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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the transition period from       to      

Commission file number 1-14303

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.

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.

The number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of July 29, 2002, the latest practicable date, was 48,604,810 shares.

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     Certain statements in this Quarterly Report on Form 10-Q (“Form 10-Q”) 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 Quarterly 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 customer’s products (particularly GM’s light trucks and SUVs);
	•		reduced purchases of our products by GM or 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 ability to attract and retain key associates;
	•		our ability to maintain satisfactory labor relations and avoid work stoppages;
	•		our customers’ ability to maintain satisfactory labor relations and avoid work stoppages;
	•		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 may hinder our ability to compete.

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

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Item 1. Financial Statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to condensed consolidated financial statements.

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to condensed consolidated financial statements.

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to condensed consolidated financial statements.

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002

1.		Organization and Basis of Presentation
		Organization. American Axle & Manufacturing Holdings, Inc. (“Holdings”) and its subsidiaries (collectively, “we”, “us”, “AAM” or the “Company”), is a Tier 1 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. 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 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), we also have 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. Holdings has no other subsidiaries other than AAM Inc.
		Basis of Presentation. We have prepared the accompanying interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended. These financial statements are unaudited but include all adjustments, consisting only of recurring items, except as noted, which we consider necessary for a fair presentation of the information set forth herein. Results of operations for the periods presented are not necessarily indicative of the results for the full fiscal year. We have reclassified certain 2001 amounts to conform to the presentation of our 2002 financial statements.
		The balance sheet at December 31, 2001 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2001.
2.		Inventories
		We state inventories at the lower of cost or market. Cost is determined principally using the last-in first-out method (LIFO). We classify perishable tooling, repair parts and other materials consumed in the manufacturing process but not incorporated into our finished products as raw materials.

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Inventories consist of the following:

3.		Long-Term Debt
		Long-term debt consists of the following:

4.		Secondary Offering of Common Stock
		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. We did not sell any shares and did not receive any of the proceeds from the sale of shares by the selling stockholders.
		After completion of the offering on March 27, 2002, Blackstone beneficially owned approximately 27% of our common stock.
		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 our common stock.

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.		Earnings Per Share
		The following table sets forth the computation of basic and diluted earnings per share:

6.		Comprehensive Income
		Comprehensive income consists of the following:

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.		Adoption of FASB Statement No. 142
		We adopted FASB Statement No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002. Under FASB Statement No. 142, we no longer amortize goodwill. Instead, we will periodically evaluate goodwill and any other acquired intangible assets for impairment.
		The following sets forth a reconciliation of net income and earnings per share information for the three months ended June 30, 2002 (“second quarter of 2002”) and the six months ended June 30, 2002 (“first half of 2002”) as compared to the three months ended June 30, 2001 (“second quarter of 2001) and the six months ended June 30, 2001 (“first half of 2001”), respectively, adjusted for the adoption of FASB Statement No. 142.

Under the transitional provisions of FASB Statement No. 142, we completed our initial goodwill impairment test in the second quarter of 2002. No impairment was indicated as a result of our goodwill impairment test.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

This management’s discussion and analysis (MD&A) should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2001.

Unless the context otherwise requires, references to “we”, “us,” “AAM” or the “Company” shall mean collectively (i) American Axle & Manufacturing Holdings, Inc. (“Holdings”), a Delaware corporation, and (ii) American Axle & Manufacturing, Inc. (“AAM Inc.”), a Delaware corporation, and its direct and indirect subsidiaries. Holdings has no other subsidiaries other than AAM Inc.

COMPANY OVERVIEW

We are a premier Tier 1 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 addition to our 14 locations in the United States (in Michigan, New York and Ohio), we also have offices and facilities in Brazil, England, Germany, Japan, Mexico and Scotland.

