AXL 2013 10K

10-K 1 axl201310k.htm FORM 10-K DECEMBER 31, 2013 AXL 2013 10K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 1-14303

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



DELAWARE		38-3161171
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		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)

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



Title of Each Class		Name of Each Exchange on Which Registered
COMMON STOCK, PAR VALUE $0.01 PER SHARE		NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS, PAR VALUE $0.01 PER SHARE		NEW YORK STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o

(Do not check if small reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The closing price of the Common Stock on June 30, 2013 as reported on the New York Stock Exchange was $18.63 per share and the aggregate market value of the registrant's Common Stock held by non-affiliates was approximately $1,278.1 million.

As of February 5, 2014, the number of shares of the registrant's Common Stock, $0.01 par value, outstanding was 75,598,824 shares.

Documents Incorporated by Reference

Portions of the registrant's Annual Report to Stockholders for the year ended December 31, 2013 and Proxy Statement for use in connection with its Annual Meeting of Stockholders to be held on May 1, 2014, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after December 31, 2013, are incorporated by reference in Part I (Items 1, 1A, 1B, 2, 3 and 4), Part II (Items 5, 6, 7, 7A, 8, 9, 9A and 9B), Part III (Items 10, 11, 12, 13 and 14) and Part IV (Item 15) of this Report.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

TABLE OF CONTENTS - ANNUAL REPORT ON FORM 10-K

Year Ended December 31, 2013



			Page Number

Part I	Item 1	Business	2
	Item 1A	Risk Factors	13
	Item 1B	Unresolved Staff Comments	17
	Item 2	Properties	18
	Item 3	Legal Proceedings	19
	Item 4	Mine Safety Disclosures	19

Part II	Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
	Item 6	Selected Financial Data	20
	Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	37
	Item 8	Financial Statements and Supplementary Data	38
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	80
	Item 9A	Controls and Procedures	80
	Item 9B	Other Information	80

Part III	Item 10	Directors, Executive Officers and Corporate Governance	81
	Item 11	Executive Compensation	81
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	81
	Item 13	Certain Relationships and Related Transactions, and Director Independence	81
	Item 14	Principal Accounting Fees and Services	81

Part IV	Item 15	Exhibits and Financial Statement Schedules	82
Exhibit 10.35		Form of Performance Share Award Agreement (Relative TSR) for Executive Officers under the 2012 Omnibus Incentive Plan
Exhibit 10.36		Form of Performance Share Award Agreement (EBITDA) for Executive Officers under the 2012 Omnibus Incentive Plan
Exhibit 10.37		Form of Restricted Stock Unit Award Agreement (Cliff Vesting) for Executive Officers under the 2012 Omnibus Incentive Plan
Exhibit 12		Computation of Ratio of Earnings to Fixed Charges
Exhibit 21		Subsidiaries of the Registrant
Exhibit 23		Consent of Independent Registered Public Accounting Firm
Exhibit 31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act
Exhibit 31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act
Exhibit 32		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS		XBRL Instance Document
Exhibit 101.SCH		XBRL Taxonomy Extension Schema Document
Exhibit 101.PRE		XBRL Extension Presentation Linkbase Document
Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

Part I


Item 1.	Business

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.


(a)	General Development of Business

Holdings, a Delaware corporation, is a successor to American Axle & Manufacturing of Michigan, Inc., a Michigan corporation, pursuant to a migratory merger between these entities in 1999.


(b)	Financial Information About Segments

See Item 8, “Financial Statements and Supplementary Data - Note 12 - Segment and Geographic Information” included in this report.


(c)	Narrative Description of Business

Company Overview

We are a Tier I supplier to the automotive industry. We manufacture, engineer, design and validate driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles (SUVs), passenger cars, crossover vehicles and commercial vehicles. Driveline and drivetrain systems include components that transfer power from the transmission and deliver it to the drive wheels. Our driveline, drivetrain and related products include axles, driveheads, chassis modules, driveshafts, power transfer units, transfer cases, chassis and steering components, transmission parts and metal-formed products. In addition to locations in the United States (U.S.) (Michigan, Ohio, Indiana and Pennsylvania), we also have offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand.

We are the principal supplier of driveline components to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks and SUVs manufactured in North America, supplying substantially all of GM's rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. Sales to GM were approximately 71% of our consolidated net sales in 2013 and approximately 73% of our consolidated net sales in both 2012 and 2011.

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 Lifetime Program Contract (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 5 to 7 years, and require us to remain competitive with respect to technology, design and quality.

We also supply driveline system products for the Chrysler Group LLC's (Chrysler) heavy-duty Ram full-size pickup trucks and its derivatives, as well as the 2014 AWD Jeep Cherokee. Sales to Chrysler were approximately 12% of our consolidated net sales in 2013, 10% in 2012 and 8% in 2011. In addition to GM and Chrysler, we supply driveline systems and other related components to Volkswagen AG (Volkswagen), Audi AG (Audi), Mack Trucks Inc. (Mack Truck), PACCAR Inc., Harley-Davidson Inc., Beijing Benz Automotive Co., Ltd., Nissan Motor Co., Ltd. (Nissan), Deere & Company, Scania AB, Tata Motors, Ford Motor Company (Ford) and other original equipment manufacturers (OEMs) and Tier I supplier companies such as Jatco Ltd. and Hino Motors Ltd. Our consolidated net sales to customers other than GM increased 17% to $926.7 million in 2013 as compared to $792.6 million in 2012 and $710.0 million in 2011.

We estimate our principal served market to be approximately $35 billion based on information available at the end of 2013. Our principal served market is the driveline market, which consists of driveline, drivetrain and related components and chassis modules for light trucks, SUVs, passenger cars, crossover vehicles and commercial vehicles, in the regions in which we compete.

The following chart sets forth the percentage of total revenues attributable to our products for the periods indicated:



	Year ended December 31,
	2013		2012		2011
Axles and driveshafts	82	%	82	%	81	%
Drivetrain components, forged products and other	18	%	18	%	19	%
Total	100	%	100	%	100	%

Business Strategy

We are focused on profitable net sales growth and strengthening our balance sheet by capitalizing on our competitive strengths and continuing to diversify our customer, product and geographic sales mix while providing exceptional value to our customers. Over the past several years, we have taken necessary restructuring actions that allowed us to make significant, sustainable structural cost reductions which have enabled us to be market cost competitive on a global basis.

We have aligned our business strategy to build value for our key stakeholders. This strategy emphasizes a commitment to deliver industry leading quality, technology leadership and operational excellence. By focusing on this commitment, we can achieve our key critical business objectives of product and customer diversification, globalization and solid financial performance. This strategy includes the following actions:

Maintain our high quality standards which are the foundation of our product durability and reliability.


•	AAM has an outstanding daily track record for delivering quality products, having averaged less than 10 discrepant parts per million (PPM) since 2003, as measured by our largest customer.


•	Our quality performance has resulted in improved warranty performance for our customers. As a result, customer incidents per thousand vehicles have improved an average of approximately 15% annually since 2006, as measured by our largest customer.

Achieve technology leadership by delivering innovative driveline products which improve the diversification of our product portfolio while increasing our total global served market.

•

AAM's significant investment in research and development has resulted in the development of advanced technology products designed to assist our customers in meeting the market demands for higher fuel-efficiency; lower emissions; more sophisticated electronic controls; improved safety, ride and handling performance; and enhanced reliability and durability for light trucks, SUVs, passenger cars, crossover vehicles and commercial vehicles.

•

In recognition of AAM's innovative approach to provide enhanced vehicle control while maximizing fuel economy, AAM's industry-first EcoTrac^®Disconnecting AWD technology was selected as a 2014 Automotive News PACE Award Finalist. AAM's EcoTrac^® Disconnecting AWD system is a fuel-efficient and environmentally friendly driveline system that provides OEMs the option of an all-wheel-drive system that disconnects when not needed to improve fuel efficiency and reduce CO₂ emissions compared to conventional AWD systems. AAM's EcoTrac^®Disconnecting AWD system is featured on the all-new 2014 Jeep Cherokee.

•

e-AAM Driveline Systems AB (e-AAM), previously a joint venture between AAM and Saab Automobile AB (Saab), was created to design and commercialize electric and hybrid driveline systems designed to improve fuel efficiency, reduce CO₂ emissions and provide AWD capability. AAM now has 100% ownership of e-AAM, and will continue engineering, developing and commercializing electric and hybrid driveline systems for passenger cars and crossover vehicles. In 2013, we announced that we had secured a new driveline systems contract featuring patented e-AAM^TMhybrid & electric driveline systems technology with Qoros Auto Co., Ltd. in China.

•

AAM has established a high efficiency product portfolio that is designed to improve axle efficiency and fuel economy through innovative product design technologies. In 2012, AAM launched a high efficiency axle on the Cadillac ATS compact luxury sport sedan, which was named the 2013 North American Car of the Year. AAM's new and incremental business backlog launching from 2014-2016 also includes our high efficiency rear-drive module on the all-new Cadillac CTS, Motor Trend's 2014 Car of the Year.

Sustain our operational excellence and focus on cost management to deliver exceptional value to our customers.


•	We had 28 successful launches in 2013. These launches included three key programs; the next generation RAM Heavy Duty pickups, the 2014 North American Truck of the Year, GM’s new full size pickups (K2XX Program), and the all-new 2014 Jeep Cherokee.


•	Our focus on cost management has led to sustainable structural reductions in AAM's fixed cost structure. We continue to focus on cost management through the implementation of the AAM Manufacturing System to improve quality, eliminate waste, and reduce lead time and total costs globally.

•

Our stand alone United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) agreement covers hourly associates at our Three Rivers Manufacturing Facility ensures market competitiveness at AAM's largest U.S. facility into 2017. The collective bargaining agreements that cover our hourly associates at our Colfor Manufacturing Inc. and MSP Industries Corporation subsidiaries expire in 2014 and 2017, respectively.


•	With the closure of our Detroit Manufacturing Complex (DMC) and Cheektowaga Manufacturing Facility (CKMF) in 2012, we have achieved market competitive labor cost structures at each of our global locations.

Diversify our business through the growth of new and existing customer relationships and expansion of our product portfolio.

•

In addition to maintaining and building upon our long standing relationships with GM and Chrysler, we have focused on generating profitable growth with new and existing global OEM customers, as well as commercial vehicle, off-road and emerging market OEMs. As a result, new business launches in 2013 included business with Scania, Nissan, Jaguar Land Rover, Daimler Truck and Honda. New and expanded business launches in 2014 through 2016 include business with Chrysler, Daimler Truck, Ford, Honda, Jaguar Land Rover, Mercedes-Benz, Nissan, Tata Motors, Volvo and others.

•

We have accelerated the development and launch of products for passenger cars and crossover vehicles and the global light truck and commercial vehicle markets. We have approximately $900 million of new and incremental business backlog launching from 2014 to 2016, of which approximately 70% relates to AWD and RWD applications for passenger cars, crossover vehicles and driveline applications for the commercial vehicle market.

•

Over 70% of our new and incremental business backlog launching from 2014 to 2016 is for customers other than GM. In addition, we have over $1 billion in quoted and emerging new business opportunities. These opportunities would allow us to continue the diversification and expansion of our customer base, product portfolio and global footprint. Substantially all of these opportunities are for customers other than GM.

Achieve globalization by increasing our presence in growth markets to support our customers' global platforms.


•	Over the past few years, we have significantly increased our installed capacity in cost competitive global growth markets to support current programs and future opportunities. Specific actions included expanding capacity in Brazil, China, Mexico, Poland, Thailand and the U.S. and constructing new facilities in India and Mexico.

•

In 2011, we also expanded our existing joint venture (JV) with Hefei Automobile Axle Co., Ltd. (HAAC), a subsidiary of the JAC Group (Anhui Jianghuai Automotive Group Co., Ltd.) to include 100% of HAAC's light commercial axle business. By adding the light and medium duty commercial axle business, this expanded joint venture will supply front and rear beam axles to several leading Chinese light truck manufacturers, including JAC and BAIC Foton, making AAM the second largest axle supplier in China's light commercial truck segment. Sales for this unconsolidated JV were approximately $181 million in 2013 and are expected to nearly double in the next five years.


•	Approximately 35% of our $900 million of new and incremental business backlog launching from 2014 to 2016 is for end use markets outside the U.S. and approximately 70% has been sourced to our manufacturing facilities outside the U.S.

Achieve solid financial performance to build value for our key stakeholders.


•	Over the past three years, AAM's compound annual growth rate (CAGR) for sales has exceeded the growth rate of the industry. We expect AAM's new and incremental business backlog to drive our sales growth to exceed a targeted 10% CAGR through 2015. This is more than double the rate of growth expected for the industry, which is expected to grow by less than 5% based on current industry estimates.

•

We have established a cost competitive, operationally flexible global manufacturing, engineering and sourcing footprint by re-aligning our global installed capacity to increase our presence in global growth markets, support global product development initiatives and establish regional cost competitiveness. This includes having manufacturing facilities in Brazil, China, India, Mexico, Poland, Scotland, Thailand and the U.S.


•	In 2013, we successfully closed on over $1.25 billion in new and amended financing agreements. As a result, we reduced our weighted average interest cost, extended our debt maturities and improved debt covenant terms and conditions. By taking advantage of favorable market conditions, we improved our flexibility to manage and grow our business and to support AAM's long-term strategic objectives.

Competition and Strengths

We compete with a variety of independent suppliers and distributors, as well as with the in-house operations of certain OEMs. Our principal competitors include Dana Holding Corporation, GKN plc, Magna International Inc., ZF Friedrichshafen AG, Linamar Corporation, Meritor Inc. and the in-house operations of various global OEMs. The sector is also attracting new competitors from Asia, some of whom are entering both of our product lines through the acquisition of OEM non-core operations.

With a focus on engineering and manufacturing, we support our business strategy and differentiate ourselves through outstanding long-term daily track records on quality, reliability, delivery and launch performance. We reduced our discrepant PPM performance, as measured by our largest customer, from 13,441 PPM in 1994 to an average of less than 10 PPM for the last 10 years.

We have converted our former fixed legacy labor cost structure to a highly flexible, competitive and variable cost structure.

We continuously evaluate the need to rationalize excess capacity through consolidation, divestiture, idling or closing facilities to maximize productivity and capacity utilization and further minimize operating and overhead costs. This is evidenced by the following actions:

•

In 2012, we closed DMC and CKMF upon the expiration of our collective bargaining agreement for these locations with the International UAW. The programs previously sourced to these locations were moved to our market cost competitive North American facilities. DMC's business was resourced to Three Rivers Manufacturing Facility, our largest U.S. manufacturing facility, and CKMF's business was resourced to our facilities in Indiana, Ohio and Mexico.


•	In 2011, we closed our Spurrier Manufacturing Facility in England.

