Item 1. Business
(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:
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.”
Item 2.
Item 2. Properties
The following is a summary of our principal facilities:
Item 3.
Item 3. Legal Proceedings
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.”
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of stockholders during the fourth quarter of fiscal year 2004.
Supplemental Item - Executive Officers and Directors of the Registrant
We possess a management team with proven leadership and extensive automotive industry experience. Our executive officers and directors are:
Name
Age
Position
Richard E. Dauch(3)
Co-Founder, Chairman of the Board & Chief Executive Officer
Joel D. Robinson
Vice Chairman
David C. Dauch
Executive Vice President - Commercial & Strategic Development
Yogendra N. Rahangdale
Executive Vice President - Operations & Planning
Richard F. Dauch
President - Metal Formed Products Division
John J. Bellanti
Vice President - Engineering & Chief Technology Officer
Marion A. Cumo, Sr.
Vice President - Driveline Division
Thomas O. Delanoy
Vice President - Materials Management & Logistics
John E. Jerge
Vice President - Human Resources
Patrick S. Lancaster
Vice President, Chief Administrative Officer & Secretary
Thomas L. Martin
Vice President - Finance & Chief Financial Officer
Allan R. Monich
Vice President - Program Management & Launch
Steven J. Proctor
Vice President - Sales & Marketing
Alberto L. Satine
Vice President - Procurement
Alan L. Shaffer
Vice President - Strategic & Business Development
Abdallah F. Shanti
Vice President - Information Technology, Electronic Product Integration & Chief Information Officer
Michael K. Simonte
Vice President & Treasurer
John S. Sofia
Vice President - Quality Assurance & Customer Satisfaction
Elizabeth A. Chappell(2)
Director
Forest J. Farmer(1)
Director
Richard C. Lappin(1)
Director
B.G. Mathis(2)
Director
Larry W. McCurdy(3)
Director
Larry K. Switzer(3)(a)
Director
Thomas K. Walker(1)
Director
Dr. Henry T. Yang(2)
Director
(1) Class I Director
(2) Class II Director
(3) Class III Director
(a) Appointed to the Board in February, 2005
Richard E. Dauch, age 62, is Co-Founder, Chairman of the Board & Chief Executive Officer of AAM, and is also Chairman of the Executive Committee of the Board of Directors. He has been Chief Executive Officer and a member of the Board of Directors since the Company began operations in March 1994. In October 1997, he was named Chairman of the Board of Directors. He was also President of AAM from March 1994 through December 2000. Prior to March 1994, he spent 12 years at Chrysler Corporation. He left Chrysler Corporation in 1991 as Executive Vice President of Worldwide Manufacturing. Mr. Dauch also served as Group Vice President of Volkswagen of America, where he established the manufacturing facilities and organization for the successful launch of the first major automotive transplant in the United States. Mr. Dauch has more than 40 years of experience in the automotive industry. Mr. Dauch has been named the 1996 Worldwide Automotive Industry Leader of the Year by the Automotive Hall of Fame, the 1997 Manufacturer of the Year by the Michigan Manufacturer’s Association, and the 1999 Michiganian of the Year by The Detroit News. In 2003, he received the Harvard Business School of Michigan Business Statesman Award, the Ernst & Young Entrepreneur of the Year Award, and the Northwood University Outstanding Business Leader Award. Mr. Dauch also served as Chairman of the National Association of Manufacturers (N.A.M.). He has lectured extensively on the subject of manufacturing and authored the book, Passion for Manufacturing, which is distributed in colleges and universities globally and in several languages.
Joel D. Robinson, age 61, was appointed Vice Chairman in October 2004. Prior to that, Mr. Robinson served as President & Chief Operating Officer (since January 2001); Executive Vice President - Operations & Chief Operating Officer (since August 1998) and Vice President, Manufacturing (since May 1997). Mr. Robinson joined our Company in March 1994 and has held various other positions including Executive Director of the GMT-800 program and Executive Director, Manufacturing Services. Mr. Robinson began his career in the automotive industry at Ford Motor Company in 1963, where he held a series of technical and manufacturing management positions. Mr. Robinson also worked for American Motors Corporation, serving as Director of Vehicle Assembly, and later, at Chrysler Corporation, where he was responsible for all car body programs. Mr. Robinson has over 40 years of experience in the global automotive industry.
