<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

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

                     For the quarter ended February 28, 2002

                                       OR

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

                           Commission File No. 1-15851

                                    APW Ltd.
             (Exact name of registrant as specified in its charter)

                 Bermuda                                04-2576375
                 -------                                ----------
       (State or other jurisdiction of           (I.R.S. Employer Id. No.)
        incorporation or organization)

                                Clarendon House
                                2 Church Street
                            Hamilton HM DX, Bermuda

                        N22 W23685 Ridgeview Parkway West
                         Waukesha, Wisconsin 53188-1013
                    (Address of principal executive offices)    (Zip code)

                                 (262) 523-7600
                                 --------------
              (Registrant's telephone number, including area code)


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   X    No ____
                                  -----

The number of shares outstanding of the registrant's Common Stock (including
related Preferred Stock purchase rights) as of April 11, 2002 was 40,810,170.

<PAGE>

                                    APW Ltd.
                                      INDEX

<TABLE>
<CAPTION>
                                                                                        Page No.
                                                                                        --------
<S>                                                                                     <C>
PART I - FINANCIAL INFORMATION
------------------------------

Item 1 - Financial Statements

                 Condensed Consolidated Statements of Operations -
                    Three and Six Months Ended February 28, 2002 and 2001 .............     3

                 Condensed Consolidated Balance Sheets -
                    February 28, 2002 and August 31, 2001 .............................     4

                 Condensed Consolidated Statements of Cash Flows -
                    Six Months Ended February 28, 2002 and 2001 .......................     5

                 Notes to Condensed Consolidated Financial Statements .................     6

Item 2 - Management's Discussion and Analysis of Financial Condition
                 and Results of Operations ............................................    12

Item 3 - Quantitative and Qualitative Disclosures About Market Risk ...................    25


PART II - OTHER INFORMATION
---------------------------

Item 1 - Legal Proceedings ............................................................    26

Item 2 - Changes in Securities and Use of Proceeds ....................................    26

Item 4 - Submissions of Matters to a Vote of Security Holders .........................    26

Item 5 - Other Information ............................................................    26

Item 6 - Exhibits and Reports on Form 8-K .............................................    27

SIGNATURE .............................................................................    27
---------
</TABLE>

                                        2

<PAGE>

PART I  - FINANCIAL INFORMATION

Item 1 - Financial Statements
-----------------------------

                                    APW Ltd.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Three Months Ended                Six Months Ended
                                                                      February 28,                     February 28,
                                                             -------------------------------- --------------------------------
                                                                  2002            2001             2002            2001
                                                             --------------- ---------------- --------------- ----------------
<S>                                                          <C>             <C>              <C>             <C>
Net sales                                                    $     200,855    $     317,563    $    420,684     $    677,286
Cost of products sold                                              185,219          254,207         383,161          523,166
                                                             --------------- ---------------- --------------- ----------------
       Gross profit                                                 15,636           63,356          37,523          154,120

Engineering, selling and administrative expenses                    51,156           57,254          91,514          113,265
Amortization and impairment of intangible assets                   397,372            6,416         403,674           12,441
Restructuring charges                                                7,465                -          17,476                -
(Gain) loss on sale of subsidiary                                   (8,210)               -          (8,210)           2,667
                                                             --------------- ---------------- --------------- ----------------

       Operating earnings (loss)                                  (432,147)            (314)       (466,931)          25,747

Financing costs                                                     16,439            7,309          30,939           13,773
Other expense (income), net                                           (132)             741            (494)           1,058
                                                             --------------- ---------------- --------------- ----------------

Earnings (loss) before income tax expense (benefit)               (448,454)          (8,364)       (497,376)          10,916

Income tax expense (benefit)                                        40,336           (2,484)         28,106            4,034
                                                             --------------- ---------------- --------------- ----------------

Net earnings (loss)                                          $    (488,790)   $      (5,880)   $   (525,482)    $      6,882
                                                             =============== ================ =============== ================
Basic earnings (loss) per share:

   Earnings (loss) per share                                 $      (12.20)   $       (0.15)   $     (13.12)    $       0.17
                                                             =============== ================ =============== ================

   Weighted average common shares outstanding                       40,055           39,444          40,050           39,343
                                                             =============== ================ =============== ================

Diluted earnings (loss) per share:

   Diluted earnings (loss) per share                         $      (12.20)   $       (0.15)   $     (13.12)    $       0.17
                                                             =============== ================ =============== ================

   Weighted average common and potential dilutive
     common shares outstanding                                      40,055           39,444          40,050           41,219
                                                             =============== ================ =============== ================
</TABLE>

      See accompanying Notes to Condensed Consolidated Financial Statements

                                        3

<PAGE>

                                    APW Ltd.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                     February 28,         August 31,
                                                                                         2002                2001
                                                                                   ----------------     ---------------
                                                                                     (Unaudited)
<S>                                                                                <C>                  <C>
                                             ASSETS
                                             ------

Current assets
        Cash and cash equivalents                                                  $          9,004     $         8,542
        Accounts receivable, net                                                             94,436             112,992
        Inventories                                                                         104,148             135,019
        Prepaid expenses                                                                     16,758              14,325
        Deferred income taxes                                                                     -              16,650
                                                                                   ----------------     ---------------
                  Total current assets                                                      224,346             287,528

Property, plant and equipment                                                               431,652             477,915
        Less: Accumulated depreciation                                                     (212,172)           (222,886)
                                                                                   ----------------     ---------------
                 Net property, plant and equipment                                          219,480             255,029

Goodwill, net                                                                               301,611             679,225
Other intangible assets, net                                                                  4,192              27,616
Other assets                                                                                 47,475              58,601
                                                                                   ----------------     ---------------

                 Total assets                                                      $        797,104     $     1,307,999
                                                                                   ================     ===============

                        LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
                        ----------------------------------------------

Current liabilities
         Short-term borrowings                                                     $        644,015     $         5,745
         Trade accounts payable                                                              80,231             118,466
         Accrued compensation and benefits                                                   28,189              29,594
         Income taxes payable                                                                43,946              37,196
         Other current liabilities                                                           65,096              40,163
                                                                                   ----------------     ---------------
                 Total current liabilities                                                  861,477             231,164

Long-term debt                                                                                    -             615,704
Other long-term liabilities                                                                  38,274              45,375

Shareholders' equity (deficit)
         Common Stock--$0.01 par value per share; authorized 250,000,000
           shares; issued and outstanding, less contingent shares, 40,055,453
           and 40,042,207 shares, respectively                                                  400                 400
         Share premium                                                                      679,429             669,772
         Accumulated deficit                                                               (753,451)           (227,927)
         Accumulated other comprehensive loss                                               (29,025)            (26,489)
                                                                                   ----------------     ---------------
                  Total shareholders' equity (deficit)                                     (102,647)            415,756
                                                                                   ----------------     ---------------

                  Total liabilities and shareholders' equity (deficit)             $        797,104     $     1,307,999
                                                                                   ================     ===============
</TABLE>

      See accompanying Notes to Condensed Consolidated Financial Statements

                                        4

<PAGE>

                                    APW Ltd.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Six Months Ended
                                                                                               February 28,
                                                                                   -------------------------------------
                                                                                        2002                  2001
                                                                                   --------------       ----------------
<S>                                                                                <C>                    <C>
Operating activities
--------------------
Net earnings (loss)                                                                $     (525,482)      $         6,882
Adjustments to reconcile net earnings (loss) to net cash
      used in operating activities:
           Depreciation and amortization                                                  440,917                31,515
           Amortization of financing fees                                                   4,683                     -
           Gain from sale of assets                                                          (252)                    -
           (Gain) loss on sale of subsidiary                                               (8,210)                2,667
           Deferred income taxes                                                           27,565                   326
           Restructuring charges                                                           17,476                     -
           Changes in operating assets and liabilities:
                    Accounts receivable                                                    31,765                 4,709
                    Inventories                                                            26,323               (28,738)
                    Prepaid expenses and other assets                                      (4,406)               (4,755)
                    Trade accounts payable                                                (35,658)                1,521
                    Income taxes                                                            7,506               (33,412)
                    Other liabilities                                                       5,201               (12,076)
                                                                                   ---------------      ----------------
     Net cash used in operating activities                                                (12,572)              (31,361)


Investing activities
--------------------
Proceeds on the sale of property, plant and equipment                                       4,112                   295
Additions to property, plant and equipment                                                (11,874)              (57,848)
Net proceeds on sale of subsidiary, net of cash sold                                       19,241                 1,782
Business acquisitions, net of cash acquired                                                     -              (241,546)
Other investing activities                                                                   (398)                 (727)
                                                                                   ---------------      ----------------
     Net cash provided by (used in) investing activities                                   11,081              (298,044)


Financing activities
--------------------
Net short term borrowings (repayments)                                                     (5,548)                  (86)
Principal repayments on long-term debt                                                   (132,687)              (79,448)
Principal borrowings on long-term debt                                                    161,378               364,587
Net commercial paper borrowings                                                                 -                50,124
Net receivables financed                                                                  (18,859)                  (50)
Debt financing costs                                                                       (2,100)                    -
Stock option exercises                                                                          -                 1,405
Other financing activities                                                                    (42)                 (823)
                                                                                   ---------------      ----------------
     Net cash provided by financing activities                                              2,142               335,709

Effect of exchange rate changes on cash                                                      (189)               (2,580)
                                                                                   ---------------      ----------------

Net increase in cash and cash equivalents                                                     462                 3,724

Cash and cash equivalents - beginning of period                                             8,542                   570
                                                                                   ---------------      ----------------

Cash and cash equivalents - end of period                                          $        9,004       $         4,294
                                                                                   ===============      ================
</TABLE>

      See accompanying Notes to Condensed Consolidated Financial Statements

                                        5

<PAGE>

                                    APW Ltd.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Description of Business
--------------------------------

      APW Ltd. ("APW" or the "Company") is a leading global provider of
Technically Enabled Manufacturing Services ("TEMS"), focused on designing and
integrating large electronic products. APW has the capabilities to design and
manufacture various subsystems for electronic products, including enclosures,
thermal management systems, backplanes, power supplies, printed circuit board
assemblies, and cabling, either as integrated custom systems or as individual
subsystems. In addition, APW provides a wide range of integration services to
its customers, including product design, supply chain management, manufacturing,
assembly, testing and drop-ship services. APW's focus is on large infrastructure
solutions, such as wireless base stations and switches, enterprise hardware and
Internet server enclosures. APW is not targeting high volume markets, such as
personal computers or cell phone handsets. These offerings provide APW's
customers with accelerated time-to-market and decreased time-to-volume
production, while reducing their production costs and allowing them to focus on
the design and marketing of their products. APW believes the Company's emphasis
on technical innovation and vertically integrated engineering and manufacturing
expertise, coupled with its total solution approach, which can be delivered on a
worldwide basis, differentiates the Company in the marketplace.

Note 2 - Holding Company Structure
----------------------------------

      APW Ltd. operates as a holding company that has no significant assets
other than investments in the stock of its wholly owned subsidiaries. APW Ltd.
has significant indebtedness, incurred through its Multi-Currency Credit
facilities, which is collateralized by substantially all of the assets,
including the stock of its subsidiaries. APW Ltd. relies on dividends and
distributions from its subsidiaries as its primary source of cash, primarily to
service its indebtedness.

