8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): December 16, 2019

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-14303	38-3161171
(Commission File Number)	(IRS Employer Identification No.)
One Dauch Drive, Detroit, Michigan	48211-1198
(Address of Principal Executive Offices)	(Zip Code)
(313) 758-2000
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation

of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	☐

 Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	AXL	New York Stock Exchange

Item 2.01 – Completion of Acquisition or Disposition of Assets

On December 16, 2019, American Axle & Manufacturing Holdings, Inc., a Delaware corporation (“AAM”), completed the previously announced sale (the “Sale”) of the entities that operate AAM’s U.S. iron casting operations pursuant to the terms of a Unit Purchase Agreement (the “Purchase Agreement”), dated as of September 18, 2019, by and among AAM, Grede AcquisitionCo, Inc., a Delaware Corporation (the “Purchaser”), and, for certain limited purposes, Grede TopCo, Inc., a Delaware corporation (“TopCo”). AAM received net proceeds of approximately $141.2 million in cash from the Sale, which are subject to customary post-closing adjustments, as well as a $60.0 million deferred payment obligation. Except in the case of certain acceleration events, TopCo will have twelve years after the closing of the Sale to pay (or cause to be paid) the deferred payment of $60.0 million which will accrue interest at the rate of 6% per annum from January 1, 2020. The Sale did not include the entities that conduct AAM’s iron casting operations in El Carmen, Mexico. The Purchaser and TopCo are entities affiliated with Gamut Capital Management, L.P.

The foregoing description of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Purchase Agreement filed as Exhibit 2.1 to AAM’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 2019, which is incorporated herein by reference.

The Purchase Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any financial or other information about AAM, the Purchaser or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, may be subject to important qualifications and limitations agreed upon by the parties thereto, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and security holders. AAM’s investors and security holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of AAM, the Purchaser or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures by AAM.

Item 7.01 Regulation FD Disclosure

On December 16, 2019, AAM issued a press release announcing the closing of the Sale. A copy of this press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information furnished in this Item 7.01 and Exhibit 99.1 is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Forward-Looking Statements

This report may contain forward-looking statements including, without limitation, statements with respect to the transaction and the anticipated consequences and benefits of the transaction and other information relating to matters that are not historical facts. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include the factors detailed from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this report. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Item 9.01 – Financial Statements and Exhibits

(b) Pro forma financial information

Unaudited pro forma condensed financial information of American Axle & Manufacturing Holdings, Inc. giving effect to the Sale and related notes thereto, including such information required by Article 11 of Regulation S-X, is attached as Exhibit 99.2 and incorporated herein by reference.

(d) Exhibits

Exhibit Number	Description of Exhibit
2.1	Unit Purchase Agreement, dated as of September 18, 2019, by and among American Axle & Manufacturing Holdings, Inc., Grede AcquisitionCo, Inc. and, for certain limited purposes, Grede TopCo, Inc. (incorporated herein by reference to Exhibit 2.1 to American Axle & Manufacturing Holdings, Inc.’s Current Report on Form 8-K, filed with the SEC on September 18, 2019).
99.1	Press Release issued by AAM on December 16, 2019.
99.2	Unaudited pro forma condensed financial information.
104	Cover Page Interactive File (cover page tags are embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
Date: December 16, 2019	By:	/s/ David E. Barnes
	Name:	David E. Barnes
	Title:	Vice President & General Counsel

EX-99.1

Exhibit 99.1

 

IMMEDIATE RELEASE

AAM CLOSES SALE OF U.S. IRON CASTING OPERATIONS

DETROIT, December 16, 2019 - American Axle & Manufacturing Holdings, Inc. (AAM), (NYSE: AXL) announced today that it has closed the previously announced sale of its U.S. iron casting operations (“Grede”) to funds managed by Gamut Capital Management. AAM received net cash proceeds of approximately $141.2 million from the sale, which are subject to customary post-closing adjustments, as well as a $60.0 million deferred payment obligation.

