UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM~~ Form 10-Q

(Mark One)


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended April 30, 2002

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2001

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-11592

HAYES LEMMERZ INTERNATIONAL, INC.

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in ~~Its~~its ~~Charter~~charter)

DELAWARE		13-3384636
Delaware		13-3384636
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
15300 Centennial Drive Northville, Michigan (Address of principal executive offices)		48167 (Zip Code)

~~15300~~Registrant’s ~~CENTENNIAL~~telephone ~~DRIVE~~number, including area code:

~~NORTHVILLE, MICHIGAN 48167~~(734) 737-5000

Indicate by check mark whether the registrant (~~Address~~1) has offiled all ~~Principal~~reports ~~Executive~~required ~~Offices~~to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (~~Zip~~or for such shorter period that the registrant ~~Code~~was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

~~Registrant’s~~The ~~telephone~~ number, ~~including area~~of ~~code:~~shares ~~(734)~~of common stock outstanding as of June ~~737-5000~~14, 2002 was 28,455,995 shares.

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. Yes o No x

The number of shares of common stock outstanding as of March 20, 2002 was 28,455,495 shares.

TABLE OF CONTENTS

~~PART~~CONSOLIDATED I.STATEMENTS ~~FINANCIAL~~OF ~~INFORMATION~~OPERATIONS ~~Item~~CONSOLIDATED 1.BALANCE ~~Financial~~SHEETS ~~Statements~~CONSOLIDATED ~~Consolidated~~STATEMENTS ~~Statements~~OF OfCASH ~~Operations~~FLOWS ~~Consolidated~~Notes ~~Balance~~to ~~Sheets~~ Consolidated Financial Statements ofCONDENSED ~~Cash~~COMBINED ~~Flows~~BALANCE ~~Notes~~SHEETS toAs ~~Consolidated~~of ~~Financial~~April ~~Statements~~30, ~~Item~~2002 2.CONDENSED ~~Management’s~~COMBINED ~~Discussion~~BALANCE ~~and~~SHEETS ~~Analysis~~As of ~~Financial~~January ~~Condition~~31, ~~and~~2002 ~~Results~~CONDENSED ofCOMBINED ~~Operations~~STATEMENTS OF CASH FLOWS CONDENSED COMBINED STATEMENTS OF CASH FLOW Item 3. Quantitative and Qualitative Disclosures about Market Risk PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES EXHIBIT INDEX EX-10.41 Critical Employee Retention Plan

HAYES LEMMERZ INTERNATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

				Page	~~Page~~
PART I. FINANCIAL INFORMATION
Item 1.	~~Item 1.~~	Financial Statements	~~Financial Statements~~
		Consolidated Statements of Operations	~~Consolidated Statements of Operations~~		2	3
		Consolidated Balance Sheets	~~Consolidated Balance Sheets~~		3	4
		Consolidated Statements of Cash Flows	~~Consolidated Statements of Cash Flows~~		4	5
		Notes to Consolidated Financial Statements	~~Notes to Consolidated Financial Statements~~		5	6
Item 2.	~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~		18	26
Item 3.	~~Item 3.~~	Quantitative and Qualitative Disclosures about Market Risk	~~Quantitative and Qualitative Disclosures about Market Risk~~		26	37
PART II. OTHER INFORMATION
Item 1.	~~Item 1.~~	Legal Proceedings	~~Legal Proceedings~~		27	38
Item 2.	~~Item 2.~~	Changes in Securities and Use of Proceeds	~~Changes in Securities and Use of Proceeds~~		27	38
Item 3.	~~Item 3.~~	Defaults upon Senior Securities	~~Defaults Upon Senior Securities~~		27	38
Item 4.	~~Item 4.~~	Submission of Matters to a Vote of Security Holders	~~Submission of Matters to a Vote of Security Holders~~		27	38
Item 5.	~~Item 5.~~	Other Information	~~Other Information~~		27	38
Item 6.	~~Item 6.~~	Exhibits and Reports on Form 8-K	~~Exhibits and Reports on Form 8-K~~		27	39
SIGNATURES						40
Signatures					28

UNLESS OTHERWISE INDICATED, REFERENCES TO THE “COMPANY” MEAN HAYES LEMMERZ INTERNATIONAL, INC., AND ITS SUBSIDIARIES AND REFERENCE TO A FISCAL YEAR MEANS THE COMPANY’S YEAR ENDED JANUARY 31 OF THE FOLLOWING YEAR (E.G., FISCAL ~~2001~~2002 MEANS THE PERIOD BEGINNING FEBRUARY 1, ~~2001,~~ 2002, AND ENDING JANUARY 31, ~~2002~~2003). THIS REPORT CONTAINS ~~FORWARD~~ FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE ~~SECURITIES~~ SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE ~~FINANCIAL~~ FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND BUSINESS OF THE COMPANY. THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS ~~AND~~ AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) THE OUTCOME AND CONSEQUENCES OF THE COMPANY’S CHAPTER 11 PROCEEDINGS; (2) COMPETITIVE PRESSURE IN THE COMPANY’S INDUSTRY INCREASES SIGNIFICANTLY; (3) GENERAL ECONOMIC CONDITIONS ARE LESS FAVORABLE THAN EXPECTED; (4) THE COMPANY’S DEPENDENCE ON THE AUTOMOTIVE INDUSTRY (WHICH HAS HISTORICALLY BEEN CYCLICAL); (5) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE COMPANY’S FINANCIAL STRUCTURE AND THE COMPANY’S COST OF CAPITAL AND BORROWED MONEY; AND (6) THE UNCERTAINTIES INHERENT IN INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY FLUCTUATIONS. THE COMPANY HAS NO DUTY UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 TO UPDATE THE FORWARD LOOKING STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE COMPANY DOES NOT INTEND TO PROVIDE SUCH UPDATES.

1 ~~EXCEPT AS SPECIFICALLY STATED OTHERWISE IN THIS~~ ~~FORM 10-Q, THE INFORMATION CONTAINED IN THE 10-Q HAS NOT BEEN~~ ~~UPDATED TO REFLECT THE MATTERS SET FORTH IN NOTE 12, “SUBSEQUENT EVENTS” BELOW.~~

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

~~Consolidated~~(Debtor-in-Possession ~~Statements~~as Ofof December 5, 2001) ~~Operations~~

CONSOLIDATED STATEMENTS OF OPERATIONS

(Millions of dollars, except share amounts)

(Unaudited)



		Three Months
		Ended April 30,

		2002			2001


		(Unaudited)




Net sales		$	486.7		$	540.9




Cost of goods sold			441.6			483.3

	Gross profit		45.1			57.6




Marketing, general and administration			27.6			26.2




Engineering and product development			5.0			5.9




Amortization of goodwill			—			6.7




Equity in losses (earnings) of joint ventures			—			0.4




Asset impairments and other restructuring charges			7.2			31.0




Other income, net			(2.6	)		(0.2	)




Reorganization items			22.5			—

	Earnings (loss) from operations		(14.6	)		(12.4	)




Interest expense, net (excluding $28.7 million not accrued on liabilities subject to compromise for the three months ended April 30, 2002)			16.8			44.2

	Loss before taxes on income and minority interest		(31.4	)		(56.6	)




Income tax provision			0.9			6.3

	Loss before minority interest		(32.3	)		(62.9	)




Minority interest			0.7			0.8

	Net loss	$	(33.0	)	$	(63.7	)





Basic net loss per share		$	(1.16	)	$	(2.24	)

Diluted net loss per share		$	(1.16	)	$	(2.24	)

		Three Months Ended						Six Months Ended
		July 31,						July 31,
					(As Restated)						(As Restated)
		2001			2000			2001			2000
Net sales		$	518.5		$	540.3		$	1,059.5		$	1,134.0
Cost of goods sold			484.9			467.6			968.2			970.8
	Gross profit		33.6			72.7			91.3			163.2
Marketing, general and administration			25.9			21.8			52.2			46.6
Engineering and product development			5.7			3.2			11.6			9.4
Amortization of intangibles			6.6			6.9			13.3			13.9
Equity in losses (earnings) of joint ventures			0.2			0.6			0.5			(0.5	)
Asset impairments and other restructuring charges			7.0			3.9			38.0			4.4
Loss on investment in joint venture			3.8			—			3.8			—
Other (income) expense, net			1.4			4.2			1.3			(2.0	)
	Earnings (loss) from operations		(17.0	)		32.1			(29.4	)		91.4
Interest expense, net			48.8			40.0			92.9			78.8
	Earnings (loss) before taxes on income, minority interest and extraordinary gain		(65.8	)		(7.9	)		(122.3	)		12.6
Income tax (benefit) provision			4.1			(2.9	)		10.4			4.4
	Earnings (loss) before minority interest and extraordinary gain		(69.9	)		(5.0	)		(132.7	)		8.2
Minority interest			1.0			0.5			1.8			1.4
	Earnings (loss) before extraordinary gain		(70.9	)		(5.5	)		(134.5	)		6.8
Extraordinary gain, net of tax			2.7			—			2.7			—
	Net income (loss)	$	(68.2	)	$	(5.5	)	$	(131.8	)	$	6.8
Basic net income (loss) per share:
	Income (loss) before extraordinary gain	$	(2.49	)	$	(0.18	)	$	(4.73	)	$	0.22
	Extraordinary gain, net of tax		0.09			—			0.09			—
Basic net income (loss) per share		$	(2.40	)	$	(0.18	)	$	(4.64	)	$	0.22
Diluted net income (loss) per share
	Income (loss) before extraordinary gain	$	(2.49	)	$	(0.18	)	$	(4.73	)	$	0.22
	Extraordinary gain, net of tax		0.09			—			0.09			—
Diluted net income (loss) per share		$	(2.40	)	$	(0.18	)	$	(4.64	)	$	0.22

See accompanying notes to consolidated financial statements.

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

~~Consolidated~~(Debtor-in-Possession ~~Balance~~as ~~Sheets~~of December 5, 2001)

CONSOLIDATED BALANCE SHEETS

(Millions of dollars, except share amounts)

								(As Restated)
					April 30,				January 31,
				July 31,				July 31,				January 31,
					2002				2002
				2001				2000				2001
					(Unaudited)
				(Unaudited)				(Unaudited)
ASSETS
Assets
Current assets:
Current assets:
	Cash and cash equivalents				$	64.0			$	45.2
	Cash and cash equivalents			$	45.4			$	16.6			$	—
	Receivables					274.6				266.2
	Receivables				315.3				192.9				248.8
	Inventories					162.8				155.2
	Inventories				207.0				228.0				217.3
	Prepaid expenses and other					35.4				36.3
	Prepaid expenses and other				36.9				44.1				38.7
			Total current assets			536.8				502.9
		Total current assets			604.6				481.6				504.8
Property, plant and equipment, net						937.3				965.4
	Net property, plant and equipment				1,039.1				1,179.4				1,104.8
Goodwill and other assets						899.0				889.8
	Goodwill and other assets				961.0				1,043.8				994.3
			Total assets		$	2,373.1			$	2,358.1
		Total assets		$	2,604.7			$	2,704.8			$	2,603.9
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Current liabilities:
	Bank borrowings and other notes				$	26.1			$	25.1
	Bank borrowings			$	74.0			$	77.8			$	79.6
	Current portion of long-term debt					12.8				14.5
	Current portion of long-term debt				1,858.5				70.0				1,613.7
	Accounts payable and accrued liabilities					282.5				232.0
	Accounts payable and accrued liabilities				463.2				471.9				491.6
			Total current liabilities			321.4				271.6
		Total current liabilities			2,395.7				619.7				2,184.9
Long-term debt, net of current portion						79.9				83.5
Long-term debt, net of current portion					53.4				1,539.3				94.6
Pension and other long-term liabilities						325.4				330.2
Pension and other long-term liabilities					319.4				337.4				335.6
Minority interest						11.4				11.8
Minority interest					11.9				8.0				10.6
Liabilities subject to compromise						2,135.8				2,121.0
		Total liabilities			2,780.4				2,504.4				2,625.7
Commitments and Contingencies
Commitments and Contingencies
Stockholders’ deficit:
Common stock subject to put agreement					—				8.5				—
	Preferred stock, 25,000,000 shares authorized, none issued or outstanding					—				—
Stockholders’ equity (deficit):
	Common stock, par value $0.01 per share:
	Preferred stock, 25,000,000 shares authorized, none issued or outstanding				—				—				—
		Voting — authorized 99,000,000 shares; 27,708,419 shares issued; 25,806,969 shares outstanding				0.3				0.3
Common stock, par value $0.01 per share:
		Nonvoting — authorized 5,000,000 shares; issued and outstanding, 2,649,026 shares				—				—
		Voting — authorized 99,000,000 shares; 27,709,919, 27,707,019, and 27,707,919 shares issued; 25,806,469, 27,707,919, and 25,806,469 shares outstanding			0.3				0.3				0.3
	Additional paid in capital					235.1				235.1
		Nonvoting — authorized 5,000,000 shares; issued and outstanding, 2,649,026 shares			—				—				—
	Common stock in treasury at cost, 1,901,450 shares					(25.7	)			(25.7	)
	Additional paid in capital				235.1				231.4				235.1
	Accumulated deficit					(575.4	)			(542.4	)
	Common stock in treasury at cost, 1,901,450 shares				(25.7	)			—				(25.7	)
	Accumulated other comprehensive loss					(135.1	)			(127.3	)
	Retained earnings (accumulated deficit)				(277.5	)			47.3				(145.7	)
			Total stockholders’ deficit			(500.8	)			(460.0	)
	Accumulated other comprehensive loss				(107.9	)			(87.1	)			(85.8	)
			Total liabilities and stockholders’ deficit		$	2,373.1			$	2,358.1
		Total stockholders’ equity (deficit)			(175.7	)			191.9				(21.8	)
		Total liabilities and stockholders’ equity		$	2,604.7			$	2,704.8			$	2,603.9

See accompanying notes to consolidated financial statements.

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

~~Consolidated~~(Debtor-in-Possession ~~Statements~~as of ~~Cash~~December 5, 2001) ~~Flows~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(Unaudited)



				Three Months
				Ended April 30,

				2002			2001


				(Unaudited)




Cash flows from operating activities:




Net loss				$	(33.0	)	$	(63.7	)




Adjustments to reconcile net loss to net cash provided by (used for) operating activities:




	Depreciation and tooling amortization				33.5			30.8




	Amortization of goodwill				—			6.7




	Amortization of deferred financing fees				1.3			1.8




	Increase in deferred income taxes				—			3.6




	Asset impairments and other restructuring charges				7.2			31.0




	Minority interest				0.7			0.8




	Reorganization items				22.5			—




	Equity in losses (earnings) of joint ventures				—			0.4




	Gain on sale of assets and businesses				(1.6	)		—




	Changes in operating assets and liabilities that increase (decrease) cash flows:




		Receivables			(10.4	)		(53.1	)




		Inventories			(8.5	)		3.8




		Prepaid expenses and other			1.0			0.8




		Accounts payable and accrued liabilities			42.1			(14.5	)




		Other long-term liabilities			(3.4	)		(3.8	)




		Payments for reorganization items			(1.4	)		—

			Cash provided by (used for) operating activities		50.0			(55.4	)

Cash flows from investing activities:




	Purchase of property, plant and equipment				(22.4	)		(31.1	)




	Proceeds from sale of assets and businesses				6.7			—




	Cash paid for purchase of Wheland Foundry				(2.1	)		—




	Other, net				(9.2	)		(1.3	)

			Cash used for investing activities		(27.0	)		(32.4	)

Cash flows from financing activities:




	Decrease in borrowings under DIP facility				(1.0	)		—




	Changes in bank borrowings and revolving facility				(2.7	)		73.1




	Payments on accounts receivable securitization				—			47.6




	Fees to amend Credit Agreement				—			(2.3	)

			Cash provided by (used for) financing activities		(3.7	)		118.4

Effect of exchange rate changes on cash and cash equivalents					(0.5	)		(1.7	)

	Increase in cash and cash equivalents				18.8			28.9




Cash and cash equivalents at beginning of year					45.2			—

Cash and cash equivalents at end of period				$	64.0		$	28.9

Supplemental data:




	Cash paid for interest			$	2.8		$	22.0




	Cash paid for income taxes			$	1.5		$	0.4

				Six Months Ended
				July 31,
							(As Restated)
				2001			2000
Cash flows from operating activities:
Net income (loss)				$	(131.8	)	$	6.8
Adjustments to reconcile net income (loss) to net cash used for operating activities:
	Depreciation and tooling amortization				61.2			59.0
	Amortization of intangibles				13.3			13.9
	Amortization of deferred financing fees				3.8			3.2
	Increase in deferred taxes				6.0			8.6
	Asset impairments and other restructuring charges				38.0			4.4
	Loss on investment in joint venture				3.8			—
	Minority interest				1.8			1.4
	Equity in losses (earnings) of joint ventures				0.5			(0.5	)
	Extraordinary gain				(4.2	)		—
	Changes in operating assets and liabilities that increase (decrease) cash flows:
		Receivables			(9.4	)		7.5
		Inventories			2.7			(37.7	)
		Prepaid expenses and other			1.2			(3.4	)
		Accounts payable and accrued liabilities			(1.2	)		(119.4	)
		Other long-term liabilities			(9.0	)		(10.9	)
			Cash used for operating activities		(23.3	)		(67.1	)
Cash flows from investing activities:
	Acquisition of property, plant and equipment				(68.4	)		(93.0	)
	Tooling expenditures				(8.3	)		(2.8	)
	Increased investment in majority-owned subsidiary				—			(7.2	)
	Proceeds from termination of cross-currency swap agreements				14.6			15.9
	Other, net				(12.9	)		4.1
			Cash used in investing activities		(75.0	)		(83.0	)
Cash flows from financing activities:
	Increase in bank borrowings and revolving facility				192.8			167.4
	Proceeds from refinancing, net of related fees				435.4			—
	Repayment of bank borrowings and revolving facility from refinancing				(371.3	)		—
	Repayment of long-term debt from refinancing				(36.6	)		—
	Payments on accounts receivable securitization				(71.6	)		(25.0	)
	Fees to amend Credit Agreement				(2.7	)		—
			Cash provided by financing activities		146.0			142.4
Effect of exchange rate changes on cash and cash equivalents					(2.3	)		(1.6	)
	Increase (decrease) in cash and cash equivalents				45.4			(9.3	)
Cash and cash equivalents at beginning of year					—			25.9
Cash and cash equivalents at end of period				$	45.4		$	16.6
Supplemental data:
	Cash paid for interest			$	84.0		$	86.2
	Cash paid for income taxes			$	4.4		$	5.5

See accompanying notes to consolidated financial statements.

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

~~Six~~Three Months Ended ~~July~~April 3130, ~~2001~~2002 and 2001 ~~2000~~

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(1) ~~Description of~~ Business and ~~Basis of~~Chapter 11 ~~Presentation~~Filings

These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year 2001 as filed with the Securities and Exchange Commission on May 1, 2002.

Description of Business

Unless otherwise indicated, references to “Company” mean Hayes Lemmerz International, Inc. and its subsidiaries and references to fiscal year ~~mean~~means the Company’s year ended January 31 of the following year (e.g., “fiscal ~~2001” refers to the period beginning~~ ~~February 1, 2001 and ending January 31,~~ 2002~~, “fiscal 2000~~” refers to the period beginning February 1, ~~2000~~ 2002 and ending January 31, ~~2001~~2003, ~~and~~ “fiscal ~~1999~~ 2001” refers to the period beginning February 1, ~~1999~~2001 and ending January 31, ~~2000)~~2002.

The Company ~~designs,~~is ~~engineers~~a ~~and~~leading ~~manufactures suspension~~supplier ~~module~~of ~~components~~wheels, ~~principally for original equipment~~wheel-end ~~manufacturers~~attachments, ~~(“OEMs”)~~aluminum ofstructural ~~passenger~~components ~~cars, light trucks~~ and ~~commercial~~automotive ~~highway vehicles worldwide~~brake components. The Company is the world’s ~~products~~ ~~include~~largest ~~one-piece~~manufacturer of ~~cast~~automotive ~~aluminum~~ wheels. In addition, ~~fabricated~~the Company also designs and ~~aluminum~~manufactures wheels, ~~fabricated~~and ~~steel~~brake ~~wheels,~~components ~~full~~for ~~face~~commercial ~~cast~~highway ~~aluminum wheels~~vehicles, ~~clad~~and ~~covered~~powertrain ~~wheels,~~components ~~wheel-end~~and ~~attachments,~~ aluminum non-structural components, ~~intake~~for ~~and~~the ~~exhaust manifolds~~automotive, ~~and~~ ~~brake~~commercial ~~drums~~highway, ~~hubs~~heating and general ~~rotors~~equipment industries.