Note 3 - Summary of Significant Accounting Policies
---------------------------------------------------

      Basis of Presentation: The accompanying unaudited condensed consolidated
      ---------------------
financial statements of APW Ltd. and its subsidiaries have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial reporting and with the instructions of Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, the financial statements include all adjustments which
are normal and recurring in nature necessary to present fairly the financial
position of the Company at February 28, 2002, the results of operations for the
three and six months ended February 28, 2002 and 2001 and cash flows for the six
months ended February 28, 2002 and 2001. These financial statements should be
read in conjunction with the audited consolidated financial statements and notes
thereto in the Company's fiscal 2001 Annual Report on Form 10-K.

      Earnings (Loss) Per Share: Basic earnings per share is calculated by
      -------------------------
dividing net earnings (loss) by the weighted average common shares outstanding
during the period. Diluted earnings per share is calculated by using the
weighted average common shares outstanding adjusted to include the potentially
dilutive effect of outstanding stock options and warrants.

                                        6

<PAGE>

      Earnings (loss) per share for the three and six months ended February 28,
2002 and 2001 is based on the following (in thousands, except earnings per share
amounts):

<TABLE>
<CAPTION>
                                                                 Three Months Ended            Six Months Ended
                                                                    February 28,                 February 28,
                                                             ---------------------------- ---------------------------
                                                                 2002          2001           2002          2001
                                                             ------------- -------------- ------------- -------------
<S>                                                          <C>            <C>           <C>           <C>
Numerator:

        Net earnings (loss) for basic and diluted earnings
        per share                                            $  (488,790)    $   (5,880)  $ (525,482)   $     6,882
                                                             ============= ============== ============= =============

Denominator:
    Weighted average common shares outstanding for
      basic earnings (loss) per share                             40,055         39,444       40,050         39,343

    Net effect of dilutive stock options based on the
      treasury stock method                                            -              -            -          1,876
                                                             ------------- -------------- ------------- -------------

        Weighted average common and potential common shares
            outstanding for diluted earnings (loss) per
            share                                                 40,055         39,444       40,050         41,219
                                                             ============= ============== ============= =============

Basic earnings (loss) per share                              $    (12.20)    $    (0.15)  $   (13.12)   $      0.17
                                                             ============= ============== ============= =============

Diluted earnings (loss) per share                            $    (12.20)    $    (0.15)  $   (13.12)   $      0.17
                                                             ============= ============== ============= =============
</TABLE>

      When the Company reports positive net earnings, the diluted earnings per
share calculation will include the impact of dilutive securities issued under
the existing stock option plans and issued warrants. Fiscal 2002 diluted
earnings per share exclude the effect of options to purchase approximately 6.9
million shares of common stock because they would be anti-dilutive due to the
net loss during the three and six months ended February 28, 2002. Warrants to
purchase approximately 6.2 million shares of common stock were outstanding as of
February 28, 2002, but were not included in the computation of diluted earnings
(loss) per share because they would be anti-dilutive due to the net loss for the
three and six months ended February 28, 2002.

     New Accounting Pronouncements: In June 2001, Statement of Financial
     -----------------------------
Accounting Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets" were issued. The statements eliminate the
pooling-of-interests method of accounting for business combinations and require
that goodwill and certain intangible assets not be amortized. Instead, these
assets will be reviewed for impairment annually with any related losses
recognized in earnings when incurred. SFAS No. 141 was effective for APW Ltd. as
of July 31, 2001. SFAS No. 142 will be effective for the Company on September 1,
2002 for existing goodwill and intangible assets. The Company is currently
evaluating the impact of SFAS No. 142.

     In June 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations"
was issued. SFAS No. 143 sets forth the financial accounting and reporting to be
followed for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 requires entities
to record the fair value of a liability for an asset retirement obligation in
the period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are to be capitalized as part of the
carrying amount of the long-lived asset. Subsequently, the recorded liability
will be accreted to its present value and the capitalized costs will be
depreciated. The Company is required to adopt SFAS No. 143 on September 1, 2002.
The Company is currently evaluating the impact of SFAS No. 143.

     In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" was issued. SFAS No. 144 modifies and expands the financial
accounting and reporting for the impairment or disposal of long-lived assets
other than goodwill, which is specifically addressed by SFAS No. 142. SFAS No.
144 maintains the requirement that an impairment loss be recognized for a
long-lived asset to be held and used if its carrying value is not recoverable
from its undiscounted cash flows, with the recognized impairment being the
difference between the carrying amount and fair value of the asset. With respect
to long-lived assets to be disposed of other than by sale, SFAS No. 144 requires
that the asset be considered held and used until it is actually disposed of but
requires that its depreciable life be revised in accordance with APB Opinion No.
20, "Accounting Changes." SFAS No. 144 also requires that an impairment loss be
recognized at the date a long-lived asset is exchanged for a similar productive

                                       7

<PAGE>

asset. The Company will be required to adopt SFAS No. 144 on September 1, 2002.
The Company is currently evaluating the impact of SFAS No. 144.

     Reclassifications: Certain prior period amounts have been reclassified to
     ------------------
conform with the fiscal 2002 presentation. Such reclassifications had no impact
on previously reported net earnings (loss).

Note 4 - Intangible Asset Impairment, Restructuring and Other Charges
---------------------------------------------------------------------

   Goodwill and other intangible asset impairment charge

     During the second quarter of fiscal 2002, the Company performed an
impairment assessment of long-lived assets, which include property, plant and
equipment, goodwill and other intangible assets. The assessment was performed
primarily due to the reduced financial performance of the Company's operating
results during the second quarter of fiscal 2002 as compared with previously
developed estimates (see Note 10). As a result of the most recent assessment,
the Company recorded a $391.6 million impairment charge to further reduce the
carrying value of goodwill and other intangible assets. The impairment charge is
recorded as a component of amortization and impairment of intangible assets in
the Condensed Consolidated Statement of Operations. In determining whether an
impairment of long-lived assets has occurred, the Company compares estimated
undiscounted cash flows to the related asset book value. The charge was measured
in accordance with the provisions of SFAS No. 121, based upon the Company's
estimated future discounted cash flows using a discount rate determined by
management to be commensurate with the risk inherent in the Company's current
business model. The remaining long-lived assets are supported by management's
current best estimates of future undiscounted cash flows and will continue to be
depreciated and amortized over their remaining useful lives, which management
considers appropriate. However, there can be no assurances that the Company's
revised forecast will be achieved and accordingly future impairment charges may
be necessary. Additionally, the carrying value of remaining long-lived assets is
supported by estimates of future undiscounted cash flows as of February 28,
2002, and such amounts could be stated at amounts in excess of their fair
values.

   Restructuring

     Beginning in fiscal 2001 and continuing in fiscal 2002, management
developed formal plans to exit certain facilities and involuntarily terminate
employees. Management's plans to exit certain facilities included the
identification of manufacturing and sales facilities for closure and the
transfer of the related operations to other facilities. Management currently
anticipates that the facility closures and all related activities will be
substantially complete within one year of the commitment dates of the respective
exit plans.

     During the three and six months ended February 28, 2002, the Company
recognized pre-tax restructuring and other charges of $16.9 million and $36.5
million, respectively. The components of the charges recorded are as follows (in
millions):

                                              Three Months   Six Months
                                                 Ended         Ended
                                              February 28,  February 28,
                                                  2002          2002
                                              --------------------------
      Facility closure costs:
           Severance                             $   1.1      $   7.5
           Lease exit costs                          6.4         10.0
           Equipment impairment                      7.6         15.5
           Other costs                               1.8          3.5
                                              --------------------------
                Total facility closure costs     $  16.9      $  36.5
                                              ==========================

     Facility closure costs relate to the rationalization of seven facilities in
the first quarter of fiscal 2002 and three facilities in the second quarter of
fiscal 2002. The severance charges impact both salaried and hourly employees.
The costs are recorded in the Condensed Consolidated Statement of Operations for
the three and six months ended February 28, 2002, respectively, as follows: (i)
severance and lease exit costs totaling $7.5 million and $17.5 million are
recorded as restructuring charges; and (ii) equipment impairment charges,
resulting from facility closures, of $7.6 million ($5.5 million recorded as cost
of products sold and $2.1 million recorded as engineering, selling and
administrative expenses) and $15.5 million ($13.4 million recorded as cost of
products sold and $2.1 million recorded as engineering, selling and
administrative expenses) and other facility closure costs totaling $1.8 million

                                        8

<PAGE>

and $3.5 million are recorded as cost of products sold.

     The following table summarizes the activity with respect to fiscal 2002
restructuring charges (in millions, except employee data):

<TABLE>
<CAPTION>
                                                          Number
                                                            of         Severance    Facilities
                                                        Employees       Reserve      Reserve       Total Reserve
                                                      -------------  ------------  -------------  ---------------
   <S>                                                <C>            <C>           <C>            <C>
   Total reserve balance at August 31, 2001                287           $ 2.1       $   5.2         $   7.3
   Add: Fiscal 2002 six month charges                      612             7.5          10.0            17.5
   Less: Fiscal 2002 six month utilization                (677)           (5.6)         (3.9)           (9.5)
                                                      -------------  ------------  -------------  ---------------
   Total reserve balance at February 28, 2002              222           $ 4.0       $  11.3         $  15.3
                                                      =============  ============  =============  ===============
</TABLE>

     Additionally, the Company has recorded a charge of $2.0 million (recorded
as a component of engineering, selling and administrative expenses in the
Condensed Consolidated Statement of Operations) during the second quarter
related to its decision to discontinue use of its two leased aircraft. This
charge reflects management's current estimates relating to future required lease
payments and the ultimate disposition timing and proceeds of the two aircraft.
See further discussion in Note 10.

Note 5 - Comprehensive Income (Loss)
------------------------------------

     The components of comprehensive income (loss) are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                           Three Months Ended           Six Months Ended
                                                              February 28,                February 28,
                                                       ---------------------------  -------------------------
                                                           2002           2001         2002          2001
                                                       -------------  ------------  -----------  ------------
   <S>                                                 <C>            <C>           <C>          <C>
   Net earnings (loss)                                  $ (488,790)    $  (5,880)   $(525,482)    $   6,882

   Cumulative effect of change in accounting
    principle for derivatives and hedging
    activities, net of tax                                       -             -            -           168

   Derivative instrument  fair market value adjustment        (724)       (1,030)      (1,379)       (1,072)

   Reclassification of derivative losses to earnings           343            39          539            81

   Foreign currency translation adjustments                   (593)        1,934       (1,696)         (161)
                                                       -------------  ------------  -----------  ------------

   Comprehensive (loss) income                          $ (489,764)    $  (4,937)   $(528,018)    $   5,898
                                                       =============  ============  ===========  ============
</TABLE>

Note 6 - Inventories
--------------------

     Inventories consisted of (in thousands):

<TABLE>
<CAPTION>
                                                               February 28,          August 31,
                                                                   2002                 2001
                                                             ----------------     ----------------
               <S>                                           <C>                  <C>
               Raw material                                  $        63,384      $        77,509
               Work-in-progress                                       25,536               31,945
               Finished goods                                         28,203               39,591
                                                             ----------------     ----------------
               Total inventories, gross                              117,123              149,045
               Less: inventory reserves                              (12,975)             (14,026)
                                                             ----------------     ----------------
                            Total inventories                $       104,148      $       135,019
                                                             ================     ================
</TABLE>

Note 7 - Divestitures
---------------------

     On February 13, 2002, APW Ltd. completed the sale of its Zero Cases
division. Total consideration from the transaction was a net $19.2 million,
which resulted in a net book gain of $8.2 million.

