Allison Transmission Announces Fourth Quarter and Full Year 2012 Results

   Allison Transmission Announces Fourth Quarter and Full Year 2012 Results

Fourth Quarter 2012:

-- Net Sales $487 million, Adjusted EBITDA $132 million and Adjusted Free Cash
Flow $82 million

Full Year 2012:

-- Net Sales $2,142 million, Adjusted EBITDA $705 million and Adjusted Free
Cash Flow $402 million

PR Newswire

INDIANAPOLIS, Feb. 19, 2013

INDIANAPOLIS, Feb. 19, 2013 /PRNewswire/ --Allison Transmission Holdings,
Inc. (NYSE: ALSN), the world's largest manufacturer of fully-automatic
transmissions for medium- and heavy-duty commercial vehicles and
hybrid-propulsion systems for city buses,  today reported net sales for the
quarter of $487 million, a 6 percent decrease from the same period in 2011.
Net Income for the quarter was $11 million, compared to a net income of $45
million for the same period in 2011, a decrease of $33 million. Adjusted Net
Income, a non-GAAP financial measure, for the quarter was $46 million,
compared to Adjusted Net Income of $52 million for the same period in 2011, a
decrease of $6 million. Diluted earnings per share for the quarter were $0.06.

(Logo: http://photos.prnewswire.com/prnh/20120702/DE33547LOGO )

The decrease in net sales was principally driven by reduced demand for North
America Off-Highway transmission products and service parts due to continued
weakness in natural gas pricing. Partially offsetting these declines were
increased net sales in the Global On-Highway and Outside North America
Off-Highway end markets and price increases on certain products. Strength in
the Outside North America Off-Highway end market was principally driven by
higher demand in the energy and mining sectors.

Adjusted EBITDA, a non-GAAP financial measure, for the quarter was $132
million, or 27.1 percent of net sales, compared to $156 million for the same
period in 2011. Adjusted EBITDA for the quarter included $7 million of costs,
excluding the contract signing bonus, to conclude a new five-year labor
agreement with the United Automotive, Aerospace, and Agricultural Implement
Workers of America (UAW) Local 933 and a $9 million product warranty charge
for specific product issues. Adjusted EBITDA for the quarter excludes a $9
million charge for the UAW Local 933 contract signing bonus. Adjusted Free
Cash Flow, also a non-GAAP financial measure, for the quarter was $82 million
compared to $30 million for the same period in 2011.

Lawrence E. Dewey, Chairman, President and Chief Executive Officer of Allison
Transmission commented, "Despite significant declines in the North America
energy sector's hydraulic fracturing market, we continued to demonstrate
strong operating margins and cash flow while concluding a new five-year labor
agreement with the UAW Local 933. The Global On-Highway end markets were
stronger than anticipated despite increased seasonal production downtime taken
by many of our customers and somewhat elevated commercial vehicle retail
inventory levels. Maintaining our prudent approach to capital structure
management we refinanced an additional $300 million of our Senior Secured
Credit Facility Term B-1 Loan due in 2014, repaid $95 million of debt and paid
a quarterly dividend to our shareholders. Given the continued heightened level
of uncertainty in our end markets, we are taking a cautious approach to 2013.
Consequently we have implemented several initiatives to proactively align
costs and programs across our business with the lack of near-term visibility
and confidence in certain of our end markets."

Fourth Quarter Net Sales by End Market

                                      Q4 2012        Q4 2011
End Market                                                          % Variance
                                      Net Sales ($M) Net Sales ($M)
North America On-Highway              $188           $175           7%
North America Hybrid-Propulsion       $32            $27            19%
Systems for Transit Bus
North America Off-Highway             $17            $70            (76%)
Military                              $74            $70            6%
Outside North America On-Highway      $73            $70            4%
Outside North America Off-Highway     $30            $19            58%
Service, Parts, Support Equipment &   $73            $85            (14%)
Other
Total                                 $487           $516           (6%)

Fourth Quarter Highlights
North America On-Highway end market net sales were up 7 percent from the same
period in 2011. The year over year increase was principally driven by higher
demand for Pupil Transport/Shuttle Series, Motorhome Series and Highway Series
models.

