Good morning. My name is Bovedal, and I'll be your conference operator today. At this time, I would like to welcome everyone to the American Axle & Manufacturing First Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Mr. Jamie Little, Director of Investor Relations. Sir, you may begin.

Thank you and good morning, everyone. Thank you for joining us today and your interest in American Axle & Manufacturing. This morning, we released our first quarter 2008 earnings announcement. If you have not had an opportunity to review this announcement, you can access it on the aam.com website or through the PR Newswire Services. A replay of this call will also be available beginning at 5 pm today through 5 pm Eastern Time May 2, 2008 calling 1-800-642-1687, reservation number 39482270. Before we begin, I would like to remind everyone that the matters discussed in this conference call may contain comments and forward-looking statements that are within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results or conditions, but rather are subject to risks and uncertainties, which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed. For additional information, we ask that you refer to our filings with the Securities and Exchange Commission. This information is also available on the aam.com website. During the call, we may refer to certain non-GAAP financial measures. Information regarding these non-GAAP measures as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on the aam.com website. We are audio webcasting this call through our website, aam.com. This call will be archived in the Investors section of the website and will be available there for one year to later listening. During the quarter, we are plan on attending 2008 KeyBanc Capital Markets Industrial, Automotive & Transportation Conference in Boston on June 5th and 2008 Wachovia Securities Nantucket Conference on June 23rd and 24th. In addition, we are always happy to host Investors Day at our facilities either here in Detroit or at other locations. Please feel free to contact me to schedule a visit. With that, let me turn things over to AAM's Co-founder, Chairman and CEO, Dick Dauch.

Thank you, Jamie, and good morning everyone. Thank you for joining us today to discuss AAM's financial results for the first quarter of 2008. Joining me on the call today are Yogen Rahangdale, our Vice Chairman and Chief Technology Officer, David Dauch, our Executive Vice President and Chief Operating Officer, and Mike Simonte, our Group's Vice President and Chief Financial Officer. I would like to start the call this morning by providing an update on our ongoing contract negotiations with the International UAW. Then I will move on to our first quarter 2008 financial results, before turning things over to Mike to discuss the details of our financial performance. After that we will open the call for any questions you men and women may have. Today, Friday April 25, 2008, marks the 60th day of the strike called by the International UAW, against our Company AAM. AAM's primary objective and these negotiations with the International UAW has been and continues to be to achieve a US market competitive labor cost structure for AAM's original location in the United States of America. We also require operating flexibility for efficiency and competitiveness. AAM leads a US market competitive labor agreement with these facilities. It is necessary, because the International UAW previously negotiated in the past year market competitive labor agreement with many of AAM's US competitors both in the supply group, as well as within Chrysler LLC and Ford Motor Company. This includes the Dana Corporation, FormTech, Chinese-owned Neapco in the State of Michigan and Indian-based Bharat Forge in Lansing, Michigan. It also includes the in-house axle-making operations in the Ford Motor Company and Chrysler LLC. The all in wage-and-benefit package granted by the International UAW to these companies have reduced approximately $30 an hour down to $20 an hour. Under our…

Our sales in the first quarter of 2008 were $588 million that's down approximately $240 million from 802 million in the first quarter of 2007. As Dick noted, the single largest driver of this reduction in sales was the strike called by the International UAW against AAM's original US location. This International UAW strike, which as Dick mentioned, is now at its 60th day has shown most production at [inaudible], Three Rivers, Tonawanda forge and Cheektowaga Machining operation. Based on the production schedule that are going to be effective with new International UAW called the strike against our company on February 25, 2008, we have estimated that the strike reduced sales by $143 million in the first quarter of 2008, reduced operating income by approximately $46 million, and has been approximately $0.56 per share of lost earnings in total. The company did expect a year-over-year reduction in sales of approximately 15% in the first half of 2008. We discussed that on our most recent teleconference at the end of January. Excluding the impact of this strike, first quarter volumes were reasonably consistent with our expectations and our plans. Now let me expand on that a little bit. Excluding the impact of the strike, our sales were down approximately 10% year-over-year. Obviously, the revised energy prices, weakening economic conditions, credit market instability, and market share favoring past cause and cross-over vehicles were negatively affecting sales in our light truck business in the United States. There were few additional matters that exacerbated this comparison in the first quarter of 2007. In the first quarter of 2007, we were supporting the launch of the GMT900 pick-up. Inventory for that product line were lean at the time and production was strong. The second of these issues was that the Easter holiday fell into the…

Thank you, Mike, and thank you, Dick. We have very reserved some time to take questions. I would ask that you please limit your questions to no more than two. So, at this time, please feel free to proceed with any questions you may have.