                                        9

<PAGE>

Note 8 - Accounts Receivable Facility
-------------------------------------

     At February 28, 2002 and August 31, 2001, accounts receivable were reduced
by $39.1 million and $58.0 million, respectively, representing receivable
interests sold under the Accounts Receivable Facility. The maximum that can be
sold under this facility is $80.0 million, but at any date is limited to the
amount of the Company's eligible receivables. The balance at February 28, 2002
reflects that limit. Eligible receivables are based on geographic origination,
aging status and customer concentration limits.

Note 9 - Contingencies and Litigation
-------------------------------------

     APW Ltd. is a party to various legal proceedings which have arisen in the
normal course of its business. These legal proceedings typically include product
liability, environmental, labor, patent and contract claims, and commission
disputes.

     APW Ltd. has recorded reserves for loss contingencies based on the specific
circumstances of each case. Such reserves are recorded when it is probable that
a loss has been incurred as of the balance sheet date and such loss can be
reasonably estimated. In the opinion of management, the resolution of these
contingencies will not have a material adverse effect on APW Ltd.'s financial
condition, results of operations or cash flows.

     APW Ltd. has facilities at numerous geographic locations, which are subject
to a range of environmental laws and regulations. Compliance with these laws has
and will require expenditures on a continuing basis. Predecessors to APW Ltd.
have been identified by the United States Environmental Protection Agency
("EPA") as "Potentially Responsible Parties" regarding various multi-party
Superfund sites. Potentially Responsible Parties are jointly and severally
liable with respect to Superfund remediation liabilities. Any liability in
connection with these sites has been assumed by APW Ltd. Based on the Company's
investigations, management believes that the Company is a de minimis participant
in certain of these sites. As to one other site, the Company is a minor
participant, and the Company's share of estimated cleanup costs is not likely to
exceed $1.1 million. As to another EPA site where the Company is not a de
minimis participant, the state has required additional ground water testing at a
former APW Ltd. manufacturing facility, and the Company cannot reasonably
estimate the amount of the Company's liability, if any. In addition, the Company
is also involved in other state cleanup actions for which management believes
the aggregate costs of remediation are adequately reserved for.

     APW Ltd. anticipates that environmental costs will be expensed or
capitalized depending on their future economic benefits. Expenditures that have
no future economic value are expensed. Liabilities will be recorded when
environmental remediation is probable and the costs can be reasonably estimated.
Although the level of future expenditures for environmental remediation is
impossible to determine with any degree of certainty, management does not
believe these costs are likely to have a material adverse effect on APW Ltd.'s
financial position, results of operations or cash flows.

     The Company, as well as one current, and one former executive have been
sued in three actions which are pending in the United States District Court for
the Eastern District of Wisconsin in connection with alleged violations of
Federal securities laws which preceded a drop in the price of its common stock
ending on March 20, 2001. The first of these suits which is captioned Stewart
Norman Hicks v. APW Ltd., et al., was filed on December 10, 2001. The
subsequently filed suits are captioned Robert Betz v. APW Ltd, et al., and
Market Street Securities v. APW Ltd., et al. The complaints for all three suits
allege violations of the Federal securities laws and seek certification of a
plaintiff class consisting of all purchasers of the Company's common stock
between September 26, 2000 and March 20, 2001, inclusive. The complaint does not
quantify the damages. The Company has not yet been served with the complaints
but understands that the respective plaintiffs intend to seek consolidation of
the suits. At this time, the Company cannot evaluate the merits of these claims.

Note 10 - Liquidity, Debt Covenant Compliance and Management's Plans
--------------------------------------------------------------------

     On September 27, 2001, the Company's lenders amended certain debt covenants
associated with APW Ltd.'s Multi-Currency Credit Agreement, UK Revolving Credit
Agreement and the Accounts Receivable Facility (collectively, "credit
facilities"). These revised covenants were established based upon APW Ltd.
management's financial forecasts prior to the events of September 11, 2001.
Following the events of September 11 and throughout the fiscal 2002 first
quarter, APW Ltd. experienced a significant decline in net sales compared to
prior periods and a further decline compared to management's financial forecasts
that were the basis for the financial covenants set forth in the September 27,
2001

                                       10

<PAGE>

amendment. Such declines are related to a number of factors, certain of which
were impacted by the terrorist attacks that took place in the United States on
September 11, 2001. On December 13, 2001, the Company's lenders amended certain
debt covenants associated with the Company's credit facilities to reflect the
Company's revised financial forecasts as of that point in time. The revisions in
the covenants were considered necessary due to the magnitude of the decline in
the fiscal 2002 first quarter actual results compared to prior periods and
management's forecasts. In addition, the amendment repriced the outstanding
warrants issued in conjunction with the May 15, 2001 amendment to the closing
price of APW Ltd.'s common stock on December 10, 2001 of $1.98 and eliminates
the previous reduction provision if the Company met repayment targets by August
31, 2002. The Company also issued warrants for 9.9% of the common stock
outstanding on December 13, 2001 (approximately 4.1 million shares) at a price
of $0.01. These $0.01 warrants are cancelled if the credit facilities are repaid
by July 31, 2002 (entirely cancelled) or September 30, 2002 (49.5% cancelled).
During the second quarter of fiscal 2002, $8.5 million was recorded as the
estimated fair value of the warrants issued in conjunction with the December
amendment and was recorded as an increase in deferred financing costs and an
increase in share premium.

     During the quarter ended February 28, 2002, the Company amended its credit
facilities on three different occasions. The net result of these amendments was:
(i) to provide a temporary deferment of cash interest payment obligations until
April 15, 2002; (ii) to increase the size of the UK Revolving Credit Facility by
approximately $5.0 million under the UK Revolving Credit Agreement; (iii) to
allow for the sale of the assets of the Company's Zero Cases division; and (iv)
to provide a waiver of all financial covenant requirements for the period from
January 31, 2002 until April 15, 2002.

     As of February 28, 2002, the Company was in compliance under its credit
facilities as a result of having all of the financial covenants waived. Although
the Company has received a waiver of all financial covenants prior to February
28, 2002, substantially the same or more restrictive financial covenants will be
in place for the period ending May 31, 2002. Based on its current projections,
the Company believes that it is probable that it will not meet certain of these
covenants for the period ending May, 31, 2002 unless further waived or otherwise
amended through ongoing negotiations with its lenders. As such, in accordance
with Emerging Issues Task Force Issue ("EITF") 86-30, the Company has classified
all of its debt obligations as current as of February 28, 2002. The Company has
been pursuing discussions with its lenders concerning a recapitalization plan.
The discussions have centered around a recapitalization of the balance sheet
that is intended to result in no disruption to the operating subsidiaries and
their suppliers, who will be paid in full in the normal course of business. In
connection with the recapitalization plan, the Company intends that such plan
would entail the following: (i) the conversion of $550.0 million of the current
and outstanding debt plus accrued interest to common stock; (ii) the allowance
of a new financing line of credit of $110.0 million; (iii) the issuance of
common stock (and possible preferred stock or warrants) to the existing lenders
so that they would end up owning substantially all of the outstanding capital
stock of the Company; (iv) the issuance of warrants to the Company's existing
shareholders for some number of additional shares which become exercisable if
the lenders receive a return of their initial investment; and (v) the retention
of existing management. The Company has been negotiating this plan with the
lenders and primarily through its steering committee. To date, the Company and
the lenders have agreed in principal on the main terms of the recapitalization
plan, but no definitive agreement has yet been agreed to and executed. It is
anticipated that the plan will be implemented through a pre-packaged or
pre-negotiated Chapter 11 of APW Ltd., the holding company. Consequently, the
lenders will have agreed to the terms of the recapitalization plan prior to the
filing. This plan would be structured in such a way so that all of the
obligations of APW Ltd. (see Note 2 - Holding Company Structure) could be
assumed, adjusted or eliminated in a bankruptcy proceeding. The Company and its
lenders are structuring the recapitalization of the Company so that only APW
Ltd., the holding company, should be affected. Under this plan, the Chapter 11
filing of APW Ltd., the holding company, will not effect, in any direct way the
operating subsidiaries and their ability to conduct business normally with their
customers and suppliers. In particular, there is no intent to impair the
suppliers of the operating subsidiaries. If the Company cannot execute the
recapitalization plan as currently conceived, APW Ltd. would likely be forced to
file and seek protection under the bankruptcy laws. Given, that at this point
there is not a definitive recapitalization plan document agreed to with the
Company's lending group and as such, prospectively the Company could be required
to meet the future financial covenants of our current amended credit facilities
(unless otherwise waived or amended), which the Company feels that at this point
is not probable, coupled with the Company's current level of liquidity, there is
substantial doubt about the Company's ability to continue as a going concern.

     In order to facilitate the finalization of negotiations regarding the terms
of the recapitalization and the related documentation, on April 15, 2002, the
Company unanimously received an extension with regard to the deferment of
interest payments and a waiver of all financial covenants for the period through
May 14, 2002. The Accounts Receivable Facility will terminate on May 15, 2002
unless terminated earlier according to its terms (including, without limitation
the occurrence of a "termination event" that is not waived or amended) or
extended by mutual agreement of parties thereto. The Company does not currently
expect that the facility will be extended beyond the May 15, 2002 termination
date.

     APW Ltd.'s management plans to continue to aggressively pursue additional
revenue opportunities within its

                                       11

<PAGE>

core customer markets. APW Ltd. adopted several restructuring plans during
fiscal 2001 and throughout the first six months of fiscal 2002 in an effort to
reduce costs in the wake of declining net sales experienced during those
periods. These programs resulted in restructuring charges during fiscal 2001 and
the first six months of fiscal 2002 and have provided cost savings that are
expected to continue into the future. Management plans to consider additional
cost-reduction programs, as necessary, to further align the Company's cost base
with net sales.

     In December 2001, a subsidiary of the Company received notification from
the lessor of two of its aircraft that the lease contracts ("contracts") for the
two aircraft would be terminated effective March 4, 2002. In conjunction with
the termination, the terms of the contracts would require the Company to pay the
lessor approximately $12.3 million for the two aircraft and, in exchange, the
lessor would convey all of its rights, title and interest in the two aircraft to
the Company. The Company is actively working with the lessor to identify a third
party which would purchase and/or lease the two aircraft, thereby eliminating
the Company's $12.3 million payment obligation. The lessor has informed the
Company that it is willing to continue to work with the Company to find third
party alternatives to eliminate the cost of terminating this contract, provided
the Company continues to make scheduled lease payments. As such, the Company has
recorded a charge of $2.0 million during the second quarter related to its
decision to discontinue use of the related aircraft. This charge reflects
management's current estimates relating to future required lease payments and
the ultimate disposition timing and proceeds of the two aircraft.

