##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 31, 2008
 or
 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: 000-50303
 Hayes Lemmerz International, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    32-0072578(IRS Employer
Identification No.)15300 Centennial Drive 
Northville, Michigan(Address of principal executive offices)
    
    48168(Zip Code)
 Registrants telephone number, including area code:
(734) 737-5000
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 
 þ o




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##### 



HAYES LEMMERZ INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Consolidated Statements of Operations
    
    
    3Condensed Consolidated Balance Sheets
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Consolidated Statements of Changes in Stockholders Equity
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    37PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37Item 3. Defaults upon Senior Securities
    
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    
    37Item 5. Other Information
    
    
    38Item 6. Exhibits
    
    
    38Signature
    
    
    38EX-31.1EX-31.2EX-32.1EX-32.2
  Unless otherwise indicated, references to we, us, or our mean Hayes Lemmerz International,
Inc., a Delaware corporation, and its subsidiaries. References to fiscal year means the 12-month
period commencing on February 1 st of that year and ending January 31 st of the
following year (e.g., fiscal 2008 means the period beginning February 1, 2008 and ending
January 31, 2009). This report contains forward looking statements with respect to our financial
condition, results of operations, and business. All statements other than statements of historical
fact made in this Quarterly Report on Form 10-Q are forward-looking. Such forward-looking
statements include, among others, those statements including the words expect, anticipate,
intend, believe, and similar language. These forward looking statements involve certain risks
and uncertainties. Our actual results may differ significantly from those projected in the
forward-looking statements. Factors that may cause actual results to differ materially from those
contemplated by such forward looking statements include, among others: (1) competitive pressure in
our industry; (2) fluctuations in the price of steel, aluminum, and other raw materials;
(3) changes in general economic conditions; (4) our dependence on the automotive industry (which
has historically been cyclical) and on a small number of major customers for the majority of our
sales; (5) pricing pressure from automotive industry customers and the potential for re-sourcing of
business to lower-cost providers; (6) changes in the financial markets or our debt ratings
affecting our financial structure and our cost of capital and borrowed money; (7) the uncertainties
inherent in international operations and foreign currency fluctuations; and (8) the risks described
in our Annual Report on Form 10-K for the fiscal year ended January 31, 2008. You are cautioned
not to place undue reliance on the forward-looking statements, which speak only as of the date of
this Quarterly Report on Form 10-Q. We have no duty to update the forward looking statements in
this Quarterly Report on Form 10-Q and we do not intend to provide such updates
 2




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##### Table of Contents



Item 1. Financial Statements
 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended July 31,
    
    
    Six Months Ended July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions, except per share amounts)Net sales
    
    $
    563.5
    
    
    $
    544.1
    
    
    $
    1,137.3
    
    
    $
    1,042.7Cost of goods sold
    
    
    491.6
    
    
    
    491.0
    
    
    
    1,001.7
    
    
    
    933.4Gross profit
    
    
    71.9
    
    
    
    53.1
    
    
    
    135.6
    
    
    
    109.3Marketing, general, and administrative
    
    
    39.4
    
    
    
    45.5
    
    
    
    78.7
    
    
    
    80.8Amortization of intangibles
    
    
    2.9
    
    
    
    2.6
    
    
    
    5.7
    
    
    
    5.0Asset impairments and other restructuring charges
    
    
    5.8
    
    
    
    1.5
    
    
    
    9.1
    
    
    
    3.9Other expense, net
    
    
    34.1
    
    
    
    9.5
    
    
    
    30.7
    
    
    
    7.5(Loss) earnings from operations
    
    
    (10.3
    )
    
    
    (6.0
    )
    
    
    11.4
    
    
    
    12.1Interest expense, net
    
    
    14.3
    
    
    
    15.8
    
    
    
    27.6
    
    
    
    33.9Loss on early extinguishment of debt
    
    
    
    
    
    
    21.2
    
    
    
    
    
    
    
    21.5Other non-operating expense
    
    
    1.0
    
    
    
    0.1
    
    
    
    2.7
    
    
    
    0.1Loss from continuing operations before taxes
and minority interest
    
    
    (25.6
    )
    
    
    (43.1
    )
    
    
    (18.9
    )
    
    
    (43.4
    )Income tax expense
    
    
    14.6
    
    
    
    13.3
    
    
    
    27.6
    
    
    
    21.8Loss from continuing operations before minority interest
    
    
    (40.2
    )
    
    
    (56.4
    )
    
    
    (46.5
    )
    
    
    (65.2
    )Minority interest
    
    
    6.8
    
    
    
    5.7
    
    
    
    13.3
    
    
    
    9.5Loss from continuing operations
    
    
    (47.0
    )
    
    
    (62.1
    )
    
    
    (59.8
    )
    
    
    (74.7
    )Discontinued operations:Income from operations, net of tax of
$0.0, $0.2, $0.0, $0.2, respectively
    
    
    
    
    
    
    2.5
    
    
    
    
    
    
    
    3.4Loss on sale of business, net of tax of $0 for all periods
    
    
    
    
    
    
    (27.5
    )
    
    
    
    
    
    
    (31.1
    )Loss from discontinued operations
    
    
    
    
    
    
    (25.0
    )
    
    
    
    
    
    
    (27.7
    )Net loss
    
    $
    (47.0
    )
    
    $
    (87.1
    )
    
    $
    (59.8
    )
    
    $
    (102.4
    )Loss per common share dataBasic and diluted:Loss from continuing operations
    
    $
    (0.46
    )
    
    $
    (0.78
    )
    
    $
    (0.59
    )
    
    $
    (1.25
    )Loss from discontinued operations
    
    
    
    
    
    
    (0.32
    )
    
    
    
    
    
    
    (0.46
    )Net loss
    
    $
    (0.46
    )
    
    $
    (1.10
    )
    
    $
    (0.59
    )
    
    $
    (1.71
    )Weighted average shares outstanding (in thousands)
    
    
    101,104
    
    
    
    79,336
    
    
    
    101,087
    
    
    
    59,854
  3




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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 July 31,
    
    
    January 31,2008
    
    
    2008(Dollars in millions)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    87.5
    
    
    $
    160.2Receivables, net of allowance of $1.3 and $1.5 at July 31, 2008
and January 31, 2008, respectively
    
    
    295.0
    
    
    
    305.6Other receivables
    
    
    43.2
    
    
    
    48.3Inventories
    
    
    218.4
    
    
    
    179.1Assets held for sale
    
    
    26.5
    
    
    
    21.4Deferred tax assets
    
    
    6.1
    
    
    
    5.0Prepaid expenses
    
    
    8.5
    
    
    
    7.2Total current assets
    
    
    685.2
    
    
    
    726.8Property, plant, and equipment, net of accumulated depreciation of $451.9 and
$385.0 as of July 31, 2008 and January 31, 2008, respectively
    
    
    630.8
    
    
    
    616.8Goodwill
    
    
    252.1
    
    
    
    240.5Customer relationships, net of amortization of $22.8 and $19.7 at July 31, 2008
and January 31, 2008, respectively
    
    
    106.6
    
    
    
    103.7Other intangible assets, net of amortization of $46.1 and $40.2 at July 31, 2008
and January 31, 2008, respectively
    
    
    65.3
    
    
    
    65.0Deferred tax assets
    
    
    1.8
    
    
    
    4.2Other assets
    
    
    52.4
    
    
    
    48.9Total assets
    
    $
    1,794.2
    
    
    $
    1,805.9LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Bank borrowings and other notes
    
