|
|
|
|
|
|

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OFTHE SECURITIES
            EXCHANGE ACT OF 1934

FOR QUARTERLY PERIOD ENDED JUNE 29, 2003COMMISSION FILE NUMBER
            1-12068

METALDYNE CORPORATION

(Exact name of
            registrant as specified in its charter)

Delaware
                   
                   38-2513957(State or other jurisdiction of
                        incorporation or organization)
                   
                   (I.R.S. Employer Identification
                        No.)47659 Halyard Drive, Plymouth,
                        Michigan
                   
                   48170-2429(Address of principal executive
                        offices)
                   
                   (Zip Code)


(734) 207-6200(Registrant's telephone
            number)

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

Indicate by check mark whether the registrant is an accelerated filer (as
            defined in Rule 12b-2 of the Exchange Act). Yes
             No
            X

There is currently no public market for the registrant's common stock.

Indicate the number of shares outstanding of each of the issuer's classes
            of common stock, as of the latest practical date.

Class
                   
                   Shares outstanding at July 31,
                        2003Common stock, par value $1 per
                        share
                   
                   
                   43,871,745




|
|
|
|
|
|

METALDYNE CORPORATION

INDEX

Page No.Part I.
                   
                   Financial InformationItem 1.
                   
                   Financial StatementsConsolidated Balance Sheets —
                        June 29, 2003 and December 29, 2002
                   
                   
                   2Consolidated Statements of Operations
                        for the Three and Six Months Ended     June 29, 2003
                        and June 30, 2002
                   
                   
                   3Consolidated Statements of Cash Flows
                        for the Six Months Ended June 29, 2003     and June 30,
                        2002
                   
                   
                   4Notes to Consolidated Financial
                        Statements
                   
                   
                   5-22Item 2.
                   
                   Management's Discussion and Analysis
                        of Financial Condition and Results of
                            Operations
                   
                   
                   23-39Item 3.
                   
                   Quantitative and Qualitative
                        Disclosure About Market Risk
                   
                   
                   39Item 4.
                   
                   Controls and Procedures
                   
                   
                   39-40Part II.
                   
                   Other Information and Signature
                   
                   
                   41-206


1

PART I. FINANCIAL INFORMATION Item 1. Financial Statements

METALDYNE CORPORATIONCONSOLIDATED BALANCE SHEET June 29, 2003 and
            December 29, 2002(Dollars in thousands except per share amounts)

June 29, 2003
                   
                   December 29, 2002(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
                   
                   $
                   7,080
                   
                   
                   $
                   19,130Receivables, net:Trade, net of allowance for doubtful
                        accounts
                   
                   
                   168,720
                   
                   
                   
                   147,670Affiliates
                   
                   
                   19,810
                   
                   
                   
                   27,820Other
                   
                   
                   8,930
                   
                   
                   
                   11,380Total receivables, net
                   
                   
                   197,460
                   
                   
                   
                   186,870Inventories
                   
                   
                   80,850
                   
                   
                   
                   76,820Deferred and refundable income
                        taxes
                   
                   
                   4,510
                   
                   
                   
                   23,550Prepaid expenses and other assets
                   
                   
                   34,170
                   
                   
                   
                   29,140Total current assets
                   
                   
                   324,070
                   
                   
                   
                   335,510Equity investments in affiliates
                   
                   
                   149,510
                   
                   
                   
                   147,710Property and equipment, net
                   
                   
                   710,370
                   
                   
                   
                   697,510Excess of cost over net assets of
                        acquired companies
                   
                   
                   552,230
                   
                   
                   
                   552,100Intangible and other assets
                   
                   
                   274,230
                   
                   
                   
                   286,220Total assets
                   
                   $
                   2,010,410
                   
                   
                   $
                   2,019,050LIABILITIES AND SHAREHOLDERS'
                        EQUITYCurrent liabilities:Accounts payable
                   
                   $
                   185,270
                   
                   
                   $
                   186,440Accrued liabilities
                   
                   
                   113,670
                   
                   
                   
                   108,330Current maturities, long-term
                        debt
                   
                   
                   101,840
                   
                   
                   
                   99,900Total current liabilities
                   
                   
                   400,780
                   
                   
                   
                   394,670Long-term debt
                   
                   
                   669,000
                   
                   
                   
                   668,960Deferred income taxes
                   
                   
                   117,200
                   
                   
                   
