Financial Overview

(in million dollars)

	FY2008	FY2007	Rate of change (%)	Remarks
Sales	2,109	3,248.2	(35.1)	-Sales in 2008 reflect a decrease of approximately 41% in production volumes for the major full-size truck and SUV programs the Company currently supports for GM and Chrysler and a decrease of approximately 53% in production volumes for the products supporting GM's mid-size light truck and SUV programs. -A strike called by UAW had a significant adverse impact on the results of operations for the first six months of FY2008
Gross profit	(865.2)	278.4	-	-

NOTE: In the Company's annual report on FY2008, the public accounting firm cited factors that raise substantial doubt about the Company's ability to continue as a going concern.

Impact of the Strike Called by UAW
- On February 25, 2008, the four-year master labor agreement between the Company and the UAW that covered approximately 3,650 associates at its original five facilities in Michigan and New York expired. UAW called a strike at these facilities upon expiration of this agreement. The strike continued 87 days and had a significant adverse impact on the results of operations for the first six months of 2008, as shown below:

Impact of the Strike

(in million dollars)

For the first 6 month in FY2008
Loss of Net Sales	414.0
Increase in Gross Loss	129.4
Increase in Net Loss	132.5

The New Labor Agreements
-In May, 2008, the Company reached an agreement that was ratified by 76 percent of the UAW membership at its original five facilities in Michigan and New York. The new contract improved its labor cost structure and operating flexibility. The Company nearly eliminated legacy labor costs at the Company and converted its labor costs from fixed to variable. Specifically, the Company achieved a greater than 50 percent reduction in its fully loaded labor cost (FLLC) - from approximately $74 per hour to $34 per hour. It anticipates annual structural hourly labor cost reductions in excess of $300 million as a result of these actions.

Restructuring
-More than 2,500 hourly and salaried positions were cut in 2008. This
will generate over $350 million in total annual structural cost reductions.

-Detroit, Cheektowaga and Three Rivers have adopted AWS (alternative work schedules).

-Sold the previously idled and closed Buffalo facility effective October 3, 2008.

-Sold the Tonawanda forging facility effective December 3, 2008.

-The Company is on track to idle operations at the Detroit forging facility in January 2009.

-The Company will idle / consolidate significant portions of the Detroit Manufacturing Complex.

Contracts
Its new and incremental business backlog was approximately 1.4 billion dollars as of January 15, 2009.

-Approximately 50% for global end use markets (other than N.A.)
-Approximately 85% sourced to AAM's facilities outside the U.S.
-Approximately 60% for AWD / RWD passenger cars and CUVs
	. 13 AWD / RWD programs for 6 customers
-Approximately $800 million launching in 2009 - 2011
-Strategic wins with new customers including:
	. Major award from Mack Truck launching in 2009 (carrier assemblies) . Nissan (rear axles and driveshafts for 2010 light vehicle program) . Chery Automobile Co., Ltd. (driveshafts for a 2009 model year CUV) . Brilliance China Automotive Co., Ltd. (IRDAs for 2010 CUV) . Tata Motors (axles for light duty truck 2009 program) . MNAL (driving heads for a 2009 commercial vehicle program)

Joint Ventures
-The Company announced that it has entered into an agreement to form a 50-50 joint venture with Hefei Automobile Axle Co, Ltd., (HAAC), a subsidiary of the JAC Group. The new company, Hefei AAM Automotive Driveline & Chassis System Co., Ltd., is expected to commence operations in the first quarter of 2009. The company will supply rear beam axles, front axles, power transfer units (PTU), Rear Drive Modules (RDM) and suspension modules to JAC Automotive for its passenger cars, sport utility vehicles (SUVs), multi-purpose vehicles (MPVs) and commercial vehicles. (From a press release on Dec. 11, 2008)

R&D Expenditure

(in million dollars)

	FY2008	FY2007	FY2006
Total	85.0	80.4	83.2

-Product development includes power transfer units, transfer cases, driveline and transmission differentials, multi-piece driveshafts, halfshafts, torque transfer devices, and front and rear drive axles. The Company continues to focus on electronic integration in its existing products and to support the development of hybrid vehicle systems.

Product Development
-Future technologies under development include an electric rear-drive-modules (RDM) which eliminates the power transfer units (PTUs) and driveshaft in a FWD vehicle architecture; and an electronically-controlled differential that controls torque left to right on a vehicle.

Capital Expenditure

(in million dollars)

	FY2008	FY2007	FY2006
Total	140.2	186.5	286.6

-In 2008, the capital spending supported its restructuring, redeployment initiatives, customer capacity programs, the future launch of passenger car and crossover vehicle programs within the Company's new business backlog and the continued development of new and expanded facilities in Thailand, Brazil and India.

Investment Plan for FY2009
-The Company expects its capital spending in FY2009 to be in the range of $140 - $150 million, which includes support for the construction of new manufacturing facilities, processes and systems in India and Thailand.

Domestic Investment
-In December 2008, the Company acquired differential gear, hypoid pinion and ring gear forging businesses from FormTech Industries LLC (FormTech), including a manufacturing facility in Ft. Wayne, Indiana. The Company's new subsidiary at this facility, AccuGear, Inc., will produce net shaped differential gears for a variety of customers.
-In Michigan, the Company launched Oxford Forge, Inc. in Oxford and opened its new DieTronik Manufacturing tool and die facility in Auburn Hills.

Investment outside USA
- In Feb. 2008, the Company announced plans to establish a new manufacturing facility in Thailand. The Company has acquired approximately 21 acres in an industrial park in the Rayong Province, southeast of Bangkok, for the construction a 90,000 square-foot, wholly-owned manufacturing plant for driveline products. It is anticipated that the groundbreaking will occur in the spring of 2008 with start of production targeted for 2011.