    $
    54.9
    
    
    $
    32.9Current portion of long-term debt
    
    
    5.0
    
    
    
    4.8Accounts payable
    
    
    342.4
    
    
    
    372.0Accrued payroll and employee benefits
    
    
    71.4
    
    
    
    76.4Liabilities held for sale
    
    
    8.6
    
    
    
    8.2Other accrued liabilities
    
    
    66.4
    
    
    
    61.6Total current liabilities
    
    
    548.7
    
    
    
    555.9Long-term debt, net of current portion
    
    
    601.6
    
    
    
    572.2Deferred tax liabilities
    
    
    78.0
    
    
    
    76.1Pension and other long-term liabilities
    
    
    322.4
    
    
    
    328.9Minority interest
    
    
    74.7
    
    
    
    70.5Commitments and contingenciesStockholders equity:Preferred stock, 1,000,000 shares authorized, none issued or outstanding at
July 31, 2008 or January 31, 2008
    
    
    
    
    
    
    Common stock, par value $0.01 per share:200,000,000 shares authorized; 101,116,801 and 101,057,966
issued and outstanding at July 31, 2008 and January 31, 2008, respectively
    
    
    1.0
    
    
    
    1.0Additional paid in capital
    
    
    884.2
    
    
    
    882.0Accumulated deficit
    
    
    (990.0
    )
    
    
    (928.7
    )Accumulated other comprehensive income
    
    
    273.6
    
    
    
    248.0Total stockholders equity
    
    
    168.8
    
    
    
    202.3Total liabilities and stockholders equity
    
    $
    1,794.2
    
    
    $
    1,805.9
  4




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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
 Six Months Ended July 31,2008
    
    
    2007(Dollars in millions)Cash flows from operating activities:Net loss
    
    $
    (59.8
    )
    
    $
    (102.4
    )Adjustments to reconcile net loss from operations to net cash provided by
(used for) operating activities:Net loss from discontinued operations
    
    
    
    
    
    
    27.7Depreciation and amortization
    
    
    55.9
    
    
    
    56.4Amortization of deferred financing fees and accretion of discount
    
    
    1.2
    
    
    
    2.2Asset impairments
    
    
    7.3
    
    
    
    0.5Deferred income taxes
    
    
    (0.5
    )
    
    
    4.6Minority interest
    
    
    13.3
    
    
    
    9.5Equity compensation expense
    
    
    2.0
    
    
    
    4.9Loss on sale of assets and businesses
    
    
    37.6
    
    
    
    12.2Loss on early extinguishment of debt
    
    
    
    
    
    
    21.5Changes in operating assets and liabilities that increase (decrease) cash flows:Receivables
    
    
    30.4
    
    
    
    (63.2
    )Other receivables
    
    
    5.1
    
    
    
    (10.7
    )Inventories
    
    
    (29.3
    )
    
    
    (34.6
    )Prepaid expenses and other
    
    
    (1.7
    )
    
    
    2.1Accounts payable and accrued liabilities
    
    
    (74.3
    )
    
    
    62.6Cash used for operating activities
    
    
    (12.8
    )
    
    
    (6.7
    )Cash flows from investing activities:Purchase of property, plant, equipment, and tooling
    
    
    (43.0
    )
    
    
    (40.8
    )Sale of assets
    
    
    (26.4
    )
    
    
    1.1Cash used for investing activities
    
    
    (69.4
    )
    
    
    (39.7
    )Cash flows from financing activities:Changes in bank borrowings and credit facilities
    
    
    20.8
    
    
    
    (0.3
    )Repayment of long-term debt
    
    
    (1.5
    )
    
    
    (133.3
    )Dividends paid to minority shareholders
    
    
    (10.8
    )
    
    
    (10.1
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    193.1Fees paid for Rights Offering
    
    
    
    
    
    
    (31.5
    )Cash provided by financing activities
    
    
    8.5
    
    
    
    17.9Cash flows of discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    6.6Net cash provided by investing activities
    
    
    
    
    
    
    37.4Net cash used for financing activities
    
    
    
    
    
    
    (4.6
    )Net cash provided by discontinued operations
    
    
    
    
    
    
    39.4Effect of exchange rate changes on cash and cash equivalents
    
    
    1.0
    
    
    
    2.9(Decrease) increase in cash and cash equivalents
    
    
    (72.7
    )
    
    
    13.8Cash and cash equivalents at beginning of period
    
    
    160.2
    
    
    
    38.5Cash and cash equivalents at end of period
    
    $
    87.5
    
    
    $
    52.3Supplemental data:Cash paid for interest
    
    $
    29.2
    
    
    $
    32.1Cash paid for income taxes
    
    $
    26.2
    
    
    $
    10.8
  5




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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
 Additional
    
    
    
    
    
    
    Accumulated OtherPaid in
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    Par Value
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Total(Dollars in millions, except share amounts)Balance at January 31, 2008
    
    
    101,057,966
    
    
    $
    1.0
    
    
    $
    882.0
    
    
    $
    (928.7
    )
    
    $
    248.0
    
    
    $
    202.3Preferred stock dividends accrued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59.8
    )
    
    
    
    
    
    
    (59.8
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.5
    
    
    
    21.5Unrealized gain on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.7
    
    
    
    4.7Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33.6
    )Shares of redeemable preferred stock of
subsidiary converted into common stock
    
    
    14,152
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Shares issued for vested RSUs
    
    
    44,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension measurement date adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    (0.6
    )
    
    
    (1.8
    )Equity compensation expense
    
    
    
    
    
    
    
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    2.0Balance at July 31, 2008
    
    
    101,116,801
    
    
    $
    1.0
    
    
    $
    884.2
    
    
    $
    (990.0
    )
    
    $
    273.6
    
    
    $
    168.8Balance at January 31, 2007
    
    
    38,470,434
    
    
    $
    0.4
    
    
    $
    678.6
    
    
    $
    (733.6
    )
    
    $
    156.4
    
    
    $
    101.8Preferred stock dividends accrued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (102.4
    )
    
    
    
    
    
    
    (102.4
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39.9
    
    
    
    39.9Unrealized gain on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    1.7Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60.8
    )Shares of redeemable preferred stock of
subsidiary converted into common stock
    
    
    89,932
    
    
    
    
    
    
    
    2.1
    
    
    
    
    
    
    
    
    
    
    
    2.1Shares issued for vested RSUs
    
    
    847,341
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock issued to note holders
    
    
    1,049,020
    
    
    
    
    
    
    
    5.3
    
    
    
    
    
    
    
    
    
    
    
    5.3Common stock issued, net of fees
    
    
    59,423,077
    
    
    
    0.6
    
    
    
    184.8
    
    
    
    
    
    
    
    
    
    
    
    185.4Equity compensation expense
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    
    5.0Balance at July 31, 2007
    
    
    99,879,804
    
    
    $
    1.0
    
    
    $
    875.8
    
    
    $
    (836.4
    )
    
    $
    198.0
    
    
    $
    238.4
  6




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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Three and six months ended July 31, 2008 and 2007
 (Unaudited)
 (Dollars in millions, unless otherwise stated)
 Note 1. Description of Business
  Description of Business
   Note 2. Basis of Presentation
    Note 3. Stock-Based Compensation
    7




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##### Table of Contents



Note 4. Inventories
  July 31,
    
    
    January 31,2008
    
    
    2008Raw materials
    
    $
    51.5
    
    
    $
    41.4Work-in-process
    
    
    45.2
    
    
    
    41.8Finished goods
    
    
    87.5
    
    
    