Note 11 - Income Taxes
----------------------

     At August 31, 2001 and November 30, 2001 the Company's net deferred tax
assets were $27.9 million and $39.2 million, respectively, which are primarily
comprised of net operating losses incurred during fiscal year 2001 and the first
quarter of fiscal year 2002. Due to the size of APW Ltd.'s net operating loss
carry-forwards in relation to the Company's recent history of unprofitable
operations and to the continuing uncertainties surrounding recoverability of
these losses and other net deferred tax assets, a valuation allowance of $138.5
million has been established to reduce the Company's net deferred tax assets to
$0.4 million as of February 28, 2002. APW Ltd. currently provides for income
taxes only to the extent that the Company expects to pay taxes for current
income, as well as for deferred taxes for those tax jurisdictions in which the
Company continues to be profitable.

Note 12 - Subsequent Events
---------------------------

     On April 2, 2002, the Company received notification from the New York Stock
Exchange ("NYSE") that the Company's shares of common stock have been suspended
and that the issue has been removed from the NYSE's trading list due to its
non-compliance with the exchange's continuing listing criteria. As of April 8,
2002 the Company commenced trading on the OTC Bulletin Board under the ticker
"APWLF".

     On April 15, 2002 the Company unanimously received an extension with regard
to the deferment of interest payments and a waiver of all financial covenants
for the period through May 14, 2002.

Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

     The following discussion of our financial condition and our results of
operations should be read in conjunction with our accompanying unaudited
condensed consolidated financial statements and related notes thereto.

Overview

     APW Ltd. is a leading global technically enabled manufacturing services
provider, focused on designing and integrating large electronic enclosure
products. We have the capabilities to design and manufacture various subsystems
for electronic products, including enclosures, power supplies, thermal
management systems, printed circuit board assemblies, and cabling, either as
individual subsystems or as integrated custom systems. We provide a wide range
of integrated design, manufacturing and logistics services to customers,
including product design, supply chain management, manufacturing, assembly,
testing and drop-ship services. Operating in over 30 locations throughout North
America, South America, Europe and Asia, we provide our solutions and services
to original equipment manufacturers, primarily in the communications (datacom
and telecom), computing (enterprise hardware - large servers, large data
storage, networking) and Internet (application service providers, Internet
service providers and web hosting) markets. Our customers include industry
leaders such as Applied Materials, Cisco, Compaq, Cymer, EMC, Ericsson, Fujitsu,
Hewlett-Packard, IBM, Lucent, Marconi, Motorola, NCR, Nortel Networks and Sun
Microsystems.

                                       12

<PAGE>

Significant Accounting Policies

     Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. These policies and methods are the most important to the
portrayal of the Company's financial condition and results, and require
management's most difficult, subjective and complex judgments. The following is
a brief discussion of the more significant accounting policies and methods used
by APW Ltd.

General

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. The most significant estimates and assumptions relate to the
recoverability of long-lived assets including goodwill and other intangibles,
the realization of deferred income taxes and the adequacy of restructuring
reserves. Actual amounts could differ significantly from these estimates.

Recoverability of long-lived assets, goodwill and other intangible assets

     We periodically assess the impairment of long-lived assets, goodwill and
other identifiable intangible assets under SFAS No. 121 and Accounting
Principles Board Opinion No. 17 whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Factors we consider
important which could trigger an impairment review include the following:

..  significant underperformance relative to expected historical or forecasted
   future operating results;
..  significant changes in the manner of our use of the acquired assets or the
   strategy for our overall business;
..  commitments by management to close certain facilities that is made as part of
   a company-wide restructuring initiative;
..  significant negative industry or economic trends;
..  significant decline in our stock price for a sustained period; and
..  our market capitalization relative to net book value.

     Upon the existence of one or more of the above indicators of impairment, we
estimate the future undiscounted cash flows and compare such estimates to the
related asset book value. If it is determined that these estimated future
undiscounted cash flows will not be sufficient to enable the recovery of the
related asset book value, we measure any impairment based on a projected
discounted cash flow method using a discount rate determined by our management
to be commensurate with the risk inherent in our current business model.

     Prospectively, we must continue to assess the recoverability of the
Company's long-lived assets, goodwill and other intangibles. In so doing, we
will be required to make assumptions regarding estimated future cash flows and
other factors to determine the fair value of the respective assets. While we
believe our estimates are reasonable, if our estimates or their related
assumptions change in the future, we may be required to record additional
impairment charges. Assumptions we make regarding estimated future cash flow
include: (i) future revenue growth (and mix); (ii) future composition of cost of
products sold and operating expenses; and (iii) future capital expenditure
requirements.

Accounting for income taxes

     As part of the process of preparing our consolidated financial statements,
we are required to estimate our income taxes in each of the tax jurisdictions in
which we operate. This process involves us estimating our current tax liability
together with assessing temporary differences resulting from differing treatment
of items for tax and book purposes. These differences result in deferred tax
assets and liabilities, which are included within our consolidated balance
sheet.

     Significant management judgment is required in determining our provision
for income taxes, deferred tax assets and liabilities and any related valuation
allowance recorded against our net deferred tax assets. Generally accepted
accounting principles require that we record a valuation allowance against our
deferred tax assets if it is "more likely than not" that we will not be able to
utilize them to offset future taxes.

                                       13

<PAGE>

     At August 31, 2001 and November 30, 2001 our net deferred tax assets were
$27.9 million and $39.2 million, respectively, which are primarily comprised of
net operating losses incurred during fiscal year 2001 and the first quarter of
fiscal year 2002. Due to the size of our net operating loss carry-forwards in
relation to our recent history of unprofitable operations and to the continuing
uncertainties surrounding recoverability of these losses and other net deferred
tax assets, a valuation allowance of $138.5 million has been established to
reduce our net deferred tax assets to $0.4 million as of February 28, 2002. We
currently provide for income taxes only to the extent that we expect to pay
taxes for current income, as well as for deferred taxes for those tax
jurisdictions in which we continue to be profitable.

Restructuring Reserves

     Restructuring charges as presented in our Condensed Consolidated Statement
of Operations are comprised of severance and lease exit costs. These charges are
recognized in accordance with EITF 94-3 and SAB 100. Our accruals for lease exit
obligations stemming from closed facilities are based on management's best
estimate of the total future cash flows required to exit such facilities. Actual
costs could differ materially due to factors such as our ability to secure
subleases, the creditworthiness of sub-lessees and our success at negotiating
early termination agreements with our lessors. These factors are significantly
dependent on the general health of the economy and the resultant demand for
commercial property.

Unaudited Adjusted Results of Operations

     For the purposes of supplemental analysis, unaudited adjusted financial
information for the three and six months ended February 28, 2002 and 2001
("fiscal 2002 second quarter", "fiscal 2001 second quarter", "fiscal 2002 six
months", and "fiscal 2001 six months", respectively) is presented below. The
adjusted fiscal 2002 second quarter and six months condensed consolidated
statements of operations presents our operations assuming the restructuring and
other charges did not occur during the three and six months ended February 28,
2002 and 2001.

<TABLE>
<CAPTION>
                                                       As a Percentage                             As a Percentage
                                                        of Net Sales                                of Net Sales
                             Three Months Ended      Three Months Ended     Six Months Ended      Six Months Ended
                                February 28,            February 28,          February 28,          February 28,
                            --------------------------------------------- -------------------------------------------
                             2002/(1,4)/   2001        2002      2001      2002/(2,4)/  2001/(3)/   2002       2001
                            --------------------------------------------- ------------------------------------------
                                (in millions)                                (in millions)
<S>                         <C>          <C>         <C>         <C>      <C>           <C>         <C>       <C>
Net sales                     $ 200.9    $ 317.6      100.0%     100.0%     $  420.7    $  677.3    100.0%    100.0%

Gross profit                     22.7       63.4       11.3%      20.0%         54.2       154.2     12.9%     22.8%

Engineering, selling and
   administrative expenses       48.8       57.3       24.3%      18.0%         89.1       113.3     21.2%     16.7%
Amortization of intangibles       5.8        6.4        2.9%       2.0%         12.1        12.4      2.9%      1.8%

Operating (loss) earnings       (31.9)      (0.3)     (15.9%)     (0.1%)       (47.0)       28.5    (11.2%)     4.2%

Net financing costs              16.4        7.3        8.2%       2.3%         30.9        13.8      7.3%      2.0%
Other (income) expense, net      (0.1)       0.8        0.0%       0.3%         (0.5)        1.1     (0.1%)     0.2%

Earnings (loss) before
   income taxes                 (48.2)      (8.4)     (24.0%)     (2.6%)       (77.4)       13.6    (18.4%)     2.0%
</TABLE>

(1)  Adjustments to exclude restructuring and other charges for the fiscal 2002
     second quarter are: (i) a $7.5 million restructuring charge for severance
     and lease exit costs; (ii) a $7.6 million equipment impairment charge
     related to facility closures ($5.5 million of which is included in cost of
     products sold and $2.1 million is included in engineering, selling and
     administrative expenses in the Condensed Consolidated Statement of
     Operations); (iii) a $1.8 million charge related to miscellaneous facility
     closure costs ($1.5 million of which is included in cost of products sold
     and $0.3 million is included in engineering, selling and administrative
     expenses in the Condensed Consolidated Statement of Operations); (iv) a
     $391.6 million impairment charge to reduce the carrying value of goodwill
     and other intangibles (included as a component of amortization and
     impairment of intangible assets in the Condensed Consolidated Statement of
     Operations); and (v) an $8.2 million gain on the sale of a division.

(2)  Adjustments to exclude restructuring and other charges for the fiscal 2002
     six months are: (i) a $17.5 million restructuring charge for severance and
     lease exit costs; (ii) a $15.5 million equipment impairment charge related
     to facility closures ($13.4 million of which is included in cost of
     products sold and $2.1 million is included in engineering, selling and

                                       14

<PAGE>

     administrative expenses in the Condensed Consolidated Statement of
     Operations); (iii) a $3.5 million charge related to miscellaneous facility
     closure costs ($3.2 million of which is included in cost of products sold
     and $0.3 million is included in engineering, selling and administrative
     expenses in the Condensed Consolidated Statement of Operations); (iv) a
     $391.6 million impairment charge to reduce the carrying value of goodwill
     and other intangibles (included as a component of amortization and
     impairment of intangible assets in the Condensed Consolidated Statement of
     Operations); and (v) an $8.2 million gain on the sale of a division.

(3)  Adjustment excludes a $2.7 million net loss on the sale of a subsidiary.

(4)  Adjusted results of operations for the three and six months ended February
     28, 2002 include $9.5 million in other charges recorded in operating
     expenses that relate to the Company's 401(k) plan (such charges were higher
     in the current periods than similar charges in prior periods), the
     estimated future required lease payments and the ultimate disposition of
     the Company's two leased aircraft and additional professional fees incurred
     related to the Company's recapitalization plan.