                   146,510Other long-term liabilities
                   
                   
                   139,530
                   
                   
                   
                   143,300Total liabilities
                   
                   
                   1,326,510
                   
                   
                   
                   1,353,440Redeemable preferred stock, 545,154
                        shares outstanding
                   
                   
                   69,110
                   
                   
                   
                   64,510Redeemable restricted common stock,
                        0.8 million and 1.7 million shares outstanding, respectively
                   
                   
                   17,020
                   
                   
                   
                   23,790Less: Restricted unamortized stock
                        awards
                   
                   
                   (1,150
                   )
                   
                   
                   (3,120
                   )Total redeemable stock
                   
                   
                   84,980
                   
                   
                   
                   85,180Preferred stock (non-redeemable), $1
                        par, Authorized: 25 million; Outstanding: None
                   
                   
                   —
                   
                   
                   
                   —Common stock, $1 par, Authorized: 250
                        million; Outstanding: 42.7 million and 42.6 million shares, respectively
                   
                   
                   42,730
                   
                   
                   
                   42,650Paid-in capital
                   
                   
                   692,430
                   
                   
                   
                   684,870Accumulated deficit
                   
                   
                   (160,490
                   )
                   
                   
                   (147,100
                   )Accumulated other comprehensive
                        income
                   
                   
                   24,250
                   
                   
                   
                   10Total shareholders' equity
                   
                   
                   598,920
                   
                   
                   
                   580,430Total liabilities, redeemable stock
                        and shareholders' equity
                   
                   $
                   2,010,410
                   
                   
                   $
                   2,019,050


The accompanying notes are an integral part of the consolidated financial
            statements.

2

METALDYNE CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS
            (Dollars in thousands except per share data)

Three Months Ended
                   
                   Six Months Ended(Unaudited)
                   
                   (Unaudited)June 29, 2003
                   
                   June 30, 2002
                   
                   June 29, 2003
                   
                   June 30, 2002Net sales
                   
                   $
                   390,290
                   
                   
                   $
                   530,460
                   
                   
                   $
                   771,610
                   
                   
                   $
                   1,090,330Cost of sales
                   
                   
                   (339,780
                   )
                   
                   
                   (432,520
                   )
                   
                   
                   (679,580
                   )
                   
                   
                   (889,570
                   )Gross profit
                   
                   
                   50,510
                   
                   
                   
                   97,940
                   
                   
                   
                   92,030
                   
                   
                   
                   200,760Selling, general and administrative
                        expenses
                   
                   
                   (27,050
                   )
                   
                   
                   (53,170
                   )
                   
                   
                   (55,790
                   )
                   
                   
                   (113,250
                   )Restructuring charges
                   
                   
                   (2,330
                   )
                   
                   
                   —
                   
                   
                   
                   (3,860
                   )
                   
                   
                   —Legacy restricted stock award
                        expense
                   
                   
                   (580
                   )
                   
                   
                   (1,080
                   )
                   
                   
                   (1,480
                   )
                   
                   
                   (3,160
                   )Operating profit
                   
                   
                   20,550
                   
                   
                   
                   43,690
                   
                   
                   
                   30,900
                   
                   
                   
                   84,350Other expense, net:Interest
                        expense
                   
                   
                   (17,240
                   )
                   
                   
                   (28,500
                   )
                   
                   
                   (35,120
                   )
                   
                   
                   (56,620
                   )Loss on repurchase of debentures and
                        early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )Loss on interest rate arrangements
                        upon early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )Equity earnings (loss) from
                        affiliates, net
                   
                   
                   (80
                   )
                   
                   
                   2,780
                   
                   
                   
                   (2,710
                   )
                   
                   
                   2,330Other, net
                   
                   
                   (3,760
                   )
                   
                   
                   (4,960
                   )
                   
                   
                   (5,220
                   )
                   
                   
                   (7,680
                   )Other expense, net
                   
                   
                   (21,080
                   )
                   
                   
                   (100,230
                   )
                   
                   
                   (43,050
                   )
                   
                   
                   (131,520
                   )Loss before income taxes and
                        cumulative effect of change in accounting principle
                   
                   
                   (530
                   )
                   
                   
                   (56,540
                   )
                   
                   
                   (12,150
                   )
                   
                   
                   (47,170
                   )Income tax expense (benefit)
                   
                   
                   (1,010
                   )
                   
                   
                   (41,750
                   )
                   
                   
                   (3,260
                   )
                   