North America Hybrid-Propulsion Systems for Transit Bus end market net sales
were up 19 percent from the same period in 2011 principally due to the timing
of orders.

North America Off-Highway end market net sales were down 76 percent from the
same period in 2011. The year over year decrease was principally driven by
lower demand from hydraulic fracturing applications due to weakness in natural
gas pricing.

Military end market net sales were up 6 percent from the same period in 2011
principally due to higher wheeled product requirements for several programs
partially offset by lower tracked products demand commensurate with reduced
U.S. defense spending.

Outside North America On-Highway end market net sales were up 4 percent from
the same period in 2011 reflecting strength in China partially offset by
weakness in Latin America while European end markets were flat.

Outside North America Off-Highway end market net sales were up 58 percent from
the same period in 2011 principally driven by strength in the energy and
mining sectors.

Service Parts, Support Equipment & Other end market net sales were down 14
percent from the same period in 2011. The year over year decrease was
principally driven by lower demand for North America Off-Highway and
On-Highway service parts partially offset by price increases on certain
products.

Gross profit for the quarter was $194 million, a decrease of 13 percent over
gross profit of $222 million for the same period in 2011. Gross margin for the
quarter was 39.9 percent, a decrease of 320 basis points over a gross margin
of 43.1 percent for the same period in 2011. Excluding the costs ($7 million)
and charges ($8 million) to conclude a new five-year labor agreement with the
UAW Local 933 the gross margin decreased 30 basis points from the same period
in 2011.

Selling, general and administrative expenses for the quarter were $112
million, an increase of 2 percent over selling, general and administrative
expenses of $110 million for the same period in 2011. The increase was
principally driven by a $9 million product warranty charge for specific
product issues and a $1 million contract signing bonus charge to conclude a
new five-year labor agreement with the UAW Local 933 partially offset by
reduced global commercial spending activities.

Engineering – research and development expenses for the quarter were $28
million, an increase of 7 percent over engineering – research and development
expenses of $26 million for the same period in 2011. The increase was
principally driven by higher product initiatives spending.

Fourth Quarter Non-GAAP Financial Measures
Adjusted EBITDA for the quarter was $132 million, or 27.1 percent of net
sales, compared to $156 million, or 30.3 percent of net sales, for the same
period in 2011. The decrease in Adjusted EBITDA was principally driven by
decreased net sales, $7 million of costs to conclude a new five-year labor
agreement with the UAW Local 933, a $9 million product warranty charge and
higher product initiatives spending partially offset by favorable material
costs, price increases on certain products and reduced global commercial
spending activities.

Adjusted Net Income for the quarter was $46 million compared to $52 million
for the same period in 2011. The decrease in Adjusted Net Income was
principally driven by decreased Adjusted EBITDA and a $9 million contract
signing bonus charge to conclude a new five-year labor agreement with the UAW
Local 933 partially offset by decreased cash interest expense as a result of
debt refinancing and repayments.

Adjusted Free Cash Flow for the quarter was $82 million compared to $30
million for the same period in 2011. The increase was principally driven by
increased net cash provided by operating activities and reduced capital
expenditures. The decrease in capital expenditures was principally driven by
prior year spending for the India expansion and the timing of investments in
productivity and replacement programs partially offset by increased product
initiatives spending.

2013 Guidance
Allison expects 2013 net sales to decline in the range of 6 to 8 percent, an
Adjusted EBITDA margin in the range of 32 to 34 percent, and an Adjusted Free
Cash Flow in the range of $325 to $375 million, or $1.75 to $2.01 per diluted
share. Capital expenditures are expected to be in the range of $80 to $90
million, which includes maintenance spending of approximately $60 million.
Cash income taxes are expected to be in the range of $15 to $20 million.

