10-K

TABLE OF CONTENTS

EX-10.47 Agreement dated December 21, 2001

EX-10.48 Amendment to Monitoring Agreement

EX-10.49 2nd Amendment to Employment Agmnt - Dauch

EX-12 Computation Ratio/Earnings to Fixed Charges

EX-13 Management's Discussion and Analysis

EX-21 Subsidiaries of the Company

EX-23 Independent Auditors' Consent

________________________________________________________________________________

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, 2001

or

o 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.

DELAWARE

(State of incorporation)

38-3161171

(I.R.S. Employer Identification No.)

1840 HOLBROOK AVENUE, DETROIT, MICHIGAN 48212

(Address of principal executive offices, including Zip Code)

313-974-2000

(Registrant’s telephone number, including area code)

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

COMMON STOCK, PAR VALUE $0.01 PER SHARE

(Title of each class)

NEW YORK STOCK EXCHANGE

(Name of each exchange on which registered)

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

     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 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.  [ ]

     As of March 21, 2002, the registrant had 47,736,898 shares of voting common stock outstanding. The aggregate market value of the voting stock of the registrant held by stockholders (not including voting stock held by directors and executive officers of the registrant) on March 21, 2002 was approximately $767.4 million.

Documents Incorporated By Reference:

     Portions of the Registrant’s Annual Report to Stockholders for the year ended December 31, 2001 and Proxy Statement for use in connection with its Annual Meeting of Stockholders to be held on May 16, 2002, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than April 30, 2002, are incorporated by reference in Part I (Items 1, 2 and 3), Part II (Items 5, 6, 7, 7A and 8) and Part III (Items 10, 11, 12 and 13) of this Report.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

TABLE OF CONTENTS — ANNUAL REPORT ON FORM 10-K

Year Ended December 31, 2001

			Page Number
Cautionary Statements				1
Part I.	Item 1	Business		2
	Item 2	Properties		5
	Item 3	Legal Proceedings		6
	Item 4	Submission of Matters to a Vote of Stockholders		6
		Supplemental Item — Executive Officers of the Registrant		7
Part II.	Item 5	Market for Registrant’s Common Stock and Related Stockholder Matters		10
	Item 6	Selected Consolidated Financial Data		10
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operation		10
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk		10
	Item 8	Financial Statements and Supplementary Data		10
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		10
Part III.	Item 10	Directors and Executive Officers of the Registrant		11
	Item 11	Executive Compensation		11
	Item 12	Common Stock Ownership of Certain Beneficial Owners and Management		11
	Item 13	Certain Relationships and Related Transactions		11
Part IV.	Item 14	Exhibits, Financial Statement Schedules and Reports on Form 8-K		12
Signatures				21
Schedule II		Valuation and Qualifying Accounts		22
Independent Auditors’ Report				23
Exhibit 12		Computation of Ratio of Earnings to Fixed Charges		24
Exhibit 21		Subsidiaries of the Company as of March 21, 2002		25

Cautionary Statements

      Certain statements in this Annual Report on Form 10-K (“Form 10-K”) are forward-looking in nature and relate to trends and events that may affect our future financial position and operating results. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms “will,” “expect,” “anticipate,” “intend,” “project” and similar words or expressions are intended to identify forward-looking statements. These statements speak only as of the date of this report. The statements are based on our current expectations, are inherently uncertain, are subject to risks, and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors, including, but not limited to, the following:

•  adverse changes in the economic conditions or political stability of our principal markets (particularly North America, Mexico, Europe and South America);

•  reduced demand for our customers’ products (particularly GM’s light trucks and SUVs);

•  reduced purchases of our products by GM and other customers;

•  our ability and our customers’ ability to successfully launch new product programs;

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

•  supply shortages or price fluctuations in raw materials, utilities or other operating supplies;

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

•  our ability to attract and retain key associates;

•  our ability to maintain satisfactory labor relations;

•  risks of noncompliance with environmental regulations;

•  liabilities arising from legal proceedings to which we are or may become a party or claims against us or our products;

•  availability of financing for working capital, capital expenditures, R&D, or other general corporate purposes;

•  adverse changes in laws or government regulations affecting our products or our customers’ products (including the Corporate Average Fuel Economy regulations); and

•  other unanticipated events and conditions that 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.

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Part I

Item 1. Business

(a) General Development of Business

General

      As used in this report, except as otherwise indicated in information incorporated by reference, references to “AAM,” “the Company,” “we,” “our” or “us” mean American Axle & Manufacturing Holdings, Inc. (“Holdings”) and its subsidiaries and predecessors, collectively.

      We are a premier Tier I supplier to the automotive industry and a worldwide leader in the manufacture, engineering, design and validation of driveline systems and related components and modules for light trucks, sport utility vehicles (“SUVs”) and passenger cars. Driveline systems include all of the components that transfer power from the transmission and deliver it to the drive wheels. Driveline and related products produced by us include axles, modules, driveshafts, chassis and steering components, driving heads, crankshafts, transmission parts and forged products.

      In March 1994, we were formed by a private investor group led by Richard E. Dauch, who purchased the Final Drive and Forge Business Unit of the Saginaw Division of General Motors Corporation (“GM”). In connection with this acquisition and under subsequent additional binding agreements we have entered into with GM, we are the sole-source supplier of substantially all of the driveline components and forged products supplied to GM for the life of each of the GM vehicle programs supplied.

      In October 1997, Blackstone Capital Partners II Merchant Banking Fund L.P. and certain other affiliated investors (collectively, “Blackstone”) acquired a majority ownership position of our company in a leveraged recapitalization.

      Since 1994, we have dramatically improved product quality and manufacturing efficiency through a combination of management leadership, investments in new equipment and technology, workforce training, and process and system improvements resulting in increased capacity utilization. From March 1994 through December 2001, we have invested approximately $1.9 billion in capital expenditures and we have received and maintained ISO/ QS 9000 certification for each of our facilities. As a result, (i) the average number of axles produced per production day increased from approximately 10,000 per day in March 1994 to approximately 15,750 per day in 2001 and (ii) discrepant parts shipped to GM (as measured by GM) decreased from approximately 13,400 parts per million (“PPM”) during the six months ended December 31, 1994 to 31 PPM during the six months ended December 31, 2001.

Initial Public Offering (IPO)

      Holdings is the survivor of a migratory merger with American Axle & Manufacturing of Michigan, Inc. (“AAMM”) and has no significant assets other than its 100% ownership of American Axle & Manufacturing, Inc. (“AAM Inc.”) and its subsidiaries. Pursuant to this merger, which was effected in January 1999 in connection with our IPO, each share of AAMM’s common stock was converted into 3,945 shares of Holdings’ common stock. Holdings has no other subsidiaries other than AAM Inc. In February 1999, Holdings completed an IPO and issued 7 million shares of its common stock.

Acquisitions

      In 1999, we acquired two domestic automotive forging companies, Colfor Manufacturing Inc. (“Colfor”) and MSP Industries Corporation (“MSP”), and a majority interest in a joint venture in Brazil which machines forging and driveline components for automotive OEMs for aggregate cash purchase consideration of approximately $239 million.

      In 1998, we acquired Albion Automotive (Holdings) Limited (“Albion”) for a cash purchase price of approximately $42 million plus $30 million of assumed debt and capital lease obligations. Albion supplies

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front steerable and rear axles, driving heads, crankshafts, chassis components and transmission parts used primarily in medium-duty trucks and buses for customers located in the United Kingdom and elsewhere in Europe.

(b) Financial Information About Industry Segments

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report to Stockholders (“Annual Report”), page 42, section entitled “Financials — Notes to Consolidated Financial Statements, Note 10 — Segment and Geographic Information.”

(c) Narrative Description of Business

Company Overview

      We are the principal supplier of driveline components to GM for its light trucks, SUVs and rear-wheel drive (“RWD”) passenger cars manufactured in North America, supplying substantially all of GM’s rear axle and front four-wheel drive/ all-wheel drive (“4WD/AWD”) axle requirements for these vehicle platforms in 2001. As a result of our Component Supply Agreement (“CSA”) and Lifetime Program Contracts with GM (“LPCs”), 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 an LPC. Sales to GM were approximately 87% of our total sales in 2001, 85% in 2000 and 86% in 1999.

      We sell most of our products under long-term contracts with prices established at the time the contracts were entered into. Some of our contracts require us to reduce our prices in subsequent years and all of our contracts allow us to negotiate price increases for engineering changes. 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 6 to 12 years, and require us to remain competitive with respect to technology, design and quality. We will compete for future GM business upon the termination of the LPCs or the CSA.

      We also supply driveline systems and other related components to DaimlerChrysler, Ford Motor Company, Nissan, Renault, Visteon Automotive, Delphi Automotive, PACCAR and other OEMs and Tier I supplier companies. Our sales to customers other than GM were $404.6 million in 2001 as compared to $475.4 million in 2000, principally as a result of lower demand for passenger car and commercial vehicle products in North America and Europe. However, we expect our sales to customers other than GM to grow significantly in the next two years as we launch several new driveline system products for DaimlerChrysler and other OEMs and Tier I supplier companies. The most significant of these new product programs is our launch of the heavy duty Dodge Ram 4x4 full-size pick-up trucks (“Dodge Ram program”) in the second half of 2002. As a result of the Dodge Ram program, we expect our sales to DaimlerChrysler to exceed 10% of our total sales in 2003, as compared to less than 1% in 2001 and all previous years.

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

		Year ended December 31,
		2001			2000			1999
Rear axles			57.9	%		53.8	%		52.5	%
Front axles			15.9			14.7			16.0
Driveshafts			6.5			7.3			7.9
Chassis components			7.1			7.4			7.9
Forged products			8.8			11.2			11.1
Other			3.8			5.6			4.6
	Total		100.0	%		100.0	%		100.0	%

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Industry and Competition

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, pages 18-19, section entitled “Financials — Management’s Discussion and Analysis — Industry and Competition.”

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 numerous qualified sources in quantities sufficient for our needs.

Research and Development (“R&D”)

      Since March 1, 1994, we have invested approximately $261 million in R&D focusing on new product and process development. We plan to continue to invest in the development of new product, process and systems technologies to improve productive efficiency and flexibility in our operations and continue to deliver innovative new products, modules and integrated driveline systems to our customers.

      We are currently focusing our R&D activities in the areas of mass and weight reduction; noise, vibration and harshness (NVH) improvements; durability; and new product offerings such as integrated driveline systems and modules. Our new Smart-Bar™ stabilizer bar-based active roll-control system and the Integrated Oil Pan (IOP) Front Axle Module with Electronic Disconnect are two current examples of high value-added technology products that have resulted from our commitment to research and development and seek to improve the performance and design flexibility of our customers’ products. Our increased commitment to R&D has also resulted in the development of our PowerLite™ aluminum rear-axle system, TracRite™ traction-enhancing locking differentials (including a brand-new electronically controlled TracRite™ EL model) and our Gen II and Gen III universal joints, all of which have been instrumental in new product program wins for us. We have also developed, installed and tested independent front and rear drive chassis suspension modules (“IFDA” and “IRDA”) and we are currently developing electronic wheel-speed sensors for traction and stability control for potential future SUV and passenger car applications.

      R&D spending was $51.7 million in 2001, $46.4 million in 2000 and $39.1 million in 1999.

Patents and Trademarks

      We maintain and have pending various U.S. and foreign patents 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 is material to our business nor would expiration or invalidity of any patent have a material adverse effect on our business or our ability to compete.

Cyclicality and Seasonality

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, page 24, section entitled “Financials — Management’s Discussion and Analysis — Cyclicality and Seasonality.”

Associates

      We believe that one of our most important assets is our workforce. Since 1994, we have focused on making significant improvements in our labor relations through improving working conditions, incentive programs and town hall meetings with our hourly and salaried associates. We have also implemented a program of continuous training whereby associates are taught the skill sets important to producing products of precision quality.

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      We also recognize that a key element of our long-term competitiveness is developing a constructive working relationship with our unions. Our unions have committed to assist us in achieving both quality and productivity gains over the life of our contracts. We believe our relationships with our associates and their unions are positive.

      As of December 31, 2001, we employed approximately 11,725 associates, approximately 9,681 of which are employed in the United States. Approximately 7,696 associates are represented by the United Automobile, Aerospace and Agricultural Implement Workers of America, or “UAW”. Approximately 6,897 associates represented by the UAW are subject to a collective bargaining agreement that expires February 25, 2004; another 799 associates at Colfor and MSP are also represented by the UAW under collective bargaining agreements that expire in 2005. Approximately 259 associates are represented by the International Association of Machinists (“IAM”) under a collective bargaining agreement which runs through May 5, 2004. In addition, approximately 802 associates at Albion, 686 associates at our Guanajuato, Mexico facility (“Guanajuato Gear & Axle”) and 197 associates at our Brazilian majority-owned subsidiary are represented by labor unions that are subject to collective bargaining agreements. The collective bargaining agreements at Albion, certain of which may be terminated upon six-months notice, expire in 2004 and the agreements in Mexico and Brazil expire annually.

Credit and Working Capital Practices

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, pages 21-24, section entitled “Financials — Management’s Discussion and Analysis — Liquidity and Capital Resources.”

(d) Financial Information About Foreign and Domestic Operations and Export Sales

      International operations are subject to certain additional risks inherent in conducting business outside the United States, such as changes in currency exchange rates, price and currency exchange controls, import restrictions, nationalization, expropriation and other governmental action.

      For further financial information regarding foreign and domestic sales and export sales, see Exhibit 13 to the Form 10-K, Annual Report, page 42, section entitled “Financials — Notes to Consolidated Financial Statements, Note 10 — Segment and Geographic Information.”

Item 2. Properties

      The following is a summary of our principal facilities:

	Approx.		Type
Name	Sq. Feet		of Interest		Function
Detroit Gear & Axle Detroit, MI		1,764,000		Owned	Rear and front axles, front suspensions and rear brake drums
Buffalo Gear, Axle & Linkage Buffalo, NY		1,199,000		Owned	Rear axles and steering linkages
Three Rivers Driveline Three Rivers, MI		750,000		Owned	Rear axles and driveshafts, front auxiliary driveshafts and universal joints
Guanajuato Gear & Axle Guanajuato, Mexico		839,000		Owned	Rear axles
Guanajuato Forge Guanajuato, Mexico		111,000		Owned	Forged products
Scotstoun Plant Glasgow, Scotland		453,000		Leased	Front and rear axles for medium-duty trucks and vans
Farington Plant Lancashire, England		328,000		Leased	Front and rear axles for buses and chassis components

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	Approx.		Type
Name	Sq. Feet		of Interest		Function
Spurrier Plant Lancashire, England		303,000		Leased	Crankshafts and fabricated parts
AAM do Brasil Curitiba, Brazil		130,600		Owned	Machining of forged products
Detroit Forge Detroit, MI		710,000		Owned	Forged products
Tonawanda Forge Tonawanda, NY		470,000		Owned	Forged products
Colfor — Malvern Malvern, Ohio		234,000		Owned	Forged products
Colfor — Salem Salem, Ohio		189,000		Owned	Forged products
Colfor — Minerva Minerva, Ohio		125,000		Owned	Machining of forged products
Cheektowaga Plant Cheektowaga, NY		116,000		Owned	Machining of forged products
MSP — Oxford Oxford, MI		125,000		Leased	Forged products
MSP — Centerline Centerline, MI		14,000		Leased	Forged products
Technical Center Rochester Hills, MI		66,000		Owned	R&D, design engineering, metallurgy, testing, validation and sales
Corporate Headquarters Detroit, MI		31,000		Owned	Executive and administrative offices located at the Detroit Gear & Axle
Global Procurement Center Rochester Hills, MI		16,000		Leased	Executive and administrative offices

      Borrowings under our Senior Secured Bank Credit Facilities (“Bank Credit Facilities”) are secured by the capital stock of our significant subsidiaries and all of our assets, including facilities, except for those securing the Receivables Facility and other permitted bank, equipment and lease financings. See Exhibit 13 to this Form 10-K, Annual Report, pages 21-24, section entitled “Financials — Management’s Discussion and Analysis — Liquidity and Capital Resources” for further information regarding our Bank Credit Facilities.

Item 3. Legal Proceedings

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, page 25, section entitled “Financials — Management’s Discussion and Analysis — Litigation and Environmental Regulations.”

Item 4. Submission of Matters to a Vote of Stockholders

      No matters were submitted to a vote of stockholders during the fourth quarter of fiscal year 2001.

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Supplemental Item — Executive Officers of the Registrant

      We possess a management team with proven leadership and extensive automotive industry experience. Our executive officers and directors are:

Name	Age		Position
Richard E. Dauch(3)		59	Co-Founder, Chairman of the Board and Chief Executive Officer
Joel D. Robinson		58	President and Chief Operating Officer
Robin J. Adams		48	Executive Vice President — Finance and Chief Financial Officer
Patrick S. Lancaster		54	Group Vice President, Chief Administrative Officer and Secretary
Yogendra N. Rahangdale		54	Group Vice President and Chief Technical Officer
Marion A. Cumo		59	Vice President, Materials Management and Logistics
David C. Dauch		37	Vice President, Manufacturing — Driveline Division
Richard F. Dauch		41	Vice President, Sales and Marketing
George J. Dellas		59	Vice President, Quality Assurance and Customer Satisfaction
David J. Demos		51	Vice President; President and Chief Operating Officer of Colfor Manufacturing, Inc.
Robert A. Krause		45	Vice President and Treasurer
Roy H. Langenbach		62	Vice President, Procurement
Allan R. Monich		48	Vice President, Manufacturing — Forging Division
Daniel V. Sagady, P.E.		52	Vice President, Engineering and Product Development
Alan L. Shaffer		51	Vice President, Manufacturing Services
Forest J. Farmer(1)		61	Director
Robert L. Friedman(2)		59	Director
Richard C. Lappin(1)		57	Director
B.G. Mathis(2)		69	Director
Larry W. McCurdy(3)		66	Director
Bret D. Pearlman(2)		35	Director
John P. Reilly(3)		58	Director
Thomas K. Walker(1)		61	Director

(1)	Class I Director
(2)	Class II Director
(3)	Class III Director

      Richard E. Dauch, age 59, is Co-Founder, Chairman of the Board and Chief Executive Officer, and is also Chairman of the Executive Committee of the Board of Directors. He has been Chief Executive Officer and a member of the Board of Directors since co-founding our Company in 1994. In October 1997, he was named Chairman of the Board of Directors. He was also President of our Company from 1994 through December 2000. Before March 1994, he spent 12 years with Chrysler Corporation (“Chrysler”). He left Chrysler in 1991 as Executive Vice President of Worldwide Manufacturing. Prior to joining Chrysler, Mr. Dauch served as Group Vice President of Volkswagen of America, where he established the manufacturing facilities for the first major automotive transplant facility in the United States. Mr. Dauch began his career with GM in 1964, where he progressed over the course of 12 years from a college-graduate-in-training to the youngest plant manager in Chevrolet’s history. He has received numerous honors, nationally and internationally, including being recognized in 1996 as the Worldwide Automotive Industry Leader of the Year by the Automotive Hall of Fame, the 1997 Manufacturer of the Year by the Michigan Manufacturer’s Association and the 1999 Michiganian of the Year by The Detroit News. He is on the board of directors of several manufacturing and civic organizations and has lectured extensively on the subjects of manufacturing and management. Mr. Dauch has authored a book, Passion for Manufacturing, which is distributed in 80 countries in several languages.