~~Basis of Presentation~~ Chapter 11 Filings

~~The~~On ~~accompanying~~December 5, ~~consolidated~~2001, ~~financial statements~~Hayes ~~have~~Lemmerz ~~been~~International, ~~prepared~~Inc., on30 of aits ~~going~~wholly-owned ~~concern~~domestic ~~basis~~subsidiaries ~~which contemplates~~and ~~continuity~~one ofwholly-owned Mexican ~~operations~~subsidiary (collectively, ~~realization~~the of“Debtors”) ~~assets,~~filed ~~and~~voluntary ~~payment~~petitions offor ~~liabilities~~reorganization inrelief (the “Chapter 11 ~~ordinary~~Filings” ~~course~~or ofthe ~~business~~“Filings”) ~~and~~under doChapter 11 ~~not~~of ~~reflect~~the ~~adjustments~~Bankruptcy ~~that~~Code ~~might~~in ~~result if~~ the ~~Company~~United isStates ~~unable~~Bankruptcy toCourt ~~continue~~for asthe aDistrict ~~going~~of ~~concern.~~Delaware ~~The Company’s~~(the ~~recent~~“Bankruptcy ~~history~~Court”). ofThe ~~significant~~Chapter 11 ~~losses,~~Filings ~~deficit in~~are ~~stockholders’~~being ~~equity~~jointly ~~and~~administered, ~~issues~~for ~~related~~procedural topurposes ~~compliance~~only, ~~with~~before ~~debt~~the ~~covenants~~Bankruptcy ~~raise~~Court ~~substantial~~under ~~doubt~~Case ~~about~~No. 01-11490-MFW. During the ~~Company’s ability~~pendency toof ~~continue~~these asFilings, athe ~~going~~Debtors ~~concern.~~remain Asin ispossession of ~~more~~their ~~fully discussed~~properties inand ~~Note 12,~~assets ~~the~~and ~~Company~~management ~~filed~~of athe ~~voluntary~~Company ~~petition~~continues ~~for~~to ~~reorganization~~operate ~~under~~the ~~Chapter 11~~businesses of the ~~Bankruptcy~~ ~~Code~~Debtors as debtors-in ~~December 2001~~-possession. ~~Continuing~~As as a ~~going concern~~debtor-in-possession, isthe ~~dependent~~Company ~~upon,~~is authorized ~~among~~to ~~other~~operate ~~things,~~ the ~~Company’s~~ ~~formulation~~business of athe ~~plan~~Debtors, ofbut ~~reorganization~~may ~~that is~~not ~~confirmed~~engage byin ~~the~~transactions ~~Bankruptcy~~outside ~~Court,~~of the ~~success~~ordinary ofcourse ~~future~~of business ~~operations,~~without ~~and~~ the ~~generation~~approval of ~~sufficient~~the ~~cash~~Bankruptcy ~~from~~Court, after ~~operations~~notice and ~~financing~~the ~~sources~~opportunity tofor ~~meet~~a ~~the Company’s obligations~~hearing.

~~The~~Currently, ~~Company’s~~it ~~unaudited~~is ~~interim~~not ~~consolidated~~possible to predict the length of time the ~~financial~~Company ~~statements~~will dooperate ~~not~~under ~~include~~the ~~all~~protection of ~~the~~Chapter 11 ~~disclosures~~and ~~required~~the bysupervision ~~accounting~~of ~~principles~~the ~~generally~~Bankruptcy ~~accepted~~Court, inwhen the ~~United~~ ~~States~~Company ofwill file ~~America~~a ~~for~~plan ~~annual~~or ~~financial~~plans ~~statements.~~of Inreorganization with the Bankruptcy ~~opinion~~Court, the outcome of ~~management~~the Chapter 11 proceedings in general, ~~all~~or ~~adjustments~~the ~~considered~~effect ~~necessary~~of ~~for a~~the ~~fair~~proceedings ~~presentation~~on the business of the Company ~~interim~~or ~~period~~on ~~results~~the ~~have~~interest ~~been~~of the various creditors and ~~included~~stakeholders. ~~Operating~~Under ~~results~~the ~~for~~priority scheme established by the Bankruptcy ~~six~~Code, ~~months~~certain ~~ended~~post-petition liabilities and ~~July 31~~pre-petition liabilities need to be satisfied before shareholders can receive any distribution. The ultimate recovery, ~~2001~~if ~~are~~any, to shareholders will not ~~necessarily~~be ~~indicative~~determined until confirmation of ~~the~~a ~~results~~plan or plans of reorganization. There can be ~~that~~no ~~may~~assurance as to what value, if any, will be ~~expected~~ascribed ~~for~~to the common ~~full~~stock ~~fiscal~~of ~~year~~the ~~ending January 31~~Company in the bankruptcy proceedings, ~~2002.~~and the value of the equity represented by that stock could be substantially diluted or canceled.

On May 30, 2002, an order was entered with the Bankruptcy Court approving, among other things, a critical employee retention plan filed with the Bankruptcy Court in February, 2002 which is designed to compensate certain critical employees in order to assure their retention and availability during the Company’s restructuring. The plan has two components which will (i) reward critical employees who remain with the Company (and certain affiliates of the Company who are not directly involved in the restructuring) during and through the completion of the restructuring (the “Retention Bonus”) and (ii) provide additional incentives to

a more limited group of the most senior critical employees if the enterprise value upon completing the restructuring exceeds an established baseline (the “Restructuring Performance Bonus”).

The maximum possible aggregate amount of Retention Bonus is approximately $8.5 million and is payable in cash and is due upon the consummation of the restructuring, provided, however, that 35% of such bonus will be paid on October 1, 2002, if the restructuring has not been consummated by that date. The maximum possible aggregate amount of any Restructuring Performance Bonus is $37.5 million and will be payable as soon as reasonably practicable after the consummation of the restructuring. Up to 70% of the amount by which a Restructuring Performance Bonus exceeds a participant’s Retention Bonus may be paid in restricted shares or units of any common stock of the Company that is issued as part of a confirmed plan of reorganization in connection with the restructuring, if the Company’s Board of Directors elects, within the time period specified in the plan, to elect such option. The amount of any Restructuring Performance Bonus to be earned is not currently estimatable.

Reorganization items as reported in the accompanying consolidated statement of operations for the three months ended April 30, 2002 is comprised of:






Critical employee retention plan provision		$	2.5




Estimated accrued liability for rejected prepetition leases			12.5




Professional fees directly related to the filing			7.6




Interest earned during Chapter 11 reorganization proceedings			(0.1	)

	Total	$	22.5

Cash payments of $1.4 million were paid during this period with respect to such reorganization items.

The condensed financial statements of the Debtors are presented in Note 11, “Condensed Combined Financial Statements.”

(2) Basis of Presentation

As discussed in Note 1, the Company filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code in December 2001. The accompanying consolidated financial statements have been prepared in accordance with AICPA Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code,” and on a going concern basis. Continuing as a going concern contemplates continuity of operations, realization of assets, and payment of liabilities in the ordinary course of business. The accompanying consolidated financial statements do not reflect adjustments that might result if the Company is unable to continue as a going concern. The Company’s recent history of significant losses, deficit in stockholders’ equity and issues related to non-compliance with debt covenants, raise substantial doubt about the Company’s ability to continue as a going concern. Continuing as a going concern is dependent upon, among other things, the Company’s formulation of a plan of reorganization that is confirmed by the Bankruptcy Court, the success of future business operations, and the generation of sufficient cash from operations and financing sources to meet the Company’s obligations. SOP 90-7 requires the segregation of liabilities subject to compromise by the Bankruptcy Court as of the bankruptcy filing date, and identification of all transactions and events that are directly associated with the reorganization of the Company.

The Company’s unaudited interim consolidated financial statements do not include all of the disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim period results have been included. Operating results for the three months ended April 30, 2002 are not necessarily indicative of the results that may be expected for the full fiscal year ending January 31, 2003.

Certain prior period amounts have been reclassified to conform to the current year presentation.

(2) Restatement of Consolidated Financial Statements

On February 19, 2002, the Company issued restated consolidated financial statements as of and for the fiscal years ended January 31, 2001 and 2000, and related quarterly periods (the “10-K/A”), and for the fiscal quarter ended April 30, 2001 (the “10-Q/A”). The restatement was the result of failure by the Company to properly apply certain accounting standards generally accepted in the United States of America, and because certain accounting errors and irregularities in the Company’s financial statements were identified.

The Company has been advised that the Securities and Exchange Commission (“SEC”) is conducting an investigation into the facts and circumstances giving rise to the restatement, and the Company has been and intends to continue cooperating with the SEC. The Company cannot predict the outcome of such an investigation.

~~HAYES LEMMERZ INTERNATIONAL, INC. AND~~(3) Inventories ~~SUBSIDIARIES~~

~~Notes~~The tomajor ~~Consolidated~~classes ~~Financial Statements —~~of ~~(Continued)~~inventory are as follows:

Six Months Ended July 31, 2001 and 2000


		April 30,		January 31,
		2002		2002

Raw materials		$	37.3	$	38.7




Work-in-process			47.2		39.2




Finished goods			39.4		41.4




Spare parts and supplies			38.9		35.9

	Total	$	162.8	$	155.2

(~~Unaudited~~4) Property, Plant and Equipment

~~(Millions~~The major classes of ~~Dollars~~property, ~~Unless~~plant ~~Otherwise~~and equipment are as ~~Stated)~~follows:

(2) Restatement of Consolidated Financial Statements — (Continued)


		April 30,			January 31,
		2002			2002

Land		$	30.0		$	29.9




Buildings			243.4			240.6




Machinery and equipment			1,053.8			1,063.3

			1,327.2			1,333.8




Accumulated depreciation			(389.9	)		(368.4	)

	Property, plant and equipment, net	$	937.3		$	965.4

~~The~~(5) Asset ~~primary~~Impairments ~~categories of restatement adjustments are discussed more fully in the Company’s Annual Report on Form 10-K/A~~ and ~~the notes to the consolidated financial~~Other ~~statements~~Restructuring ~~included therein. Following are the primary~~Charges ~~categories of restatement adjustments to the Company’s~~ ~~previously reported financial results for the three month and six month periods ended July 31, 2000 ($ in millions):~~

			Quarter Ended			Six Months Ended
			July 31, 2000			July 31, 2000
Adjustments (increasing) decreasing net income:
	Deferred operating expenditures		$	4.4		$	6.9
	Unrecorded trade payables and claims			3.7			4.5
	Acquisition accounting			6.5			10.2
	Customer credits and other			3.2			4.4
	Asset impairment losses			2.1			2.1
		Total adjustment to pre-tax income		19.9			28.1
	Income taxes			(7.9	)		(12.7	)
		Total adjustment to net income		12.0			15.4
Adjustments (increasing) decreasing stockholders’ equity
	Tax effect of net investment hedges			8.6			10.3
	Other			(0.2	)		0.5
		Total decrease in stockholders’ equity	$	20.4		$	26.2

Asset impairments and other restructuring charges recorded by the Company during the three months ended April 30, 2002 and 2001 are as follows (millions of dollars):

The restatement adjustments to the consolidated balance sheet as of July 31, 2000 reflected in the table below include the cumulative effect of the restatement adjustments for fiscal 1999 through July 31, 2000.


		2002		2001

Impairment of manufacturing facilities		$	—	$	28.5




Impairment of machinery and equipment			—		2.5




Facility closures			6.7		—




Other restructuring			0.5		—

	Total	$	7.2	$	31.0

~~For~~ Impairment ~~purposes~~ of ~~these consolidated financial~~Manufacturing ~~statements, certain reclassifications have been made to conform~~Facilities ~~presentation as follows:~~

	•	The common stock subject to put agreement was reclassified from additional paid in capital at July 31, 2000 as previously reported.
	•	Certain non-current deferred income tax assets and liabilities as previously reported at July 31, 2000 were reclassified either as part of the previously reported amounts or as restatement adjustments.

As a consequence of the notifications received in April 2001 by the Company from certain customers of its Petersburg, Michigan manufacturing facility regarding significantly lower future product orders and the failure to obtain adequate customer support required to relocate production, management revised its estimate of future undiscounted cash flows expected to be generated by the facility. The Company concluded that this estimated amount was less than the carrying value of the long-lived assets related to the Petersburg facility and, accordingly, recognized an impairment charge of $28.5 million in the first quarter of fiscal 2001.

~~These~~ Facility ~~reclassifications, which did not affect~~Closures ~~previously reported net income (loss), have been made to the~~ ~~consolidated financial statements and are included in the accompanying tables.~~

In February 2002, the Company committed to a plan to close its manufacturing facility in Somerset, Kentucky. In connection with the closure of the Somerset facility (which commenced during February 2002), the Company recorded an estimated restructuring charge of $6.7 million in the first quarter of fiscal 2002. This charge includes amounts related to lease termination costs and other closure costs including security and maintenance costs subsequent to the shut down date. The amount of the charge related to leases was

~~HAYES~~$3.5 million ~~LEMMERZ~~and ~~INTERNATIONAL~~is classified as a liability subject to compromise at April 30, ~~INC~~2002. ~~AND~~The other closure costs are ~~SUBSIDIARIES~~expected to be paid during fiscal 2002 and 2003.

~~Notes~~The tofollowing ~~Consolidated~~table ~~Financial~~describes the activity in the balance sheet ~~Statements —~~accounts ~~(Continued)~~affected by the severance and other restructuring charges noted above during the three months ended April 30, 2002:

Six Months Ended July 31, 2001 and 2000


			Severance
	January 31,		and Other								April 30,
	2002		Restructuring					Cash			2002
	Accrual		Charges		Reclassification			Payments			Accrual

Facility exit costs	$	11.7	$	6.7	$	(3.5	)	$	(0.6	)	$	14.3




Severance		6.0		0.5		—			(1.7	)		4.8

	$	17.7	$	7.2	$	(3.5	)	$	(2.3	)	$	19.1

~~(Unaudited)~~In connection with an early retirement program in the fourth quarter of fiscal 2001, a charge of $3.8 million related to supplemental retirement benefits was included in the above table at January 31, 2002. This amount is recorded as a component of the Company’s accrued benefit cost of the applicable defined benefit plans and will be funded as part of the requirements of the entire plans. Accordingly, for purposes of the current presentation of the above table, this amount has not been included.

(~~Millions~~6) Sale ofand ~~Dollars~~Purchase ~~Unless~~of ~~Otherwise~~Assets ~~Stated)~~and Businesses

~~(2) Restatement~~ Purchase of ~~Consolidated Financial~~Wheland ~~Statements — (Continued)~~Foundry

~~Consolidated~~In ~~Statement~~March 2002, the Company purchased the facility and assets of a ~~Operations~~foundry in Chattanooga, Tennessee for $4.1 million. This purchase integrates the foundry, which produces brake drum castings for the Company’s Commercial Highway operations. The purchase price for this business included cash payments and a note payable in the amount of $2.0 million due in March, 2003. Of the purchase price, $2.6 million was allocated to the fair value of the land, building, and machinery and equipment purchase and $1.5 million was allocated to goodwill.

~~(Millions~~ Sales of ~~dollars,~~Assets ~~except per share~~and ~~amounts)~~Businesses

		Quarter Ended July 31, 2000
		As Previously						As
		Reported			Restatements			Restated
Net sales		$	542.8		$	(2.5	)	$	540.3
Cost of goods sold			458.4			9.2			467.6
	Gross profit		84.4			(11.7	)		72.7
Marketing, general and administration			24.0			(2.2	)		21.8
Engineering and product development			3.2			—			3.2
Amortization of intangible assets			7.1			(0.2	)		6.9
Equity in losses of joint ventures			0.6			—			0.6
Asset impairments and other restructuring charges			—			3.9			3.9
Other (income) expense, net			(2.5	)		6.7			4.2
	Earnings from operations		52.0			(19.9	)		32.1
Interest expense, net			40.0			—			40.0
	Earnings (loss) before taxes on income and minority interest		12.0			(19.9	)		(7.9	)
Income tax (benefit) provision			5.0			(7.9	)		(2.9	)
	Earnings (loss) before minority interest		7.0			(12.0	)		(5.0	)
Minority interest			0.5			—			0.5
	Net income (loss)	$	6.5		$	(12.0	)	$	(5.5	)
Basic net income (loss) per share		$	0.21		$	(0.39	)	$	(0.18	)
Diluted net income (loss) per share		$	0.21		$	(0.39	)	$	(0.18	)

Other income, net in the consolidated statement of operations of $2.6 million includes a gain on the sale of the Company’s Brazilian agricultural business of approximately $0.9 million. The Company received $5.2 million in cash in connection with this sale. Gains on the sale of equipment at various other locations accounted for most of the remainder of the balance in this account.

(7) Earnings Per Share

Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share are computed by dividing net income (loss) by the diluted weighted average shares outstanding. Diluted weighted average shares assume the exercise of stock options and warrants, so long as they are not anti-dilutive.

Shares outstanding for the three months ended April 30, 2002 and 2001, were as follows (thousands of shares):



	Three Months
	Ended

	2002		2001

Weighted average shares outstanding		28,456		28,456




Dilutive effect of options and warrants		—		—

Diluted shares outstanding		28,456		28,456

~~HAYES~~For ~~LEMMERZ~~the ~~INTERNATIONAL~~three months ending April 30, ~~INC.~~2002 ~~AND~~and 2001, ~~SUBSIDIARIES~~respectively, all options and warrants were excluded from the calculation of diluted earnings (loss) per share as the effect was anti-dilutive due to the net loss reflected for such periods.

~~Notes to Consolidated Financial Statements —~~ (~~Continued~~8) Comprehensive Income

~~Six~~SFAS ~~Months~~No. 130, ~~Ended~~“Reporting ~~July 31~~Comprehensive Income,” establishes ~~2001~~standards for the reporting and display of ~~2000~~comprehensive income. Comprehensive income is defined as all changes in a Company’s net assets except changes resulting from transactions with shareholders. It differs from net income in that certain items currently recorded to equity would be a part of comprehensive income.

~~(Unaudited)~~The components of comprehensive loss for the three months ended April 30, 2002 and 2001 are as follows:

(Millions of Dollars Unless Otherwise Stated)


		2002			2001

Net loss		$	(33.0	)	$	(63.7	)




Cumulative translation adjustments			(7.8	)		(5.7	)

	Total comprehensive loss	$	(40.8	)	$	(69.4	)

(29) ~~Restatement~~ Liabilities ofSubject ~~Consolidated Financial~~to ~~Statements — (Continued)~~Compromise

~~Consolidated~~The ~~Statement~~principal categories of ~~Operations~~claims classified as liabilities subject to compromise under reorganization proceedings are identified below. All amounts below may be subject to future adjustment depending on Bankruptcy Court action, further developments with respect to disputed claims, or other events, including the reconciliation of claims filed with the Bankruptcy Court to amounts included in the Company’s records. Additional pre-petition claims may arise from rejection of additional executory contracts or unexpired leases by the Company. Under a confirmed plan of reorganization, all pre-petition claims may be paid and discharged at amounts substantially less than their allowed amounts.

~~(Millions~~ Recorded ~~of dollars, except per share~~Liabilities ~~amounts)~~

		Six Months Ended July 31, 2000
		As Previously						As
		Reported			Restatements			Restated
Net sales		$	1,137.6		$	(3.6	)	$	1,134.0
Cost of goods sold			951.3			19.5			970.8
	Gross profit		186.3			(23.1	)		163.2
Marketing, general and administration			48.5			(1.9	)		46.6
Engineering and product development			9.4			—			9.4
Amortization of intangible assets			14.3			(0.4	)		13.9
Equity in earnings of joint ventures			(0.5	)		—			(0.5	)
Asset impairments and other restructuring charges			—			4.4			4.4
Other (income) expense, net			(4.9	)		2.9			(2.0	)
	Earnings from operations		119.5			(28.1	)		91.4
Interest expense, net			78.8			—			78.8
	Earnings before taxes on income and minority interest		40.7			(28.1	)		12.6
Income tax provision			17.1			(12.7	)		4.4
	Earnings before minority interest		23.6			(15.4	)		8.2
Minority interest			1.4			—			1.4
	Net income	$	22.2		$	(15.4	)	$	6.8
Basic net income per share		$	0.73		$	(0.51	)	$	0.22
Diluted net income per share		$	0.73		$	(0.51	)	$	0.22

On a consolidated basis, recorded liabilities subject to compromise under Chapter 11 proceedings consisted of the following (millions of dollars):


			April 30,		January 31,
			2002		2002

Accounts payable and accrued liabilities, principally trade			$	156.2	$	155.2




Credit Agreement:




	Term loans			176.8		176.8




	Revolving facility			572.8		572.1




	Accrued interest			26.5		13.4




Senior Notes and Senior Subordinated Notes:




	Face value			1,152.8		1,152.8




	Accrued interest			50.7		50.7

		Total	$	2,135.8	$	2,121.0

The increase in accounts payable and accrued liabilities in the above table is due primarily to additional accruals for rejected lease obligations net of payments to certain vendors pursuant to procedures approved by the Bankruptcy Court.

The Bankruptcy Code generally disallows the payment of interest that would otherwise accrue postpetition with respect to unsecured or undersecured claims. The Company has continued to record interest expense accruing postpetition with respect to the Credit Agreement because the Company currently estimates that such accrued interest will be an allowed claim as part of a plan or plans of reorganization. The amount of such

~~HAYES~~interest ~~LEMMERZ~~recorded ~~INTERNATIONAL~~at April 30, ~~INC~~2002 was $26.5 million and ~~AND~~has been classified as a liability subject to compromise in ~~SUBSIDIARIES~~the accompanying consolidated balance sheet.