David C. Dauch, age 40, has been Executive Vice President - Commercial & Strategic Development since January 2005. Prior to that, he served as Senior Vice President, Commercial (since May 2004); Senior Vice President, Sales, Marketing & Driveline Division (since September 2003); Vice President, Manufacturing - Driveline Division (since January 2001); Vice President, Sales and Marketing (since 1998) and Director of Sales, GM Full-Size Truck Programs (since May 1996). Mr. Dauch joined our Company in July 1995 as Manager, Sales Administration. Prior to joining our Company, Mr. Dauch held various positions at Collins & Aikman Products Company, including Sales Manager. Mr. Dauch is a member of the Board of Directors of Collins & Aikman. David C. Dauch is a son of Richard E. Dauch.
Yogendra (Yogen) N. Rahangdale, age 57, has been Executive Vice President - Operations & Planning since May 2004. Prior to that, he served as Executive Vice President & Chief Technology Officer (since September 2003); Group Vice President & Chief Technology Officer (since January 2001); Vice President, Manufacturing and Procurement Services (since March 2000); Vice President, Manufacturing Services (since April 1999); Executive Director, Manufacturing Services (since March 1998) and Director, Corporate Manufacturing Planning (since joining our Company in August 1995). Prior to joining our Company, Mr. Rahangdale spent 12 years with Chrysler Corporation in a variety of positions including Manager, Paint & Energy Management.
Richard F. Dauch, age 44, has been President - Metal Formed Products Division since January 2005. Prior to that, he served as Vice President, Metal Formed Products Division (since May 2004); Vice President, Investor Relations (since September 2003); Vice President, Financial Planning (since September 2002); Vice President, Sales and Marketing (since January 2002); Vice President, Sales (since January 2001); Vice President, Manufacturing - Driveline Division (since July 1999); Vice President, Manufacturing (since August 1998); Director, Strategic and Capacity Planning (since February 1998) and Plant Manager, Detroit Gear & Axle Plant (since May 1996). Mr. Dauch joined our Company in May 1995 as Corporate Manager, Labor Relations, and served in that position until May 1996. Prior to joining our Company, Mr. Dauch served as a Senior Business Manager and Business Unit Manager with United Technologies Corporation from July 1992. Prior to his automotive career, Mr. Dauch served in the U.S. Army for eleven years, with assignments including Platoon Leader and Company Commander. Richard F. Dauch is a son of Richard E. Dauch.
John J. Bellanti, age 50, has been Vice President - Engineering & Chief Technology Officer since May 2004. Prior to that, he served as Vice President, Engineering & Product Development (since September 2003); Executive Director, Manufacturing Services (since March 2000); Director, Manufacturing Engineering (since June 1998); Director Advanced Programs (since May 1996) and Plant Manager, Detroit Forge Plant (since joining our Company in March 1994). Prior to joining our Company, Mr. Bellanti, worked 22 years at General Motors in various manufacturing and engineering positions, most recently serving as Production Manager. Mr. Bellanti was on the Board of Directors for the North American Forging Industry Association from 1999 through 2003, serving as President of that Association in 2002.
Marion A. Cumo, Sr., age 62, has been Vice President - Driveline Division since May 2004. Prior to that, he served as Vice President, Program Management & Launch (since September 2002); Vice President, Materials Management and Logistics (since May 1996) and Vice President, Quality Assurance and Customer Satisfaction (since joining our Company in March 1994). Prior to joining our Company, Mr. Cumo spent 11 years working as a manufacturing executive at Chrysler Corporation. His most recent title at Chrysler was General Plants Manager of Assembly Operations. After leaving Chrysler, Mr. Cumo became president of Tri-County Chrysler Products in Peebles/West Union, Ohio, and also worked as an automotive manufacturing consultant. Mr. Cumo began his career at General Motors and has over 38 years experience in the global automotive industry including positions with General Motors, Volkswagen of America and Chrysler.