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      Joel D. Robinson, age 58, was appointed President and Chief Operating Officer in January 2001. Prior to that, Mr. Robinson served as Executive Vice President — Chief Operating Officer (since August 1998), Executive Vice President, Operations and Vice President, Manufacturing (since April 1997). Mr. Robinson joined our Company in March 1994 and has held various other positions including Executive Director of the GMT800 Program and Executive Director, Manufacturing Services. He began his career in the automotive industry at Ford Motor Company in 1963, where he held a series of technical and manufacturing management positions. Mr. Robinson also worked for American Motors Corporation, serving as Director of Vehicle Assembly, and later, at Chrysler, where he was responsible for all car body programs.

      Robin J. Adams, age 48, has been Executive Vice President — Finance and Chief Financial Officer since he joined our Company in July 1999. Prior to joining our Company, he spent 13 years with Borg-Warner in various financial positions, including Vice President and Treasurer (Principal Financial Officer) from 1993 and Assistant Treasurer from 1991 to 1993. He began his career in 1976 with Illinois Central Railroad Company, where he served in a variety of positions in accounting, finance and corporate planning, including Assistant Director of Corporate & Financial Planning.

      Patrick S. Lancaster, age 54, has been Group Vice President, Chief Administrative Officer and Secretary since January 2001. Prior to that, he was Vice President and Secretary (since March 2000), Vice President, General Counsel and Secretary (since November 1997) and General Counsel and Secretary (since June 1994). Mr. Lancaster worked at Fruehauf Trailer Corporation and its predecessor Company (from 1981 to 1994) where he last served as General Counsel and Assistant Secretary from March 1990 until he joined our Company.

      Yogendra (Yogen) N. Rahangdale, age 54, has been Group Vice President and Chief Technical Officer since January 2001. Prior to that, he served as Vice President, Manufacturing and Procurement Services (since March 2000); Vice President, Manufacturing Services (since April 1999); Executive Director, Manufacturing Services (since March 1998); and Director, Corporate Manufacturing Planning (since August 1995). Prior to joining our Company, Rahangdale spent 12 years with Chrysler in a variety of positions including Manager, Paint and Energy Management.

      Marion A. Cumo, age 59, has been Vice President, Materials Management and Logistics since January 2001. Prior to that, he was Vice President, Materials Management (since May 1996) and Vice President, Quality Assurance and Customer Satisfaction (since March 1994). Prior to joining our Company, Mr. Cumo spent 11 years working as a manufacturing executive at Chrysler. His most recent title at Chrysler was General Plants Manager of Assembly Operations. After leaving Chrysler, Mr. Cumo became president of Tri-County Chrysler Products in Peebles/ West Union, Ohio, and also worked as an automotive manufacturing consultant. Mr. Cumo began his career at GM and has over 35 years experience in the automotive industry.

      David C. Dauch, age 37, has been Vice President, Manufacturing — Driveline Division since January 2001. Prior to that, he was 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 at Collins & Aikman Products Company, including Sales Manager. David C. Dauch is a son of Richard E. Dauch.

      Richard F. Dauch, age 41, has been Vice President, Sales and Marketing since January 2002. Prior to that, he served as Vice President, Sales (since January 2001); Vice President, Manufacturing — Driveline Division (since July 1999); Vice President, Manufacturing (since August 1998); Director, Strategic and Capacity Planning (since February 1998) and Plant Manager, Detroit Gear & Axle Plant (since May 1996). Mr. Dauch joined our Company in May 1995 as Corporate Manager, Labor Relations, and served in that position until May 1996. Prior to joining our Company, Mr. Dauch served as a Senior Business Manager and Business Unit Manager with United Technologies Corporation from February 1992. Prior to his automotive career, Mr. Dauch served in the U.S. Army for nine years, with assignments including Platoon Leader and Company Commander. Richard F. Dauch is a son of Richard E. Dauch.

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      George J. Dellas, age 59, has been Vice President, Quality Assurance and Customer Satisfaction since May 1996. Prior to that, he was Vice President, Procurement and Material Management (since the 1994 acquisition). Prior to joining our Company, Mr. Dellas spent 11 years in executive positions of increasing responsibility at Chrysler from Production Foreman to Vice President. Before leaving Chrysler in 1991, he served as the Director of Advanced Planning for the Assembly Division. Mr. Dellas has over 36 years experience in the global automotive industry.

      David J. Demos, age 51, has been Vice President; President and Chief Operating Officer of Colfor Manufacturing, Inc. since July 2001. Prior to that, he was Vice President — Strategic Planning and Business Development (since March 1, 2000); Vice President, Procurement (since August 1998); Vice President, Sales and Business Development (since November 1997); and Vice President, Sales (since May 1996). He also served as Executive Director, Sales and Marketing; and Director, Sales, Marketing and Planning. Prior to joining our Company in March 1994, Mr. Demos worked for GM for 21 years in various engineering, quality and sales positions in the United States and overseas. In his most recent position with GM, he was Chief Engineer of the Final Drive and Forge Business Unit of the Saginaw Division.

      Robert A. Krause, age 45, has been Vice President and Treasurer since July 1999. In addition to his treasury duties, Mr. Krause is also responsible for investor relations. Prior to that, he was Treasurer and acting interim Chief Financial Officer (since May 1999) and Treasurer (since January 1998). Mr. Krause has more than twenty years of experience in treasury and corporate controller functions. Prior to joining our Company, he worked for Baxter International Inc. (from 1985 to 1997) where he served in various positions in treasury and corporate controller functions including Director, International Treasury, and Director, Corporate Reporting. In addition, Mr. Krause spent several years in public accounting and is a certified public accountant.

      Roy H. Langenbach, age 62, has been Vice President, Procurement since April 2000, and previously was Director, Materials Management since the formation of our Company in March 1994. Mr. Langenbach has over 37 years experience in the automotive industry. Prior to joining our Company, Mr. Langenbach served in a progression of manufacturing management positions at GM, Volkswagen of America, Ford Motor Company and Benteler Industries.

      Allan R. Monich, age 48, has been Vice President, Manufacturing — Forging Division since October 2001, and previously was Vice President, Human Resources since 1998, and Vice President, Personnel, since November 1997. Prior to that, Monich served as 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, he worked for GM for 22 years in the areas of manufacturing, quality assurance, sales and engineering, including four years as a GM Plant Manager.

      Daniel V. Sagady, P.E., age 52, has been Vice President, Engineering and Product Development, since November 1997. Prior to that, he was Executive Director of Product Engineering since May 1996 and Director of Product Engineering since March 1994. He began his career at GM in 1967 and has spent over 34 years in the automotive industry with both Ford and GM where he has held various positions in manufacturing, quality, testing and developmental engineering. Mr. Sagady is a licensed Professional Engineer.

      Alan L. Shaffer, age 51, has been Vice President, Manufacturing Services since joining our Company in October, 2000. Prior to joining our Company, Mr. Shaffer was Executive Vice President of Eventory, Inc. in Bedford, Massachusetts. Prior to that, Mr. Shaffer served as Group Vice President, Metalworking Technologies at Milacron, Inc. since 1986.

9

Part II

Item 5.  Market for Registrant’s Common Stock and Related Stockholder Matters

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, page 42, section entitled “Financials — Notes to Consolidated Financial Statements, Note 11 — Unaudited Quarterly Financial Data and Market for the Company’s Common Stock.”

Item 6. Selected Consolidated Financial Data

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, page 45, section entitled “Seven Year Financial Summary.”

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, pages 18-26, section entitled “Financials — Management’s Discussion and Analysis.”

      Recent Developments. On March 21, 2002, we priced a secondary offering of 8.0 million shares of common stock owned by Blackstone Capital Partners II Merchant Banking Fund L.P. and its affiliates (“Blackstone”) and 1.5 million shares of common stock by Richard E. Dauch, AAM’s Co-Founder, Chairman of the Board and Chief Executive Officer.

      After completion of the offering on March 27, 2002, Blackstone beneficially owned approximately 27% of our common stock. The underwriters have an option to purchase an additional 1.425 million shares from Blackstone to cover over-allotments.

      After completion of the offering on March 27, 2002, Mr. Dauch beneficially owned approximately 14% of our common stock and remains the largest holder (other than Blackstone) of the Company’s common stock.

      We did not sell any shares and did not receive any of the proceeds from the sale of shares by the selling stockholders.

      On March 8, 2002, Moody’s Investors Service upgraded its rating on our 9.75% senior subordinated notes due March 2009 to Ba3 from B1. Moody’s also improved our ratings outlook to positive, from stable, and confirmed our Ba2 rating on our senior debt.

      On March 7, 2002, Standard & Poor’s revised our ratings outlook to positive from stable and affirmed its BB corporate credit rating on our senior debt.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, page 24, section entitled “Financials — Management’s Discussion and Analysis — Market Risk.”

Item 8. Financial Statements and Supplementary Data

      Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, pages 28-42, sections entitled “Financials — Consolidated Financial Statements” and “Financials — Notes to Consolidated Financial Statements.”

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None

10

Part III

Item 10.  Directors and Executive Officers of the Registrant

      The information required by Item 10 regarding directors is incorporated by reference from the information in the sections entitled “Nominees for Class III Directors,” “Returning Members of the Board of Directors,” and “Security Ownership of AAM Directors & Officers and Certain Beneficial Owners of AAM Stock” in the Proxy Statement for the Annual Meeting of Stockholders to be held on May 16, 2002 (“Proxy Statement”), which is being filed on March 28, 2002.

      The information required by Item 10 regarding executive officers appears as a Supplemental Item in Part I and incorporated by reference from the information in the section entitled “Security Ownership of AAM Directors & Officers and Certain Beneficial Owners of AAM Stock” in our Proxy Statement.

Item 11. Executive Compensation

      The information required by Item 11 is incorporated by reference from the information in the section entitled “Executive Compensation, Retirement Program and Employment Agreements” in our Proxy Statement.

Item 12. Common Stock Ownership of Certain Beneficial Owners and Management

      The information required by Item 12 is incorporated by reference from the information in the section entitled “Security Ownership of AAM Directors & Officers and Certain Beneficial Owners of AAM Stock” in our Proxy Statement.

Item 13. Certain Relationships and Related Transactions

      The information required by Item 13 is incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report, page 41, section entitled “Financials — Notes to Consolidated Financial Statements, Note 9 — Related Party Transactions” and the information in the section entitled “Other Information” in our Proxy Statement.

11

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a) The following documents are filed as a part of this report:

           1. Exhibits

See Item (c) below.

2. Schedule II — Valuation and Qualifying Accounts

The report of Deloitte & Touche LLP, independent auditors, on our consolidated financial statement schedule (Schedule II) for the years ended December 31, 2001, December 31, 2000 and December 31, 1999

All other schedules have been omitted because they are not applicable or not required.

      (b) Report on Form 8-K

None

      (c) Exhibits

The following exhibits were previously filed unless otherwise indicated:

Number	Description of Exhibit
3.01	Amended and Restated Certificate of Incorporation
		(Incorporated by reference to Exhibit 3.01 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
3.02	Bylaws
		(Incorporated by reference to Exhibit 3.01 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
4.01(a)	Specimen Stock Certificate
		(Incorporated by reference to Exhibit 4.01 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
4.01(b)	Indenture, dated as of March 5, 1999, among American Axle & Manufacturing, Inc., as issuer, American Axle & Manufacturing Holdings, Inc., as guarantor, and IBJ Whitehall Bank & Trust Company, as trustee
		(Incorporated by reference to Exhibit 4.01 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))
4.02	Form of 9.75% Senior Subordinated Note due 2009 (the “Exchange Note”)
		(Incorporated by reference to Exhibit 4.02 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))
4.03	Exchange and Registration Rights Agreement, dated March 5, 1999, among AAM Inc., Chase Securities, Inc., Donaldson Lufkin & Jenrette Securities Corporation and Morgan Stanley & Co. Incorporated
		(Incorporated by reference to Exhibit 4.03 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))

12

Number	Description of Exhibit
10.01	Asset Purchase Agreement, dated February 18, 1994, between AAM, Inc. and General Motors Corporation (“GM”), and all amendments thereto
		(Incorporated by reference to Exhibit 10.01 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.02	Component Supply Agreement, dated February 28, 1994, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.02 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.02(a)	Amendment No. 1 to Component Supply Agreement, dated February 28, 1994, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.02(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.02(b)	Amendment No. 2 to Component Supply Agreement, dated February 7, 1996, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.02(b) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.02(c)	Letter of Intent dated February 21, 1996, by G.M.T.G., GMT-800 PGM Worldwide Purchasing (“G.M.T.G”) (re: front & rear axles)
		(Incorporated by reference to Exhibit 10.02(c) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.02(d)	Letter of Intent dated February 21, 1996, by G.M.T.G. (re: front & rear propeller shafts)
		(Incorporated by reference to Exhibit 10.02(d) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.02(e)	Letter Agreement dated June 25, 1997, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.02(e) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.02(f)	Amended and Restated Memorandum of Understanding, dated September 2, 1997, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.02(f) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.02(g)	MOU Extension Agreement, dated September 22, 1997, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.02(g) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.03	GMCL Purchase Order Agreement dated February 17, 1994 by and between AAM, Inc. and General Motors of Canada Limited (“GMCL”)
		(Incorporated by reference to Exhibit 10.03 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))

13

Number	Description of Exhibit
††10.04	AAM/GMCL Supply Agreement dated February 17, 1994 (“AAM/GMCL Supply Agreement”) by and between AAM, Inc. and GMCL
		(Incorporated by reference to Exhibit 10.04 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.04(a)	Amending Agreement dated as of September 5, 1996, between AAM, Inc. and GMCL
		(Incorporated by reference to Exhibit 10.04(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.04(b)	Amending Agreement dated as of October 7, 1996, between AAM, Inc. and GMCL
		(Incorporated by reference to Exhibit 10.04(b) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.04(c)	Amendment No. 1 to AAM/ GMCL Supply Agreement dated February 17, 1994, between AAM, Inc. and GMCL
		(Incorporated by reference to Exhibit 10.04(c) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.05	Agreement dated February 17, 1997, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.05 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.05(a)	Letter dated December 13, 1996, by AAM, Inc.
		(Incorporated by reference to Exhibit 10.05(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.07	1997 American Axle & Manufacturing of Michigan, Inc. Replacement Plan
		(Incorporated by reference to Exhibit 10.07 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.08	The Amended and Restated American Axle & Manufacturing of Michigan, Inc. Management Stock Option Plan
		(Incorporated by reference to Exhibit 10.08 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.09	Nonqualified Stock Option Agreement, dated October 30, 1997, between AAM, Inc. and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.09 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.10	Indemnification Agreement, dated February 28, 1994, between AAM, Inc. and GM
		(Incorporated by reference to Exhibit 10.10 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))

14

Number	Description of Exhibit
‡10.11	Employment Agreement, dated November 6, 1997, by and between the Company and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.11 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.11(a)	Letter Agreement, dated August 18, 1997, between AAM Acquisition, Inc. and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.11(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.12	Recapitalization Agreement, dated as of September 19, 1997, among AAM, Inc., the Company, Jupiter Capital Corporation (“Jupiter”), Richard E. Dauch, Morton E. Harris (“Harris”) and AAM Acquisition, Inc.
		(Incorporated by reference to Exhibit 10.12 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.13	Stockholders’ Agreement, dated as October 29, 1997, among Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone Family Investment Partnership II L.P., Jupiter, Richard E. Dauch, Harris and American Axle & Manufacturing of Michigan, Inc.
		(Incorporated by reference to Exhibit 10.13 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.13(a)	Disposition Agreement, dated as of December 10, 1998, between American Axle & Manufacturing of Michigan, Inc. and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.13(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.14	Monitoring Agreement, dated as of October 29, 1997, between the Company and Blackstone Management Partners L.P.
		(Incorporated by reference to Exhibit 10.14 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.15	Credit Agreement, dated as of October 27, 1997 (the “Credit Agreement”), among the Company, AAM, Inc., the lenders named therein, The Chase Manhattan Bank, as administrative agent and collateral agent, and Chase Manhattan Bank Delaware, as fronting bank
		(Incorporated by reference to Exhibit 10.15 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.15(a)	Amendment No. 1, Waiver and Agreement, dated as of September 30, 1998, to the Credit Agreement, as amended
		(Incorporated by reference to Exhibit 10.15(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))

15

Number	Description of Exhibit
10.15(b)	Amendment No. 2, Waiver and Agreement, dated as of January 11, 1999, to the Credit Agreement, as amended
		(Incorporated by reference to Exhibit 10.15(b) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.16	AAM Master Trust Pooling Agreement, dated as of October 29, 1997, among AAM Receivables Corp.(“AAM Receivables”), the Company, as Servicer, and The Chase Manhattan Bank, as Trustee
		(Incorporated by reference to Exhibit 10.16 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.16(a)	AAM Master Trust Series 1997-A Supplement to Pooling Agreement, dated as of October 29, 1997 (“Series 1997-A Supplement”), among AAM Receivables, the Company, as Servicer, and The Chase Manhattan Bank, as Trustee
		(Incorporated by reference to Exhibit 10.16(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.16(b)	Amendment No. 1 to Series 1997-A Supplement, dated July 17, 1998
		(Incorporated by reference to Exhibit 10.16(b) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.16(c)	Amendment No. 2 to Series 1997-A Supplement, dated September 30, 1998
		(Incorporated by reference to Exhibit 10.16(c) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.17	Receivables Sale Agreement, dated as of October 29, 1997, between AAM Receivables, as purchaser, and the Company, as Seller and Servicer
		(Incorporated by reference to Exhibit 10.17 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.18	Servicing Agreement, dated as of October 29, 1997, among AAM Receivables, the Company, as Servicer, and The Chase Manhattan Bank, as Trustee
		(Incorporated by reference to Exhibit 10.18 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.20	1999 Stock Incentive Plan
		(Incorporated by reference to Exhibit 10.20 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.21	Nonqualified Stock Option Agreement, dated October 29, 1997, between the Company and Gary J. Witosky
		(Incorporated by reference to Exhibit 10.21 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))

16

Number	Description of Exhibit
††10.22(a)	Lifetime Program Contract for GMT-325 Products, between GM and AAM, Inc.
		(Incorporated by reference to Exhibit 10.22(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.22(b)	Lifetime Program Contract for GMT-330 Products, between GM and AAM, Inc.
		(Incorporated by reference to Exhibit 10.22(b) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.22(c)	Lifetime Program Contract for New M-SUV Products, between GM and AAM, Inc.
		(Incorporated by reference to Exhibit 10.22(c) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.22(d)	Lifetime Program Contract for GMT-400 Products, between GM and AAM, Inc.
		(Incorporated by reference to Exhibit 10.22(d) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.22(e)	Lifetime Program Contract for GMT-800 Products, between GM and AAM, Inc.
		(Incorporated by reference to Exhibit 10.22(e) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.23	Senior Secured Promissory Note dated August 14, 1998, made by Richard E. Dauch in favor of AAM, Inc.
		(Incorporated by reference to Exhibit 10.23 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
††10.24	Nomination Letter, dated August 8, 1998 between Isuzu/ GM Joint Purchasing Team and AAM, Inc.
		(Incorporated by reference to Exhibit 10.24 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-1 (Registration No. 333-53491))
10.25	AAM Master Trust Pooling Agreement, dated as of October 29, 1997, as Amended and Restated as of March 25, 1999
		(Incorporated by reference to Exhibit 10.16 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))
10.26	AAM Master Trust Series 1999-A Supplement to Pooling Agreement, dated as of March 25, 1999
		(Incorporated by reference to Exhibit 10.16(a) filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))