Our 2013 net sales guidance reflects a cautious approach given the continued
heightened level of uncertainty in our end markets and the lack of near-term
visibility and confidence in certain of our end markets. Allison's 2013 net
sales outlook also incorporates an assumed continuation of cyclically low
levels of demand in the North America energy sector's hydraulic fracturing
market, the previously considered reductions in U.S. defense spending to
longer term averages experienced during periods without active conflicts and
lower demand in the North America Hybrid-Propulsion Systems for Transit Bus
end market due to municipal spending constraints. Accordingly we assume year
over year net sales reductions in the Global Off-Highway, Military and North
America Hybrid-Propulsion Systems for Transit Bus end markets partially offset
by year over year net sales growth in the Global On-Highway and Service Parts,
Support Equipment & Other end markets.

Although we are not providing specific first quarter 2013 guidance, Allison
does expect first quarter net sales to be significantly lower than the same
period in 2012. The anticipated year over year decline in first quarter net
sales is principally driven by considerably lower demand in the North America
energy sector's hydraulic fracturing market, previously considered reductions
in Military net sales and weaker Global On-Highway end markets entering 2013.
Allison expects that the majority of the full year 2013 net sales reduction
implied by the midpoint of our guidance will occur in the first quarter
followed by growth in the Global On-Highway end markets for the balance of the
year.

Our 2013 Adjusted EBITDA margin guidance incorporates several initiatives to
proactively align costs and programs across our business with Allison's
cautious approach to net sales guidance. These cost initiatives also
demonstrate our capability and commitment to maintain Adjusted EBITDA margins
and Adjusted Free Cash Flow generation while supporting a cyclical recovery in
Allison's core North America On-Highway end market and Outside North America
growth plans.

Conference Call and Webcast
The company will host a conference call at 8:30 a.m. Eastern Time on Tuesday,
February 19, 2013 to discuss its fourth quarter 2012 results. Dial-in number
is 1-719-457-2083 and the U.S. toll-free dial-in number is 1-888-364-3109.
Passcode for the call is 4104359. A live webcast of the conference call will
also be available on the investor relations page of the Company's website at
http://ir.allisontransmission.com/.

For those unable to participate in the conference call, a replay will be
available from 11:30 a.m. Eastern Time on February 19, 2013 until 11:59 a.m.
on February 26, 2013. The replay dial-in number is 1-858-384-5517 and the U.S.
toll-free replay dial-in number is 1-877-870-5176. Replay passcode is 4104359.

About Allison Transmission
Allison Transmission is the world's largest manufacturer of fully-automatic
transmissions for medium- and heavy-duty commercial vehicles, medium- and
heavy-tactical U.S. military vehicles and hybrid-propulsion systems for
transit buses. Allison transmissions are used in a variety of applications
including on-highway trucks (distribution, refuse, construction, fire and
emergency), buses (primarily school and transit), motor homes, off-highway
vehicles and equipment (primarily energy and mining) and military vehicles
(wheeled and tracked). Founded in 1915, the Allison business is headquartered
in Indianapolis, Indiana, U.S.A. and employs approximately 2,800 people.
Allison has manufacturing facilities and customization centers located in
China, The Netherlands, Brazil, India and Hungary. With a global presence,
serving customers in North America, Europe, Asia, Australia, South America,
and Africa, Allison also has over 1,400 independent distributor and dealer
locations worldwide. More information about Allison is available at
www.allisontransmission.com.