                   
                   (38,240
                   )Income (loss) before cumulative effect
                        of change in accounting principle
                   
                   
                   480
                   
                   
                   
                   (14,790
                   )
                   
                   
                   (8,890
                   )
                   
                   
                   (8,930
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (36,630
                   )Net income (loss)
                   
                   
                   480
                   
                   
                   
                   (14,790
                   )
                   
                   
                   (8,890
                   )
                   
                   
                   (45,560
                   )Preferred stock dividends
                   
                   
                   2,280
                   
                   
                   
                   1,700
                   
                   
                   
                   4,500
                   
                   
                   
                   3,410Loss attributable to common stock
                   
                   $
                   (1,800
                   )
                   
                   $
                   (16,490
                   )
                   
                   $
                   (13,390
                   )
                   
                   $
                   (48,970
                   )Basic earnings (loss) per share:Before cumulative effect of change in
                        accounting principle less preferred stock dividends
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (0.29
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (0.86
                   )Net loss attributable to common
                        stock
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (1.15
                   )Diluted earnings (loss) per
                        share:Before cumulative effect of change in
                        accounting principle less preferred stock dividends
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (0.29
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (0.86
                   )Net loss attributable to common
                        stock
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (1.15
                   )


The accompanying notes are an integral part of the consolidated financial
            statements.

3

METALDYNE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
            (Dollars in thousands)