17

Number	Description of Exhibit
10.27	Receivables Sale Agreement, dated as of October 29, 1997, as Amended and Restated as of March 25, 1999
		(Incorporated by reference to Exhibit 10.17 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))
10.28	Servicing Agreement, dated as of October 27, 1997, as Amended and Restated as of March 25, 1999
		(Incorporated by reference to Exhibit 10.18 filed with American Axle & Manufacturing Holdings, Inc. Registration Statement on Form S-4 (Registration No. 333-76605))
‡10.29	Employment agreement, dated as of July 6, 1999, by and between American Axle & Manufacturing Holdings, Inc. and Robin J. Adams
		(Incorporated by reference to Exhibit 10.01 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended June 30, 1999)
10.30	Amendment No. 2 dated August 31, 1999, to the AAM/ GMCL Supply Agreement originally dated February 17, 1994
		(Incorporated by reference to Exhibit 10.01 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended September 30, 1999)
10.31	Letter Agreement, dated as of December 15, 1998, as amended January 11, 2000, between B.G. Mathis and the Company
		(Incorporated by reference to Exhibit 10.01 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended March 31, 2000)
††10.32	Amendment No. 3 to AAM/ GMCL Supply Agreement dated February 17, 1994, as amended
		(Incorporated by reference to Exhibit 10.02 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended March 31, 2000)
††10.33	Agreement dated as of February 24, 2000, by and between American Axle & Manufacturing, Inc. and General Motors Corporation
		(Incorporated by reference to Exhibit 10.03 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended March 31, 2000)
††10.34	Settlement Agreement dated as of July 28, 2000 by and between American Axle & Manufacturing, Inc. and General Motors Corporation
		(Incorporated by reference to Exhibit 10.01 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended September 30, 2000)
10.35	Amendment No. 4 and Agreement dated as of July 27, 2000, to the Credit Agreement, as amended
		(Incorporated by reference to Exhibit 10.02 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended September 30, 2000)

18

Number	Description of Exhibit
10.36	Amendment No. 5 and Agreement dated as of August 15, 2000, to the Credit Agreement, as amended
		(Incorporated by reference to Exhibit 10.03 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended September 30, 2000)
‡10.37	Amendment dated December 20, 2000 to Employment Agreement dated as of November 6, 1997 by and between American Axle & Manufacturing Holdings, Inc. and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.07 filed with American Axle & Manufacturing Holdings, Inc. Form 10-K for the year ended December 31, 2000)
‡10.38	Stock Purchase Agreement dated December 20, 2000 by and between American Axle & Manufacturing Holdings, Inc. and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.08 filed with American Axle & Manufacturing Holdings, Inc. Form 10-K for the year ended December 30, 2000)
‡10.39	Supplemental Compensation Agreement dated December 20, 2000 by and between American Axle & Manufacturing Holdings, Inc. and Richard E. Dauch
		(Incorporated by reference to Exhibit 10.09 filed with American Axle & Manufacturing Holdings, Inc. Form 10-K for the year ended December 30, 2000)
‡10.40	Employment Agreement dated September 30, 2000 by and between American Axle & Manufacturing Holdings, Inc. and Alan Shaffer
		(Incorporated by reference to Exhibit 10.10 filed with American Axle & Manufacturing Holdings, Inc. Form 10-K for the year ended December 30, 2000)
10.41	Lifetime Program Contract between General Motors Corporation North American Operations (“Buyer”) and American Axle & Manufacturing, Inc. (“Seller”)
		(Incorporated by reference to Exhibit 10.01 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended June 30, 2001)
10.42	Agreement dated as of June 14, 2001 by and between General Motors Corporation and American Axle & Manufacturing, Inc.
		(Incorporated by reference to Exhibit 10.02 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended June 30, 2001)
10.43	Restatement of the American Axle & Manufacturing, Inc. Personal Savings Plan for Hourly-Rate Associates dated September 27, 2001
		(Incorporated by reference to Exhibit 10.01 to our Registration Statement on Form S-8 (Registration Statement No. 333-70466))
10.44	Restatement of the American Axle & Manufacturing, Inc. Salaried Savings Plan dated September 27, 2001
		(Incorporated by reference to Exhibit 10.02 to our Registration Statement on Form S-8 (Registration Statement No. 333-70466))

19

Number	Description of Exhibit
10.45	Amendment No. 1 to the 1999 American Axle & Manufacturing of Michigan, Inc. Stock Incentive Plan
		(Incorporated by reference to Exhibit 10.03 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended September 30, 2001)
10.46	Amendment No. 2 to the 1999 American Axle & Manufacturing, Inc. Stock Incentive Plan
		(Incorporated by reference to Exhibit 10.04 filed with American Axle & Manufacturing Holdings, Inc. Form 10-Q for the quarterly period ended September 30, 2001)
†*10.47	Agreement dated as December 21, 2001 by and between General Motors Corporation and American Axle & Manufacturing, Inc.**
*10.48	Amendment to Monitoring Agreement Dated As of October 29, 1997**
‡*10.49	Second Amendment, dated as of December 10, 2001, to the Employment Agreement, dated as of November 6, 1997, by and between American Axle & Manufacturing Holdings, Inc., a Delaware corporation and Richard E. Dauch**
*12	Statement of Computation of Ratio of Earnings to Fixed Charges
*13	Annual Report to Stockholders for the year ended December 31, 2001, pages 18-42 and page 45, sections entitled “Financials — Management’s Discussion and Analysis,” “Financials — Consolidated Financial Statements,” “Financials — Notes to Consolidated Financial Statements,” and “Seven-Year Financial Summary”**
*21	Subsidiaries of the Company
*23	Consent of Deloitte & Touche LLP**

      (All other exhibits are not applicable.)

†	New Confidentiality Request
††	Confidentiality Requests Already Approved by the SEC
‡	Reflects Management or Compensatory Contract

 *  Filed herewith

**  Shown only in the original filed with the Securities and Exchange Commission

20

Signatures

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

(Registrant)

By: /s/ ROBIN J. ADAMS

Name: Robin J. Adams

Title: Executive Vice President — Finance

and Chief Financial Officer

(Chief Accounting Officer)

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.

Signature	Title	Date
/s/ RICHARD E. DAUCH Richard E. Dauch	Co-Founder, Chairman of the Board of Directors and Chief Executive Officer	March 28, 2002
/s/ ROBIN J. ADAMS Robin J. Adams	Executive Vice President — Finance and Chief Financial Officer	March 28, 2002
/s/ FOREST J. FARMER Forest J. Farmer	Director	March 28, 2002
/s/ ROBERT L. FRIEDMAN Robert L. Friedman	Director	March 28, 2002
/s/ RICHARD C. LAPPIN Richard C. Lappin	Director	March 28, 2002
/s/ B.G. MATHIS B.G. Mathis	Director	March 28, 2002
/s/ LARRY W. MCCURDY Larry W. McCurdy	Director	March 28, 2002
/s/ BRET D. PEARLMAN Bret D. Pearlman	Director	March 28, 2002
/s/ JOHN P. REILLY John P. Reilly	Director	March 28, 2002
/s/ THOMAS K. WALKER Thomas K. Walker	Director	March 28, 2002

21

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

			Additions –
	Balance at		Charged to		Deductions –			Balance
	Beginning of		Costs and		See Notes			At End of
	Period		Expenses		Below			Period
	(In millions)
Year Ended December 31, 1999:
Allowance for doubtful accounts	$	8.7		3.1		0.4	(1)	$	11.4
Valuation allowance for deferred taxes		45.5		1.2		13.3	(2)		33.4
Inventory valuation allowance		34.1		4.0		3.4	(3)		34.7
LIFO reserve		7.0		0.8		—			7.8
Year Ended December 31, 2000:
Allowance for doubtful accounts		11.4		0.8		0.2	(1)		12.0
Valuation allowance for deferred taxes		33.4		1.5		6.2	(2)		28.7
Inventory valuation allowance		34.7		6.8		14.2	(3)		27.3
LIFO reserve		7.8		1.3		—			9.1
Year Ended December 31, 2001:
Allowance for doubtful accounts		12.0		5.0		4.3	(1)		12.7
Valuation allowance for deferred taxes		28.7		5.1		2.8	(2)		31.0
Inventory valuation allowance		27.3		8.9		11.7	(3)		24.5
LIFO reserve		9.1		0.2		—			9.3

(1)	Uncollectible accounts charged off net of recoveries.
(2)	Adjustments associated with our assessment of the uncertainty of realizing the full benefit of deferred tax assets (principally related to acquired foreign NOLs and capital allowance carryforwards).
(3)	Inventory adjustments for physical quantity discrepancies and write-offs of excess and obsolete inventories.

22

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

American Axle & Manufacturing Holdings, Inc.:

      We have audited the consolidated financial statements of American Axle & Manufacturing Holdings, Inc. and its subsidiaries (the “Company”) as of December 31, 2001 and 2000, and for each of the three years in the period ended December 31, 2001, and have issued our report thereon dated January 23, 2002; such consolidated financial statements and report are included in your 2001 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of the Company, listed in Item 14. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/S/ DELOITTE & TOUCHE LLP

Detroit, Michigan

January 23, 2002

23 EX-10.47 3 k67860ex10-47.txt EX-10.47 AGREEMENT DATED DECEMBER 21, 2001 EXHIBIT 10.47 AGREEMENT THIS AGREEMENT, dated as of December 21, 2001, by and between General Motors Corporation ("GM") and American Axle & Manufacturing, Inc. ("AAM"). WHEREAS, AAM and GM have entered into an Agreement, dated as of June 14, 2001, relative to the * * * series program (the "June 14, 2001 Agreement"), which requires GM to source driveline products to AAM in accordance with the terms and conditions of that Agreement in order for certain other provisions to become effective. To avoid any doubt or uncertainty in connection with action being taken by AAM and GM relative to such sourcing, the parties hereto agree as follows: 1. GM and AAM agree that the * * * sourcing to AAM for the life of the * * * series program contemplated by Paragraph 3 of the June 14, 2001 Agreement relative to the driveline components described in Paragraph 1.a. of the June 14, 2001 Agreement has been accomplished by Exhibit I to the June 14, 2001 Agreement, except for the actions required by Paragraph 1.c. GM shall include such components in Lifetime Program Contracts between GM and AAM as required in Paragraph 1.c. of the June 14, 2001 Agreement as soon as practicable. 2. With respect to * * * series program driveline components not listed in Exhibit I, GM and AAM agree that to the best of their respective knowledge, as of this date, such components to which AAM has a right of last refusal as provided for in Paragraph 1.b. of the June 14, 2001 Agreement are limited to the following: i) certain * * * manufactured by Dana Corporation for the * * * series program and ii) modules for the * * * series program. GM and AAM agree that with respect to such modules, the Nomination Letter dated December 21, 2001 from GM to AAM, which sources such modules exclusively to AAM for the life of the * * * series program, a copy of which is attached hereto as Exhibit A, shall constitute the exclusive sourcing of such modules to AAM for the life of the * * * series program contemplated in Paragraph 3 of the June 14, 2001 Agreement, except for the actions required by Paragraph 1.c. GM shall include such modules in Lifetime Program Contracts between GM and AAM as required by Paragraph 1.c. of the June 14, 2001 Agreement as soon as practicable. With respect to the aforesaid propshafts, GM shall deliver to AAM a 30 day letter for such propshafts on or before January 7, 2002, providing AAM with a right of last refusal with respect to such propshafts in accordance with the AAM/GM 30-Day Letter Procedure, dated as of July 28, 2000, between GM and AAM. To the extent that other * * * series program driveline components not listed in Exhibit I to the June 14, 2001 Agreement are identified or developed, GM shall source such components exclusively to AAM in accordance with Paragraph 1.c. of the June 14, 2001 Agreement without delay after such identification or development. 3. In consideration of the foregoing, AAM agrees to pay GM $* * * million by wire transfer as soon as practicable but no later than December 31, 2001. AAM agrees to reduce * * * component prices in accordance with the terms and conditions of the June 14, 2001 Agreement as modified hereby effective upon the resolution of AAM's right of last refusal with respect to the aforementioned propshafts and, if applicable, sourcing of the aforementioned propshafts to AAM as provided for in Paragraph 3 of the June 14, 2001 Agreement. 4. Unless specifically modified by this Agreement, the terms and conditions of the June 14, 2001 Agreement shall remain in full force and effect as originally written. GENERAL MOTORS CORPORATION AMERICAN AXLE & MANUFACTURING, INC. By: /s/ Gloria Jackson By: /s/ Brian W. McPartlin --------------------------------- ------------------------------- Title: Commodity Manager Title: Sales Director - GM Programs ------------------------------ ----------------------------- /s/ Helmut Kittler /s/ Barbara Whittaker [LOGO] GENERAL MOTORS North American Vehicle Operations WORLDWIDE PURCHASING December 21, 2001 Richard F. Dauch Vice President, Sales American Axle & Manufacturing, Inc. 2965 Technology Drive Rochester Hills, MI 48309 RE: NOMINATION LETTER FOR THE * * * REAR MODULE ASSEMBLY Dear Rick: This letter will confirm that American Axle and Manufacturing, Inc. ("AAM") has been awarded the * * * Rear Module Assembly. In accordance with the June 14, 2001 Agreement between AAM and General Motors Corporation ("GM") AAM is hereby designated the sole source, exclusive supplier of the * * * Rear Module Assembly for the life of the * * * Series program. This sourcing applies to the * * * Series program and all derivatives thereof based upon the * * * platform. These modules will be included in a Lifetime Program Contract between AAM and GM in accordance with paragraph 1c of the Agreement dated as of June 14, 2001 between AAM and GM as soon as practicable. Not withstanding the fact that AAM is design responsible for the Rear Module Assembly as set forth in the June 14, 2001 Agreement, AAM submitted a quote to GM on December 13, 2001 for the Rear Module Design, based upon the GM design. AAM and GM agree to work cooperatively together to minimize the cost of the module as the design for the ultimate product is developed. Please reference the letter dated December 14, 2001, which outlines all * * * Rear Module piece cost and investment targets that AAM and GM will jointly work toward achieving. If you have any questions regarding this letter, please contact me at (586) 492-3690 to discuss. Sincerely; /s/ Joe Lentine /s/ Helmut Kittler Joe Lentine Director, Advance Purchasing Metallic GM NAVO Worldwide Purchasing cc: Gloria Jackson Helmut Kittler David Siemen John Glowski Barbara Whittaker North American Vehicle Operations MC 483-550-200 1999 Centerpoint Parkway Pontiac, MI 48341-3150 [LOGO] GENERAL MOTORS WWP-Advance Purchasing December 14, 2001 Rick Dauch Vice President, Sales American Axle & Manufacturing Subject: Sourcing Letter for * * * IRS Module Dear Rick: This letter confirms that GM designates AAM as the Tier I for all * * * business that replaces business AAM currently has on the * * * including the IRS sub-assembly. AAM and GM agree to work cooperatively together to minimize the cost of the module as the design for the ultimate product is developed, working toward a cost target of $1.185M and an investment target of $9.2M. If you have any questions regarding this letter please contact me at (586) 492-3690 to discuss. Sincerely, /s/ Joe T. Lentine /s/ Helmut Kittler Joseph T. Lentine Director -- Advance Purchasing -- Metallic cc: Gloria Jackson David Siemen Barbara Whittaker John Glowski Helmut Kittler Chevrolet Central Office Building, 30007 Van Dyke Avenue, M/C 480-205-201, Warren, MI 48090-9065 * Portions of this Exhibit 10.47 were omitted and filed separately with the Secretary of the Securities and Exchange Commission (the "Commission") pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 406 under the Securities Act of 1933, as amended. Such portions are marked by the symbol "* * *". EX-10.48 4 k67860ex10-48.txt EX-10.48 AMENDMENT TO MONITORING AGREEMENT EXHIBIT 10.48 AMENDMENT TO MONITORING AGREEMENT DATED AS OF OCTOBER 29, 1997 BETWEEN AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC. AND BLACKSTONE MANAGEMENT PARTNERS L.P. This Amendment (the "Amendment") to the Monitoring Agreement dated as of October 29, 1997 between American Axle & Manufacturing of Michigan, Inc. and Blackstone Management Partners L.P. (the "Agreement") is entered into as of the 19th day of November, 2001, by and between American Axle & Manufacturing Holdings, Inc., a Delaware corporation, successor by merger of American Axle & Manufacturing of Michigan, Inc., a Michigan corporation, (the "Company") and Blackstone Management Partners L.P., a Delaware limited partnership ("Blackstone"). For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. Commencing on January 1, 2002 (the "Effective Date"), Section 3 of the Agreement is deleted and replaced in its entirety with the following: 3. Fees. In consideration of the services contemplated by Section 2, for the remaining term of this Agreement, commencing with payments due following the Effective Date, the Company and its successors agree to pay to Blackstone an annual monitoring fee (the "Monitoring Fee") which will be paid in advance in semi-annual equal installments on March 31 and September 30 of each year. The Monitoring Fee shall be based upon Blackstone's percentage ownership of the voting common stock of the Company ("Blackstone Ownership %") in accordance with the following schedule:

Blackstone Ownership % Annual Fee ---------------------- ---------- Current ownership 46.9% $ 3.5 million Less than 45.0% $ 3.4 million Less than 40.0% $ 3.0 million Less than 35.0% $ 2.6 million Less than 30.0% $ 2.2 million Less than 25.0% $ 1.8 million Less than 20.0% $ 1.4 million Less than 15.0% $ 1.0 million Less than 10.0% $ 0.6 million Less than 5.0% $ 0.2 million 0.0% $ 0.0 million

Provided, however, that no change in the annual fee based upon a change in Blackstone Ownership % in accordance with the forgoing schedule shall be effective until a divestiture of Company stock by Blackstone. By way of illustration, but not of limitation, dilution through option exercises or other equity transactions will not trigger fee decreases but will be taken into account in determining the Blackstone Ownership % when Blackstone divests of Company stock. 2. Commencing on the Effective Date, Section 7 of the Agreement is deleted and replaced in its entirety with the following: 7. Term. This Agreement shall be effective as of the Effective Date and shall continue until such time as Blackstone and its affiliates beneficially own no Company stock, at which time the Agreement, including this Amendment, shall terminate (such termination date, the "Termination Date"), provided that section 4 shall remain in effect with respect to Out-of-Pocket Expenses incurred prior to the Termination Date. The provisions of Sections 5 and 9, and otherwise as the context so requires, shall survive the termination of this Agreement. 3. Except as otherwise expressly provided in this Amendment, the Agreement shall remain in full force and effect as originally written. Words and phrases defined in the Agreement shall have the same meaning(s) when used in this Amendment unless redefined herein. In the event of a conflict between the terms and conditions of the Agreement and this Amendment, the terms and conditions of this Amendment shall control. 4. This Amendment constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, pertaining to the subject matter contained herein. Any addition, deletion, or modification of any kind to this Amendment shall only be binding upon the parties if evidenced through a written document signed by an authorized representative of each party hereto. 5. This Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered as of the date first written above. American Axle & Manufacturing Blackstone Management Partners L.P. Holdings, Inc. By Blackstone Management Partners L.L.C., its General Partner By: /s/ Robin J. Adams By: /s/ Robert L. Friedman ------------------ ---------------------- Name: Robin J. Adams Name: Robert L. Friedman Title: Executive VP & CFO Title: Member 2 EX-10.49 5 k67860ex10-49.txt EX-10.49 2ND AMENDMENT TO EMPLOYMENT AGMNT - DAUCH EXHIBIT 10.49 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT SECONDED AMENDMENT, dated as of December 10, 2001, to the Employment Agreement (the "Agreement"), dated as of November 6, 1997, by and between AMERICAN AXLE & MANUFACTURING HOLDINGS, INC., a Delaware corporation (the "Company"), and Richard E. Dauch (the "Employee"): 1. The second sentence of Section 1 of the Agreement is hereby amended to read in its entirety as follows: "The assignment shall be as Co-Founder, Chairman & Chief Executive Officer." 2. Section 3(a) of the Agreement is hereby amended to read in its entirety as follows: "(a) Base Salary. The Company will pay Employee a salary effective March 1, 2001 at a per annum rate of Nine Hundred and Thirty Five Thousand United States Dollars (U.S. $935,000), payable in accordance with the Company's customary payroll procedures for senior executives (the `Annual Base Salary')." 3. Section 2 of Exhibit A to the Agreement is hereby amended to read in its entirety as follows: "2. Determination of Annual Cash Bonus. The Annual Cash Bonus shall be determined as of each Measurement Date for the calendar year ending on such Measurement Date pursuant to the following: (a) If the Company continues to outperform the financial performance of the Company's industry peer group, Employee's Annual Cash Bonus shall equal three times the amount of the Employee's then Annual Base Salary." (b) If the Company's financial performance equals or is less than the financial performance of the Company's industry peer group, Employee's Annual Cash Bonus shall be an amount up to the amount of the Employee's then Annual Base Salary as determined by the Compensation Committee of the Company's Board of Directors. 2 (c) If the Company's financial performance outperforms the Company's industry peer group by an amount greater than it has historically, Employee's Annual Cash Bonus shall be an amount in excess of the amount set forth in Section 2(a) hereof as determined by the Compensation Committee of the Company. (d) The metrics for assessing financial performance under this Agreement shall be set jointly by the Compensation Committee of the Board and the Employee and reviewed no less than every three years for consistency with creating value for the Company's shareholders. 4. Exhibit B to the Agreement shall be amended to add the following: "3. Company shall grant to Employee 300,000 stock options each year during the term of this Agreement, which annual grant amount shall be subject to review and increase by the Compensation Committee of the Company's Board of Directors and the Employee upon any major changes to the Company's corporate structure." 3 5. As modified by this Second Amendment, the Agreement as previously amended, shall continue in full force and effect in accordance with its terms. 6. The Supplemental Compensation Agreement dated December 20, 2000 between the Company and the Employee shall continue in full force and effect as originally written unaffected by the terms of this Second Amendment to the Agreement. IN WITNESS WHEREOF, the parties hereto have here unto set their hands and seal as of the day and year first above written. AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. /s/ Richard E. Dauch By: /s/ Thomas K. Walker - -------------------- -------------------- Richard E. Dauch Title: Chairman of the Compensation Committee 4 EX-12 6 k67860ex12.htm EX-12 COMPUTATION RATIO/EARNINGS TO FIXED CHARGES