Forward-Looking Statements
This press release may contain forward-looking statements. All statements
other than statements of historical fact contained in this press release are
forward-looking statements, including all statements regarding future
financial results. In some cases, you can identify forward-looking statements
by terminology such as "may," "will," "should," "expect," "plans," "project,"
"anticipate," "believe," "estimate," "predict," "intend," "forecast," "could,"
"potential," "continue" or the negative of these terms or other similar terms
or phrases. Forward-looking statements are not guarantees of future
performance and involve known and unknown risks. Factors which may cause the
actual results to differ materially from those anticipated at the time the
forward-looking statements are made include, but are not limited to: risks
related to our substantial indebtedness; our participation in markets that are
competitive; general economic and industry conditions; our ability to prepare
for, respond to and successfully achieve our objectives relating to
technological and market developments and changing customer needs; the failure
of markets outside North America to increase adoption of fully-automatic
transmissions; the discovery of defects in our products, resulting in delays
in new model launches, recall campaigns and/or increased warranty costs and
reduction in future sales or damage to our brand and reputation; the
concentration of our net sales in our top five customers and the loss of any
one of these; risks associated with our international operations; brand and
reputational risks; our intention to pay dividends; and labor strikes, work
stoppages or similar labor disputes, which could significantly disrupt our
operations or those of our principal customers. Although we believe the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, we can give no assurance that the expectations will be
attained or that any deviation will not be material. All information is as of
the date of this press release, and we undertake no obligation to update any
forward-looking statement to conform the statement to actual results or
changes in expectations.

Use of Non-GAAP Financial Measures
This press release contains information about Allison's financial results
which are not presented in accordance with accounting principles generally
accepted in the United States ("GAAP"). Such non-GAAP financial measures are
reconciled to their closest GAAP financial measures at the end of this press
release. Non-GAAP financial measures should not be considered in isolation or
as a substitute for our reported results prepared in accordance with GAAP and,
as calculated, may not be comparable to other similarly titled measures of
other companies.

Attachment

  oCondensed Consolidated Statements of Operations
  oCondensed Consolidated Balance Sheets
  oCondensed Consolidated Statements of Cash Flows
  oReconciliation of GAAP to Non-GAAP Financial Measures



Allison Transmission Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
                                                   

                      Three months ended December  Year ended December 31,
                      31,
                      2012           2011           2012           2011
                      (Unaudited)  (Unaudited)  (Unaudited)  (Audited)
Net sales             $        $        $         $    
                      487.0         516.1         2,141.8        2,162.8
Cost of sales         292.8          293.7          1,187.5        1,208.3
Gross profit          194.2          222.4          954.3          954.5
Selling, general and
administrative        112.0          109.9          419.0          409.1
expenses
Engineering -
research and          28.1           26.0           115.1          116.4
development
Operating income      54.1           86.5           420.2          429.0
Interest expense,     (35.6)         (33.4)         (151.2)        (217.3)
net
Other income          2.6            (3.3)          (52.8)         (61.1)
(expense), net
Income before income  21.1           49.8           216.2          150.6
taxes
Income tax (expense)  (9.9)          (5.3)          298.0          (47.6)
benefit
Net income            $        $        $        $     
                       11.2         44.5        514.2         103.0
Basic earnings per
share attributable
to
                      $        $        $        $     
 common              0.06         0.25         2.83         0.57
stockholders
Diluted earnings per
share attributable
to
                      $        $        $        $     
 common              0.06         0.24         2.76         0.56
stockholders

Allison Transmission Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
                                        December 31,       December 31,
                                        2012                 2011
                                        (Unaudited)        (Audited)
ASSETS
Current Assets
 Cash and cash equivalents           $       80.2  $     
                                                             314.0
 Accounts receivables - net of
allowance for
 doubtful accounts of $0.9 and    165.0                194.7
$1.3 respectively
 Inventories                         157.1                155.9
 Deferred income taxes, net          55.3                 3.4
 Other current assets                32.7                 34.7
Total Current Assets                    490.3                702.7
Property, plant and equipment, net      596.2                581.8
Intangible assets, net                  3,657.1              3,807.1
Deferred income taxes, net              32.2                 0.8
Other non-current assets                90.2                 100.2
TOTAL ASSETS                            $     4,866.0    $     5,192.6
LIABILITIES
Current Liabilities
 Accounts payable                    $      133.1   $     
                                                             162.6
 Current portion of long term        19.5                 31.0
debt
Other current liabilities               225.2                256.3
Total Current Liabilities               377.8                449.9
Long term debt                          2,801.3              3,345.0
Other non-current liabilities           330.0                576.0
TOTAL LIABILITIES                       3,509.1              4,370.9
TOTAL STOCKHOLDERS' EQUITY              1,356.9              821.7
TOTAL LIABILITIES & STOCKHOLDERS'       $     4,866.0    $     5,192.6
EQUITY



