Delaware
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001-14303
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38-3161171
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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One Dauch Drive, Detroit, Michigan
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48211-1198
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(Address of principal executive offices)
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(Zip code)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 8.01
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Other Events
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Item 9.01
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Financial Statements and Exhibits.
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(d)
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Exhibit
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99.1
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AAM’s unaudited pro forma condensed combined statement of income for the year ended December 31, 2017, and the notes related thereto, which reflect AAM’s acquisition of MPG.
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
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|||
Date: March 12, 2018
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By:
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/s/ Christopher J. May
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Christopher J. May
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Vice President & Chief Financial Officer
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Historical
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|||||||||||||||||||||||||
AAM
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MPG
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Pro Forma | |||||||||||||||||||||||
Year Ended
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Three Months
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Effect of | Acquisition | Condensed | |||||||||||||||||||||
(in millions, except per share data)
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December 31, 2017
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Ended April 2, 2017
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Reclassification
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Adjusted MPG
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Adjustments
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Combined
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|||||||||||||||||||
Net sales
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$
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6,266.0
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$
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749.1
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$
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-
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$
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749.1
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$
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(23.8
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)
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A1
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$
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6,991.3
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|||||||||||
Cost of goods sold
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5,146.9
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620.7
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-
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620.7
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(45.0
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)
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A2
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5,722.6
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|||||||||||||||||
Gross profit
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1,119.1
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128.4
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-
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128.4
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21.2
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1,268.7
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|||||||||||||||||||
Selling, general and administrative expense
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390.1
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89.8
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(43.3
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)
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R1
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46.5
|
0.1
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A3
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436.7
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||||||||||||||||
Amortization of intangible assets
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75.3
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-
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17.5
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R1
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17.5
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5.6
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A4
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98.4
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|||||||||||||||||
Restructuring and acquisition-related costs
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110.7
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-
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25.8
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R1
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25.8
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(73.7
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)
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A5
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62.8
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||||||||||||||||
Operating income
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543.0
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38.6
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-
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38.6
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89.2
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670.8
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|||||||||||||||||||
Interest expense
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(195.6
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)
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(26.8
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)
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-
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(26.8
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)
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(9.5
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)
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A6
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(231.9
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)
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|||||||||||||
Investment income
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2.9
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-
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-
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-
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-
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2.9
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|||||||||||||||||||
Other income (expense), net
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(10.3
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)
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1.1
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-
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1.1
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2.7
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A7
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(6.5
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)
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||||||||||||||||
Income before income taxes
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340.0
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12.9
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-
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12.9
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82.4
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435.3
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|||||||||||||||||||
Income tax expense
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2.5
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3.4
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-
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3.4
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28.8
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A8
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34.7
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||||||||||||||||||
Net income
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$
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337.5
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$
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9.5
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$
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-
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$
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9.5
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$
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53.6
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$
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400.6
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|||||||||||||
Income attributable to noncontrolling interest
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(0.4
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)
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(0.1
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)
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-
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(0.1
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)
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-
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(0.5
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)
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|||||||||||||||
Net income attributable to stockholders
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$
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337.1
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$
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9.4
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$
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-
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$
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9.4
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$
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53.6
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$
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400.1
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|||||||||||||
Earnings per share:
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|||||||||||||||||||||||||
Basic
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$
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3.22
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$
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3.52
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|||||||||||||||||||||
Diluted
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$
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3.21
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$
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3.51
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|||||||||||||||||||||
Weighted average common shares
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|||||||||||||||||||||||||
Basic
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102.3
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111.2
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A9
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||||||||||||||||||||||
Diluted
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102.8
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111.7
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A9
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Reclassification Adjustments – Unaudited pro forma condensed combined statement of income:
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Year Ended
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|||||
December 31, 2017
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||||||
(in millions)
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||||||
R1
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To reclassify MPG’s amortization expense, as well as their expenses incurred in conjunction with the merger, from Selling, general and administrative expense to Amortization of intangible assets and Restructuring and acquisition-related costs, respectively.
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$
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43.3
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December 31, 2017
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||||||
(in millions)
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||||||
A1
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Adjustment to net sales to eliminate MPG sales to AAM
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$
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23.8
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|||
A2
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To eliminate the cost of goods sold associated with MPG’s sales to AAM
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$
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(23.8
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)
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To adjust depreciation expense in cost of goods sold for the step-up of PP&E to fair value
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3.7
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|||||
To eliminate impact of step-up of inventory to fair value
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(24.9
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)
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||||
Adjustment to cost of goods sold
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$
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(45.0
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)
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A3
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To adjust depreciation expense in SG&A for the step-up of PP&E to fair value
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$
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0.1
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|||
A4
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To adjust amortization expense for intangible assets as a result of the write-off of MPG historical intangible assets and AAM’s recognition of new intangible assets as a result of the acquisition
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$
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5.6
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|||
A5
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To eliminate the effect of one-time acquisition-related charges that will not have an impact on the combined entity after the merger
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$
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73.7
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A6
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AAM incurred new debt as a result of the merger that was used, in part, to fund the cash consideration payable in connection with the merger, related fees and expenses, and to refinance certain existing indebtedness of MPG. The amount of new debt incurred was $2.85 billion, with maturities ranging from five to 10 years and a weighted average interest rate of 5.1%, including the amortization of financing fees. The following calculation represents the impact on interest expense as a result of the new borrowings and refinancing of certain existing long-term indebtedness of MPG:
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|||||
Interest expense on new senior secured credit facility (Term Loans) and new senior unsecured notes
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$
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33.0
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||||
Amortization of debt issuance costs and other fees
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3.3
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|||||
Elimination of MPG historical interest expense
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(26.8
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)
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||||
Adjustment to Interest expense
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$
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9.5
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||||
AAM incurred approximately $90.0 million in debt issuance costs associated with the new borrowings, which will be amortized into interest expense over the life of the borrowings. The impact of a 1/8% (12.5 basis points) change in the interest rate would result in a change of approximately $1.2 million in interest expense on an annual basis.
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||||||
A7
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To eliminate the debt refinancing and redemption costs incurred as a result of extinguishing certain existing long-term indebtedness of MPG
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$
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2.7
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|||
A8
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To adjust income tax expense at the statutory rate of 35% in the United States
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$
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28.8
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A9 |
The following table represents the estimated pro forma adjustments to shares outstanding for the purposes of calculating basic and diluted earnings per share:
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|||||||||
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Year Ended December 31, 2017
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|||||||||
Basic
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Diluted
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|||||||||
(in millions of shares)
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||||||||||
AAM weighted average shares as of December 31, 2016
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76.4
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76.9
|
||||||||
Shares of AAM common stock issued to stockholders of MPG, including MPG restricted shares accelerated and converted
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34.3
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34.3
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||||||||
Additional shares issued
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0.5
|
0.5
|
||||||||
Weighted average pro forma shares outstanding
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111.2
|
111.7
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