EXHIBIT 12 — COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

	Year Ended December 31,
	2001			2000			1999			1998			1997
	(Unaudited)
	(In millions, except for ratios)
Fixed Charges:
Interest expense, including amortization of debt issuance costs	$	60.2		$	65.7		$	61.7		$	44.8		$	9.0
Estimated interest portion of rents		16.6			15.0			12.0			4.7			3.2
Capitalized interest		13.2			11.9			8.5			3.8			0.2
Preferred stock dividend		—			—			—			—			12.0
Gross-up of preferred stock dividend as if it were pre-tax		—			—			—			—			6.8
Total fixed charges as defined		90.0			92.6			82.2			53.3			31.2
Earnings:
Income from continuing operations before income tax expense		180.9			203.4			183.4			5.6			94.2
Total fixed charges as defined		90.0			92.6			82.2			53.3			31.2
Fixed charges not deducted in the determination of income from continuing operations before income tax expense		(13.2	)		(11.9	)		(8.5	)		(3.8	)		(19.0	)
Total earnings as defined	$	257.7		$	284.1		$	257.1		$	55.1		$	106.4
Ratio of earnings to fixed charges		2.86			3.07			3.13			1.03			3.41

24 EX-13 7 k67860ex13.htm EX-13 MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBIT 13 — PAGES 18-42 AND PAGE 45 OF ANNUAL REPORT TO

STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2001

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

FINANCIALS — MANAGEMENT’S DISCUSSION AND ANALYSIS

Overview

      We are a premier Tier I supplier to the automotive industry and a worldwide leader in the manufacture, engineering, design and validation of driveline systems and related components and modules for light trucks, sport utility vehicles (“SUVs”) and passenger cars. Driveline systems include all of the components that transfer power from the transmission and deliver it to the drive wheels. Driveline and related products produced by us include axles, modules, driveshafts, chassis and steering components, driving heads, crankshafts, transmission parts and forged products.

      We are the principal supplier of driveline components to General Motors Corporation (“GM”) for its light trucks, SUVs and rear-wheel drive (“RWD”) passenger cars manufactured in North America, supplying substantially all of GM’s rear axle and front four-wheel drive/all-wheel drive (“4WD/AWD”) axle requirements for these vehicle platforms in 2001. As a result of our Component Supply Agreement (“CSA”) and Lifetime Program Contracts with GM (“LPCs”), 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 an LPC. Sales to GM were approximately 87% of our total sales in 2001, 85% in 2000 and 86% in 1999.

      We sell most of our products under long-term contracts with prices established at the time the contracts were entered into. Some of our contracts require us to reduce our prices in subsequent years and all of our contracts allow us to negotiate price increases for engineering changes. 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 6 to 12 years, and require us to remain competitive with respect to technology, design and quality. We will compete for future GM business upon the termination of the LPCs or the CSA.

      We also supply driveline systems and other related components to DaimlerChrysler, Ford Motor Company, Nissan, Renault, Visteon Automotive, Delphi Automotive, PACCAR and other OEMs and Tier I supplier companies. Our sales to customers other than GM were $404.6 million in 2001 as compared to $475.4 million in 2000, principally as a result of lower demand for passenger car and commercial vehicle products in North America and Europe. However, we expect our sales to customers other than GM to grow significantly in the next two years as we launch several new driveline system products for DaimlerChrysler and other OEMs and Tier I supplier companies. The most significant of these new product programs is our launch of the heavy duty Dodge Ram 4x4 full-size pick-up trucks (“Dodge Ram program”) in the second half of 2002. As a result of the Dodge Ram program, we expect our sales to DaimlerChrysler to exceed 10% of our total sales in 2003, as compared to less than 1% in 2001 and all previous years.

Industry and Competition

      The worldwide automotive industry is highly competitive. Customers are constantly pressuring suppliers to optimize and improve technology, quality, product cost, durability, reliability and overall customer service. The driveline systems segment of the industry in which we compete reflects these pressures. A prevailing trend in the industry is that OEMs are shifting research and development, design and validation responsibility to their suppliers. The OEMs have also been reducing the number of their suppliers, preferring stronger relationships with fewer suppliers capable of providing complete systems and modules to their increasingly global operations. As a result, the number of Tier I suppliers is being reduced. We expect these trends to continue, eventually resulting in a smaller number of dominant, worldwide suppliers.

      We believe we are well positioned to compete in the worldwide automotive industry as these trends further impact our business. We will continue to leverage our excellence in manufacturing, product engineering and design to further diversify, strengthen and globalize our OEM customer base. We will also continue to invest in the development of new product, process and systems technologies to improve productive efficiency

and flexibility in our operations and continue to deliver innovative new products, modules and integrated driveline systems to our customers. Our new Smart-Bar^TM stabilizer bar-based active roll-control system and the Integrated Oil Pan (IOP) Front Axle Module with Electronic Disconnect are two current examples of high value-added technology products that have resulted from our commitment to research and development and that seek to improve the performance and design flexibility of our customers’ products.

      In 2001, we generated approximately $2.15 billion of our sales, or approximately 69% of our total sales, from new axle and related driveline system components introduced by us since July 1998. Our strong performance in major new product introductions will continue in 2002 as we launch several new high-volume 4WD/AWD driveline products to support the Dodge Ram program, GM’s new extended versions of its mid-sized SUVs (Chevrolet Trailblazer and GMC Envoy), GM’s new full-size vans, the Hummer “H2” sport-utility truck (“SUT”) and the Chevrolet SSR. In 2003, we will launch new 4WD/AWD driveline products to support GM’s new mid-sized pick-up trucks, which will replace the current Chevrolet S-10 and GMC Sonoma models.

      Over the past three years, our content-per-vehicle has increased nearly 30% from $870 in 1998 to $1,115 in 2001. This was primarily as a result of our efforts in new product development and the industry trend toward higher 4WD/AWD penetration. We benefit from increased 4WD/AWD penetration because we are able to sell two axles on a 4WD/AWD vehicle versus one on a traditional light truck or SUV. The increase in our content-per-vehicle is important because it has enabled us to increase our sales at a rate in excess of changes in industry production rates. Despite a 10% decline in North American (“N.A.”) light vehicle builds and a 4% decline in GM’s light truck production in 2001 as compared to 2000, our sales increased 1% in 2001. We believe that this performance is evidence of our ability to bring the right products, systems and technologies to market at a competitive cost for our customers.

Results of Operations

      Net sales. Net sales increased 1% in 2001 to $3.107 billion as compared to $3.069 billion in 2000 and $2.953 billion in 1999. Our increase in 2001 sales of 1% as compared to 2000 compares to an estimated 10% reduction in N.A. light vehicle production for the year and a 4% decrease in GM light truck production. Our increase in 2000 sales of 4% compares to an increase in N.A. light vehicle production of just under 1% and a 1% decrease in GM light truck production.

      These charts illustrate how we have benefited from two key trends favorably impacting our business. Sales generated from new axle and related driveline system components introduced by us since July 1998 now represent approximately 69% of our total sales. 4WD/AWD penetration has increased to 55% and is expected to increase further to greater than 60% in 2003. As a result of contributions from these new higher value-added technology products and increasing 4WD/AWD product penetration, content-per-vehicle has increased nearly 30% over the past three years from $870 in 1998 to in excess of $1,100 in 2001.

*  4WD/AWD penetration is equal to the total number of front axles we produce divided by the total number of rear axles we produce for the vehicle programs on which we sell product.

     The primary driver of our increased sales in 2001 and 2000 is our higher content-per-vehicle, which increased from $930 in 1999 to $979 in 2000 and $1,115 in 2001. This increase was primarily a result of increased sales of higher value-added technology products to GM, particularly our new 11.5” rear axle system used in GM’s heavy-duty pick-up trucks and our new IOP Front Axle Module featured on GM’s new mid-sized SUVs. Our content-per-vehicle also increased in 2001 because of higher 4WD/ AWD penetration in the products we ship to GM.

     In 2001, sales gains related to our increased content-per-vehicle discussed above were partly offset by reductions in shipments to customers other than GM affected by lower demand for passenger cars and commercial vehicles in North America and Europe.

     In 2000, our sales increased because we had a full year of shipments from Colfor Manufacturing, Inc. (“Colfor”) and MSP Industries Corporation (“MSP”), both of which we acquired on April 1, 1999, and our joint venture in Brazil, which we acquired in the fourth quarter of 1999. Excluding the impact of businesses acquired in 1999, year 2000 sales increased approximately 2.4% as compared to 1999.

     Gross Profit. Gross profit was $409.7 million in 2001 as compared to $426.2 million in 2000 and $388.8 million in 1999. Gross margin was 13.2% in 2001 as compared to 13.9% in 2000 and 13.2% in 1999. The decreases in gross profit and gross margin in 2001 were partly due to lost contribution margin resulting from lower production volumes. In addition, depreciation and amortization expense increased $18.7 million in 2001. This increase in depreciation and amortization, which principally reflects the cost of investments we have made to support our long-term production requirements, negatively impacted gross profit and gross margin in 2001.

     Gross profit and gross margin were also negatively impacted in 2001 by an $11.7 million fourth quarter charge related to the consolidation of our operations located in the United Kingdom. This charge included a

$10.0 million accrual of severance obligations payable to approximately 350 associates pursuant to FASB Statement No. 112, “Employers’ Accounting for Postemployment Benefits.” This charge also included $1.5 million of costs that will be incurred to cancel contracts for services no longer needed and a $0.2 million write off of fixed assets made permanently idle as a result of a facility shut-down. Excluding the impact of this $11.7 million charge, gross profit would have been $421.4 million and gross margin would have been 13.6% in 2001.

     The increases in gross profit and gross margin in 2000 were primarily due to the increased sales of higher value-added technology products to GM and the successful start-up of production in our new Silao, Mexico (“Guanajuato Gear & Axle”) and Cheektowaga, New York, (“Cheektowaga”) manufacturing facilities.

     Selling, General and Administrative Expenses (“SG&A”). Selling, general and administrative expenses, or “SG&A” (including research and development), amounted to $164.4 million in 2001 as compared to $162.6 million in 2000 and $147.6 million in 1999. Research and development spending (“R&D”) increased approximately 11% to $51.7 million in 2001 as compared to $46.4 million in 2000 and $39.1 million in 1999. However, this increase in R&D was partly offset by cost reductions in other areas, including the impact of lower profit- sharing accruals in 2001.

     The increase in spending related to SG&A in 2000 as compared to 1999 was primarily due to increased R&D, the addition of Colfor, MSP and our joint venture in Brazil, and increased profit-sharing accruals resulting from increased profitability.

     We continue to aggressively pursue development of new product, process and systems technologies in our R&D activities, particularly in the areas of mass and weight reduction; noise, vibration and harshness (“NVH”) improvements; durability; and new product offerings such as integrated driveline systems and modules. In addition to the Smart-Bar^TM and the IOP Front Axle Module, our increased commitment to R&D has resulted in our development of the PowerLite^TM aluminum rear-axle system, TracRite^TM traction-enhancing locking differentials (including a brand-new electronically controlled TracRite^TM EL model) and our Gen II and Gen III universal joints, all of which have been instrumental in new product program wins for us. We have also developed, installed and tested independent front and rear drive chassis suspension modules (“IFDA” and “IRDA”) and we are currently developing electronic wheel-speed sensors for traction and stability control for potential future SUV and passenger car applications.

     Operating Income. Operating income was $241.3 million in 2001 as compared to $259.4 million in 2000 and $237.8 million in 1999. Operating margin was 7.8% in 2001, 8.5% in 2000 and 8.1% in 1999. The decreases in operating income and operating margin in 2001 were primarily due to the factors discussed above relating to the decreases in gross profit and gross margin and the increase in SG&A expenses.

     The increases in operating income and operating margin in 2000 were primarily due to the factors discussed above relating to the increases in gross profit and gross margin, partially offset by increased R&D and other SG&A costs and higher goodwill amortization related to the Albion, Colfor and MSP acquisitions.

     EBITDA.⁽¹⁾ EBITDA was $367.8 million in 2001 as compared to $377.0 million in 2000 and $334.6 million in 1999. EBITDA margin was 11.8% in 2001, 12.3% in 2000 and 11.3% in 1999. The decreases in EBITDA and EBITDA margin in 2001 were due primarily to the factors discussed above relating to the decreases in gross profit and gross margin and the increase in SG&A expenses.

     The increases in EBITDA and EBITDA margin in 2000 were due primarily to the factors discussed above relating to the increases in gross profit and gross margin, partially offset by increased R&D and other SG&A costs. EBITDA and EBITDA margin also increased in 2000 as a result of other operating cost reductions.

     Net Interest Expense. Net interest expense was $59.4 million in 2001, $58.8 million in 2000 and $54.6 million in 1999. The increase in net

interest expense in 2001 was due primarily to a higher average amount of net debt outstanding, partially offset by lower average interest rates in effect in 2001. The increase in net interest expense in 2000 was due primarily to higher average amounts of net debt outstanding and higher average interest rates in effect in 2000, offset by a higher amount of interest capitalized on construction in progress.

      Other Income (Expense), Net. We recognized $1.0 million of other expense in 2001 as compared to other income of $2.8 million in 2000 and $0.2 million in 1999. These amounts related principally to foreign exchange gains and losses. Other income in 2000 also included a one-time benefit associated with stock sold in connection with the demutualization of our life-insurance provider.

      Income Tax Expense. Income tax expense was $66.0 million in 2001, $74.2 million in 2000, and $67.8 million in 1999. Our effective tax rate was 36.5% in 2001 and 2000 and 37.0% in 1999.

      Net Income and Earnings Per Share. Net income was $114.9 million in 2001 as compared to $129.2 million in 2000 and $115.6 million in 1999. Diluted earnings per share was $2.36 per share in 2001 as compared to $2.60 per share in 2000 and $2.34 per share in 1999.

Liquidity and Capital Resources

      Our primary liquidity needs are to fund capital expenditures and debt service and to support working capital requirements in our expanding operations. We rely principally upon operating cash flow and borrowings under our primary credit facilities to meet these needs. We believe that cash flow available from these sources will be sufficient to meet our projected capital expenditures, debt service obligations and working capital requirements in 2002.

      Operating Activities. Net cash provided by operating activities was $232.8 million in 2001, $252.2 million in 2000 and $310.3 million in 1999. After adjusting our earnings for the impact of deferred income taxes, depreciation and amortization, and pensions and other postretirement benefits, we generated $8.6 million of additional operating cash flow in 2001 as compared to 2000 and $25.8 million of additional operating cash flow in 2000 as compared to 1999.

      A change in payment terms with GM effective March 1, 2001 from net 20 days to net 25th proximo adversely impacted our operating cash flow by approximately $90 million in the first quarter of 2001. This final change in payment terms with GM was effective for products shipped to GM beginning on March 1, 2001 and completes a three-year transition from the next-day payment terms in effect prior to March 1, 1999. Similar changes in payment terms with GM adversely impacted operating cash flow by approximately $80 million in the first quarter of 2000 and $70 million in the first quarter of 1999.

(1) 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.

Operating cash flow was favorably impacted in 2001 as compared to 2000 by increased accounts receivable collections related to customer tooling and reduced inventories.

      Inventories at year-end 2001 and year-end 2000 reflected increases as compared to 1999 levels that were necessary to support customer banking requirements related to new product launches. At year-end 2001, inventories also reflect the impact of our strategy to manage daily production volumes and avoid premium operating costs in advance of unusually high customer demand for certain products in the first quarter of 2002. Repair parts inventories have also increased in 2001 and 2000 as compared to 1999 levels as we took delivery of a significant amount of new machinery and equipment and sourced our initial stocks of related maintenance material.

      In addition, our increased funding of supplier payments and other accrued expenses resulted in approximately $136.6 million less operating cash flow in 2001 on a year-over-year basis. The primary driver of this increased funding requirement in 2001 was a significant reduction in capital spending in the second half of 2001 as compared to the much higher rates of spending we incurred beginning in the second half of 1999 and running through the second quarter of 2001.

      Our accruals at year-end 2001 include $9.7 million for the unpaid severance benefit obligations related to the consolidation of our operations located in the United Kingdom, all of which we expect to fund in 2002. Although we may pursue legal remedies or other indemnities to mitigate the financial impact of these severance obligations, we have accrued our best estimate of the lump-sum benefits that will ultimately be paid to eligible associates upon termination of employment.

      Operating cash flow in 2000 was adversely impacted by increased working capital requirements due to the start-up of production in Guanajuato Gear & Axle and Cheektowaga. Operating cash flow in 2000 was also negatively impacted in comparison to prior years by the one-time lump-sum payments we made to certain associates in connection with several new long-term collective bargaining agreements we negotiated with our unions.

      Investing Activities. Capital expenditures were $375.5 million in 2001, $381.0 million in 2000 and $301.7 million in 1999. We significantly reduced the rate of capital spending in the second half of 2001 and expect to limit our capital expenditures to between $250 million and $275 million in 2002. Our largest capital projects in 2001 and 2002 include our investment to support the Dodge Ram program and GM’s launch of its mid-sized SUVs (including the new extended versions to be launched in 2002), as well as expenditures required to support the 2003 launch of GM’s new mid-sized pick-up trucks (including the Chevrolet S-10 and GMC Sonoma replacements) and the H2 SUT. Capital spending in 2001 and 2002 also includes the construction of a forging facility adjacent to Guanajuato Gear & Axle and other strategic investments designed to support new manufacturing processes, systems and technologies, and to improve product designs and achieve operating cost reductions.