~~Notes~~The DIP Facility provides for the postpetition cash payment at certain intervals of interest and fees accruing postpetition under the Company’s prepetition credit agreements if certain tests are satisfied relating to ~~Consolidated~~the ~~Financial~~liquidity position ~~Statements~~and earnings of the Company and its subsidiaries, and the repatriation of funds from foreign subsidiaries. On May —1, 2002, ~~(Continued)~~a payment of $2.1 million for a portion of accrued interest was made with respect to this provision.

~~Six~~The ~~Months~~Company ~~Ended~~has ~~July~~not continued to record interest expense accruing postpetition with respect to the Senior Notes and the Senior Subordinated Notes because the Company cannot currently reasonably estimate the amount of such interest, if any, that will be an allowed claim as part of a plan or plans of reorganization. The amount of such interest accruing postpetition that has not been recorded at April 3130, ~~2001~~2002 was ~~and~~$47.4 million. If it is determined that such interest ~~2000~~is allowable as a claim, the amount might include some or all interest accruing from the date of the Chapter 11 Filing. The recorded amount of prepetition accrued interest was $50.7 million, which has been classified as a liability subject to compromise in the accompanying consolidated balance sheet at April 30, 2002.

~~(Unaudited)~~ Contingent Liabilities

~~(Millions~~Contingent liabilities of ~~Dollars~~the ~~Unless~~Debtors ~~Otherwise~~as of the Chapter 11 ~~Stated)~~Filing date are also subject to compromise. The Company is a party to litigation matters and claims that are normal in the course of its operations. Generally, litigation related to “claims,” as defined by the Bankruptcy Code, is stayed. Also, as a normal part of their operations, the Company’s subsidiaries undertake certain contractual obligations, warranties and guarantees in connection with the sale of products or services. The outcome of the bankruptcy process on these matters cannot be predicted with certainty.

(210) ~~Restatement~~ Segment ~~of Consolidated Financial~~Reporting ~~Statements — (Continued)~~

~~Consolidated~~The ~~Balance~~Company ~~Sheet~~is organized based primarily on markets served and products produced. Under this organization structure, the Company’s operating segments have been aggregated into three reportable segments: Automotive Wheels, Components, and Other. The Other category includes Commercial Highway products, the corporate office and elimination of intercompany activities, none of which meet the requirements of being classified as an operating segment.

~~(Millions~~The offollowing ~~dollars,~~table ~~except~~represents ~~share~~revenues and other financial ~~amounts)~~information by business segment for the three months ended April 30:

					As of July 31, 2000
			Revenue								Net Income (Loss)							Total Assets
					As
			2002				2001				2002				2001			2002		2001
					Previously								As
Automotive Wheels			$	285.4			$	324.3			$	(13.1	)		$	(9.5	)	$	1,180.9	$	1,336.0
					Reported				Restatements				Restated
Components				176.5				176.9				(3.2	)			(4.0	)		872.5		917.3
Assets
Other				24.8				39.7				(16.7	)			(50.2	)		319.7		293.9
	Current assets:
	Total		$	486.7			$	540.9			$	(33.0	)		$	(63.7	)	$	2,373.1	$	2,547.2
		Cash and cash equivalents			$	16.6			$	—			$	16.6
		Receivables				203.8				(10.9	)			192.9
		Inventories				211.4				16.6				228.0
		Deferred tax assets				—				32.2				32.2
		Prepaid expenses and other				14.1				(2.2	)			11.9
			Total current assets			445.9				35.7				481.6
	Property, plant and equipment, net					1,187.4				(8.0	)			1,179.4
	Deferred tax assets					97.1				(69.7	)			27.4
	Goodwill and other assets					1,086.7				(70.3	)			1,016.4
			Total assets		$	2,817.1			$	(112.3	)		$	2,704.8
Liabilities and Stockholders’ Equity
		Current liabilities:
		Bank borrowings			$	77.8			$	—			$	77.8
		Current portion of long-term debt				70.0				—				70.0
		Accounts payable and accrued liabilities				469.0				2.9				471.9
			Total current liabilities			616.8				2.9				619.7
	Long-term debt, net of current portion					1,539.3				—				1,539.3
	Deferred tax liabilities					115.0				(44.9	)			70.1
	Pension and other long-term liabilities					288.9				(21.6	)			267.3
	Minority interest					8.0				—				8.0
			Total liabilities			2,568.0				(63.6	)			2,504.4
	Commitments and contingencies
	Common stock subject to put agreement					8.5				—				8.5
	Stockholders’ equity:
		Preferred stock				—				—				—
		Common stock:
			Voting			0.3				—				0.3
			Nonvoting			—				—				—
		Additional paid in capital				231.4				—				231.4
		Retained earnings				80.3				(33.0	)			47.3
		Accumulated other comprehensive loss				(71.4	)			(15.7	)			(87.1	)
			Total stockholders’ equity			240.6				(48.7	)			191.9
			Total liabilities and stockholders’ equity		$	2,817.1			$	(112.3	)		$	2,704.8

The net income (loss) amounts for the three months ended April 30, 2002 presented in the above table include reorganization items of $12.5 million and $10.0 million in Automotive Wheels and Other, respectively.

(11) Condensed Combined Financial Statements

The following condensed combined financial statements present in one format the financial information required for entities that have filed for reorganization relief under Chapter 11 of the Bankruptcy Code pursuant to SOP 90-7, and the financial information required with respect to those entities which guarantee certain of the Company’s debt.

~~HAYES~~subsidiaries’ ~~LEMMERZ~~cumulative ~~INTERNATIONAL~~results of operations, ~~INC~~capital contributions, distributions and other equity changes. ~~AND~~The ~~SUBSIDIARIES~~principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

~~Notes~~ Guarantor toand ~~Consolidated Financial~~Nonguarantor ~~Statements —~~Financial ~~(Continued)~~Statements

~~Six~~The ~~Months~~senior ~~Ended~~subordinated ~~July 31,~~notes and senior notes are guaranteed by certain of the Company’s domestic subsidiaries. Certain other domestic subsidiaries and the foreign subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the senior subordinated notes and the senior notes. In the third quarter of fiscal 2001, amendments were entered into by the Company and holders of the Company’s 8 1/4% and ~~2000~~9 1/8% Senior Subordinated Notes ( the “8 1/4% Notes” and the “9 1/8% Notes”). Such amendments conformed the lists of guarantor subsidiaries of the respective senior subordinated notes to that list of subsidiaries guaranteeing the 11 7/8% Notes (the “Conformed Guarantor Subsidiaries”). The list of guarantor subsidiaries of the Company’s 11% Senior Subordinated Notes (the “11% Notes”) was not conformed.

The condensed consolidating financial information as of and for the three months ended April 30, 2002 for those guarantor subsidiaries of the 11% Notes (~~Unaudited~~the “Guarantor Subsidiaries”) has been presented separately below as the 11% Notes are not guaranteed by the Conformed Guarantor Subsidiaries. Collectively, the Guarantor Subsidiaries and the Conformed Guarantor Subsidiaries guarantee the 8 1/4% Notes, the 9 1/8% Notes, and the 11 7/8% Notes.

~~(Millions~~At ofApril 30, ~~Dollars~~2001, ~~Unless~~the ~~Otherwise~~8 1/4% Notes, the 9 1/8% ~~Stated)~~Notes, and the 11% Notes were guaranteed by the Guarantor Subsidiaries. Certain other domestic subsidiaries and the foreign subsidiaries did not guarantee these notes.

~~(3) Bank~~ Financial ~~Borrowings~~Statements ~~and~~for Entities ~~Long-Term~~in Reorganization Under Chapter 11 ~~Debt~~

~~Refinancing~~As discussed in Note 1, Hayes Lemmerz International, Inc. (the “Parent”), 30 of its wholly-owned domestic subsidiaries, and one wholly-owned Mexican subsidiary (the “Nonguarantor Debtor”) filed voluntary petitions for reorganization relief under Chapter 11. In accordance with SOP 90-7, condensed consolidating financial information is presented below as of and for the three months ended April 30, 2002.

On June 21, 2001, the Company received formal approval for Consent and Amendment No. 5 to the Credit Agreement. Such amendment provided for and/or permits, among other things, the issuance and sale of certain senior unsecured notes (the “Senior Notes”) by the Company, a receivables securitization transaction, and changes to the various financial covenants contained in the Credit Agreement in the event that the issuance and sale of the Senior Notes does occur. The amendment also provided the Company with the option of establishing a new “B” tranche of term loans (the “B Term Loan”) under the Credit Agreement. The amendment also provides for the net cash proceeds of the issuance and sale of the Senior Notes to be applied as follows: (i) the first $140,000,000, to prepay outstanding term loans (in direct order of stated maturity) under the Credit Agreement; (ii) the next $60,000,000, at the Company’s option, to prepay indebtedness of the Company’s foreign subsidiaries; (iii) the next $50,000,000, to prepay outstanding term loans (in direct order of stated maturity) under the Credit Agreement; (iv) the next $50,000,000, at the Company’s option, to repurchase or redeem a portion of the Company’s existing senior subordinated notes; and (v) the remainder, if any, to prepay outstanding term loans (in direct order of stated maturity) and then to reduce the revolving credit commitments under the Credit Agreement.

On June 22, 2001, the Company received $291.1 million in net proceeds from the issuance of 11 7/8% senior unsecured notes due 2006 in the original principal amount of $300 million (the “11 7/8% Notes”). In addition, on July 2, 2001, the Company received $144.3 million in net proceeds from the issuance of the B Term Loan. These aggregate net proceeds totaled $435.4 million and were used as follows ($ in millions):

Permanent reduction of Credit Agreement indebtedness with a principal balance of $334.3, plus $2.2 in accrued interest		$	336.5
Payment on foreign indebtedness with a principal balance of $47.0			47.0
Repurchase of certain Senior Subordinated Notes with a face value of $47.2, plus $1.0 in accrued interest			37.6
Payment of fees and expenses on the above			0.8
Remaining cash proceeds held by Company			13.5
	Total	$	435.4

In connection with the repurchase of the senior subordinated notes at a discount, the Company recorded an extraordinary gain of $10.6 million in the second quarter of fiscal 2001. This gain was offset by $0.9 million of unamortized deferred financing costs written off as a result of the repurchase. Further, in connection with the B Term refinancing and permanent reduction of the Credit Agreement, the Company recorded an extraordinary loss of $5.5 million for the write-off of unamortized deferred financing costs associated with the Credit Agreement. These extraordinary items are reflected net of tax of $1.5 million on the accompanying consolidated statement of operations. As a result, the deferred tax asset valuation allowance was reduced by a corresponding amount with the benefit included in Income tax provision on the consolidated statement of operations included herein.

The 11 7/8% Notes mature on June 15, 2006 and require interest payments semi-annually on each June 15 and December 15 commencing December 15, 2001. The 11 7/8% Notes may not be redeemed prior to June 15, 2005; provided, however, that the Company may, at any time and from time to time prior to June 15, 2004, redeem up to 35% of the aggregate principal amount of the 11 7/8% Notes at a price equal to 111.875% of the aggregate principal amount so redeemed, plus accrued and unpaid interest to the date of redemption, with the

~~HAYES~~CONDENSED ~~LEMMERZ~~COMBINED ~~INTERNATIONAL,~~STATEMENTS ~~INC.~~OF ~~AND~~OPERATIONS ~~SUBSIDIARIES~~

~~Notes~~For tothe ~~Consolidated~~Three ~~Financial Statements~~Months Ended April —30, ~~(Continued)~~2002

Six Months Ended July 31, 2001 and 2000



		Debtors												Non-Debtors

								Conformed			Nonguarantor
					Guarantor			Guarantor			Debtor			Nonguarantor						Consolidated
		Parent			Subsidiaries			Subsidiaries			Subsidiary			Subsidiaries			Eliminations			Total

Net sales		$	64.0		$	122.8		$	125.8		$	11.0		$	170.7		$	(7.6	)	$	486.7




Cost of goods sold			61.2			110.4			121.5			11.0			145.1			(7.6	)		441.6

	Gross profit		2.8			12.4			4.3			—			25.6			—			45.1




Marketing, general and administration			6.3			6.9			4.8			—			9.6			—			27.6




Engineering and product development			0.8			1.9			0.9			—			1.4			—			5.0




Amortization of goodwill			—			—			—			—			—			—			—




Equity in (earnings) losses of subsidiaries and joint ventures			21.8			4.5			(2.4	)		(0.1	)		—			(23.8	)		—




Asset impairments and other restructuring charges			—			—			6.7			—			0.5			—			7.2




Loss on investment in joint venture			—			—			—			—			—			—			—




Other expense (income), net			—			0.1			(0.1	)		—			(2.6	)		—			(2.6	)




Reorganization items			10.0			12.5			—			—			—			—			22.5

	Earnings (loss) from operations		(36.1	)		(13.5	)		(5.6	)		0.1			16.7			23.8			(14.6	)




Interest expense, net			0.9			6.0			4.5			—			5.4			—			16.8

	Earnings (loss) before taxes on income and minority interest		(37.0	)		(19.5	)		(10.1	)		0.1			11.3			23.8			(31.4	)




Income tax provision			(4.0	)		0.2			0.3			0.1			4.3			—			0.9

	Earnings (loss) before minority interest		(33.0	)		(19.7	)		(10.4	)		—			7.0			23.8			(32.3	)




Minority interest			—			—			—			—			0.7			—			0.7

	Net income (loss)	$	(33.0	)	$	(19.7	)	$	(10.4	)	$	—		$	6.3		$	23.8		$	(33.0	)

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(3) Bank Borrowings and Long-Term Debt — (Continued)

Net Cash Proceeds (as defined) of one or more Equity Offerings (as defined), provided that at least $195.0 million aggregate principal amount of the 11 7/8% Notes remain outstanding. On or after June 15, 2005, the Company may, at its option, redeem the 11 7/8% Notes upon the terms and conditions set forth in the indenture.

The 11 7/8% Notes rank equally to all other existing and future senior debt but are effectively subordinated to the borrowings under the Credit Agreement to the extent of collateral securing the Credit Agreement. The 11 7/8% Notes are effectively subordinated to all liabilities (including trade and intercompany obligations) of the Company’s subsidiaries which are not guarantors of the Credit Agreement and the B Term Loan. The indenture governing the 11 7/8% Notes provide for certain restrictions regarding additional debt, dividends and other distributions, additional stock of subsidiaries, certain investments, liens, transactions with affiliates, mergers, consolidations, and the transfer and sales of assets. The indenture also provides that a holder of the 11 7/8% Notes may, under certain circumstances, have the right to require that the Company repurchase such holder’s 11 7/8% Notes upon a change of control of the Company. The 11 7/8% Notes are unconditionally guaranteed as to the payment of principal, premium, if any, and interest, jointly and severally by the Company’s material domestic subsidiaries.

Pursuant to an Exchange Offer Registration Rights Agreement (the “Registration Rights Agreement”), the Company agreed to use its best efforts to file and have declared effective an Exchange Offer Registration Statement with respect to an offer to exchange the 11 7/8% Notes for other notes of the Company with terms substantially identical to the 11 7/8% Notes. The Company also agreed to consummate such exchange offer on or prior to December 19, 2001. As a result of the Chapter 11 Filings by the Company on December 5, 2001 as discussed in Note 12, such registration has not occurred.

The B Term Loans amortize at the rate of 1% of principal per year and mature in full on December 31, 2005 (at which time all remaining unpaid principal will be due and payable). The B Term Loans rank equally with all other loans outstanding under the Credit Agreement and share equally in the guarantees and collateral granted by the Company and its subsidiaries to secure the amounts outstanding under the Credit Agreement. The B Term Loans are also subject to the same covenants and events of default which govern all other loans outstanding under the Credit Agreement.

The interest rates of the B Term Loans are, at the option of the Company, based upon either an adjusted eurocurrency rate (the “eurocurrency rate”) or the rate which is equal to the highest of CIBC’s prime rate, the federal funds rate plus 1/2 of 1% and the base certificate of deposit rate plus 1% (the “ABR rate”), in each case plus an applicable margin. For B Term Loans which bear interest at the eurocurrency rate, the applicable margin is 5.0%, and for B Term Loans which bear interest at the ABR rate, the applicable margin is 4.0%. The Company may elect interest periods of one, two, three or six months for eurocurrency loans. Interest is computed on the basis of actual number of days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, for ABR loans based on the prime rate). Interest is payable at the end of each interest period and, in any event, at least every three months.

The Credit Agreement, as amended, contains certain financial covenants regarding interest coverage ratios, fixed charge coverage ratios, leverage ratios and capital spending limitations. For purposes of these consolidated financial statements, all amounts outstanding with respect to the Credit Agreement, the senior subordinated notes, and the 11 7/8% Notes outstanding at July 31, 2001 are classified as a current liability as of July 31, 2001.

~~HAYES~~CONDENSED ~~LEMMERZ~~COMBINED ~~INTERNATIONAL,~~STATEMENTS ~~INC.~~OF ~~AND~~OPERATIONS ~~SUBSIDIARIES~~

~~Notes~~For tothe ~~Consolidated~~Three ~~Financial Statements~~Months Ended April —30, ~~(Continued)~~2001

Six Months Ended July 31, 2001 and 2000


					Guarantor			Nonguarantor						Consolidated
		Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net sales		$	70.4		$	123.6		$	349.2		$	(2.3	)	$	540.9




Cost of goods sold			61.0			113.9			310.7			(2.3	)		483.3

	Gross profit		9.4			9.7			38.5			—			57.6




Marketing, general and administration			3.9			6.4			15.9			—			26.2




Engineering and product development			0.9			1.8			3.2			—			5.9




Amortization of goodwill			0.3			1.9			4.5			—			6.7




Equity in (earnings) loss of subsidiaries and joint ventures			53.2			12.4			—			(65.2	)		0.4




Asset impairments and other restructuring charges			—			—			31.0			—			31.0




Other income, net			(0.1	)		—			(0.1	)		—			(0.2	)

	Earnings (loss) from operations		(48.8	)		(12.8	)		(16.0	)		65.2			(12.4	)




Interest expense, net			14.8			11.0			18.4			—			44.2

	Earnings (loss) before taxes on income and minority interest		(63.6	)		(23.8	)		(34.4	)		65.2			(56.6	)




Income tax provision			0.1			0.2			6.0			—			6.3

	Earnings (loss) before minority interest		(63.7	)		(24.0	)		(40.4	)		65.2			(62.9	)




Minority interest			—			—			0.8			—			0.8

Net income (loss)		$	(63.7	)	$	(24.0	)	$	(41.2	)	$	65.2		$	(63.7	)

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(3) Bank Borrowings and Long-Term Debt — (Continued)

Trade Securitization Agreement

In July 1998, the Company entered into a three-year trade securitization agreement pursuant to which the Company and certain of its subsidiaries sold, and continued to sell on an ongoing basis, a portion of their accounts receivables to a special purpose entity (“Funding Co.”), which is wholly owned by the Company. Accordingly, the Company and such subsidiaries, irrevocably and without recourse, transferred and continued to transfer substantially all of their U.S. dollar denominated trade accounts receivable to Funding Co. Funding Co. then sold and continued to sell such trade accounts receivable to an independent issuer of receivable-backed commercial paper. The Company had collection and administrative responsibilities with respect to all the receivables that were sold. There were no receivables sold as of July 31, 2001.

This trade securitization agreement expired on May 1, 2001. From that time up to July 31, 2001, the Company financed the amount of receivables previously sold under the securitization agreement with its revolving credit facility. The impact of the discontinued securitization program had an adverse impact on liquidity of approximately $71.6 million for the six month period ended July 31, 2001.

(4) Derivative Financial Instruments

On February 1, 2001, the Company adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, SFAS 137, “Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of FASB Statement No. 133” and SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133.” The adoption of these standards did not have a material impact on the Company’s financial position or results of operations.

The Company has significant investments in foreign subsidiaries. The majority of these investments are in Europe wherein the Euro is the functional currency. As a result, the Company is exposed to fluctuations in exchange rates between the Euro and the U.S. Dollar. To reduce this exposure, the Company has entered into cross-currency interest rate swap agreements. At July 31, 2001 and January 31, 2001, the Company held $100 million and $281 million, respectively, notional amount of cross-currency interest rate swaps which are recorded in the accompanying consolidated balance sheets at fair value. At July 31, 2001 and January 31, 2001, the Company had recorded an unrealized gain of approximately $1.1 million and an unrealized loss of approximately $0.4 million, respectively. The fair value of the Company’s cross-currency interest rate swaps is the estimated amount the Company would receive or pay to terminate the agreement based on third party market quotes. The Company has designated these swap agreements as hedges of the foreign currency exposure of its net investment in foreign operations. In addition, the Company has designated a term loan, totaling 59.7 million Deutschemarks, as a hedge of foreign currency exposure of its net investment in its German operation.