    62.4Spare parts and supplies
    
    
    34.2
    
    
    
    33.5Total
    
    $
    218.4
    
    
    $
    179.1
 Note 5. Assets Held for Sale
  July 31,
    
    
    January 31,2008
    
    
    2008Nuevo Laredo, Mexico facility
    
    $
    23.3
    
    
    $
    16.0Huntington, Indiana facility
    
    
    1.7
    
    
    
    2.7Howell, Michigan facility
    
    
    1.5
    
    
    
    2.7Total
    
    $
    26.5
    
    
    $
    21.4
   July 31,
    
    
    January 31,2008
    
    
    2008Receivables
    
    $
    16.0
    
    
    $
    11.3Inventories
    
    
    5.8
    
    
    
    4.1Prepaid expenses
    
    
    0.2
    
    
    
    0.1Property, plant, and equipment, net
    
    
    1.3
    
    
    
    0.5Total assets held for sale
    
    $
    23.3
    
    
    $
    16.0Accounts payable and accrued liabilities
    
    $
    8.6
    
    
    $
    8.0Total liabilities held for sale
    
    $
    8.6
    
    
    $
    8.0
  8




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##### Table of Contents



Note 6. Discontinued Operations
   Three Months Ended July 31,
    
    
    Six Months Ended July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    
    
    
    $
    26.2
    
    
    $
    
    
    
    $
    56.9Earnings before income tax expense
    
    $
    
    
    
    $
    1.1
    
    
    $
    
    
    
    $
    5.1Income tax expense
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.9Net income
    
    $
    
    
    
    $
    0.9
    
    
    $
    
    
    
    $
    4.2
   Three Months Ended July 31,
    
    
    Six Months Ended July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    
    
    
    $
    23.8
    
    
    $
    
    
    
    $
    55.5Loss before income tax expense
    
    $
    
    
    
    $
    (25.3
    )
    
    $
    
    
    
    $
    (27.5
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.7
    )Net loss
    
    $
    
    
    
    $
    (25.3
    )
    
    $
    
    
    
    $
    (26.8
    )
   9




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##### Table of Contents



Three Months Ended July 31,
    
    
    Six Months Ended July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6.8Loss before income tax expense
    
    $
    
    
    
    $
    (0.6
    )
    
    $
    
    
    
    $
    (5.1
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    
    
    
    $
    (0.6
    )
    
    $
    
    
    
    $
    (5.1
    )
  Note 7. Bank Borrowings, Other Notes, and Long-Term Debt
   July 31,
    
    
    January 31,2008
    
    
    2008Various foreign bank and government loans, weighted average interest rates of
4.7% and 4.0% at July 31, 2008 and January 31, 2008, respectively
    
    $
    2.9
    
    
    $
    3.3Term Loan maturing 2014, weighted average interest rate of 7.1% and 7.4%
at July 31, 2008 and January 31, 2008, respectively
    
    
    401.1
    
    
    
    381.58.25% New Senior Notes due 2015
    
    
    202.6
    
    
    
    192.2606.6
    
    
    
    577.0Less current portion of long-term debt
    
    
    (5.0
    )
    
    
    (4.8
    )Total long-term debt
    
    $
    601.6
    
    
    $
    572.2
 Euro Denominated Debt
  Rights Offering
   10




---



##### Table of Contents



1 2
 Old Notes
 1 2
   Tender Offer for Senior Notes
  New Senior Notes
 1 4
  11




---



##### Table of Contents



Credit Facility
        12




---



##### Table of Contents



Note 8. Pension Plans and Postretirement Benefits Other Than Pensions
   US Plans
    
    
    International PlansPension Benefits
    
    
    Other Benefits
    
    
    Pension BenefitsThree Months Ended July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    0.3
    
    
    $
    0.2
    
    
    $
    
    
    
    $
    
    
    
    $
    0.2
    
    
    $
    0.1Interest cost
    
    
    2.6
    
    
    
    2.6
    
    
    
    2.3
    
    
    
    2.3
    
    
    
    1.9
    
    
    
    1.7Expected return on plan assets
    
    
    (3.3
    )
    
    
    (3.0
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    (0.2
    )Amortization of net loss
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    (0.7
    )
    
    $
    (0.2
    )
    
    $
    2.0
    
    
    $
    2.1
    
    
    $
    1.8
    
    
    $
    1.6
 US Plans
    
    
    International PlansPension Benefits
    
    
    Other Benefits
    
    
    Pension BenefitsSix Months Ended July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    0.5
    
    
    $
    0.5
    
    
    $
    
    
    
    $
    
    
    
    $
    0.4
    
    
    $
    0.3Interest cost
    
    
    5.2
    
    
    
    5.2
    
    
    
    4.7
    
    
    
    4.7
    
    
    
    3.8
    
    
    
    3.3Expected return on plan assets
    
    
    (6.6
    )
    
    
    (6.0
    )
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.4
    )Amortization of net loss
    
    
    (0.5
    )
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    (1.4
    )
    
    $
    (0.3
    )
    
    $
    3.9
    
    
    $
    4.5
    
    
    $
    3.6
    
    
    $
    3.2
   13




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##### Table of Contents



Note 9. Asset Impairments and Other Restructuring Charges
  Three Months Ended July 31, 2008AutomotiveWheels
    
    
    Other
    
    
    TotalFacility closure costs
    
    $
    0.3
    
    
    $
    0.1
    
    
    $
    0.4Impairment of facility, machinery, and equipment
    
    
    4.6
    
    
    
    
    
    
    
    4.6Severance and other restructuring costs
    
    
    0.8
    
    
    
    
    
    
    
    0.8Total
    
    $
    5.7
    
    
    $
    0.1
    
    
    $
    5.8
 Three Months Ended July 31, 2007AutomotiveWheels
    
    
    Other
    
    
    TotalFacility closure costs
    
    $
    0.6
    
    
    $
    
    
    
    $
    0.6Impairment of facility, machinery, and equipment
    
    
    0.4
    
    
    
    
    
    
    
    0.4Severance and other restructuring costs
    
    
    
    
    
    
    0.5
    
    
    
    0.5Total
    
    $
    1.0
    
    
    $
    0.5
    
    
    $
    1.5
 Six Months Ended July 31, 2008AutomotiveWheels
    
    
    Other
    
    
    TotalFacility closure costs
    
    $
    0.6
    
    
    $
    0.2
    
    
    $
    0.8Impairment of facility, machinery, and equipment
    
    
    7.3
    
    
    
    
    
    
    
    7.3Severance and other restructuring costs
    
    
    0.9
    
    
    
    0.1
    
    
    
    1.0Total
    
    $
    8.8
    
    
    $
    0.3
    
    
    $
    9.1
 Six Months Ended July 31, 2007AutomotiveWheels
    
    
    Other
    
    
    TotalFacility closure costs
    
    $
    2.7
    
    
    $
    0.1
    
    
    $
    2.8Impairment of facility, machinery, and equipment
    
    
    0.5
    
    
    
    
    
    
    
    0.5Severance and other restructuring costs
    
    
    
    
    
    
    0.6
    
    
    
    0.6Total
    
    $
    3.2
    
    
    $
    0.7
    
    
    $
    3.9
  Asset Impairment Losses and Other Restructuring Charges for the Three Months Ended July 31, 2008
   14




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Asset Impairment Losses and Other Restructuring Charges for the Three Months Ended July 31, 2007
    Asset Impairment Losses and Other Restructuring Charges for the Six Months Ended July 31, 2008
    Asset Impairment Losses and Other Restructuring Charges for the Six Months Ended July 31, 2007
    Facility Exit Costs and Severance Accruals
  CashPayments andEffects ofJanuary 31,
    