      Our largest capital projects in 2000 were related to the construction and subsequent expansion of Guanajuato Gear & Axle, which started operations in the first quarter of 2000, and the launch of several new long-term product programs in 2000 and early 2001, including GM’s heavy-duty pick-up trucks and full-size luxury SUVs (the GMC Yukon Denali and the Cadillac Escalade).

      Our investing activities in 1999 included approximately $239 million of outlays related to the Colfor and MSP acquisitions and our investment in the joint venture in Brazil.

      Although we have invested a significant amount of capital over the past several years to support our long-term production requirements, we believe these investments support our goal of improving our financial performance over the long-term. Our after-tax return on invested capital, or “ROIC”, was nearly 12% in 2001 and in excess of 16% in each of the two previous years. We believe our ROIC performance is at the top end of the range for our industry. Our ROIC was lower in 2001 because of an increase in our working capital requirements primarily attributable to the March 2001 change in GM payment terms, an increase in the fixed capital we have in place in advance of future product program launches, and the impact of the estimated 10% reduction in N.A. light vehicle production in 2001 as compared to 2000.

Return on Invested Capital (“ROIC”)

      The following table summarizes the calculation of ROIC in 2001, 2000 and 1999:

	Year Ended December 31,
	2001			2000			1999
	(In millions)
Net income	$	114.9		$	129.2		$	115.6
Add: After-tax net interest expense		37.7			37.3			34.4
After-tax return		152.6			166.5			150.0
Net debt at year-end(1)		865.9			781.9			634.7
Stockholders’ equity at year-end		534.7			372.0			263.7
Invested capital at year-end		1,400.6			1,153.9			898.4
Invested capital at beginning of year		1,153.9			898.4			729.3
Average invested capital		1,277.3			1,026.2			813.9
ROIC(2)		11.9	%		16.2	%		18.4	%

(1)	net debt is equal to total debt less cash and equivalents
(2)	other companies may calculate ROIC differently

      Financing Activities. Net cash provided by financing activities was $120.2 million in 2001, $24.1 million in 2000 and $179.5 million in 1999. Total long-term debt increased in 2001 by $61.1 million to $878.2 million at year-end, principally as a result of increasing our net borrowings under our primary bank credit facilities to fund capital spending requirements.

      In August 2001, we raised $57.7 million in a public offering of 7.5 million shares of our common stock through which we issued 3.0 million treasury shares and Blackstone Capital Partners II Merchant Banking Fund L.P. and certain of its affiliates (collectively, “Blackstone”) sold 4.5 million shares. The number of our shares that are publicly traded approximately doubled upon consummation of this offering and we used the proceeds from the sale of our shares to repay a portion of our outstanding debt. Prior to this offering, Blackstone’s beneficial ownership of our common stock was approximately 55.2%. After the offering, Blackstone’s beneficial ownership of our common stock was approximately 43.2%. Consistent with our Registration Statement disclosures related to the offering, we have assumed the exercise of approximately 4.0 million deep-in-the-money options to purchase common shares that were granted prior to our IPO and that were exercisable at the time of the offering in the determination of Blackstone’s beneficial ownership percentages disclosed in the preceding sentences.

      In December 2000, our Co-Founder, Chairman of the Board & Chief Executive Officer, Richard E. Dauch, agreed to extend his employment relationship with us by two years until December 31, 2006. In connection with this extension, we repurchased approximately 3.1 million shares of common stock from Mr. Dauch, at current market prices, at a total cost of approximately $21.3 million. Mr. Dauch used the proceeds from the sale to pay off a personal loan incurred to pay taxes in connection with an earlier investment in our company. We agreed to repurchase these shares because of the favorable economic impact of this transaction and in consideration of the extension of Mr. Dauch’s employment agreement.

      In 1999, our financing activities included several significant events. In February 1999, we raised approximately $107.7 million of net proceeds in our initial public offering and issued 7 million shares of common stock. Our initial public offering was followed in March 1999 by our issuance of $300 million of 9.75% senior subordinated notes due 2009, a transaction in which we raised net proceeds of approximately $288.7 million. Also in 1999, we closed sale-leaseback transactions involving $187.0 million of existing machinery and equipment.

      Debt Capitalization and Availability. Our primary credit facilities consist of our Senior Secured Bank Credit Facilities (the “Bank Credit Facilities”), which are described in further detail below, and our

receivables financing facility (the “Receivables Facility”), which provides up to $153.0 million of revolving financing commitments through October 2003. Borrowings under the Bank Credit Facilities are secured by the capital stock of our significant subsidiaries and all of our assets except for those securing the Receivables Facility and other permitted bank, equipment and lease financings. Other significant sources of our debt capitalization include our senior subordinated notes, capital lease obligations and uncommitted bank credit lines.

      The Bank Credit Facilities, which were last amended in August 2000, consist of the following:

•  Senior Secured Revolving Credit Facility (the “Revolver”) providing for revolving loans and the issuance of letters of credit in an aggregate principal and stated amount not to exceed $378.8 million available through October 2004; and

•  Senior Secured Term Loan Facility (the “Term Loan”) providing for term loans in an aggregate principal amount of $373.0 million. We will make semi-annual principal payments in varying amounts on the Term Loan through April 2006, at which time the remaining balance of $175.0 million will be due.

      In 2001, we secured the use of uncommitted bank credit lines totaling $40 million. At December 31, 2001, $7 million was outstanding under such Money Market Lines.

      With respect to the Bank Credit Facilities, $373.0 million was outstanding under the Term Loan and $25.0 million was outstanding under the Revolver at year-end 2001. At year-end 2001, we had additional borrowing capacity of $353.8 million under the Bank Credit Facilities, all of which was available under the Revolver. Additionally at year-end 2001, $138.0 million was outstanding and an additional $15.0 million was available to us under the Receivables Facility.

      The weighted average interest rate of our long-term debt outstanding as of year-end 2001 was approximately 6.0% as compared to approximately 9.0% at December 31, 2000.

      Our off-balance sheet financing relates principally to operating leases for certain facilities and manufacturing machinery and equipment. These operating leases are fully disclosed in Note 2 to our financial statements. Pursuant to these operating leases, most of which were initiated prior to year-end 1999, we have the opportunity to purchase underlying machinery and equipment at specified buy-out dates. We plan to exercise our purchase option for approximately $45 million of such lease buy-outs in 2002. Remaining lease renewal or repurchase options are approximately $3 million in 2003 and $106 million in 2006. We will continue to evaluate lease financing alternatives in the future.

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. Because most of our business is denominated in U.S. dollars, we do not currently have significant exposures relating to currency exchange risks. We had only a nominal amount of currency hedges in effect during 2001 and, at December 31, 2001, we did not have any currency hedges in place. Future business operations and opportunities, including the expansion of our business outside North America, may expose us to 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 forward contracts.

      Interest Rate Risk. We are exposed to variable interest rates on our Bank Credit Facilities, the Receivables Facility and a portion of our sale-leaseback financing. The pre-tax earnings and cash flow impact of a one-percentage-point increase in interest rates (approximately 16.6% of our weighted average

interest rate at December 31, 2001) on our long-term debt outstanding at year-end 2001 would be approximately $5.3 million.

      At year-end 2001, we have hedged a portion of our interest rate risk by entering into interest rate swaps with a notional amount of approximately $45.5 million. These interest rate swaps convert variable financing based on 3-month LIBOR rates into fixed U.S. dollar rates varying from 6.88% to 6.96%. We have designated the interest rate swaps as effective cash flow hedges of the related debt and lease obligations and, accordingly, we have reflected the net cost of such agreements as an adjustment to interest expense over the lives of the debt and lease agreements.

      Adoption of FASB Statement No. 133. We adopted FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, on January 1, 2001. FASB Statement No. 133 requires us to recognize all derivatives on the balance sheet at fair value. If a derivative qualifies under FASB Statement No. 133 as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value, and changes in the fair value of derivatives that do not qualify as hedges, are immediately recognized in earnings.

      The cumulative effect of adopting FASB Statement No. 133 was to decrease stockholders’ equity by $0.8 million, net of tax. The effect on net income in 2001 was not significant, primarily because the hedges in place as of January 1, 2001 qualified for hedge accounting treatment and were highly effective.

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 a two-week shutdown of operations in July and an approximate one-week shutdown in December. In addition, our OEM customers have historically incurred lower production rates in the third quarter as model changes enter production. Accordingly, our third quarter and fourth quarter results may reflect these trends.

Effects of Inflation

      Inflation generally affects us by increasing the cost of labor, equipment, utilities and raw materials. Because rates of inflation in countries where we have significant operations have been moderate during the periods presented, we believe that inflation has not had a significant impact on our operations. In order to protect against the future impact of inflation, we will continue to aggressively pursue productivity improvements in our operations, principally through the increased use of the AAM Manufacturing System, a lean manufacturing system designed to reduce waste. We also plan to continue to emphasize favorable supply agreements in our direct material purchasing function, including joint efforts with key suppliers to identify and share in cost reductions, the use of long-term supply agreements when appropriate, and the further development of our e-commerce initiatives.

Litigation and Environmental Regulations

      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.

      GM has agreed to indemnify and hold us harmless from certain environmental issues identified as potential areas of environmental concern at March 1, 1994. GM has also agreed to indemnify us, under certain circumstances, for up to 10 years from such date with respect to certain pre-closing environmental conditions. Based on our assessment of costs associated with our environmental responsibilities, including recurring administrative costs, capital expenditures and other compliance costs, we do not expect such

costs to have a material effect on our financial condition, results of operations, cash flows or competitive position in the foreseeable future.

Effect of New Accounting Standards

      Effective January 1, 2002, we will adopt FASB Statement No. 142, “Goodwill and Other Intangible Assets.” Under FASB Statement No. 142, we will no longer amortize goodwill. Instead, we will periodically evaluate goodwill and any other acquired intangible assets for impairment. We are in the process of determining the impact of adopting FASB Statement No. 142 and whether it will have a material effect on our results of operations or financial position. Goodwill amortization amounted to $4.0 million for the year-ended 2001.

      Effective January 1, 2002, we will adopt FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” FASB Statement No. 144 supersedes FASB Statement No. 121 as well as certain provisions of APB 30. The main objective of FASB Statement No. 144 is to clarify certain provisions of FASB Statement No. 121 relating to impairment of long-lived assets. FASB Statement No. 144 also includes more stringent requirements for classifying assets available for disposal and expands the scope of activities that will require discontinued operations reporting. We are in the process of determining the impact of adopting FASB Statement No. 144 and whether it will have a material effect on our results of operations or financial position.

Significant Accounting Policies

      Our significant accounting policies are more fully described in Note 1 to our financial statements. In order to prepare financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts and disclosures in our financial statements. By their nature, these estimates are subject to an inherent degree of uncertainty and actual results could differ from our estimates.

      Our significant accounting policies include:

      Estimated useful lives for depreciation. At December 31, 2001, over 80% of our capitalized investment in property, plant and equipment, or nearly $1.4 billion, is 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 15 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 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.

      Valuation of indirect inventories. As part of our strategy to control our investment in working capital and manage the risk of excess and obsolete stocks, we generally do not maintain large balances of productive raw materials, work-in-process or finished goods inventories. Instead, we utilize lean manufacturing techniques and coordinate our daily production activities to meet our daily customer delivery requirements. The ability to address plant maintenance issues on a real-time basis is a critical element of our ability to pursue such an operational strategy. Our machinery and equipment may run for long periods of time without disruption and suddenly fail to operate as intended. In addition, certain repair parts required to address such maintenance requirements may be difficult or cost prohibitive to source on a real time basis.

      To facilitate our continuous preventive maintenance strategies and to protect against costly disruptions in operations due to machine downtime, we carry a significant investment in inherently slow-moving machine repair parts and other maintenance materials and supplies. At December 31, 2001, such indirect inventories comprise approximately 25% of our total gross inventories. For inventory valuation purposes, we

evaluate our usage of such slow-moving inventory on a quarterly basis by part number and adjust our inventory valuation allowances as necessary to recognize as an asset only those quantities that we can reasonably estimate will be used. While we believe that we have made an appropriate valuation of such inventory for accounting purposes, unforeseen changes in inventory usage requirements, manufacturing processes, maintenance and repair techniques, or inventory control may result in actual usage of such inventories that differ materially from current estimates.

      Accounts receivable allowances. The scope of our relationship with GM is inherently complex and, from time to time, we identify differences in our valuation of receivables due from GM. Differences in the quantity of parts processed as receipts by GM and the quantity of parts shipped by AAM is one major type of such difference. Other differences arise in the application of commercial agreements addressing the valuation of nonroutine pricing adjustments or cost recoveries related to such items as significant variations in production volumes, engineering changes and the impact of foreign exchange and metal market price movements. By their nature, some of the commercial issues require bilateral discussion or negotiation to resolve. It is not unusual for some of these differences to be outstanding for several months before both parties agree on the valuation of an item and settle the receivable.

      From a financial reporting perspective, we track the aging of uncollected billings and adjust our allowances based on our evaluation of the probability of collection. If we are uncertain as to whether we will be successful collecting a balance we determine in accordance with our understanding of a commercial agreement, we generally do not recognize the revenue or cost recovery until such time that the uncertainty is removed. While we believe that we have made an appropriate valuation of our accounts receivable due from GM and other customers for accounting purposes, unforeseen changes in our ability to enforce commercial agreements, collect aged receivables, or maintain effective controls and procedures relating to the proper cut-off of shipping and invoicing activities may result in actual collections that differ materially from current estimates.

Forward-Looking Information

      Certain statements in this MD&A and elsewhere in this Annual Report are forward-looking in nature and relate to trends and events that may affect our future financial position and operating results. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms “will,” “expect,” “anticipate,” “intend,” “project” and similar words or expressions are intended to identify forward-looking statements. These statements speak only as of the date of this Annual Report. The statements are based on our current expectations, are inherently uncertain, are subject to risks, and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors, including, but not limited to, the following:

•  adverse changes in the economic conditions or political stability of our principal markets (particularly North America, Mexico, Europe and South America);

•  reduced demand for our customers’ products (particularly GM’s light trucks and SUVs);

•  reduced purchases of our products by GM and other customers;

•  our ability and our customers’ ability to successfully launch new product programs;

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

•  supply shortages or price fluctuations in raw materials, utilities or other operating supplies;

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

•  our ability to attract and retain key associates;

•  our ability to maintain satisfactory labor relations;

•  risks of noncompliance with environmental regulations;

•  liabilities arising from legal proceedings to which we are or may become a party or claims against us or our products;

•  availability of financing for working capital, capital expenditures, R&D, or other general corporate purposes;

•  adverse changes in laws or government regulations affecting our products or our customers’ products (including the Corporate Average Fuel Economy regulations); and

•  other unanticipated events and conditions that 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.

MANAGEMENT’S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS

      We are responsible for the preparation of the accompanying consolidated financial statements of American Axle & Manufacturing Holdings, Inc. (“AAM”), as well as their integrity and objectivity. The financial statements were prepared in conformity with generally accepted accounting principles and include amounts based on our best estimates and judgments.

      We are also responsible for maintaining a comprehensive system of internal control. Our system of internal control is designed to provide reasonable assurance that we can rely upon our accounting systems and the underlying books and records to prepare financial information presented in accordance with generally accepted accounting principles and that our associates follow established policies and procedures. We continually review our system of internal control for effectiveness. We consider the recommendations of our internal auditors and independent auditors concerning internal control and take the necessary actions that are cost-effective in the circumstances.

      The Audit Committee of our Board of Directors is comprised entirely of directors who are not AAM associates and is responsible for assuring that we fulfilled our responsibilities in the preparation of the accompanying financial statements. The Audit Committee meets regularly with our internal auditors, the independent auditors, and AAM management to review their activities and ensure that each is properly discharging its responsibilities and to assess the effectiveness of internal control. The Audit Committee reviews the scope of audits and the accounting principles applied in our financial reporting. The Audit Committee selects the independent auditors annually in advance of the Annual Meeting of Stockholders and submits its selection for ratification at the meeting. Deloitte & Touche LLP has been engaged as independent auditors to audit the accompanying financial statements and to issue their report thereon, which appears on this page.

      To ensure complete independence, our internal auditors and Deloitte & Touche LLP have full and free access to meet with the Audit Committee, without AAM management present, to discuss the results of their audits, the adequacy of internal control, and the quality of our financial reporting.

/s/ Richard E. Dauch	/s/ Robin J. Adams
RICHARD E. DAUCH Co-Founder, Chairman of the Board & Chief Executive Officer January 23, 2002	ROBIN J. ADAMS Executive Vice President — Finance & Chief Financial Officer

INDEPENDENT AUDITORS’ REPORT

      To the Board of Directors and Stockholders of American Axle & Manufacturing Holdings, Inc.:

      We have audited the accompanying consolidated balance sheets of American Axle & Manufacturing Holdings, Inc. and its subsidiaries (the “Company”) as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Detroit, Michigan

January 23, 2002

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended December 31,
	2001			2000			1999
	(In millions, except per share data)
Net sales	$	3,107.2		$	3,069.5		$	2,953.1
Cost of goods sold		2,697.5			2,643.3			2,564.3
Gross profit		409.7			426.2			388.8
Selling, general and administrative expenses		164.4			162.6			147.6
Goodwill amortization		4.0			4.2			3.4
Operating income		241.3			259.4			237.8
Net interest expense		(59.4	)		(58.8	)		(54.6	)
Other income (expense), net		(1.0	)		2.8			0.2
Income before income taxes		180.9			203.4			183.4
Income taxes		66.0			74.2			67.8
Net income	$	114.9		$	129.2		$	115.6
Basic earnings per share	$	2.55		$	2.79		$	2.87
Diluted earnings per share	$	2.36		$	2.60		$	2.34

See accompanying notes to consolidated financial statements.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

			December 31,
			2001			2000
			(In millions, except per
			share data)
ASSETS
Current assets:
	Cash and equivalents		$	12.3		$	35.2
	Accounts receivable, net of allowance of $12.7 in 2001 and $12.0 in 2000			270.7			247.3
	Inventories			158.0			160.4
	Prepaid expenses and other			17.3			43.1
	Deferred income taxes			19.7			14.6
Total current assets				478.0			500.6
Property, plant and equipment, net				1,448.7			1,200.1
Deferred income taxes				19.4			16.1
Goodwill				150.2			154.3
Other assets and deferred charges				64.6			31.4
Total assets			$	2,160.9		$	1,902.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	304.0		$	341.3
	Accrued compensation and benefits			110.6			120.2
	Other accrued expenses			62.4			48.8
Total current liabilities				477.0			510.3
Long-term debt				878.2			817.1
Deferred income taxes				36.7			—
Postretirement benefits and other long-term liabilities				234.3			203.1
Total liabilities				1,626.2			1,530.5
Stockholders’ equity:
	Preferred stock, par value $0.01 per share; 10.0 million shares authorized; no shares outstanding in 2001 or 2000			—			—
	Common stock, par value $0.01 per share; 150.0 million shares authorized; 47.2 million and 46.8 million shares issued in 2001 and 2000, respectively			0.5			0.5
	Series common stock, par value $0.01 per share; 40.0 million shares authorized; no shares outstanding in 2001 or 2000			—			—
	Paid-in capital			242.2			202.1
	Retained earnings			308.2			193.3
	Treasury stock at cost; 0.1 million shares in 2001 and 3.1 million shares in 2000			(0.7	)		(21.3	)
	Accumulated other comprehensive loss, net of tax:
		Minimum pension liability adjustment		(9.9	)		—
		Foreign currency translation adjustments		(3.9	)		(2.6	)
		Unrecognized loss on derivatives		(1.7	)		—
Total stockholders’ equity				534.7			372.0
Total liabilities and stockholders’ equity			$	2,160.9		$	1,902.5