Allison Transmission Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
                                                                

                      Three months ended December 31,          Year ended December 31,
                      2012                 2011                  2012                 2011
                      (Unaudited)        (Unaudited)         (Unaudited)        (Audited)
Net cash
provided by           $                 $                 $                $    
operating             112.1               71.9                 497.5                469.2
activities
Net cash used
for investing         (30.2)               (40.4)                (138.7)              (55.9)
activities
-
Additions of   (30.0)               (41.6)               (123.9)               (96.9)
long-lived
assets
Net cash used
for financing         (85.2)               (80.6)                (593.5)              (369.9)
activites
Effect of
exchange rate         1.6                  9.3                   0.9                  18.4
changes in
cash
Net (decrease)
increase in cash and  (1.7)                (39.8)                (233.8)              61.8
cash equivelents
Cash and cash
equivalents at        81.9                 353.8                 314.0                252.2
beginning of
period
Cash and cash         $               $                  $               $    
equivalents at        80.2                 314.0                80.2                 314.0
end of period
Supplemental
disclosures:
             $               $                $                $    
Interest              46.7                 68.0                 167.3                208.6
paid
             $              $               $               $     
Income taxes          1.7                  0.7                  10.7                  5.8
paid



Allison Transmission Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in millions, Unaudited)
                                                      

                                 Three months ended   Year ended December
                                 December 31,         31,
                                 2012       2011       2012         2011
                                 $       $       $        $    
Net income                                       514.2      103.0
                                 11.2      44.5
plus:
 Interest expense,            35.6       33.4       151.2        217.3
net
 Cash interest                (46.7)     (68.0)     (167.3)      (208.6)
expense
 Income tax expense           9.9        5.3        (298.0)      47.6
(benefit)
 Cash income taxes            (1.7)      (0.7)      (10.7)       (5.8)
 Fee to terminate services
agreement with the Sponsors      -          -          16.0         -
(a)
 Initial public offering      -          -          6.1          -
expenses (b)
 Technology-related           -          -          14.4         -
investments expense (c)
 Amortization of intangible   37.5       37.9       150.0        151.9
assets
                                 $       $       $        $    
Adjusted net income                              375.9      305.4
                                 45.8      52.4
 Cash interest                46.7       68.0       167.3        208.6
expense
 Cash income taxes            1.7        0.7        10.7         5.8
 Depreciation of property,    26.5       26.8       102.5        103.8
plant and equipment
 Loss on repurchases of       0.5        4.7        22.1         16.0
long-term debt (d)
 Dual power inverter module   -          -          9.4          -
extended coverage (e)
 UAW Local 933 contract       8.8        -          8.8          -
signing bonus (f)
 Benefit plan                 -          -          2.3          -
re-measurement (g)
 Unrealized loss (gain) on    0.2        1.7        (0.9)        6.8
hedge contracts (h)
 Premiums and expenses on
tender offer for long-term       -          -          -            56.9
debt (i)
 Benefit plan                 -          (0.5)      -            (2.5)
adjustment (j)
 Other (k)                    1.7        2.4        7.0          11.1
                                 $       $       $        $    
Adjusted EBITDA                                    705.1      711.9
                                 131.9     156.2
Adjusted EBITDA excluding        $       $       $        $    
technology-related license                         717.1      711.9
expenses (l)                     131.9     156.2
                                 $       $       $        $    
Net sales                                        2,141.8     2,162.8
                                 487.0     516.1
Adjusted EBITDA margin           27.1%      30.3%      32.9%        32.9%
Adjusted EBITDA margin excluding
technology-related license       27.1%      30.3%      33.5%        32.9%
expenses (l)
Net Cash Provided by Operating   $       $       $        $    
Activities                                       497.5       469.2
                                 112.1     71.9
(Deductions) or Additions to
Reconcile to Adjusted Free
Cash Flow:
Additions of long-lived          (30.0)     (41.6)     (123.9)      (96.9)
assets
Fee to terminate services
agreement with the Sponsors      -          -          16.0         -
(a)
Technology-related license       -          -          12.0         -
expenses (l)
                                 $       $       $        $    
Adjusted Free Cash Flow                         401.6       372.3
                                 82.1      30.3
            Represents a one-time payment (recorded in Other income (expense),
(a)         net) to terminate the services agreement with affiliates of the
            Carlyle Group and Onex Corporation (the "Sponsors").
(b)         Represents fees and expenses (recorded in Other income (expense),
            net) related to our initial public offering in March 2012.
            Represents an impairment charge (recorded in Other income
            (expense), net) for investments in co-development agreements with
(c)         various companies to expand our position in transmission