Fiscal 2002 Second Quarter Compared to the Fiscal 2001 Second Quarter

Net Sales

      Net sales for the fiscal 2002 second quarter were $200.9 million compared
to $317.6 million in the fiscal 2001 second quarter, a decrease of 36.7%. Net
sales in the fiscal 2002 second quarter were negatively impacted by the broad
based slow down in the technology sector which has resulted in reduced demand
for some of our customers products and in turn has negatively impacted the
demand those customers have for our products and services.

      Our fiscal 2002 second quarter sales were influenced by the inclusion of
acquisitions completed in the second quarter of fiscal 2001. Excluding these
acquisitions, net sales decreased 41.1% in the fiscal 2002 second quarter when
compared to sales in the fiscal 2001 second quarter.

Geographic Sales

                                         Three Months Ended
                                            February 28,
                                       -------------------------
                                            2002       2001      Change
                                       --------------------------------
                                             (In millions)

         Americas                        $   114.4   $   195.5   (41.5%)
         Europe and Asia                      86.5       122.1   (29.2%)
                                       --------------------------------
              Total                      $   200.9   $   317.6   (36.7%)
                                       ================================

      Net sales in the Americas for the fiscal 2002 second quarter were $114.4
million compared to $195.5 million in the fiscal 2001 second quarter, a decrease
of 41.5%. Our fiscal 2002 second quarter sales were influenced by the inclusion
of acquisitions completed in the second quarter of fiscal 2001. Excluding these
acquisitions, net sales decreased 48.5% in the fiscal 2002 second quarter when
compared to net sales in the fiscal 2001 second quarter. Net sales in Europe and
Asia for the fiscal 2002 second quarter were $86.5 million compared to $122.1
million in the fiscal 2001 second quarter, a decrease of 29.2%.

Gross Profit

      Gross profit for the fiscal 2002 second quarter was $15.6 million compared
to $63.4 million in the fiscal 2001 second quarter, a decrease of 75.4%. As a
percentage of net sales, the fiscal 2002 second quarter gross profit was 7.8%
compared to 20.0% in the fiscal 2001 second quarter. The decrease in gross
profit as a percentage of net sales is primarily a result of a combination of
factors: (i) $7.0 million of costs related to facility closures (primarily
equipment write-offs); (ii) under-absorption of costs resulting from the broad
based slow down in the technology sector which significantly reduced sales
volumes; and (iii) a shift in sales mix to programs with increased levels of
systems integration, which typically have lower margins.

      On an adjusted basis, gross profit for the fiscal 2002 second quarter was
$22.7 million compared to $63.4 million in the fiscal 2001 second quarter, a
decrease of 64.2%. As a percentage of net sales, the fiscal 2002 second quarter
gross profit was 11.3% compared to 20.0% in the fiscal 2001 second quarter. The
decrease in adjusted gross

                                       15

<PAGE>

profit as a percentage of net sales is primarily a result of the
under-absorption of costs resulting from reduced sales volumes and a shift in
sales mix to programs with increased levels of systems integration, which
typically have lower margins.

Operating Expenses

      Operating expenses in the fiscal 2002 second quarter were $51.2 million
compared to $57.3 million in the fiscal 2001 second quarter. As a percentage of
net sales, operating expenses were 25.5% for the fiscal 2002 second quarter,
compared to 18.0% for the fiscal 2001 second quarter. Our operating expenses
consist primarily of engineering, selling, marketing, finance, information
technology and general administrative expenses. Operating expenses have been
reduced by $6.1 million from the fiscal 2001 second quarter. The reduction in
operating expenses is primarily due to the restructuring and cost reduction
efforts we have made. Although operating expenses have been reduced from the
fiscal 2001 second quarter, operating expenses as a percentage of net sales
increased due to the under-absorption of costs resulting from the broad based
slow down in the technology sector which significantly reduced sales volumes.

      On an adjusted basis, operating expenses for the fiscal 2002 second
quarter were $48.8 million compared to $57.3 million in the fiscal 2001 second
quarter, a decrease of 14.8%. As a percentage of net sales, fiscal 2002 second
quarter operating expenses were 24.3% compared to 18.0% in the fiscal 2001
second quarter. The increase in adjusted operating expenses as a percentage of
net sales is primarily a result of having substantially the same amount of
adjusted fixed costs on significantly reduced sales volume. The effect of this
negative operating leverage has been mitigated by the restructuring actions we
have taken over last year. Our adjusted operating expenses in the quarter are
higher than the first quarter of fiscal 2002 due to the inclusion of $9.5 in
other charges primarily related to the Company's 401(k) plan (such charges were
higher in the current periods than similar charges in prior periods), the
estimated future required lease payments and the ultimate disposition of the
Company's two leased aircraft and additional professional fees incurred in
conjunction with the Company's recapitalization plan. Excluding these items, our
operating expenses for the fiscal 2002 second quarter were $39.3 million or
19.5% of sales.

Amortization of Intangible Assets

      In the fiscal 2002 second quarter, we performed an impairment assessment
of our long-lived assets as a result of revised Company forecasts resulting from
continuing deterioration of our operating results. As a result of the
assessment, we recorded a $391.6 million impairment charge to reduce the
carrying value of goodwill and other intangible assets. Total amortization
expense, including the impairment charge, in the fiscal 2002 second quarter was
$397.4 million compared to $6.4 million in the fiscal 2001 second quarter.
Excluding the impairment charge, amortization for the fiscal 2002 second quarter
was $5.8 million compared to $6.4 million in the fiscal 2001 second quarter.

Restructuring and Other Charges

      Beginning in fiscal 2001 and continuing through the fiscal 2002 second
quarter, management has developed formal plans to exit certain facilities and
involuntarily terminate employees. Management's plans to exit certain facilities
included the identification of manufacturing and sales facilities for closure
and the transfer of the related operations to other facilities. Management
currently anticipates that the facility closures and all related activities will
be substantially complete within one year of the commitment dates of the
respective exit plans.

      A restructuring charge totaling $7.5 million was recorded during the
fiscal 2002 second quarter. The restructuring charge relates to the
rationalization of three facilities and the involuntary termination of both
salaried and hourly employees. Severance costs associated with the involuntary
termination of employees totaled $1.1 million. Lease exit costs resulting from
facility closures totaled $6.4 million. In addition to the restructuring charge
totaling $7.5 million, we incurred $9.4 million of other costs related to
facility closures (primarily equipment impairment charges). Of the $16.9 million
in rationalization charges, $9.3 million are cash costs and $7.6 million are
non-cash costs. Of the $9.3 million in cash costs, only $1.8 million are
incremental cash costs that would not have been incurred in the next 12 months
without undertaking these restructuring actions.

      Since commencing our restructuring plans in the third quarter of fiscal
2001, we have recorded restructuring and restructuring related charges totaling
$67.8 million. Our restructuring program was implemented to reduce our

                                       16

<PAGE>

aggregate fixed cost structure to mitigate the revenue decline we began to
experience as a result of a weak economic environment in the computing,
telecommunication, and semi-conductor markets we serve. We have rationalized 18
facilities through consolidating the operations of closed locations into
existing larger locations, thus eliminating fixed facility costs and redundant
headcount and better leveraging our existing infrastructure. Through February
28, 2002 we have spent approximately $23.1 million on cash restructuring, with
only approximately $3.0 million of the total being incremental cash costs that
would not have been incurred in the next 12 months without undertaking these
restructuring actions. Over the same period, we have reduced aggregate adjusted
operating expenses (which include manufacturing overhead expenses included in
cost of products sold as well as engineering, selling and administrative
expenses) excluding other charges of $9.5 million described in Operating
expenses above, by approximately $40.4 million per quarter, with the reduction
split between the benefits of restructuring plans implemented and the reduction
in variable operating expenses due to reduced sales volume. Prospectively,
management will continue to review existing infrastructure for opportunities to
reduce our overall cost structure, and will likely implement additional
restructuring plans as deemed necessary.

Divestiture

      On February 13, 2002, APW Ltd. completed the sale of its Zero Cases
division. Total consideration from the transaction was a net $19.2 million,
which resulted in a net book gain of $8.2 million.

Operating Loss

      We incurred an operating loss of $432.1 million in the fiscal 2002 second
quarter compared to $0.3 million in the fiscal 2001 second quarter. The
operating loss was primarily due to: (i) a $391.6 million goodwill and other
intangible asset impairment charge; (ii) a $7.5 million restructuring charge;
(iii) $9.4 million of costs related to facility closures (primarily equipment
impairment charges); and (iv) reduced sales volumes, driven by the broad based
slow down in the technology sector, which resulted in the under-absorption of
costs during the fiscal 2002 second quarter.

      On an adjusted basis, we incurred an operating loss of $31.9 million in
the fiscal 2002 second quarter and $0.3 million in the fiscal 2001 second
quarter. The operating loss was primarily due to the reduced sales volumes
driven by the broad based slow down in the technology sector, which resulted in
the under-absorption of costs during the fiscal 2002 second quarter. Excluding
the $9.5 million in other charges (described in Operating expenses above), that
were recorded in the second quarter of fiscal 2002, the operating loss was $22.4
million.

Financing Costs

      Financing costs in the fiscal 2002 second quarter were $16.4 million
compared to $7.3 million in the fiscal 2001 second quarter. Included in the
fiscal 2002 second quarter financing costs is $3.1 million of non-cash
amortization of capitalized costs and the value of warrants issued as a result
of amending our credit facilities during fiscal 2001 and through the first six
months of fiscal 2002. The increase in our net financing costs, excluding the
$3.1 million of non-cash amortization, is a result of the increase in our
outstanding indebtedness to fund acquisitions made in the second quarter of
fiscal 2001, capital expenditures, restructuring activities and operations.

Income Tax Expense

      We recorded income tax expense in the fiscal 2002 second quarter of $40.3
million compared to a $2.5 million income tax benefit in the fiscal 2001 second
quarter. Included in our fiscal 2002 second quarter tax expense is a charge of
$128.7 million to increase our valuation allowance to $138.5 million at February
28, 2002. As a result of this charge, our net deferred tax asset balance was
reduced to $0.4 million at February 28, 2002. We will continue to record a
valuation allowance to offset any future income tax benefits until it is more
likely than not that we will be able to realize such benefits.

                                       17

<PAGE>

Fiscal 2002 Six Months Compared to the Fiscal 2001 Six Months

Net Sales

     Net sales for the fiscal 2002 six months were $420.7 million compared to
$677.3 million in the fiscal 2001 six months, a decrease of 37.9%. Net sales in
the fiscal 2002 six months were negatively impacted by the broad based slow down
in the technology sector which has resulted in reduced demand for some of our
customers products and in turn has negatively impacted the demand those
customers have for our products and services. In addition to the broad based
slow down in the technology sector, the terrorist attacks that took place on
September 11, 2001 have had an adverse impact on our business.

     Our fiscal 2002 six month sales were influenced by the inclusion of
acquisitions completed in the second quarter of fiscal 2001. Excluding these
acquisitions, net sales decreased 42.8% in the fiscal 2002 six months when
compared to sales in the fiscal 2001 six months.

