 (GPS) *** ***
LT 08/01/2003 ***
LINKAGE & PITMAN
LT 08/01/2003 ***
TOTAL 800
GMT 600/610
REARS
LT 08/01/2002 *** ***
LT 08/01/2003 ***
PROPS
LT 08/01/2002 *** ***
LT 08/01/2003 ***
LINKAGE
LT 08/01/2002 *** ***
LT 08/01/2003 ***
STAB BAR
LT 08/01/2002 *** ***
LT 08/01/2003 ***
TOTAL PER YEAR *** ***
</TABLE>
<TABLE>
<CAPTION>
AXLES 01/01/03-12/31/2003 01/01/04-02/25/2004 _____ 2/25/04
THRU 2/25/04
<S> <C> <C> <C>
8.25
97-01 05/25/2000 **** **** ****
97-01 05/25/2001 **** **** ****
97-01 05/25/2002 **** **** ****
LT 08/01/2003 **** **** ****
8.25
97-01 05/25/2000 **** **** ****
97-01 05/25/2001 **** **** ****
97-01 05/25/2002 **** **** ****
LT 08/01/2003 **** **** ****
8.6 LEAF
97-01 05/25/2000 **** **** ****
97-01 05/25/2001 **** **** ****
97-01 05/25/2002 **** **** ****
LT 08/01/2003 **** **** ****
8.6 MULTI-LINK
97-01 05/25/2000 **** **** ****
97-01 05/25/2001 **** **** ****
97-01 05/25/2002 **** **** ****
LT 08/01/2003 **** **** ****
9.5
97-01 05/25/2000 **** **** ****
97-01 05/25/2001 **** **** ****
97-01 05/25/2002 **** **** ****
LT 08/01/2003 **** **** ****
10.5
97-01 05/25/2000 **** **** ****
97-01 05/25/2001 **** **** ****
97-01 05/25/2002 **** **** ****
LT 08/01/2003 **** **** ****
11.5
08/01/2003 *** *** ***
PROPS
97-01 03/01/2001 (GPS) *** *** ***
LT 08/01/2003 *** *** ***
LINKAGE & PITMAN
LT 08/01/2003
TOTAL 800
GMT 600/610
REARS
LT 08/01/2002 *** *** ***
LT 08/01/2003 *** *** ***
PROPS
LT 08/01/2002 *** *** ***
LT 08/01/2003 *** *** ***
LINKAGE
LT 08/01/2002 *** *** ***
LT 08/01/2003 *** *** ***
STAB BAR
LT 08/01/2002 *** *** ***
LT 08/01/2003 *** *** ***
TOTAL PER YEAR *** *** ***
</TABLE>
* Portions of this Exhibit 10.03 were omitted and filed separately with the
Secretary of the Securities and Exchange Commission (the "Commission")
pursuant to an application for confidential treatment filed with the
Commission pursuant to Rule 406 under the Securities Act of 1933, as
amended. Such portions are marked by the symbol "***".
<PAGE> 5
*Assumes that AAM is awarded 610 axle and propshaft
LT = Lifetime agreement reductions
97-01 = Red action due to GMT 800 capital
* Portions of this Exhibit 10.03 were omitted and filed separately with the
Secretary of the Securities and Exchange Commission (the "Commission")
pursuant to an application for confidential treatment filed with the
Commission pursuant to Rule 406 under the Securities Act of 1933, as
amended. Such portions are marked by the symbol "***".
<PAGE> 1
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
EXHIBIT 12.01 - COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(in millions, except for ratios)
YEAR ENDED DECEMBER 31: 1999 1998 1997 1996 1995
- ----------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense, including amortization of debt issuance costs $ 61.7 $44.8 $ 9.0 $ 0.3 $ 1.6
Estimated interest portion of rents 12.0 4.7 3.2 1.5 0.1
Capitalized interest 8.5 3.8 0.2 - -
Preferred stock dividend - - 12.0 17.9 13.6
Gross-up of preferred stock dividend as if it were pre-tax - - 6.8 10.1 7.7
--------------------------------------------------
Total fixed charges as defined 82.2 53.3 31.2 29.8 23.0
Earnings:
Income from continuing operations before income tax expense 183.4 5.6 94.2 98.3 118.0
Total fixed charges as defined 82.2 53.2 31.2 29.8 23.0
Fixed charges not deducted in the determination of income from
continuing operations before income tax expense (8.5) (3.8) (19.0) (28.0) (21.3)
--------------------------------------------------
Total earnings as defined $257.1 55.0 106.4 100.1 119.7
--------------------------------------------------
Ratio of earnings to fixed charges 3.13 1.03 3.41 3.36 5.21
==================================================
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000:
- ----------------------------------
<S> <C>
Fixed charges:
Interest expense, including amortization of debt issuance costs $15.9
Estimated interest portion of rents 3.7
Capitalized interest 3.0
------
Total fixed charges as defined 22.6
Earnings:
Income from continuing operations before income tax expense 63.6
Total fixed charges as defined 22.6
Fixed charges not deducted in the determination of income from
continuing operations before income tax expense (3.0)
------
Total earnings as defined 83.2
------
Ratio of earnings to fixed charges 3.68
======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such consolidated financial statements.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 34
<SECURITIES> 0
<RECEIVABLES> 325
<ALLOWANCES> 5
<INVENTORY> 133
<CURRENT-ASSETS> 533
<PP&E> 1,296
<DEPRECIATION> 302
<TOTAL-ASSETS> 1,755
<CURRENT-LIABILITIES> 472
<BONDS> 766
0
0
<COMMON> 1
<OTHER-SE> 303
<TOTAL-LIABILITY-AND-EQUITY> 1,755
<SALES> 836
<TOTAL-REVENUES> 836
<CGS> 716
<TOTAL-COSTS> 716
<OTHER-EXPENSES> 43
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 64
<INCOME-TAX> 24
<INCOME-CONTINUING> 40
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40
<EPS-BASIC> .86
<EPS-DILUTED> .80
</TABLE>