Thomas O. Delanoy, age 53, has been Vice President - Materials Management & Logistics since October 2004. Prior to that, he served as Executive Director Production Control and Materials Management (since September 2002); Director, Materials Management (since March 2000); Director of Business Integration (since December 1998); Plant Manager, Detroit Forge (since August 1994) and Production Manager (since joining our Company in March 1994). Prior to joining our Company, Mr. Delanoy served at General Motors, Volkswagen of America, and Chrysler Corporation in a variety of production and operations positions.
John E. Jerge, age 43, has been Vice President - Human Resources since September 2004. Prior to that, he served as Executive Director, Labor Relations (since April 2004); Director, Labor Relations (since January 2003); Plant Manager, Detroit Gear & Axle Plant (since March 2000); Plant Manager, Buffalo Gear Axle & Linkage (since November 1997) and Manufacturing Manager, Buffalo Gear Axle & Linkage (since joining our Company in March 1994). Prior to joining our Company, Mr. Jerge began his automotive career at Chrysler Corporation in 1984 where he progressed through a variety of manufacturing management positions.
Patrick S. Lancaster, age 57, has been Vice President, Chief Administrative Officer & Secretary since September 2003. Prior to that, he served as Group Vice President, Chief Administrative Officer & Secretary (since January 2001); Vice President and Secretary (since March 2000); Vice President, General Counsel and Secretary (since November 1997) and General Counsel and Secretary (since June 1994). Mr. Lancaster is a member of the State Bar of Michigan.
Thomas L. Martin, age 61, has been Vice President - Finance & Chief Financial Officer since joining our Company in June 2004. Prior to that, he served on AAM’s Board of Directors and was a member of the Board’s Audit Committee (since February 2004). Prior to joining our Company, Mr. Martin served in various financial positions at DaimlerChrysler including Chief Financial Officer and Board member, Chrysler de Mexico; Chief Financial Officer, Chrysler International - Europe; Controller, Chrysler de Mexico and Director, Core Process Implementation. In addition, he served as Controller, Service & Parts Division and Financial Manager for Manufacturing, Engineering, Program Management, Design, Procurement & Supply, Chrysler Financial and Corporate Staffs. Mr. Martin has over 36 years of experience in the global automotive industry.
Allan R. Monich, age 51, has been Vice President - Program Management & Launch since May 2004. Prior to that, he served as Vice President, Manufacturing Forging Division (since October 2001); Vice President, Human Resources (since 1998); Vice President, Personnel (since November 1997) and Plant Manager for the Buffalo Gear & Axle Plant in Buffalo, NY since the formation of our Company in March 1994. Prior to joining our Company in March 1994, he worked for General Motors for 22 years in the areas of manufacturing, quality assurance, sales and engineering, including four years as a Plant Manager.
Steven J. Proctor, age 48, has been Vice President - Sales & Marketing since June 2004. Prior to that, he served as Executive Director, Driveline Sales & Marketing (since September 2003); President and Chief Operating Officer of AAM do Brasil (since September 1999); Director, GMT-360, I-10/GMT-355 (since December 1998); Director, Worldwide Programs (since February 1998); Director, Strategic Planning (since July 1996) and Director, General Programs (since joining our Company in March 1994). Prior to joining our Company, Mr. Proctor worked for General Motors for 20 years in the areas of product and industrial engineering, production, material management and sales.
Alberto L. Satine, age 48, has been Vice President - Procurement since January 2005. Prior to that, he served as Executive Director, Global Procurement Direct Materials (since January 2004); General Manager, Latin and South American Driveline Sales and Operations (since August 2003) and General Manager of International Operations (since joining our Company in May 2001). Prior to joining our Company, Mr. Satine held several management positions at Dana Corporation, including the position of President of Dana’s Andean Operations in South America from 1997 to 2000 and General Manager of the Spicer Transmission Division in Toledo, Ohio from 1994 to 1997.
Alan L. Shaffer, age 54, has been Vice President - Strategic & Business Development since September 2003. Prior to that, he served as Senior Vice President, Sales, Marketing & Strategic Planning (since September 2002) and Vice President, Manufacturing Services since joining our Company in October 2000. Prior to joining our Company, Mr. Shaffer was Executive Vice President of Eventory, Inc. in Bedford, Massachusetts since February 2000 and served as Group Vice President, Metalworking Technologies at Milacron, Inc. since 1986.