The Company records the gain or loss on the derivative financial instruments designated as hedges of the foreign currency exposure of its net investment in foreign operations as currency translation adjustments in Accumulated Other Comprehensive Loss to the extent the hedges are effective. The gain or loss on the hedging instruments offset the change in currency translation adjustments resulting from translating the foreign operations’ financial statements from their respective functional currency to the Dollar. In the second quarter of fiscal 2001, the Company recorded a gain of $2.1 million on the instruments designated as hedges in Accumulated Other Comprehensive Loss. The tax effect of this gain was offset by a reversal of the deferred

~~HAYES~~CONDENSED ~~LEMMERZ~~COMBINED ~~INTERNATIONAL,~~BALANCE ~~INC. AND~~SHEETS ~~SUBSIDIARIES~~

~~Notes~~As toof ~~Consolidated Financial Statements~~April —30, ~~(Continued)~~2002

Six Months Ended July 31, 2001 and 2000



		Debtors												Non-Debtors

								Conformed			Nonguarantor
					Guarantor			Guarantor			Debtor			Nonguarantor
		Parent			Subsidiaries			Subsidiaries			Subsidiary			Subsidiaries			Eliminations

Cash and cash equivalents		$	21.9		$	0.2		$	—		$	0.7		$	41.2		$	—




Receivables			23.7			40.5			66.3			8.9			135.2			—




Inventories			18.3			26.9			40.2			1.4			76.0			—




Prepaid expenses and other			8.7			4.8			6.3			0.5			15.3			(0.2	)

	Total current assets		72.6			72.4			112.8			11.5			267.7			(0.2	)




Net property, plant and equipment			120.4			179.6			241.4			7.3			389.0			(0.4	)




Goodwill and other assets			902.2			226.0			397.1			21.7			291.9			(939.9	)

	Total assets	$	1,095.2		$	478.0		$	751.3		$	40.5		$	948.6		$	(940.5	)

Bank borrowings and other notes		$	—		$	2.0		$	—		$	—		$	24.1		$	—




Current portion of long-term debt			—			—			—			—			12.8			—




Accounts payable and accrued liabilities			74.6			16.4			42.0			(1.5	)		171.1			(20.1	)

	Total current liabilities		74.6			18.4			42.0			(1.5	)		208.0			(20.1	)




Long-term debt, net of current portion			—			—			—			—			79.9			—




Pension and other long-term liabilities			81.0			59.0			13.9			—			171.5			—




Minority interest			—			—			—			—			11.4			—




Intercompany accounts			(572.7	)		354.5			45.2			(0.5	)		173.5			—




Liabilities subject to compromise			2,013.1			54.7			62.5			5.5			—			—




Common stock			0.3			—			—			—			—			—




Additional paid-in capital			235.1			197.2			905.4			53.4			323.8			(1,479.8	)




Common stock in treasury at cost			(25.7	)		—			—			—			—			—




Retained earnings (accumulated deficit)			(575.4	)		(192.9	)		(213.3	)		(15.7	)		61.8			360.1




Accumulated other comprehensive loss			(135.1	)		(12.9	)		(104.4	)		(0.7	)		(81.3	)		199.3

	Total stockholders’ equity (deficit)		(500.8	)		(8.6	)		587.7			37.0			304.3			(920.4	)

	Total liabilities and stockholder’s equity (deficit)	$	1,095.2		$	478.0		$	751.3		$	40.5		$	948.6		$	(940.5	)

[Additional columns below] ~~(Unaudited)~~

~~(Millions~~[Continued offrom ~~Dollars~~above ~~Unless~~table, ~~Otherwise Stated~~first column(s) repeated]

(4) Derivative Financial Instruments — (Continued)


		Consolidated
		Total

Cash and cash equivalents		$	64.0




Receivables			274.6




Inventories			162.8




Prepaid expenses and other			35.4

	Total current assets		536.8




Net property, plant and equipment			937.3




Goodwill and other assets			899.0

	Total assets	$	2,373.1

Bank borrowings and other notes		$	26.1




Current portion of long-term debt			12.8




Accounts payable and accrued liabilities			282.5

	Total current liabilities		321.4




Long-term debt, net of current portion			79.9




Pension and other long-term liabilities			325.4




Minority interest			11.4




Intercompany accounts			—




Liabilities subject to compromise			2,135.8




Common stock			0.3




Additional paid-in capital			235.1




Common stock in treasury at cost			(25.7	)




Retained earnings (accumulated deficit)			(575.4	)




Accumulated other comprehensive loss			(135.1	)

	Total stockholders’ equity (deficit)		(500.8	)

	Total liabilities and stockholder’s equity (deficit)	$	2,373.1

tax asset valuation allowance such that there was no net tax effect in the quarter ended July 31, 2001. As these derivative financial instruments were accounted for as qualifying hedges prior to adoption of SFAS No. 133, no transition adjustment was recorded at the date of adoption.

(5) Inventories

The major classes of inventory are as follows:

		July 31,		January 31,
		2001		2001
Raw materials		$	46.9	$	49.7
Work-in-process			53.2		60.1
Finished goods			71.5		72.4
Spare parts and supplies			35.4		35.1
	Total	$	207.0	$	217.3

(6) Property, Plant and Equipment

The major classes of property, plant and equipment are as follows:

		July 31,			January 31,
		2001			2001
Land		$	30.4		$	31.2
Buildings			234.5			248.7
Machinery and equipment			1,119.8			1,134.9
			1,384.7			1,414.8
Accumulated depreciation			(345.6	)		(310.0	)
	Net property, plant and equipment	$	1,039.1		$	1,104.8

(7) Asset Impairments and Other Charges

During the first quarter of fiscal 2001, the Company recognized asset impairment losses of $28.5 million related to the Company’s Petersburg, Michigan facility and $2.5 million related to the abandonment of plans to continue to invest in the start-up of certain single-purpose equipment at another facility. In June 2001, the Company committed to a plan to close the Petersburg facility, and accordingly recorded a related charge of $0.6 million. During the second quarter of fiscal 2001, the Company recognized an impairment loss of $6.4 million related principally to a change in management’s plan for future use of idled machinery and equipment in the Automotive Wheel segment, and to investments in machinery, equipment, and tooling at its Somerset, Kentucky facility. The Company also recorded a $3.8 million loss on its investment in a Mexican joint venture, which had incurred and expects to continue to incur significant operating losses.

(8) Earnings Per Share

~~HAYES~~CONDENSED ~~LEMMERZ~~COMBINED ~~INTERNATIONAL,~~BALANCE ~~INC. AND~~SHEETS ~~SUBSIDIARIES~~

~~Notes~~As toof ~~Consolidated Financial Statements~~January —31, ~~(Continued)~~2002

Six Months Ended July 31, 2001 and 2000



		Debtors												Non-Debtors

								Conformed			Nonguarantor
					Guarantor			Guarantor			Debtor			Nonguarantor
		Parent			Subsidiaries			Subsidiaries			Subsidiary			Subsidiaries			Eliminations

Cash and cash equivalents		$	11.3		$	0.1		$	0.3		$	0.4		$	33.1		$	—




Receivables			19.0			48.6			57.0			10.2			131.4			—




Inventories			16.2			27.1			39.9			0.3			71.7			—




Prepaid expenses and other			10.9			6.5			5.2			0.2			18.9			(5.4	)

	Total current assets		57.4			82.3			102.4			11.1			255.1			(5.4	)




Net property, plant and equipment			120.9			183.1			244.0			7.3			410.1			—




Goodwill and other assets			932.4			230.2			395.6			22.1			282.2			(972.7	)

	Total assets	$	1,110.7		$	495.6		$	742.0		$	40.5		$	947.4		$	(978.1	)

Bank borrowings		$	—		$	—		$	—		$	—		$	25.1		$	—




Current portion of long-term debt			—			—			—			—			14.5			—




Accounts payable and accrued liabilities			51.4			8.9			26.0			3.2			167.7			(25.2	)

	Total current liabilities		51.4			8.9			26.0			3.2			207.3			(25.2	)




Long-term debt, net of current portion			1.0			—			—			—			82.5			—




Pension and other long-term liabilities			83.7			61.3			11.9			—			173.3			—




Minority interest			—			—			—			—			11.8			—




Intercompany accounts			(570.5	)		364.6			38.7			(3.7	)		170.9			—




Liabilities subject to compromise			2,005.1			48.7			63.2			4.0			—			—




Common stock			0.3			—			—			—			—			—




Additional paid-in capital			235.1			197.2			905.4			53.4			323.8			(1,479.8	)




Common stock in treasury at cost			(25.7	)		—			—			—			—			—




Retained earnings (accumulated deficit)			(542.4	)		(173.2	)		(202.9	)		(15.7	)		55.5			336.3




Accumulated other comprehensive loss			(127.3	)		(11.9	)		(100.3	)		(0.7	)		(77.7	)		190.6

	Total stockholders’ equity (deficit)		(460.0	)		12.1			602.2			37.0			301.6			(952.9	)

	Total liabilities and stockholder’s equity (deficit)	$	1,110.7		$	495.6		$	742.0		$	40.5		$	947.4		$	(978.1	)

[Additional columns below] ~~(Unaudited)~~

~~(Millions~~[Continued offrom ~~Dollars~~above ~~Unless~~table, ~~Otherwise Stated~~first column(s) repeated]

(8) Earnings Per Share — (Continued)


		Consolidated
		Total

Cash and cash equivalents		$	45.2




Receivables			266.2




Inventories			155.2




Prepaid expenses and other			36.3

	Total current assets		502.9




Net property, plant and equipment			965.4




Goodwill and other assets			889.8

	Total assets	$	2,358.1

Bank borrowings		$	25.1




Current portion of long-term debt			14.5




Accounts payable and accrued liabilities			232.0

	Total current liabilities		271.6




Long-term debt, net of current portion			83.5




Pension and other long-term liabilities			330.2




Minority interest			11.8




Intercompany accounts			—




Liabilities subject to compromise			2,121.0




Common stock			0.3




Additional paid-in capital			235.1




Common stock in treasury at cost			(25.7	)




Retained earnings (accumulated deficit)			(542.4	)




Accumulated other comprehensive loss			(127.3	)

	Total stockholders’ equity (deficit)		(460.0	)

	Total liabilities and stockholder’s equity (deficit)	$	2,358.1

income (loss) by the diluted weighted average shares outstanding. Diluted weighted average shares assume the exercise of stock options and warrants.

Shares outstanding for the three months and six months ended July 31, 2001 and 2000, were as follows (in thousands):

	Three Months				Six Months
	Ended				Ended
	2001		2000		2001		2000
Weighted average shares outstanding		28,455		30,357		28,455		30,357
Dilutive effect of options and warrants		—		89		—		218
Diluted shares outstanding		28,455		30,446		28,455		30,575

For the three month and six month periods ending July 31, 2001, all options and warrants were excluded from the calculation of diluted earnings (loss) per share as the effect was anti-dilutive due to the net loss reflected for such periods.

(9) Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive income. Comprehensive income is defined as all changes in a Company’s net assets except changes resulting from transactions with shareholders. It differs from net income in that certain items currently recorded to equity would be a part of comprehensive income.

The components of comprehensive income (loss) for the six months ended July 31, 2001 and 2000 are as follows:

		2001			2000
Net income (loss)		$	(131.8	)	$	6.8
Cumulative translation adjustments			(22.1	)		(5.6	)
	Total comprehensive income (loss)	$	(153.9	)	$	1.2

(10) Contingencies

Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability, patent infringement, and employee benefit matters. While the amounts claimed may be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that exist. Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on facts currently available, management believes that the disposition of matters that are pending or asserted will not have a material adverse effect on the financial position of the Company.

Certain operating leases covering leased assets with an original cost of approximately $68.0 million, contain provisions which, if certain events occur or conditions are met, including termination of the lease, might require the Company to purchase or re-sell the leased assets within a specified period of time, generally one year, based on amounts specified in the lease agreements. On July 18, 2001, the Company received notification of termination from a lessor with respect to leased assets having approximately $25.0 million of

~~HAYES~~CONDENSED ~~LEMMERZ~~COMBINED ~~INTERNATIONAL,~~STATEMENTS ~~INC.~~OF ~~AND~~CASH FLOWS ~~SUBSIDIARIES~~

~~Notes~~For tothe ~~Consolidated~~Three ~~Financial Statements~~Months Ended April —30, ~~(Continued)~~2002

Six Months Ended July 31, 2001 and 2000



			Debtors												Non-Debtors

									Conformed			Nonguarantor
						Guarantor			Guarantor			Debtor			Nonguarantor					Consolidated
			Parent			Subsidiaries			Subsidiaries			Subsidiary			Subsidiaries			Eliminations		Total

Cash flows provided by (used for) operating activities			$	18.2		$	15.0		$	2.3		$	(3.1	)	$	17.6		$	—	$	50.0




Cash flows from investing activities:




	Acquisition of property, plant, equipment, and tooling			(4.9	)		(2.4	)		(6.0	)		—			(9.1	)		—		(22.4	)




	Proceeds from sale of assets and non-core businesses			—			0.1			—			—			6.6			—		6.7




	Other, net			(0.2	)		(2.4	)		(3.2	)		0.2			(5.7	)		—		(11.3	)

		Cash provided by (used for) investing activities		(5.1	)		(4.7	)		(9.2	)		0.2			(8.2	)		—		(27.0	)




Cash flows from financing activities:




	Increase in bank borrowings, revolving facility, DIP facility and other notes			(0.3	)		—			—			—			(3.4	)		—		(3.7	)

		Cash provided by (used for) financing activities		(0.3	)		—			—			—			(3.4	)		—		(3.7	)




Increase (decrease) in parent loans and advances				(2.2	)		(10.2	)		6.6			3.2			2.6			—		—




Effect of exchange rates of cash and cash equivalents				—			—			—			—			(0.5	)		—		(0.5	)

		Net increase (decrease) in cash and cash equivalents		10.6			0.1			(0.3	)		0.3			8.1			—		18.8




Cash and cash equivalents at beginning of period				11.3			0.1			0.3			0.4			33.1			—		45.2

Cash and cash equivalents at end of period			$	21.9		$	0.2		$	—		$	0.7		$	41.2		$	—	$	64.0

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(10) Contingencies — (Continued)

original cost (which termination was not to be effective for one year). The Company has not agreed with the lessor that a termination has occurred at the time of the notice and has continued to use the leased assets.

(11) Segment Reporting

The following table represents revenues and other financial information by business segment for the six months ended July 31:

		Revenue				Net income (loss)						Total Assets
				(As Restated)					(As Restated)					(As Restated)
		2001		2000		2001			2000			2001		2000
Automotive wheels		$	636.8	$	699.8	$	(38.7	)	$	9.3		$	1,286.0	$	1,438.0
Cast components			339.9		342.3		(10.8	)		(4.3	)		897.2		951.3
Other			82.8		91.9		(82.3	)		1.8			421.5		315.5
	Total	$	1,059.5	$	1,134.0	$	(131.8	)	$	6.8		$	2,604.7	$	2,704.8

(12) Subsequent Events

Chapter 11 Filings

On December 5, 2001, the Company, 30 of its wholly-owned domestic subsidiaries and one wholly-owned Mexican subsidiary (collectively, the “Debtors”) filed voluntary petitions for reorganization (the “Chapter 11 Filings” or the “Filings”) under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Filings are being jointly administered, for procedural purposes only, before the Bankruptcy Court under Case No. 01-11490-MFW.

During the pendancy of these Filings, the Debtors remain in possession of their properties and assets and management of the Company continues to operate the businesses of the Debtors as debtors-in-possession. As a debtor-in-possession, the Company is authorized to operate the business of the Debtors, but may not engage in transactions outside of the ordinary course of business without the approval of the Bankruptcy Court, after notice and the opportunity for a hearing.

~~HAYES~~CONDENSED ~~LEMMERZ~~COMBINED ~~INTERNATIONAL,~~STATEMENTS ~~INC.~~OF ~~AND~~CASH FLOW ~~SUBSIDIARIES~~

~~Notes~~For tothe ~~Consolidated~~three ~~Financial Statements~~months ended April —30, ~~(Continued)~~2001

Six Months Ended July 31, 2001 and 2000


						Guarantor			Nonguarantor					Consolidated
			Parent			Subsidiaries			Subsidiaries			Eliminations		Total

Cash flows provided by (used for) operating activities			$	9.9		$	(43.2	)	$	(22.1	)			$	(55.4	)




Cash flows from investing activities:




	Acquisition of property, plant and equipment, and tooling			(1.1	)		(1.8	)		(28.2	)		—		(31.1	)




	Other, net			(5.7	)		4.2			0.2			—		(1.3	)

		Cash provided by (used for) investing activities		(6.8	)		2.4			(28.0	)		—		(32.4	)




Cash flows from financing activities:




	Increase in bank borrowings and revolver			67.3			—			5.8			—		73.1




	Proceeds from accounts receivable securitization			17.6			16.9			13.1			—		47.6




	Financing fees			(2.3	)		—			—			—		(2.3	)

		Cash provided by financing activities		82.6			16.9			18.9			—		118.4




Increase (decrease) in parent loans and advances				(63.6	)		23.8			39.8			—		—




Effect of exchange rates of cash and cash equivalents				—			—			(1.7	)		—		(1.7	)

		Net increase (decrease) in cash and cash equivalents		22.1			(0.1	)		6.9			—		28.9




Cash and cash equivalents at beginning of period				(19.3	)		0.2			19.1			—		—

Cash and cash equivalents at end of period			$	2.8		$	0.1		$	26.0				$	28.9

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(12) Subsequent Events — (Continued)

The Bankruptcy Court has approved payment of certain of the Debtors’ pre-petition liabilities, such as employee wages, benefits, and certain customer, vendor and freight program related payments. In addition, the Bankruptcy Court authorized the Debtors to continue and maintain the majority of their employee benefit programs. Pension and savings plan funds are in trusts and protected under federal regulations. All required contributions are current in the respective plans. The Debtors have received Bankruptcy Court approval for the retention of legal, financial and management consulting professionals, and from time to time may seek Bankruptcy Court approval for the retention of additional financial and management consulting professionals, to advise the Debtors in the bankruptcy proceedings and the restructuring of its businesses.

Pursuant to the automatic stay provisions of Section 362 of the Bankruptcy Code, actions to collect pre-petition indebtedness and virtually all litigation against the Debtors that was, or could have been, brought prior to the commencement of the Chapter 11 Filings are stayed, and other contractual obligations of the Debtors may not be enforced against them. In addition, under Section 365 of the Bankruptcy Code, subject to the approval of the Bankruptcy Court, the Debtors may assume or reject executory contracts and unexpired leases. Parties affected by any such rejections may file proofs of claim with the Bankruptcy Court in accordance with the reorganization process. Proof of claims for damages resulting from the rejection of executory contracts or unexpired leases generally must be filed with the Bankruptcy Court by the later of (a) the general claims bar date established by the Bankruptcy Court (which was not established as of the date of this filing), or (b) the date that is thirty days after entry of order approving the rejection. As of the date of this filing, the Debtors had not yet completed their review of all contracts and leases for assumption or rejection, but ultimately will assume or reject all such contracts and leases. The Debtors cannot presently determine or reasonably predict the ultimate liability that may result from rejecting such contracts or leases or from the filing of rejection damage claims, but such rejections could result in additional liabilities subject to compromise.

All liabilities subject to compromise are subject to future adjustment depending on Bankruptcy Court action, further developments with respect to disputed claims, or other events. Under a confirmed plan of reorganization, most all unsecured pre-petition claims may be paid at amounts substantially less than their allowed amounts. In light of the number of creditors of the Debtors, the claims resolution process may take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known and, because the settlement terms of such allowed claims is subject to a confirmed plan of reorganization, the ultimate resolution with respect to allowed claims is not presently ascertainable.

The consummation of a plan or plans of reorganization is the principal objective of the Chapter 11 Filings. A plan of reorganization sets forth the means for satisfying claims against and interests in the Company and its Debtor subsidiaries, including the liabilities subject to compromise. Generally, pre-petition liabilities are subject to settlement under such a plan or plans of reorganization, which must be voted upon by certain creditors and approved by the Bankruptcy Court. As provided by the Bankruptcy Code, the Debtors initially have the exclusive right for 120 days (April 4, 2002), or a longer period of time subject to approval by the Bankruptcy Court, to submit a plan or plans of reorganization. The Debtors have retained Lazard Freres & Co. LLC, as financial advisors and investment bankers for the purpose of providing financial advisory and investment banking services during the Chapter 11 reorganization process. The Company anticipates that any plan or plans of reorganization it may propose, if ultimately approved by the Bankruptcy Court, would result in substantial dilution of the interest of existing equity holders, so that they would hold little, if any, meaningful stake in the reorganized enterprise.

~~HAYES~~(12) Recent ~~LEMMERZ~~Income ~~INTERNATIONAL,~~Tax ~~INC. AND~~Law ~~SUBSIDIARIES~~Changes

~~Notes~~On March 9, 2002, the Jobs Creation and Worker Assistance Act of 2002 was signed into law. Among other provisions, the law permits a five-year carryback for tax losses generated in tax years ending in 2001 and 2002. As a result of this tax law change, the Company is entitled to ~~Consolidated~~file ~~Financial~~a claim for a refund of ~~Statements~~federal income taxes. The Company’s preliminary estimate of the amount of carryback refunds is $4.1 —million. ~~(Continued)~~This amount has been recorded during the current period and has reduced the current provision for income taxes in the consolidated statement of operations. The Company is continuing to study the effect of this change in the law and, upon completion of the study, the Company’s estimate of the amount of the carryback refunds may increase.

