DETROIT, July 25 /PRNewswire-FirstCall/ -- American Axle & Manufacturing
Holdings, Inc. (AAM), which is traded as AXL on the NYSE, today reported its
financial results for the second quarter of 2008.
Second Quarter 2008 results
-- Second quarter sales of $490.5 million
-- Net loss of $644.3 million, or $12.49 per share
-- AAM's quarterly results reflect the adverse impact of a strike called
by the International UAW at AAM's original U.S. locations in Michigan
and New York; AAM estimates the reduction in sales and operating income
resulting from the strike to be $274.9 million and $86.6 million (or
$1.73 per share), respectively
-- AAM's quarterly results also reflect the adverse impact of special
charges, asset impairments and other non-recurring operating costs of
$575.6 million, or $11.16 per share; these charges, substantially all
of which were non-cash in the period, relate to the new labor
agreements and hourly and salaried attrition program activity, plant
closures and other actions to rationalize underutilized capacity and
align AAM's business to current and projected market requirements
-- 51% year-over-year decline in total light truck production volumes as
compared to the second quarter of 2007
-- Content-per-vehicle of $1,312, approximately the same as the previous
year
AAM's results in the second quarter of 2008 were a net loss of $644.3
million or $12.49 per share. This compares to net earnings of $34.6 million,
or $0.66 per share, in the second quarter of 2007.
AAM's results in the second quarter of 2008 were severely impacted by an
87 day strike called by the International UAW at AAM's original U.S.
locations. AAM estimates the reduction in sales and operating income
resulting from the strike in the second quarter of 2008 to be $274.9 million
and $86.6 million ($1.73 per share), respectively.
In the second quarter of 2008, AAM recorded special charges and non-
recurring operating costs of $575.6 million, or $11.16 per share. Of this
total, approximately 95% of these charges and costs were non-cash in the
period.
These charges and costs are summarized in the following table:
in millions EPS Impact
Lump-sum signing bonus paid to UAW associates
at original U.S. locations $19.1 $0.37
Accrual for Supplemental Unemployment
Benefits (SUB) 18.0 0.35
Attrition programs and benefit reductions
for hourly and salaried associates 146.8 2.85
Asset impairments, lease accruals and indirect
inventory write-downs 329.9 6.39
Valuation allowance for U.S. deferred tax assets 54.4 1.06
Other (primarily plant closure accruals and
asset redeployment costs) 7.4 0.14
------ ------
Total special charges and non-recurring operating
costs $575.6 $11.16
====== ======
-- Special charge of $19.1 million, or $0.37 per share related to the
lump-sum signing bonus of $5,000 paid to approximately 3,650 UAW-
represented associates in May 2008 upon ratification of the new labor
agreements at AAM's original U.S. locations.
-- Special charge of $18.0 million, or $0.35 per share for Supplemental
Unemployment Benefits (SUB) estimated to be payable to UAW-represented
associates during the term of the new labor agreements at AAM's
original U.S. locations.
-- Special charges of $146.8 million, or $2.85 per share relating to
hourly and salaried attrition programs and benefit reductions,
including pension and other postretirement benefit curtailments and
special and contractual termination benefits. Included in this
activity are charges relating to plant closing agreements, early
voluntary elections under the Special Separation Program (SSP) offered
to UAW-represented associates at AAM's original U.S. locations and
salaried workforce reductions.
-- Asset impairment charges, operating lease accruals and indirect
inventory write-downs, of $329.9 million, or $6.39 per share.
Approximately half of these charges relate to the planned closure of
three of AAM's original U.S. locations (including the previously idled
driveline assembly facility in Buffalo, New York and two forging
facilities: one in Tonawanda, New York and the other in Detroit,
Michigan) and idling of portions of AAM's driveline assembly facility
in Detroit, Michigan. The remaining portion of the asset impairment
charges results from the impact of structural changes in the level of
market demand and reductions in customer production volumes anticipated
for the major North American light truck and SUV product programs AAM
currently supports for GM in the Detroit and Three Rivers, Michigan
driveline assembly facilities.
-- Special charge of $54.4 million, or $1.06 per share to establish a
valuation allowance on AAM's U.S. deferred tax assets as required under
SFAS No. 109, Accounting for Income Taxes.
-- Other special charges and non-operating costs of $7.4 million, or
$0.14 per share primarily relating to liabilities incurred in relation
to plant closings, including costs to redeploy machinery and equipment.
'AAM's results in the second quarter of 2008 were severely impacted by the
brutal combination of the International UAW strike and steep declines in light
truck and SUV production volumes resulting from a weakening domestic economy,
rapidly escalating fuel prices, deteriorating credit market conditions and
historically low consumer confidence,' said AAM Co-Founder, Chairman of the
Board & Chief Executive Officer Richard E. Dauch. 'AAM has a comprehensive
restructuring plan to transition the business to successfully adapt to new
market realities. AAM has the financial resources, management expertise and
determination necessary to execute the plan. The permanent and
transformational improvement in our cost structure and operating flexibility
generated from the new labor agreements, along with our accelerated capacity
rationalization initiatives, position AAM for future profitability, as we
continue to diversify and expand AAM's customer base, product portfolio,
served markets and global footprint.'
Net sales in the second quarter of 2008 were $490.5 million as compared to
$916.5 million in the second quarter of 2007. AAM estimates that
approximately $274.9 million of this decrease was attributable to the
International UAW strike. Customer production volumes for the major light
truck and SUV product programs AAM currently supports for GM and Chrysler were
down approximately 51% in the second quarter of 2008 as compared to the prior
year. Non-GM sales represented 29% of total sales in the second quarter of
2008.
AAM's content-per-vehicle is measured by the dollar value of its product
sales supporting GM's North American truck and SUV platforms and Chrysler's
heavy duty Dodge Ram pickup trucks. For the second quarter 2008, AAM's
content-per-vehicle of $1,312 was approximately the same as the second quarter
of 2007.
Net sales in the first half of 2008 were $1.1 billion as compared to $1.7
billion in the first half of 2007. The company's operating loss in the first
half of 2008 was $609.5 million as compared to operating income of $95.9
million or 5.6% of sales for the first half of 2007. For the first half of
2008, AAM estimates the reduction in sales and operating income resulting from
the International UAW strike to be $414.0 million and $129.4 million ($2.57
per share), respectively.
AAM's SG&A spending for the second quarter of 2008 was $44.9 million as
compared to $54.2 million in the second quarter of 2007. In the first half of
2008, AAM's SG&A spending was $94.3 million as compared to $103.1 million in
the first half of 2007. AAM's R&D spending for the first half of 2008 was
approximately $42.1 million as compared to $39.7 million in the first half of
2007.
AAM defines free cash flow to be net cash provided by (or used in)
operating activities less capital expenditures and dividends paid. Net cash
used in operating activities in first half of 2008 was $75.9 million as
compared to net cash provided by operating activities of $234.6 million in the
first half of 2007. Capital spending for the first half of 2008 was $66.9
million as compared to $75.5 million in the first half of 2007.