    
    
    
    
    
    Foreign
    
    
    July 31, 20082008 Accrual
    
    
    Expense
    
    
    Currency
    
    
    AccrualFacility closure costs
    
    $
    
    
    
    $
    0.8
    
    
    $
    (0.8
    )
    
    $
    Severance and other restructuring costs
    
    
    0.2
    
    
    
    1.0
    
    
    
    (0.2
    )
    
    
    1.0Total
    
    $
    0.2
    
    
    $
    1.8
    
    
    $
    (1.0
    )
    
    $
    1.0
 15




---



##### Table of Contents



Note 10. Weighted Average Shares Outstanding
  Three Months Ended July 31,
    
    Six Months Ended July 31,2008
    
    2007
    
    2008
    
    2007Basic weighted average shares outstanding
    
    
    101,104
    
    
    
    79,336
    
    
    
    101,087
    
    
    
    59,854Dilutive effect of options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted average shares outstanding
    
    
    101,104
    
    
    
    79,336
    
    
    
    101,087
    
    
    
    59,854
  Note 11. Taxes on Income
  Three Months Ended July 31,2008
    
    2007US
    
    Foreign
    
    US
    
    ForeignPre-tax loss
    
    $
    (23.2
    )
    
    $
    (2.4
    )
    
    $
    (23.1
    )
    
    $
    (20.0
    )Income tax expense
    
    
    0.4
    
    
    
    14.2
    
    
    
    0.5
    
    
    
    12.8
 Six Months Ended July 31,2008
    
    2007US
    
    Foreign
    
    US
    
    ForeignPre-tax income (loss)
    
    $
    (41.3
    )
    
    $
    22.4
    
    
    $
    (49.4
    )
    
    $
    6.0Income tax expense
    
    
    0.7
    
    
    
    26.9
    
    
    
    0.7
    
    
    
    21.1
      16




---



##### Table of Contents



Note 12. Segment Reporting
   Three Months Ended July 31, 2008AutomotiveWheels
    
    Other
    
    TotalNet sales
    
    $
    550.1
    
    
    $
    13.4
    
    
    $
    563.5Asset impairments and other restructuring charges
    
    
    5.7
    
    
    
    0.1
    
    
    
    5.8(Loss) earnings from operations
    
    
    (12.3
    )
    
    
    2.0
    
    
    
    (10.3
    )
 Three Months Ended July 31, 2007AutomotiveWheels
    
    Other
    
    TotalNet sales
    
    $
    521.2
    
    
    $
    22.9
    
    
    $
    544.1Asset impairments and other restructuring charges
    
    
    1.0
    
    
    
    0.5
    
    
    
    1.5Earnings (loss) from operations
    
    
    21.7
    
    
    
    (27.7
    )
    
    
    (6.0
    )
 Six Months Ended July 31, 2008AutomotiveWheels
    
    Other
    
    TotalNet sales
    
    $
    1,112.1
    
    
    $
    25.2
    
    
    $
    1,137.3Asset impairments and other restructuring charges
    
    
    8.8
    
    
    
    0.3
    
    
    
    9.1Earnings from operations
    
    
    4.6
    
    
    
    6.8
    
    
    
    11.4
 Six Months Ended July 31, 2007AutomotiveWheels
    
    Other
    
    TotalNet sales
    
    $
    988.0
    
    
    $
    54.7
    
    
    $
    1,042.7Asset impairments and other restructuring charges
    
    
    3.2
    
    
    
    0.7
    
    
    
    3.9Earnings (loss) from operations
    
    
    46.3
    
    
    
    (34.2
    )
    
    
    12.1
 As of July 31, 2008AutomotiveWheels
    
    Other
    
    TotalTotal assets
    
    $
    1,971.8
    
    
    $
    (177.6
    )
    
    $
    1,794.2
 As of January 31, 2008AutomotiveWheels
    
    Other
    
    TotalTotal assets
    
    $
    1,956.6
    
    
    $
    (150.7
    )
    
    $
    1,805.9
 Note 13. Minority Interest in Equity of Consolidated Subsidiaries
  17




---



##### Table of Contents



January 31,July 31, 2008
    
    
    2008Minority interest in consolidated affiliates
    
    $
    63.5
    
    
    $
    59.3Minority interest in preferred stock
    
    
    11.2
    
    
    
    11.2Total minority interest
    
    $
    74.7
    
    
    $
    70.5
 Note 14. New Accounting Pronouncements
 Disclosures about
Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Fair Value Measurements
 18




---



##### Table of Contents



Note 15. Condensed Consolidating Financial Statements
   Guarantor and Nonguarantor Financial Statements
  19




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Six Months Ended July 31, 2008
(Unaudited)
 Guarantor
    
    
    NonguarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Net sales
    
    $
    
    
    
    $
    
    
    
    $
    707.8
    
    
    $
    475.6
    
    
    $
    (46.1
    )
    
    $
    1,137.3Cost of goods sold
    
    
    0.1
    
    
    
    
    
    
    
    641.4
    
    
    
    406.3
    
    
    
    (46.1
    )
    
    
    1,001.7Gross profit
    
    
    (0.1
    )
    
    
    
    
    
    
    66.4
    
    
    
    69.3
    
    
    
    
    
    
    
    135.6Marketing, general, and administrative
    
    
    
    
    
    
    0.4
    
    
    
    54.6
    
    
    
    23.7
    
    
    
    
    
    
    
    78.7Equity in (earnings) losses of
subsidiaries and joint ventures
    
    
    59.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59.7
    )
    
    
    Amortization of intangibles
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    5.4
    
    
    
    
    
    
    
    5.7Asset impairments and other restructuring charges
    
    
    
    
    
    
    
    
    
    
    8.3
    
    
    
    0.8
    
    
    
    
    
    
    
    9.1Other (income) expense, net
    
    
    
    
    
    
    
    
    
    
    (5.2
    )
    
    
    16.8
    
    
    
    19.1
    
    
    
    30.7(Loss) earnings from operations
    
    
    (59.8
    )
    
    
    (0.4
    )
    
    
    8.4
    
    
    
    22.6
    
    
    
    40.6
    
    
    
    11.4Interest expense (income), net
    
    
    
    
    
    
    41.7
    
    
    
    (21.0
    )
    
    
    6.9
    
    
    
    
    
    
    
    27.6Other non-operating expense
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    1.4
    
    
    
    0.7
    
    
    
    2.7(Loss) earnings from continuing operations
before taxes and minority interest
    
    
    (59.8
    )
    
    
    (42.1
    )
    
    
    28.8
    
    
    
    14.3
    
    
    
    39.9
    
    
    
    (18.9
    )Income tax expense
    
    
    
    
    
    
    1.7
    
    
    
    12.2
    
    
    
    13.7
    
    
    
    
    
    
    
    27.6(Loss) earnings from continuing 
operations before minority interest
    
    
    (59.8
    )
    
    
    (43.8
    )
    
    
    16.6
    
    
    
    0.6
    
    
    
    39.9
    
    
    
    (46.5
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.3
    
    
    
    
    
    
    
    13.3Net (loss) income
    
    $
    (59.8
    )
    
    $
    (43.8
    )
    
    $
    16.6
    
    
    $
    (12.7
    )
    
    $
    39.9
    
    
    $
    (59.8
    )
 20




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Six Months Ended July 31, 2007
(Unaudited)
 Guarantor
    
