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Web Address of American Axle & Manufacturing: Related Topics: Supplier Groups
© 1998 - 2004
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Companies
: American Axle
Full Year Highlights:
AAM reported fourth quarter earnings per share of 96 cents compared to the reported 99 cents per share in the fourth quarter of 2002. Earnings for the full year 2003 were a record $197.1 million, an increase in earnings of nearly 12% as compared to the $176.1 million reported for 2002. Full year 2003 diluted earnings per share were $3.70, an increase of 9% when compared to the reported $3.38 per share in 2002. Fourth quarter and full year 2002 results included a $5.5 million non-recurring gain or 10 cents per share, net of tax and other related costs, due to insurance proceeds from a fire at AAM's forge operations in Detroit. AAM continued its strong financial performance through the fourth quarter of 2003. Our performance for the quarter and year was again driven by successful launches of new, advanced product technology and our relentless focus on productivity and driving cost out of the entire value chain," said American Axle & Manufacturing Co-Founder, Chairman of the Board & CEO Richard E. Dauch. "AAM is proud to have met its financial commitments for 2003 and achieved investment grade credit status from both Standard & Poor's and Moody's in the fourth quarter of 2003." Sales were a fourth quarter record $926.1 million, up 2% as compared to $911.0 million in the fourth quarter of 2002. Sales to non-GM customers were up nearly 8% in the fourth quarter and represented 18.7% of total sales in the quarter versus 17.7% in the fourth quarter of 2002. AAM's record sales for the full year 2003 were $3.7 billion, up nearly 6% as compared to $3.5 billion in 2002. This compares to an estimated decrease of 3% in North American vehicle builds for the year. AAM sales in the quarter and the year were positively affected by increased General Motors light truck production, strong sales of the heavy-duty Dodge Ram, the HUMMER H2, and the fourth quarter 2003 launches of the GMC Envoy XUV and the GMC Canyon and Chevrolet Colorado mid-size trucks. Sales to non-GM customers were up 35% for the year and represented 18.3% of total sales in 2003 versus 14.3% in the prior year. AAM's content per vehicle increase of 3%, to more than $1,170, contributed to the increase in sales year over year. Gross margin was 14.9% in the fourth quarter of 2003 compared to the 14.2% gross margin reported in the fourth quarter of 2002. Gross margin for 2003 was 14.7% compared to the 14.1% in 2002. Operating income was $91.5 million or 9.9% of sales in the fourth quarter of 2003, as compared to $83.0 million or 9.1% of sales for the fourth quarter of 2002. Operating income for 2003 was $346.3 or 9.4% of sales compared to the $311.2 or 8.9% of sales in 2002. Cash flow provided by operations in the fourth quarter of 2003 was $170.9 million, up 13.1%, compared to $151.1 million generated in the similar period of 2002. Capital spending in the quarter was $56.2 million and for the full year 2003 was $229.1 million. As a result of this normalized level of capital spending and $496.9 million in cash flow provided by operating activities, net cash flow after capital expenditures was a positive $267.8 million for 2003. With this continued strong positive cash flow, AAM was able to reduce net debt levels by over $280 million in 2003, resulting in a net debt to capital ratio at year-end of 31% versus the 51% level at December 31, 2002. Research and development (R&D) spending rose approximately 12% to $60.7 million in 2003 versus $54.0 million for 2002. This increase is consistent with the Company's initiatives to develop future products targeted at growth segments of the market. As a result of this R&D commitment, AAM generated over 80% of its sales from new products introduced to the market since mid-1998. This compares to 78% for the year 2002 and 69% for 2001. Recent developments During the fourth quarter of 2003, AAM received a double notch credit rating upgrade to BBB, or investment grade, from Standard & Poor's and an investment grade upgrade from Moody's Investor Services to Baa3. On November 12, 2003, AAM announced that it had secured a new driveline systems contract. The contract includes front and rear axles, driveshafts and TracRite(R) differentials. The contract value is estimated at approximately $30 million annually for vehicles that will launch in model year 2005. This contract supports AAM's efforts to further diversify its customer base and product portfolio. On December 3, 2003, AAM announced the pricing of a secondary offering by Blackstone Capital Partners II Banking Fund L.P. and its affiliates (Blackstone). Under this offering, Blackstone sold its remaining shares of AAM stock and is no longer an equity shareholder in AAM. On December 23, 2003, AAM announced that Mr. Robert L. Friedman and Mr. Bret D. Pearlman, representatives from Blackstone, resigned from the AAM Board of Directors. This was the final step in Blackstone's planned and completed orderly exit strategy of its investment in AAM. On January 22, 2004, AAM announced plans to redeem all of AAM's 9.75% Senior Subordinated Notes Due March 2009 (the "9.75% Notes") on March 1, 2004. This redemption covers all $300.0 million of AAM's outstanding 9.75% Notes. AAM will report a pre-tax charge of $22.3 million in the first quarter of 2004 related to the redemption of the 9.75% Notes and the first quarter of 2004 refinancing of its bank credit facility. AAM is a world leader in the manufacture, engineering, design and validation of driveline systems and related components and modules, chassis systems and forged products for light trucks, sport utility vehicles and passenger cars. In addition to its 14 locations in the United States (in Michigan, New York and Ohio), AAM also has offices and facilities in Brazil, England, Germany, Japan, Mexico and Scotland.
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