Abdallah F. Shanti, age 44, has been Vice President - Information Technology, Electronic Product Integration & Chief Information Officer since January 2005. Prior to that, he served as Vice President, Procurement, Information Technology & Chief Information Officer (since September 2002) and Executive Director, Information Technology & Chief Information Officer (since joining our Company in December 1999). Prior to joining our Company, Mr. Shanti served as Vice President, Global Information Technology at LucasVarity PLC. Mr. Shanti began his career with GM/Electronic Data Systems Corporation in 1984 where he served in a variety of information technology leadership roles providing services for automotive and manufacturing corporations. He has over 20 years of experience in the global automotive industry including positions with General Motors, where he most recently served as General Director, Systems Engineering; LucasVarity PLC; Perot Systems Corporation and GM/Electronic Data Systems Corporation.
Michael K. Simonte, age 41, has been Vice President & Treasurer since May 2004. Prior to that, he served as Treasurer (since September 2002) and Director, Corporate Finance (since joining our Company in December 1998). Prior to joining our Company, Mr. Simonte served as Senior Manager at the Detroit office of Ernst & Young LLP. Mr. Simonte is a certified public accountant.
John S. Sofia, age 45, has been Vice President - Quality Assurance & Customer Satisfaction since October 2004. Prior to that, he served as Director, Advanced Quality Planning (since August 2002); Plant Manager, Detroit Forge (since April 2001); Director, Product Engineering (since June 2000); Manager of the Current Production & Process Engineering Group (since September 1997) and Engineering Manager, (since joining our Company in May 1994). Prior to joining our Company, Mr. Sofia served at Chrysler Corporation in a variety of manufacturing and engineering positions.
The business experience of our Board of Directors is incorporated by reference from the information in the sections entitled “Nominees for Directors” and “Returning Members of the Board of Directors” in our Proxy Statement.
Part II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock, par value $0.01 per share, is listed for trading on the New York Stock Exchange under the symbol “AXL.”
Holders and High and Low Sales Prices
Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled “Financials - Notes to Consolidated Financial Statements, Note 14 - Unaudited Quarterly Financial and Market Data.”
Dividends
In April 2004, AAM’s Board of Directors declared our first quarterly cash dividend as a public company of $0.15 per share. As of December 31, 2004, we have paid $23.0 million to stockholders of record under the quarterly cash dividend program. On an annualized basis, the dividend payout is $0.60 per share.
Securities Authorized for Issuance Under Equity Compensation Plans
The information regarding our equity compensation plans is incorporated by reference from the information in the section entitled “Report of the Compensation Committee on Executive Compensation” in our Proxy Statement.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In February 2004, our Board of Directors approved a stock repurchase program under which we were able to repurchase up to 2.5 million shares of our common stock in the open market or in privately negotiated transactions from time to time over the next two years. In July 2004, the remaining 325,900 shares of our common stock were repurchased under the stock repurchase program in open market transactions pursuant to Rule 10b-18.
In August 2004, our Board of Directors approved an additional 3.0 million shares for repurchase under the stock repurchase program, bringing the aggregate program total to 5.5 million shares.
The following table provides information about our equity security repurchases during the year ended December 31, 2004 that are registered pursuant to Section 12 of the Exchange Act:
Issuer Purchases of Equity Securities
Item 6.
Item 6. Selected Financial Data
Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled “Five Year Financial Summary.”
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled “Financials - Management’s Discussion and Analysis.”
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, section entitled “Financials - Management’s Discussion and Analysis - Market Risk.”
Item 8.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, sections entitled “Financials - Consolidated Financial Statements” and “Financials - Notes to Consolidated Financial Statements.”
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A.
Item 9A. Controls and Procedures
Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that (1) our disclosure controls and procedures were effective as of December 31, 2004, and (2) no change in internal control over financial reporting occurred during the quarter ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm are incorporated by reference from Item 8 of this Form 10-K “Financial Statements and Supplementary Data.”
Item 9B.