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 the second quarter of 2002. 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 increased 14.5% to $1,551.0 million, in the first half of 2002 as compared to $1,355.0 million in the first half of 2001. Sales to GM represented approximately 89% of our total sales in the first half of 2002 as compared to 86% in the first half of 2001 and 87% for the full year 2001.

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.

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We also supply driveline systems and other related components to DaimlerChrysler, Ford Motor Company, Nissan, Renault, Delphi Automotive, PACCAR and other original equipment manufacturers (“OEMs”) and Tier I supplier companies. Our sales to customers other than GM were $189.5 million in the first half of 2002 as compared to $217.1 million in the first half of 2001. We expect our sales to customers other than GM to grow significantly in the second half of 2002 and in 2003 as we launch several new high-volume 4WD/AWD driveline products for DaimlerChrysler and other OEMs and Tier 1 supplier companies. The most significant of these new product programs is our launch of new products to support 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.

RESULTS OF OPERATIONS—THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30, 2001

Net Sales. Net sales increased to $881.3 million in the second quarter of 2002 as compared to $811.0 million in the second quarter of 2001. This 9% increase in sales in the second quarter of 2002 compares to an estimated 7% increase in N.A. light vehicle production and a 19% increase in light truck production by GM. A 12% reduction in sales to customers other than GM also impacted our sales growth in the second quarter of 2002.

Our content-per-vehicle decreased approximately 1.8% to $1,101 in the second quarter of 2002 as compared to $1,121 in the second quarter of 2001. The penetration rate of our 4WD/AWD systems increased to 55.3% in the second quarter of 2002 as compared to 54.0% in the second quarter of 2001. Both the decrease in content-per-vehicle and the increase in 4WD/AWD penetration are primarily attributable to a product mix shift in GM light truck production. Most of our unit volume growth in the second quarter of 2002 as compared to the second quarter of 2001 was related to an increase in production of GM’s mid-sized SUVs, such as as the Chevrolet Trailblazer and GMC Envoy. Although these vehicles carry a higher-than-average 4WD/AWD penetration rate, these products generate a lower-than-average content-per-vehicle, which impacted our sales growth in the second quarter of 2002.

Gross Profit. Gross profit increased approximately 15.2% to $131.5 million in the second quarter of 2002 as compared to $114.1 million in the second quarter of 2001. Gross margin increased to 14.9% of sales in the second quarter of 2002 as compared to 14.1% in the second quarter of 2001. The increases in gross profit and gross margin were primarily due to the impact of higher production volumes, productivity gains and tight cost controls, including reductions in purchased material costs.

Selling, General and Administrative Expenses (“SG&A”). SG&A (including research and development) increased to $44.5 million or 5.0% of sales in the second quarter of 2002 as compared to $42.3 million or 5.2% of sales in the second quarter of 2001. Almost all of this increase was due to increased profit-sharing accruals resulting from our increased profitability as compared to the second quarter of 2001.

Research and development spending (“R&D”) was $13.4 million in the second quarter of 2002, approximately the same as the $13.6 million we reported for the second quarter of 2001. Although our R&D spending in the second quarter of 2002 was down slightly from the second quarter of 2001, R&D spending for the first half of 2002 is up 3% and we expect to increase our R&D spending on a full year basis in 2002. The focus of this increasing investment continues to be our development of new product, process and systems technologies to improve the efficiency and flexibility of our operations in order to continue to deliver innovative new products, modules and integrated driveline systems to our customers.

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The development and continuing enhancement of our independent front and rear drive chassis suspension modules (“IFDA” and “IRDA”) and several rear axle systems featuring 4-wheel steering (including our new I-Ride Chassis Modules and a multi-link rear-steerable beam axle) are current examples of high value-added technology-based products that have resulted from our commitment to improve the performance and design flexibility of customers’ products. As a result of our commitment to these and other R&D initiatives, we generated more than 70% of our total sales in the second quarter of 2002 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 the second half of 2002 as we complete the launch of 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), Isuzu’s new mid-sized SUV (Ascender), GM’s new full-size vans, and the Hummer “H2” sport-utility truck (“SUT”). In 2003, we will launch new 4WD/AWD driveline products to support the new GM and Isuzu mid-sized pick-up trucks that will replace the current Chevrolet S-10, GMC Sonoma and Isuzu Hombre models.