Forward-Looking Statements

This report may contain forward-looking statements including, without limitation, statements with respect to the transaction and the anticipated consequences and benefits of the transaction and other information relating to matters that are not historical facts. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include the factors detailed from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this report. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About AAM

AAM (NYSE:AXL) delivers POWER that moves the world. As a leading global tier 1 automotive supplier, AAM designs, engineers and manufactures driveline and metal forming technologies that are making the next generation of vehicles smarter, lighter, safer and more efficient. Headquartered in Detroit, AAM has over 20,000 associates operating at nearly 80 facilities in 17 countries to support our customers on global and regional platforms with a focus on quality, operational excellence and technology leadership.  To learn more, visit aam.com.

###

For more information:

Investor Contact:

Jason P. Parsons

Director, Investor Relations

(313) 758-2404

jason.parsons@aam.com

Media Contact:

Christopher M. Son
Vice President, Marketing & Communications
(313) 758-4814
chris.son@aam.com

Or visit the AAM website at www.aam.com.

 

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

On December 16, 2019, American Axle & Manufacturing Holdings, Inc., a Delaware corporation (“AAM”), completed the previously announced sale (the “Sale”) of the entities that operate AAM’s U.S. iron casting operations (the “Grede Business”) pursuant to the terms of a Unit Purchase Agreement, dated as of September 18, 2019, by and among AAM, Grede AcquisitionCo, Inc., a Delaware corporation, and, for certain limited purposes, Grede TopCo, Inc., a Delaware corporation (“TopCo”). AAM received net proceeds of approximately $141.2 million in cash from the Sale, which are subject to customary post-closing adjustments, as well as a $60.0 million deferred payment obligation.

The following unaudited pro forma condensed financial statements (the “Pro Forma Financial Statements”) have been prepared to illustrate the effect of the Sale on AAM’s historical consolidated financial statements.

The Pro Forma Financial Statements are for informational purposes only. They do not purport to indicate the results that would actually have been obtained had the Sale been completed on the assumed date or for the periods presented, or to indicate the results that may be realized in the future.

The Pro Forma Financial Statements are subject to the assumptions and adjustments described in the accompanying notes below. The assumptions and adjustments are based on information presently available. Actual adjustments may differ materially from the information presented. Additionally, the Pro Forma Financial Statements should be read in conjunction with:

• AAM’s unaudited condensed consolidated financial statements and accompanying notes for the nine months ended September 30, 2019 included in its Quarterly Report on Form 10-Q for the period ended September 30, 2019; and

• AAM’s audited consolidated financial statements and accompanying notes for the year ended December 31, 2018 included in its Annual Report on Form 10-K for the year ended December 31, 2018.

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American Axle & Manufacturing Holdings, Inc.

PRO FORMA CONDENSED BALANCE SHEET

As of September 30, 2019

	Historical
(in millions)	AAM			Pro Forma Adjustments				Adjusted AAM
Assets
Current assets
Cash and cash equivalents	$	375.1		$	135.5		A1	$	510.6
Accounts receivable, net		976.9			—				976.9
Inventories, net		403.1			—				403.1
Prepaid expenses and other		130.9			—				130.9
Current assets held-for-sale		312.2			(312.2	)	A2		—
Total current assets		2,198.2			(176.7	)			2,021.5
Property, plant and equipment, net		2,326.4			—				2,326.4
Deferred income taxes		61.9			—				61.9
Goodwill		1,127.5			—				1,127.5
Other intangible assets, net		881.5			—				881.5
GM postretirement cost sharing asset		223.1			—				223.1
Other assets and deferred charges		497.7			60.0		A3		557.7
Total assets		7,316.3			(116.7	)			7,199.6
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt		23.8			—				23.8
Accounts payable		703.7			—				703.7
Accrued compensation and benefits		165.1			—				165.1
Deferred revenue		22.6			—				22.6
Accrued expenses and other		220.2			—				220.2
Current liabilities held-for-sale		101.7			(101.7	)	A2		—
Total current liabilities		1,237.1			(101.7	)			1,135.4
Long-term debt, net		3,673.3			—				3,673.3
Deferred revenue		83.1			—				83.1
Deferred income taxes		21.6			—				21.6
Postretirement benefits and other long-term liabilities		891.6			—				891.6
Total liabilities		5,906.7			(101.7	)			5,805.0
Stockholders’ Equity
Common stock, par value		1.2			—				1.2
Paid-in capital		1,310.1			—				1,310.1
Retained earnings		703.0			(12.9	)	A4		690.1
Treasury stock		(209.3	)		—				(209.3	)
Accumulated other comprehensive income (loss)
Defined benefit plans, net of tax		(241.1	)		(2.1	)	A5		(243.2	)
Foreign currency translation adjustments		(131.3	)		—				(131.3	)
Unrecognized loss on cash flow hedges, net of tax		(25.8	)		—				(25.8	)
Total AAM stockholders’ equity		1,406.8			(15.0	)			1,391.8
Noncontrolling interests in subsidiaries		2.8			—				2.8
Total stockholders’ equity		1,409.6			(15.0	)			1,394.6
Total liabilities and stockholders’ equity	$	7,316.3		$	(116.7	)		$	7,199.6