Item 9B. Other Information
None
Part III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 regarding directors is incorporated by reference from the information in the sections entitled “Nominees for Directors,” “Returning Members of the Board of Directors” and “Security Ownership of AAM Directors and Officers and Certain Beneficial Owners” in the Proxy Statement for the Annual Meeting of Stockholders to be held on April 28, 2005 (Proxy Statement), which is being filed on March 22, 2005.
The information required by Item 10 regarding executive officers appears as a Supplemental Item in Part I and incorporated by reference from the information in the section entitled “Security Ownership of AAM Directors and Officers and Certain Beneficial Owners” in our Proxy Statement.
We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Administrative Officer and Chief Financial Officer and the senior financial executives who report directly to our Chief Financial Officer. This code of ethics has been posted to our website at www.aam.com and is available free of charge through our website. Our Board of Directors has also adopted the AAM Corporate Governance Guidelines and the AAM Code of Business Conduct. The AAM Corporate Governance Guidelines and the AAM Code of Business Conduct have been posted to our website and are available in print free of charge to any AAM stockholder who requests it.
Item 11.
Item 11. Executive Compensation
The information required by Item 11 is incorporated by reference from the information in the sections entitled “Report of the Compensation Committee on Executive Compensation” and “Executive Compensation, Retirement Program and Employment and Continuity Agreements” in our Proxy Statement.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Equity Compensation Plan Information
The information in the section entitled “Security Ownership of AAM Directors and Officers and Certain Beneficial Owners” is incorporated by reference from our Proxy Statement.
Item 13.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 regarding certain relationships and related transactions is incorporated by reference from the information in the section entitled “Certain Relationships and Related-Party Transactions” in our Proxy Statement.
Item 14.
Item 14. Principal Accounting Fees and Services
The information required by Item 14 is incorporated by reference from the information in the section entitled “Report of the Audit Committee” in our Proxy Statement.
Part IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as a part of this report:
1.
All Financial Statements
Management’s Report on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders’ Equity
Notes to Consolidated Financial Statements
The above financial statements are filed as Exhibit 13 to this Form 10-K.
2.
Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts and the report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm, on our consolidated financial statement schedule (Schedule II) for the years ended December 31, 2004, 2003 and 2002 are filed as part of this Form 10-K.
All other schedules have been omitted because they are not applicable or not required.
3.
Exhibits
The following exhibits were previously filed unless otherwise indicated:
++ Confidentiality Requests Approved by the SEC
‡ Reflects Management or Compensatory Contract
* Filed herewith
** Shown only in the original filed with the Securities and Exchange Commission
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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:
March 1, 2005
By: /s/ Thomas L. Martin
Name:
Thomas L. Martin
Title: Vice President - Finance
& Chief Financial Officer
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
Signature
Title
Date
/s/ Richard E. Dauch
Co-Founder, Chairman of the Board &
March 1, 2005
Richard E. Dauch
Chief Executive Officer
/s/ Thomas L. Martin
Vice President - Finance &
March 1, 2005
Thomas L. Martin
Chief Financial Officer
/s/ Elizabeth A. Chappell
Director
March 1, 2005
Elizabeth A. Chappell
/s/ Forest J. Farmer
Director
March 1, 2005
Forest J. Farmer
/s/ Richard C. Lappin
Director
March 1, 2005
Richard C. Lappin
/s/ B.G. Mathis
Director
March 1, 2005
B.G. Mathis
/s/ Larry W. McCurdy
Director
March 1, 2005
Larry W. McCurdy
/s/ Larry K. Switzer
Director
March 1, 2005
Larry K. Switzer
/s/ Thomas K. Walker
Director
March 1, 2005
Thomas K. Walker
/s/ Dr. Henry T. Yang
Director
March 1, 2005
Dr. Henry T. Yang
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
American Axle & Manufacturing Holdings, Inc.:
We have audited the consolidated financial statements of American Axle & Manufacturing Holdings, Inc. and its subsidiaries (the Company) as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, and the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, and have issued our reports thereon dated February 1, 2005; such consolidated financial statements and reports are included in your 2004 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of the Company, listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Detroit, Michigan
February 1, 2005