    
    NonguarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Net sales
    
    $
    
    
    
    $
    
    
    
    $
    679.4
    
    
    $
    412.1
    
    
    $
    (48.8
    )
    
    $
    1,042.7Cost of goods sold
    
    
    0.1
    
    
    
    
    
    
    
    632.8
    
    
    
    349.3
    
    
    
    (48.8
    )
    
    
    933.4Gross profit
    
    
    (0.1
    )
    
    
    
    
    
    
    46.6
    
    
    
    62.8
    
    
    
    
    
    
    
    109.3Marketing, general, and administrative
    
    
    
    
    
    
    
    
    
    
    62.2
    
    
    
    18.6
    
    
    
    
    
    
    
    80.8Equity in (earnings) losses of
subsidiaries and joint ventures
    
    
    102.3
    
    
    
    33.4
    
    
    
    
    
    
    
    
    
    
    
    (135.7
    )
    
    
    Amortization of intangibles
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    4.5
    
    
    
    
    
    
    
    5.0Asset impairments and other restructuring charges
    
    
    
    
    
    
    
    
    
    
    3.9
    
    
    
    
    
    
    
    
    
    
    
    3.9Other expense (income) , net
    
    
    
    
    
    
    
    
    
    
    5.5
    
    
    
    (137.4
    )
    
    
    139.4
    
    
    
    7.5(Loss) earnings from operations
    
    
    (102.4
    )
    
    
    (33.4
    )
    
    
    (25.5
    )
    
    
    177.1
    
    
    
    (3.7
    )
    
    
    12.1Interest expense, net
    
    
    
    
    
    
    7.9
    
    
    
    21.0
    
    
    
    5.0
    
    
    
    
    
    
    
    33.9Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    21.5
    
    
    
    
    
    
    
    
    
    
    
    21.5Other non-operating (income) expense
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (1.0
    )
    
    
    3.4
    
    
    
    0.1(Loss) earnings from continuing operations
before taxes and minority interest
    
    
    (102.4
    )
    
    
    (41.3
    )
    
    
    (65.7
    )
    
    
    173.1
    
    
    
    (7.1
    )
    
    
    (43.4
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    11.5
    
    
    
    10.3
    
    
    
    
    
    
    
    21.8(Loss) earnings
from continuing operations before
minority interest
    
    
    (102.4
    )
    
    
    (41.3
    )
    
    
    (77.2
    )
    
    
    162.8
    
    
    
    (7.1
    )
    
    
    (65.2
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    10.3
    
    
    
    
    
    
    
    9.5(Loss) earnings from continuing operations
    
    
    (102.4
    )
    
    
    (41.3
    )
    
    
    (76.4
    )
    
    
    152.5
    
    
    
    (7.1
    )
    
    
    (74.7
    )(Loss) earnings from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (33.9
    )
    
    
    6.2
    
    
    
    
    
    
    
    (27.7
    )Net (loss) income
    
    $
    (102.4
    )
    
    $
    (41.3
    )
    
    $
    (110.3
    )
    
    $
    158.7
    
    
    $
    (7.1
    )
    
    $
    (102.4
    )
 21




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CONDENSED CONSOLIDATING BALANCE SHEETS
As of July 31, 2008
(Unaudited)
 Guarantor
    
    
    NonguarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Cash and cash equivalents
    
    $
    
    
    
    $
    21.3
    
    
    $
    19.8
    
    
    $
    46.4
    
    
    $
    
    
    
    $
    87.5Receivables, net
    
    
    
    
    
    
    
    
    
    
    150.2
    
    
    
    144.8
    
    
    
    
    
    
    
    295.0Other receivables
    
    
    
    
    
    
    
    
    
    
    43.2
    
    
    
    43.2
    
    
    
    (43.2
    )
    
    
    43.2Inventories
    
    
    
    
    
    
    
    
    
    
    139.5
    
    
    
    78.9
    
    
    
    
    
    
    
    218.4Assets held for sale
    
    
    
    
    
    
    
    
    
    
    26.5
    
    
    
    
    
    
    
    
    
    
    
    26.5Prepaid expenses and other current assets
    
    
    
    
    
    
    
    
    
    
    7.0
    
    
    
    7.7
    
    
    
    (0.1
    )
    
    
    14.6Total current assets
    
    
    
    
    
    
    21.3
    
    
    
    386.2
    
    
    
    321.0
    
    
    
    (43.3
    )
    
    
    685.2Property, plant, and equipment, net
    
    
    
    
    
    
    
    
    
    
    384.3
    
    
    
    246.6
    
    
    
    (0.1
    )
    
    
    630.8Goodwill and other assets, net
    
    
    168.8
    
    
    
    854.0
    
    
    
    111.6
    
    
    
    361.0
    
    
    
    (1,017.2
    )
    
    
    478.2Total assets
    
    $
    168.8
    
    
    $
    875.3
    
    
    $
    882.1
    
    
    $
    928.6
    
    
    $
    (1,060.6
    )
    
    $
    1,794.2Bank borrowings and other notes
    
    $
    
    
    
    $
    
    
    
    $
    46.3
    
    
    $
    8.6
    
    
    $
    
    
    
    $
    54.9Current portion of long-term debt
    
    
    
    
    
    
    4.1
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    5.0Liabilities held for sale
    
    
    
    
    
    
    
    
    
    
    8.6
    
    
    
    
    
    
    
    
    
    
    
    8.6Accounts payable and other accrued liabilities
    
    
    
    
    
    
    6.3
    
    
    
    274.2
    
    
    
    242.7
    
    
    
    (43.0
    )
    
    
    480.2Total current liabilities
    
    
    
    
    
    
    10.4
    
    
    
    329.1
    
    
    
    252.2
    
    
    
    (43.0
    )
    
    
    548.7Long-term debt, net of current portion
    
    
    
    
    
    
    599.6
    
    
    
    0.6
    
    
    
    1.4
    
    
    
    
    
    
    
    601.6Pension and other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    282.9
    
    
    
    117.5
    
    
    
    
    
    
    
    400.4Minority interest
    
    
    
    
    
    
    
    
    
    
    11.2
    
    
    
    64.8
    
    
    
    (1.3
    )
    
    
    74.7Parent loans
    
    
    
    
    
    
    493.4
    
    
    
    (614.4
    )
    
    
    145.8
    
    
    
    (24.8
    )
    
    
    Common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0Additional paid-in capital
    
    
    884.2
    
    
    
    (54.3
    )
    
    
    1,285.2
    
    
    
    273.9
    
    
    
    (1,504.8
    )
    
    
    884.2Retained earnings (accumulated deficit)
    
    
    (990.0
    )
    
    
    (193.3
    )
    
    
    (558.2
    )
    
    
    (131.8
    )
    
    
    883.3
    
    
    
    (990.0
    )Accumulated other comprehensive
income (loss)
    
    
    273.6
    
    
    
    19.5
    
    
    
    145.7
    
    
    
    204.8
    
    
    
    (370.0
    )
    
    
    273.6Total stockholders equity
    
    
    168.8
    
    
    
    (228.1
    )
    
    
    872.7
    
    
    
    346.9
    
    
    
    (991.5
    )
    
    
    168.8Total liabilities and stockholders equity
    
    $
    168.8
    
    
    $
    875.3
    
    
    $
    882.1
    
    
    $
    928.6
    
    
    $
    (1,060.6
    )
    
    $
    1,794.2
 22




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEETS
As of January 31, 2008
 Guarantor
    
    
    NonguarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Cash and cash equivalents
    
    $
    
    
    