See accompanying notes to consolidated financial statements.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Year Ended December 31,
			2001			2000			1999
			(In millions)
Operating activities:
Net income			$	114.9		$	129.2		$	115.6
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			126.6			107.9			89.5
	Deferred income taxes			40.2			30.5			9.8
	Pensions and other postretirement benefits, net of contributions			11.2			16.7			43.6
	Loss on disposal of equipment			5.2			4.8			4.3
	Changes in operating assets and liabilities:
		Accounts receivable		(25.0	)		(59.5	)		(46.6	)
		Inventories		1.2			(28.8	)		12.7
		Accounts payable and accrued expenses		(44.3	)		92.3			73.7
		Other assets and liabilities		2.8			(40.9	)		7.7
Net cash provided by operating activities				232.8			252.2			310.3
Investing activities:
Purchases of property, plant and equipment				(375.5	)		(381.0	)		(301.7	)
Acquisitions, net of cash acquired				—			—			(239.4	)
Proceeds from sale-leaseback of equipment				—			—			187.0
Net cash used in investing activities				(375.5	)		(381.0	)		(354.1	)
Financing activities:
Issuance of 9.75% Senior Subordinated Notes Due 2009				—			—			288.7
Net borrowings (payments) of long-term debt				61.6			45.7			(206.7	)
Debt issuance costs				(0.1	)		(1.4	)		(10.3	)
Issuance of common stock, net				57.7			—			107.7
Employee stock option exercises				1.0			1.1			0.1
Purchase of treasury stock				—			(21.3	)		—
Net cash provided by financing activities				120.2			24.1			179.5
Effect of exchange rate changes on cash				(0.4	)		(0.3	)		—
Net increase (decrease) in cash and equivalents				(22.9	)		(105.0	)		135.7
Cash and equivalents at beginning of year				35.2			140.2			4.5
Cash and equivalents at end of year			$	12.3		$	35.2		$	140.2

      See accompanying notes to consolidated financial statements.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

								Retained						Accumulated
	Common Stock							Earnings						Other
	Shares			Par		Paid-in		(Accumulated			Treasury			Comprehensive			Comprehensive
	Outstanding			Value		Capital		Deficit)			Stock			Loss			Income
	(In millions, except per share data)
Balance at January 1, 1999		32.5		$	—	$	92.5	$	(51.5	)	$	—		$	(0.6	)
Net income									115.6								$	115.6
Foreign currency translation, net															(0.1	)		(0.1	)
Comprehensive income																	$	115.5
Issuance of common stock		7.0			0.4		107.3
Exercise of stock options		6.9			0.1
Balance at December 31, 1999		46.4			0.5		199.8		64.1			—			(0.7	)
Net income									129.2								$	129.2
Foreign currency translation, net															(1.9	)		(1.9	)
Comprehensive income																	$	127.3
Exercise of stock options, including tax benefit		0.4					2.3
Purchase of treasury stock		(3.1	)									(21.3	)
Balance at December 31, 2000		43.7		$	0.5	$	202.1	$	193.3		$	(21.3	)	$	(2.6	)
Net income									114.9								$	114.9
Cumulative effect of adopting FASB Statement No. 133, net															(0.8	)		(0.8	)
Unrecognized loss on derivatives, net															(0.9	)		(0.9	)
Foreign currency translation, net															(1.3	)		(1.3	)
Minimum pension liability adjustment, net															(9.9	)		(9.9	)
Comprehensive income																	$	102.0
Issuance of common stock		3.0					37.1					20.6
Exercise of stock options, including tax benefit		0.4					3.0
Balance at December 31, 2001		47.1		$	0.5	$	242.2	$	308.2		$	(0.7	)	$	(15.5	)

See accompanying notes to consolidated financial statements.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Organization and Summary of Significant Accounting Policies

      Organization. American Axle & Manufacturing Holdings, Inc. (“Holdings”) and its subsidiaries (collectively,“we,” “us”, “AAM” or “the Company”), is a Tier I supplier to the automotive industry and a worldwide leader in the manufacture, engineering, validation and design of driveline systems and related components and modules for light trucks, sport utility vehicles (“SUVs”) and passenger cars. The driveline system includes all the components that transfer power from the transmission and deliver it to the drive wheels. Driveline and related products produced by us include axles, modules, driveshafts, chassis components, driving heads, crankshafts, transmission parts and forged products. In addition to our 14 locations in the United States (in Michigan, New York and Ohio), the Company also has offices and facilities in Brazil, England, Germany, Japan, Mexico and Scotland.

      Holdings is the survivor of a migratory merger with American Axle & Manufacturing of Michigan, Inc. (“AAMM”) and has no significant assets other than its 100% ownership of American Axle & Manufacturing, Inc. (“AAM Inc.”) and its subsidiaries. Pursuant to this merger, which was effected in January 1999 in connection with our initial public offering, each share of AAMM’s common stock was converted into 3,945 shares of Holdings’ common stock. All share and per share amounts have been adjusted to reflect this conversion. Holdings has no other subsidiaries other than AAM Inc.

      Principles of Consolidation. We include the accounts of Holdings and its subsidiaries in our consolidated financial statements. We eliminate the effects of all intercompany transactions, balances and profits in our consolidation.

      Revenue Recognition. We recognize revenue when products are shipped to our customers and title transfers under standard commercial terms.

      Research and Development Costs. We expense research and development costs (“R&D”) as incurred. R&D costs were $51.7 million, $46.4 million and $39.1 million in 2001, 2000 and 1999, respectively.

      Cash and Equivalents. Cash and equivalents include all of our cash balances and highly liquid investments with a maturity of 90 days or less at time of purchase.

      Customer Tooling. Reimbursable costs we incur for customer tooling are classified as accounts receivable. When we estimate the cost of such customer tooling to exceed customer reimbursement, we record a provision for such loss as a component of our allowance for doubtful accounts.

      Inventories. We state our inventories at the lower of cost or market. The cost of our U.S. inventories is determined principally using the last-in, first-out method (LIFO). The cost of foreign inventories and all of our indirect inventories is determined principally using the first-in, first-out method (FIFO). We classify indirect inventories, which include perishable tooling, repair parts and other materials consumed in the manufacturing process but not incorporated into our finished products, as raw materials. When we determine that our gross inventories exceed usage requirements, or if inventories become obsolete or otherwise not saleable, we record a provision for such loss as a component of our inventory accounts. This policy predominantly affects our accounting for indirect inventories.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories consist of the following:

	2001			2000
	(In millions)
Raw materials and work-in-process	$	166.1		$	165.5
Finished goods		25.7			31.3
Gross inventories		191.8			196.8
LIFO reserve		(9.3	)		(9.1	)
Other inventory valuation reserves		(24.5	)		(27.3	)
Net inventories	$	158.0		$	160.4

      Property, Plant and Equipment. Property, plant and equipment consists of the following:

							Estimated
	2001			2000			Useful Lives
							(Years)
	(In millions)
Land	$	17.3		$	15.2			—
Land improvements		11.5			8.7			10-15
Buildings and building improvements		235.8			201.1			15-40
Machinery and equipment		1,372.4			1,101.9			3-15
Construction in progress		282.7			236.9			—
		1,919.7			1,563.8
Accumulated depreciation		(471.0	)		(363.7	)
Property, plant and equipment, net	$	1,448.7		$	1,200.1

      We state property, plant and equipment at cost. Construction in progress includes costs incurred for the construction of buildings and building improvements, and machinery and equipment in process.

      We record depreciation on the straight-line method over the estimated useful lives of depreciable assets, which averaged approximately 13 years in 2001 and 2000. Depreciation amounted to $118.2 million, $100.6 million and $85.5 million in 2001, 2000 and 1999, respectively.

      Acquisitions. Effective July 1, 2001, we adopted FASB Statement No. 141, “Business Combinations.” FASB Statement No. 141 requires that we use the purchase method of accounting for all future business combinations. FASB Statement No. 141 also requires that we recognize certain intangible assets acquired in business combinations as assets apart from goodwill. Our adoption of FASB Statement No. 141 did not impact our financial position or results of operations in 2001.

      In 1999, we acquired two domestic automotive forging companies, Colfor Manufacturing Inc. (“Colfor”) and MSP Industries Corporation (“MSP”), and a majority interest in a joint venture in Brazil which machines forging and driveline components for automotive OEMs for aggregate cash purchase consideration of approximately $239 million. We accounted for these acquisitions using the purchase method of accounting.

      Goodwill. We record goodwill when the purchase price of acquired businesses exceeds the value of their identifiable net tangible and intangible assets acquired. Through December 31, 2001, we amortized goodwill on the straight-line method over periods up to 40 years. We amortized $4.0 million of goodwill in 2001. Accumulated goodwill amortization was $11.7 million at December 31, 2001 and $7.7 million at December 31, 2000.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Effective January 1, 2002, we will adopt FASB Statement No. 142, “Goodwill and Other Intangible Assets.” Under FASB Statement No. 142, we will no longer amortize goodwill. Instead, we will periodically evaluate goodwill and any other acquired intangible assets for impairment. We are in the process of determining the impact of adopting FASB Statement No. 142 and whether it will have a material effect on our results of operations or financial position.

      Impairment of Long-Lived Assets. We periodically review the realization of our long-lived assets, including goodwill, based on an evaluation of remaining useful lives and the current and expected future profitability and cash flows related to such assets.

      Effective January 1, 2002, we will adopt FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” FASB Statement No. 144 supersedes FASB Statement No. 121 as well as certain provisions of APB 30. The main objective of FASB Statement No. 144 is to further clarify certain provisions of FASB Statement No. 121 relating to impairment of long-lived assets. FASB Statement No. 144 also includes more stringent requirements for classifying assets available for disposal and expands the scope of activities that will require discontinued operations reporting. We are in the process of determining the impact of adopting FASB Statement No. 144 and whether it will have a material effect on our results of operations or financial position.

      Stock-Based Compensation. As allowed under FASB Statement No. 123, “Accounting for Stock-Based Compensation,” we account for employee stock options in accordance with APB No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. We measure compensation cost as the excess, if any, of the market price of our common stock at the date of grant over the amount our associates must pay to acquire the stock.

      Derivatives. We adopted FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, on January 1, 2001. FASB Statement No. 133 requires us to recognize all derivatives on the balance sheet at fair value. If a derivative qualifies under FASB Statement No.133 as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value, and changes in the fair value of derivatives that do not qualify as hedges, are immediately recognized in earnings.

      The cumulative effect of adopting FASB Statement No. 133 was to decrease stockholders’ equity by $0.8 million, net of tax. The effect on net income in 2001 was not significant, primarily because the hedges in place as of January 1, 2001 qualified for hedge accounting treatment and were highly effective.

      Currency Translation. We translate the assets and liabilities of our foreign subsidiaries to U.S. dollars at end-of-period exchange rates. We translate the income statement elements of our foreign subsidiaries to U.S. dollars at average-period exchange rates. We report the effect of translation for our foreign subsidiaries that use the local currency as their functional currency as a separate component of stockholders’ equity. Gains and losses resulting from the remeasurement of assets and liabilities of our foreign subsidiary that uses the U.S. dollar as its functional currency are reported in current period income. We also report any gains and losses arising from transactions denominated in a currency other than our functional currency in current period income.

      Use of Estimates. In order to prepare financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts and disclosures in our financial statements. Actual results could differ from those estimates.

      Reclassifications. We have reclassified certain 1999 and 2000 amounts to conform to the presentation of our 2001 financial statements.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.     Long Term Debt and Lease Obligations

      Long-term debt consists of the following:

	2001		2000
	(In millions)
Bank Credit Facilities:
Revolver	$	25.0	$	—
Term Loan		373.0		374.0
Total Bank Credit Facilities		398.0		374.0
Receivables Facility		138.0		120.0
9.75% Notes, net of discount		298.3		298.1
Capital lease obligations		10.8		17.4
Other debt agreements		33.1		7.6
Long-term debt	$	878.2	$	817.1

      Bank Credit Facilities. At December 31, 2001, our Senior Secured Bank Credit Facilities (the “Bank Credit Facilities”) consist of a $378.8 million Revolving Credit Facility (“Revolver”) due October 2004 and a $373.0 million Senior Secured Term Loan Facility (“Term Loan”) due in semi-annual installments of varying amounts through April 2006.

      Borrowings under the Bank Credit Facilities are secured by the capital stock of our significant subsidiaries and all of our assets except for those securing the Receivables Facility and other permitted bank, equipment and lease financings. Borrowings under the Bank Credit Facilities bear interest at rates based on LIBOR or an alternate base rate, plus an applicable margin. At December 31, 2001, $353.8 million was available for future borrowings under the Revolver.

      At December 31, 2001, the weighted average rate of interest on the balances outstanding under the Bank Credit Facilities was 3.9%.

      Receivables Facility. We have established a receivables financing facility (the “Receivables Facility”) through AAM Receivables Corp. (“Receivables Corp.”), a wholly-owned, bankruptcy-remote subsidiary of AAM Inc. Pursuant to the Receivables Facility, AAM Inc. agreed to sell certain trade receivables from time to time to Receivables Corp., which, in turn, transferred all of such receivables to a trust that issued variable funding certificates representing undivided interests in the receivables pool. Under the variable funding certificates, a bank group provided us a revolving financing commitment of up to $153.0 million through October 2003, subject to the terms and conditions of the Receivables Facility. The receivables held by the trust are not available to our general creditors. In accordance with FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” we have accounted for the Receivables Facility as if it were a secured borrowing.

      The Receivables Facility bears interest at rates based on LIBOR or an alternate base rate, plus an applicable margin. Availability under the Receivables Facility depends on the amount of receivables generated by AAM Inc., the rate of collection on those receivables and certain other characteristics of those receivables that affect their eligibility. At December 31, 2001, $138.0 million was outstanding and an additional $15.0 million was available to us under the Receivables Facility.

      The weighted-average interest rate on our borrowings under the Receivables Facility at December 31, 2001 was 3.4%.

      9.75% Notes. In March 1999, AAM Inc. issued $300 million of 9.75% Senior Subordinated Notes Due 2009 (the “9.75% Notes”). Our net proceeds from the issuance of the 9.75% Notes was

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

approximately $288.7 million after deduction of discounts to the initial purchasers, and other fees and expenses.

      The 9.75% Notes are unsecured senior subordinated obligations of AAM Inc. and are fully and unconditionally guaranteed by Holdings. Prior to the maturity date of March 1, 2009, we may redeem the 9.75% Notes beginning on March 1, 2004 at stated redemption prices beginning at 104.875% at March 1, 2004 and decreasing to 100% on March 1, 2007 and thereafter. In addition, we may also redeem up to $105 million of the 9.75% Notes using the proceeds of certain equity offerings through March 1, 2002 at a redemption price of 109.75%.

      Including amortization of the original issue discount, the 9.75% Notes bear interest at 9.875%.

      Leases. We lease certain facilities, machinery and equipment under capital leases expiring at various dates. Approximately $33.9 million and $34.9 million of such gross asset cost is included in property, plant and equipment at December 31, 2001 and 2000, respectively. The weighted-average interest rate on these capital lease obligations at December 31, 2001 was 6.3%.

      We also lease certain facilities, machinery and equipment under operating leases expiring at various dates. All of the leases contain renewal and/or purchase options. Future minimum payments under noncancelable operating leases are as follows: $85.1 million in 2002; $29.5 million in 2003; $26.5 million in 2004; $28.6 million in 2005; $29.4 million in 2006; and $96.7 million thereafter. Our total expense relating to such operating leases was $48.5 million, $45.1 million and $32.6 million in 2001, 2000 and 1999, respectively.

      Other Debt Agreements. We utilize local currency credit facilities to finance the operations of certain foreign subsidiaries. These revolving credit facilities, which are generally secured by the assets of the local subsidiaries, expire at various dates through March 2006. At December 31, 2001, $25.4 million was outstanding and an additional $2.8 million was available to us under these facilities.

      In 2001, we secured the use of uncommitted bank credit lines totaling $40 million. At December 31, 2001, $7 million was outstanding under such Money Market Lines bearing interest at an average rate of 3.3%.

      Debt Covenants. The Bank Credit Facilities and the 9.75% Notes contain various operating covenants which, among other things, impose limitations on our ability to declare or pay dividends or distributions on capital stock, redeem or repurchase capital stock, incur liens, incur indebtedness, or merge, make acquisitions or sell assets. We are also required to comply with financial covenants relating to interest coverage, leverage, retained earnings and capital expenditures. At our option, we may prepay borrowings under the Bank Credit Facilities at any time without penalty, other than breakage costs. We are also subject to mandatory prepayment terms under the Bank Credit Facilities under certain conditions.

      Debt Maturities. Aggregate maturities of long-term debt are as follows (in millions):

2002	$	11.8
2003		142.1
2004		58.5
2005		175.0
2006		189.7
Thereafter		301.1
Total	$	878.2

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      We have sufficient availability to refinance current maturities of long-term debt through the Bank Credit Facilities, the Receivables Facility and the Money Market Lines and have, therefore, classified such obligations as long-term debt at December 31, 2001.

      Net Interest Expense. The following table summarizes supplemental information regarding net interest expense:

	2001			2000			1999
	(In millions)
Gross interest expense	$	73.5		$	77.6		$	70.2
Capitalized interest		(13.2	)		(11.9	)		(8.5	)
Interest income		(0.9	)		(6.9	)		(7.1	)
Net interest expense	$	59.4		$	58.8		$	54.6
Interest paid	$	70.5		$	71.6		$	55.8

3.     Derivatives and Risk Management

      Derivative Financial Instruments. In the normal course of business, we are exposed to market risk, principally associated with changes in foreign currency exchange rates and interest rates. To manage a portion of these inherent risks, we purchase certain types of derivative financial instruments, from time to time, based on management’s judgment of the trade-off between risk, opportunity and cost. We do not hold or issue derivative financial instruments for trading or speculative purposes.

      Currency Forward Contracts. Because most of our business is denominated in U.S. dollars, we do not currently have significant exposures relating to currency exchange risks. We had only a nominal amount of currency hedges in effect during 2001 and, at December 31, 2001, we did not have any currency hedges in place.

      Interest Rate Swaps. We are exposed to variable interest rates on the Bank Credit Facilities, the Receivables Facility and a portion of our sale-leaseback financing. At December 31, 2001, we have hedged a portion of our interest rate risk by entering into interest rate swaps with a notional amount of approximately $45.5 million. These interest rate swaps convert variable financing based on 3-month LIBOR rates into fixed U.S. dollar rates varying from 6.88% to 6.96%. We have designated the interest rate swaps as effective cash flow hedges of the related debt and lease obligations and, accordingly, we have reflected the net cost of such agreements as an adjustment to interest expense over the lives of the debt and lease agreements.

      Fair Value of Financial Instruments. The carrying value of our cash and equivalents, accounts receivable, accounts payable and accrued liabilities approximates their fair values due to the short-term maturities of these assets and liabilities. The carrying value of our borrowings under the Bank Credit Facilities, the Receivables Facility, the Money Market Lines and other foreign debt approximate their fair value due to the frequent resetting of the interest rates. We have estimated the fair value of the 9.75% Notes at December 31, 2001, using available market information, to be approximately $312.0 million.

      Concentrations of Credit Risk. In the normal course of business, we provide credit to customers in the automotive industry. We periodically evaluate the credit worthiness of our customers and we maintain reserves for potential credit losses, which, when realized, have been within the range of our allowance for doubtful accounts. When appropriate, we also diversify the concentration of invested cash among different financial institutions and we monitor the selection of counterparties to other financial instruments to avoid unnecessary concentrations of credit risk.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      With the exception of sales to General Motors Corporation (“GM”), no single customer accounted for more than 10% of our consolidated net sales in any year presented. Sales to GM were approximately 87%, 85% and 86% of our total net sales in 2001, 2000 and 1999, respectively. Accounts receivable due from GM were approximately $230 million at year-end 2001 and approximately $200 million at year-end 2000.