Your first question comes from the line of Rich Kwas of Wachovia.

Good morning gentlemen.

Good morning Rich.

Good morning Rich.

Mike, could you go into a little bit about the contribution margin that you have realized in the first quarter, it was a little big higher than I would have expected given that you are paying as much in labor cost and if you could just walk us through that would be helpful?

Okay, no problem, Rich. A couple of things going out. First one is truly we are not paying as much to our hourly associates in the original US locations, but we were also not generating sales with those locations. So now the analysis is the profit margins of the plants that we are running and moving our operations. We see our large contribution margin in this quarter whether you can get it sequentially through the fourth quarter or year-over-year in the first quarter, about 33 to 34% loss margin on sales. Now that’s a little bit higher than the 30% range than normal we expect, but in the time period we have been managing extraordinary events. I would say a couple of things. First of all, at the plants that we are running and particularly to shift these manufacturing from some of our original US locations other locations, we had some logistical issues we have to overcome, we have some supply issues with raw materials to a different location and incurred some [inaudible] to do that. We did pay some overtime. We had to increase security and maintenance expenses. These is a host of things we had to do about the plant running and not running to manage through this situation. The other thing I would mention, I would say though that what I have already said is the primary reason for that 3 to 4% higher loss margin rate in this quarter, to begin with I would say is that excluding the impact of the strike our volumes were down about 15% or so in the quarter. Our volume for heavy duty program were down more than that, probably 50% more than that and so that also had an impact on this margin comparison in the quarter.

That’s helpful, thank you. And then as we think about this for the current quarter, with that contribution margin, the negative contribution margin actually come in a little bit relative to 34 in the first quarter or should be about the same?

I don’t think it's going to be significantly different. We are seeing a ramp up in our activity in our Guanajuato Mexico facility that happens to be of an impact of the International UAW strike, but we still have the same additions at our original US locations and we will sort of continue to face the same headwinds until the strike is resolved.

Okay. And then a last quick one on CapEx. As we think about it with a lot of your business launching in '09 and '10 as part of the five-year backlog, when does the CapEx get spent on that? Is that going to be more of an '09 phenomenon, are you going to start ramping that up later this year?

We have previously stated about 300 million of CapEx this year and a little north of that in '09.

Okay. So it shouldn’t be a big ramp up in this business sales. Okay, thank you.

Rich, CapEx in this quarter at $33 million is 1 million lower than the rate we just outlined, but we will see CapEx pick up a little bit according to run rate as we work through the rest of this year.

Thanks.

Thank you, Rich.

Your next question comes from the line of Brett Hoselton of Keybanc Capital Markets.

Good morning gentlemen.

Good morning Brett.

Good morning Brett.

Can you gentlemen be a little bit more specific in terms of what are the primary differences between yourself and American Axle and the UAW in terms of the all-in labor cost what they are proposing versus what you are requesting?

Let me start with this that our primary objective here are to continue negotiations with International UAW and to accomplish a labor market competitive structure in the original locations in the US and to cheer operating flexibility that's pretty clear that’s what the objectives are, that’s what the needs are. We need this because we got to be able to compete with all competition, most of which are now in the US, be they domestic or be they foreign home. We also think that International UAW as I said earlier has accomplished negotiations with our direct competitors here again Dana, FormTech, Neapco, Bharat Forge, et cetera which leaves us non-competitive on labor cost and therefore inability to favorably get in the Q new work and orientation work. Our company is absolutely committed to correcting these losses that we have sustained financially in these locations over the last three years. We need a structure and permanent change. That's been communicated well over 30 months informally and formally including us and their party and it's not these particular locations where they are not viable, they are not profitable, they are not sustainable, that's generically where we are at.