All of our global facilities utilize the AAM Manufacturing System, a business philosophy focused on lean manufacturing designed to facilitate cost reductions, improve quality, reduce inventory and improve our operating flexibility. This philosophy is demonstrated through the following:

•

Ability to drive home the benefits of market cost competitiveness and productivity initiatives - our Three Rivers Manufacturing Facility was named one of the 10 best plants in North America by IndustryWeek Magazine, which recognizes North American manufacturing facilities that foster productive and competitive work environments and optimize customer satisfaction. The AAM Manufacturing System and associate involvement were noted as key enablers for the plant to be awarded new business.

•

Recognition for demonstrating outstanding achievements in manufacturing processes, quality enhancements, productivity improvement and customer satisfaction - our Guanajuato Manufacturing Complex is a prior "Shingo Prize" award recipient for Manufacturing Excellence, which focuses on lean manufacturing techniques and promotes world-class business performance through continuous improvements in core manufacturing and business processes.

Industry Trends

See Item 7, “Management's Discussion and Analysis - Industry Trends.”

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 qualified sources in quantities sufficient for our needs. We currently have contracts with our steel suppliers that ensure continuity of supply to our principal operating facilities in North America. We also have validation and testing capabilities that enable us to strategically qualify steel sources on a global basis. As we continue to expand our global manufacturing footprint, we will rely on suppliers in local markets that have not yet proven their ability to meet our requirements.

Research and Development (R&D)

We continue to invest in the development of new products, processes and systems to improve efficiency and flexibility in our operations and continue to deliver innovative new products, chassis modules and integrated driveline systems to our customers.

In 2013, R&D spending was $103.4 million, net of customer engineering, design and development recoveries, as compared to $123.4 million in 2012 and $113.6 million in 2011. The focus of this investment continues to be developing innovative driveline and drivetrain systems and related components for light trucks, passenger cars, SUVs, crossover vehicles and commercial vehicles in the global marketplace. Product development in this area includes power transfer units, transfer cases, driveline and transmission differentials, multi-piece driveshafts, constant velocity joints, torque transfer devices, chassis modules and front and rear drive axles. We continue to focus on electronic integration in our existing and future products to advance their performance. We also continue to support the development of hybrid and electric vehicle systems. Special emphasis is also placed on the development of products and systems that provide our customers with advancements in fuel efficiency and emissions reduction and improved performance metrics such as noise vibration harshness (NVH) and power density. 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.

We have also developed and commercialized a disconnecting AWD system, which strengthens AAM's position as a leader in global driveline systems technology. AAM's EcoTrac^® Disconnecting AWD system is an industry-first technology that seamlessly engages AWD functionality while improving fuel efficiency and reducing CO₂ emissions. The system is featured on the all-new 2014 Jeep Cherokee.

AAM also develops and manufactures high-efficiency axle systems through the use of proprietary technologies to optimize product design and lubrication management, while also significantly reducing friction and improving fuel economy. In 2012, AAM launched a high efficiency axle on the Cadillac ATS compact luxury sport sedan. AAM's new and incremental business backlog also includes our high efficiency rear-drive modules on the all-new Cadillac CTS, Motor Trend's 2014 Car of the Year.

Our e-AAM subsidiary engineers and develops electric and hybrid driveline systems to be commercialized for passenger cars and crossover vehicles. These systems are designed to improve fuel efficiency by up to 30%, reduce CO₂emissions and provide AWD capability with the additional benefit of improved vehicle stability when compared to traditional mechanical AWD systems.

Through the development of our EcoTrac^® Disconnecting AWD system, our high efficiency axles and our e-AAM hybrid and electric driveline systems, we have significantly advanced our efforts to improve fuel efficiency and ride and handling performance while reducing emissions.

Backlog

We typically enter into agreements with our customers to provide axles or other driveline or drivetrain products for the life of our customers' vehicle programs. Our new and incremental business backlog includes awarded programs and incremental content and volume including customer requested engineering changes. Our backlog may be impacted by various assumptions, many of which are provided by our customers based on their long range production plans. These assumptions include future production volume estimates, changes in program launch timing and fluctuation in foreign currency exchange rates.

Our new and incremental business backlog is approximately $900 million for programs launching from 2014 to 2016. Approximately 70% of our new and incremental business backlog relates to RWD and AWD applications for passenger cars, crossover vehicles and driveline applications for the commercial vehicle markets. Approximately 35% of our new and incremental business backlog will be for end use markets outside the U.S. and approximately 70% has been sourced to our non-U.S. manufacturing facilities. Over 70% of our new and incremental business backlog is for customers other than GM.

Patents and Trademarks

We maintain and have pending various U.S. and foreign patents, 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

Our operations are cyclical because they are directly related to worldwide automotive production, which is itself cyclical and dependent on general economic conditions and other factors. Our business is also moderately seasonal as our major OEM customers historically have an extended shutdown of operations (typically 1 to 2 weeks) in conjunction with their model year changeover and an approximate one-week shutdown in December. Accordingly, our quarterly results may reflect these trends.

Environmental Matters

We are subject to various federal, state, local and foreign environmental and occupational safety and health laws, regulations and ordinances, including those regulating air emissions, water discharge, waste management and environmental cleanup. We closely monitor our environmental conditions to ensure that we are in compliance with applicable laws, regulations and ordinances. We have made, and will continue to make, capital and other expenditures to comply with environmental requirements, including recurring administrative costs. Such expenditures were not significant in 2013, 2012 and 2011.

Associates

We employ approximately 12,650 associates on a global basis, including our joint venture affiliates, of which approximately 3,650 are employed in the U.S. Approximately 2,175 associates are represented by the UAW. Approximately 1,450 of our hourly associates at our Three Rivers Manufacturing Facility in Michigan are subject to a stand alone UAW agreement that expires September 13, 2017. An additional 725 associates at our Colfor Manufacturing, Inc. and MSP Industries Corporation subsidiaries are represented by the UAW under collective bargaining agreements that expire June 6, 2014 and April 18, 2017, respectively. In addition, approximately 125 associates at our Albion Automotive subsidiary in Scotland, approximately 3,500 associates at our Guanajuato Manufacturing Complex in Mexico and approximately 750 associates at our Araucaria Manufacturing Facility in Brazil are represented by labor unions that are subject to collective bargaining agreements. The current collective bargaining agreement at Albion will expire on March 31, 2014. The collective bargaining agreements in Mexico and Brazil expire annually.

Executive Officers of the Registrant



Name	Age	Position
David C. Dauch .........................................	49	Chairman of the Board, President & Chief Executive Officer
Michael K. Simonte ...................................	50	Executive Vice President & Chief Financial Officer
Alberto L. Satine .......................................	57	Senior Vice President - Global Driveline Operations
Terry J. Woychowski..................................	58	Senior Vice President - Engineering & Quality
Mark S. Barrett ..........................................	53	Group Vice President - Procurement, Program Management and Driveshaft Business Unit
Steven J. Proctor ......................................	57	Group Vice President - Global Sales and Business Development
Michael Bly.................................................	46	President - AAM Europe, Vice President - AAM Corporate
David A. Culton .........................................	48	Vice President - Material Cost Optimization
Phillip R. Guys ..........................................	51	Vice President - Product Engineering & Development
Terri M. Kemp ...........................................	48	Vice President - Human Resources
Michael J. Lynch .......................................	49	Vice President - Finance & Controller
Allan R. Monich..........................................	60	Vice President - Quality, Warranty & Customer Satisfaction
Kevin M. Smith..........................................	52	Vice President - Global Manufacturing Services
John S. Sofia ............................................	53	Vice President - Global Program Management
Thomas J. Szymanski................................	52	President - AAM North America, Vice President - AAM Corporate
Norman Willemse .....................................	57	Vice President - Metal Formed Products Business Unit

David C. Dauch, age 49, has been Chairman of the Board, President and Chief Executive Officer since September 2013 and has served on AAM's Board of Directors since April 2009. Prior to that, he served as President and Chief Executive Officer (since September 2012), President & Chief Operating Officer (since June 2008), Executive Vice President & Chief Operating Officer (since December 2007); Executive Vice President - Commercial & Strategic Development (since January 2005); 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 and served on the Board of Directors at Collins & Aikman Products Company. Presently, he serves on the Boards of Directors of Business Leaders for Michigan, the Detroit Regional Chamber, the Great Lakes Council Boy Scouts of America and the Boys & Girls Clubs of Southeastern Michigan. Mr. Dauch also serves on the Miami University Business Advisory Council.

Michael K. Simonte, age 50, has been Executive Vice President & Chief Financial Officer since December 2011. Simonte previously served as Executive Vice President - Finance & Chief Financial Officer (since February 2009), Group Vice President - Finance & Chief Financial Officer (since December 2007); Vice President - Finance & Chief Financial Officer (since January 2006); Vice President & Treasurer (since May 2004); and Treasurer (since September 2002). Simonte joined AAM in December 1998 as Director, Corporate Finance. Prior to joining our Company, Simonte served as Senior Manager at the Detroit office of Ernst & Young LLP. Simonte is a certified public accountant.

Alberto L. Satine, age 57, has been Senior Vice President - Global Driveline Operations since January 2014. Prior to that, he served as Group Vice President - Global Sales & Business Development (since December 2011), Vice President - Strategic & Business Development (since November 2005), Vice President - Procurement (since January 2005); Executive Director, Global Procurement Direct Materials (since January 2004); General Manager, Latin 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.

Terry J. Woychowski, age 58 , has been Senior Vice President - Engineering & Quality since February 2013. Prior to joining AAM, Mr. Woychowski spent more than 30 years with General Motors, where he held numerous senior management positions including Vice President, Global Quality & Vehicle Launches, Vice President, Global Vehicle Program Management and Global Chief Engineer Full-size Trucks & Executive Director.

Mark S. Barrett, age 53, has been Group Vice President - Procurement, Program Management and Driveshaft Business Unit since August 2013. Prior to that, he served as Group Vice President - Procurement and Program Management (since February 2013), Group Vice President - Engineering & Procurement (since November 2012), Group Vice President - Engineering, Product Development & Procurement (since December 2011), Vice President - Engineering & Product Development (since October 2008), Executive Director, Engineering & Product Development (since January 2008); Executive Director, Axle & Drivetrain (since November 2006); Executive Director, Powertrain, Driveshaft and Halfshaft Engineering (since January 2006); Executive Director, Released and Domestic Programs (since January 2004); Director, Mid Size Axle Programs (since December 1998) and Staff Project Engineer (since joining our Company in March 1994). Prior to joining our Company, Mr. Barrett served at General Motors for nine years in a variety of manufacturing and engineering positions.

Steven J. Proctor, age 57, has been Group Vice President - Sales and Business Development since January 2014. Prior to that, he served as President - AAM Europe, Vice President - AAM Corporate (since June 2012), President - AAM Asia, Vice President - AAM Corporate (since October 2008); Vice President - Sales & Marketing (since June 2004); 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 Motors 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.

Michael J. Bly, age 46 , has been President - AAM Europe, Vice President - AAM Corporate since joining our Company in January 2014. Prior to joining AAM, he spent more than 27 years with General Motors in a variety of management roles in the areas of powertrain, engineering and electrification. Mr. Bly's final position prior to leaving General Motors was Vice President of European Powertrain Engineering.

David A. Culton, age 48, has been Vice President - Material Cost Optimization since January 2014. Prior to that, he served as President - AAM Americas, Vice President - AAM Corporate (since June 2012), President - AAM Europe, Vice President - AAM Corporate (since November 2010), Vice President - Commercial (since September 2009); Vice President - Unibody Vehicle Business Unit (since October 2008); Controller (since April 2007); Executive Director, Sales (since July 2006); Director, Commercial Analysis (since August 2004); Director, Finance - Operations (Since June 2003); Finance Manager (since August 1999); and Assistant Finance Manager (since joining our Company in September 1998). Prior to joining our Company, Mr. Culton served at Chrysler Corporation for 10 years in a variety of management, finance, engineering and manufacturing positions.

Phillip R. Guys, age 51, has been Vice President - Product Engineering & Development since November 2012. Prior to that, he served as Vice President - Product Engineering since joining AAM in December 2011. Prior to joining our Company, Mr. Guys served for four years at Linamar Corporation in various senior management positions, including Vice President - Engineering, and over 20 years in various engineering positions of increasing responsibility at Ford Motor Company and General Motors.

Terri M. Kemp, age 48, has been Vice President - Human Resources since September 2012. Prior to that, she served as Executive Director - Human Resources & Labor Relations (since November 2010); Executive Director - Human Resources (since September 2009); Director - Human Resources Operations (since October 2008); Director - Program Management (since March 2008); Director - Program Management, Mexico (since August 2006); Launch Manager (since May 2006); Manager - Manufacturing (since August 2005); Manager - Manufacturing, Front Axles and Gears (since June 2005); Area Manager - Plant 1 (since October 2004); Director - Personnel, Detroit Gear & Axle (since January 2003); Area Manager - Plant 6 (since March 2002); Manager - Program Management (since February 2001); Area Manager - Manufacturing Plant 8 (since June 1999); Supervisor - I.E. Plants 1, 6 and 8 (since August 1998); Production Coordinator (since September 1997); and Manager - Productivity since joining the Company in July 1996. Prior to joining our Company, Mrs. Kemp served for nine years at Corning Incorporated, where she progressed through a series of manufacturing positions with increasing responsibility, including Industrial Engineer, Department Head and Operations Manager.

Michael J. Lynch, age 49, has been Vice President - Finance & Controller since September 2012. Prior to that, he served as Executive Director & Controller (since October 2008); Director - Commercial Analysis (since July 2006); Director - Finance, Driveline Americas (since March 2006); Director - Investment & Commercial Analysis (since November 2005); Director - Finance, Driveline (since October 2005); Director - Finance Operations, U.S. (since April 2005); Manager - Finance (since June 2003); Manager - Finance, Forge Division (since September 2001); Finance Manager - Albion Automotive (since October 1998); Supervisor - Cost Estimating (since February 1998) and Financial Analyst at the Detroit Manufacturing Facility since joining AAM in September 1996. Prior to joining our Company, Mr. Lynch served at Stellar Engineering for nine years in various capacities.

Allan R. Monich, age 60, has been Vice President - Quality, Warranty & Customer Satisfaction since November 2010. Prior to that, he served as Executive Director - Warranty (since January 2010); Vice President - Quality Assurance & Customer Satisfaction (since July 2006); Vice President - Program Management & Capital Planning (since October 2005); Vice President - Program Management & Launch (since May 2004); 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, Mr. Monich worked for General Motors for 22 years in the areas of manufacturing, quality assurance, sales and engineering, including four years as a Plant Manager.