Geographic Sales

                                           Six Months Ended
                                             February 28,
                                        ---------------------
                                           2002        2001      Change
                                        ---------------------------------
                                            (In millions)

         Americas                       $   247.1   $   419.1    (41.0%)
         Europe and Asia                    173.6       258.2    (32.8%)
                                        --------------------------------
              Total                     $   420.7   $   677.3    (37.9%)
                                        ================================

     Net sales in the Americas for the fiscal 2002 six months were $247.1
million compared to $419.1 million in the fiscal 2001 six months, a decrease of
41.0%. Our fiscal 2002 six month sales were influenced by the inclusion of
acquisitions completed in the second quarter of fiscal 2001. Excluding these
acquisitions, net sales decreased 49% in the fiscal 2002 six months when
compared to net sales in the fiscal 2001 six months. Net sales in Europe and
Asia for the fiscal 2002 six months were $173.6 million compared to $258.2
million in the fiscal 2001 six months, a decrease of 32.8%.

Gross Profit

     Gross profit for the fiscal 2002 six months was $37.5 million compared to
$154.2 million in the fiscal 2001 six months, a decrease of 75.7%. As a
percentage of net sales, the fiscal 2002 six months gross profit was 8.9%
compared to 22.8% in the fiscal 2001 six months. The decrease in gross profit as
a percentage of net sales is primarily a result of a combination of factors: (i)
$16.6 million of costs related to facility closures (primarily equipment
write-offs); (ii) under-absorption of costs resulting from the broad based slow
down in the technology sector which significantly reduced sales volumes; and
(iii) a shift in sales mix to programs with increased levels of systems
integration, which typically have lower margins.

     On an adjusted basis, gross profit for the fiscal 2002 six months was $54.2
million compared to $154.2 million in the fiscal 2001 six months, a decrease of
64.9%. As a percentage of net sales, the fiscal 2002 six months gross profit was
12.9% compared to 22.8% in the fiscal 2001 six months. The decrease in adjusted
gross profit as a percentage of net sales is primarily a result of the
under-absorption of costs resulting from reduced sales volumes and a shift in
sales mix to programs with increased levels of systems integration, which
typically have lower margins.

Operating Expenses

     Operating expenses in the fiscal 2002 six months were $91.5 million
compared to $113.3 million in the fiscal 2001 six months. As a percentage of net
sales, operating expenses were 21.8% for the fiscal 2002 six months, compared to
16.7% for the fiscal 2001 six months. Our operating expenses consist primarily
of engineering, selling, marketing, finance, information technology and general
administrative expenses. Operating expenses have been reduced by $21.8 million
from the fiscal 2001 six months. The reduction in operating expenses is
primarily due to the restructuring and cost reduction efforts we have made.
Although operating expenses have been reduced from the

                                       18

<PAGE>

fiscal 2001 six months, operating expenses as a percentage of net sales
increased due to the under-absorption of costs resulting from the broad based
slow down in the technology sector which significantly reduced sales volumes.

     On an adjusted basis, operating expenses for the fiscal 2002 six months
were $89.1 million compared to $113.3 million in the fiscal 2001 six months, a
decrease of 21.4%. As a percentage of net sales, fiscal 2002 six month operating
expenses were 21.2% compared to 16.7% in the fiscal 2001 six months. The
increase in adjusted operating expenses as a percentage of net sales is
primarily a result of having substantially the same amount of adjusted fixed
costs on significantly reduced sales volume. The effect of this negative
operating leverage has been mitigated by the restructuring actions we have taken
over the last year. Our adjusted operating expenses in the fiscal 2002 six
months include $9.5 in other charges incurred in the second quarter which are
primarily related to the Company's 401(k) plan (such charges were higher in the
current periods than similar charges in prior periods), the estimated future
required lease payments and the ultimate disposition of the Company's two leased
aircraft and additional professional fees incurred in conjunction with the
Company's recapitalization plan. Excluding these items, our operating expenses
for the fiscal 2002 six months were $79.6 million or 18.9% of sales.

Amortization of Intangible Assets

     In the fiscal 2002 second quarter, we performed an impairment assessment of
our long-lived assets as a result of revised Company forecasts resulting from
continuing deterioration of our operating results. As a result of the
assessment, we recorded a $391.6 million impairment charge to reduce the
carrying value of goodwill and other intangible assets. Total amortization
expense, including the impairment charge, in the fiscal 2002 six months was
$403.7 million compared to $12.4 million in the fiscal 2001 six months.
Excluding the impairment charge, amortization for the fiscal 2002 six months was
$12.1 million compared to $12.4 million in the fiscal 2001 six months.

Restructuring and Other Charges

     Beginning in fiscal 2001 and continuing through the fiscal 2002 second
quarter, management has developed formal plans to exit certain facilities and
involuntarily terminate employees. Management's plans to exit certain facilities
included the identification of duplicate manufacturing and sales facilities for
closure and the transfer of the related operations to other facilities.
Management currently anticipates that the facility closures and all related
activities will be substantially complete within one year of the commitment
dates of the respective exit plans.

     A restructuring charge totaling $17.5 million was recorded during the
fiscal 2002 six months. The restructuring charge relates to the rationalization
of ten facilities and the involuntary termination of both salaried and hourly
employees. Severance costs associated with the involuntary termination of
employees totaled $7.5 million. Lease exit costs resulting from facility
closures totaled $10.0 million. In addition to the restructuring charge totaling
$17.5 million, we incurred $19.1 million of other costs related to facility
closures (primarily equipment impairment charges). Of the $36.5 million in
rationalization charges, $21.0 million are cash costs and $15.5 million are
non-cash costs. Of the $21.0 million in cash costs, only $3.5 million are
incremental cash costs that would not have been incurred in the next 12 months
without undertaking these restructuring actions.

     Since commencing our restructuring plans in the third quarter of fiscal
2001, we have recorded restructuring and restructuring related charges totaling
$67.8 million. Our restructuring program was implemented to reduce our aggregate
fixed cost structure to mitigate the revenue decline we began to experience as a
result of a weak economic environment in the computing, telecommunication, and
semi-conductor markets we serve. We have rationalized 18 facilities through
consolidating the operations of closed locations into existing larger locations,
thus eliminating fixed facility costs and redundant headcount and better
leveraging our existing infrastructure. Through February 28, 2002 we have spent
approximately $23.1 million on cash restructuring, with only approximately $3.0
million of the total being incremental cash costs that would not have been
incurred in the next 12 months without undertaking these restructuring actions.
Over the same period, we have reduced aggregate adjusted operating expenses
(which include manufacturing overhead expenses included in cost of products sold
as well as engineering, selling and administrative expenses) excluding other
charges of $9.5 million described in Operating expenses above, by approximately
$40.4 million per quarter, with the reduction split between the benefits of
restructuring plans implemented and the reduction in variable operating expenses
due to reduced sales volume. Prospectively, management will continue to review
existing infrastructure for opportunities to reduce our overall cost structure,
and will likely implement

                                       19

<PAGE>

additional restructuring plans as deemed necessary.

Divestiture

     On February 13, 2002, APW Ltd. completed the sale of its Zero Cases
division. Total consideration from the transaction was a net $19.2 million,
which resulted in a net book gain of $8.2 million.

Operating Loss

     We incurred an operating loss of $466.9 million in the fiscal 2002 six
months compared to operating earnings of $25.7 million in the fiscal 2001 six
months. The operating loss was primarily due to: (i) a $391.6 million impairment
of goodwill and other intangible assets; (ii) a $17.5 million restructuring
charge; (iii) $19.1 million of costs related to facility closures (primarily
equipment impairment charges); and (iv) reduced sales volumes, driven by the
broad based slow down in the technology sector, which resulted in the
under-absorption of costs during the fiscal 2002 six months.

     On an adjusted basis, we incurred an operating loss of $47.0 million in the
fiscal 2002 six months and operating earnings of $28.5 million in the fiscal
2001 six months. The operating loss was primarily due to the reduced sales
volumes driven by the broad based slow down in the technology sector, which
resulted in the under-absorption of costs during the fiscal 2002 six months.
Excluding the $9.5 million in other charges, (described in Operating expenses
above), that were recorded in the second quarter of fiscal 2002, the operating
loss was $37.5 million.

Financing Costs

     Financing costs in the fiscal 2002 six months were $30.9 million compared
to $13.8 million in the fiscal 2001 six months. Included in the fiscal 2002 six
months financing costs is $4.7 million of non-cash amortization of capitalized
fees and warrants issued as a result of amending our credit facilities during
fiscal 2001 and through the first six months of fiscal 2002. The increase in our
net financing costs, excluding the $4.7 million of non-cash amortization, is a
result of the increase in our outstanding indebtedness to fund acquisitions made
in the second quarter of fiscal 2001, capital expenditures, restructuring
activities and operations.

Income Tax Expense

     We recorded income tax expense in the fiscal 2002 six months of $28.1
million compared to $4.0 million in the fiscal 2001 six months. Included in our
fiscal 2002 six months tax expense is a charge of $128.7 million to increase our
valuation allowance to $138.5 million at February 28, 2002. As a result of this
charge, our net deferred tax asset balance was reduced to $0.4 million at
February 28, 2002. We will continue to record a valuation allowance to offset
any future income tax benefits until it is more likely than not that we will be
able to realize such benefits.

Liquidity and Capital Resources

Cash Flows

     Cash and cash equivalents totaled $9.0 million at February 28, 2002 and
$8.5 million at August 31, 2001.

     Net cash used in operating activities in the fiscal 2002 six months was
$12.6 million compared to $31.4 million used in the fiscal 2001 six months. The
net use of cash in the fiscal 2002 six months was primarily due to restructuring
and related payments totaling $12.0 million. Other net uses of cash included the
funding of operating losses, and payments to professional advisors, offset by a
source of cash from primary working capital (receivables, inventory, and
payables).

     Net cash provided by investing activities for the fiscal 2002 six months
was $11.1 million compared to net cash used in investing activities of $298.0
million for the fiscal 2001 six months. The net source of cash for the fiscal
2002 six months was primarily due to $19.2 million of proceeds on the sale of a
subsidiary offset by capital expenditures of $11.9 million.

                                       20

<PAGE>

     Net cash provided by financing activities for the fiscal 2002 six months
was $2.1 million compared to $335.7 million provided in the fiscal 2001 six
months. The net cash provided by financing activities for the fiscal 2002 six
months primarily came from net borrowings on our long-term debt facility of
$28.7 million, which was offset by $5.5 million in payments on short-term
borrowings, $2.1 million in debt financing costs and a reduction in sold
receivables of $18.9 million.

Off-Balance Sheet Arrangements, Contractual Obligations and Commercial
Commitments

     On January 22, 2002, the SEC issued FR-61, "Commission Statement about
Management's Discussion and Analysis of Financial Condition and Results of
Operations." FR-61 indicates that registrants should consider the need to
provide disclosures concerning transactions, arrangements and other
relationships with unconsolidated entities or other persons that are reasonably
likely to affect materially liquidity or the availability of, or requirements
for capital resources as well as disclosures concerning a registrant's
obligations and commitments to make future payments under contracts, such as
debt, leases, and contingent commitments. In response to this release, we have
outlined our off-balance sheet arrangement as well as our contractual
obligations and commercial commitments as they relate to the Company.