~~Six~~(13) New ~~Months Ended July 31, 2001 and~~Accounting ~~2000~~Pronouncements

~~(Unaudited)~~Effective February 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires that goodwill and indefinite-lived intangible assets be reviewed for impairment annually, rather than amortized into earnings. The Company has discontinued amortizing such assets into earnings, but has not yet completed testing for impairment of the amount of goodwill recorded as of February 1, 2002 as is required by the pronouncement. As of February 1, 2002, the Company had unamortized goodwill and other intangibles of approximately $822.4 million, which will be subject to the transition provisions of SFAS No. 142. The Company believes it will incur a significant write-down in the value of its goodwill upon completion of the adoption of SFAS No. 142 and, in accordance with SFAS No. 142, any loss will be recognized as a cumulative effect of a change in accounting principle. The pro forma effect of SFAS No. 142 on the Company’s earnings for the three months ended April 30, 2002 and 2001 is as follows:

(Millions of Dollars Unless Otherwise Stated)


	2002			2001

Reported net loss	$	(33.0	)	$	(63.7	)




Addback goodwill amortization		—			6.7

Adjusted net loss	$	(33.0	)	$	(57.0	)

Basic and diluted loss per share:




Reported net loss	$	(1.16	)	$	(2.24	)




Addback goodwill amortization		—			0.24

Adjusted net loss	$	(1.16	)	$	(2.00	)

~~(12)~~Effective February ~~Subsequent~~1, 2002, the Company also adopted SFAS ~~Events~~No. —141, “Business Combinations” and SFAS No. ~~(Continued)~~144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The adoption of these pronouncements did not have a material effect on the Company’s consolidated financial statements.

~~Bankruptcy~~Item ~~Code,~~2. ~~confirmation~~Management’s ofDiscussion ~~a plan of reorganization requires the approval of the Bankruptcy Court~~ and ~~the~~ ~~affirmative~~Analysis ~~vote~~ of ~~each~~Financial ~~impaired~~Condition ~~class of creditors~~ and ~~equity~~ ~~security~~Results ~~holders. The Bankruptcy Court may confirm a plan notwithstanding the non-acceptance~~ of the plan by an impaired class of creditors or equity security holders if certain requirements of the Bankruptcy Code are met. There can be no assurance that a reorganization plan or plans will be proposed by the Debtors or confirmed by the Bankruptcy Court, or that any such plan or plans will be consummated. Operations

~~Currently,~~Business ~~it is not possible to predict the length of time the Company will operate under the protection of Chapter 11~~ and ~~the supervision of the Bankruptcy Court, when the Company will file a plan or plans of reorganization with the Bankruptcy Court, the outcome of the~~ Chapter 11 ~~proceedings~~ ~~in general, or the effect of the proceedings on the~~Filings ~~business of the Company or on the interest of the various~~ creditors and stakeholders. Under the priority scheme established by the Bankruptcy Code, certain post-petition liabilities need to be satisfied before shareholders can receive any distribution. The ultimate recovery, if any, to shareholders will not be determined until confirmation of a plan or plans of reorganization. There can be no assurance as to what value, if any, will be ascribed to the common stock of the Company in the bankruptcy proceedings, and the value of the equity represented by that stock could be substantially diluted or canceled.

~~The~~This ~~Company’s~~discussion ~~financial~~should ~~statements commencing with the period that includes December 5, 2001, the date of filing of the Chapter 11 proceedings, will~~ be ~~presented~~ read in ~~conformity~~conjunction with the ~~AICPA~~ Company’s ~~Statement~~Annual ~~of Position~~Report ~~90-7,~~on ~~“Financial Reporting By Entities In Reorganization Under the Bankruptcy Code,” (“SOP~~Form 9010-~~7”).~~K ~~The~~for ~~statement~~the ~~requires a~~fiscal ~~segregation~~year of2001 ~~liabilities~~as ~~subject~~filed towith ~~compromise by~~ the ~~Bankruptcy~~ ~~Court~~Securities asand ofExchange ~~the bankruptcy filing date and~~Commission ~~identification~~on ofMay 1, ~~all~~2002 ~~transactions~~ and ~~events that are directly associated with~~ the ~~reorganization~~other ofinformation ~~the~~included ~~Company~~herein.

~~The~~ Description ~~accompanying consolidated financial statements do not reflect: (a) the requirements~~ of ~~SOP~~ ~~90-7, (b) the realizable value of assets on a liquidation~~Business ~~basis or their availability to satisfy liabilities;~~ (c) aggregate pre-petition liability amounts that may be allowed for unrecorded claims or contingencies, or their status or priority; (d) the effect of any changes to the Debtors’ capital structure or in the Debtors’ business operations as the result of an approved plan of reorganization; or (e) adjustments to the carrying value of assets (including goodwill and other intangibles) or liability amounts that may be necessary as the result of actions by the Bankruptcy Court.

~~Facility~~Unless ~~Closures~~otherwise indicated, references to “Company” mean Hayes Lemmerz International, Inc. and its subsidiaries and references to fiscal year means the Company’s year ended January 31 of the following year (e.g., “fiscal 2002” refers to the period beginning February 1, 2002 and ending January 31, 2003, “fiscal 2001” refers to the period beginning February 1, 2001 and ending January 31, 2002.

InThe ~~February 2002, the~~ Company ~~committed~~is to a ~~plan~~ toleading ~~close~~supplier ~~its~~of ~~manufacturing facility in Somerset~~wheels, ~~Kentucky.~~wheel-end ~~The~~attachments, ~~Company~~aluminum ~~will~~structural ~~record~~components ~~asset~~and ~~impairment~~automotive ~~losses with respect to~~brake ~~this facility of $6~~components.~~3 million~~ inThe ~~the~~Company ~~fourth~~is ~~quarter of fiscal 2001. In connection with~~ the ~~closure~~world’s oflargest ~~the Somerset~~manufacturer ~~facility (which commenced during February 2002), the Company will record an estimated restructuring charge~~ of ~~$4.4 million~~ inautomotive ~~the first quarter of fiscal 2002~~wheels. ~~This~~In ~~charge relates to the termination of leases and other closure~~ ~~costs, including security and maintenance costs subsequent to the shutdown date, and is expected to be paid during fiscal 2002 and 2003.~~

Other Subsequent Events

Other events occurring subsequent to July 31, 2001 regarding a new management team, the market for the Company’s common stock, facility closures, a reduction of the Company’s North American salaried

~~HAYES~~addition, ~~LEMMERZ~~the ~~INTERNATIONAL~~Company also designs and manufactures wheels and brake components for commercial highway vehicles, ~~INC.~~and ~~AND~~powertrain ~~SUBSIDIARIES~~components and aluminum non-structural components for the automotive, commercial highway, heating and general equipment industries.

~~Notes to Consolidated Financial Statements~~ Chapter ~~— (Continued)~~11 Filings

~~Six~~On ~~Months~~December 5, ~~Ended~~2001, ~~July~~Hayes Lemmerz International, Inc., 30 of its wholly-owned domestic subsidiaries and one wholly-owned Mexican subsidiary (collectively, the “Debtors”) filed voluntary petitions for reorganization relief (the “Chapter 3111 Filings” or the “Filings”) under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Filings are being jointly administered, ~~2001~~for procedural purposes only, before the Bankruptcy Court under Case No. 01-11490-MFW. During the pendency of these Filings, the Debtors remain in possession of their properties and assets and management of the Company ~~2000~~continues to operate the businesses of the Debtors as debtors-in-possession. As a debtor-in-possession, the Company is authorized to operate the business of the Debtors, but may not engage in transactions outside of the ordinary course of business without the approval of the Bankruptcy Court, after notice and the opportunity for a hearing.

~~(Unaudited)~~Currently, it is not possible to predict the length of time the Company will operate under the protection of Chapter 11 and the supervision of the Bankruptcy Court, when the Company will file a plan or plans of reorganization with the Bankruptcy Court, the outcome of the Chapter 11 proceedings in general, or the effect of the proceedings on the business of the Company or on the interest of the various creditors and stakeholders. Under the priority scheme established by the Bankruptcy Code, certain post-petition liabilities and pre-petition liabilities need to be satisfied before shareholders can receive any distribution. The ultimate recovery, if any, to shareholders will not be determined until confirmation of a plan or plans of reorganization. There can be no assurance as to what value, if any, will be ascribed to the common stock of the Company in the bankruptcy proceedings, and the value of the equity represented by that stock could be substantially diluted or canceled.

On May 30, 2002, an order was entered with the Bankruptcy Court approving, among other things, a critical employee retention plan filed with the Bankruptcy Court in February, 2002 which is designed to compensate certain critical employees in order to assure their retention and availability during the Company’s restructuring. The plan has two components which will (~~Millions~~i) reward critical employees who remain with the Company (and certain affiliates of ~~Dollars~~the ~~Unless~~Company ~~Otherwise~~who are not ~~Stated~~directly involved in the restructuring) during and through the completion of the restructuring (the “Retention Bonus”) and (ii) provide additional incentives to a more limited group of the most senior critical employees if the enterprise value upon completing the restructuring exceeds an established baseline (the “Restructuring Performance Bonus”).

~~(12)~~The maximum possible aggregate amount of Retention Bonus is approximately $8.5 ~~Subsequent~~million and is payable in cash and is ~~Events~~due upon the consummation of the restructuring, provided, however, that 35% of such bonus will be paid on October —1, 2002, if the restructuring has not been consummated by that date. The maximum possible aggregate amount of any Restructuring Performance Bonus is $37.5 ~~(Continued)~~million and will be payable as soon as reasonably practicable after the consummation of the restructuring. Up to 70% of the amount by which a Restructuring Performance Bonus exceeds a participant’s Retention Bonus may be paid in restricted shares or units of any common stock of the Company that is issued as part of a confirmed plan of reorganization in connection with the restructuring, if the Company’s Board of Directors elects, within the time period specified in the plan, to elect such option. The amount of any Restructuring Performance Bonus to be earned is not currently estimatable.

workforce, sale of non-core businesses, and legal proceedings are more fully discussed in the Company’s Annual Report on Form 10-K/ A, and the notes to the consolidated financial statements contained therein.

(13) Guarantor and Non-Guarantor Financial Statements

As of July 31, 2001, the senior subordinated notes and senior notes are guaranteed by certain of the Company’s domestic subsidiaries. Certain other domestic subsidiaries and the foreign subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the senior subordinated notes and senior notes. In the third quarter of fiscal 2001, amendments were entered into by the Company and holders of the Company’s 8 1/4% and 9 1/8% Senior Subordinated Notes (the “8 1/4% Notes” and the “9 1/8% Notes”). Such amendments conformed the lists of guarantor subsidiaries of the respective senior subordinated notes to that list of subsidiaries guaranteeing the 11 7/8% Notes (the “Conformed Guarantor Subsidiaries”). The list of guarantor subsidiaries of the Company’s 11% Senior Subordinated Notes (the “11% Notes”) was not conformed.

The condensed consolidating financial information as of and for the six months ended July 31, 2001 for those guarantor subsidiaries of the 11% Notes (the “Guarantor Subsidiaries”) has been presented separately below as the 11% Notes are not guaranteed by the Conformed Guarantor Subsidiaries. Collectively, the Guarantor Subsidiaries and the Conformed Guarantor Subsidiaries guarantee the 8 1/4% Notes, the 9 1/8% Notes, and the 11 7/8% Notes.

As of July 31, 2000, the 8 1/4% Notes, the 9 1/8% Notes, and the 11% Notes were guaranteed by the Guarantor Subsidiaries. Certain other domestic subsidiaries and the foreign subsidiaries did not guarantee these notes.

The following condensed consolidating financial information presents:

(1) Condensed consolidating financial statements as of July 31, 2001 and January 31, 2001, and for the six month periods ended July 31, 2001 and 2000, of (a) Hayes Lemmerz International, Inc., the parent, (b) the guarantor subsidiaries (as defined), (c) the non-guarantor subsidiaries (as defined), and (d) the Company on a consolidated basis, and (2) Elimination entries necessary to consolidate Hayes Lemmerz International, Inc., the parent, with guarantor and non-guarantor subsidiaries.

The condensed consolidating financial statements are presented on the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the Company’s share of the subsidiaries’ cumulative results of operations, capital contributions, distributions and other equity changes. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

~~HAYES~~Reorganization ~~LEMMERZ~~items ~~INTERNATIONAL~~as reported in the accompanying consolidated statement of operations for the three months ended April 30, ~~INC.~~2002 ~~AND~~is comprised of: ~~SUBSIDIARIES~~

Notes to Consolidated Financial Statements — (Continued)






Critical employee retention plan provision		$	2.5




Estimated accrued liability for rejected prepetition leases			12.5




Professional fees directly related to the filing			7.6




Interest earned during Chapter 11 reorganization proceedings			(0.1	)

	Total	$	22.5

~~Six~~Cash ~~Months~~payments ~~Ended~~of ~~July~~$1.4 ~~31,~~million ~~2001~~were ~~and~~paid during this period ~~2000~~with respect to such reorganization items.

~~(Unaudited)~~The condensed financial statements of the Debtors are presented in Note 11, “Condensed Combined Financial Statements.”

~~(Millions~~Results of ~~Dollars Unless Otherwise~~Operations ~~Stated)~~

~~(13) Guarantor~~Sales ~~and~~of ~~Non~~the Company’s wheels, wheel-~~Guarantor~~end attachments, ~~Financial~~aluminum ~~Statements — (Continued)~~structural components and brake components produced in North America are directly affected by the overall level of passenger car, light truck and commercial highway vehicle production of North American OEMs, while sales of its wheels and automotive castings in Europe are directly affected by the overall vehicle production in Europe. The North American and European automotive industries are sensitive to the overall strength of their respective economies.

~~Condensed~~The ~~Consolidating~~Company ~~Statements~~is organized based primarily on markets served and products produced. Under this organization structure, the Company’s operating segments have been aggregated into three reportable segments: Automotive Wheels, Components and Other. The Automotive Wheels segment includes results from the Company’s operations that primarily design and manufacture fabricated steel and cast aluminum wheels for original equipment manufacturers in the global passenger car and light vehicle markets. The Components segment includes results from the Company’s operations that primarily design and manufacture suspension, brake and powertrain components for original equipment manufacturers in the global passenger car and light vehicle markets. The Other segment includes results from the Company’s operations that primarily design and manufacture wheel and brake products for commercial highway and aftermarket customers in North America. The Other segment also includes financial results related to the Company’s tire and wheel operations in Europe, the corporate office and elimination of ~~Operations~~certain intercompany activities.

~~For~~ Three ~~the~~Months ~~Six~~Ended April 30, 2002 Compared to Three Months Ended ~~July~~ April 3130, 2001

								Conformed
					Guarantor			Guarantor			Non-guarantor						Consolidated
		Parent			Subsidiaries			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales		$	135.0		$	252.4		$	251.7		$	425.6		$	(5.2	)	$	1,059.5
Cost of goods sold			124.5			232.0			264.5			352.4			(5.2	)		968.2
	Gross profit		10.5			20.4			(12.8	)		73.2			—			91.3
Marketing, general and administration			8.3			12.6			10.0			21.3			—			52.2
Engineering and product development			1.7			3.7			1.6			4.6			—			11.6
Amortization of intangibles			0.5			3.9			5.4			3.5			—			13.3
Equity in (earnings) loss of subsidiaries and joint ventures			91.8			31.0			0.8			(0.1	)		(123.0	)		0.5
Asset impairments and other restructuring charges			4.7			—			33.3			—			—			38.0
Loss on investment in joint venture			3.8			—			—			—			—			3.8
Other (income) expense, net			1.1			—			(0.1	)		0.3						1.3
	Earnings (loss) from operations		(101.4	)		(30.8	)		(63.8	)		43.6			123.0			(29.4	)
Interest expense, net			34.3			21.9			19.7			17.0			—			92.9
	Earnings (loss) before taxes on income, minority interest, and extraordinary gain		(135.7	)		(52.7	)		(83.5	)		26.6			123.0			(122.3	)
Income tax (benefit) provision			(1.2	)		0.3			0.5			10.8			—			10.4
	Earnings (loss) before minority interest and extraordinary gain		(134.5	)		(53.0	)		(84.0	)		15.8			123.0			(132.7	)
Minority interest			—			—			—			1.8			—			1.8
	Earnings (loss) before extraordinary gain		(134.5	)		(53.0	)		(84.0	)		14.0			123.0			(134.5	)
Extraordinary gain, net of tax			2.7			—			—			—			—			2.7
	Net income (loss)	$	(131.8	)	$	(53.0	)	$	(84.0	)	$	14.0		$	123.0		$	(131.8	)

Net Sales


		2002		2001		% Change


		(millions)




Automotive Wheels		$	285.4	$	324.3		(12.0%	)




Components			176.5		176.9		(0.2%	)




Other			24.8		39.7		(37.6%	)

	Total	$	486.7	$	540.9		(10.0%	)

The Company’s Wheels operations net sales were $38.9 million lower in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. Net sales from the North American Wheels business unit were $11.4 million lower in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. The ramp-down of production and subsequent closure of the Company’s Somerset, KY facility accounted for approximately $9.4 million of this decrease. Higher production volumes in the Company’s remaining North American wheel operations increased sales by $7.0 million in the first quarter of fiscal 2002, which was offset by $6.3 million in lower pricing. Lower aluminum pricing, which is passed on to the Company’s customers and therefore has a minimal effect on profit margins, also decreased sales by $2.7 million. Net sales from the

~~HAYES~~Company’s ~~LEMMERZ~~foreign ~~INTERNATIONAL,~~wheel ~~INC~~operations decreased $27.5 million. ~~AND~~The impact of foreign exchange rate ~~SUBSIDIARIES~~fluctuations relative to the U.S. dollar decreased net sales by approximately $11.0 million. Changes in aluminum wheel prices arising from changes in the aluminum metal market negatively impacted net sales by $4.4 million. The remaining decrease in net sales from the foreign wheel operations resulted primarily from a decrease in passenger car and commercial highway customer demand for fabricated steel wheels.

~~Notes~~The Company’s Components operations net sales were slightly lower in the first quarter of fiscal 2002 compared to ~~Consolidated~~the ~~Financial~~same ~~Statements~~period in fiscal 2001. Net sales from the Company’s North American suspension components operations increased $8.6 —million ~~(Continued)~~in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. Sales from recently launched new customer programs increased sales by $15.7 million in the first quarter of fiscal 2002. This was partially offset by approximately $8.3 million lower sales to Ford related to the Ranger, F-Series truck and other SUV programs. The remainder of the sales variance in the suspension operations is due to changes in volume, pricing and sales mix between periods. Net sales from the Company’s powertrain and brakes operations were $3.6 million lower in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. The impact of the closure of the Company’s Petersburg, MI facility during the fourth quarter of fiscal 2001 decreased sales by $6.0 million in the first quarter of fiscal 2002. Other volume and pricing variances accounted for the remainder of the difference in sales in those operations. The Company also recorded $5.6 million lower net sales from its European component operations. In the European components operations, the impact of foreign exchange rate fluctuations relative to the U.S. dollar decreased sales by $1.8 million. The remaining differences in the net sales from the European components operations were due to lower customer demand.

~~Six~~The ~~Months~~Company’s ~~Ended~~Other ~~July~~segment recorded $14.9 ~~31,~~million lower net sales in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. This decrease is primarily due to the $10.2 million decrease in net sales from the Company’s commercial highway and aftermarket operations. ~~2000~~This decrease was driven by significantly lower production volumes at the Company’s heavy-duty truck and trailer customers. The impact of the sale of the Company’s system service business in the fourth quarter of fiscal 2001 was the other primary reason for the decrease in Other sales.

~~(Unaudited)~~ Gross Profit

~~(Millions~~The Company’s gross profit decreased from $57.6 million in the first quarter of ~~Dollars~~fiscal ~~Unless~~2001 ~~Otherwise~~to ~~Stated)~~$45.1 million in the same period in fiscal 2002.

~~(13)~~The Company’s Wheels segment reported $4.3 ~~Guarantor~~million lower ~~and~~gross ~~Non~~profit in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. Gross profit from the Company’s North American wheels operations increased $7.0 million from the first quarter of fiscal 2001 to the first quarter of fiscal 2002. The ramp-~~Guarantor~~down of production and ~~Financial~~subsequent ~~Statements~~closure of the Company’s Somerset, KY facility during the first quarter of fiscal 2002 increased gross profit by approximately $10.6 —million. This increase was primarily due to the poor operating performance of that facility in fiscal 2001. The Company also reached a favorable settlement agreement related to a historical dispute with a certain customer that improved gross profit by $1.9 ~~(Continued)~~million during the first quarter of 2002. The Company also recorded higher depreciation costs at its Gainesville, GA facility to recognize a change in its estimate of the remaining useful life of certain assets, which reduced gross profit by $2.7 million in the first quarter of fiscal 2002. Higher volumes, manufacturing variances and lower pricing comprise the remaining differences in gross profit from the Company’s North American wheel operations. The Company’s foreign wheel operations gross profit decreased $11.3 million during this period. The impact of lower sales decreased gross profit by $5.3 million in the Company’s foreign wheel operations. The impact of foreign exchange rate fluctuations relative to the U.S. dollar decreased gross profit by approximately $1.9 million. The remaining difference in gross profit is primarily due to lower operating performance in the Company’s foreign fabricated wheel operations.