Kevin M. Smith, age 52, has been Vice President - Global Manufacturing Services since November 2012. Prior to that, he served as Vice President - Driveshaft Business Unit (since December 2011); Vice President - Program Management & Launch (since November 2010), Executive Director - Advanced Programs, Cost Reductions & Productivity (since January 2010); Vice President - Mexico Operations (since December 2007); Plant Manager, Guanajuato Gear & Axle (since February 2007); Executive Director, Manufacturing Engineering (since July 2006); Executive Director, Axle Engineering (since January 2006); Director, GMT 900 Program (since October 2001); Director, Manufacturing Engineering (since June 2001); Plant Manager, Buffalo Gear, Axle & Linkage (since March 2000); Plant Manager, Three Rivers (since February 1998); Manufacturing Manager, Detroit Gear & Axle Plant (since February 1996) and Manufacturing Engineering Manager, Buffalo Gear, Axle & Linkage (since joining our Company in March 1994). Prior to joining our Company, Mr. Smith served at Chrysler Corporation for 10 years in a variety of manufacturing and engineering positions.

John S. Sofia, age 53, has been Vice President - Global Program Management since November 2012. Prior to that, he served as Vice President - Commercial Vehicle Business (since March 2008); Vice President - Product Engineering, Commercial Vehicle Operations & Chief Technology Officer (since December 2007); Vice President - Engineering & Product Development (since July 2006); Vice President - Quality Assurance & Customer Satisfaction (since October 2004); 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 for 10 years in a variety of manufacturing and engineering positions.

Thomas J. Szymanski, age 52, has been President - AAM North America, Vice President - AAM Corporate since January 2014. Prior to that, he served as Vice President - Operations - AAM Americas (since November 2012), Vice President - Global Manufacturing Services (since November 2010); Executive Director - Manufacturing Planning (since October 2008); Executive Director - Corporate Manufacturing Services Unibody Vehicles (since January 2008); Director - Cost Estimating & Advanced Manufacturing Engineering (since August 2006); President & Chief Operating Officer - Colfor Manufacturing, Inc. (since August 2004); Director - Corporate Manufacturing Engineering (since January 2003); Plant Manager - Three Rivers Gear & Axle (since March 2000); Plant Manager - Tonawanda Forge (since December 1998); Manufacturing Manager - Tonawanda Forge (since March 1994); and Area Manager, Axle Assembly - Buffalo Gear & Axle (since the formation of our Company in March 1994). Prior to joining our Company in March 1994, Mr. Szymanski worked for General Motors for 11 years in a variety of manufacturing and plant management positions.

Norman Willemse, age 57, has been Vice President - Metal Formed Product Business Unit since December 2011. Prior to that, he served as Vice President - Global Metal Formed Product Business Unit (since October 2008), Vice President - Global Metal Formed Product Operations (since December 2007); General Manager - Metal Formed Products Division (since July 2006) and Managing Director - Albion Automotive (since joining our Company in August 2001). Prior to joining our Company, Mr. Willemse served at ATSAS for seven years as Executive Director Engineering & Commercial and John Deere for over 17 years in various engineering positions of increasing responsibility. Mr. Willemse is a professional certified mechanical engineer.

Internet Website Access to Reports

The website for American Axle & Manufacturing Holdings, Inc. is www.aam.com. Our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The information contained in the Company's website is not included, or incorporated by reference, in this Annual Report on Form 10-K.


(d)	Financial Information About Geographic Areas

International operations are subject to certain additional risks inherent in conducting business outside the U.S., such as changes in currency exchange rates, price and currency exchange controls, import restrictions, nationalization, expropriation and other governmental action. Financial information relating to our operations by geographic area is presented in the following table. Net sales are attributed to countries based upon location of customer. Long-lived assets exclude deferred income taxes.



	December 31,
	2013		2012		2011
	(in millions)
Net sales
United States	$	1,682.0	$	1,576.6	$	1,587.3
Canada	74.4		75.0		60.8
Mexico	865.6		755.1		678.5
South America	201.1		216.4		134.8
Asia	255.2		214.5		33.2
Europe and other	129.0		93.3		90.4
Total net sales	$	3,207.3	$	2,930.9	$	2,585.0

Long-lived assets
United States	$	850.0	$	865.3	$	845.7
Mexico	469.3		417.7		384.9
South America	100.2		113.3		131.9
Asia	176.7		159.0		131.7
Europe	93.2		72.5		51.3
Total long-lived assets	$	1,689.4	$	1,627.8	$	1,545.5


Item 1A.	Risk Factors

The following risk factors and other information included in this Annual Report on Form 10-K should be considered. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected.

Our business is significantly dependent on sales to GM and Chrysler.

We are the principal supplier of driveline components to GM for its full-size RWD light trucks and SUVs manufactured in North America, supplying substantially all of GM's rear axle and 4WD/AWD axle requirements for these vehicle platforms. Sales to GM were approximately 71% of our consolidated net sales in 2013 and approximately 73% of our consolidated net sales in both 2012 and 2011. A reduction in our sales to GM or a reduction by GM of its production of RWD light trucks or SUVs, as a result of market share losses of GM or otherwise, could have a material adverse effect on our results of operations and financial condition.

We also supply driveline system products for Chrysler's heavy-duty Ram full-size pickup trucks and its derivatives, as well as the 2014 AWD Jeep Cherokee. Sales to Chrysler accounted for approximately 12% of our consolidated net sales in 2013, 10% in 2012 and 8% in 2011. A reduction in our sales to Chrysler or a reduction by Chrysler of its production of the Ram program, as a result of market share losses of Chrysler or otherwise, could have a material adverse effect on our results of operations and financial condition.

Our business may also be adversely affected by reduced demand for the product programs we currently support, or if we do not obtain sales orders for successor programs that replace our current product programs.

Our business is dependent on the rear-wheel drive light truck and SUV market segments in North America.

A substantial portion of our revenue is derived from products supporting RWD light truck and SUV platforms in North America. Sales and production levels of light trucks and SUVs are being affected by many factors, including changes in consumer demand; product mix shifts favoring other types of light vehicles, such as front-wheel drive based crossover vehicles and passenger cars; fuel prices; and government regulation, such as the corporate average fuel economy (CAFE) regulations and related emissions standards promulgated by federal and state regulators. In 2012, the Obama Administration announced new CAFE standards for cars and light-duty trucks, raising the standard to the equivalent of 54.5 miles per gallon by 2025. Our customers are currently planning for these regulations and the potential impact on consumer preferences and demand for vehicles. A reduction in the market segment we currently supply could have a material adverse impact on our results of operations and financial condition.

Our company or our customers may not be able to successfully and efficiently manage the timing and costs of new product program launches.

Certain of our customers are preparing to launch, or have recently launched, new product programs for which we will supply newly developed driveline system products and related components. There can be no assurance that we will successfully complete the transition of our manufacturing facilities and resources to support these new product programs or other future product programs on a timely basis. Accordingly, the launch of new product programs may adversely affect production rates or other operational efficiency and profitability measures at our facilities. We may also experience difficulties with the performance of our supply chain on program launches, which could result in our inability to meet our contractual obligations to key customers. Production shortfalls or production delays, if any, could result in our failure to effectively manage our material and freight costs relating to these program launches. In addition, our customers may delay the launch or fail to successfully execute the launch of these new product programs, or any additional future product program for which we will supply products. Our revenues, operating results and financial condition could be adversely impacted if our customers fail to timely launch such programs or if we are unable to manage the timing requirements and costs of new product program launches.

Our company may not realize all of the revenue expected from our new and incremental business backlog.

The realization of incremental revenues from awarded business is inherently subject to a number of risks and uncertainties, including the accuracy of customer estimates relating to the number of vehicles to be produced in new and existing product programs and the timing of such production. It is also possible that our customers may delay or cancel a product program that has been awarded to us. Our revenues, operating results and financial condition could be adversely affected relative to our current financial plans if we do not realize substantially all the revenue from our new and incremental business backlog.

We are under continuing pressure from our customers to reduce our prices.

Annual price reductions are a common practice in the automotive industry. The majority of our products are sold under long-term contracts with prices scheduled at the time the contracts are established. Many of our contracts require us to reduce our prices in subsequent years and most of our contracts allow us to adjust prices for engineering changes. If we must accommodate a customer's demand for higher annual price reductions and are unable to offset the impact of any such price reductions through continued technology improvements, cost reductions or other productivity initiatives, our results of operations and financial condition could be adversely affected.

Our business faces substantial competition.

The automotive industry is highly competitive. Our competitors include the driveline component manufacturing facilities controlled by certain existing OEMs, as well as many other domestic and foreign companies possessing the capability to produce some or all of the products we supply. Some of our competitors are affiliated with OEMs and others have economic advantages as compared to our business, such as patents, existing underutilized capacity and lower wage and benefit costs. Technology, design, quality, delivery and cost are the primary elements of competition in our industry segment. As a result of these competitive pressures and other industry trends, OEMs and suppliers are developing strategies to reduce costs. These strategies include supply base consolidation and global sourcing. Our business may be adversely affected by increased competition from suppliers benefiting from OEM affiliate relationships, bankruptcy reorganization or financial and other resources that we do not possess. Our business may also be adversely affected if we do not sustain our ability to meet customer requirements relative to technology, design, quality, delivery and cost.

Our business could be adversely affected by disruptions in our supply chain and our customers' supply chain.

We depend on a limited number of suppliers for certain key components and materials needed for our products. We rely upon, and expect to continue to rely upon, certain suppliers for critical components and materials that are not readily available in sufficient volume from other sources. As we continue to expand our global manufacturing footprint, we need to rely on suppliers in local markets that have not yet proven their ability to meet our requirements. These supply chain characteristics make us susceptible to supply shortages and price increases. In addition, over the past several years, many of our direct material suppliers have filed for bankruptcy protection and restructured their operations to significantly reduce their installed capacity. If production volumes increase rapidly, there can be no assurance that the suppliers of critical components and materials will be able or willing to meet our future needs on a timely basis. A significant disruption in the supply of these materials could have a material adverse effect on our results of operations and financial condition.

Natural disasters, such as the earthquake in Japan and floods in Thailand, affected the automotive industry's supply chain in 2011. Although our direct supply chain did not suffer material adverse effects from these natural disasters, future natural disasters could cause a disruption in the supply of critical components to us and our customers and have a material adverse effect on our results of operations and financial condition.

General global economic conditions may have an adverse impact on our operating performance and results of operations.

The automotive industry has continued to improve over the past four years after suffering the effects of the global financial crisis experienced in 2008 and 2009. While the U.S. Seasonally Adjusted Annual Rate of sales (SAAR) increased to 15.5 million units in 2013 from 14.4 million in 2012 and 12.7 million in 2011, the automotive industry is still recovering from the effects of the unprecedented decline in consumer demand and production volumes. General economic instability may still hinder a full recovery of the domestic automotive industry over the next few years. Additionally, continued turmoil in the European credit markets poses a potential threat to global growth and market stability, which could have an adverse impact on the recovery of the automotive industry. Deteriorating conditions in the U.S. or global economy that result in another reduction or depressed levels of automotive production and sales by our largest customers may adversely affect our business, financial condition and results of operations. Additionally, in a flat or declining economic environment, we may experience the negative effects of increased competitive pricing pressure and customer turnover.

Our company's global operations are subject to risks and uncertainties.

We have business and technical offices and manufacturing facilities in many foreign countries, including Brazil, China, India, Mexico, Poland, Scotland, Sweden and Thailand. Approximately 9,000 of our 12,650 associates are located outside of the U.S. International operations are subject to certain risks inherent in conducting business outside the U.S., such as changes in currency exchange rates, tax laws, price and currency exchange controls, import restrictions, nationalization, expropriation and other governmental action. Our global operations may also be adversely affected by political events and domestic or international terrorist events and hostilities. These uncertainties could have a material adverse effect on the continuity of our business and our results of operations and financial condition. As we continue to expand our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other risks.

We may incur material losses and costs as a result of product recall or field action, product liability and warranty claims, litigation and other disputes and claims.

We are exposed to warranty, product recall or field action and product liability claims in the event that our products fail to perform as expected, and we may be required to participate in a recall of such products. Beginning in 2011, we have an increased level of warranty responsibility for our products, per our contractual agreements with our largest customer GM. Prior to 2011, we experienced negligible warranty charges from our customers due to the quality, reliability and durability performance of our products. We are not responsible for certain warranty claims that may be incurred by our customer. This includes returned components for which no trouble was found upon inspection, discretionary acts of dealer goodwill, defects related to directed buy components, or build to print design issues. We review warranty claim activity in detail, and we may have disagreements with our customers as to responsibility for these types of costs incurred by our customer. In addition, as we continue to diversify our customer base, we have an increased obligation to share in the cost of providing warranties as part of our agreements with new customers. Costs and expenses associated with warranties, field actions, product recalls and product liability claims could have a material adverse impact on our results of operations and financial condition and may differ materially from the estimated liabilities that we have recorded in our consolidated financial statements.

We are also involved in various legal proceedings incidental to our business. Although we believe that none of these matters is likely to have a material adverse effect on our results of operations or financial condition, there can be no assurance as to the ultimate outcome of any such legal proceeding or any future legal proceedings.

Our business could be adversely affected by volatility in the price of raw materials.

Worldwide commodity market conditions have resulted in volatility in the cost of steel and other metallic materials in recent years. As general economic conditions have improved and customer demand has increased, the cost of steel and metallic materials needed for our products has increased. If we are unable to pass cost increases on to our customers, this could have a material adverse effect on our results of operations and financial condition.

A failure of our information technology (IT) networks and systems, or the inability to successfully implement upgrades to our enterprise resource planning systems, could adversely impact our business and operations.

We rely upon information technology networks and systems to process, transmit and store electronic information, and to manage or support a variety of business processes or activities. Additionally, we and certain of our third-party vendors collect and store personal information in connection with human resources operations and other aspects of our business. The secure operation of these information technology networks and systems and the proper processing and maintenance of this information are critical to our business operations. Despite the implementation of security measures, our IT systems are at risk to damages from computer viruses, unauthorized access, cyber attack and other similar disruptions. The occurrence of any of these events could compromise our networks, and the information stored there could be accessed, publicly disclosed or lost. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, the disruption of our operations or damage to our reputation. We may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

Further, we are continually expanding and updating our networks and systems in response to the changing needs of our business. We are currently in the process of developing and testing global enterprise resource planning (ERP) systems to upgrade many of our existing operating and financial systems. We will begin implementing these ERP systems in the second half of 2014. Such an implementation is a major undertaking, both financially and from a management and personnel perspective. Should the systems not be implemented successfully, or if the systems do not perform in a satisfactory manner once implementation is complete, our business and operations could be disrupted and our results of operations could be adversely affected, including our ability to report accurate and timely financial results.

Our business could be adversely affected if we fail to maintain satisfactory labor relations.