Accounts Receivable Facility

     APW North America Inc., a wholly owned subsidiary of APW Ltd., and certain
domestic subsidiaries (collectively, "Originators") sell trade accounts
receivable to Applied Power Credit Corporation ("APCC"), a wholly-owned, limited
purpose, consolidated subsidiary of the Company. APCC is a separate corporate
entity that sells participating interests in its pool of accounts receivable to
financial institutions ("Purchasers"). The Purchasers, in turn, receive an
ownership and security interest in the pool of receivables. Participation
interests in new receivables generated by the Originators are purchased by APCC
and resold to the Purchasers on a revolving basis as collections reduce
previously sold participation interests. The accounts receivable sold to
Purchasers are reflected as a reduction of receivables in the Condensed
Consolidated Balance Sheets. APCC has no risk of credit loss on such receivables
as they are sold without recourse. APW North America Inc. retains collection and
administrative responsibilities on the participation interests sold as servicer
for APCC and the Purchasers. Further, APCC is a bankruptcy remote corporation,
and as such, the assets held by APCC would not be available to satisfy the
claims of APW Ltd.'s creditors until all of the amounts owed to the Purchasers
have been paid in full.

     The Accounts Receivable Facility described above represents "off-balance
sheet financing." This results in assets being removed from our balance sheet,
rather than incurring a liability similar to that of traditional financing. The
receivables are sold on a revolving basis where new eligible receivables replace
collected receivables on a daily basis. The maximum amount of receivables that
can be sold under the current facility is $80.0 million. At February 28, 2002
and August 31, 2001, only $39.1 and $58.0 million, respectively, of this
facility was utilized due to this limitation. To the extent eligible receivables
under this facility decrease from this amount, cash collections on the sold
receivables must be repaid to the Purchaser, thereby reducing our availability
under the facility. Conversely, if more eligible receivables are generated due
to increased sales, we can increase the cash available to us under the facility
via the sale of these new eligible receivables up to the maximum allowed of
$80.0 million. Upon the facility's termination, the Purchaser would be entitled
to all cash collections on receivables sold to it by APCC until its net
investment ($39.1 million at February 28, 2002) had been repaid.

     The Accounts Receivable Facility will terminate on May 15, 2002 unless
terminated earlier according to its terms (including, without limitations the
occurrence of a "termination event" that is not waived or amended) or extended
by mutual agreement of parties thereto. We do not currently expect that the
facility will be extended beyond the May 15, 2002 termination date.

Contractual Obligations and Commercial Commitments

     Currently, we have classified all of our debt under the Multi-Currency
Credit facilities as current in accordance with EITF 86-30 which is discussed
further in the Liquidity section below.

     We lease, through various subsidiaries, certain facilities and equipment
under various lease agreements generally over periods of one to twenty years.
Under most arrangements, we also pay the property taxes, insurance, maintenance
and expenses related to the leased properties. Future obligations on
non-cancelable operating leases in effect at February 28, 2002 are: $21.3
million for the remainder of fiscal 2002; $25.5 million in fiscal 2003 and
$164.2 million thereafter. These amounts

                                       21

<PAGE>

represent amounts that have previously been disclosed in our Form 10-K for the
twelve months ended August 31, 2002 as adjusted for the current year's activity.
Included in the February 28, 2002 Condensed Consolidated Balance Sheet are $11.3
million of lease exit reserves that would reduce our future obligations listed
above. Total rental expense under operating leases for the fiscal 2002 six
months was approximately $14.5 million.

Capitalization

     Debt at February 28, 2002 totaled $644.0 million, an increase of
approximately $22.6 million from August 31, 2001. The increase in debt was
primarily due to restructuring costs, capital expenditures and the $18.9 million
decrease in receivables sold under the accounts receivable facility, offset by
$19.2 million of proceeds from the sale of a division.

     To reduce the risk of interest rate increases, we may periodically enter
into interest rate swap agreements. Our current interest rate swap activity is
limited to two agreements and is not significant.

Liquidity

     On September 27, 2001, the Company's lenders amended certain debt covenants
associated with APW Ltd.'s Multi-Currency Credit Agreement, UK Revolving Credit
Agreement and the Accounts Receivable Facility (collectively, "credit
facilities"). These revised covenants were established based upon APW Ltd.
management's financial forecasts prior to the events of September 11, 2001.
Following the events of September 11 and throughout the fiscal 2002 first
quarter, APW Ltd. experienced a significant decline in net sales compared to
prior periods and a further decline compared to management's financial forecasts
that were the basis for the financial covenants set forth in the September 27,
2001 amendment. Such declines are related to a number of factors, certain of
which were impacted by the terrorist attacks that took place in the United
States on September 11, 2001. On December 13, 2001, the Company's lenders
amended certain debt covenants associated with the Company's credit facilities
to reflect the Company's revised financial forecasts as of that point in time.
The revisions in the covenants were considered necessary due to the magnitude of
the decline in the fiscal 2002 first quarter actual results compared to prior
periods and management's forecasts. In addition, the amendment repriced the
outstanding warrants issued in conjunction with the May 15, 2001 amendment to
the closing price of APW Ltd.'s common stock on December 10, 2001 of $1.98 and
eliminates the previous reduction provision if the Company met repayment targets
by August 31, 2002. The Company also issued warrants for 9.9% of the common
stock outstanding on December 13, 2001 (approximately 4.1 million shares) at a
price of $0.01. These $0.01 warrants are cancelled if the credit facilities are
repaid by July 31, 2002 (entirely cancelled) or September 30, 2002 (49.5%
cancelled). During the second quarter of fiscal 2002, $8.5 million was recorded
as the estimated fair value of the warrants issued in conjunction with the
December amendment and was recorded as an increase in deferred financing costs
and an increase in share premium.

     During the quarter ended February 28, 2002, the Company amended its credit
facilities on three different occasions. The net result of these amendments was:
(i) to provide a temporary deferment of cash interest payment obligations until
April 15, 2002; (ii) to increase the size of the UK Revolving Credit Facility by
approximately $5.0 million under the UK Revolving Credit Agreement; (iii) to
allow for the sale of the assets of the Company's Zero Cases division; and (iv)
to provide a waiver of all financial covenant requirements for the period from
January 31, 2002 until April 15, 2002.

     As of February 28, 2002, the Company was in compliance under its credit
facilities as a result of having all of the financial covenants waived. Although
the Company has received a waiver of all financial covenants prior to February
28, 2002, substantially the same or more restrictive financial covenants will be
in place for the period ending May 31, 2002. Based on its current projections,
the Company believes that it is probable that it will not meet certain of these
covenants for the period ending May, 31, 2002 unless further waived or otherwise
amended through ongoing negotiations with its lenders. As such, in accordance
with Emerging Issues Task Force Issue ("EITF") 86-30, the Company has classified
all of its debt obligations as current as of February 28, 2002. The Company has
been pursuing discussions with its lenders concerning a recapitalization plan.
The discussions have centered around a recapitalization of the balance sheet
that is intended to result in no disruption to the operating subsidiaries and
their suppliers, who will be paid in the normal course of business. In
connection with the recapitalization plan, the Company intends that such plan
would entail the following: (i) the conversion of $550.0 million of the current
and outstanding debt plus accrued interest to common stock; (ii) the allowance
of a new financing line of credit of $110.0 million; (iii) the issuance of
common stock (and possible preferred stock or warrants) to the existing lenders
so that they would end up owning substantially all of the outstanding capital
stock of the Company; (iv) the issuance of warrants to the Company's

                                       22


<PAGE>

existing shareholders for some number of additional shares which become
exercisable if the lenders receive a return of their initial investment; and (v)
the retention of existing management. The Company has been negotiating this plan
with the lenders and primarily through its steering committee. To date, the
Company and the lenders have agreed in principal on the main terms of the
recapitalization plan, but no definitive agreement has yet been agreed to and
executed. It is anticipated that the plan will be implemented through a
pre-packaged or pre-negotiated Chapter 11 of APW Ltd., the holding company.
Consequently, the lenders will have agreed to the terms of the recapitalization
plan prior to the filing. This plan would be structured in such a way so that
all of the obligations of APW Ltd. (see Note 2 to the Condensed Consolidated
Financial Statements - Holding Company Structure) could be assumed, adjusted or
eliminated in a bankruptcy proceeding. The Company and its lenders are
structuring the recapitalization of the Company so that only APW Ltd., the
holding company, should be affected. Under this plan, the Chapter 11 filing of
APW Ltd., the holding company, will not effect, in any direct way the operating
subsidiaries and their ability to conduct business normally with their customers
and suppliers. In particular, there is no intent to impair the suppliers of the
operating subsidiaries. If we cannot execute the recapitalization plan as
currently conceived, APW Ltd. would likely be forced to file and seek protection
under the bankruptcy laws. Given, that at this point there is not a definitive
recapitalization plan document agreed to with our lending group and as such,
prospectively the Company could be required to meet the future financial
covenants of our current amended credit facilities (unless otherwise waived or
amended), which the Company feels that at this point is not probable, coupled
with the Company's current level of liquidity, there is substantial doubt about
the Company's ability to continue as a going concern.

     In order to facilitate the finalization of negotiations regarding the terms
of the recapitalization and the related documentation, on April 15, 2002, the
Company unanimously received an extension with regard to the deferment of
interest payments and a waiver of all financial covenants for the period through
May 14, 2002. The Accounts Receivable Facility will terminate on May 15, 2002
unless terminated earlier according to its terms (including, without limitation
the occurrence of a "termination event" that is not waived or amended) or
extended by mutual agreement of parties thereto. We do not currently expect that
the facility will be extended beyond the May 15, 2002 termination date.

     APW Ltd.'s management plans to continue to aggressively pursue additional
revenue opportunities within its core customer markets. APW Ltd. adopted several
restructuring plans during fiscal 2001 and throughout the first six months of
fiscal 2002 in an effort to reduce costs in the wake of declining net sales
experienced during those periods. These programs resulted in restructuring
charges during fiscal 2001 and the first six months of fiscal 2002 and have
provided cost savings that are expected to continue into the future. Management
plans to consider additional cost-reduction programs, as necessary, to further
align the Company's cost base with net sales.

     In December 2001, a subsidiary of the Company received notification from
the lessor of two of its aircraft that the lease contracts ("contracts") for the
two aircraft would be terminated effective March 4, 2002. In conjunction with
the termination, the terms of the contracts would require the Company to pay the
lessor approximately $12.3 million for the two aircraft and, in exchange, the
lessor would convey all of its rights, title and interest in the two aircraft to
the Company. The Company is actively working with the lessor to identify a third
party which would purchase and/or lease the two aircraft, thereby eliminating
the Company's $12.3 million payment obligation. The lessor has informed the
Company that it is willing to continue to work with the Company to find third
party alternatives to eliminate the cost of terminating this contract, provided
the Company continues to make scheduled lease payments. As such, the Company has
recorded a charge of $2.0 million during the second quarter related to its
decision to discontinue use of the related aircraft. This charge reflects
management's current estimates relating to future required lease payments and
the ultimate disposition timing and proceeds of the two aircraft.