Operating Income. Operating income increased approximately 23% to $87.0 million in the second quarter of 2002 as compared to $70.8 million in the second quarter of 2001. Operating margin increased to 9.9% in the second quarter of 2002 as compared to 8.7% in the second quarter of 2001. The increases in operating income and operating margin were primarily due to the factors discussed above relating to the increase in gross profit, partly offset by higher SG&A expenses.

Operating income was also favorably impacted by our adoption of FASB Statement No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002. Under FASB Statement No. 142, we no longer amortize goodwill. Instead, we will periodically evaluate goodwill and any other acquired intangible assets for impairment. The impact of no longer amortizing goodwill resulted in a $1.0 million increase in operating income in the second quarter of 2002.

EBITDA. Income from continuing operations before interest expense, income taxes, depreciation and amortization (“EBITDA”) increased approximately 19.4% to $122.4 million in the second quarter of 2002 as compared to $102.5 million in the second quarter of 2001. EBITDA margin increased to 13.9% in the second quarter of 2002 as compared to 12.6% in the second quarter of 2001. The increases in EBITDA and EBITDA margin were primarily due to the factors discussed above relating to the increase in gross profit, partly offset by higher SG&A expenses.

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.

Net Interest Expense. Net interest expense was $12.2 million in the second quarter of 2002 as compared to $16.9 million in the second quarter of 2001. We have reduced our borrowings in 2002 as a result of our increased operating cash flow and lower capital spending levels. Net interest expense was also favorably impacted by the lower average interest rates in effect in the second quarter of 2002.

Income Tax Expense. Income tax expense was $27.3 million in the second quarter of 2002 as compared to $20.0 million in the second quarter of 2001. Our effective income tax rate was approximately 36% in the second quarter of 2002 and 37% in the second quarter of 2001.

Net Income and Earnings Per Share. Net income increased approximately 43% to $48.6 million in the second quarter of 2002 as compared to $34.0 million in the second quarter of 2001. Diluted earnings per share increased to $0.92 in the second quarter of 2002 as compared to $0.72 in the second quarter of 2001.

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RESULTS OF OPERATIONS—SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO SIX MONTHS ENDED JUNE 30, 2001

Net Sales. Net sales increased to $1,740.5 million in the first half of 2002 as compared to $1,572.1 million in the first half of 2001. This 11% increase in sales in the first half of 2002 compares to an estimated 5% increase in N.A. light vehicle production and a 19% increase in light truck production by GM. A 13% reduction in sales to customers other than GM also impacted our sales growth in the first half of 2002.

Our content-per-vehicle was $1,118 in the first half of 2002 and $1,119 in the first half of 2001. The penetration rate of our 4WD/AWD systems increased to 57.3% in the first half of 2002 as compared to 53.8% in the first half of 2001. Both the decrease in content-per-vehicle and the increase in 4WD/AWD penetration are primarily attributable to a product mix shift in GM light truck production. Most of our unit volume growth in the first half of 2002 as compared to the first half of 2001 was related to an increase in production of GM’s mid-sized SUVs, such as the Chevrolet Trailblazer and GMC Envoy. Although these vehicles carry a higher-than-average 4WD/AWD penetration rate, these products generate a lower-than-average content-per-vehicle, which impacted our sales growth in the first half of 2002.

Gross Profit. Gross profit increased approximately 19% to $250.2 million in the first half of 2002 as compared to $210.0 million in the first half of 2001. Gross margin increased to 14.4% of sales in the first half of 2002 as compared to 13.4% in the first half of 2001. The increases in gross profit and gross margin were primarily due to the impact of higher production volumes, productivity gains and tight cost controls, including reductions in purchased material costs.