4.     Employee Benefit Plans

      Pension and Other Postretirement Benefits. We sponsor various qualified and non-qualified defined benefit pension plans for our eligible associates. We also maintain hourly and salaried benefit plans that provide postretirement medical, dental, vision and life benefits to our eligible retirees and their dependents in the United States. We provide benefits under collective bargaining agreements to a majority of our hourly associates.

      Actuarial valuations of our benefit plans were made as of September 30, 2001 and September 30, 2000. The following table summarizes the changes in benefit obligations and plan assets and reconciles the funded status of the benefit plans to the net benefit plan liability.

	Pension Benefits						Other Benefits
	2001			2000			2001			2000
	(In millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	196.4		$	156.8		$	115.5		$	90.1
Service cost		21.0			20.2			17.5			18.4
Interest cost		16.4			14.0			10.6			8.5
Plan amendments		0.1			17.3			—			—
Actuarial (gain) loss		17.3			(6.6	)		27.6			(0.6	)
Participant contributions		2.0			1.7			—			—
Adjustment due to measurement date change		—			(1.1	)		—			—
Benefit payments		(3.0	)		(3.1	)		(0.8	)		(0.9	)
Currency fluctuations		(0.9	)		(2.8	)		—			—
Net change		52.9			39.6			54.9			25.4
Benefit obligation at end of year		249.3			196.4			170.4			115.5
Change in plan assets:
Fair value of plan assets at beginning of year		200.5			161.8			—			—
Actual return on plan assets		(33.9	)		13.5			—			—
Employer contributions		35.5			30.5			0.8			0.9
Participant contributions		1.9			1.6			—			—
Adjustment due to measurement date change		—			(0.8	)		—			—
Benefit payments		(3.0	)		(3.1	)		(0.8	)		(0.9	)
Currency fluctuations		(1.2	)		(3.0	)		—			—
Net change		(0.7	)		38.7			—			—
Fair value of plan assets at end of year		199.8			200.5			—			—
Funded status — U.S. plans at September 30		(35.0	)		—			(170.4	)		(115.5	)
Funded status — foreign plan at September 30		(14.5	)		4.1			—			—
Unrecognized actuarial (gain) loss		23.8			(47.3	)		(2.6	)		(31.5	)
Unrecognized prior service cost		18.7			20.3			—			0.1
Fourth quarter contribution		0.4			0.3			0.2			0.2
Net liability at December 31	$	(6.6	)	$	(22.6	)	$	(172.8	)	$	(146.7	)

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Amounts recognized in our balance sheet are as follows:

	Pension Benefits						Other Benefits
	2001			2000			2001			2000
	(In millions)
Prepaid benefit cost	$	0.8		$	—		$	—		$	—
Accrued benefit liability		(39.8	)		(22.8	)		(172.8	)		(146.7	)
Intangible asset		17.7			0.2			—			—
Minimum pension liability adjustment		14.7			—			—			—
Net liability at December 31	$	(6.6	)	$	(22.6	)	$	(172.8	)	$	(146.7	)

	Pension Benefits									Other Benefits
	2001			2000			1999			2001			2000			1999
	(In millions)
Components of net periodic benefit costs:
Service cost	$	21.0		$	20.2		$	21.7		$	17.5		$	18.4		$	21.7
Interest cost		16.4			14.0			10.9			10.6			8.5			7.2
Expected asset return		(17.7	)		(13.8	)		(12.4	)		N/A			N/A			N/A
Amortized gain		(1.7	)		(1.5	)		(0.2	)		(1.2	)		(1.4	)		(0.4	)
Amortized prior service cost		1.7			1.6			0.5			—			—			—
Net benefit cost	$	19.7		$	20.5		$	20.5		$	26.9		$	25.5		$	28.5

      The principal weighted average assumptions used in the valuation of the U.S. and foreign plans were as follows:

	Pension Benefits																		Other Benefits
	2001						2000						1999
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign			2001			2000			1999
Discount rate		7.50	%		6.00	%		8.00	%		6.00	%		7.75	%		6.00	%		7.50	%		8.00	%		7.85	%
Expected return on plan assets		9.25	%		8.00	%		9.25	%		8.00	%		9.25	%		8.00	%		N/A			N/A			N/A
Rate of compensation increase		4.25	%		3.50	%		4.25	%		4.00	%		4.25	%		4.00	%		4.25	%		4.25	%		4.25	%

      For measurement purposes, an 8.0% annual increase in the per-capita cost of covered health care benefits was assumed for 2002. The rate was assumed to decrease gradually to 5.0% for 2008 and remain at that level thereafter. Health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point increase in the assumed health care cost trend rate would have increased total service and interest cost in 2001 and the postretirement obligation by $7.0 million and $36.9 million, respectively. A one-percentage-point decrease in the assumed health care cost trend rate would have decreased total service and interest cost in 2001 and the postretirement obligation by $5.2 million and $28.1 million, respectively.

      Severance Obligations. Pursuant to FASB Statement No. 112, “Employers’ Accounting for Postemployment Benefits,” and in connection with the consolidation of our operations located in the United Kingdom, we have accrued severance benefits payable to approximately 350 associates in 2001. We expensed a total of $10.0 million for such severance benefits in 2001, of which approximately $9.7 million is unpaid and accrued at December 31, 2001. We expect to fund all severance obligations associated with this plan of consolidation by December 31, 2002. Although we may pursue legal remedies or other indemnities to mitigate the financial impact of these severance obligations, we have accrued our best

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimate of the lump-sum benefits that will ultimately be paid to eligible associates upon termination of employment.

      Voluntary Savings Plans. Most of our U.S. associates are eligible to participate in a voluntary savings plan. Our maximum match under these plans is 50% of the first 6% of salaried associate contributions. Matching contributions amounted to $2.0 million, $2.6 million and $1.6 million in 2001, 2000 and 1999, respectively.

      Deferred Compensation Plan. Certain U.S. associates are eligible to participate in a non-qualified deferred compensation plan. We fund a portion of the amounts participants elect to defer in this plan. Our funded portion of the plan amounted to approximately $2.2 million of the $4.8 million liability at December 31, 2001 and approximately $1.4 million of the $2.6 million liability at December 31, 2000.

5.     Stock Options

      At December 31, 2001, we have stock options outstanding under three stock compensation plans approved by our stockholders. Under two of these plans, one of which was amended by our stockholders in 2001, a total of 14.1 million options have been authorized for issuance to our directors, officers and certain other associates in the form of options, stock appreciation rights or other awards that are based on the value of our common stock. The exercise price of the options, rights or other awards issued under these plans will not be less than the fair market value of our common stock on the date of grant. We have granted a total of 8.6 million options under these stock compensation plans at December 31, 2001, which become exercisable based upon duration of employment. The vesting of some of these options can be accelerated subject to the satisfaction of certain performance criteria each year. At December 31, 2001, 0.3 million of these options have been exercised.

      At December 31, 2001, there are also 1.5 million options held by several of our officers that were granted in 1997 as a replacement for an incentive compensation plan established in 1994. These options were immediately vested and are exercisable at a weighted-average exercise price per share of approximately $0.20. A total of 0.3 million options granted under this plan have been exercised prior to December 31, 2001.

      The following table summarizes activity relating to our stock options:

		Number of			Weighted-Average
		Shares			Exercise Price
		(In millions, except per share data)
Outstanding at January 1, 1999			14.3		$	1.68
	Options granted		0.6			15.38
	Options exercised		(6.9	)		0.02
	Options lapsed or canceled		(0.2	)		6.34
Outstanding at December 31, 1999			7.8		$	4.07
	Options granted		1.5			14.85
	Options exercised		(0.4	)		2.93
	Options lapsed or canceled		(0.1	)		7.66
Outstanding at December 31, 2000			8.8		$	5.90
	Options granted		1.6			8.94
	Options exercised		(0.4	)		2.42
	Options lapsed or canceled		(0.1	)		6.09
Outstanding at December 31, 2001			9.9		$	6.54

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Options outstanding at December 31, 2001 have a weighted-average remaining contractual life of approximately 8 years. The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at December 31, 2001:

			Weighted		Number of		Weighted
Range of	Outstanding		Average		Stock Options		Average
Exercise Prices	Stock Options		Exercise Price		Exercisable		Exercise Price
	(In millions, except per share data)
$0.01 – $0.25		1.5	$	0.20		1.5	$	0.20
$4.26		4.8		4.26		3.1		4.26
$8.85		1.5		8.85		—		—
$9.00 – $13.13		0.3		12.39		0.1		12.62
$15.00 – $18.4		0 1.8		15.34		0.8		15.34
		9.9	$	6.54		5.5	$	4.77

      We account for employee stock options in accordance with APB 25. Had we determined compensation cost based upon the fair value of the options at the grant date consistent with the method specified by FASB Statement No. 123, our net income and earnings per share would have been adjusted to the pro forma amounts indicated below:

	2001		2000		1999
	(In millions, except per share
	data)
Net income as reported	$	114.9	$	129.2	$	115.6
Pro forma	$	109.9	$	126.2	$	114.5
Basic earnings per share as reported	$	2.55	$	2.79	$	2.87
Pro forma	$	2.44	$	2.73	$	2.84
Diluted earnings per share as reported	$	2.36	$	2.60	$	2.34
Pro forma	$	2.28	$	2.57	$	2.30

      The fair value of each option was estimated on the date of grant using an option-pricing model with the following assumptions:

	2001			2000			1999
Assumptions:
Expected volatility		52.10	%		39.70	%		38.60	%
Risk-free interest rate		4.91	%		5.64	%		4.74	%
Dividend yield		None			None			None
Expected life of option		7 years			7 years			7 years
Weighted average grant-date fair value	$	5.29		$	7.89		$	6.95

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.     Income Taxes

      The following is a summary of the components of our provision for income taxes:

	2001			2000			1999
	(In millions)
Current:
Federal	$	24.9		$	29.6		$	47.7
Michigan single business tax		4.7			5.5			7.2
Other state and local		(3.8	)		(3.2	)		(0.5	)
Foreign		—			0.7			—
Total current		25.8			32.6			54.4
Deferred:
Federal		38.4			34.5			11.1
Michigan single business tax		(1.3	)		1.5			2.9
Other state and local		3.2			1.1			1.8
Foreign		(0.1	)		4.5			(2.4	)
Total deferred		40.2			41.6			13.4
Total income taxes	$	66.0		$	74.2		$	67.8

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

	2001			2000			1999
Federal statutory		35.0	%		35.0	%		35.0	%
Foreign income taxes		4.2			1.2			0.9
State and local		0.5			1.6			4.5
Federal credits and other		(3.2	)		(1.3	)		(3.4	)
Effective income tax rate		36.5	%		36.5	%		37.0	%

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      The following is a summary of the significant components of our deferred tax assets and liabilities:

	2001			2000
	(In millions)
Current deferred tax assets:
Employee benefits	$	12.4		$	8.5
Accounts receivable		4.2			1.4
Inventory and other		3.1			4.7
Total current deferred tax assets	$	19.7		$	14.6
Noncurrent deferred tax assets:
Employee benefits	$	62.2		$	53.9
NOL carryforwards		20.5			21.2
Tax credit carryforwards		20.0			3.7
Fixed assets		15.3			17.8
Prepaid taxes		11.7			14.2
Goodwill		1.2			1.7
Other		6.3			4.7
Valuation allowance		(31.0	)		(28.7	)
Noncurrent deferred tax assets, net		106.2			88.5
Noncurrent deferred tax liabilities:
Fixed assets		(123.5	)		(72.4	)
Net noncurrent deferred tax (liability) asset	$	(17.3	)	$	16.1

      Noncurrent deferred tax assets and liabilities recognized in our balance sheet are as follows:

	2001			2000
	(In millions)
U.S. Federal deferred tax liability, net	$	(36.7	)	$	—
Other foreign deferred tax asset, net		19.4			—
U.S. Federal and foreign deferred tax asset, net		—			16.1
Net noncurrent deferred tax (liability) asset	$	(17.3	)	$	16.1

      The deferred income tax assets and liabilities summarized above reflect the impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws. At year-end 2001, our net noncurrent foreign deferred tax asset is primarily attributable to $118.7 million of available foreign net operating loss (“NOL”) and capital allowance carryforwards that do not expire. At year-end 2001, our net U.S. Federal deferred tax liability, which is principally attributable to the impact of accelerated tax depreciation, also includes the impact of $13.8 million of U.S. federal R&D tax credit carryforwards that expire between 2018 and 2020.

      Our valuation allowance represents the amount of deferred tax assets that we believe are not likely to be realized. We considered our prior operating results and future plans, as well as the utilization period of other temporary differences, in determining the amount of our valuation allowance.

      Payments for federal, state, local and foreign income taxes were $31.7 million, $43.9 million and $48.8 million in 2001, 2000 and 1999, respectively.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.     Earnings per Share

      The following table sets forth the computation of our basic and diluted earnings per share:

		2001		2000		1999
		(In millions, except per
		share data)
Numerator:
Net income		$	114.9	$	129.2	$	115.6
Denominators:
Basic shares outstanding —
	Weighted-average shares outstanding		45.1		46.3		40.3
Effect of dilutive securities:
	Dilutive stock options		3.6		3.4		9.2
Diluted shares outstanding —
	Adjusted weighted-average shares after assumed conversions		48.7		49.7		49.5
Basic earnings per share		$	2.55	$	2.79	$	2.87
Diluted earnings per share		$	2.36	$	2.60	$	2.34

8.     Commitments and Contingencies

      Obligated purchase commitments for capital expenditures were approximately $95.6 million at December 31, 2001 as compared to $210.2 million at December 31, 2000.

      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 consolidated financial condition, operating results or cash flows.

9.     Related Party Transactions

      In connection with a leveraged recapitalization transaction in 1997 through which Blackstone Capital Partners II Merchant Banking Fund L.P. and certain of its affiliates (collectively “Blackstone”) acquired a majority ownership interest, we entered into an agreement, which was amended in 2001, pursuant to which Blackstone provides certain advisory and consulting services to us. We incurred costs of $4.0 million, $4.6 million and $4.0 million for such services provided by Blackstone in 2001, 2000 and 1999, respectively.

      In December 2000, AAM’s Co-Founder, Chairman of the Board & Chief Executive Officer, Richard E. Dauch, agreed to extend his employment relationship with AAM by two years until December 31, 2006. In connection with this extension, we repurchased approximately 3.1 million shares of common stock from Mr. Dauch, at current market prices, at a total cost of approximately $21.3 million. Mr. Dauch used the proceeds from the sale to pay off a personal loan incurred to pay taxes in connection with an earlier investment in AAM.

10.  Segment and Geographic Information

      We operate in one reportable segment: the manufacture, engineering, validation and design of driveline systems and related components and modules for light trucks, SUVs and passenger cars. Financial information relating to our operations by geographic area is presented in the following table. Net

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

sales are attributed to countries based upon location of customer. Long-lived assets exclude deferred income taxes.

	2001		2000		1999
	(In millions)
Net sales:
United States	$	2,305.9	$	2,291.3	$	2,280.9
Canada		376.1		372.6		405.9
Mexico and South America		299.1		266.1		139.8
Europe and Other		126.1		139.5		126.5
Total net sales	$	3,107.2	$	3,069.5	$	2,953.1
Long-lived assets:
United States	$	1,308.0	$	1,156.5	$	947.0
Other		355.5		229.3		170.1
Total long-lived assets	$	1,663.5	$	1,385.8	$	1,117.1

11.  Unaudited Quarterly Financial Data and Market for the Company’s Common Stock

Quarter Ended		March 31		June 30		September 30		December 31		Full Year
		(In millions, except per share data)
2001:
Net Sales		$	761.1	$	811.0	$	743.5	$	791.6	$	3,107.2
Gross Profit			95.9		114.1		95.7		104.0		409.7
Net income			24.0		34.0		25.5		31.4		114.9
Diluted earnings per share		$	0.51	$	0.72	$	0.51	$	0.62	$	2.36
Market price(1)
	High	$	11.55	$	17.00	$	22.25	$	21.79	$	22.25
	Low	$	7.75	$	8.85	$	10.03	$	12.06	$	7.75
2000:
Net Sales		$	835.9	$	819.7	$	675.5	$	738.4	$	3,069.5
Gross Profit			119.7		120.1		89.1		97.3		426.2
Net income			40.1		40.0		24.2		24.9		129.2
Diluted earnings per share(2)			0.80		0.80		0.48		0.51		2.60
Market price(1)
	High	$	17.00	$	16.88	$	16.00	$	12.56	$	17.00
	Low	$	12.00	$	14.19	$	10.75	$	5.94	$	5.94

(1)	Prices are the quarterly high and low closing sales prices for our common stock as reported by the New York Stock Exchange. We had approximately 482 stockholders of record as of February 15, 2002.
(2)	Full year diluted earnings per share will not necessarily agree to the sum of the four quarters because each quarter is a separate calculation.

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

SELECTED CONSOLIDATED FINANCIAL & OTHER DATA

SEVEN YEAR FINANCIAL SUMMARY

	Year Ended December 31,
	2001			2000			1999			1998(a)			1997			1996		1995
	(In millions, except per share data)
Statement of income data:
Net sales	$	3,107.2		$	3,069.5		$	2,953.1		$	2,040.6		$	2,147.5		$	2,022.3	$	1,968.1
Gross profit		409.7			426.2			388.8			156.4			216.0			172.0		179.5
Selling, general and administrative expenses		164.4			162.6			147.6			106.4			104.0			83.1		70.6
Operating income		241.3			259.4			237.8			49.9			112.0			88.9		108.9
Net interest (expense) income		(59.4	)		(58.8	)		(54.6	)		(44.3	)		(1.8	)		9.4		9.1
Net income		114.9			129.2			115.6			3.5			55.3			61.7		70.6
Diluted earnings per share	$	2.36		$	2.60		$	2.34		$	0.08		$	0.43		$	0.43	$	0.50
Diluted shares outstanding(b)		48.7			49.7			49.5			43.2			126.5			142.5		142.5
Balance sheet data:
Cash and equivalents	$	12.3		$	35.2		$	140.2		$	4.5		$	17.3		$	126.0	$	170.3
Total assets		2,160.9			1,902.5			1,673.2			1,223.9			1,016.7			771.2		737.0
Total long-term debt		878.2			817.1			774.9			693.4			507.0			2.4		1.0
Preferred stock		—			—			—			—			—			200.0		200.0
Stockholders’ equity		534.7			372.0			263.7			40.4			37.2			250.2		168.6
Other data:
EBITDA(c)	$	367.8		$	377.0		$	334.6		$	119.2		$	152.8		$	134.7	$	144.8
Depreciation and amortization		126.6			107.9			89.5			68.8			50.2			36.1		25.2
Capital expenditures		375.5			381.0			301.7			210.0			282.6			162.3		147.1
Net cash provided by operating activities		232.8			252.2			310.3			81.4			200.8			65.7		196.9
Invested capital(d)		1,400.6			1,153.9			898.4			729.3			526.9			326.6		199.3

(a)  The following table sets forth the estimated adverse impact on our 1998 operating results related to the GM work stoppage which occurred in June and July of 1998 and the temporary reduction of certain payments made by GM to us as part of the commercial arrangements between us.