Okay. Let me ask you this question maybe a little bit more specifically. You have kind of thrown out a 20 to $30 number for your competitors, you are suggesting you are above that which kind of suggest that you are maybe in that 30 or 30 above range or something along those lines that the UAW is maybe two times at this point in time at around $60 that's a pretty significant different kind of a $30 differential and obviously those are my numbers. But what I am wondering is what makes up that $30 difference, maybe specifically what are you talking about with UAW with regards to future retirement benefits, healthcare benefits and pension benefits?

Well, let's start. We collectively negotiate with UAW, not you.

Okay, fair enough. With regards to options there has been some discussion about replacement worker, there has also been some discussion about the possibility of closing your US facilities, where do you see as some of the logical options. Is it possible for you to get replacement workers and is it possible for you to close the US facilities and move them south or where does needs them to, what would the alternatives be?

First of all, management has the right and the responsibility, nobody else runs business except their selves, we will work at all stages and quarters softer, collectively and we are confined with contracts. When contracts expire, they have expired. What we are looking forward to is an appropriate compliance with legality and appropriate process and appropriate way to get ourselves where we can be competitive and operational flexible and that’s where we are at. Thank you.

Well, thank you very much gentlemen.

Your next question comes from the line of Himanshu Patel of J.P. Morgan.

Hi. Dick, I just had a question on General Motors involvement here. It seems like GM has been on the sidelines in most of these negotiations. What have you exactly been doing or talking to GM to get them comfortable with the current situation? And how long would you expect GM sort of benign stands on this at the last?

Well, first of all, good morning Himanshu. And secondly, as it relates to General Motors, they are our largest and most critical customer, and they have obviously been very open, forthright with them that our contract was going to expire in February 25 of '08 and how they handle their own operations and flexibility was certainly up to them, but we won't comment on GM other than to say we are working very softly, effectively with them, because they are our customer and that’s the first part we have to do is take care of our customer and we want to minimize disruptions that result from our AAM called by International UAW strike and secondly support GM however we can and obviously there are issues and we are working that out with GM and GM has been most professional, most helpful and we are most supportive of them as best as we can on this very difficult chapter of our life.

And I am just wondering would you care to comment on GM's own labor dispute they are having at some of their facilities right now. Do you think this is completely independent or do you think this is the UAW trying to get GM involved in your dispute?

I think that’s a better question for you to ask GM.

Okay, very good. That’s all I have. Thank you.

Thank you sir.

Your next question comes from the line of John Murphy of Merrill Lynch.

First question on the cost of the UAW plants, you have already stated to get them to agree to what you want to first is your Mexican plants and what would be the cost differential if you got this contract win by the Mexican plants?

We would still -- first of all good morning John.

Good morning.

As we said, we have been obligated to pay an all-in labor cost per hour as if we were OEM, we never had been and we must have receipts. Therefore they are way too high, that was 245% of their level of the present 20 to $30 range where we as a supplier should be. We are negotiating and try to get that down somewhere close to that, early in the spring, and that has to be done as you know, collectively between the two institutions AAM and International UAW and we will report on that when we have something to report on that.

Okay. You're Mexican plants and US plants at that time once you reach resolution, as you would like to welcome the similar cost structure?

They are selling in different markets, different demographics and we are talking about US, we are talking about contracts in USA, we are not talking about Mexico, we are talking about UAW contracts that compete with AAM and USA so to start with primary as AAM that will go to the direct competitors of getting to USA Dana or Chrysler or Ford or Neapco or FormTech or many elements so lets not try to change what the direction is what the focus is.

Okay. And then secondly, if you can just elaborate on how many axles you are shipping out of Guanajuato and its sounds like you have done a great job of doubling the output there in short order and they are potential to increase value even more in the near-term at Guanajuato?

Okay. Thank you very much.

You are welcome.

Your next question comes from the line Chris Ceraso of Credit Suisse.

Thanks. Good morning.

Good morning Chris.

The comment that you just made that brings up the questions about, if you can bring out that kind of capacity for Mexico and generate $1 billion of sales, once all this is resolved will you dial that back down in favor of doing more stuff in the US, would you don’t have to scale down your US ops and keep running as much as you can at the Mexico?