Selling, General and Administrative Expenses. SG&A (including research and development) increased to $90.7 million or 5.2% of sales in the first half of 2002 as compared to $83.7 million or 5.3% of sales in the first half of 2001. Most of this increase was due to the costs associated with our secondary stock offering in March 2002 and increased profit-sharing accruals resulting from our increased profitability as compared to the first half of 2001.

R&D spending increased approximately 3% to $27.1 million in the first half of 2002 as compared to $26.4 million in the first half of 2001. The increase in our R&D spending in the first half of 2002 as compared to the first half of 2001 was primarily due to the factors discussed above relating to the expected increase in R&D spending for the full year 2002. We generated approximately 72% of our total sales in the first half of 2002 from newer technology-based products introduced by us in the North American light vehicle market since July 1998.

Operating Income. Operating income increased approximately 28% to $159.5 million in the first half of 2002 as compared to $124.3 million in the first half of 2001. Operating margin increased to 9.2% in the first half of 2002 as compared to 7.9% in the first half of 2001. The increases in operating income and operating margin were primarily due to the factors discussed above relating to the increase in gross profit, partly offset by higher SG&A expenses.

Operating income was also favorably impacted by our adoption of FASB Statement No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002. Under FASB Statement No. 142, we no longer amortize goodwill. Instead, we will periodically evaluate goodwill and any other acquired intangible assets for impairment. The impact of no longer amortizing goodwill resulted in a $2.0 million increase in operating income in the first half of 2002.

EBITDA. EBITDA increased approximately 21% to $226.9 million in the first half of 2002 as compared to $187.1 million in the first half of 2001. EBITDA margin increased to 13.0% in the first half of 2002 as compared to 11.9% in the first half of 2001. The increases in EBITDA and

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EBITDA margin were primarily due to the factors discussed above relating to the increase in gross profit, partly offset by higher SG&A expenses.

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.

Net Interest Expense. Net interest expense was $23.8 million in the first half of 2002 as compared to $32.5 million in the first half of 2001. We have reduced borrowings in 2002 as a result of our increased operating cash flow and lower capital spending levels. Net interest expense was also favorably impacted by the lower average interest rates in effect in the first half of 2002.

Income Tax Expense. Income tax expense was $49.1 million in the first half of 2002 as compared to $33.4 million in the first half of 2001. Our effective income tax rate was approximately 36% in the first half of 2002 and 36.5% in the first half of 2001.

Net Income and Earnings Per Share. Net income increased approximately 51% to $87.4 million in the first half of 2002 as compared to $58.0 million in the first half of 2001. Diluted earnings per share increased to $1.68 in the first half of 2002 as compared to $1.23 in the first half of 2001.

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.

Cash Flow from Operations. Net cash provided by operating activities increased to $189.5 million in the first half of 2002 as compared to $24.3 million in the first half of 2001. After adjusting our earnings for the impact of noncash charges other than changes in operating assets and liabilities, we generated $39.9 million of additional operating cash flow in the first half of 2002 as compared to the first half of 2001.

A major factor in our improved operating cash flow performance was the impact of our final change in payment terms with GM on March 1, 2001 from net 20 days to net 25^th proximo. That change in payment terms adversely impacted our operating cash flow in the first quarter of 2001 by approximately $90 million. Our operating cash flow in the first half of 2002 also benefited from reduced funding of supplier payments and other accrued expenses. The primary driver of the reduced funding requirement for supplier payments was the significant reduction in capital spending in the second half of 2001 and the first half of 2002 as compared to the much higher rates of spending we incurred in the second half of 2000 and the first half of 2001.

Inventories at June 30, 2002 reflect increases as compared to year-earlier levels that were necessary to support new product launches, including the Dodge Ram program. We have also elected to increase stocks of certain components to manage daily production volumes and avoid premium operating costs in advance of unusually high customer demand for certain products in the third quarter of 2002.