     At February 28, 2002 and March 31, 2002, we had $23.3 million and $12.3
million, respectively, of borrowings available under our two credit facilities
and $9.0 million and $9.8 million, respectively, in cash. To provide additional
liquidity, we have been extending payables beyond their normal payment terms. At
February 28, 2002 and March 31, 2002, although we sold all eligible accounts
receivable under our accounts receivable facility, we had the availability to
sell an incremental $40.9 and $40.8 million, respectively. Our future, liquidity
could further decline if we experience a negative variance from our expected
operating results or if we do not receive additional deferments of interest on
our credit facilities from our lenders.

New Accounting Pronouncements

     In June 2001, SFAS No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets" were issued. The statements eliminate the
pooling-of-interests method of accounting for business combinations and require
that goodwill and certain intangible assets not be amortized. Instead, these
assets will be reviewed for impairment annually with any related losses
recognized in earnings when incurred. SFAS No. 141 was effective for us as of
July 31, 2001. SFAS No. 142 will be effective for us on September 1, 2002 for
existing goodwill and intangible assets. We are currently evaluating the impact
of SFAS No. 142.

                                       23

<PAGE>

     In June 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations"
was issued. SFAS No. 143 sets forth the financial accounting and reporting to be
followed for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 requires entities
to record the fair value of a liability for an asset retirement obligation in
the period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are to be capitalized as part of the
carrying amount of the long-lived asset. Subsequently, the recorded liability
will be accreted to its present value and the capitalized costs will be
depreciated. We are required to adopt SFAS No. 143 on September 1, 2002. We are
currently evaluating the impact of SFAS No. 143.


     In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" was issued. SFAS No. 144 modifies and expands the financial
accounting and reporting for the impairment or disposal of long-lived assets
other than goodwill, which is specifically addressed by SFAS No. 142. SFAS No.
144 maintains the requirement that an impairment loss be recognized for a
long-lived asset to be held and used if its carrying value is not recoverable
from its undiscounted cash flows, with the recognized impairment being the
difference between the carrying amount and fair value of the asset. With respect
to long-lived assets to be disposed of other than by sale, SFAS No. 144 requires
that the asset be considered held and used until it is actually disposed of but
requires that its depreciable life be revised in accordance with APB Opinion No.
20, "Accounting Changes." SFAS No. 144 also requires that an impairment loss be
recognized at the date a long-lived asset is exchanged for a similar productive
asset. We will be required to adopt SFAS No. 144 on September 1, 2002. We are
currently evaluating the impact of SFAS No. 144.

Seasonality

     Due to the shortened number of business days in the second quarter of our
fiscal year (from December 1 to February 28), we typically experience lower
sales volumes in the second quarter of each fiscal year as compared to the other
quarters in the fiscal year.

                                       24

<PAGE>

Forward-looking Statements and Cautionary Factors
-------------------------------------------------

     Certain statements contained in this document, as well as statements in
other Company communications, which are not historical facts, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. The terms
"anticipate", "believe", "estimate", "expect", "objective", "plan", "project"
and similar expressions are intended to identify forward-looking statements.
Such forward-looking statements are subject to inherent risks and uncertainties
that may cause actual results or events to differ materially from those
contemplated by such forward-looking statements. In addition to the assumptions
and other factors referred to specifically in connection with such statements,
factors that may cause actual results or events to differ materially from those
contemplated by such forward-looking statements include, without limitation,
general economic conditions, market conditions in the computer, semiconductor,
telecommunication, and electronic industries in North America, South America,
Europe and Asia, market acceptance of existing and new products, successful
integration of acquisitions, competitive product and pricing pressures, foreign
currency risk, interest rate risk, the Company's ability to access capital
markets, extension of forbearance of interest obligations and other factors that
may be referred to in APW Ltd.'s reports filed with the Securities and Exchange
Commission from time to time.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

     We are exposed to market risk from changes in foreign exchange and interest
rates and, to a lesser extent, commodities. To reduce such risks, we selectively
use financial instruments.

     Currency Risk - We have significant international operations. In most
     -------------
instances, our products are produced at manufacturing facilities located near
the customer. As a result, significant volumes of finished goods are
manufactured in countries for sale into those markets. For goods purchased from
our affiliates, we denominate the transaction in the functional currency of the
producing operation.

     We have adopted the following guidelines to manage our foreign exchange
exposures:

          (i)   increase the predictability of costs associated with goods whose
                purchase price is not denominated in the functional currency of
                the buyer;

          (ii)  minimize the cost of hedging through the use of naturally
                offsetting positions (borrowing in local currency), netting,
                pooling; and

          (iii) where possible, sell product in the functional currency of the
                producing operation.

     Our identifiable foreign exchange exposures result primarily from the
anticipated purchase of product from affiliates and third-party suppliers along
with the repayment of intercompany loans with foreign subsidiaries denominated
in foreign currencies. We periodically identify naturally occurring offsetting
positions and then may purchase hedging instruments to protect against
anticipated exposures. The Company had no such foreign currency hedging
instruments at February 28, 2002. Based on our overall currency rate exposure,
including derivative financial instruments and nonfunctional currency
denominated receivables and payables, a near-term 10% appreciation or
depreciation of the U.S. dollar would not have a significant effect on our
financial position, results of operations and cash flows over the next fiscal
year.

     Interest Rate Risk - We periodically enter into interest rate swaps to
     ------------------
stabilize financing costs by minimizing the effect of potential interest rate
increases on floating-rate debt in a rising interest rate environment. Under
these agreements, we contract with a counter party to exchange the difference
between a fixed rate and a floating rate applied to the notional amount of the
swap. The effective portion of any gain or loss due to a change in the fair
value is initially recorded as a component of other comprehensive income (loss)
and subsequently reclassified into earnings when the hedged exposure affects
earnings. The fair value of our interest rate swap agreements was a liability of
$2.6 million and $2.4 million at February 28, 2002 and August 31, 2001,
respectively. A sixty-eight (10% of our weighted average interest rate)
basis-point change in interest rates on average long-term borrowings would have
impacted net interest expense by approximately $2.4 million for the six months
ended February 28, 2002.

     Commodity Prices - We are exposed to fluctuation in market prices for
     ----------------
steel. Therefore, we have established a program for centralized negotiation of
steel prices. This program allows APW Ltd. to take advantage of economies of
scale as well as to cap pricing. All business units are able to purchase steel
under this arrangement. In general, the contracts lock steel pricing for 18
months and enable APW Ltd. to pay less if market prices fall.

                                       25

<PAGE>

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings
--------------------------

         The Company, as well as one current, and one former executive have been
sued in three actions which are pending in the United States District Court for
the Eastern District of Wisconsin in connection with alleged violations of
Federal securities laws which preceded a drop in the price of its common stock
ending on March 20, 2001. The first of these suits which is captioned Stewart
Norman Hicks v. APW Ltd., et al., was filed on December 10, 2001. The
subsequently filed suits are captioned Robert Betz v. APW Ltd, et al., and
Market Street Securities v. APW Ltd., et al. The complaints for all three suits
allege violations of the Federal securities laws and seek certification of a
plaintiff class consisting of all purchasers of the Company's common stock
between September 26, 2000 and March 20, 2001, inclusive. The complaint does not
quantify the damages. The Company has not yet been served with the complaints
but understands that the respective plaintiffs intend to seek consolidation of
the suits. At this time, the Company cannot evaluate the merits of these claims.

Item 2 - Changes in Securities and Use of Proceeds
--------------------------------------------------

       On December 13, 2001, the Company issued warrants to purchase a total of
4,030,027 shares of the Company's common stock (3,455,610 to the Company's U.S.
lenders and 584,597 to the Company's U.K. lenders). The warrants are exercisable
at any time during a period from October 1, 2002 through May 15, 2006, at an
exercise price of $0.01 per share, although under certain limited circumstances
the exercise date may be accelerated. The warrants were issued to certain
lenders as an inducement in connection with the Company's renegotiations of its
Amended and Restated Multi-Currency Credit Agreement and Amended U.K. Facility
Agreement. The issuance of warrants did not generate any proceeds and no
underwriter was involved in the issuance. The warrants are subject to a complete
reduction if certain prepayment targets are met. The Company issued the warrants
in reliance upon Section 4(2) and Regulation D of the Securities Act of 1933, as
amended, in a transaction not involving a public offering. The lenders were the
only offerees in this transaction, and no public solicitation was made. The
warrant holders are investors with access to all relevant information necessary
to evaluate the investment and have represented to the Company that the shares
were being acquired for investment purposes. The shares of common stock
underlying the warrants are subject to certain transfer restrictions and have
registration rights.

Item 4 - Submissions of Matters to a Vote of Security Holders
-------------------------------------------------------------

       The Annual Meeting of Shareholders was held on January 14, 2002 and the
following proposals were voted on. The number of votes cast for, against,
abstained and withheld for each proposal is set forth below:

(a)    Election of Directors - Class of 2002

                             Share Votes For      Share Votes Withheld
                             ---------------      --------------------
Jack L. Heckel                  34,108,886                537,547
Gerald McGoey                   34,102,942                543,491
Bruno D'Avanzo                  34,102,379                544,054

       Mr. Heckel and Mr. McGoey terms expire in 2005 and Mr. D'Avanzo's term
expires in 2004.

(b)    Appointment of Independent Auditors

       The appointment of PricewaterhouseCoopers LLP as the independent auditors
was approved with 34,403,591 for, 191,673 against and 51,169 withheld.

Item 5 - Other Information
--------------------------

       In April 2002, Mr. Jack Heckel resigned as a director due to recent
health reasons that prevent him from participating in Board meetings.

                                       26

<PAGE>

Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------

(a)   Exhibit 4.3 Sixth Amendment to Amended and Restated Multicurrency
      Credit Agreement


(b)   Reports on Form 8-K

      On December 21, 2001, the Company filed a Current Report on Form 8-K dated
December 13, 2001, reporting under Item 5 the Company's renegotiations of its
Multi-Currency Credit Agreement, Facility Agreement with the Royal Bank of
Scotland and Receivables Purchasing Agreement, collectively, the "credit
facilities".

      On February 19, 2002 the Company filed a Current Report on Form 8-K dated
February 13, 2002, reporting under Item 5 the Company's divestiture of its Zero
Cases division.

       On February 25, 2002 the Company filed a Current Report on Form 8-K dated
January 15, 2002, reporting under Item 5 the Company's further negotiations of
its credit facilities.

      On February 28, 2002 the Company filed a Current Report on Form 8-K dated
February 15, 2002, reporting under Item 5 the Company's additional
renegotiations of its credit facilities.

                                    SIGNATURE
                                    ---------

      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.

                                 APW Ltd.
                                 --------
                                 (Registrant)

Date:  April 15, 2002            By: /s/ Richard D. Carroll
                                    -----------------------
                                 Richard D. Carroll
                                 Vice President and Chief Financial Officer

                                 (Principal Financial Officer and duly
                                 authorized to sign on behalf of the registrant)

                                       27