American Axle & Manufacturing Announces Record Third Quarter Earnings, Up 37%

DETROIT, Oct. 23, 2002-- American Axle & Manufacturing Holdings, Inc. (AAM), traded as AXL on the NYSE, today reported record third quarter earnings of 70 cents per share for 2002. This represents an increase of 37% compared to the 51 cents earned in the third quarter of 2001. Sales in the third quarter hit a record level for the third straight quarter on a comparative basis to prior years. Sales were up $85 million or 11.4% to $829 million for the third quarter of 2002 as compared to the $744 million in the year earlier period. North American vehicle builds were up approximately 11% by comparison.

Sales were positively impacted in the quarter by increased General Motors light truck production and the successful AAM launch of both the heavy-duty Dodge Ram program and the HUMMER H2 driveline system. Sales to GM were up 4.3% in the third quarter. Sales to non-GM customers were up 63% in the quarter and represented 18% of total sales in the quarter versus 12% in the third quarter of 2001. Sales to GM were positively impacted by the launch of the HUMMER H2 driveline system and negatively impacted by the discontinuance of the Firebird/Camaro program by GM. Revenues from customers other than GM continue to increase with the successful launch of the new heavy-duty Dodge Ram program. For the nine months ended September 30, 2002, sales were $2.569 billion, representing an increase of $253 million, or 10.9%, from the $2.316 billion generated the first nine months of 2001.

Operating income was $68.7 million, or 8.3% of sales in the quarter, as compared to $54.1 million or 7.3% of sales for the third quarter of 2001. For the nine months ended September 30, 2002, operating income was $228.2 million or 8.9% of sales, versus $178.4 million, or 7.7% of sales for the same period of 2001. Earnings for the first nine months of 2002 were $2.39 per share, up 37% as compared to $1.74 per share earned in the first nine months of 2001.

"We were pleased to be able to recently increase our 2002 earnings guidance for the third quarter. AAM is delivering earnings that are slightly ahead of that guidance," said AAM Co-Founder, Chairman & CEO, Richard E. Dauch. "AAM's 37% earnings per share growth versus the third quarter of 2001 is largely due to our ability to meet the demands for increased light truck builds at both GM, our largest customer, and DaimlerChrysler. Our expanded product portfolio and favorable mix, our ability to successfully execute multiple product launches and our continued focus on productivity improvements and tight cost controls contributed to our record Q3 earnings."

Capital spending in the first nine months of 2002 was $157.9 million, $148.9 million less than the $306.8 million spent in the first nine months of 2001. This planned reduction in capital spending is in line with AAM's previous guidance to achieve lower, sustainable levels of capital spending. AAM has already upgraded its facilities and systems to state-of-the-art world- class manufacturing operations, producing the company's newer, technology- based products, and therefore capital spending needs are significantly reduced resulting in increased cash flow.

Net cash flow after capital expenditures was $75 million positive for the nine months ended September 30, 2002, a $275 million improvement over the same period of 2001.

AAM's net debt to capital ratio has been improved to 54% at September 30, 2002 versus 62% at December 31, 2001.

Recent Events

On August 1, 2002, the company announced that its United Kingdom (UK) based subsidiary, Albion Automotive Ltd., received a contract to continue to supply rear axles for Renault Truck's commercial vans and medium duty vehicles through 2006. The extension will provide Renault Truck with AAM's enhanced product features, such as an electronic differential lock actuator, and the program is expected to generate annual revenue of approximately $18.5 million.

On August 8, 2002, AAM announced it had been selected as the supplier of rear axle shafts for a future model year Chrysler Group vehicle. The axle shafts will be produced at AAM's Detroit Forge facility, further diversifying AAM's customer base.

On August 15, 2002, the company stated it had launched production of its latest advanced technology front and rear axles, front auxiliary shafts, rear drive shafts, and heavy duty steering linkages for the GMC Savana and Chevrolet Express. The AAM products include a Noise, Vibration and Harshness (NVH) optimized front axle system.

On October 7, 2002 AAM announced it expected third quarter per share earnings to be approximately 10% higher than current consensus estimates of 63 cents per share. The company also raised earnings guidance to $3.20 per share for the full year 2002 from the previous guidance of $3.00 per share, approximately 35% higher than the $2.36 per share earned in the full year 2001.