2 

American Axle & Manufacturing Holdings, Inc.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2019

	Historical
(in millions)	AAM			Pro Forma Adjustments				Adjusted AAM
Net sales	$	5,100.9		$	(509.2	)	A6	$	4,591.7
Cost of goods sold		4,381.7			(492.1	)	A6		3,889.6
Gross profit		719.2			(17.1	)			702.1
Selling, general and administrative expenses		274.7			(9.9	)	A6		264.8
Amortization of intangible assets		73.6			(8.8	)	A6		64.8
Impairment charge		225.0			(225.0	)	A6		—
Restructuring and acquisition-related costs		36.0			(1.4	)	A6		34.6
Operating income		109.9			228.0				337.9
Interest expense		(163.9	)		(0.6	)	A6		(164.5	)
Investment income		3.4			2.7		A7		6.1
Other expense, net
Debt refinancing and redemption costs		(7.5	)		—				(7.5	)
Other, net		(9.0	)		(0.4	)	A6		(9.4	)
Income (loss) before income taxes		(67.1	)		229.7				162.6
Income tax expense (benefit)		(37.4	)		48.2		A8		10.8
Net income (loss)	$	(29.7	)	$	181.5			$	151.8
Net income attributable to noncontrolling interests		(0.4	)		—				(0.4	)
Net income (loss) attributable to AAM	$	(30.1	)	$	181.5			$	151.4
Basic earnings (loss) per share	$	(0.27	)	$	1.57		A9	$	1.30
Diluted earnings (loss) per share	$	(0.27	)	$	1.56		A9	$	1.29

3 

American Axle & Manufacturing Holdings, Inc.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2018

	Historical
(in millions)	AAM			Pro Forma Adjustments				Adjusted AAM
Net sales	$	7,270.4		$	(741.3	)	A6	$	6,529.1
Cost of goods sold		6,130.0			(724.9	)	A6		5,405.1
Gross profit		1,140.4			(16.4	)			1,124.0
Selling, general and administrative expenses		385.7			(15.9	)	A6		369.8
Amortization of intangible assets		99.4			(13.2	)	A6		86.2
Goodwill impairment		485.5			(313.4	)	A6		172.1
Restructuring and acquisition-related costs		78.9			(1.3	)	A6		77.6
Gain on sale of business		(15.5	)		—				(15.5	)
Operating income		106.4			327.4				433.8
Interest expense		(216.3	)		(1.2	)	A6		(217.5	)
Investment income		2.0			3.6		A7		5.6
Other income (expense)
Debt refinancing and redemption costs		(19.4	)		—				(19.4	)
Gain on settlement of capital lease		15.6			—				15.6
Other, net		(2.2	)		(1.6	)	A6		(3.8	)
Income (loss) before income taxes		(113.9	)		328.2				214.3
Income tax expense (benefit)		(57.1	)		68.9		A8		11.8
Net income (loss)	$	(56.8	)	$	259.3			$	202.5
Net income attributable to noncontrolling interests		(0.7	)		—				(0.7	)
Net income (loss) attributable to AAM	$	(57.5	)	$	259.3			$	201.8
Basic earnings (loss) per share	$	(0.51	)	$	2.25		A9	$	1.74
Diluted earnings (loss) per share	$	(0.51	)	$	2.24		A9	$	1.73

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NOTES TO PRO FORMA FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