    $
    84.7
    
    
    $
    30.3
    
    
    $
    45.2
    
    
    $
    
    
    
    $
    160.2Receivables, net
    
    
    
    
    
    
    
    
    
    
    151.1
    
    
    
    154.5
    
    
    
    
    
    
    
    305.6Other receivables
    
    
    
    
    
    
    
    
    
    
    48.3
    
    
    
    48.3
    
    
    
    (48.3
    )
    
    
    48.3Inventories
    
    
    
    
    
    
    
    
    
    
    111.3
    
    
    
    67.8
    
    
    
    
    
    
    
    179.1Assets held for sale
    
    
    
    
    
    
    
    
    
    
    21.4
    
    
    
    
    
    
    
    
    
    
    
    21.4Prepaid expenses and other current assets
    
    
    
    
    
    
    
    
    
    
    7.0
    
    
    
    5.3
    
    
    
    (0.1
    )
    
    
    12.2Total current assets
    
    
    
    
    
    
    84.7
    
    
    
    369.4
    
    
    
    321.1
    
    
    
    (48.4
    )
    
    
    726.8Property, plant, and equipment, net
    
    
    
    
    
    
    
    
    
    
    376.5
    
    
    
    240.4
    
    
    
    (0.1
    )
    
    
    616.8Goodwill and other assets, net
    
    
    202.3
    
    
    
    811.0
    
    
    
    112.6
    
    
    
    346.3
    
    
    
    (1,009.9
    )
    
    
    462.3Total assets
    
    $
    202.3
    
    
    $
    895.7
    
    
    $
    858.5
    
    
    $
    907.8
    
    
    $
    (1,058.4
    )
    
    $
    1,805.9Bank borrowings and other notes
    
    $
    
    
    
    $
    
    
    
    $
    29.6
    
    
    $
    3.3
    
    
    $
    
    
    
    $
    32.9Current portion of long-term debt
    
    
    
    
    
    
    3.8
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    4.8Liabilities held for sale
    
    
    
    
    
    
    
    
    
    
    8.2
    
    
    
    
    
    
    
    
    
    
    
    8.2Accounts payable and other accrued liabilities
    
    
    
    
    
    
    6.2
    
    
    
    288.5
    
    
    
    263.7
    
    
    
    (48.4
    )
    
    
    510.0Total current liabilities
    
    
    
    
    
    
    10.0
    
    
    
    326.3
    
    
    
    268.0
    
    
    
    (48.4
    )
    
    
    555.9Long-term debt, net of current portion
    
    
    
    
    
    
    569.9
    
    
    
    0.6
    
    
    
    1.7
    
    
    
    
    
    
    
    572.2Pension and other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    287.8
    
    
    
    117.2
    
    
    
    
    
    
    
    405.0Minority interest
    
    
    
    
    
    
    
    
    
    
    11.2
    
    
    
    60.5
    
    
    
    (1.2
    )
    
    
    70.5Parent loans
    
    
    
    
    
    
    487.9
    
    
    
    (543.3
    )
    
    
    78.1
    
    
    
    (22.7
    )
    
    
    Common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0Additional paid-in capital
    
    
    882.0
    
    
    
    (54.3
    )
    
    
    1,249.4
    
    
    
    304.5
    
    
    
    (1,499.6
    )
    
    
    882.0Retained earnings (accumulated deficit)
    
    
    (928.7
    )
    
    
    (149.2
    )
    
    
    (590.4
    )
    
    
    (101.5
    )
    
    
    841.1
    
    
    
    (928.7
    )Accumulated other comprehensive
income (loss)
    
    
    248.0
    
    
    
    31.4
    
    
    
    116.9
    
    
    
    179.3
    
    
    
    (327.6
    )
    
    
    248.0Total stockholders equity
    
    
    202.3
    
    
    
    (172.1
    )
    
    
    775.9
    
    
    
    382.3
    
    
    
    (986.1
    )
    
    
    202.3Total liabilities and stockholders equity
    
    $
    202.3
    
    
    $
    895.7
    
    
    $
    858.5
    
    
    $
    907.8
    
    
    $
    (1,058.4
    )
    
    $
    1,805.9
 23




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended July 31, 2008
(Unaudited)
 Guarantor
    
    
    NonguarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Cash flows (used for) provided by operating activities
    
    $
    (0.1
    )
    
    $
    (43.2
    )
    
    $
    13.9
    
    
    $
    17.4
    
    
    $
    (0.8
    )
    
    $
    (12.8
    )Cash flows from investing activities:Purchase of property, plant,
equipment, and tooling
    
    
    
    
    
    
    
    
    
    
    (14.8
    )
    
    
    (28.2
    )
    
    
    
    
    
    
    (43.0
    )Investments in subsidiaries
    
    
    0.1
    
    
    
    (0.6
    )
    
    
    (22.3
    )
    
    
    75.5
    
    
    
    (52.7
    )
    
    
    Sale of assets
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    (29.9
    )
    
    
    3.3
    
    
    
    (26.4
    )Cash provided by (used for) investing activities
    
    
    0.1
    
    
    
    (0.6
    )
    
    
    (36.9
    )
    
    
    17.4
    
    
    
    (49.4
    )
    
    
    (69.4
    )Cash flows from financing activities:Changes in bank borrowings and credit facilities
    
    
    
    
    
    
    
    
    
    
    15.1
    
    
    
    5.7
    
    
    
    
    
    
    
    20.8Repayment of long-term debt
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    (1.5
    )Dividends paid to minority shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.8
    )
    
    
    
    
    
    
    (10.8
    )Proceeds from parent investments
    
    
    
    
    
    
    
    
    
    
    39.1
    
    
    
    (86.4
    )
    
    
    47.3
    
    
    
    Cash (used for) provided by financing activities
    
    
    
    
    
    
    (1.0
    )
    
    
    54.2
    
    
    
    (92.0
    )
    
    
    47.3
    
    
    
    8.5(Decrease) increase in parent loans
and advances
    
    
    
    
    
    
    (20.9
    )
    
    
    (42.6
    )
    
    
    60.6
    
    
    
    2.9
    
    
    
    Effect of exchange rates on cash and cash
equivalents
    
    
    
    
    
    
    2.3
    
    
    
    0.9
    
    
    
    (2.2
    )
    
    
    
    
    
    
    1.0(Decrease) increase in cash and cash equivalents
    
    
    
    
    
    
    (63.4
    )
    
    
    (10.5
    )
    
    
    1.2
    
    
    
    
    
    
    
    (72.7
    )Cash and cash equivalents at beginning
of period
    
    
    
    
    
    
    84.7
    
    
    
    30.3
    
    
    
    45.2
    
    
    
    
    
    
    
    160.2Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    21.3
    
    
    $
    19.8
    
    
    $
    46.4
    
    
    $
    
    
    
    $
    87.5
 24




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended July 31, 2007
(Unaudited)
 Guarantor
    
    
    NonguarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Cash flows (used for) provided by
operating activities
    
    $
    (0.1
    )
    
    $
    (0.8
    )
    
    $
    (58.8
    )
    
    $
    56.4
    
    
    $
    (3.4
    )
    
    $
    (6.7
    )Cash flows from investing activities:Purchase of property, plant,
equipment, and tooling
    
    
    
    
    
    
    
    
    
    
    (17.8
    )
    
    
    (23.0
    )
    
    
    
    
    
    
    (40.8
    )Investments in subsidiaries
    
    
    (185.3
    )
    
    
    (416.0
    )
    
    
    734.3
    
    
    