~~Condensed~~Gross ~~Consolidating~~profit ~~Statements~~at the Company’s Components segment decreased by $4.3 million in the first quarter of fiscal 2002 ~~Operations~~compared to the same period in fiscal 2001. The North American suspension operations recorded $2.8 million lower gross profit. The favorable impact on gross profit due to higher production volumes was more than offset by one-time start-up costs recorded on the many new program launches that took place in the

For the Six Months Ended July 31, 2000, As Restated

					Guarantor			Non-guarantor						Consolidated
		Parent			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales		$	156.5		$	319.5		$	667.1		$	(9.1	)	$	1,134.0
Cost of goods sold			130.4			274.2			575.3			(9.1	)		970.8
	Gross profit		26.1			45.3			91.8			—			163.2
Marketing, general and administration			3.3			11.4			31.9			—			46.6
Engineering and product development			0.9			3.7			4.8			—			9.4
Amortization of intangibles			0.5			3.9			9.5			—			13.9
Equity in (earnings) loss of subsidiaries and joint ventures			(2.4	)		7.2			(0.2	)		(5.1	)		(0.5	)
Asset impairments and other restructuring charges			2.1			—			2.3			—			4.4
Other (income) expense, net			(0.2	)		—			(1.8	)		—			(2.0	)
	Earnings (loss) from operations		21.9			19.1			45.3			5.1			91.4
Interest expense, net			12.5			28.5			37.8			—			78.8
	Earnings (loss) before taxes on income and minority interest		9.4			(9.4	)		7.5			5.1			12.6
Income tax (benefit) provision			2.6			(0.8	)		2.6			—			4.4
	Earnings (loss) before minority interest		6.8			(8.6	)		4.9			5.1			8.2
Minority interest			—			—			1.4			—			1.4
	Net income (loss)	$	6.8		$	(8.6	)	$	3.5		$	5.1		$	6.8

~~HAYES~~Suspension ~~LEMMERZ~~business ~~INTERNATIONAL,~~unit ~~INC~~in the first quarter of fiscal 2002. Gross ~~AND~~profit at the Company’s powertrain and brakes ~~SUBSIDIARIES~~operations decreased $1.0 million in the first quarter of fiscal 2002 compared to the same period in fiscal 2001. The majority of the remaining difference in gross profit in the Components segment is due to lower operating performance in one of the Company’s foreign components businesses.

~~Notes~~Other gross profit decreased $3.9 million in the first quarter of fiscal 2002 compared to ~~Consolidated~~the ~~Financial~~same period in fiscal ~~Statements~~2001. The Company’s commercial highway and aftermarket operations recorded $1.5 —million ~~(Continued)~~lower gross profit in the first quarter of fiscal 2002 due primarily to lower sales and production volumes. The effects of higher retiree medical costs during the first quarter of fiscal 2002 combined with the sale of the Company’s system service business in the fourth quarter of fiscal 2001 are the other primary reasons for the decrease in Other gross profit.

Six Months Ended July 31, 2001 and 2000

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(13) Guarantor and Non-Guarantor Financial Statements — (Continued)

Condensed Consolidating Balance Sheets

As of July 31, 2001

								Conformed			Non-
					Guarantor			Guarantor			guarantor						Consolidated
		Parent			Subsidiaries			Subsidiaries			Subsidiaries			Eliminations			Total
Cash and cash equivalents		$	13.8		$	(0.7	)	$	1.0		$	31.3		$	—		$	45.4
Receivables			15.0			49.8			84.5			166.0			—			315.3
Inventories			24.7			41.0			47.3			94.0			—			207.0
Prepaid expenses and other			13.2			11.4			17.5			23.5			(28.7	)		36.9
	Total current assets		66.7			101.5			150.3			314.8			(28.7	)		604.6
Net property, plant and equipment			125.9			236.7			253.5			423.0			—			1,039.1
Goodwill and other assets			1,097.7			237.4			623.2			296.7			(1,294.0	)		961.0
	Total assets	$	1,290.3		$	575.6		$	1,027.0		$	1,034.5		$	(1,322.7	)	$	2,604.7
Bank borrowings		$	—		$	—		$	—		$	74.0		$	—		$	74.0
Current portion of long-term debt			1,840.0			—			—			18.5			—			1,858.5
Accounts payable and accrued liabilities			22.8			88.9			156.1			218.2			(22.8	)		463.2
	Total current liabilities		1,862.8			88.9			156.1			310.7			(22.8	)		2,395.7
Long-term debt, net of current portion			—			—			—			53.4			—			53.4
Pension and other long-term liabilities			68.6			48.4			16.3			111.3			—			244.6
Deferred tax liabilities			2.0			3.0			5.0			64.8			—			74.8
Minority interest			—			—			—			11.9			—			11.9
Parent loans			(467.4	)		322.1			(69.8	)		215.1			—			—
	Total liabilities		1,466.0			462.4			107.6			767.2			(22.8	)		2,780.4
Common stock			0.3			—			—			—			—			0.3
Additional paid-in capital			235.1			173.4			1,161.8			294.7			(1,629.9	)		235.1
Common stock in treasury at cost			(25.7	)		—			—			—			—			(25.7	)
Retained earnings (accumulated deficit)			(277.5	)		(55.0	)		(137.8	)		56.4			136.4			(277.5	)
Accumulated other comprehensive income (loss)			(107.9	)		(5.2	)		(104.6	)		(83.8	)		193.6			(107.9	)
	Total stockholders’ equity (deficit)		(175.7	)		113.2			919.4			267.3			(1,299.9	)		(175.7	)
	Total liabilities and stockholders’ equity	$	1,290.3		$	575.6		$	1,027.0		$	1,034.5		$	(1,322.7	)	$	2,604.7

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Six Months Ended July 31, 2001 and 2000

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(13) Guarantor and Non-Guarantor Financial Statements — (Continued)

Condensed Consolidating Balance Sheet

As of January 31, 2001

								Conformed			Non-
					Guarantor			Guarantor			guarantor						Consolidated
		Parent			Subsidiaries			Subsidiaries			Subsidiaries			Eliminations			Total
Cash and cash equivalents		$	(19.3	)	$	0.2		$	1.9		$	17.2		$	—		$	—
Receivables			68.2			2.6			9.7			168.3			—			248.8
Inventories			34.4			41.9			50.9			90.1			—			217.3
Prepaid expenses and other			7.0			8.7			17.1			27.3			(21.4	)		38.7
	Total current assets		90.3			53.4			79.6			302.9			(21.4	)		504.8
Net property, plant and equipment			143.3			240.0			271.2			450.3			—			1,104.8
Goodwill and other assets			1,220.9			274.5			641.5			320.3			(1,462.9	)		994.3
	Total assets	$	1,454.5		$	567.9		$	992.3		$	1,073.5		$	(1,484.3	)	$	2,603.9
Bank borrowings		$	—		$	—		$	—		$	79.6		$	—		$	79.6
Current portion of long-term debt			1,597.5						0.5			15.1			0.6			1,613.7
Accounts payable and accrued liabilities			29.0			98.1			147.4			235.6			(18.5	)		491.6
	Total current liabilities		1,626.5			98.1			147.9			330.3			(17.9	)		2,184.9
Long-term debt, net of current portion			—			—			—			94.6			—			94.6
Deferred tax liabilities			2.0			3.0			5.0			58.7			—			68.7
Pension and other long-term liabilities			70.5			53.1			32.9			110.4			—			266.9
Minority interest			—			—			—			10.6			—			10.6
Parent loans			(222.7	)		245.4			(218.3	)		195.6			—			—
	Total liabilities		1,476.3			399.6			(32.5	)		800.2			(17.9	)		2,625.7
Common stock			0.3			—			—			—			—			0.3
Additional paid-in capital			235.1			173.4			1,161.8			294.7			(1,629.9	)		235.1
Common stock in treasury at cost			(25.7	)		—			—			—			—			(25.7	)
Retained earnings (accumulated deficit)			(145.7	)		(1.9	)		(53.9	)		42.3			13.5			(145.7	)
Accumulated other comprehensive loss			(85.8	)		(3.2	)		(83.1	)		(63.7	)		150.0			(85.8	)
	Total stockholders’ equity (deficit)		(21.8	)		168.3			1,024.8			273.3			(1,466.4	)		(21.8	)
	Total liabilities and stockholder’s equity	$	1,454.5		$	567.9		$	992.3		$	1,073.5		$	(1,484.3	)	$	2,603.9

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Six Months Ended July 31, 2001 and 2000

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(13) Guarantor and Non-Guarantor Financial Statements — (Continued)

Condensed Consolidating Statement of Cash Flows

For the six months ended July 31, 2001

										Conformed
							Guarantor			Guarantor			Non-guarantor					Consolidated
				Parent			Subsidiaries			Subsidiaries			Subsidiaries			Eliminations		Total
Cash flows used for operating activities				$	(15.0	)	$	(20.8	)	$	(43.1	)	$	55.6			—	$	(23.3	)
Cash flows from investing activities:
	Acquisition of property, plant, equipment and tooling				(3.3	)		(9.3	)		(21.7	)		(42.4	)		—		(76.7	)
	Other, net				7.1			(0.3	)		(16.4	)		11.3			—		1.7
		Cash used for investing activities			3.8			(9.6	)		(38.1	)		(31.1	)		—		(75.0	)
Cash flows from financing activities:
	Increase in bank borrowings and revolving facility				184.0			—			(0.6	)		9.4			—		192.8
	Proceeds from refinancing, net of related fees				435.4			—			—			—			—		435.4
	Repayment of bank borrowings, revolving facility, and long term debt from refinancing				(370.9	)		—			—			(37.0	)		—		(407.9	)
	Proceeds (payments) on accounts receivable securitization				43.0			(47.1	)		(67.5	)		—			—		(71.6	)
	Fees to amend Credit Agreement				(2.7	)		—			—			—			—		(2.7	)
			Cash provided by financing activities		288.8			47.1			(68.1	)		(27.6	)		—		146.0
Increase (decrease) in parent loans and advances					(244.5	)		76.6			148.5			19.4			—		—
Effect of exchange rates of cash and cash equivalents					—			—			—			(2.3	)		—		(2.3	)
			Net increase (decrease) in cash and cash equivalents		33.1			(0.9	)		(0.8	)		14.0			—		45.4
Cash and cash equivalents at beginning of period					(19.3	)		0.2			1.8			17.3			—		—
Cash and cash equivalents at end of period				$	13.8		$	(0.7	)	$	1.0		$	31.3		$	—	$	45.4

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Six Months Ended July 31, 2001 and 2000

(Unaudited)

(Millions of Dollars Unless Otherwise Stated)

(13) Guarantor and Non-Guarantor Financial Statements — (Continued)

Condensed Consolidating Statement of Cash Flows

For the six months ended July 31, 2000, As Restated

						Guarantor			Non-guarantor					Consolidated
			Parent			Subsidiaries			Subsidiaries			Eliminations		Total
Cash flows used for operating activities			$	(18.4	)	$	(40.4	)	$	(8.3	)		—		(67.1	)
Cash flows from investing activities:
	Acquisition of property, plant, equipment and tooling			(7.4	)		(15.3	)		(73.1	)		—		(95.8	)
	Other, net			2.1			(0.3	)		11.0			—		12.8
		Cash used for investing activities		(5.3	)		(15.6	)		(62.1	)		—		(83.0	)
Cash flows from financing activities:
	Increase in bank borrowings and revolver			149.6			—			17.8			—		167.4
	Proceeds (payments) on accounts receivable securitization			6.6			(24.2	)		(7.4	)		—		(25.0	)
		Cash provided by financing activities		156.2			(24.2	)		10.4			—		142.4
Increase (decrease) in parent loans and advances				(131.7	)		80.2			51.5			—		—
Effect of exchange rates of cash and cash equivalents				—			—			(1.6	)		—		(1.6	)
		Net increase (decrease) in cash and cash equivalents		0.8			—			(10.1	)		—		(9.3	)
Cash and cash equivalents at beginning of period				6.8			0.1			19.0			—		25.9
Cash and cash equivalents at end of period			$	7.6		$	0.1		$	8.9		$	—	$	16.6

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

The following discussion and analysis should be read in conjunction with the Company’s Consolidated Financial Statements, related notes thereto and the other information included elsewhere herein and in the Company’s Annual Report on Form 10-K/ A filed with the SEC on February 19, 2002. The financial information included in the following discussion and analysis reflects the results of the restatements of the consolidated financial statements for the three month and six month periods ended July 31, 2000 discussed more fully below.

Organization, Chapter 11 Filings and Other Recent Developments

The Company designs, engineers and manufactures suspension module components, principally for original equipment manufacturers (“OEMs”) of passenger cars, light trucks and commercial highway vehicles worldwide. The Company’s products include one-piece cast aluminum wheels, fabricated aluminum wheels, fabricated steel wheels, full face cast aluminum wheels, clad covered wheels, wheel-end attachments, aluminum structural components, intake and exhaust manifolds, and brake drums, hubs and rotors.

Chapter 11 Filings

Shortly after the commencement of the Chapter 11 Filings, on December 21, 2001, the Bankruptcy Court granted interim approval for the Debtors to obtain $45 million in debtor-in-possession financing. Subsequently, on January 28, 2002, the Bankruptcy Court granted final approval of a $200 million debtor-in-possession financing facility for the Debtors. The Bankruptcy Court has approved payment of certain of the Debtors’ pre-petition liabilities, such as employee wages, benefits, and certain customer, vendor and freight program related payments. In addition, the Bankruptcy Court authorized the Debtors to continue and maintain the majority of their employee benefit programs. Pension and savings plan funds are in trusts and protected under federal regulations. All required contributions are current in the respective plans. The Debtors have received Bankruptcy Court approval for the retention of legal, financial and management consulting professionals, and from time to time may seek Bankruptcy Court approval for the retention of additional financial and management consulting professionals, to advise the Debtors in the bankruptcy proceedings and the restructuring of its businesses.

the ultimate liability that may result from rejecting such contracts or leases or from the filing of rejection damage claims, but such rejections could result in additional liabilities subject to compromise.

Confirmation of a plan of reorganization is subject to certain findings being made by the Bankruptcy Court, all of which are required by the Bankruptcy Code. Subject to certain exceptions set forth in the Bankruptcy Code, confirmation of a plan of reorganization requires the approval of the Bankruptcy Court and the affirmative vote of each impaired class of creditors and equity security holders. The Bankruptcy Court may confirm a plan notwithstanding the non-acceptance of the plan by an impaired class of creditors or equity security holders if certain requirements of the Bankruptcy Code are met. There can be no assurance that a reorganization plan or plans will be proposed by the Debtors or confirmed by the Bankruptcy Court, or that any such plan or plans will be consummated.

Currently, it is not possible to predict the length of time the Company will operate under the protection of Chapter 11 and the supervision of the Bankruptcy Court, when the Company will file a plan or plans of reorganization with the Bankruptcy Court, the outcome of the Chapter 11 proceedings in general, or the effect of the proceedings on the business of the Company or on the interest of the various creditors and stakeholders. Under the priority scheme established by the Bankruptcy Code, certain post-petition liabilities need to be satisfied before shareholders can receive any distribution. The ultimate recovery, if any, to shareholders will not be determined until confirmation of a plan or plans of reorganization. There can be no assurance as to what value, if any, will be ascribed to the common stock of the Company in the bankruptcy proceedings, and the value of the equity represented by that stock could be substantially diluted or canceled.

The Company’s financial statements commencing with the period that includes December 5, 2001, the date of filing of the Chapter 11 proceedings, will be presented in conformity with the AICPA’s Statement of Position 90-7, “Financial Reporting By Entities In Reorganization Under the Bankruptcy Code,” (“SOP 90-7”). The statement requires a segregation of liabilities subject to compromise by the Bankruptcy Court as of the bankruptcy filing date and identification of all transactions and events that are directly associated with the reorganization of the Company.

The accompanying consolidated financial statements do not reflect: (a) the requirements of SOP 90-7, (b) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (c) aggregate pre-petition liability amounts that may be allowed for unrecorded claims or contingencies, or their status or priority; (d) the effect of any changes to the Debtors’ capital structure or in the Debtors’ business operations as the result of an approved plan of reorganization; or (e) adjustments to the carrying value of assets

(including goodwill and other intangibles) or liability amounts that may be necessary as the result of actions by the Bankruptcy Court.

Restatement of Consolidated Financial Statements

On February 19, 2002, the Company issued restated consolidated financial statements as of and for the fiscal years ended January 31, 2001 and 2000, and related quarterly periods, and for the fiscal quarter ended April 30, 2001. The restatement was the result of failure by the Company to properly apply certain accounting standards generally accepted in the United States of America, and because certain accounting errors and irregularities in the Company’s financial statements were identified.

The Company has been advised that the SEC is conducting an investigation into the facts and circumstances giving rise to the restatement, and the Company has been and intends to continue cooperating with the SEC. The Company cannot predict the outcome of such an investigation.

Facility Closures

As more fully discussed in Note 12 to the consolidated financial statements included herein, the Company committed to a plan in February 2002 to close its manufacturing facility in Somerset, Kentucky.

Bank Borrowings and Long-Term Debt

See Note 3 to the consolidated financial statements included herein for a discussion of certain transactions and events which affect the amount and classification of a significant portion of the Company’s debt.

Results of Operations

Sales of the Company’s wheels, wheel-end attachments, aluminum structural components, powertrain and brake components produced in North America are directly affected by the overall level of passenger car, light truck and commercial highway vehicle production of North American OEMs, while sales of its wheels and automotive castings in Europe are directly affected by the overall vehicle production in Europe. The North American and European automotive industries are sensitive to the overall strength of their respective economies.

The Company is organized based primarily on markets served and products produced. Under this organization structure, the Company’s operating segments have been aggregated into three reportable segments: Automotive Wheels, Components and Other. The Automotive Wheels segment includes results from the Company’s operations that primarily manufacture and distribute fabricated steel and cast aluminum wheels for original equipment manufacturers in the global passenger car and light vehicle markets. The Components segment includes results from the Company’s operations that primarily manufacture and distribute suspension, brake and powertrain components for original equipment manufacturers in the global passenger car and light vehicle markets. The Other segment includes results from the Company’s operations that primarily manufacture and distribute wheel and brake products for commercial highway and aftermarket customers in North America. The Other segment also includes financial results related to the corporate office and elimination of certain intercompany activities.

Three Months Ended July 31, 2001 Compared to Three Months Ended July 31, 2000

Net Sales

		(As Restated)
		2001		2000		% Change
		(millions)
Automotive Wheels		$	309.4	$	336.8		(8.1	)%
Components			163.0		162.6		0.3
Other			46.1		40.9		12.7
	Total	$	518.5	$	540.3		(4.0	)

The Company’s net sales for the second quarter of fiscal 2001 were $518.5 million, a decrease of 4.0% as compared to net sales of $540.3 million for the second quarter of fiscal 2000. This decrease is primarily due to the impact of lower light vehicle and heavy-duty vehicle production levels in North America and the build-out and termination of certain original equipment manufacturer (“OEM”) platforms on the Company’s North American operations.

Net sales from the Company’s Automotive Wheels segment decreased 8.1% from $336.8 million in the three months ended July 31, 2000 to $309.4 million in the same period in 2001. This was primarily due to a $30.5 million reduction in sales from the Company’s North American operations arising from lower OEM production levels and lower market share in 2001 compared to 2000. This decrease was partially offset by an increase of $11.7 million in sales from the Company’s foreign aluminum wheel operations primarily due to increasing penetration rates of aluminum wheels in the European light vehicle market. The increase in sales from the Company’s foreign operations was partially offset by an approximate $15.6 million decline in the value of European currencies relative to the U.S. dollar between the second quarter of 2001 and 2000.

Components net sales were essentially unchanged for the three months ending July 31, 2001 compared to the same period in 2000. The impact of lower OEM production levels and the build-out and termination of certain customer platforms reduced net sales from the Company’s North American operations were offset by the increase in net sales arising from the acquisition of Schenk in Maulbronn, Germany on September 2, 2000 (“Schenk acquisition”) and higher net sales from the Company’s non-core aluminum operations, collectively called Metaalgieterij Giesen B. V. (“MGG”) in Europe.

Other net sales increased 12.7% from $40.9 million in the three months ending July 31, 2000 to $46.1 million in the same period in 2001. This increase is primarily due to higher sales from the Company’s system service business in Europe. This increase was partially offset by the significant decrease in heavy duty Class 8 truck and trailer production in North America between those time periods.

Gross Profit

The Company’s gross profit margin for the second quarter of fiscal 2001 decreased to $33.6 million or 6.5% of net sales as compared to $72.7 million or 13.5% of net sales for the second quarter of fiscal 2000.

The Company’s gross profit from Automotive Wheels decreased $36.0 million from the second quarter of fiscal 2000 compared to the same period in fiscal 2001. Gross profit from the Company’s North American operations decreased $34.8 million from the three months ended July 31, 2000 compared to the same period in 2001. This decrease is primarily due to recurring manufacturing difficulties at the Company’s Somerset, Kentucky facility and lower operating performance at various facilities in North America, which reduced gross profit by approximately $20.1 million and $11.7 million, respectively. Lower OEM production requirements in North America reduced gross profit by approximately $3.0 million. The decrease in gross profit from the Company’s North American operations was partially offset by a $1.0 million increase in gross profit primarily due to improved operating performance at various foreign operations.

Gross profit from Components decreased $2.8 million from the second quarter of fiscal 2000 compared to the same period in fiscal 2001. This decrease is primarily due to lower operating performance, lower OEM production requirements and the inefficiencies arising from lower production.