The majority of our hourly associates worldwide are members of industrial trade unions employed under the terms of collective bargaining agreements. Substantially all of our hourly associates in the U.S. are represented by the UAW. Approximately 4,250 of our hourly associates at our facilities in Mexico and Brazil are also covered by collective bargaining agreements which expire annually. There can be no assurance that future negotiations with our labor unions will be resolved favorably or that we will not experience a work stoppage or disruption that could have a material adverse impact on our results of operations and financial condition. In addition, there can be no assurance that such future negotiations will not result in labor cost increases or other terms and conditions that could adversely affect our results of operations and financial condition or our ability to compete for future business.

Our company's ability to operate effectively could be impaired if we lose key personnel.

Our success depends, in part, on the efforts of our executive officers and other key associates. In addition, our future success will depend on, among other factors, our ability to continue to attract and retain qualified personnel. The loss of the services of our executive officers or other key associates, or the failure to attract or retain associates, could have a material adverse effect on our results of operations and financial condition.

Our financial condition and operations may be adversely affected by a violation of financial and other covenants.

Our Amended Revolving Facility contains financial covenants related to secured and unsecured indebtedness leverage and interest coverage. The Amended Revolving Facility limits our ability to make certain investments, loans and guarantees, declare dividends or distributions on capital stock, redeem or repurchase capital stock and certain debt obligations, incur liens, incur indebtedness, enter into certain restrictive agreements, merge, make acquisitions or sell all or substantially all of our assets. The indenture governing our senior unsecured notes also restricts our ability to incur debt secured by liens, engage in consolidations or mergers or sell all or substantially all of our assets, and engage in certain sale and leaseback transactions. The Amended Revolving Facility also significantly restricts our ability to incur additional secured debt. The Amended Revolving Facility and the indentures governing our senior unsecured notes also include customary events of default. Obligations under the Amended Revolving Facility, the 7.75% senior unsecured notes due 2019 (7.75% Notes), the 6.625% senior unsecured notes due 2022 (6.625% Notes), the 6.25% senior unsecured notes due 2021 (6.25% Notes) and our 5.125% senior unsecured notes due 2019 (5.125% Notes) are required to be guaranteed by most of our U.S.

subsidiaries that hold domestic assets. In addition, the Amended Revolving Facility is secured on a first priority basis by all or substantially all of our assets, the assets of Holdings and each guarantor's assets, including a pledge of capital stock of our U.S. subsidiaries that hold domestic assets, including each guarantor, and a portion of the capital stock of the first tier foreign subsidiaries of AAM. A violation of any of these covenants or agreements could result in a default under these contracts, which could permit the lenders or note holders to accelerate repayment of any borrowings or notes outstanding at that time and levy on the collateral granted in connection with these contracts. A default or acceleration under the Amended Revolving Facility or the indentures governing our senior unsecured notes may result in increased capital costs and defaults under our other debt agreements and may adversely affect our ability to operate our business, our subsidiaries' and guarantors' ability to operate their respective businesses and our results of operations and financial condition.

Our company faces substantial pension and other postretirement benefit obligations.

We have significant pension and other postretirement benefit obligations to certain of our associates and retirees. Our ability to satisfy the funding requirements associated with these obligations will depend on our cash flow from operations and our ability to access credit and the capital markets. The funding requirements of these benefit plans, and the related expense reflected in our financial statements, are affected by several factors that are subject to an inherent degree of uncertainty and volatility, including governmental regulation. Key assumptions used to value these benefit obligations and the cost of providing such benefits, funding requirements and expense recognition include the discount rate, the expected long-term rate of return on pension assets and the health care cost trend rate. If the actual trends in these factors are less favorable than our assumptions, this could have an adverse effect on our results of operations and financial condition.

Our business is subject to costs associated with environmental, health and safety regulations.

Our operations are subject to various federal, state, local and foreign laws and regulations governing, among other things, emissions to air, discharge to waters and the generation, handling, storage, transportation, treatment and disposal of waste and other materials. We believe that our operations and facilities have been and are being operated in compliance, in all material respects, with such laws and regulations, many of which provide for substantial fines and criminal sanctions for violations. The operation of our manufacturing facilities entails risks in these areas, however, and there can be no assurance that we will not incur material costs or liabilities. In addition, potentially significant expenditures could be required in order to comply with evolving environmental, health and safety laws, regulations or other pertinent requirements that may be adopted or imposed in the future by governmental authorities.

We may be unable to consummate and successfully integrate acquisitions and joint ventures.

As we continue to expand globally, we have engaged, and may continue to engage, in acquisitions and joint ventures that involve potential risks, including failure to successfully integrate and realize the expected benefits of such acquisitions and joint ventures. Integrating acquired operations is a significant challenge and there is no assurance that we will be able to manage the integrations successfully. Failure to successfully integrate acquired operations or to realize the expected benefits of such acquisitions may have an adverse impact on our results of operations and financial condition.


Item 1B.	Unresolved Staff Comments

None.


Item 2.	Properties

We operate in 13 countries and have 35 manufacturing, engineering and business office facilities worldwide of which the principal facilities are:



Name	Type of Interest	Function
Three Rivers Manufacturing Facility Three Rivers, MI	Owned	Front and rear axles, power transfer units, rear differential modules, driveheads and steering linkages
Lancaster Manufacturing Facility Lancaster, Pennsylvania	Leased	Assembly of axles and driveheads for commercial vehicles
Colfor Manufacturing, Inc. Malvern, OH Minerva, OH	Owned	Forged products Forged and machined products and rear axles
MSP Industries Oxford, MI	Leased	Forged and machined products
Oxford Forge Oxford, MI	Owned	Forged products
AccuGear, Inc. Fort Wayne, IN	Owned	Forged and machined products
DieTronik Auburn Hills, MI	Owned	Tool & die manufacturer
Guanajuato Manufacturing Complex Guanajuato, Mexico	Owned	Rear axles and driveshafts, front axles, front auxiliary driveshafts, forging products, rear differential modules, power transfer units and transfer cases
Silao Manufacturing Facility Silao, Mexico	Leased	Machined products
AccuGear - Silao Silao, Mexico	Owned	Forged and machined products
Araucária Manufacturing Facility Araucária, Brazil	Owned	Front and rear axles, machining of forged and cast products, and constant velocity joints
Rayong Manufacturing Facility Rayong, Thailand	Owned	Front and rear axles and driveshafts
Albion Automotive Glasgow, Scotland	Leased	Front and rear axles for medium and heavy-duty trucks and buses and transfer cases
Changshu Manufacturing Facility Changshu, China	Owned	Front axles, independent rear drive axles, rear drive modules, gear sets and machined cases
Pantnagar Manufacturing Facility Pantnagar, India	Owned	Rear axles and driveshafts
Pune Manufacturing Facility Pune, India	Owned	Rear axles and driveheads
Chennai Manufacturing Facility Chennai, India	Owned	Assembly of front and rear axles
Swidnica Manufacturing Facility Swidnica, Poland	Owned	Transmission differentials and machined products
World Headquarters Detroit, MI	Owned	Executive and administrative offices
Quality Engineering Technical Center Auburn Hills, MI	Owned	Prototypes, R&D, and design engineering
Technical Center Rochester Hills, MI	Owned	R&D, design engineering, metallurgy, testing and validation

We believe that our property and equipment is properly maintained and in good operating condition. We will continue to evaluate capacity requirements in light of current and projected market conditions. We also intend to continue redeploying assets in order to increase our capacity utilization and reduce future capital expenditures to support program launches.


Item 3.	Legal Proceedings

We are involved in various legal proceedings incidental to our business. Although the outcome of these matters cannot be predicted with certainty, we do not believe that any of these matters, individually or in the aggregate, will have a material effect on our financial condition, results of operations or cash flows.


Item 4.	Mine Safety Disclosures

Not applicable.

Part II

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 (NYSE) under the symbol “AXL.”

Stockholders and High and Low Sales Prices



2013		1^st Quarter		2^nd Quarter		3^rd Quarter		4^th Quarter		Full Year
	High	$	13.72	$	18.63	$	20.94	$	20.45	$	20.94
	Low	$	11.03	$	11.94	$	18.65	$	17.41	$	11.03
2012
	High	$	12.95	$	12.06	$	12.80	$	12.48	$	12.95
	Low	$	10.49	$	8.36	$	9.55	$	9.43	$	8.36

Prices are the quarterly high and low closing sales prices for our common stock as reported by the NYSE. We had approximately 338 stockholders of record as of February 5, 2014.

Dividends

We did not declare or pay any cash dividends on our common stock in 2013. Our Amended and Restated Credit Agreement limits our ability to declare or pay dividends or distributions on capital stock.

Securities Authorized for Issuance under Equity Compensation Plans

The information regarding our securities authorized for issuance under equity compensation plans is incorporated by reference from our Proxy Statement.

Item 6. Selected Financial Data

FIVE YEAR CONSOLIDATED FINANCIAL SUMMARY

Year Ended December 31,



	2013				2012				2011				2010			2009
	(in millions, except per share data)
Statement of income data
Net sales	$	3,207.3			$	2,930.9			$	2,585.0			$	2,283.0		$	1,521.6
Gross profit (loss)	478.7				399.7				455.1				401.7			(31.1		)
Selling, general and
administrative expenses	238.4				243.3				231.7				197.6			172.7
Operating income (loss)	240.3				156.4				223.4				204.1			(203.8		)
Net interest expense	(115.3		)		(101.0		)		(82.7		)		(85.2		)	(82.5		)
Net income (loss)	94.5			^(a)	366.7			^(a)(b)(c)	137.1			^(a)(b)	114.5			(253.3		)	^(a)(b)
Net income (loss) attributable to AAM	94.5			^(a)	367.7			^(a)(b)(c)	142.8			^(a)(b)	115.4			(253.1		)	^(a)(b)
Diluted earnings (loss) per share	$	1.23			$	4.87			$	1.89			$	1.55		$	(4.81	)
Diluted shares outstanding	76.8				75.4				75.4				74.5			52.6

Balance sheet data
Cash and cash equivalents	$	154.0			$	62.4			$	169.2			$	244.6		$	178.1
Total assets	3,029.0				2,866.0				2,328.7				2,114.7			1,986.8
Total long-term debt	1,559.1				1,454.1				1,180.2				1,010.0			1,071.4
Total AAM stockholders' equity (deficit)	33.6				(120.8		)		(425.5		)		(479.5		)	(560.2		)
Dividends declared per share	—				—				—				—			—

Statement of cash flows data
Cash provided by (used in) operating activities	$	223.0			$	(175.5	)		$	(56.3	)		$	240.3		$	15.9
Cash used in investing activities	(218.7		)		(185.4		)		(184.1		)		(107.0		)	(74.6		)
Cash provided by (used in) financing activities	88.8				253.5				167.2				(66.4		)	32.1

Other data
Depreciation and amortization	$	177.0			$	152.2			$	139.4			$	131.6		$	134.7
Capital expenditures	251.9				207.6				163.1				108.3			137.7
Purchase buyouts of leased equipment	—				—				13.4				7.8			—
Proceeds from sale-leaseback of equipment	24.1				12.1				—				—			—


(a)	Includes charges of $35.1 million, net of tax, in 2013, $19.8 million in 2012, $3.1 million in 2011 and $7.7 million in 2009 related to debt refinancing and redemption costs.

(b)

Includes net special charges, curtailment gains, asset impairments and asset redeployment and other restructuring costs associated with plant closures of $40.6 million in 2012 (including $28.7 million of expense related to contractual termination benefits provided to certain eligible UAW associates as a result of the DMC and CKMF plant closures); asset impairments, other non-recurring costs and tax refunds of $16.6 million in 2011 (including $0.5 million related to the non-controlling interest portion of a $1.6 million asset impairment recorded by e-AAM) and $120.5 million in 2009 primarily related to restructuring actions.


(c)	Includes the impact of the reversal of our valuation allowance on U.S. federal deferred tax assets of $337.5 million in the fourth quarter of 2012.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

COMPANY OVERVIEW

American Axle & Manufacturing Holdings, Inc. (Holdings) and its subsidiaries (collectively, we, our, us or AAM) is a Tier I supplier to the automotive industry. We manufacture, engineer, design and validate driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles (SUVs), passenger cars, crossover vehicles and commercial vehicles. Driveline and drivetrain systems include components that transfer power from the transmission and deliver it to the drive wheels. Our driveline, drivetrain and related products include axles, chassis modules, driveshafts, power transfer units, transfer cases, chassis and steering components, driveheads, transmission parts and metal-formed products. In addition to locations in the United States (U.S.) (Michigan, Ohio, Indiana and Pennsylvania), we also have offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand.

We are the principal supplier of driveline components to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks and SUVs manufactured in North America, supplying substantially all of GM's rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. Sales to GM were approximately 71% of our consolidated net sales in 2013 and 73% of our consolidated net sales in both 2012 and 2011.

We also supply driveline system products for the Chrysler Group LLC's (Chrysler) heavy-duty Ram full-size pickup trucks and its derivatives, as well as the 2014 AWD Jeep Cherokee. Sales to Chrysler were approximately 12% of our consolidated net sales in 2013, 10% in 2012 and 8% in 2011. In addition to GM and Chrysler, we supply driveline systems and other related components to Volkswagen AG, Audi AG, Mack Trucks Inc., PACCAR Inc., Harley-Davidson Inc., Beijing Benz Automotive Co., Ltd., Nissan Motor Co., Ltd., Deere & Company, Scania AB, Tata Motors, Ford Motor Company (Ford) and other original equipment manufacturers (OEMs) and Tier I supplier companies such as Jatco Ltd. and Hino Motors Ltd. Our consolidated net sales to customers other than GM increased 17% to $926.7 million in 2013 as compared to $792.6 million in 2012 and $710.0 million in 2011.

INDUSTRY TRENDS

There are a number of significant trends affecting the highly competitive automotive industry. As general economic and industry specific conditions continue to stabilize and improve, the global automotive industry continues to experience intense competition, volatility in fuel, steel, metallic and other commodity prices and significant pricing pressures. At the same time, the industry is focused on investing in future products that will incorporate the latest technology, meet changing customer demands and comply with more stringent government regulations.

In 2013, the U.S. SAAR increased to 15.5 million units, which compares to 14.4 million units in 2012 and 12.7 million units in 2011. Although the U.S. economy continues to improve, the ongoing market weakness in the Euro-zone and the deterioration of growth indicators in emerging markets may still hinder a full recovery of the domestic automotive industry over the next few years. However, as a result of pent-up demand and the increasing age of vehicles currently on the road, we believe that the U.S. domestic OEMs and their suppliers will continue to be able to capitalize on these trends and provide improved financial performance.

MORE STRINGENT GOVERNMENT REGULATIONS FOR FUEL-EFFICIENCY AND EMISSIONS REDUCTIONS With a shift towards aggressive, environmentally focused legislation in the U.S., there has been an increased demand for technologies designed to help reduce emissions, increase fuel economy and minimize the environmental impact of vehicles. In 2012, the Obama Administration announced the new CAFE standard for cars and light-duty trucks, raising the standard to the equivalent of 54.5 miles per gallon, by 2025. As a result, OEMs and suppliers are competing intensely to develop and market new and alternative technologies, such as electric vehicles, hybrid vehicles, fuel cells, diesel engines and efficiency improvements of driveline systems to improve fuel economy and emissions.