|                                                                                                                                                               |  |                |          |               |  |   |            |   |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | -------- | ------------- |  | - | ---------- | - |  | 
|                                                                                                                                                               |  | 6 Months Ended
|                                                                                                                                                               |  | (Unaudited)   
|                                                                                                                                                               |  | June 29,2003   |          | June 30, 2002
|Operating activities:                                                                                                                                          | 
|Net loss                                                                                                                                                       |  | $              | (8,890   | )             |  | $ | (45,560    | )
|Adjustments to reconcile net cash
                   provided by (used for) operating activities:                                                              | 
|Depreciation and amortization                                                                                                                                  |  |                | 52,710   |               |  |   | 63,550     |  
|Legacy stock award expense                                                                                                                                     |  |                | 1,480    |               |  |   | 3,160      |  
|Debt fee amortization                                                                                                                                          |  |                | 1,100    |               |  |   | 3,410      |  
|Deferred income taxes                                                                                                                                          |  |                | (30,170  | )             |  |   | 3,040      |  
|Non-cash interest expense (interest
                   accretion)                                                                                              |  |                | 3,500    |               |  |   | 8,900      |  
|Loss on interest rate
                   arrangements                                                                                                          |  |                | —        |               |  |   | 7,550      |  
|Equity (earnings) losses, net of
                   dividends                                                                                                  |  |                | 2,710    |               |  |   | (2,330     | )
|Tax refund receivable                                                                                                                                          |  |                | —        |               |  |   | (20,000    | )
|Cumulative effect of change in
                   recognition and measurement of goodwill impairment                                                           |  |                | —        |               |  |   | 36,630     |  
|Loss on repurchase of debentures and
                   early retirement of term loans                                                                         |  |                | —        |               |  |   | 62,000     |  
|Other, net                                                                                                                                                     |  |                | (5,790   | )             |  |   | (1,430     | )
|Changes in assets and liabilities, net
                   of acquisition/disposition of business:                                                              | 
|Accounts receivable                                                                                                                                            |  |                | (4,270   | )             |  |   | (71,230    | )
|Net repayments of accounts receivable
                   sale                                                                                                  |  |                | —        |               |  |   | (167,360   | )
|Inventory                                                                                                                                                      |  |                | (3,570   | )             |  |   | (3,400     | )
|Refundable income taxes                                                                                                                                        |  |                | 16,300   |               |  |   | —          |  
|Prepaid expenses and other assets                                                                                                                              |  |                | (5,980   | )             |  |   | (3,090     | )
|Accounts payable and accrued
                   expenses                                                                                                       |  |                | 4,770    |               |  |   | 8,410      |  
|Total change in assets and
                   liabilities                                                                                                      |  |                | 7,250    |               |  |   | (236,670   | )
|Net cash provided by (used for)
                   operating activities                                                                                        |  |                | 23,900   |               |  |   | (117,750   | )
|Investing activities:                                                                                                                                          | 
|Capital expenditures                                                                                                                                           |  |                | (57,790  | )             |  |   | (57,210    | )
|Proceeds from sale/leaseback of fixed
                   assets                                                                                                |  |                | 8,460    |               |  |   | 33,370     |  
|Disposition of businesses to a related
                   party                                                                                                |  |                | 22,570   |               |  |   | 840,000    |  
|Proceeds from sale of TriMas
                   shares                                                                                                         |  |                | 20,000   |               |  |   | —          |  
|Acquisition of business, net                                                                                                                                   |  |                | (7,650   | )             |  |   | —          |  
|Investment in joint venture                                                                                                                                    |  |                | (20,000  | )             |  |   | —          |  
|Other, net                                                                                                                                                     |  |                | —        |               |  |   | (500       | )
|Net cash provided by (used for)
                   investing activities                                                                                        |  |                | (34,410  | )             |  |   | 815,660    |  
|Financing activities:                                                                                                                                          | 
|Proceeds of term loan facilities                                                                                                                               |  |                | —        |               |  |   | 400,000    |  
|Principal payments of term loan
                   facilities                                                                                                  |  |                | (500     | )             |  |   | (1,112,450 | )
|Proceeds of revolving credit
                   facility                                                                                                       |  |                | 180,000  |               |  |   | 275,400    |  
|Principal payments of revolving credit
                   facility                                                                                             |  |                | (180,000 | )             |  |   | (275,400   | )
|Proceeds of senior subordinated notes
                   due 2012                                                                                              |  |                | —        |               |  |   | 250,000    |  
|Principal payments of convertible
                   subordinated debentures, due 2003 (net of $1.2 million non-cash portion of
                   repurchase) |  |                | —        |               |  |   | (128,280   | )
|Proceeds of other debt                                                                                                                                         |  |                | 3,110    |               |  |   | —          |  
|Principal payments of other debt                                                                                                                               |  |                | (4,150   | )             |  |   | (3,820     | )
|Restricted cash related to the
                   convertible subordinated notes                                                                               |  |                | —        |               |  |   | (77,000    | )
|Capitalization of debt refinancing
                   fees                                                                                                     |  |                | —        |               |  |   | (11,590    | )
|Issuance of common stock                                                                                                                                       |  |                | —        |               |  |   | 1,270      |  
|Penalties on early extinguishment of
                   debt                                                                                                   |  |                | —        |               |  |   | (6,480     | )
|Other, net                                                                                                                                                     |  |                | —        |               |  |   | 1,200      |  
|Net cash used for financing
                   activities                                                                                                      |  |                | (1,540   | )             |  |   | (687,150   | )
|Net increase (decrease) in cash                                                                                                                                |  |                | (12,050  | )             |  |   | 10,760     |  
|Cash and cash equivalents, beginning
                   of period                                                                                              |  |                | 19,130   |               |  |   | —          |  
|Cash and cash equivalents, end of
                   period                                                                                                    |  | $              | 7,080    |               |  | $ | 10,760     |  
|Supplementary cash flow
                   information:                                                                                                        | 
|Cash paid (refunded) for income taxes,
                   net                                                                                                  |  | $              | (12,440  | )             |  | $ | 9,200      |  
|Cash paid for interest                                                                                                                                         |  | $              | 31,570   |               |  | $ | 56,520     |  
|                                                                                                                                                              

The accompanying notes are an integral part of the consolidated financial
            statements.

4

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|   |                                                  
|-- | -------------------------------------------------
|1. | Business
                   and Other Information

We ("Metaldyne" or the "Company") are a leading global manufacturer of
            highly engineered metal components for the global light vehicle market. Our
            products include metal-formed and precision-engineered components and modular
            systems used in vehicle transmission, engine and chassis applications.

In the opinion of Company management, the unaudited financial statements
            contain all adjustments, including adjustments of a normal recurring nature,
            necessary to present fairly the financial position, results of operations and
            cash flows for the periods presented. These statements should be read in
            conjunction with the Company's financial statements included in the Annual
            Report on Form 10-K for the fiscal year ended December 29, 2002 (the "2002 Form
            10-K"). The results of operations for the period ended June 29, 2003 are not
            necessarily indicative of the results for the full year.