AAM’s historical consolidated financial statements have been adjusted in the Pro Forma Financial Statements to give effect to pro forma events that are (1) directly attributable to the Sale, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed statements of operations (the “Pro Forma Statements of Operations”), expected to have a continuing impact on the results of AAM. The unaudited pro forma condensed balance sheet as of September 30, 2019 (the “Pro Forma Balance Sheet”) is based on the historical unaudited consolidated balance sheet of AAM and the internally-prepared unaudited balance sheet of the Grede Business, and has been prepared to reflect the Sale as if it occurred on September 30, 2019. The Pro Forma Statement of Operations for the nine months ended September 30, 2019 is based on the historical unaudited consolidated statement of operations of AAM and the internally-prepared unaudited statement of operations of the Grede Business for this period. The Pro Forma Statement of Operations for the year ended December 31, 2018 is based on the historical audited consolidated statement of operations of AAM and the internally-prepared unaudited statement of operations of the Grede Business for this period. The Pro Forma Statements of Operations give effect to the Sale as if it occurred on January 1, 2018, the beginning of the earliest period presented.

5 

2. PRO FORMA ADJUSTMENTS

Adjustments related to the Sale and the derecognition of balances of the Grede Business from the AAM consolidated financial statements are reflected in the “Pro Forma Adjustments” columns in the Pro Forma Financial Statements and are as follows:

Pro Forma Balance Sheet:

A1 The following represents the calculation of the preliminary adjustment to cash and cash equivalents:

	September 30, 2019 (in millions)
Cash proceeds from the Sale subsequent to customary closing adjustments	$	141.2
Payment of transaction costs		(5.7	)
Adjustment to cash and cash equivalents	$	135.5

A2 The following represents the assets and liabilities of the Grede Business that were classified as held-for-sale in the September 30, 2019 historical balance sheet of AAM:

	September 30, 2019 (in millions)
Accounts receivable, net	$	89.1
Inventories		32.8
Prepaid expenses and other		1.5
Property, plant and equipment, net		184.6
Intangible assets, net		158.2
Other assets and deferred charges		71.0
Impairment of carrying value		(225.0	)
Total assets held-for-sale	$	312.2
Accounts payable		71.3
Accrued compensation and benefits		6.8
Accrued expenses and other		3.4
Postretirement benefits and other long-term liabilities		20.2
Total liabilities held-for-sale	$	101.7

A3 A portion of the consideration to be received by AAM for the Sale is in the form of a deferred payment obligation of $60.0 million. Except in the case of certain acceleration events, TopCo will have twelve years after the closing of the Sale to pay (or cause to be paid) the deferred payment of $60.0 million, which will accrue interest at the rate of 6% per annum from January 1, 2020.

A4 This represents the estimated loss on the Sale that is included as an adjustment to Retained earnings but is not included in the Pro Forma Statement of Operations for the year ended December 31, 2018 because it will not have a continuing impact on AAM after the Sale is completed.

A5 The Sale will result in the derecognition of approximately $2.1 million of net deferred actuarial gains in accumulated other comprehensive income (loss) associated with the Grede Business’s pension and other postretirement benefit plans.

6 

Pro Forma Statements of Operations

A6 This represents the adjustments to derecognize the Grede Business activity from the historical AAM consolidated statements of operations for the nine months ended September 30, 2019 and the year ended December 31, 2018.

A7 As noted in adjustment A3, $60.0 million of the consideration received is in the form of a deferred payment obligation which will accrue interest at an annual rate of 6%, resulting in increased Investment income of $2.7 million for the nine months ended September 30, 2019 and $3.6 million for the year ended December 31, 2018.

A8 This represents adjustments to income tax expense (benefit) at the statutory rate of 21% in the United States.

A9 The adjustments to basic and diluted earnings (loss) per share are calculated using weighted-average shares of 115.6 million and 116.0 million, respectively, for the nine months ended September 30, 2019 and 115.0 million and 115.8 million, respectively, for the year ended December 31, 2018.

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Cover [Abstract]
Document Type	8-K
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Entity Registrant Name	AMERICAN AXLE & MANUFACTURING HOLDINGS INC
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Title of 12(b) Security	Common Stock, par value $0.01 per share
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