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Investing Activities. Capital expenditures were $116.8 million in the first half of 2002 as compared to $239.8 million in the first half of 2001. As discussed above, we significantly reduced the rate of capital spending beginning 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 2002 include our investment to support the Dodge Ram program and GM’s launch of the new extended versions of its mid-sized SUVs, 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 2002 also includes the construction of a forging facility and sequencing center adjacent to our Silao, Mexico manufacturing facility (“Guanajuato Gear & Axle”). Although we will continue to make strategic investments to support new manufacturing processes, systems and technologies, and to improve product designs and achieve operating cost reductions, we will be able to reduce future capital spending because we have substantially completed the process of rebuilding our facilities to support our long-term production requirements.

Financing Activities. Net cash used by financing activities was $76.9 million in the first half of 2002 as compared to a net source of $181.9 million in the first half of 2001. Total long-term debt outstanding decreased by $83.9 million in the first half of 2002 to $794.3 million at June 30, 2002. Improved operating cash flow performance and a lower level of capital spending were the primary reasons why our net borrowings were lower in the first half of 2002 as compared to the first half of 2001.

With respect to the Bank Credit Facilities, $372.5 million was outstanding under the Term Loan at June 30, 2002. At June 30, 2002, we had additional borrowing capacity of $378.8 million under the Bank Credit Facilities, all of which was available under the Revolver. Additionally at June 30, 2002, $83.0 million was outstanding and an additional $70 million was available to us under the Receivables Facility.

The weighted average interest rate of our long-term debt outstanding was approximately 6.0% at June 30, 2002 and December 31, 2001.

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

After completion of the offering on March 27, 2002, Blackstone beneficially owned approximately 27% of our common stock.

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 our common stock.

Credit Ratings Upgrade. In March 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.

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

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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 approximately a one-week shutdown in December. In addition, 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.

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 adverse effect on our financial condition, results of operations or cash flow.

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 flow or competitive position in the foreseeable future.

EFFECT OF NEW ACCOUNTING STANDARDS

FASB Statement No. 142. As noted above, we adopted FASB Statement No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002. Under the transitional provisions of FASB Statement No. 142, we completed our initial goodwill impairment test in the second quarter of 2002. No impairment was indicated as a result of our goodwill impairment test.

FASB Statement No. 144. Effective January 1, 2002, we adopted 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 Opinion No. 30. The main objective of FASB Statement No. 144 is to further clarify certain provisions of FASB Statement No. 121 relating to the 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. The adoption of FASB Statement No. 144 did not have a significant impact on our results of operations or financial position in the first half of 2002.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

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 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 and, at June 30, 2002, we did not have any material 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 the 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 had 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.

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.

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Item 4. Submission of Matters to a Vote of Security Holders

Our annual meeting of stockholders was held on May 16, 2002 for the purpose of electing directors and approving the appointment of our independent auditors. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management’s solicitation. Each of management’s nominees for directors as listed in the proxy statement were elected with the number of votes set forth below:

In addition to the directors listed above, returning members of the Board of Directors include:

The results of the other matter voted upon at the annual meeting are as follows:

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Item 6. Exhibits and Reports on Form 8-K.

(a)		Exhibits
		Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index hereto.
(b)		Reports on Form 8-K
		During the quarter ended June 30, 2002, we did not file a Current Report on Form 8-K.
		On June 27, 2002, the Securities and Exchange Commission issued an Order requiring the filing of sworn statements pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934. On August 1, 2002, we filed a Current Report on Form 8-K for the purpose of filing the sworn statements of Richard E. Dauch, Co-Founder, Chairman of the Board of Directors and Chief Executive Officer, and Robin J. Adams, Executive Vice President — Finance and Chief Financial Officer pursuant to such Order.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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EXHIBIT INDEX