The Company's fiscal year ends on the Sunday nearest December 31. The
            Company's fiscal quarters end on the Sundays nearest March 31, June 30, and
            September 30. All year and quarter references relate to the Company's fiscal
            year and fiscal quarters unless otherwise stated.

|   |                                            
|-- | -------------------------------------------
|2. | Stock
                   Options and Awards

The Company adopted Statement of Financial Accounting Standards ("SFAS")
            No. 148, "Accounting for Stock-Based Compensation—Transition and
            Disclosure—an amendment of FASB Statement No. 123" effective for the
            fiscal year ended December 29, 2002. The following disclosure for the financial
            statements for the period ended June 29, 2003 assumes that the Company
            continues to account for stock-based employee compensation using the intrinsic
            value method under Accounting Principles Board ("APB") No. 25 and related
            interpretations.

The Company has one stock-based employee compensation plan. No
            stock-based employee compensation cost is reflected in net income, as all
            options granted under this plan had an exercise price equal to the market value
            of the underlying common stock on the date of grant. The following table
            illustrates the effect on net income and earnings per share if the Company had
            applied the fair value recognition provisions of SFAS No. 123, "Accounting for
            Stock-Based Compensation," to stock-based employee compensation.

(In thousands, except per share
                        amounts)Three Months Ended
                   
                   Six Months EndedJune 29, 2003
                   
                   June 30, 2002
                   
                   June 29, 2003
                   
                   June 30, 2002Net loss attributable to common stock,
                        as reported
                   
                   $
                   (1,800
                   )
                   
                   $
                   (16,490
                   )
                   
                   $
                   (13,390
                   )
                   
                   $
                   (48,970
                   )Deduct: Total stock-based employee
                        compensation expense determined under fair value based method for all awards,
                        net of related tax effects
                   
                   
                   (470
                   )
                   
                   
                   (400
                   )
                   
                   
                   (940
                   )
                   
                   
                   (940
                   )Pro forma net loss attributable to
                        common stock
                   
                   $
                   (2,270
                   )
                   
                   $
                   (16,890
                   )
                   
                   $
                   (14,330
                   )
                   
                   $
                   (49,910
                   )Loss per share:Basic — as reported
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (1.15
                   )Basic — pro forma for
                        stock-based compensation
                   
                   $
                   (0.05
                   )
                   
                   $
                   (0.40
                   )
                   
                   $
                   (0.33
                   )
                   
                   $
                   (1.17
                   )Diluted — as reported
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (1.15
                   )Diluted — pro forma for
                        stock-based compensation
                   
                   $
                   (0.05
                   )
                   
                   $
                   (0.40
                   )
                   
                   $
                   (0.33
                   )
                   
                   $
                   (1.17
                   )


5

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

|   |                                      
|-- | -------------------------------------
|3. | Earnings
                   Per Share

The following reconciles the numerators and denominators used in the
            computations of basic and diluted earnings per common share:

(In thousands except per share
                        amounts)Three Months Ended
                   
                   Six Months EndedJune 29, 2003
                   
                   June 30, 2002
                   
                   June 29, 2003
                   
                   June 30, 2002Weighted average number of shares
                        outstanding
                   
                   
                   42,730
                   
                   
                   
                   42,650
                   
                   
                   
                   42,730
                   
                   
                   
                   42,650Income (loss) before cumulative effect
                        of change in accounting principle
                   
                   $
                   480
                   
                   
                   $
                   (14,790
                   )
                   
                   $
                   (8,890
                   )
                   
                   $
                   (8,930
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (36,630
                   )Net income (loss)
                   
                   
                   480
                   
                   
                   
                   (14,790
                   )
                   
                   
                   (8,890
                   )
                   
                   
                   (45,560
                   )Less: Preferred stock dividends
                   
                   
                   2,280
                   
                   
                   
                   1,700
                   
                   
                   
                   4,500
                   
                   
                   
                   3,410Loss used for basic and diluted
                        earnings per share computation
                   
                   $
                   (1,800
                   )
                   
                   $
                   (16,490
                   )
                   
                   $
                   (13,390
                   )
                   
                   $
                   (48,970
                   )Basic earnings (loss) per share:Before cumulative effect of change in
                        accounting principle less preferred stock
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (0.29
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (0.86
                   )Net loss attributable to common stock
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (1.15
                   )Total shares used for basic earnings
                        per share computation
                   
                   
                   42,730
                   
                   
                   
                   42,650
                   
                   
                   
                   42,730
                   
                   
                   
                   42,650Contingently issuable shares
                   
                   
                   920
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Total shares used for diluted earnings
                        per share computation
                   
                   
                   43,650
                   
                   
                   