	As		GM		Temporary		As
	Reported		Work		Payment		Adjusted
	1998		Stoppage		Reductions		1998
Net sales	$	2,040.6	$	187.6	$	51.5	$	2,279.7
Gross profit		156.4		71.2		51.5		279.1
Operating income		49.9		71.2		51.5		172.6
EBITDA(c)		119.2		71.2		51.5		241.9

(b)	Pursuant to a migratory merger effected in January 1999 and undertaken in connection with the IPO, each share of American Axle & Manufacturing of Michigan, Inc.’s common stock was converted into 3,945 shares of American Axle & Manufacturing Holdings, Inc. common stock. All share and per share amounts have been adjusted to reflect this conversion.
(c)	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.
(d)	Invested capital represents the sum of total debt and stockholders’ equity (including preferred stock) less cash and equivalents.

EX-21 8 k67860ex21.htm EX-21 SUBSIDIARIES OF THE COMPANY

EXHIBIT 21 — SUBSIDIARIES OF THE COMPANY AS OF MARCH 21, 2002

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

							% Owned by
					Organized		Immediate
Subsidiary					Under Laws of		Parent (1)
American Axle & Manufacturing Holdings, Inc.						Delaware
	American Axle & Manufacturing, Inc.					Delaware		100%
		AAM Receivables Corp.				Delaware		100%
		American Axle International Sales, LTD				U.S. V.I.		100%
		Colfor Manufacturing Inc.				Delaware		100%
		MSP Industries Corporation				Michigan		100%
			MSP Team, LLC			Michigan		99%	(2)
		American Axle & Manufacturing de Mexico Holdings S. de R.L. de C.V.				Mexico		99.99%	(2)
			Guanajuato Gear & Axle de Mexico S. de R.L. de C.V.			Mexico		99.99%	(2)
			American Axle & Manufacturing de Mexico S.A. de C.V.			Mexico		99.99%	(2)
		AAM International Holdings, Inc.				Delaware		100%
			Albion Automotive (Holdings) Limited			Scotland		100%
				Albion Automotive Limited		Scotland		100%
				Farington Components Limited		England		100%
			AAM Comércio e Participações Ltda.			Brazil		99.99%	(2)
				AAM do Brasil Ltda.		Brazil		90%

(1)	All subsidiaries set forth herein are reported in our financial statements through consolidations or under the equity method of accounting; there are no subsidiaries omitted from this list.
(2)	Remaining shares owned by the Company or its subsidiaries.

25 EX-23 9 k67860ex23.txt EX-23 INDEPENDENT AUDITORS' CONSENT EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT To the Board of Directors and Stockholders of American Axle & Manufacturing Holdings, Inc. We consent to the incorporation by reference in Registration Statements Nos. 333-41976 and 333-70466 on Form S-8 and No. 333-83946 on Form S-3 of American Axle & Manufacturing Holdings, Inc. of our reports dated January 23, 2002, appearing in and incorporated by reference in this Annual Report on Form 10-K of American Axle & Manufacturing Holdings, Inc. for the year ended December 31, 2001. /s/ DELOITTE & TOUCHE LLP Detroit, Michigan March 27, 2002 GRAPHIC 10 k67860k67860a1.gif GRAPHIC begin 644 k67860k67860a1.gif M1TE&.#EAFP#2`,3_`/___W]_?U5550```#\_/ZFIJ;^_OY^?G]34U-_?WT!` M0"`@(!\?'V9F9C,S,\S,S!`0$/___P`````````````````````````````` M`````````````````````````"'Y!`$``!$`+`````";`-(`0`7_8"2.9&F> M:*JN;.N^<'P*@T`,1#0,XD[S.N!.""S1!"3?3D0CW')!P2_2M-5ZM27U&M4& ME+5CT/3UC;X$:V"+W#JO-[5L3J_;16AY^<[O^_^`@8*#A(6&AXB)BHLO18R+ M!@$&!P$(D0>1!IF4$0>/+(Z?HJ-UH:2$`@JJJZRMK0L!DH-22+0!`FMK(Z:G M@JFNP*ZPLJ>\O8"_P+#&?>$=1.4)@V)-K9ZC#M%P*))BB71_QG)R`TA#)`0HZ4\>3)E0I:L&(KR MMV@F38LV,>+$M[$8-I\_45XTH9"=3A="$K:ATB;75)XG)DD:&(&K"$T`/:E` MFA1@4*9#B;K<>;0LT*4KTSY]A/7C@[MX\^K5VZ"H";)NS\8=.I>/PPBW<*&H M.T+`WL>/^ZX=`;BLX(]IF?E=`9>>Y\^@0S_Z443+G2&H]3%FRL5/F2$JQ-R1 MG5K,81UBCAB3S0:Q8BW`B?3.?85XK>+(CQ^_<<+T$BW&L3"IU<:TZ.O8LVO? 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EX-10.47

                                                                   EXHIBIT 10.47

                                    AGREEMENT


         THIS AGREEMENT, dated as of December 21, 2001, by and between General
Motors Corporation ("GM") and American Axle & Manufacturing, Inc. ("AAM").

         WHEREAS, AAM and GM have entered into an Agreement, dated as of June
14, 2001, relative to the * * * series program (the "June 14, 2001 Agreement"),
which requires GM to source driveline products to AAM in accordance with the
terms and conditions of that Agreement in order for certain other provisions to
become effective.

         To avoid any doubt or uncertainty in connection with action being taken
by AAM and GM relative to such sourcing, the parties hereto agree as follows:

         1.       GM and AAM agree that the * * * sourcing to AAM for the life
                  of the * * * series program contemplated by Paragraph 3 of the
                  June 14, 2001 Agreement relative to the driveline components
                  described in Paragraph 1.a. of the June 14, 2001 Agreement has
                  been accomplished by Exhibit I to the June 14, 2001 Agreement,
                  except for the actions required by Paragraph 1.c. GM shall
                  include such components in Lifetime Program Contracts between
                  GM and AAM as required in Paragraph 1.c. of the June 14, 2001
                  Agreement as soon as practicable.

         2.       With respect to * * * series program driveline components not
                  listed in Exhibit I, GM and AAM agree that to the best of
                  their respective knowledge, as of this date, such components
                  to which AAM has a right of last refusal as provided for in
                  Paragraph 1.b. of the June 14, 2001 Agreement are limited to
                  the following: i) certain * * * manufactured by Dana
                  Corporation for the * * * series program and ii) modules for
                  the * * * series program. GM and AAM agree that with respect
                  to such modules, the Nomination Letter dated December 21, 2001
                  from GM to AAM, which sources such modules exclusively to AAM
                  for the life of the * * * series program, a copy of which is
                  attached hereto as Exhibit A, shall constitute the exclusive
                  sourcing of such modules to AAM for the life of the * * *
                  series program contemplated in Paragraph 3 of the June 14,
                  2001 Agreement, except for




                  the actions required by Paragraph 1.c. GM shall include such
                  modules in Lifetime Program Contracts between GM and AAM as
                  required by Paragraph 1.c. of the June 14, 2001 Agreement as
                  soon as practicable. With respect to the aforesaid propshafts,
                  GM shall deliver to AAM a 30 day letter for such propshafts on
                  or before January 7, 2002, providing AAM with a right of last
                  refusal with respect to such propshafts in accordance with the
                  AAM/GM 30-Day Letter Procedure, dated as of July 28, 2000,
                  between GM and AAM. To the extent that other * * * series
                  program driveline components not listed in Exhibit I to the
                  June 14, 2001 Agreement are identified or developed, GM shall
                  source such components exclusively to AAM in accordance with
                  Paragraph 1.c. of the June 14, 2001 Agreement without delay
                  after such identification or development.

         3.       In consideration of the foregoing, AAM agrees to pay GM $* * *
                  million by wire transfer as soon as practicable but no later
                  than December 31, 2001. AAM agrees to reduce * * * component
                  prices in accordance with the terms and conditions of the June
                  14, 2001 Agreement as modified hereby effective upon the
                  resolution of AAM's right of last refusal with respect to the
                  aforementioned propshafts and, if applicable, sourcing of the
                  aforementioned propshafts to AAM as provided for in Paragraph
                  3 of the June 14, 2001 Agreement.

         4.       Unless specifically modified by this Agreement, the terms and
                  conditions of the June 14, 2001 Agreement shall remain in full
                  force and effect as originally written.

GENERAL MOTORS CORPORATION                     AMERICAN AXLE &
                                               MANUFACTURING, INC.

By:  /s/ Gloria Jackson                     By:  /s/ Brian W. McPartlin
     ---------------------------------           -------------------------------

Title:  Commodity Manager                   Title: Sales Director - GM Programs
        ------------------------------             -----------------------------
         /s/ Helmut Kittler
         /s/ Barbara Whittaker




                                                    [LOGO]        GENERAL MOTORS
                                               North American Vehicle Operations
                                                            WORLDWIDE PURCHASING


December 21, 2001

Richard F. Dauch
Vice President, Sales
American Axle & Manufacturing, Inc.
2965 Technology Drive
Rochester Hills, MI  48309

RE:  NOMINATION LETTER FOR THE * * * REAR MODULE ASSEMBLY

Dear Rick:

This letter will confirm that American Axle and Manufacturing, Inc. ("AAM") has
been awarded the * * * Rear Module Assembly.

In accordance with the June 14, 2001 Agreement between AAM and General Motors
Corporation ("GM") AAM is hereby designated the sole source, exclusive supplier
of the * * * Rear Module Assembly for the life of the * * * Series program.

This sourcing applies to the * * * Series program and all derivatives thereof
based upon the * * * platform. These modules will be included in a Lifetime
Program Contract between AAM and GM in accordance with paragraph 1c of the
Agreement dated as of June 14, 2001 between AAM and GM as soon as practicable.

Not withstanding the fact that AAM is design responsible for the Rear Module
Assembly as set forth in the June 14, 2001 Agreement, AAM submitted a quote to
GM on December 13, 2001 for the Rear Module Design, based upon the GM design.

AAM and GM agree to work cooperatively together to minimize the cost of the
module as the design for the ultimate product is developed. Please reference the
letter dated December 14, 2001, which outlines all * * * Rear Module piece cost
and investment targets that AAM and GM will jointly work toward achieving.

If you have any questions regarding this letter, please contact me at (586)
492-3690 to discuss.

Sincerely;

/s/ Joe Lentine
/s/ Helmut Kittler

Joe Lentine
Director, Advance Purchasing Metallic
GM NAVO Worldwide Purchasing

cc:      Gloria Jackson
         Helmut Kittler
         David Siemen
         John Glowski
         Barbara Whittaker

        North American Vehicle Operations MC 483-550-200 1999 Centerpoint
                         Parkway Pontiac, MI 48341-3150




                                                        [LOGO]    GENERAL MOTORS
                                                          WWP-Advance Purchasing


December 14, 2001



Rick Dauch
Vice President, Sales
American Axle & Manufacturing


Subject:  Sourcing Letter for * * * IRS Module

Dear Rick:

This letter confirms that GM designates AAM as the Tier I for all * * * business
that replaces business AAM currently has on the * * * including the IRS
sub-assembly.

AAM and GM agree to work cooperatively together to minimize the cost of the
module as the design for the ultimate product is developed, working toward a
cost target of $1.185M and an investment target of $9.2M.

If you have any questions regarding this letter please contact me at (586)
492-3690 to discuss.

Sincerely,

/s/ Joe T. Lentine
/s/ Helmut Kittler

Joseph T. Lentine
Director -- Advance Purchasing -- Metallic

cc:      Gloria Jackson
         David Siemen
         Barbara Whittaker
         John Glowski
         Helmut Kittler





   Chevrolet Central Office Building, 30007 Van Dyke Avenue, M/C 480-205-201,
                             Warren, MI 48090-9065

* Portions of this Exhibit 10.47 were omitted and filed separately with the
Secretary of the Securities and Exchange Commission (the "Commission") pursuant
to an application for confidential treatment filed with the Commission pursuant
to Rule 406 under the Securities Act of 1933, as amended. Such portions are
marked by the symbol "* * *".

EX-10.48

                                                                   EXHIBIT 10.48

AMENDMENT TO MONITORING AGREEMENT DATED AS OF OCTOBER 29, 1997 BETWEEN AMERICAN
 AXLE & MANUFACTURING OF MICHIGAN, INC. AND BLACKSTONE MANAGEMENT PARTNERS L.P.

         This Amendment (the "Amendment") to the Monitoring Agreement dated as
of October 29, 1997 between American Axle & Manufacturing of Michigan, Inc. and
Blackstone Management Partners L.P. (the "Agreement") is entered into as of the
19th day of November, 2001, by and between American Axle & Manufacturing
Holdings, Inc., a Delaware corporation, successor by merger of American Axle &
Manufacturing of Michigan, Inc., a Michigan corporation, (the "Company") and
Blackstone Management Partners L.P., a Delaware limited partnership
("Blackstone").

         For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:

1. Commencing on January 1, 2002 (the "Effective Date"), Section 3 of the
Agreement is deleted and replaced in its entirety with the following:

         3. Fees. In consideration of the services contemplated by Section 2,
         for the remaining term of this Agreement, commencing with payments due
         following the Effective Date, the Company and its successors agree to
         pay to Blackstone an annual monitoring fee (the "Monitoring Fee") which
         will be paid in advance in semi-annual equal installments on March 31
         and September 30 of each year. The Monitoring Fee shall be based upon
         Blackstone's percentage ownership of the voting common stock of the
         Company ("Blackstone Ownership %") in accordance with the following
         schedule:



         Blackstone Ownership %                             Annual Fee
         ----------------------                             ----------
                                                  
          Current ownership         46.9%               $     3.5 million
                  Less than         45.0%               $     3.4 million
                  Less than         40.0%               $     3.0 million
                  Less than         35.0%               $     2.6 million
                  Less than         30.0%               $     2.2 million
                  Less than         25.0%               $     1.8 million
                  Less than         20.0%               $     1.4 million
                  Less than         15.0%               $     1.0 million
                  Less than         10.0%               $     0.6 million
                  Less than          5.0%               $     0.2 million
                                     0.0%               $     0.0 million


         Provided, however, that no change in the annual fee based upon a change
         in Blackstone Ownership % in accordance with the forgoing schedule
         shall be effective until a divestiture of Company stock by Blackstone.
         By way of illustration, but not of limitation, dilution through option
         exercises or other equity transactions will not trigger fee decreases
         but will be taken into account in determining the Blackstone Ownership
         % when Blackstone divests of Company stock.


2. Commencing on the Effective Date, Section 7 of the Agreement is deleted and
replaced in its entirety with the following:

         7. Term. This Agreement shall be effective as of the Effective Date and
         shall continue until such time as Blackstone and its affiliates
         beneficially own no Company stock, at which time the Agreement,
         including this Amendment, shall terminate (such termination date, the
         "Termination Date"), provided that section 4 shall remain in effect
         with respect to Out-of-Pocket Expenses incurred prior to the
         Termination Date. The provisions of Sections 5 and 9, and otherwise as
         the context so requires, shall survive the termination of this
         Agreement.

3. Except as otherwise expressly provided in this Amendment, the Agreement shall
remain in full force and effect as originally written. Words and phrases defined
in the Agreement shall have the same meaning(s) when used in this Amendment
unless redefined herein. In the event of a conflict between the terms and
conditions of the Agreement and this Amendment, the terms and conditions of this
Amendment shall control.

4. This Amendment constitutes the entire agreement of the parties with respect
to the subject matter hereof and supersedes any and all prior agreements,
whether written or oral, pertaining to the subject matter contained herein. Any
addition, deletion, or modification of any kind to this Amendment shall only be
binding upon the parties if evidenced through a written document signed by an
authorized representative of each party hereto.

5. This Amendment may be executed in two (2) or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

         IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the date first written above.


American Axle & Manufacturing                Blackstone Management Partners L.P.
Holdings, Inc.                               By Blackstone Management Partners
                                             L.L.C., its General Partner


By:      /s/ Robin J. Adams                  By:    /s/ Robert L. Friedman
         ------------------                         ----------------------
Name:    Robin J. Adams                      Name:  Robert L. Friedman
Title:   Executive VP & CFO                  Title: Member



                                       2

EX-10.49

                                                                   EXHIBIT 10.49

                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT



         SECONDED AMENDMENT, dated as of December 10, 2001, to the Employment
Agreement (the "Agreement"), dated as of November 6, 1997, by and between
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC., a Delaware corporation (the
"Company"), and Richard E. Dauch (the "Employee"):

1. The second sentence of Section 1 of the Agreement is hereby amended to read
in its entirety as follows:

                  "The assignment shall be as Co-Founder, Chairman & Chief
                  Executive Officer."

2. Section 3(a) of the Agreement is hereby amended to read in its entirety as
follows:

                           "(a) Base Salary. The Company will pay Employee a
                  salary effective March 1, 2001 at a per annum rate of Nine
                  Hundred and Thirty Five Thousand United States Dollars (U.S.
                  $935,000), payable in accordance with the Company's customary
                  payroll procedures for senior executives (the `Annual Base
                  Salary')."





3. Section 2 of Exhibit A to the Agreement is hereby amended to read in its
entirety as follows:

                  "2. Determination of Annual Cash Bonus.

                           The Annual Cash Bonus shall be determined as of each
                  Measurement Date for the calendar year ending on such
                  Measurement Date pursuant to the following:

                           (a) If the Company continues to outperform the
                  financial performance of the Company's industry peer group,
                  Employee's Annual Cash Bonus shall equal three times the
                  amount of the Employee's then Annual Base Salary."

                           (b) If the Company's financial performance equals or
                  is less than the financial performance of the Company's
                  industry peer group, Employee's Annual Cash Bonus shall be an
                  amount up to the amount of the Employee's then Annual Base
                  Salary as determined by the Compensation Committee of the
                  Company's Board of Directors.




                                       2


                           (c) If the Company's financial performance
                  outperforms the Company's industry peer group by an amount
                  greater than it has historically, Employee's Annual Cash Bonus
                  shall be an amount in excess of the amount set forth in
                  Section 2(a) hereof as determined by the Compensation
                  Committee of the Company.

                           (d) The metrics for assessing financial performance
                  under this Agreement shall be set jointly by the Compensation
                  Committee of the Board and the Employee and reviewed no less
                  than every three years for consistency with creating value for
                  the Company's shareholders.

4. Exhibit B to the Agreement shall be amended to add the following:

                  "3. Company shall grant to Employee 300,000 stock options each
                  year during the term of this Agreement, which annual grant
                  amount shall be subject to review and increase by the
                  Compensation Committee of the Company's Board of Directors and
                  the Employee upon any major changes to the Company's corporate
                  structure."



                                       3


5. As modified by this Second Amendment, the Agreement as previously amended,
shall continue in full force and effect in accordance with its terms.

6. The Supplemental Compensation Agreement dated December 20, 2000 between the
Company and the Employee shall continue in full force and effect as originally
written unaffected by the terms of this Second Amendment to the Agreement.

         IN WITNESS WHEREOF, the parties hereto have here unto set their hands
and seal as of the day and year first above written.


                                        AMERICAN AXLE &
                                        MANUFACTURING HOLDINGS, INC.



/s/ Richard E. Dauch                    By: /s/ Thomas K. Walker
- --------------------                        --------------------
Richard E. Dauch                        Title: Chairman of the Compensation
                                               Committee






                                       4

EX-12

ex12

EX-13

ex13

EX-21

ex21

EX-23

                                                                      EXHIBIT 23



INDEPENDENT AUDITORS' CONSENT


To the Board of Directors and Stockholders of
American Axle & Manufacturing Holdings, Inc.

We consent to the incorporation by reference in Registration Statements Nos.
333-41976 and 333-70466 on Form S-8 and No. 333-83946 on Form S-3 of American
Axle & Manufacturing Holdings, Inc. of our reports dated January 23, 2002,
appearing in and incorporated by reference in this Annual Report on Form 10-K
of American Axle & Manufacturing Holdings, Inc. for the year ended December
31, 2001.

/s/ DELOITTE & TOUCHE LLP


Detroit, Michigan
March 27, 2002