            technologies.
            Represents a $0.5 million and $4.7 million loss (recorded in Other
            income (expense), net) realized on the redemptions and repayments
            of long-term debt for the three months ended December

(d)         31, 2012 and 2011, respectively. Represents a $22.1 million and
            $16.0 million loss (recorded in Other income (expense), net)
            realized on the redemptions and repayments of long-term debt for
            the

            years ended December 31, 2012 and 2011, respectively.
            Represents a $9.4 million charge (recorded in Selling, general
            and administrative expenses) to increase the Company's liability
(e)         related to the dual power inverter module extended coverage

            program due to claims data and additional design issues identified
            during introduction of replacement units.
            Represents an $8.8 million ($7.7 million recorded in Cost of
            sales, $1.0 million recorded in Selling, general and
            administrative expenses, and $0.1 million recorded in Engineering
            – research and
(f)
            development) bonus to eligible employees recorded in the fourth
            quarter of 2012 as a result of UAW Local 933 - represented
            employees ratifying a labor contract effective November 2012

            through November 2017.
            Represents a $2.3 million settlement charge (recorded in Other
            income (expense), net) related to the settlement of pension
(g)         obligations for certain hourly employees from the Company's hourly

            defined benefit pension plan to General Motors' pension plan.
            Represents $0.2 million and $1.7 million of unrealized losses
            (recorded in Other income (expense), net) on the mark-to-market of
            our foreign currency and commodities derivative contracts for

            the three months ended December 31, 2012 and 2011, respectively.
(h)         Represents ($0.9) million and $6.8 million of unrealized (gains)
            losses (recorded in Other income (expense), net) on the mark-

            to-market of our foreign currency and commodities derivative
            contracts for years ended December 31, 2012 and 2011,
            respectively.
            Represents $56.9 million (recorded in Other income (expense), net)
(i)         of premiums and expenses related to the tender offer for 11.25%
            senior toggle notes due 2015.
            Represents a ($0.5) million ($0.1 million recorded in Cost of
            sales, $0.2 million recorded in Selling, general and
            administrative expenses, and $0.2 million recorded in Engineering
            – research and

            development) and ($2.5) million ($0.8 million recorded in Cost of
(j)         sales, $0.9 million recorded in Selling, general and
            administrative expenses, and $0.8 million recorded in Engineering
            – research

            and development) favorable adjustment related to certain
            differences between benefits promised under a benefit plan and the
            administration of the plan for the three months and year ended
            December 31, 2011, respectively.
            Represents employee stock compensation expense and service fees
(k)         (recorded in Selling, general and administrative expenses) paid to
            the Sponsors.
            Represents $12.0 million (recorded in Engineering – research and
(l)         development) of payments to various companies for licenses to
            expand our position in transmission technologies.

SOURCE Allison Transmission Holdings, Inc.

Website: http://www.allisontransmission.com
Contact: Investor Relations, +1-317-242-3078, ir@allisontransmission.com; or
Media Relations, +1-317-242-5000, media@allisontransmission.com