We are responding to the continuing change in vehicle mix in the North American market as well as expected increases in CAFE regulations, with ongoing research and development (R&D) efforts that focus on fuel economy, emission reduction and environmental improvements. These efforts position us to compete as this product mix shift continues and have led to new business awards for products that support AWD and RWD passenger cars and crossover vehicles. We are continuing to invest in the development of advanced products focused on fuel economy, mass reductions, vehicle safety and performance, while leveraging electronics and technology. We have increased our focus on alternative energy and electronics by investing in product development that is consistent with the continued shift in market demand. Approximately two-thirds of AAM's new and incremental business backlog launching from 2014 to 2016, which is an estimated $900 million, relates to AAM's newest AWD systems for passenger cars and crossover vehicles. These systems are designed to improve fuel efficiency by up to 30%, reduce CO₂emissions and provide AWD capability with the additional benefit of improved vehicle stability when compared to traditional mechanical AWD systems. We have also developed and commercialized a disconnecting AWD system, which strengthens AAM's position as a leader in global driveline systems technology. AAM's EcoTrac^® Disconnecting AWD system is an industry-first technology that seamlessly engages AWD functionality while improving fuel efficiency and reducing CO₂ emissions. The system is featured on the all-new 2014 Jeep Cherokee.

AAM has established a high-efficiency product portfolio that is designed to improve axle efficiency and fuel economy through innovative product design technology. Our lineup of high efficiency axles for rear-wheel drive and AWD applications is featured on multiple new vehicles, including GM's all-new Cadillac ATS, which was named the 2013 North American Car of the Year. AAM's new and incremental business backlog launching from 2014 to 2016 also includes our high efficiency rear-drive module on the all-new Cadillac CTS, Motor Trend's 2014 Car of the Year. Through the development of our EcoTrac^® Disconnecting AWD system, our high efficiency axles and our e-AAM hybrid and electric driveline systems, we have significantly advanced our efforts to improve fuel efficiency and ride and handling performance while reducing emissions.

INCREASE IN DEMAND FOR ELECTRONIC INTEGRATION The electronic content of vehicles continues to expand, largely driven by consumer demand for greater vehicle performance, functionality, and affordable convenience options. This demand is a result of increased communication abilities in vehicles as well as increasingly stringent regulatory standards for energy efficiency, emissions reduction and increased safety. As these electronics continue to become more reliable and affordable, we expect this trend to continue. The increased use of electronics provides greater flexibility in vehicles and enables the OEMs to better control vehicle stability, fuel efficiency and safety while improving the overall driving experience. Suppliers with enhanced capability in electronic integration have greater sourcing opportunities with OEMs and may be able to obtain more favorable pricing for these products.

GLOBAL AUTOMOTIVE PRODUCTION The trend toward the globalization of automotive production continues to intensify in regions such as Asia (particularly China, India, South Korea and Thailand), Eastern Europe and South America. Automotive production in these regions is expected to continue to grow while production in the traditional automotive centers such as North America and Western Europe are continuing to improve from recent declines. We have significantly increased our global installed capacity to support current programs and future opportunities. We have expanded our capacity in Brazil, China, Mexico, Poland, Thailand and the U.S. and constructed new facilities in India and Mexico. We also have offices in China, India and South Korea to support these developing markets. We expect our business activity in these markets to increase significantly over the next several years. Approximately 35% of our new and incremental business backlog is for end use markets outside the U.S. and approximately 70% has been sourced to our manufacturing facilities outside the U.S.

RESULTS OF OPERATIONS

NET SALES Net sales increased by 9% to $3,207.3 million in 2013 as compared to $2,930.9 million in 2012 and $2,585.0 million in 2011.

Our sales in 2013, as compared to 2012, reflect an increase in global launch activity principally related to higher production volumes for the major North American light truck programs we currently support, additional content on GM and Chrysler's next generation full-size truck programs and a 17% increase in non-GM sales.

Our sales in 2012, as compared to 2011, reflect an increase of approximately 3.8% in production volumes for the major North American light truck and SUV programs we currently support. These increases reflect the improvement in both general economic conditions and market conditions in the automotive industry. The increase in sales also reflects the favorable impact of new product launches, many of which support passenger car platforms.

Our content-per-vehicle (CPV) (as measured by the dollar value of our products supporting our customers' North American light truck and SUV programs) increased to $1,550 in 2013 as compared to $1,473 in 2012 and $1,487 in 2011. The increase in CPV in 2013 as compared to 2012 principally reflects additional content in GM and Chrysler's next generation full-size truck programs. The change in content-per-vehicle in 2012 as compared to 2011 is primarily due to a reduction in deferred revenue recognition related to the 2008 AAM - GM Agreement.

Our 4WD/AWD penetration rate increased to 66.1% in 2013 as compared to 64.4% in 2012 and 63.0% in 2011. We define 4WD/AWD penetration as the total number of front axles we produce divided by the total number of rear axles we produce for the vehicle programs we support.

GROSS PROFIT Gross profit increased to $478.7 million in 2013 as compared to $399.7 million in 2012 and $455.1 million in 2011. Gross margin was 14.9% in 2013 as compared to 13.6% in 2012 and 17.6% in 2011. The increase in gross profit in 2013 as compared to 2012 is primarily due to the profit contribution from higher sales, including our largest North American light truck programs and other global launches. The increase in gross profit in 2013 also reflects lower warranty accruals and the impact of stabilized levels of global launch activity, which includes lower material and freight costs, as compared to 2012. Our gross profit in 2013 includes the impact of costs relating to a customer delay affecting the launch of AAM's EcoTrac^® Disconnecting All-Wheel Drive system. In addition, our gross profit in 2013 also includes the impact of receiving $11.4 million related to settling a capacity increase cancellation claim with one of our largest customers, which is partially offset by other costs associated with this capacity increase.

Gross profit in 2012 includes special charges of $28.7 million of expense related to contractual termination benefits provided to certain eligible UAW associates as a result of the DMC and CKMF plant closures and $32.5 million of expense primarily related to asset impairments, asset redeployment and other restructuring costs associated with the closure of DMC and CKMF. The impact on gross profit as a result of these special charges was partially offset by a $21.8 million other postretirement benefits (OPEB) curtailment gain recorded as a result of the DMC and CKMF hourly associates who have terminated employment from AAM as a result of our plant closures and a $5.2 million settlement gain related to the termination of the UAW Legal Services Plan. Also included in gross profit in 2012, is a gain of $2.2 million related to the sale of CKMF.

The change in gross profit in 2012 as compared to 2011 primarily reflects the impact of special charges related to the closure of DMC and CKMF, as well as costs associated with increased levels of global launch activity, which includes premium freight costs, lower capacity utilization and labor inefficiencies. We estimated premium freight costs to be approximately $24 million in 2012. In addition, gross profit in 2012 was adversely impacted by material cost inflation of approximately $32 million and higher warranty accruals.

Gross profit in 2011 included special charges and other non-recurring operating costs of $15.0 million, which included $8.7 million of asset impairment charges and indirect inventory obsolescence as a result of the announced closure of CKMF and $6.3 million of other plant closure related costs. Gross profit in 2011 also included a $6.1 million gain related to the sale of equipment that we had previously written down to its estimated fair value as a result of asset impairments.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) SG&A (including R&D) was $238.4 million in 2013 as compared to $243.3 million in 2012 and $231.7 million in 2011. SG&A as a percentage of net sales was 7.4% in 2013, 8.3% in 2012 and 9.0% in 2011. R&D spending in product, process and systems was $103.4 million in 2013, net of customer engineering, design and development (ED&D) recoveries, as compared to $123.4 million in 2012 and $113.6 million in 2011. The change in SG&A in 2013 as compared to 2012 primarily reflects the favorable impact of lower R&D expense, which includes customer ED&D recoveries. This was partially offset by higher incentive compensation accruals and stock-based compensation.

The increase in SG&A in 2012 as compared to 2011 is primarily the result of higher R&D spending and increases in our salaried workforce to support worldwide growth, which is partially offset by lower incentive compensation accruals and stock-based compensation expense.

In 2011, Saab (our former joint venture partner in e-AAM) filed for bankruptcy and entered into liquidation status. As a result, in 2011, we recorded a $1.6 million impairment charge to SG&A to write off the intangible asset associated with the long-term supply agreement with Saab acquired as part of our joint venture formation in 2010.

OPERATING INCOME Operating income increased to $240.3 million in 2013 as compared to $156.4 million in 2012 and $223.4 million in 2011. Operating margin was 7.5% in 2013 as compared to 5.3% in 2012 and 8.6% in 2011. The changes in operating income and operating margin in 2013, 2012 and 2011 were due to the factors discussed in Gross Profit and SG&A.

INTEREST EXPENSE Interest expense was $115.9 million in 2013, $101.6 million in 2012 and $83.9 million in 2011. The increase in interest expense in 2013 as compared to 2012 and 2012 as compared to 2011 reflects higher average outstanding borrowings.

The weighted-average interest rate of our total debt outstanding was 7.3%, 7.8% and 8.0% during 2013, 2012 and 2011, respectively.

INVESTMENT INCOME Investment income was $0.6 million in both 2013 and 2012 and $1.2 million in 2011. Investment income includes interest and dividends earned on cash and cash equivalents during the period.

OTHER INCOME (EXPENSE) Following are the components of Other Income (Expense) for 2013, 2012 and 2011:

Debt refinancing and redemption costs In 2013, we expensed $36.8 million of unamortized debt issuance costs, discount and prepayment premiums related to the termination of our class C loan facility, the purchase and voluntary redemption of $300.0 million of our 7.875% Notes and the voluntary redemption of the remaining $340.0 million of our 9.25% Notes. In 2012, we expensed $19.8 million of unamortized debt issuance costs, discount and prepayment premiums related to our Amended and Restated Revolving Credit Agreement, the purchase of $137.8 million of our 5.25% Notes pursuant to a tender offer, the subsequent redemption of the remaining $112.2 million of our 5.25% Notes and the voluntary redemption of $42.5 million of our 9.25% Notes. In 2011, we expensed $3.1 million of unamortized debt issuance costs, discount and prepayment premiums related to the voluntary redemption of $42.5 million of our 9.25% Notes and the termination of our Second Lien Term Loan with GM.

Other, net Other, net, which includes the net effect of foreign exchange gains and losses and our proportionate share of earnings from equity in unconsolidated subsidiaries, was expense of $1.9 million in 2013, expense of $4.1 million in 2012 and income of $0.5 million in 2011. The change in 2012, as compared to 2011, is primarily due to foreign exchange losses in our Brazil and Mexican operations.

INCOME TAX EXPENSE (BENEFIT) Income tax expense (benefit) was a benefit of $8.2 million in 2013 as compared to a benefit of $335.2 million in 2012 and expense of $1.0 million in 2011. Our effective income tax rate was negative 9.5% in 2013 as compared to negative 1,064.2% in 2012 and 0.7% in 2011.

The following is a reconciliation of our provision for income taxes to the expected amounts using statutory rates:



	2013		2012		2011
Federal statutory	35.0	%	35.0	%	35.0	%
Foreign income taxes	(48.5	)	(85.0	)	(34.6	)
Change in enacted tax rate	(9.9	)	—		—
State and local	0.2		3.5		(1.2	)
Valuation allowance	12.4		(985.0	)	(30.7	)
U.S. tax on unremitted foreign earnings	(0.2	)	(29.5	)	26.3
Other	1.5		(3.2	)	5.9
Effective income tax rate	(9.5	)%	(1,064.2	)%	0.7	%

Our income tax expense and effective tax rate for 2013 primarily reflect favorable foreign tax rates, along with our inability to realize a tax benefit for current foreign losses. In the fourth quarter of 2013, new Mexican tax reform was enacted that, among other things, increased the tax rate related to Maquiladora companies from 17.5% to 30%. We recorded a tax benefit of $8.5 million as a result of revaluing our deferred tax assets at the newly enacted rate.

In 2013, we recorded tax expense of $4.8 million relating to changes in estimates in the U.S. and certain foreign jurisdictions. Our income tax benefit and effective tax rate for 2013 also reflects the impact of recording a tax benefit of $1.5 million relating to the release of a prior year unrecognized tax benefit due to the expiration of the applicable statute of limitations and a tax benefit of $3.3 million relating to an election we made in 2013 regarding the treatment of foreign exchange gains and losses in a foreign jurisdiction. During 2013, we also settled various income tax audits resulting in a reduction of our liability for unrecognized income tax benefits of $8.4 million and a cash payment of $4.7 million.

In 2012, our business returned to a position of cumulative profitability on a pre-tax basis, considering our operating results for the three years ended December 31, 2012. We concluded that this record of cumulative profitability in recent years, in addition to the restructuring of our U.S. operations and our long range forecast showing continued profitability, provided sufficient positive evidence that our net U.S. federal tax benefits more likely than not would be realized. Accordingly, in 2012, we released the valuation allowance against our net federal deferred tax assets for entities in the U.S., resulting in a $337.5 million benefit in our 2012 provision for income taxes. Our income tax benefit and effective tax rate in 2012 reflected the impact of this valuation allowance reversal.

Our income tax expense and effective tax rate for 2012 also reflect a net tax expense of $1.3 million related to the amendment of state income tax returns as a result of the settlement of federal income tax audits for the tax years 2004 through 2007.

As of December 31, 2013, we retained a valuation allowance of approximately $163.7 million related to net deferred tax assets in several foreign jurisdictions and U.S. state and local jurisdictions. See "Critical Accounting Estimates – Valuation of Deferred Tax Assets and Other Tax Liabilities" below for more detail on the impact of this reversal.

For each reporting period until the valuation allowance was released, we experienced low effective tax rates as we continued to record net tax expense only for those locations in which we did not have a valuation allowance in place. As a result of reversing our valuation allowance against our net federal deferred tax assets in the U.S. in 2012, we expect to experience higher effective tax rates going forward.

Our income tax expense and effective tax rate in 2011 reflect the effect of recognizing a net operating loss (NOL) benefit against our taxable income in the U.S. Our income tax expense for 2011 also reflects net tax benefits of $4.5 million relating to the favorable resolution of income tax audits in the U.S. and the impacts of tax law changes in Brazil and the state of Michigan. Our low effective tax rate for 2011 was primarily the result of our valuation allowance against deferred tax assets as of December 31, 2011.

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS Net loss attributable to noncontrolling interests was $1.0 million in 2012 and $5.7 million in 2011. The noncontrolling interest in e-AAM was acquired in the first quarter of 2012, so there is no longer an allocation of net loss attributable to noncontrolling interests related to this entity.