AAM is a world leader in the manufacture, engineering, design and validation of driveline systems and related components and modules, chassis systems and forged products for trucks, buses, sport utility vehicles and passenger cars. In addition to its 14 locations in the United States (in Michigan, New York and Ohio), AAM also has offices and facilities in Brazil, England, Germany, Japan, Mexico and Scotland

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended Nine months ended September 30, September 30, ---------------------- ---------------------- 2002 2001 2002 2001 -------- -------- -------- -------- (In millions, except per share data) Net sales $828.7 $743.5 $2,569.2 $2,315.6 Cost of goods sold 716.4 647.8 2,206.7 2,009.9 -------- -------- -------- -------- Gross profit 112.3 95.7 362.5 305.7 Selling, general and administrative expenses 43.6 40.6 134.3 124.3 Goodwill amortization - 1.0 - 3.0 -------- -------- -------- -------- Operating income 68.7 54.1 228.2 178.4 Net interest expense (13.2) (14.7) (37.0) (47.2) Other income, net 1.6 0.7 2.4 0.3 -------- -------- -------- -------- Income before income taxes 57.1 40.1 193.6 131.5 Income taxes 20.6 14.6 69.7 48.0 -------- -------- -------- -------- Net income $36.5 $25.5 $123.9 $83.5 ======== ======== ======== ======== Diluted earnings per share $0.70 $0.51 $2.39 $1.74 ======== ======== ======== ======== Diluted shares outstanding 52.5 49.6 51.8 47.9 ======== ======== ======== ======== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2002 2001 -------------- --------------- (Unaudited) (In millions) ASSETS Current assets: Cash and equivalents $7.1 $12.3 Accounts receivable, net 397.9 270.7 Inventories 181.7 158.0 Prepaid expenses and other 47.2 17.3 Deferred income taxes 14.0 19.7 -------------- --------------- Total current assets 647.9 478.0 Property, plant and equipment, net 1,540.1 1,448.7 Deferred income taxes 19.8 19.4 Goodwill 150.2 150.2 Other assets 48.4 64.6 -------------- --------------- Total assets $2,406.4 $2,160.9 ============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $565.8 $477.0 Long-term debt 823.0 878.2 Deferred income taxes 69.3 36.7 Postretirement benefits and other long-term liabilities 255.9 234.3 -------------- --------------- Total liabilities 1,714.0 1,626.2 Stockholders' equity 692.4 534.7 Total liabilities and stockholders' -------------- --------------- equity $2,406.4 $2,160.9 ============== =============== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months Nine months ended ended September 30, September 30, --------------------- --------------------- 2002 2001 2002 2001 --------- --------- --------- --------- (In millions) Operating activities Net income $36.5 $25.5 $123.9 $83.5 Depreciation and amortization 38.1 31.4 104.4 93.9 Other (31.0) 26.1 4.8 (70.1) --------- --------- --------- --------- Net cash flow provided by operating activities 43.6 83.0 233.1 107.3 Capital expenditures (41.1) (67.0) (157.9) (306.8) --------- --------- --------- --------- Net cash flow provided (used) after capital expenditures 2.5 16.0 75.2 (199.5) Purchase buyout of leased equipment (30.3) - (35.4) - --------- ---------- ---------- --------- Net cash flow (used in) provided by operations (27.8) 16.0 39.8 (199.5) Net increase (decrease) in long-term debt 28.9 (70.1) (55.9) 111.3 Net proceeds from issuance of common stock - 57.7 - 57.7 Stock option exercises 4.2 0.1 12.1 0.6 Effect of exchange rate changes on cash (0.7) (0.3) (1.2) (0.7) --------- ---------- ---------- --------- Net increase (decrease) in cash and equivalents 4.6 3.4 (5.2) (30.6) Cash and equivalents at beginning of period 2.5 1.2 12.3 35.2 --------- ---------- ---------- --------- Cash and equivalents at end of period $7.1 $4.6 $7.1 $4.6 ========= ========== ========== ========= EBITDA (a) $108.5 $86.3 $335.4 $273.4 ========= ========== ========== ========= (a) EBITDA represents income from continuing operations before interest expense, income taxes, depreciation and amortization. EBITDA should not be construed as income from operations, net income or cash flow from operating activities as determined by generally accepted accounting principles. Other companies may calculate EBITDA differently.