Other gross profit decreased $0.4 million from the second quarter of fiscal 2000 compared to the same period in fiscal 2001. This decrease is primarily due to lower sales and lower operating margins in the commercial highway market.

Marketing, General and Administrative

~~Marketing~~The Company’s marketing, general and administrative ~~expenses~~ expenses increased to $251.94 million ~~or 5.0% of net sales for the second quarter of fiscal 2001~~ from ~~$21.8 million or 4.0% of net sales for~~ the ~~second~~first quarter of fiscal ~~2000.~~2001 ~~This increase is primarily due~~ to ~~increased~~the ~~provisions~~same ~~for~~period ~~past due accounts receivable~~ in ~~the~~fiscal ~~North American wheels business~~2002.

Marketing, general and administrative expenses at the Company’s Wheels segment decreased by $1.9 million. The Company’s North American wheels operations recorded $0.9 million lower marketing, general and administrative expenses primarily due to lower headcount arising from the Reduction-In-Force and Early Retirement Incentive Programs that the Company implemented in its North American locations during the fourth quarter of fiscal 2001. The Company’s foreign wheel operations recorded $1.0 million lower marketing, general and administrative expenses primarily due to exchange rate fluctuations and the cost reduction impact of various restructuring initiatives.

The Company’s Components segment marketing, general and administrative expenses were essentially unchanged. The North American suspension operations marketing, general and administrative expenses increased $0.3 million in the three months ended April 30, 2002 compared to the same period in fiscal 2001 due primarily to higher recruiting, relocation and other expenses related to the development of a new management team in the business unit and the many customer program launches. Marketing, general and administrative expenses at the Company’s powertrain and brakes operations increased $0.4 million. These increases were offset by lower marketing, general and administrative expenses at the Company’s foreign component operations.

Marketing, general and administrative expenses in the Company’s other segment increased by $3.3 million from the first quarter of fiscal 2001 to the first quarter of fiscal 2002. This increase is primarily due to higher auditing, consulting and legal fees incurred in the first quarter of fiscal 2002 compared to the same period in fiscal 2001.

Engineering and Product Development

Engineering ~~and product development~~ expenses ~~increased~~ ~~from~~were $30.29 million orlower ~~0.6% of net sales~~ in the ~~second~~ first quarter of fiscal ~~2000~~2002 compared to ~~$5.7 million~~the orsame ~~1.1%~~period ofin fiscal ~~net~~2001. ~~sales~~The ~~for~~Wheels ~~the~~segment ~~second~~reported ~~quarter of fiscal 2001~~$0.8 million ~~Lower~~lower engineering ~~and~~expenses ~~product~~in ~~development~~the ~~spending,~~first ~~net~~quarter of ~~customer~~fiscal 2002 ~~recoveries,~~primarily inat the Company’s ~~wheel~~foreign ~~operations~~fabricated ~~in fiscal~~wheel ~~2000~~operations isdue to the ~~primary~~cost ~~reason~~reduction ~~for~~impact ~~this~~of ~~variance~~various restructuring initiatives.

Equity in Losses (Earnings) of Joint Ventures

~~Equity~~The inCompany ~~losses~~did ofnot ~~joint~~record ~~ventures~~equity ~~improved $0.4 million~~in tolosses ~~$0.2 million~~ of ~~losses~~joint ~~for~~ventures in the ~~second~~ first quarter of fiscal ~~2001~~2002 asdue ~~compared~~ to ~~$0.6 million~~the ofpermanent impairment ~~losses~~of ~~for~~these ~~the~~investments ~~same period~~ in fiscal ~~2000~~2001.

22 ~~Asset Impairments and Other Restructuring~~ ~~Charges~~

During the second quarter of fiscal 2001 the Company recognized an impairment loss of $6.4 million related principally to a change in management’s plan for future use of idled machinery and equipment in the Automotive Wheel segment and to investments in machinery, equipment and tooling at its Somerset, Kentucky facility. Such assets were written down to fair value based on the expected scrap value, if any, of such machinery, equipment and tooling. The Company also recognized closure costs of $0.6 million related to its Petersburg, Michigan facility.

In the restatement of the Company’s financial statements for the second quarter of fiscal 2000, the Company recorded an asset impairment loss of $2.1 million related to assets previously sold or disposed of. The Company also recorded $1.8 million of severance and other restructuring costs in its wheel operations in Germany during the second quarter of fiscal 2000.

Loss on Investment in Joint Venture

The Company recorded a $3.8 million loss on investment in joint venture related to its Mexican joint venture, which had incurred and expects to continue to incur significant operating losses.

Interest Expense, net

Interest expense was $48.8 million for the second quarter of fiscal 2001 compared to $40.0 million for the second quarter of fiscal 2000. This increase primarily reflects higher outstanding borrowings.

Six Months Ended July 31, 2001 Compared to Six Months Ended July 31, 2000

Net Sales

		(As Restated)
		2001		2000		% Change
		(millions)
Automotive Wheels		$	636.8	$	699.8		(9.0)	%
Components			339.9		342.3		(0.7)
Other			82.8		91.9		(9.9)
	Total	$	1,059.5	$	1,134.0		(6.6)

The Company’s net sales for the six months ended July 31, 2001 were $1,059.5 million, a decrease of 6.6% as compared to net sales of $1,134.0 million in the same period in 2000. This decrease is primarily due to the impact of lower sales to light vehicle OEMs and heavy-duty vehicle manufacturers in North America and the build-out and termination of certain OEM platforms on the Company’s North American operations.

Net sales from the Company’s Automotive Wheels segment decreased 9.0% from $699.8 million in the six months ended July 31, 2000 to $636.8 million in the same period in 2001. This was primarily due to a $73.6 million reduction in sales from the Company’s North American operations arising from lower OEM production levels and lower market share in 2001 compared to 2000. This decrease was partially offset by an increase of $10.6 million in sales from the Company’s foreign operations primarily due to increasing penetration rates of aluminum wheels in the European light vehicle market. The increase in sales from the Company’s foreign operations was partially offset by an approximate $29.9 million decline in the value of European currencies relative to the U.S. dollar between the first six months of 2001 and 2000.

Components net sales were essentially unchanged for the six months ending July 31, 2001 compared to the same period in 2000. The impact of lower OEM production levels and the build-out and termination of certain customer platforms reduced net sales from the Company’s North American operations which were offset by the increase in net sales arising from the Schenk acquisition and higher net sales from the Company’s MGG operations in Europe.

Other net sales decreased 9.9% from $91.9 million in the six months ended July 31, 2000 to $82.8 million in the same period in 2001. This decrease is primarily due to the significant decrease in heavy duty Class 8 truck and trailer production in North America between those time periods. This decrease was partially offset by higher sales from the Company’s system service business in Europe.

Gross Profit

The Company’s gross profit margin for the six months ended July 31, 2001 decreased to $91.3 million or 8.6% of net sales as compared to $167.2 million or 14.7% of net sales for the first six months of fiscal 2000.

The Company’s gross profit from Automotive Wheels decreased $61.8 million from the first six months of fiscal 2000 compared to the same period in fiscal 2001. Gross profit from the Company’s North American operations decreased $63.2 million from the six months ended July 31, 2000 compared to the same period in 2001. This decrease is primarily due to recurring manufacturing difficulties at the Company’s Somerset, Kentucky facility and lower operating performance at various facilities in North America, which reduced gross profit by approximately $29.5 million and $24.5 million, respectively. Lower OEM production requirements in North America reduced gross profit by approximately $9.2 million. The decrease in gross profit from the Company’s North American operations was partially offset by a $1.4 million increase in gross profit primarily due to improved operating performance at various foreign operations.

Gross profit from Components decreased $10.8 million from the first six months of fiscal 2000 compared to the same period in fiscal 2001. This decrease is primarily due to lower operating performance, lower OEM production requirements and the inefficiencies arising from lower production in the North American operations. The decrease was partially offset by improved operating performance at the Company’s MGG

operations in Europe and the Schenk acquisition, which collectively increased gross profit by approximately $0.9 million in the six months ended July 31, 2001 compared to the same period in fiscal 2000.

Other gross profit decreased $3.2 million from the first six months of fiscal 2000 compared to the same period in fiscal 2001. This decrease is primarily due to lower sales and lower operating margins in the commercial highway market.

Marketing, General and Administration

Marketing, general and administrative expenses increased from $46.6 million or 4.1% of net sales for the six months ended July 31, 2000 to $52.2 million or 4.9% of net sales for the six months ended July 31, 2001. This increase is primarily due to increased provisions for past due accounts receivable in the North American wheels business.

Engineering and Product Development

Engineering and product development expenses increased from $9.4 million or 0.8% of net sales in the six months ended July 31, 2000 to $11.6 million or 1.1% of net sales in the same period in fiscal 2001. Lower engineering and product development spending, net of customer recoveries, in the Company’s wheel operations in fiscal 2000 is the primary reason for this variance.

Equity in Losses (Earnings) of Joint Ventures

Equity in losses (earnings) of joint ventures decreased $1.0 million to $0.5 million of losses for the first six months of fiscal 2001 as compared to $0.5 million of earnings for the same period in fiscal 2000. This decrease primarily reflects reduced sales volume and profit associated with the Company’s interest in Reynolds-Lemmerz Industries, Canada.

Asset Impairments and Other Restructuring Charges

InAsset ~~the~~impairments ~~six~~and ~~months~~other ~~ended~~restructuring ~~July 31,~~charges ~~2001~~recorded ~~the~~by ~~Company recognized asset impairment losses of $38.0 million. This is primarily comprised of asset impairment losses of $28.5 million related to~~ the Company~~’s Petersburg,~~ ~~Michigan~~during ~~facility, $0.6 million of closure costs related to~~ the ~~Petersburg~~three ~~facility,~~months ~~$2.5 million related~~ended ~~to the abandonment of plans to continue to invest in the start-up of certain single-purpose equipment at another facility~~April 30, ~~and items previously discussed in this~~2002 ~~Management’s Discussion~~ and ~~Analysis~~2001 ~~for~~are ~~the~~as ~~three~~follows ~~months ended~~(millions ~~July 31,~~of ~~2001.~~dollars):

As a consequence of the notifications received in April 2001 by the Company from certain customers of its Petersburg, Michigan manufacturing facility regarding significantly lower future product orders and the failure to obtain adequate customer support required to relocate production, management should have revised its estimate of future undiscounted cash flows expected to be generated by the facility. The Company concluded that this estimated amount was less than the carrying value of the long-lived assets related to the Petersburg facility and, accordingly, recognized an impairment charge of $28.5 million in the three month ended April 30, 2001.


		2002		2001

Impairment of manufacturing facilities		$	—	$	28.5




Impairment of machinery and equipment			—		2.5




Facility closures			6.7		—




Other restructuring			0.5		—

	Total	$	7.2	$	31.0

In Impairment ~~the restatement~~ of ~~the Company’s~~Manufacturing ~~financial statements for the six months ended July 31,~~Facilities ~~2000, the Company recorded an asset impairment loss of $2.1~~ million related to assets previously sold or disposed of. The Company also recorded $2.3 million of severance and other restructuring costs in its wheel operations in Germany during the second quarter of fiscal 2000.

~~Interest~~As ~~Expense~~a consequence of the notifications received in April 2001 by the Company from certain customers of its Petersburg, ~~net~~Michigan manufacturing facility regarding significantly lower future product orders and the failure to obtain adequate customer support required to relocate production, management revised its estimate of future undiscounted cash flows expected to be generated by the facility. The Company concluded that this estimated amount was less than the carrying value of the long-lived assets related to the Petersburg facility and, accordingly, recognized an impairment charge of $28.5 million in the first quarter of fiscal 2001.

~~Interest~~ Facility ~~expense was $92.9 million for the~~Closures ~~second quarter of fiscal 2001 compared to $78.8 million for~~ ~~the second quarter of fiscal 2000. This increase primarily reflects higher outstanding borrowings.~~

32 In February 2002, the Company committed to a plan to close its manufacturing facility in Somerset, Kentucky. In connection with the closure of the Somerset facility (which commenced during February 2002), the Company recorded an estimated restructuring charge of $6.7 million in the first quarter of fiscal 2002. This charge includes amounts related to lease termination costs and other closure costs including security and maintenance costs subsequent to the shutdown date. The amount of the charge related to leases was $3.5 million and is classified as a liability subject to compromise at April 30, 2002. The other closure costs are expected to be paid during fiscal 2002 and 2003.

The following table describes the activity in the balance sheet accounts affected by the severance and other restructuring charges noted above during the three months ended April 30, 2002:


			Severance
	January 31,		and Other								April 30,
	2002		Restructuring					Cash			2002
	Accrual		Charges		Reclassification			Payments			Accrual

Facility exit costs	$	11.7	$	6.7	$	(3.5	)	$	(0.6	)	$	14.3




Severance		6.0		0.5		—			(1.7	)		4.8

	$	17.7	$	7.2	$	(3.5	)	$	(2.3	)	$	19.1

In connection with an early retirement program in the fourth quarter of fiscal 2001, a charge of $3.9 million related to supplemental retirement benefits was included in the above table at January 31, 2002. This amount is recorded as a component of the Company’s accrued benefit cost of the applicable defined benefit plans and will be funded as part of the requirements of the entire plans. Accordingly, for purposes of the current presentation of the above table, this amount has not been included.

Other Income, net

The Company’s Suspension business unit recorded $0.3 million of income during the first quarter of fiscal 2001 related to certain customer tooling agreements.

Interest Expense, net

Interest expense was $16.8 million for the first quarter 2002 compared to $44.2 million for the first quarter 2001. This decrease reflects the discontinuation of interest accrued on the Company’s subordinated debt as well as lower interest rates.

Income Taxes

The income tax provision for the quarter is primarily the result of tax expense in foreign jurisdictions and various states. The Company has determined that a valuation allowance is required against all net deferred tax assets in the United States and certain deferred tax assets in foreign jurisdictions. As such, there is no United States federal income tax benefit recorded against current losses.

On March 9, 2002, the Jobs Creation and Worker Assistance Act of 2002 was signed into law. Among other provisions, the law permits a five-year carryback for tax losses generated in tax years ending in 2001 and 2002. As a result of this tax law change, the Company is entitled to file a claim for a refund of federal income taxes. The Company’s preliminary estimate of the amount of carryback refunds is $4.1 million. This amount has been recorded during the current period and has reduced the current provision for income taxes in the consolidated statement of operations. The Company is continuing to study the effect of this change in the law and, upon completion of the study, the Company’s estimate of the amount of the carryback refunds may increase.

Liquidity and Capital Resources

Chapter 11 Filings

As ~~previously~~ discussed above, the Company and certain subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the Bankruptcy Code. The matters described under this caption “Liquidity and Capital Resources”, to the extent that they relate to future events or expectations, may be significantly affected by the Chapter 11 Filings. Those proceedings will involve, or result in, various restrictions on the Company’s activities, limitations on financing, the need to obtain Bankruptcy Court approval for various matters and uncertainty as to relationships with vendors, suppliers, customers and others with whom the Company may conduct or seek to conduct business.

~~DIP~~ Cash ~~Facility~~Flows

The ~~Bankruptcy Court has approved the~~ Company’s ~~request~~operations ~~for~~provided ~~a total of~~ $~~200~~50.0 million in ~~debtor-~~cash in~~-possession~~ ~~financing (~~the ~~“DIP~~first ~~facility”). The~~quarter ~~amounts~~of ~~that~~fiscal ~~the~~2002 ~~Company~~compared ~~is able~~ to ~~borrow~~a ~~under~~use ~~the DIP~~of ~~facility~~$55.4 million ~~are~~in ~~determined~~the byfirst aquarter ~~borrowing~~of ~~base~~fiscal ~~formula~~2001. ~~based on~~This ~~certain~~improvement ~~eligible~~resulted ~~assets~~primarily offrom the ~~Company.~~effect As of ~~March~~(i) ~~21,~~lower ~~2002,~~supplier ~~the~~payments ~~Company~~during ~~had~~the ~~$14.0 million~~current inperiod, ~~cash borrowings and~~(ii) lower ~~had~~interest ~~issued~~payments ~~$4.7 million~~during inthe ~~letters~~current ofperiod ~~credit~~and ~~pursuant to~~(iii) a ~~this~~lower ~~financing.~~investment ~~The~~in ~~amount~~receivables ~~available~~in ~~under~~ the ~~DIP~~current ~~facility~~period. asThese ofimprovements ~~March 21,~~were ~~2002,~~partially ~~after~~offset ~~taking~~by ~~into~~lower ~~account~~gross ~~the~~profits during ~~aforementioned~~the ~~borrowings~~current ~~and letters of credit, was $87~~period.~~9 million.~~

~~Refinancing~~The principal sources of liquidity for the Company’s future operating, capital expenditure, facility closure and other restructuring requirements are expected to be (i) cash flows from operations, (ii) proceeds from the sale of non-core assets and businesses, (iii) borrowings under various foreign bank and government loans and (iv) and borrowings under the DIP Facility. While the Company expects that such sources will meet these requirements, there can be no assurances that such sources will prove to be sufficient.

OnCapital ~~June 22,~~expenditures ~~2001,~~for the ~~Company~~first ~~received~~quarter of fiscal 2002 were $~~291~~22.14 million. inThese ~~net~~expenditures ~~proceeds~~were ~~from~~primarily ~~the~~for additional ~~issuance~~machinery ~~of 11 7/8%~~and ~~senior~~equipment ~~unsecured~~to ~~notes~~improve ~~due~~productivity ~~2006~~and reduce incosts, ~~the~~to ~~original principal~~meet ~~amount~~demand offor ~~$300 million~~new ~~(the~~vehicle ~~“11 7/8% Notes”).~~platforms Inand ~~addition,~~to meet onexpected ~~July 2,~~requirements ~~2001,~~for the Company ~~received~~’s ~~$144~~products.~~3 million~~ ~~in net proceeds from the issuance~~The ofCompany ~~the~~anticipates ~~B Term~~capital ~~Loan.~~expenditures ~~These~~for ~~aggregate~~fiscal ~~net~~2002 ~~proceeds~~will ~~totaled~~be approximately $~~435~~100.40 million relating primarily to new vehicle platforms, and ~~were~~maintenance ~~used~~and ascost ~~follows~~reduction ~~($ in~~programs. ~~millions):~~

Permanent reduction of Credit Agreement indebtedness with a principal balance of $334.3, plus $2.2 in accrued interest		$	336.5
Payment on foreign indebtedness with a principal balance of $47.0.			47.0
Repurchase of certain Senior Subordinated Notes with a face value of $47.2, plus $1.0 in accrued interest			37.6
Payment of fees and expenses on the above			0.8
Remaining cash proceeds held by Company			13.5
	Total	$	435.4

In connection with the repurchase of the senior subordinated notes at a discount, the Company recorded an extraordinary gain of $10.6 million in the second quarter of fiscal 2001. This gain was offset by $4.0 million of unamortized deferred financing costs written off as a result of the repurchase. Further, in connection with the B Term refinancing and permanent reduction of the Credit Agreement, the Company recorded an extraordinary loss of $2.4 million for the write-off of unamortized deferred financing costs associated with the Credit Agreement. The tax effect of these extraordinary items was offset by a reversal of the deferred tax asset valuation allowance, such that there was no net tax effect in the quarter ended July 31, 2001.

The Credit Agreement, as amended, contains certain financial covenants regarding interest coverage ratios, fixed charge coverage ratios, leverage ratios and capital spending limitations. At July 31, 2001, there was $175.9 million outstanding under the term loan facilities of the Credit Agreement, which amount represents the total amount available under the facility. At July 31, 2001, there was $514.1 million outstanding under the revolving credit facility and $124.6 million available. As a result of the Debtors’ Chapter 11 Filings, all additional availability under the Credit Agreement has been terminated, although letters of credit amounting to approximately $11.0 million remain outstanding.

All amounts outstanding with respect to the Credit Agreement, the aforementioned senior subordinated notes, and the 11 7/8% Notes are classified as a current liability in the consolidated financial statements as of July 31, 2001 included herein.

Trade Securitization Agreement

Other Liquidity Matters

~~During~~As ~~the~~of ~~second~~April 30, ~~quarter~~2002, ofthere ~~fiscal~~were ~~2000,~~no ~~the Board~~amounts of ~~Directors~~outstanding borrowings ~~approved~~under the ~~repurchase~~Company’s Debtor-In-Possession facility (the “DIP Facility”). As of upthe todate anof ~~aggregate~~this offiling $305.02 million in letters of ~~the~~credit ~~Company’s~~were ~~outstanding~~issued ~~common~~in ~~stock.~~connection ~~The~~with ~~Company~~the ~~repurchased~~DIP ~~approximately~~Facility ~~1.9 million shares~~and ofthe ~~its~~amount ~~common~~of ~~stock~~availability under ~~for~~the anDIP ~~aggregate~~Facility ~~purchase~~was ~~price of approximately~~ $25109.79 million, ~~during~~net ~~fiscal~~of ~~2000~~the amount of issued letters of credit.