NET INCOME ATTRIBUTABLE TO AAM AND EARNINGS PER SHARE (EPS) Net income attributable to AAM was $94.5 million in 2013 as compared to $367.7 million in 2012 and $142.8 million in 2011. Diluted earnings per share was $1.23 in 2013 as compared to $4.87 per share in 2012 and $1.89 per share in 2011. Net Income and EPS were primarily impacted by the factors discussed in Gross Profit, SG&A, Interest Expense, Debt Refinancing and Redemption Costs and Income Tax Expense (Benefit).

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are to fund capital expenditures, debt service obligations and our working capital requirements. We believe that operating cash flow, available cash and cash equivalent balances and available committed borrowing capacity under our Amended Revolving Facility will be sufficient to meet these needs.

OPERATING ACTIVITIES Net cash provided by operating activities was $223.0 million in 2013 as compared to net cash used in operating activities of $175.5 million in 2012 and net cash used in operating activities of $56.3 million in 2011.

Sales and production volumes Cash provided by (used in) operating activities was favorably impacted by higher profits related to an increase in sales and production activity in 2013 and 2012.

Interest paid Interest paid in 2013 was $123.2 million as compared to $88.9 million in 2012 and $73.1 million in 2011. The increase in interest paid in 2013, as compared to 2012, and 2012, as compared to 2011, relates primarily to higher average outstanding borrowings during the year. The amount of accrued interest included in other accrued expenses on our Consolidated Balance Sheet was $19.9 million and $35.1 million as of December 31, 2013 and 2012, respectively.

Pension and OPEB Due to our significant pension contributions made in 2012, we did not make any cash payments in 2013 to satisfy our regulatory funding requirements. We contributed $225.4 million to our pension trusts in 2012, which included our regulatory funding requirements of $35.0 million. This compares to $52.0 million in 2011, which included $26.0 million of contributions that were in excess of our minimum statutory funding requirements for the 2011 calendar year. These funding figures compare to our annual pension expense, including special and contractual termination benefits and settlements of $5.7 million in 2013, $24.6 million in 2012 and $14.5 million in 2011.

In 2012, AAM and the Pension Benefit Guaranty Corporation entered into an agreement regarding any liability that may have arisen under the Employee Retirement Income Security Act of 1974 in connection with the closures of DMC and CKMF. As part of this agreement, in 2012, we contributed $114.7 million in excess of our statutory minimum to our U.S. hourly pension plan, which is included in the contributions described above.

Our cash outlay for OPEB, net of GM cost sharing, was $11.2 million in 2013 and $11.5 million in both 2012 and 2011. This compares to our annual postretirement cost, including special and contractual termination benefits, curtailment gains and settlements, of $12.7 million in 2013, $3.3 million in 2012 and $15.2 million in 2011. We expect our cash outlay for other postretirement benefit obligations in 2014, net of GM cost sharing, to be approximately $17 million.

Accounts receivable Accounts receivable at year-end 2013 were $458.5 million as compared to $463.4 million at year-end 2012 and $333.3 million at year-end 2011. The increase in our year-end 2012 accounts receivable balance was primarily due to increased sales in November and December 2012 as compared to November and December of 2011, as well as the change in administration of GM payment terms.

Inventories At year-end 2013, inventories were $261.8 million as compared to $224.3 million at year-end 2012 and $177.2 million at year-end 2011. The increase in inventory in 2013, as compared to 2012, primarily reflects increased materials on hand to support increased production levels in our current programs and new program launches in 2014. The increase in inventory in 2012, as compared to 2011, was primarily related to the impact of global sourcing and plant loading initiatives, new program launches and increased production in existing programs during 2012.

Accounts payable At year-end 2013, accounts payable were $445.8 million as compared to $396.1 million at year-end 2012 and $337.1 million at year-end 2011. The increase in accounts payable at year-end 2013, as compared to year-end 2012, primarily reflects an increase in sales and production volumes. The increase in accounts payable at year-end 2012, as compared to year-end 2011, primarily reflects an increase in sales and production levels and higher capital expenditures.

Cash paid for special charges In 2012, we made cash payments of $37.9 million for special charges primarily related to asset redeployment, capital expenditures and other costs associated with the closure of DMC and CKMF in 2012. We paid $34.6 million in 2011 related to asset redeployment and other costs associated with our announced closures of DMC and CKMF and leased assets that were permanently idled prior to 2011.

In 2011, we paid $18.6 million for purchase buyouts of leased equipment, of which $13.4 million is included in the investing section of our Consolidated Statement of Cash Flows.

GM Payment Terms As a result of a change in the administration of GM supplier payment terms from pay on shipment to pay on receipt, our operating cash flow was negatively impacted by approximately $33.1 million in 2012.

In conjunction with the 2009 Settlement and Commercial Agreement with GM, we agreed to expedited payment terms of “net 10 days” from GM (as compared to previously existing terms of approximately 45 days) in exchange for a 1% early payment discount. In 2011, we elected to terminate the expedited payment terms and transition to GM standard weekly payment terms of approximately 50 days. As a result of the termination of these expedited payment terms in 2011, our operating cash flow was negatively impacted by approximately $190 million in 2011.

INVESTING ACTIVITIES Capital expenditures were $251.9 million in 2013, $207.6 million in 2012 and $163.1 million in 2011. Our capital spending primarily supported our significant global program launches within our new and incremental business backlog.

We expect our capital spending in 2014 to be approximately 6% of sales, which includes support for our global program launches in 2014 and 2015 within our new and incremental business backlog.

In 2013 and 2012, we entered into various sale-leaseback transactions for equipment recently purchased. We received proceeds of $24.1 million and $12.1 million in 2013 and 2012, respectively, related to these transactions.

In 2011, we expanded our existing joint venture (JV) with HAAC to include HAAC's light commercial axle business and made an additional investment of $16.5 million. Each party continues to own 50 percent of the JV, which we account for under the equity method of accounting.

FINANCING ACTIVITIES Net cash provided by financing activities was $88.8 million in 2013 as compared to$253.5 million in 2012 and $167.2 million in 2011. Total debt outstanding was $1,559.1 million at year-end 2013, $1,454.1 million at year-end 2012 and $1,180.2 million at year-end 2011. The increase in total debt outstanding at year-end 2013, as compared to year-end 2012, was primarily due to the issuance of $400.0 million of 6.25% senior unsecured notes, $200.0 million of 5.125% senior unsecured notes and $150.0 million drawn under our Term Facility, which was partially offset by using these proceeds to purchase and redeem $300.0 million of our 7.875% senior unsecured notes and to redeem the remaining $340.0 million of our 9.25% senior secured notes. Total debt outstanding increased by $273.9 million at year-end 2012, as compared to year-end 2011, primarily as a result of the issuance of $550.0 million of 6.625% senior unsecured notes in the third quarter of 2012, which was partially offset by using the proceeds to purchase and redeem $250.0 million of our 5.25% Notes and redeem $42.5 million of our 9.25% Notes.

AMENDED REVOLVING FACILITY AND TERM FACILITY On September 13, 2013, we amended and restated the Credit Agreement dated as of January 9, 2004 (as amended and restated, the Amended and Restated Credit Agreement and the facility thereunder, the Amended Revolving Facility). As of December 31, 2013, the Amended Revolving Facility provided up to $523.5 million of revolving bank financing commitments through September 13, 2018. At December 31, 2013, $501.6 million was available under the Amended Revolving Credit Facility, which reflected a reduction of $21.9 million for standby letters of credit issued against the facility.

The Amended and Restated Credit Agreement, among other things, increased the aggregate commitments by approximately $158.5 million and extended the maturity date from June 30, 2016 to September 13, 2018. In addition, the Amended and Restated Credit Agreement provides for a senior secured term loan A facility in an aggregate principal amount of $150.0 million (Term Facility). The full amount of the Term Facility was drawn in the fourth quarter of 2013 and remains outstanding as of December 31, 2013. We paid debt issuance costs of $6.9 million in 2013 associated with the amendments and restatements of our Amended Revolving Facility and Term Facility. In 2012 and 2011, we paid debt issuance costs of $1.7 million and $5.9 million, respectively, associated with the amendments and restatements of our revolving credit facility.

Borrowings under the Amended Revolving Facility and Term Facility bear interest at rates based on adjusted LIBOR or an alternate base rate, plus an applicable margin. The applicable margin for LIBOR-based loans will be between 1.5% and 3.0%.

Under the Amended Revolving Facility, certain negative covenants were revised to provide increased flexibility. In the event AAM achieves investment grade corporate credit ratings from S&P and Moody's, AAM may elect to release all of the collateral from the liens granted pursuant to the collateral agreement, subject to notice requirements and other conditions. The Amended Revolving Facility and Term Facility are secured on a first priority basis by all or substantially all of the assets of AAM and each guarantor under the Collateral Agreement dated as of November 7, 2008, as amended and restated as of September 13, 2013.

On March 20, 2013, we terminated our class C loan facility of $72.8 million, which would have matured on June 30, 2013. Upon termination, we expensed $0.5 million of unamortized debt issuance costs related to the class C facility. We had been amortizing the debt issuance costs over the expected life of the borrowing.

The Amended Revolving Facility provides back-up liquidity for our foreign credit facilities. We intend to use the availability of long-term financing under the Amended Revolving Facility to refinance any current maturities related to such credit facilities that are not otherwise refinanced on a long-term basis in their local markets.

9.25% Notes In 2009, we issued $425.0 million of 9.25% senior secured notes due 2017 (9.25% Notes). The notes were issued at a discount of $5.5 million. Net proceeds from these notes were used for the repayment of certain indebtedness.

In 2012 and 2011, we elected to exercise an option to redeem 10% of the original amount of our 9.25% Notes outstanding at a redemption price of 103% of the principal amount. This resulted in principal payments of $42.5 million and $1.3 million for the redemption premiums, as well as payments of accrued interest in both 2012 and 2011. We expensed $1.0 million in 2012 and $1.4 million in 2011 for the write-off of a proportional amount of unamortized debt discount and issuance costs related to this debt that we had been amortizing over the expected life of the borrowing.

Pursuant to the terms of the 9.25% Notes, in the fourth quarter of 2013, we voluntarily redeemed the remaining outstanding 9.25% Notes using the proceeds from the Term Facility and the issuance of the 5.125% Notes. This resulted in a principal payment of $340.0 million and $18.9 million for redemption premiums, as well as payments of accrued interest. We expensed $6.7 million in 2013 related to the write-off of the remaining unamortized debt discount and issuance costs related to the 9.25% Notes that we had been amortizing over the expected life of the borrowing.

7.875% Notes In 2007, we issued $300.0 million of 7.875% senior unsecured notes due 2017 (7.875% Notes). Net proceeds from these notes were used for general corporate purposes, including payment of amounts outstanding under our Revolving Credit Facility.

On March 1, 2013, in connection with a cash tender offer, we purchased $172.6 million aggregate principal amount of the 7.875% Notes, and paid accrued interest. Upon purchase, we expensed $5.2 million related to a tender premium, $0.1 million of professional fees and $1.2 million of unamortized debt issuance costs related to this debt. We had been amortizing the debt issuance costs over the expected life of the borrowing.

On March 15, 2013, we voluntarily redeemed the remaining 7.875% Notes outstanding. This resulted in a principal payment of $127.4 million, a payment of $3.3 million related to a redemption premium, as well as payment of accrued interest. Upon redemption, we expensed $0.9 million of unamortized debt issuance costs related to this debt. We had been amortizing the debt issuance costs over the expected life of the borrowing.

7.75% Notes In 2011, we issued $200.0 million of 7.75% senior unsecured notes due 2019 (7.75% Notes). Net proceeds from these notes were used for general corporate purposes, including the repayment of certain amounts outstanding under our Revolving Credit Facility. In 2011, we paid debt issuance costs of $5.0 million related to the 7.75% Notes.

6.625% Notes In 2012, we issued $550.0 million of 6.625% senior unsecured notes due 2022 (6.625% Notes). Concurrent with the offering of the 6.625% Notes, we made a tender offer to purchase our 5.25% Notes, of which the aggregate principal amount then outstanding was $250.0 million. Net proceeds from the 6.625% Notes were used to fund the purchase of $137.8 million of the outstanding 5.25% Notes pursuant to the tender offer, certain pension obligations and for other general corporate purposes. We also used the net proceeds to fund the redemption of the remaining 5.25% Notes, including the payment of interest, and to redeem $42.5 million aggregate principal amount of our 9.25% Notes. We paid debt issuance costs of $8.9 million related to the 6.625% Notes in 2012.

6.25% Notes In the first quarter of 2013, we issued $400.0 million of 6.25% senior unsecured notes due 2021 (6.25% Notes). Concurrent with the offering of the 6.25% Notes, we made a tender offer to purchase our 7.875% Notes, of which the aggregate principal amount outstanding at the time of the tender offer was $300.0 million. Net proceeds from the 6.25% Notes were used to fund the purchase pursuant to the tender offer and the subsequent redemption of the remaining 7.875% Notes and for other general corporate purposes. We paid debt issuance costs of $6.6 million in 2013 related to the 6.25% Notes.

5.125% Notes In the fourth quarter of 2013, we issued $200.0 million of 5.125% senior unsecured notes due 2019 (5.125% Notes). Net proceeds from the 5.125% Notes were used to redeem the remaining $190.0 million outstanding under our 9.25% Notes. We paid debt issuance costs of $3.1 million in 2013 related to the 5.125% Notes.

Foreign credit facilities We utilize local currency credit facilities to finance the operations of certain foreign subsidiaries. At December 31, 2013, $53.8 million was outstanding under these facilities and an additional $56.7 million was available.

Credit ratings To access public debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings to our securities as an indicator of credit quality for fixed income investors. A credit rating agency may change or withdraw its ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Credit ratings affect our cost of borrowing under our Amended Revolving Credit Facility and may affect our access to debt capital markets and other costs to fund our business. The credit ratings and outlook currently assigned to our securities by the rating agencies are as follows:



	Corporate Family Rating	Senior Unsecured Notes Rating	Outlook
Standard & Poor's	BB-	B+	Stable
Moody's Investors Services	B1	B2	Stable
Fitch Ratings	B+	B	Positive

Dividend program In 2009, the Company's Board of Directors decided to discontinue the quarterly cash dividend. We have not declared or paid any cash dividends on our common stock in 2013, 2012 or 2011.

Purchase of noncontrolling interest In 2012, we paid $4.0 million to acquire the remaining shares of e-AAM. e-AAM, previously a JV between AAM and Saab Automobile AB, was created to design and commercialize electric and hybrid driveline systems designed to improve fuel efficiency, reduce CO₂ emissions and provide AWD capability with the additional benefit of improved vehicle stability when compared to traditional mechanical AWD systems.

