DETROIT — American Axle & Manufacturing Holdings (AAM) has reported its sales and earnings for the first quarter of 2006.

AAM’s earnings in the first quarter of 2006 were $8.6 million or 17 cents per share. This compares to earnings of $13.3 million or 26 cents per share in the first quarter of 2005. AAM’s earnings in the first quarter of 2006 include a favorable tax adjustment of $3.1 million, or 6 cents per share, related to the settlement of federal and state tax liabilities from prior years. AAM’s first quarter results also reflect a $10.4 million increase in non-cash expenses related to depreciation and amortization, pension and post-retirement benefits and stock-based compensation.

Net sales in the first quarter of 2006 were $834.8 million as compared to $818.9 million in the first quarter of 2005. Non-GM sales increased by more than 20 percent to $203.6 million in the first quarter of 2006 as compared to the first quarter of 2005. Non-GM sales represented 24 percent of AAM’s total sales in the first quarter of 2006.

“AAM is on track to deliver significant cash flow gains in 2006,” said AAM’s Co-Founder, Chairman of the Board and Chief Executive Officer Richard Dauch. “AAM’s new product launches in 2006 are progressing very well. We are encouraged by the initial market acceptance of GM’s new full-size SUVs and look forward to supporting the launch of GM’s new full-size pick-ups later this year. AAM is also supporting the launch of new products for The Chrysler Group, Sangyong Motors, Hino, Jatco, Koyo and Harley Davidson in 2006. These important new relationships are quickly expanding AAM’s customer base and product diversification.”

AAM sales in the quarter reflect an estimated 8 percent increase in customer production volumes for the major full-size truck and SUV programs it currently supports for GM and The Chrysler Group. AAM estimates that customer production volumes for its mid-sized light truck and SUV programs were down 11 percent in the quarter on a year-over-year basis.

AAM’s content per vehicle increased by nearly 2 percent to $1,205 in the first quarter of 2006 as compared to $1,183 in the first quarter of 2005. Production mix shifts favoring AAM’s axles and driveline systems for the full-size light truck and SUV market and the four-wheel-drive HUMMER H3 in the mid-size SUV segment were the primary drivers of content growth in the quarter.

Gross margin in the first quarter of 2006 was 7.6 percent as compared to 8.8 percent in the first quarter of 2005. Operating income was $15.1 million or 1.8 percent of sales in the quarter as compared to $25.7 million or 3.1 percent of sales in the first quarter of 2005.

AAM’s lower gross margin and operating income performance in the first quarter of 2006 primarily reflects the impact of higher non-cash expenses related to depreciation and amortization, pension and postretirement benefits and stock-based compensation. Higher fringe benefit costs, including supplemental unemployment benefits paid to certain of AAM’s hourly associates, also pressured margins in the quarter.

AAM’s SG&A spending was up $1.8 million in the first quarter of 2006 to $48.4 million as compared to $46.6 million in the first quarter of 2005. AAM increased its R&D spending in the quarter by 9.7 percent on a year-over-year basis. Increased spending to support its expanded foreign business and technical offices, as well as higher non-cash expenses related to pension and post-retirement benefits and stock-based compensation also increased AAM’s SG&A costs in the quarter.

AAM defines free cash flow to be net cash provided by (or used in) operating activities less capital expenditures and dividends paid. Net cash provided by operating activities in the first quarter of 2006 was $7 million as compared to a use of $34.1 million in the first quarter of 2005. Capital spending was up $6 million in the first quarter of 2006 on a year-over-year basis to $80.8 million. Reflecting the impact of this activity and dividend payments of $7.7 million, AAM’s free cash flow in the first quarter of 2006 improved by nearly $35 million as compared to the first quarter of 2005.

For more information about AAM, go to: www.aam.com .

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