~~Certain~~During ~~operating leases covering leased assets with an original cost of approximately $68.0 million, contain provisions which, if certain events occur or conditions are met, including termination of~~ the ~~lease,~~current ~~might~~fiscal ~~require the Company to purchase or re-sell the leased assets within a specified period of time~~quarter, ~~generally one year, based on amounts specified in~~ the ~~lease agreements. On July 18, 2001, the~~ Company received ~~notification of termination from a lessor with~~ ~~respect to leased assets having approximately~~ $256.07 million of ~~original~~in ~~cost~~cash ~~(which~~proceeds ~~termination~~from ~~was~~the ~~not~~sale toof ~~be effective for~~certain ~~one~~non-core ~~year).~~assets ~~The~~and ~~Company~~businesses, ~~has~~primarily ~~not agreed with~~ the ~~lessor~~sale ~~that a termination has occurred at the time~~ of the ~~notice and has~~ ~~continued~~Company’s toBrazilian ~~use~~agricultural ~~the leased assets~~business.

~~The~~Certain ~~Company~~of ~~received~~the ~~cash~~operating inleases ~~the~~covering ~~amount~~leased ofassets with an ~~$14.6 million~~original ~~and~~cost of approximately $1568.90 million, ~~during the quarters~~contain ~~ended~~provisions ~~July 31~~which, ~~2001~~if ~~and~~certain ~~2000~~events occur or conditions are met, including ~~respectively~~termination of the lease, inmight ~~connection~~require the Company to ~~with~~purchase or re-sell the ~~early~~leased ~~termination~~assets ofwithin ~~various~~a ~~cross-currency~~specified ~~interest~~period ~~rate~~of ~~swap~~time, generally one year, based on amounts specified in the lease agreements. ~~These~~On ~~proceeds~~July 18, ~~reduced~~2001, the ~~receivable~~Company received ~~recorded~~notification byof ~~the~~termination ~~Company~~from ata ~~the~~lessor ~~time~~with respect to leased assets having approximately $25.0 million of ~~the~~original ~~early~~cost (which termination ~~resulting~~ ~~from~~was ~~accounting~~not to be effective for ~~mark-to-market~~one ~~adjustments~~year). ~~during~~The Company has not agreed with the ~~term~~lessor that a termination has occurred at the time of the ~~agreement~~notice and has continued to use the leased assets.

~~Cash~~ Critical ~~Flows~~Accounting Policies

~~Between~~ Asset ~~January 31,~~impairment ~~2001~~losses and ~~the date of the~~ ~~Chapter 11~~other ~~Filings,~~restructuring ~~the Company’s operating cash flows~~charges ~~were adversely affected by (i) a further decrease in~~ operating margins, (ii) the effect of discontinuing the receivables securitization program, less the effect on the Company of its participation in separate accelerated payment programs with some of its major customers starting in September 2001 and (iii) further contraction of terms required by trade creditors.

~~Since~~The ~~the~~Company’s ~~Chapter 11~~consolidated ~~Filings,~~statements ~~the~~of ~~Company~~operations ~~believes~~included ~~its~~herein reflect an element of operating ~~cash~~expenses described ~~flows~~as ~~will~~asset beimpairments ~~impacted~~and ~~by,~~other ~~among~~restructuring charges. ~~other~~The ~~things,~~Company ~~(i) the~~periodically ~~need~~evaluates towhether ~~fund~~events and circumstances have occurred that indicate that the ~~significant~~remaining ~~professional~~useful ~~fees~~life ~~and~~of ~~other~~any ~~costs~~of ~~directly~~its ~~related~~long tolived assets may warrant revision or that the remaining balance might not be recoverable. When ~~Chapter 11~~factors ~~Filings~~indicate that the long lived assets should be evaluated for possible impairment, ~~(ii)~~ the Company uses an estimate of the future undiscounted cash ~~requirements~~flows ~~for~~generated by the underlying ~~closure~~assets ~~and~~to ~~restructuring~~determine ofif ~~certain~~a ~~facilities,~~write-down ~~and~~is required. If a write-down ~~(iii)~~ is required, the ~~rate~~Company ~~and~~adjusts ~~level~~the book value of ~~post~~the impaired long-~~petition~~lived ~~trade~~assets ~~credit~~to their estimated fair values. Fair value is ~~available~~determined tothrough ~~the~~third ~~Company~~party appraisals or discounted cash flow calculations. The ~~amount~~related ofcharges ~~interest~~are ~~expense~~recorded ~~should be~~as ~~substantially~~an ~~less~~asset impairment ~~due~~or, toin the ~~effect~~case of ~~the~~certain ~~stay~~exit oncosts ~~payment~~in connection ofwith ~~pre-petition~~a ~~obligations~~plant closure or restructuring, a restructuring or other charge in the consolidated statements of operations.

The Company’s ~~operations~~believes ~~used $23.3~~that the Chapter ~~million~~11 Filings in December ~~cash~~2001 inand the ~~first~~ongoing ~~six~~comprehensive ~~months~~review of ~~fiscal~~all of its ~~2001~~operations ~~compared~~as topart aof ~~use~~formulating its plan or plans of reorganization ~~$67.1~~in order to emerge from Chapter ~~million~~11 will take some time to complete. As discussed above and in the ~~first~~notes ~~six~~to ~~months~~the Company’s consolidated financial statements included herein, a number of ~~fiscal~~decisions ~~2000~~have occurred or other factors have indicated that these types of charges are required to be currently recognized. ~~The~~As ~~improvement~~the ~~principally~~review ~~reflects~~continues during the ~~lower~~Company’s ~~inventory~~reorganization, ~~levels~~there can be no assurance that there will not be additional charges based on future events and that ~~supplier~~the ~~payments~~additional ~~consistent~~charges ~~with~~would not have a materially adverse ~~lower~~impact ~~sales~~on ~~volumes~~the Company’s financial position and results of operations.

34 See discussion of SFAS No. 142 below.

Valuation allowances on deferred income tax assets

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company expects the deferred tax assets, net of the valuation allowance to be realized as a result of the reversal of existing taxable temporary differences in the United States and as a result of projected future taxable income and the reversal of existing taxable temporary differences in certain foreign locations. As a result of management’s assessment, a valuation allowance was recorded. In view of the substantial doubt regarding the Company’s ability to continue as a going concern, the Company determined that it could not conclude that it was more likely than not that the benefits of certain deferred income tax

~~Capital~~assets ~~expenditures~~would ~~for~~be ~~the first six months of fiscal 2001 were $68~~realized.4 ~~million.~~The ~~These~~valuation ~~expenditures~~allowance ~~were primarily~~recorded ~~for additional machinery and equipment to improve~~by ~~productivity~~the ~~and~~Company ~~reduce~~fully ~~costs,~~reserves ~~to meet demand~~ for ~~new~~all ~~vehicle platforms,~~domestic and tocertain ~~meet~~foreign net ~~expected~~deferred ~~requirements~~tax ~~for the Company’s products~~assets.

Market Risks

In the normal course of business the Company is exposed to market risks arising from changes in foreign exchange rates, interest rates and raw material prices. The Company selectively uses derivative financial instruments to manage these risks, but does not enter into any derivative financial instruments for trading purposes.

Foreign Exchange

The Company has global operations and thus makes investments and enters into transactions in various foreign currencies. In order to minimize the risks associated with global diversification, the Company first seeks to internally net foreign exchange exposures, and uses derivative financial instruments to hedge any remaining net exposure. The Company uses forward foreign currency exchange contracts on a limited basis to reduce the earnings and cash flow impact of non-functional currency denominated transactions. The gains and losses from these hedging instruments generally offset the gains or losses from the hedged items and are recognized in the same period the hedged items are settled. In addition, the Company has entered into three cross currency interest rate swaps to hedge a portion of its investments in Europe. The currency effects of these swaps, net of tax, are reflected in the cumulative translation adjustments component of other accumulated comprehensive income, where they offset the gain or loss associated with the investments in Europe. In addition, the Company has designated a term loan, totaling 59.7 million Deutschemarks, as a hedge of foreign currency exposure of its net investment in its German operations.

Commodities

The Company relies upon the supply of certain raw materials and other inputs for its production process and has entered into firm purchase commitments for aluminum and steel. The Company manages the exposures associated with these commitments primarily through the terms of its supply and procurement contracts. Additionally, the Company uses forward contracts to hedge against changes in certain specific commodity prices of the purchase commitments outstanding. The Company had no forward contracts during the quarters ended July 31, 2001 and 2000.

Other Matters

The Company does not believe that sales of its products are materially affected by inflation, although there can be no assurance that such an effect will not occur in the future. In accordance with industry practice, the costs or benefits of fluctuations in aluminum prices are passed through to customers. In the United States, the Company adjusts the sales prices of its aluminum wheels every three to six months, if necessary, to reflect fully any increase or decrease in the price of aluminum. As a result, the Company’s net sales of aluminum wheels are adjusted, although gross profit per wheel is not materially affected. From time to time, the Company enters into futures contracts or purchase commitments solely to hedge against possible aluminum price changes that may occur between the dates of aluminum wheel price adjustments. Pricing and purchasing practices are similar in Europe, but opportunities to recover increased material costs from customers are more limited than in the United States.

The value of the Company’s consolidated assets and liabilities located outside the United States (which are translated at period end exchange rates) and income and expenses (which are translated using average rates prevailing during the period) have been affected by the translation values, particularly the Euro (as defined under “Euro Conversion”) and the Brazilian Real. Such translation adjustments are reported as a separate component of stockholders’ equity. Foreign exchange rate fluctuations could have an increased impact on the Company’s reported results of operations. However, due to the self-sustaining nature of the Company’s foreign operations (which maintain their own credit facilities, enter into borrowings and swap

agreements and incur costs in their respective local currencies), the Company believes it can effectively manage the effect of these currency fluctuations. In addition, in order to further hedge against such currency rate fluctuations, the Company has entered into certain foreign currency swap arrangements.

The Company’s net sales are continually affected by pressure from its major customers to reduce prices. The Company’s emphasis on reduction of production costs, increased productivity and improvement of production facilities has enabled the Company to respond to this pressure.

New Accounting Pronouncements

InEffective ~~August~~February 1, ~~2001~~2002, the ~~Financial~~Company ~~Accounting Standards~~adopted ~~Board (“FASB”) issued Statement of Financial Accounting Standards (“~~SFAS”) No. ~~144~~142, “~~Accounting~~Goodwill ~~for~~and ~~the~~Other ~~Impairment~~Intangible ~~or Disposal of Long-Lived~~ Assets.” SFAS No. ~~144~~142 ~~supersedes~~requires ~~FASB~~that ~~No. 121, “Accounting~~goodwill ~~for~~and ~~the Impairment of Long~~indefinite-lived intangible ~~Assets~~assets ~~and~~be reviewed for ~~Long-lived~~ ~~Assets~~impairment toannually, berather than ~~Disposed~~amortized Ofinto earnings.” The ~~statement~~Company ~~retains~~has discontinued ~~the~~amortizing ~~previously~~such ~~existing~~assets ~~accounting~~into ~~requirements~~earnings, ~~related~~but tohas ~~the recognition~~not ~~and~~yet ~~measurement~~completed testing offor impairment the ~~impairment~~amount of ~~long-lived assets~~goodwill torecorded beas ~~held~~of February 1, ~~and~~2002 ~~used~~as ~~while~~is ~~expanding~~required by the ~~measurement requirements~~pronouncement. As of February 1, ~~long-lived~~2002, ~~assets~~the toCompany behad ~~disposed~~unamortized ofgoodwill byand other ~~sale~~intangibles ~~to include~~of ~~discontinued~~approximately ~~operations~~$822.4 million, Itwhich will ~~also~~be ~~expands~~subject to the ~~previously existing~~transition ~~reporting~~provisions ~~requirements~~of ~~for discontinued operations to~~SFAS ~~include~~No. 142. aThe ~~component~~Company ofbelieves anit ~~entity~~will ~~that~~incur ~~either~~a ~~has been disposed~~significant ofwrite-down orin isthe ~~classified~~value asof ~~held~~its ~~for~~goodwill ~~sale.~~upon ~~The~~completion ~~provisions~~ of ~~this~~the ~~Statement~~adoption ~~are~~of ~~effective~~SFAS ~~for~~No. 142 ~~fiscal~~and, ~~years~~in ~~beginning~~accordance ~~after~~with SFAS ~~December~~No. 15142, ~~2001.~~any ~~The~~loss ~~Company~~will ~~has~~be ~~not~~recognized ~~yet~~as ~~completed~~a ~~its analysis~~cumulative effect of ~~the~~a ~~impact~~change ofin accounting principle. The pro forma effect of SFAS No. ~~144~~142 on ~~its~~the ~~consolidated~~Company’s earnings for the three ~~financial~~months ~~position~~ended orApril 30, ~~results~~2002 ofand ~~operations~~2001 ~~upon~~is ~~adoption.~~as follows:

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value of the liability can be made. Such associated asset retirement costs are to be capitalized as part of the carrying amount of the long-lived asset. SFAS also contains additional disclosure requirements regarding descriptions of the asset retirement obligations and reconciliations of changes therein. The provisions of this Statement are effective for fiscal years beginning after June 15, 2002. The Company has not yet completed its analysis of the impact of SFAS No. 143 on its consolidated financial position or results of operations upon adoption.


	2002			2001

Reported net loss	$	(33.0	)	$	(63.7	)




Addback goodwill amortization		—			6.7

Adjusted net loss	$	(33.0	)	$	(57.0	)

Basic and diluted loss per share:




Reported net loss	$	(1.16	)	$	(2.24	)




Addback goodwill amortization		—			0.24

Adjusted net loss	$	(1.16	)	$	(2.00	)

InEffective ~~June~~February ~~2001~~1, 2002, the ~~FASB~~Company ~~issued~~also adopted SFAS No. ~~142~~141, “~~Goodwill~~Business Combinations” and ~~Other Intangible Assets.”~~ SFAS No. ~~142 requires that goodwill be reviewed for impairment annually~~144, ~~rather~~“Accounting ~~than~~For ~~amortized~~the ~~into~~Impairment ~~earnings.~~or ~~The provisions~~Disposal of ~~this Statement are effective for fiscal years~~ ~~beginning~~Long-Lived ~~after December 15, 2001~~Assets.” ~~Amortization~~The ~~of goodwill will cease upon~~ adoption of ~~the~~this ~~Statement~~pronouncement ~~by the Company on~~did ~~February 1,~~not ~~2002.~~have ~~At that valuation date, the Company will test goodwill for impairment, and any losses will be recognized as~~ a ~~cumulative~~material effect ofon a change in accounting principle. Other acquired identifiable intangible assets having estimable useful lives will be separately stated from goodwill, and will continue to be amortized over their estimated useful lives. As of February 1, 2002, the Company’s ~~expects to have~~consolidated ~~unamortized~~financial ~~goodwill and other intangible assets of approximately $873~~statements.~~6 million, which will be subject to the~~ ~~transition provisions of SFAS No. 142. Amortization expense~~ related to goodwill and other intangible assets was $27.4 million, $27.5 million and $16.6 million for fiscal 2000, 1999 and 1998, respectively. The Company believes it will incur a significant write-down in the value of its goodwill upon adoption of SFAS No. 142.

In June 2001, the FASB issued SFAS No. ~~141~~143, “~~Business~~Accounting ~~Combinations~~for Asset Retirement Obligations.” SFAS No. ~~141~~143 requires that ~~all~~the ~~business~~fair ~~combinations~~value ~~(initiated~~of ~~after~~a ~~June 30,~~liability for an ~~2001)~~asset beretirement ~~accounted~~obligation ~~for~~be ~~under~~recognized in the ~~purchase~~period ~~method~~in which it is incurred if a reasonable estimate of ~~accounting. Use~~fair value of the liability ~~pooling-of-interests~~can ~~method~~be ismade. noSuch ~~longer~~associated ~~permitted.~~asset retirement costs ~~Adoption~~are ofto ~~this~~be ~~standard~~capitalized isas ~~not~~part ~~anticipated~~of tothe ~~have~~carrying aamount ~~material~~of the ~~effect~~long-lived onasset. ~~the~~SFAS ~~Company’s~~also ~~financial~~contains ~~position~~additional ordisclosure requirements ~~results~~regarding descriptions of the asset retirement ~~operations~~obligations asand areconciliation ~~result~~of changes therein. The provisions of ~~future~~this ~~business~~Statement ~~combinations,~~are aseffective ~~the~~for fiscal years beginning after June 15, 2002. The Company has ~~historically~~not ~~accounted~~yet completed ~~for~~its ~~such~~analysis ~~transactions~~of ~~under~~ the ~~purchase~~impact ~~method~~of SFAS No. 143 on its consolidated financial position or results of operations upon adoption.

In September 2000, the FASB issued SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement No. 125.” This statement revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain financial statement disclosures. SFAS 140 is effective for transactions occurring after March 31, 2001. The new disclosure requirements are effective for fiscal years ending after December 15,

2000. Adoption of this replacement standard did not have a material effect on the Company’s financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For the period ended ~~July~~April 3130, ~~2001~~2002, the Company did not experience any material change in market risk ~~exposures~~ exposures affecting the quantitative and qualitative disclosures as as presented in the Company’s Annual Report on Form 10-K~~/ A~~ for the year ended January 31, ~~2001~~2002.

3726

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~None~~On May 3, 2002, a group of purported purchasers of the Company’s bonds commenced a putative class action lawsuit against thirteen present or former directors and officers of the Company (but not the Company) and KPMG LLP, the Company’s independent auditor, in the United States District Court for the Eastern District of Michigan. The complaint seeks damages for an alleged class of persons who purchased Company bonds between June 3, 1999 and September 5, 2001 and claim to have been injured because they relied on the Company’s allegedly materially false and misleading financial statements.

Additionally, before the date the Company commenced its chapter 11 bankruptcy case, four other putative class actions were filed in the United States District Court for the Eastern District of Michigan against the Company and certain of its directors and officers, on behalf of a class of purchasers of Company common stock from June 3, 1999 to December 13, 2001, based on similar allegations of securities fraud. On May 10, 2002, the plaintiffs filed a consolidated and amended class action complaint seeking damages against the Company’s present and former officers and directors and KPMG.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

AsIn aaccordance ~~result~~with ofthe Senior Notes, the ~~Chapter 11~~Senior ~~Filings~~Subordinated Notes byand the note under the Credit Agreement, interest accrues ~~Debtors~~at ondefault ~~December 5~~rates, ~~2001~~however, the ~~following~~payment ~~required~~ of such interest ~~payments~~is subject ~~were~~to ~~not~~the ~~made~~Bankruptcy Code and a plan or plans of reorganization as may be approved by the ~~Company:~~Bankruptcy Court. See Note (9), Liabilities Subject To Compromise, to the Consolidated Financial Statements herein.

	Date Due	Interest Due
8 1/4% Senior Subordinated Notes	December 17, 2001	$9,252,168.75
9 1/2% Senior Subordinated Notes	January 15, 2002	17,754,968.75
11% Senior Subordinated Notes	January 15, 2002	13,164,250.00
11 7/8% Senior Notes	December 17, 2001	17,218,750.00

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

~~The Company held its Annual Meeting of~~None ~~Stockholders on June 14, 2001. At the Annual Meeting, the~~ ~~following matters were proposed and voted upon by the Company’s stockholders (including the number of votes cast for, against or withheld, as well as the number of abstentions for each such matter):~~

1. To elect three Class 2 Directors (nominees were Ranko “Ron” Cucuz, Andrew R. Heyer, and David Y. Ying) to serve until the Company’s 2004 Annual Meeting of Stockholders. The number of votes cast with respect to this matter were as follows:

Nominee	For		Withheld
Ranko Cucuz		21,065,880		266,895
Andrew R. Heyer		21,164,496		168,279
David Y. Ying		20,346,283		986,492

The terms of office of each of the following directors also continued after the meeting: Cleveland A. Christophe, Anthony Grillo, Horst Kukwa-Lemmerz, Paul S. Levy, Jeffrey C. Lightcap, Wienand Meilicke, and John S. Rodewig.

2. To approve the adoption of the Company’s Short-Term Incentive Plan. The number of votes cast with respect to this matter were as follows:

For: 20,792,093 Against: 503,618 Abstain: 37,064

3. To ratify the appointment of KPMG LLP as the Company’s independent auditors for the fiscal year ending January 31, 2002. The number of votes cast with respect to this matter were as follows:

For: 21,260,907 Against: 59,581 Abstain: 12,287

There were no broker held non-voted shares represented at the Annual Meeting with respect to any of the foregoing matters.

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K


	(a)	Exhibits

~~Exhibit~~ 10.41* ~~Number~~Critical ~~Description~~Employee ~~None~~Retention Plan as entered by the United States Bankruptcy Court for the District of Delaware on May 30, 2002.

(b) Reports on Form 8-K

~~During the fiscal quarter ended July 31,~~None ~~2001, the Company filed Current Reports on Form 8-K with~~ ~~the Securities and Exchange Commission on June 21, 2001, June 29, 2001, and July 12, 2001.~~

3927

SIGNATURES

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

HAYES LEMMERZ INTERNATIONAL, INC. /s/ KENNETH A. HILTZ Kenneth A. Hiltz Chief Financial Officer /s/ HERBERT S. COHEN Herbert S. Cohen Chief Accounting Officer

~~March 25~~June 14, 2002

4028

EXHIBIT INDEX


Exhibit No.		Description

	10.41	Critical Employee Retention Plan as entered by the United States Bankruptcy Court for the District of Delaware on May 30, 2002.

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Filing Compare · HAYES LEMMERZ INTERNATIONAL INC