Overcapacity results in cancellation of Nano Grinder order

Overcapacity results in cancellation of Nano Grinder order

In a letter to KMT, American Axle & Manufacturing, Inc. (AAM) has cancelled an
order placed earlier for six Nano Grinders. The reason for the cancellation is
that forecast volume increases for AAM did not materialize, and accordingly, its
current production capacity fulfils its requirements.

The customer has offered compensation for KMT's accrued expenses in connection
with this order and negotiations concerning final settlement have been
initiated. Consequently, the financial impact on KMT's accounts has not yet been
established, but will be announced when negotiations have been concluded. The
total order value was approximately SEK 28 M.

At an earlier date, KMT announced a delay in this customer order for a new
version of the Nano Grinder as a result of fundamental technical challenges. At
the end of 2006, the technical problems were solved and subsequently, the order
in question was ready for delivery. However, the project was postponed by the
customer who initiated a reorganisation and relocation of their production
units. The customer has now announced that it intends to cancel the order as a
result of excess production capacity.

The revolutionary Nano Grinder concept is based on more than ten years of
development. The grinder replaces rival system solutions that are five times as
large, while considerably improving productivity.


For more information, please contact:
Lars Bergström, President and CEO, Karolin Machine Tool AB
Telephone: +46 8 594 211 50 or e-mail: lars.bergstrom@kmtgroup.com