Stock repurchase In 2013, we repurchased shares of AAM common stock for $0.4 million. We repurchased 0.5 million shares of AAM common stock for $5.9 million in 2012 and we repurchased shares of AAM common stock for $0.1 million to satisfy employee tax withholding obligations due upon the vesting of our restricted stock grants in 2011.

Exercise of employee stock options We received $1.1 million in 2013, $0.1 million in 2012 and $4.6 million in 2011 related to the exercise of employee stock options.

Off-balance sheet arrangements Our off-balance sheet financing relates principally to operating leases for machinery and equipment, commercial office and production facilities, vehicles and other assets. We lease certain machinery and equipment under operating leases with various expiration dates. In 2013 and 2012, we entered into various sale-leaseback transactions for $24.1 million and $12.1 million, respectively, for machinery and equipment. Pursuant to these operating leases, we may have the option to purchase the underlying equipment on specified dates. Remaining lease repurchase options are $17.9 million through 2017.

Contractual obligations The following table summarizes payments due on our contractual obligations as of December 31, 2013:



	Payments due by period
	Total		<1yr		1-3 yrs		3-5 yrs		>5 yrs
	(in millions)
Long-term debt	$	1,553.8	$	36.4	$	37.5	$	127.2	$	1,352.7
Interest obligations	684.3		97.1		189.8		185.4		212.0
Capital lease obligations	5.3		0.4		0.8		1.1		3.0
Operating leases ⁽¹⁾	83.6		19.6		32.9		20.4		10.7
Purchase obligations ⁽²⁾	161.4		145.3		16.1		—		—
Other long-term liabilities ⁽³⁾	623.4		55.9		135.1		123.2		309.2
Total	$	3,111.8	$	354.7	$	412.2	$	457.3	$	1,887.6


(1)	Operating leases include all lease payments through the end of the contractual lease terms, which includes elections for repurchase options and excludes any non-exercised purchase options. These commitments include machinery and equipment, commercial office and production facilities, vehicles and other assets.


(2)	Purchase obligations represent our obligated purchase commitments for capital expenditures and related project expense.


(3)	Other long-term liabilities represent our estimated pension and other postretirement benefit obligations, net of GM cost sharing, that were actuarially determined through 2023, as well as our unrecognized income tax benefits.

CYCLICALITY AND SEASONALITY

Our operations are cyclical because they are directly related to worldwide automotive production, which is itself cyclical and dependent on general economic conditions and other factors. Our business is also moderately seasonal as our major OEM customers historically have an extended shutdown of operations (typically 1-2 weeks) in conjunction with their model year changeover and an approximate one-week shutdown in December. Accordingly, our quarterly results may reflect these trends.

LEGAL PROCEEDINGS

We are subject to various federal, state, local and foreign environmental and occupational safety and health laws, regulations and ordinances, including those regulating air emissions, water discharge, waste management and environmental cleanup. We closely monitor our environmental conditions to ensure that we are in compliance with applicable laws, regulations and ordinances. We have made, and will continue to make, capital and other expenditures (including recurring administrative costs) to comply with environmental requirements, including recurring administrative costs. Such expenditures were not significant in 2013, 2012 and 2011.

EFFECT OF NEW ACCOUNTING STANDARDS

On January 1, 2013, new accounting guidance regarding impairment testing of indefinite-lived intangible assets became effective. Under the new guidance, an entity testing an indefinite-lived intangible asset for impairment has the option of performing a qualitative impairment assessment before calculating the fair value of the asset. The adoption of this new accounting guidance did not have a significant effect on our impairment assessments of indefinite-lived intangible assets.

On February 5, 2013, new accounting guidance was issued which requires entities to disclose additional information about items reclassified out of accumulated other comprehensive income (AOCI). The new guidance requires entities to disclose, either on the face of the financial statements or as a separate footnote to the financial statements, additional information regarding changes in AOCI balances by component, either before tax or net-of-tax, and requires entities to disclose significant items reclassified out of AOCI by component. The new guidance does not change the current accounting guidance which states that a total for comprehensive income must be reported in either a single continuous statement or two separate but consecutive statements. Other than additional disclosure requirements, the adoption of this new guidance has had no impact on our consolidated financial statements.

On July 18, 2013, new accounting guidance was issued regarding financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for an NOL carryforward, a similar tax loss, or a tax credit carryforward, except when one is not available as of the reporting date or the entity does not intend to use the deferred tax asset for this purpose. This guidance does not affect the tabular reconciliation of the total amounts of unrecognized tax benefits, as the tabular reconciliation presents the gross amount of unrecognized tax benefits. This new guidance will be effective for us as of January 1, 2015, with early adoption permitted. Other than a possible change in financial statement disclosure, we do not believe that the adoption of this new guidance will have a significant impact on our consolidated financial statements.

CRITICAL ACCOUNTING ESTIMATES

In order to prepare consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), we are required to make estimates and assumptions that affect the reported amounts and disclosures in our consolidated financial statements. These estimates are subject to an inherent degree of uncertainty and actual results could differ from our estimates.

Other items in our consolidated financial statements require estimation. In our judgment, they are not as critical as those disclosed below. We have discussed and reviewed our critical accounting estimates disclosure with the Audit Committee of our Board of Directors.

PENSION AND OTHER POSTRETIREMENT BENEFITS In calculating our assets, liabilities and expenses related to pension and OPEB, key assumptions include the discount rate, expected long-term rates of return on plan assets and rates of increase in health care costs.

The discount rates used in the valuation of our U.S. pension and OPEB obligations were based on an actuarial review of a hypothetical portfolio of long-term, high quality corporate bonds matched against the expected payment stream for each of our plans. In 2013, the weighted average discount rates determined on that basis were 5.00% for the valuation of our pension benefit obligations and 4.95% for the valuation of our OPEB obligations. The discount rate used in the valuation of our U.K. pension obligation was based on a review of long-term bonds, including published indices in the applicable market. In 2013, the discount rate determined on that basis was 4.50%. The expected long-term rates of return on our plan assets were 7.50% for our U.S. plans and 5.15% for our U.K. plan in 2013. We developed these rates of return assumptions based on future capital market expectations for the asset classes represented within our portfolio and a review of long-term historical returns. The asset allocation for our plans was developed in consideration of the demographics of the plan participants and expected payment stream of the liability. Our investment policy allocates 35-65% of the U.S. plans' assets to equity securities, depending on the plan, with the remainder invested in fixed income securities, hedge fund investments and cash. The rates of increase in health care costs are based on current market conditions, inflationary expectations and historical information.

All of our assumptions were developed in consultation with our actuarial service providers. While we believe that we have selected reasonable assumptions for the valuation of our pension and OPEB obligations at year-end 2013, actual trends could result in materially different valuations.

The effect on our pension plans of a 0.5% decrease in both the discount rate and expected return on assets is shown below as of December 31, 2013, our valuation date.



			Expected
	Discount		Return on
	Rate		Assets
	(in millions)
Decline in funded status	$	53.9	N/A
Increase in 2013 expense	$	0.9	$	3.3

No changes in benefit levels and no changes in the amortization of gains or losses have been assumed.

For 2014, we assumed a weighted average annual increase in the per-capita cost of covered health care benefits of 7.5% for OPEB. The rate is assumed to decrease gradually to 5.0% by 2019 and remain at that level thereafter. A 0.5% decrease in the discount rate for our OPEB would have decreased total expense in 2013 and increased the postretirement obligation, net of GM cost sharing, at December 31, 2013 by $0.8 million and $20.5 million, respectively. A 1.0% increase in the assumed health care trend rate would have increased total service and interest cost in 2013 and the postretirement obligation, net of GM cost sharing, at December 31, 2013 by $1.6 million and $33.6 million, respectively.

AAM and GM share in the cost of OPEB for eligible retirees proportionally based on the length of service an employee had with AAM and GM. We estimate the future cost sharing payments and present it as an asset on our Consolidated Balance Sheet. As of December 31, 2013, we estimated $255.9 million in future GM cost sharing. If, in the future, GM was unable to fulfill this financial obligation, our OPEB expenses may be different than our current estimates.

VALUATION OF DEFERRED TAX ASSETS AND OTHER TAX LIABILITIES Because we operate in many different geographic locations, including several foreign, state and local tax jurisdictions, the evaluation of our ability to use all recognized deferred tax assets is complex.

We are required to estimate whether recoverability of our deferred tax assets is more likely than not, based on forecasts of taxable income in the related tax jurisdictions. In these estimates, we use historical results, projected future operating results based upon approved business plans, eligible carryforward periods, tax planning opportunities and other relevant considerations. This includes the consideration of tax law changes, prior profitability performance and the uncertainty of future projected profitability.

Under applicable GAAP, a sustained period of profitability in our operations is required before we would change our judgment regarding the need for a valuation allowance against our net deferred tax assets. In 2012, our business returned to a position of cumulative profitability on a pre-tax basis, considering our operating results for the three years ended December 31, 2012. We concluded that this record of cumulative profitability in recent years, in addition to the restructuring of our U.S. operations and our long range forecast showing continued profitability, has provided sufficient positive evidence that our net U.S. federal tax benefits more likely than not will be realized. Accordingly, in the fourth quarter of 2012, we released the valuation allowance against our net federal deferred assets for entities in the U.S., resulting in a $337.5 million benefit in our 2012 provision for income taxes.

As of December 31, 2013, we have retained a valuation allowance of $163.7 million related to deferred tax assets in several foreign jurisdictions and U.S. state and local jurisdictions. As of December 31, 2012 and 2011, we had valuation allowances of $166.1 million and $426.9 million, respectively. In 2011, our valuation allowance mainly related to a full valuation allowance on our U.S. net deferred tax assets.

If, in the future, we generate taxable income on a sustained basis in foreign and U.S. state jurisdictions for which we have recorded valuation allowances, our current estimate of the recoverability of our deferred tax assets could change and result in the future reversal of some or all of the valuation allowance. While we believe we have made appropriate valuations of our deferred tax assets, unforeseen changes in tax legislation, regulatory activities, audit results, operating results, financing strategies, organization structure and other related matters may result in material changes in our deferred tax asset valuation allowances or our tax liabilities.

To the extent our uncertain tax positions do not meet the “more likely than not” threshold, we have derecognized such positions. To the extent our uncertain tax positions meet the “more likely than not” threshold, we have measured and recorded the highest probable benefit, and have established appropriate reserves for benefits that exceed the amount likely to be defended upon examination.

As of December 31, 2013, 2012 and 2011, we have recorded a liability for unrecognized income tax benefits and related interest and penalties of $25.8 million, $30.9 million and $33.2 million, respectively. Our U.S. federal and certain state income tax returns and certain non-U.S. income tax returns are currently under various stages of audit by the relevant tax authorities. We will continue to monitor the progress and conclusions of all ongoing audits and will adjust our estimated liability as necessary.

PRODUCT WARRANTY We record a liability and related charge to cost of goods sold for estimated warranty obligations at the dates our products are sold or when specific warranty issues are identified. Product warranties not expected to be paid within one year are recorded as a non-current liability on our Consolidated Balance Sheet. Our estimated warranty obligations for products sold are based on significant management estimates, with input from our warranty, sales, engineering, quality and legal departments. For products and customers with actual warranty payment experience, we estimate warranty costs principally based on past claims history. For certain products and customers, actual warranty payment experience does not exist or is not mature. In these cases, we estimate our costs based on the contractual arrangements with our customers, existing customers' warranty program terms and internal and external warranty data, which includes a determination of our responsibility for potential warranty issues or claims and estimates of repair costs. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. We continuously evaluate these estimates and our customers' administration of their warranty programs. We closely monitor actual warranty claim data and adjust the liability, as necessary, on a quarterly basis.

In addition to our ordinary warranty provisions with our customers, we are also liable for product recalls and field actions, which are recorded at the time our obligation is probable and can be reasonably estimated. For warranty obligations of this nature, we bear the full responsibility of these costs. We recorded $2.3 million and $9.9 million of expense in 2013 and 2012, respectively, related to a specific field action with our largest customer.

Our warranty accrual, including both our ordinary warranty and specific field action accruals, was $14.3 million as of December 31, 2013 and $29.1 million as of December 31, 2012. In 2013, we made warranty payments of $12.3 million, of which $11.3 million related to the field action. During 2013, we also made adjustments to our warranty accrual to reflect revised estimates regarding our projected future warranty obligations. Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods. It is possible that changes in our assumptions or future warranty issues could materially affect our financial position and results of operations.

ENVIRONMENTAL OBLIGATIONS Due to the nature of our operations, we have legal obligations to perform asset retirement activities related to federal, state, local and foreign environmental requirements. The process of estimating environmental liabilities is complex and significant uncertainty exists related to the timing and method of the settlement of these obligations. Therefore, these liabilities are not reasonably estimable until a triggering event occurs that allows us to estimate a range and possibilities of potential settlement dates, and the potential methods of settlement.

As a result of the plant closures, idling and consolidation of facilities in 2012 and 2011, the methods and timing of certain asset retirement obligations related to these facilities became reasonably estimable. Based on management's best estimate of the costs, methods and timing of the settlement of these obligations, we recorded a charge of $0.1 million in 2011. As of December 31, 2013, the accrual for this liability was $0.2 million. In the future, we will update our estimated costs and potential settlement dates and methods and their associated probabilities based on current information. Any update may change our best estimate and could result in a material adjustment to this liability.

GOODWILL We review our goodwill for impairment annually during the fourth quarter. In addition, we review goodwill for impairment whenever adverse events or changes in circumstances indicate a possible impairment. This review utilizes a two-step impairment test covering goodwill and other indefinite-lived intangibles. The first step involves a comparison of the fair value of a reporting unit with its carrying value. If the carrying value of the reporting unit exceeds its fair value, the second step of the process involves a measurement and comparison of the fair value of goodwill with its carrying value. If the carrying value of the reporting unit's goodwill exceeds the fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess.

The determination of our reporting units, impairment indicators and the fair value of those reporting units and corresponding goodwill require us to make significant judgments and estimates, including the extent and timing of future cash flows. As part of the determination of future cash flows, we need to make assumptions on future general economic conditions, business projections, growth rates and discount rates. These assumptions require significant judgment and are subject to a considerable degree of uncertainty. We believe that the assumptions and estimates in our review of goodwill for impairment are reasonable. However, different assumptions could materially affect our conclusions on this matter. We performed our annual analysis in the fourth quarter and determined there was no impairment to goodwill in 2013.