    (61.9
    )
    
    
    (71.1
    )
    
    
    Sale of assets
    
    
    
    
    
    
    
    
    
    
    3.9
    
    
    
    (2.8
    )
    
    
    
    
    
    
    1.1Cash (used for) provided by investing activities
    
    
    (185.3
    )
    
    
    (416.0
    )
    
    
    720.4
    
    
    
    (87.7
    )
    
    
    (71.1
    )
    
    
    (39.7
    )Cash flows from financing activities:Changes in bank borrowings and credit facilities
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    0.3
    
    
    
    
    
    
    
    (0.3
    )Repayment of long-term debt
    
    
    
    
    
    
    523.2
    
    
    
    (661.2
    )
    
    
    4.7
    
    
    
    
    
    
    
    (133.3
    )Dividends paid to minority shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.1
    )
    
    
    
    
    
    
    (10.1
    )Proceeds from issuance of common stock
    
    
    193.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193.1Proceeds from parent investments
    
    
    
    
    
    
    0.1
    
    
    
    261.1
    
    
    
    (339.0
    )
    
    
    77.8
    
    
    
    Fees paid for Rights Offering
    
    
    (7.7
    )
    
    
    (9.2
    )
    
    
    (15.1
    )
    
    
    0.5
    
    
    
    
    
    
    
    (31.5
    )Cash provided by (used for) financing activities
    
    
    185.4
    
    
    
    514.1
    
    
    
    (415.8
    )
    
    
    (343.6
    )
    
    
    77.8
    
    
    
    17.9(Decrease) increase in parent loans
and advances
    
    
    
    
    
    
    (97.3
    )
    
    
    (246.5
    )
    
    
    347.1
    
    
    
    (3.3
    )
    
    
    Cash flows from discontinued operations
    
    
    
    
    
    
    
    
    
    
    8.2
    
    
    
    31.2
    
    
    
    
    
    
    
    39.4Effect of exchange rates on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    2.4
    
    
    
    
    
    
    
    2.9Increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    8.0
    
    
    
    5.8
    
    
    
    
    
    
    
    13.8Cash and cash equivalents at beginning
of period
    
    
    
    
    
    
    
    
    
    
    8.2
    
    
    
    30.3
    
    
    
    
    
    
    
    38.5Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    
    
    
    $
    16.2
    
    
    $
    36.1
    
    
    $
    
    
    
    $
    52.3
 25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Summary
  Company Overview
      Results of Operations
 Consolidated Results  Comparison of the Three Months Ended July 31, 2008 to the Three Months
Ended July 31, 2007
  26




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##### Table of Contents



Three Months Ended July 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeNet sales:Automotive Wheels
    
    $
    550.1
    
    
    $
    521.2
    
    
    $
    28.9
    
    
    
    5.5
    %Other
    
    
    13.4
    
    
    
    22.9
    
    
    
    (9.5
    )
    
    
    -41.5
    %Total
    
    $
    563.5
    
    
    $
    544.1
    
    
    $
    19.4
    
    
    
    3.6
    %Gross profit
    
    $
    71.9
    
    
    $
    53.1
    
    
    $
    18.8
    
    
    
    35.4
    %Marketing, general, and administrative
    
    
    39.4
    
    
    
    45.5
    
    
    
    (6.1
    )
    
    
    -13.4
    %Amortization of intangibles
    
    
    2.9
    
    
    
    2.6
    
    
    
    0.3
    
    
    
    11.5
    %Asset impairments and other restructuring charges
    
    
    5.8
    
    
    
    1.5
    
    
    
    4.3
    
    
    
    286.7
    %Other expense, net
    
    
    34.1
    
    
    
    9.5
    
    
    
    24.6
    
    
    
    258.9
    %Loss from operations
    
    
    (10.3
    )
    
    
    (6.0
    )
    
    
    (4.3
    )
    
    
    -71.7
    %Interest expense, net
    
    
    14.3
    
    
    
    15.8
    
    
    
    (1.5
    )
    
    
    -9.5
    %Loss on early extinguishment of debt
    
    
    
    
    
    
    21.2
    
    
    
    (21.2
    )
    
    
    -100.0
    %Other non-operating expense
    
    
    1.0
    
    
    
    0.1
    
    
    
    0.9
    
    
    
    900.0
    %Income tax expense
    
    
    14.6
    
    
    
    13.3
    
    
    
    1.3
    
    
    
    9.8
    %Minority interest
    
    
    6.8
    
    
    
    5.7
    
    
    
    1.1
    
    
    
    19.3
    %Loss from continuing operations
    
    
    (47.0
    )
    
    
    (62.1
    )
    
    
    15.1
    
    
    
    24.3
    %Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (25.0
    )
    
    
    25.0
    
    
    
    100.0
    %Net loss
    
    $
    (47.0
    )
    
    $
    (87.1
    )
    
    $
    40.1
    
    
    
    46.0
    %
 Sales
  Gross profit
  Marketing, general, and administrative
  Asset impairments and other restructuring charges
  27




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##### Table of Contents



Other expense, net
  Interest expense, net
  Income taxes
  Discontinued operations
   Net loss
  Segment Results  Comparison of the Three Months Ended July 31, 2008 to the Three Months Ended
July 31, 2007
 Automotive Wheels
  28




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##### Table of Contents



Three Months Ended July 31,2008
    
    
    2007
    
    
    $ ChangeNet sales
    
    $
    550.1
    
    
    $
    521.2
    
    
    $
    28.9Asset impairments and other restructuring charges:Facility closure costs
    
    $
    0.3
    
    
    $
    0.6
    
    
    $
    (0.3
    )Impairment of facility, machinery, and equipment
    
    
    4.6
    
    
    
    0.4
    
    
    
    4.2Severance and other restructuring costs
    
    
    0.8
    
    
    
    
    
    
    
    0.8Total asset impairments and other restructuring charges
    
    $
    5.7
    
    
    $
    1.0
    
    
    $
    4.7(Loss) earnings from operations
    
    $
    (12.3
    )
    
    $
    21.7
    
    
    $
    (34.0
    )
 Net sales
  Asset impairments and other restructuring charges
   (Loss) earnings from operations
  Other
  Three Months Ended July 31,2008
    
    2007
    
    $ ChangeNet sales
    
    $
    13.4
    
    
    $
    22.9
    
    
    $
    (9.5
    )Total asset impairments and other restructuring charges
    
    
    0.1
    
    
    
    0.5
    
    
    
    (0.4
    )Earnings (loss) from operations
    
    
    2.0
    
    
    
    (27.7
    )
    
    
    29.7
 Net Sales
  29




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##### Table of Contents



Asset impairments and other restructuring charges
  Earnings (loss) from operations
  Consolidated Results  Comparison of the Six Months Ended July 31, 2008 to the Six Months Ended
July 31, 2007
  Six Months Ended July 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeNet sales:Automotive Wheels
    
    $
    1,112.1
    
    
    $
    988.0
    
    
    $
    124.1
    
    
    
    12.6
    %Other
    
    
    25.2
    
    
    
    54.7
    
    
    
    (29.5
    )
    
    
    -53.9
    %Total
    
    $
    1,137.3
    
    
    $
    1,042.7
    
    
    $
    94.6
    
    
    
    9.1
    %Gross profit
    
    $
    135.6
    
    
    $
    109.3
    
    
    $
    26.3
    
    
    
    24.1
    %Marketing, general, and administrative
    
    
    78.7
    
    
    
    80.8
    
    
    
    (2.1
    )
    