Well, the great thing about the auto industry Chris is its so dynamic and you know, all the data and variables as well as I do, energy is driving the world therefore gas, diesel whatever fuel it maybe is changing the mix demographic of the car, you also note that 90 to 95% of the auto growth in the next five or so years in the future is not in the US, it's outside the US. You got to be aware and I am sure right now if I was running General Motors, Ford, Chrysler, Toyota or whatever certainly this market outside the review, part of the product line. Once they get that done and we have a supplier understand how that’s impacts us, we have to evaluate our sourcing credit and our plant loading pattern. Where that comes that, we have Mexico, US, or something else, but that’s where we competitors investor, our shareholders responsibility and make money.

Mike I know you brought up the issue of tax I do have one question on that. You mentioned in the opening remarks that the us facilities have been on profitable for at least three years that would seem to suggest you know, the way that just look back functions in terms of taking evaluation allowance that you might have had to do that. Can you just explain for me again why given chronic un-profitability of the US ops that you haven’t had the write-down your US deferred tax asset?

Yeah, a couple of things I would say you know, primary comment we made about the un-profitability of our US operations with the original US location. I think we had two US operations that are un-profitable. So always not boss there. We do have certain royalties and other situations coming back to the US. Chris I think that was important comment I think on the call today is you need to know that we have never been at tax and odd position in the US. As a result of the profits and other planning strategy that we aim to that we will continue to have us over, we have never been in a while. So while it's true that in the short-term time period, we have an issue with profitability that has not been a long-term pattern and we are confident that with the additional restructuring actions that we implemented in 2007 that we expect to initiate yet in 2008 that have broken the road and these are going to be with market competitiveness of the original US locations or along another path to achieve the same objectives. We want to have a future profitable competitive business and we will revise the forecast in the US. There is a dynamic continuing monitoring process and every quarter we undertake the appropriate accounting norms as to assure ourselves that that continues to be provide answer. As of March 31, 2008, that continues to be the right answer.

You got a lot of groundbreakings coming up, new plants going up in different countries. Is there a risk that you may have to pull back on some of this if the strike endures and you continue to burn cash or perhaps, as you suggested you may have to close US facilities and relocate to Mexico or somewhere else, which would certainly take a lot of cash. Is there any risk to these expansion plans?

If there was anything, we may accelerate them.

Okay, thanks guys.

Chris, everything I would say is that there is no default assumption that we would move all of the work outside the United States. We want to be competitive in the United States. We have plants and facility today that are competitive in the United States. We are in the process of launching Oxford Forge Inc. here in the metropolitan Detroit area with a very competitive cost structure and there are many ways for us to achieve a competitive business model in the US. So please don’t assume -- we are not saying and I don’t want you to assume let's say that we have to leave US to be competitive. That is not true.

Alright. But I guess the point Mike is if even -- whether you are talking about Mexico or even within United States, if it comes to the point where you have to close your original facilities and open new facilities or expand existing facilities either in the US or Mexico that's going to require tremendous amount of cash. So the question was, those that jeopardize your expansion plan elsewhere because I would think that…

You asked the question. I answered. What's your next question?

That's it, Dick.

Thank you.

Your next question comes from the line of David Leiker of Robert W. Baird.

Can you hear me alright?

Good morning, David.

Good morning, David.

Dick, you talk about your competitors who have got wage cost and what you have being an these handful of other folks. Have you seen any business of worry to them that with the different wage structure you think American acts a little bit ordered?

Obviously, if you take a look at the fact of economics, you are more learned in that area than I am, you got somebody who has an advantage per unit at $70, $80, to $100 a unit. You either are going to not get business or you are going to have a loss. We have no interest in having loss leaders. So I won't get into specificity as to an individual account that went somewhere. We've had a great business for the last 14 years. We are going to have a great business in the future.

I am not trying to dig anything specific, I just say in generally whether there has been…?

I understand, but I am answering you question, okay. You have the question, let me answer.

We must be all incompetitive and at each and all of location, nobody gets a break.

No, I understand that. I agree with you on that. Is there are a way you can give us any sense of how much of your lost volume in the US from these plants that are under strike you have been able to replace in Mexico?