IMPAIRMENT OF LONG-LIVED ASSETS Long-lived assets, excluding goodwill and other indefinite-lived intangible assets, to be held and used are reviewed for impairment whenever adverse events or changes in circumstances indicate a possible impairment. Recoverability of each “held for use” asset group affected by impairment indicators is determined by comparing the forecasted undiscounted cash flows of the operations to which the assets relate to their carrying amount. If the carrying amount of an asset group exceeds the undiscounted cash flows and is therefore nonrecoverable, the assets in this group are written down to their estimated fair value. We estimate fair value based on market prices, when available, or on a discounted cash flow analysis. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Significant judgments and estimates used by management when evaluating long-lived assets for impairment include:


•	An assessment as to whether an adverse event or circumstance has triggered the need for an impairment review;


•	Determination of asset groups, the primary asset within each group, and the primary asset's average estimated useful life;


•	Undiscounted future cash flows generated by the assets; and


•	Determination of fair value when an impairment is deemed to exist, which may require assumptions related to future general economic conditions, future expected production volumes, product pricing and cost estimates, working capital and capital investment requirements, discount rates and estimated liquidation values.

In 2012, we recorded asset impairment charges of $5.8 million related to previously purchased lease buyouts of equipment that we no longer expect to use in our operations. In 2011, we recorded asset impairment charges of $8.1 million as a result of the announced closure of CKMF.

ESTIMATED USEFUL LIVES FOR DEPRECIATION At December 31, 2013, approximately 79% of our capitalized investment in property, plant and equipment was related to productive machinery and equipment used in support of our manufacturing operations. The selection of appropriate useful life estimates for such machinery and equipment is a critical element of our ability to properly match the cost of such assets with the operating profits and cash flow generated by their use. We currently depreciate productive machinery and equipment on the straight-line method using composite useful life estimates up to 12 years.

While we believe that the useful life estimates currently being used for depreciation purposes reasonably approximate the period of time we will use such assets in our operations, unforeseen changes in product design and technology standards or cost, quality and delivery requirements may result in actual useful lives that differ materially from the current estimates.

Forward-Looking Statements

In this MD&A and elsewhere in this Annual Report, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 and relate to trends and events that may affect our future financial position and operating results. The terms such as “will,” “may,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “project” and similar words or expressions, as well as statements in future tense, are intended to identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and may differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:


•	reduced purchases of our products by General Motors Company (GM), Chrysler Group LLC (Chrysler) or other customers;


•	reduced demand for our customers' products (particularly light trucks and sport utility vehicles (SUVs) produced by GM and Chrysler);


•	our ability or our customers' and suppliers' ability to successfully launch new product programs on a timely basis;


•	our ability to realize the expected revenues from our new and incremental business backlog;


•	our ability to develop and produce new products that reflect market demand;


•	lower-than-anticipated market acceptance of new or existing products;


•	our ability to attract new customers and programs for new products;


•	our ability to respond to changes in technology, increased competition or pricing pressures;


•	our ability to achieve the level of cost reductions required to sustain global cost competitiveness;


•	supply shortages or price increases in raw materials, utilities or other operating supplies for us or our customers as a result of natural disasters or otherwise;


•	global economic conditions, including the impact of the continued market weakness in the Euro-zone;


•	risks inherent in our international operations (including adverse changes in political stability, taxes and other law changes, potential disruptions of production and supply, and currency rate fluctuations);


•	liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party;


•	price volatility in, or reduced availability of, fuel;


•	our ability to successfully implement upgrades to our enterprise resource planning systems;


•	our ability to maintain satisfactory labor relations and avoid work stoppages;


•	our suppliers', our customers' and their suppliers' ability to maintain satisfactory labor relations and avoid work stoppages;


•	our ability to attract and retain key associates;


•	availability of financing for working capital, capital expenditures, research and development (R&D) or other general corporate purposes, including our ability to comply with financial covenants;


•	our customers' and suppliers' availability of financing for working capital, capital expenditures, R&D or other general corporate purposes;


•	changes in liabilities arising from pension and other postretirement benefit obligations;


•	risks of noncompliance with environmental laws and regulations or risks of environmental issues that could result in unforeseen costs at our facilities;


•	adverse changes in laws, government regulations or market conditions affecting our products or our customers' products (such as the Corporate Average Fuel Economy (CAFE) regulations);


•	our ability to consummate and integrate acquisitions and joint ventures;


•	our ability or our customers' and suppliers' ability to comply with the Dodd-Frank Act and other regulatory requirements and the potential costs of such compliance; and


•	other unanticipated events and conditions that may hinder our ability to compete.

It is not possible to foresee or identify all such factors and we make no commitment to update any forward-looking statement or to disclose any facts, events or circumstances after the date hereof that may affect the accuracy of any forward-looking statement.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

MARKET RISK

Our business and financial results are affected by fluctuations in world financial markets, including interest rates and currency exchange rates. Our hedging policy has been developed to manage these risks to an acceptable level based on management's judgment of the appropriate trade-off between risk, opportunity and cost. We do not hold financial instruments for trading or speculative purposes.

CURRENCY EXCHANGE RISK From time to time, we use foreign currency forward contracts to reduce the effects of fluctuations in exchange rates, primarily relating to the Mexican Peso, Euro, Swedish Krona, Polish Zloty and Pound Sterling. At December 31, 2013, we had forward contracts with a notional amount of $67.2 million outstanding. The potential decrease in fair value of foreign exchange contracts, assuming a 10% adverse change in the foreign currency exchange rates, would be approximately $6.1 million at December 31, 2013.

Future business operations and opportunities, including the expansion of our business outside North America, may further increase the risk that cash flows resulting from these activities may be adversely affected by changes in currency exchange rates. If and when appropriate, we intend to manage these risks by utilizing local currency funding of these expansions and various types of foreign exchange contracts.

INTEREST RATE RISK We are exposed to variable interest rates on certain credit facilities. From time to time, we have used interest rate hedging to reduce the effects of fluctuations in market interest rates. As of December 31, 2013, there are no interest rate swaps in place. The pre-tax earnings and cash flow impact of a one-percentage-point increase in interest rates (approximately 16% of our weighted-average interest rate at December 31, 2013) on our long-term debt outstanding at December 31, 2013 would be approximately $2.0 million on an annualized basis.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.


Item 8.	Financial Statements and Supplementary Data

Consolidated Statements of Income

Year Ended December 31,



	2013			2012			2011
	(in millions, except per share data)

Net sales	$	3,207.3		$	2,930.9		$	2,585.0

Cost of goods sold	2,728.6			2,531.2			2,129.9

Gross profit	478.7			399.7			455.1

Selling, general and administrative expenses	238.4			243.3			231.7

Operating income	240.3			156.4			223.4

Interest expense	(115.9		)	(101.6		)	(83.9		)

Investment income	0.6			0.6			1.2

Other income (expense)
Debt refinancing and redemption costs	(36.8		)	(19.8		)	(3.1		)
Other, net	(1.9		)	(4.1		)	0.5

Income before income taxes	86.3			31.5			138.1

Income tax expense (benefit)	(8.2		)	(335.2		)	1.0

Net income	$	94.5		$	366.7		$	137.1

Net loss attributable to noncontrolling interests	—			1.0			5.7

Net income attributable to AAM	$	94.5		$	367.7		$	142.8

Basic earnings per share	$	1.23		$	4.88		$	1.91

Diluted earnings per share	$	1.23		$	4.87		$	1.89

See accompanying notes to consolidated financial statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

Consolidated Statements of Comprehensive Income

Year Ended December 31,



	2013			2012			2011
	(in millions)
Net income	$	94.5		$	366.7		$	137.1

Other comprehensive income (loss), net of tax
Defined benefit plans, net of $(41.3) million and $32.3 million of tax in 2013 and 2012, respectively	76.6			(58.9		)	(63.5		)
Foreign currency translation adjustments	(26.2		)	(9.4		)	(27.3		)
Change in derivatives	(2.0		)	7.8			(6.8		)
Other comprehensive income (loss)	48.4			(60.5		)	(97.6		)

Comprehensive income	142.9			306.2			39.5

Net loss attributable to noncontrolling interests	—			1.0			5.7
Foreign currency translation adjustments attributable to noncontrolling interests	—			0.3			0.2

Comprehensive income attributable to AAM	$	142.9		$	306.9		$	45.0

See accompanying notes to consolidated financial statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

Consolidated Balance Sheets

December 31,



	2013			2012
Assets	(in millions, except per share data)
Current assets
Cash and cash equivalents	$	154.0		$	62.4
Accounts receivable, net	458.5			463.4
Inventories, net	261.8			224.3
Deferred income taxes	36.4			34.9
Prepaid expenses and other	87.1			87.1
Total current assets	997.8			872.1

Property, plant and equipment, net	1,058.5			1,009.7
Deferred income taxes	341.8			366.1
Goodwill	156.4			156.4
GM postretirement cost sharing asset	242.0			259.7
Other assets and deferred charges	232.5			202.0
Total assets	$	3,029.0		$	2,866.0

Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable	$	445.8		$	396.1
Accrued compensation and benefits	110.1			84.9
Deferred revenue	17.0			17.2
Deferred income taxes	0.1			1.4
Other accrued expenses	94.1			101.2
Total current liabilities	667.1			600.8

Long-term debt	1,559.1			1,454.1
Deferred income taxes	9.8			9.5
Deferred revenue	76.4			82.2
Postretirement benefits and other long-term liabilities	683.0			840.2
Total liabilities	2,995.4			2,986.8

Stockholders' equity (deficit)
Series A junior participating preferred stock, par value $0.01 per share;
0.1 million shares authorized; no shares outstanding in 2013 or 2012	—			—
Preferred stock, par value $0.01 per share; 10.0 million shares
authorized; no shares outstanding in 2013 or 2012	—			—
Common stock, par value $0.01 per share; 150.0 million shares authorized;
81.6 million and 80.9 million shares issued and outstanding in 2013 and 2012, respectively	0.8			0.8
Series common stock, par value $0.01 per share; 40.0 million
shares authorized; no shares outstanding in 2013 or 2012	—			—
Paid-in capital	612.8			600.9
Accumulated deficit	(181.3		)	(275.8		)
Treasury stock at cost, 6.0 million shares in 2013 and 2012	(182.5		)	(182.1		)
Accumulated other comprehensive income (loss), net of tax
Defined benefit plans	(197.9		)	(274.5		)
Foreign currency translation adjustments	(18.6		)	7.6
Unrecognized gain on derivatives	0.3			2.3
Total AAM stockholders' equity (deficit)	33.6			(120.8		)
Noncontrolling interests in subsidiaries	—			—
Total stockholders' equity (deficit)	33.6			(120.8		)
Total liabilities and stockholders' equity (deficit)	$	3,029.0		$	2,866.0

See accompanying notes to consolidated financial statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

Consolidated Statements of Cash Flows

Year Ended December 31,



	2013			2012			2011
	(in millions)
Operating Activities
Net income	$	94.5		$	366.7		$	137.1
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Asset impairments and related indirect inventory obsolescence	—			5.8			8.7
Depreciation and amortization	177.0			152.2			139.4
Deferred income taxes	(18.7		)	(343.8		)	17.2
Stock-based compensation	10.8			2.4			4.5
Pensions and other postretirement benefits, net of contributions	6.5			(208.4		)	(33.3		)
Gain on retirement of equipment and held-for-sale assets, net	(3.5		)	(1.9		)	(6.9		)
Debt refinancing and redemption costs	9.2			1.5			1.8
Changes in operating assets and liabilities
Accounts receivable	(0.3		)	(130.6		)	(189.9		)
Inventories	(42.5		)	(49.9		)	(50.2		)
Accounts payable and accrued expenses	66.3			60.9			37.1
Deferred revenue	(5.6		)	(21.6		)	(74.7		)
Other assets and liabilities	(70.7		)	(8.8		)	(47.1		)
Net cash provided by (used in) operating activities	223.0			(175.5		)	(56.3		)

Investing activities
Purchases of property, plant and equipment	(251.9		)	(207.6		)	(163.1		)
Proceeds from sale of property, plant and equipment	9.1			10.1			8.9
Proceeds from sale-leaseback of equipment	24.1			12.1			—
Purchase buyouts of leased equipment	—			—			(13.4		)
Acquisition, net	—			—			(16.5		)
Net cash used in investing activities	(218.7		)	(185.4		)	(184.1		)

Financing activities
Net short-term borrowings (repayments) under credit facilities	(29.9		)	10.4			2.6
Proceeds from issuance of long-term debt	786.7			562.6			227.0
Payments of other long-term debt and capital lease obligations	(652.0		)	(299.1		)	(56.0		)
Debt issuance costs	(16.7		)	(10.6		)	(10.9		)
Purchase of noncontrolling interest	—			(4.0		)	—
Employee stock option exercises, including tax benefit	1.1			0.1			4.6
Purchase of treasury stock	(0.4		)	(5.9		)	(0.1		)
Net cash provided by financing activities	88.8			253.5			167.2

Effect of exchange rate changes on cash	(1.5		)	0.6			(2.2		)

Net increase (decrease) in cash and cash equivalents	91.6			(106.8		)	(75.4		)

Cash and cash equivalents at beginning of year	62.4			169.2			244.6

Cash and cash equivalents at end of year	$	154.0		$	62.4		$	169.2

Supplemental cash flow information
Interest paid	$	123.2		$	88.9		$	73.1
Income taxes paid, net	$	11.6		$	14.7		$	10.9

See accompanying notes to consolidated financial statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

Consolidated Statement of Stockholders' Equity (Deficit)



													Accumulated Other
													Comprehensive
	Common Stock												Income (Loss)			Noncontrolling
	Shares		Par		Paid-in		Accumulated			Treasury			Attributable to			Interests in
	Outstanding		Value		Capital		Deficit			Stock			AAM			Subsidiaries
	(in millions)

Balance at January 1, 2011	68.8		$	0.8	$	588.1	$	(786.3	)	$	(176.1	)	$	(106.0	)	$	11.4

Net income							142.8									(5.7		)
Change in derivatives, net													(6.8		)
Foreign currency translation													(27.5		)	0.2
Defined benefit plans, net													(63.5		)
Exercise of stock options and vesting of restricted stock	1.7				4.6
Stock-based compensation					4.5
Exercise of GM warrants	3.3
Purchase of treasury stock	—									(0.1		)
Balance at December 31, 2011	73.8		$	0.8	$	597.2	$	(643.5	)	$	(176.2	)	$	(203.8	)	$	5.9

Net income							367.7									(1.0		)
Change in derivatives													7.8
Foreign currency translation													(9.7		)	0.3
Defined benefit plans, net													(58.9		)
Exercise of stock options and vesting of restricted stock	1.5				0.1
Stock-based compensation					2.4
Acquisition of noncontrolling interest					1.2											(5.2		)
Purchase of treasury stock	(0.5	)								(5.9		)
Balance at December 31, 2012	74.8		$	0.8	$	600.9	$	(275.8	)	$	(182.1	)	$	(264.6	)	$	—

Net income							94.5
Change in derivatives													(2.0		)
Foreign currency translation													(26.2		)
Defined benefit plans, net													76.6
Exercise of stock options and vesting of restricted stock	0.8				1.1
Stock-based compensation					10.8
Purchase of treasury stock	—									(0.4		)
Balance at December 31, 2013