    
    -2.6
    %Amortization of intangibles
    
    
    5.7
    
    
    
    5.0
    
    
    
    0.7
    
    
    
    14.0
    %Asset impairments and other restructuring charges
    
    
    9.1
    
    
    
    3.9
    
    
    
    5.2
    
    
    
    133.3
    %Other expense, net
    
    
    30.7
    
    
    
    7.5
    
    
    
    23.2
    
    
    
    309.3
    %Earnings from operations
    
    
    11.4
    
    
    
    12.1
    
    
    
    (0.7
    )
    
    
    -5.8
    %Interest expense, net
    
    
    27.6
    
    
    
    33.9
    
    
    
    (6.3
    )
    
    
    -18.6
    %Loss on early extinguishment of debt
    
    
    
    
    
    
    21.5
    
    
    
    (21.5
    )
    
    
    -100.0
    %Other non-operating expense
    
    
    2.7
    
    
    
    0.1
    
    
    
    2.6
    
    
    
    2600.0
    %Income tax expense
    
    
    27.6
    
    
    
    21.8
    
    
    
    5.8
    
    
    
    26.6
    %Minority interest
    
    
    13.3
    
    
    
    9.5
    
    
    
    3.8
    
    
    
    40.0
    %Loss from continuing operations
    
    
    (59.8
    )
    
    
    (74.7
    )
    
    
    14.9
    
    
    
    19.9
    %Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (27.7
    )
    
    
    27.7
    
    
    
    100.0
    %Net loss
    
    $
    (59.8
    )
    
    $
    (102.4
    )
    
    $
    42.6
    
    
    
    41.6
    %
 Sales
  Gross profit
  30




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##### Table of Contents



Marketing, general, and administrative
  Asset impairments and other restructuring charges
   Other expense, net
  Interest expense, net
  Income taxes
  Discontinued operations
   31




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##### Table of Contents



Net loss
  Segment Results  Comparison of the Six Months Ended July 31, 2008 to the Six Months Ended July
31, 2007
 Automotive Wheels
  Six Months Ended July 31,2008
    
    
    2007
    
    
    $ ChangeNet sales
    
    $
    1,112.1
    
    
    $
    988.0
    
    
    $
    124.1Asset impairments and other restructuring charges:Facility closure costs
    
    $
    0.6
    
    
    $
    2.7
    
    
    $
    (2.1
    )Impairment of facility, machinery, and equipment
    
    
    7.3
    
    
    
    0.5
    
    
    
    6.8Severance and other restructuring costs
    
    
    0.9
    
    
    
    
    
    
    
    0.9Total asset impairments and other restructuring charges
    
    $
    8.8
    
    
    $
    3.2
    
    
    $
    5.6Earnings from operations
    
    $
    4.6
    
    
    $
    46.3
    
    
    $
    (41.8
    )
 Net sales
  Asset impairments and other restructuring charges
   Earnings from operations
  Other
  Six Months Ended July 31,2008
    
    2007
    
    $ ChangeNet sales
    
    $
    25.2
    
    
    $
    54.7
    
    
    $
    (29.5
    )Total asset impairments and other restructuring charges
    
    
    0.3
    
    
    
    0.7
    
    
    
    (0.4
    )Earnings (loss) from operations
    
    
    6.8
    
    
    
    (34.2
    )
    
    
    41.0
 32




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##### Table of Contents



Net Sales
  Asset impairments and other restructuring charges
   Earnings (loss) from operations
  Liquidity and Capital Resources
 Sources of Liquidity
  Capital Resources
     
  Cash Flows
 Operating Activities:
 33




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##### Table of Contents



Investing Activities:
 Financing Activities:
 Off Balance Sheet Arrangements
      Credit Ratings
  S&P
    
    Moodys
    
    FitchCorporate rating
    
    
    B
    
    
    
    B3
    
    
    
    BBank debt rating
    
    BB-
    
    
    B2
    
    
    BB/RR1New Senior Note rating
    
    
    B-
    
    
    Caa2
    
    B-/RR5
 Contractual Obligations
  34




---



##### Table of Contents



Payment Due by PeriodLess than 1Year
    
    
    2-3 Years
    
    
    4-5 Years
    
    
    After 5 Years
    
    
    TotalShort-term borrowings
    
    $
    54.9
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    54.9Long-term debt
    
    
    5.0
    
    
    
    9.4
    
    
    
    8.2
    
    
    
    584.0
    
    
    
    606.6Operating leases
    
    
    4.3
    
    
    
    3.1
    
    
    
    0.6
    
    
    
    0.1
    
    
    
    8.1Capital expenditures
    
    
    17.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.6United States pension contribution
    
    
    5.4
    
    
    
    7.5
    
    
    
    5.4
    
    
    
    
    
    
    
    18.3Tax reserves
    
    
    4.8
    
    
    
    0.1
    
    
    
    
    
    
    
    5.8
    
    
    
    10.7Total obligations
    
    $
    92.0
    
    
    $
    20.1
    
    
    $
    14.2
    
    
    $
    589.9
    
    
    $
    716.2
 Other Cash Requirements
  Interest
    
    $
    28.6Taxes
    
    
    25.4International pension and other post-retirement benefits funding
    
    
    11.0
 New Accounting Pronouncements
 Disclosures about
Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Fair Value Measurements
 35




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Foreign Exchange
     
 Interest Rates
   
  Commodities
  36




---



##### Table of Contents



Item 4. Controls and Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 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
  37




---



##### Table of Contents



VotesNominee Name/Proposal
    
    Votes For
    
    Withheld/Against
    
    AbstentionsWilliam H. Cunningham
    
    
    79,959,728
    
    
    
    2,767,373
    
    
    
    Mohsen Sohi
    
    
    80,396,029
    
    
    
    2,331,072
    
    
    
    Ratification of KPMG LLP
    
    
    82,144,583
    
    
    
    580,173
    
    
    
    2,345
 
 Item 5. Other Information
  
 Item 6. Exhibits
 10.23
    
    Hayes Lemmerz International, Inc. Performance Cash Plan
(incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K filed on July 17, 2008).10.24
    
    Form of Award Agreement under Hayes Lemmerz International, Inc.
Performance Cash Plan (incorporated by reference to Exhibit 10.2 to
our Current Report on Form 8-K filed on July 17, 2008).31.1
    
    Certification of Curtis J. Clawson, Chairman of the Board,
President, and Chief Executive Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification Mark A. Brebberman, Vice President, Chief Financial
Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Curtis J. Clawson, Chairman of the Board,
President, and Chief Executive Officer, Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Mark A. Brebberman, Vice President, Chief Financial
Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed electronically herewith. 
 SIGNATURES
  HAYES LEMMERZ INTERNATIONAL, INC./s/   MARK A. BREBBERMANMark A. Brebberman, Vice President, Chief Financial Officer  38




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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC.
 10-Q EXHIBIT INDEX
 10.23
    
    Hayes Lemmerz International, Inc. Performance Cash Plan
(incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K filed on July 17, 2008).10.24
    
    Form of Award Agreement under Hayes Lemmerz International, Inc.
Performance Cash Plan (incorporated by reference to Exhibit 10.2 to
our Current Report on Form 8-K filed on July 17, 2008).31.1
    
    Certification of Curtis J. Clawson, Chairman of the Board,
President, and Chief Executive Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification Mark A. Brebberman, Vice President, Chief Financial
Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Curtis J. Clawson, Chairman of the Board,
President, and Chief Executive Officer, Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of Mark A. Brebberman, Vice President, Chief Financial
Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed electronically herewith. 39