We have simply met the priority of our customer and I think we answered a little bit early to a different person, maybe you weren't listening. General Motors is our key customer. They have absolutely prioritize where they need and we try to get them the greatest what we could and Mexico has certainly had a powerful influence in doing that and we are continuing to have a great relationship with GM and support from them. And anything else from GM, you would have to ask them theirselves.

Is it fair to assume that's volume increase that you've seen in your Mexico plant is all replacing volume that would have come out of the US plants?

Yeah, certainly.

Okay, great.

Okay, great.

Thank you sir.

Your next question comes from the line of Rod Lache of Deutsche Bank.

I was wondering you had a view on the longer term capacity that you need for axle production for the traditional buying for instructing a trend year. In the next few years are you pointing for a cyclical recovery or kind of structural decline as well, that’s what I am asking?

Well, we are certainly looking at structural decline in that segment and that’s why back in year 2000 and I have reported that to you before Rod, that we changed our priorities of direction of product portfolio and technology application into more of how we will drive applications, petro car, cross over utility and rather put half of our new business growing portfolio of 1.3 billion in those petro car applications and it also diversified not just in the North American region but throughout the world. So we saw this coming couple of years ago and have secured first of all the entire portfolio in these vehicles package able, separate the order to support it and again 2008, '09 and '10, we will be launching those, particularly unit. As it relates to the full side earnings conventional architecture there will still be very significant volume, but it will be descending. And therefore we have to make some adjustments as we [inaudible] on capacity rationalization, operating flexibility must go along with that and then we redeploy, how we do our plant loading where we have most compelling economic structure to support our shareholders need and judiciary responsibility.

Could you tell us what your daily capacity is at the UAW represented plants?

I quote they are one.

Okay. Can you maybe Mike you could just refresh us on sources of liquidity aside from the cash?

Yeah, we get, you referred to the $350 million cash in the first quarter, our revolver of 1200 units is $800 million credit facility, we have some money market lines of credit available to us here in the US and we have credit facilities available to help us fund our international expansions and some other money market mines in place like Mexico, Brazil. We are working through the Tata's facility in India and will have that online sometime later this year and of course China we had a line in place -- a significant line to help us in that market. So we have multiple sources of liquidity and when you read our 10-Q that will -- later we will file at the SEC today, you will see it worth of $1.6 billion of total credit availability into these facilities about $548 million or so of net debt, at this point in time communicating more than $1 billion of availability in those facilities.

Any significant constraint covenants you know, receivable levels or things like that to back that up or is that available?

No. We had significant issues there that’s a lever I would point out that there is really no impact relative to receivables perspective, these facilities are generally unsecured, all the US facilities and so there are no restrictions [inaudible].

Okay. My last question is just on any comments on steel and there has just been a lot of talk in the market about surcharges that kind of thing, I know you have quite a bit that pass-through, can you just refresh us on the exposure there.

This is Dave Dauch. As you know, we have got middle market agreements in place with our customers, we have the ability to pass-though some, but not all of any middle market increase. At the same time you know, most importantly we have got the long-term contracts in place with the majority of our steel purchases that we think we are in good shape there. There is some exposure in regard to some of the other metal products and with respect to what are the net savings when it comes mature for the year, what we have communicate earlier has just been obviously greatest what we had originally communicated due to some of the changes in the market place.

Great. Thank you.

Yeah.

I think we have time for one last question.

Your last question comes from the line of Jonathan Steinmetz of Morgan Stanley.

Can you hear me?

Yes. Good morning Jonathan.

Good morning Jonathan.

Okay. I guess my question was around the timing and specifically when you might begin to get a bit more concerned about the collateral impact here both on customers and some other suppliers, and when that factors into your cost benefit analysis. It seems as if a lot of the inventory that’s come out already is stuff that would have come out at some point in a year, but a lot of supplier weren’t going to get as much cash on May 2nd or June 2nd as they otherwise would have. Maybe you could just talk about it to a point in time Dick when you begin to get more concerned about collateral impact?

That will be months and months away.

Meaning, like end of summer?

Month to month, you can count.

Okay. Alright. Thank you.

Welcome.

Thank you, Jonathan. And we thank all of you, who have participated on this call and appreciate your interest in American Axle & Manufacturing. We certainly look forward to talking with you in the near future.

This does conclude today's conference call. You may now disconnect.