                   42,650
                   
                   
                   
                   42,730
                   
                   
                   
                   42,650Diluted earnings (loss) per
                        share:Before cumulative effect of change in
                        accounting principle less preferred stock
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (0.29
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (0.86
                   )Net loss attributable to common stock
                   
                   $
                   (0.04
                   )
                   
                   $
                   (0.39
                   )
                   
                   $
                   (0.31
                   )
                   
                   $
                   (1.15
                   )


Diluted earnings per share reflect the potential dilution that would
            occur if securities or other contracts to issue common stock were exercised or
            converted into common stock. Excluded from the calculation of diluted earnings
            per share are stock options representing 2,570,000 and 2,490,000 of common
            shares as they are anti-dilutive at June 29, 2003 and June 30, 2002,
            respectively.

Contingently issuable shares, representing approximately 920,000
            restricted common shares, have an anti-dilutive effect on earnings per share
            for the six months ended June 29, 2003. Contingently issuable shares,
            representing approximately 1,760,000 restricted common shares, have an
            anti-dilutive effect on earnings per share for the three and six months ended
            June 30, 2002.

6

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

|   |                                 
|-- | --------------------------------
|4. | Joint
                   Venture

On December 8, 2002, the Company announced a Joint Venture Formation
            Agreement ("Agreement") with DaimlerChrysler Corporation ("DaimlerChrysler") to
            operate DaimlerChrysler's New Castle (Indiana) machining and forge facility. On
            January 2, 2003, the Company closed on this joint venture, known as NC-M
            Chassis Systems, LLC. In connection with the closing, DaimlerChrysler
            contributed substantially all of the assets of the business conducted at this
            facility in exchange for 100% of the common and preferred interests in the
            joint venture. In addition, the joint venture assumed certain liabilities of
            the business from DaimlerChrysler. Immediately following the contribution, the
            Company purchased 40% of the common interests in the joint venture from
            DaimlerChrysler for $20 million in cash. This investment is accounted for under
            the equity method of accounting, due to the Company's investment representing
            greater than 20% but less than 50% of the interest in the joint venture.
            However, the Company does not recognize losses in the joint venture to the
            extent that DaimlerChrysler provides funding for the joint venture's operations
            and capital expenditures.

Under the terms of the Agreement, the Company will have an option to
            purchase DaimlerChrysler's common and preferred interests in the joint venture
            for $118.8 million in cash, approximately $31.7 million in principal amount of
            a new issue of 10-year 10% senior subordinated notes of Metaldyne and
            approximately $64.5 million of a new series of preferred stock of Metaldyne
            with liquidation preferences. The Company's call option is available to be
            exercised assuming a satisfactory collective bargaining agreement is ratified.
            If Metaldyne does not exercise its call option within 20 business days of
            DaimlerChrysler's ratification of a satisfactory collective bargaining
            agreement or the Company fails to close within 120 days of the exercise because
            it cannot finance the acquisition, DaimlerChrysler has a call option to
            purchase the Company's initial investment for $1.00. If a new collective
            bargaining agreement is not ratified by January 31, 2004, the Company has a put
            option on its equity in the joint venture at $20 million and DaimlerChrysler
            has a call option on the Company's equity in the joint venture at $20 million.

|   |            
|-- | -----------
|5. | Acquisition

On May 30, 2003, the Company acquired a facility in Greensboro, North
            Carolina, from Dana Corporation ("Dana") for approximately $7.7 million. The
            Greensboro facility became part of the Driveline Group's Transmission and
            Program Management division. The Greensboro operation, which employs
            approximately 150 people, machines cast iron and aluminum castings, including
            various steering knuckles and aluminum carriers for light truck applications.

As part of the agreement with Dana, the Company agreed to obtain a third
            party buyer of the Greensboro facility, and agreed to sign a lease agreement
            with this party. If the Company failed to obtain a third party buyer for this
            property within 60 days of the acquisition, it agreed to pay Dana $10 million
            to purchase the facility. To secure this arrangement, the Company gave Dana a
            letter of credit for $10 million. On July 14, 2003, the Company subsequently
            entered into a long-term lease agreement with a third party, thereby releasing
            the Company from the $10 million letter of credit.

|   |                                                        
|-- | -------------------------------------------------------
|6. | Goodwill
                   and Other Intangible Assets

Effective January 1, 2002, the Company adopted Statement of Financial
            Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets" and
            ceased amortizing goodwill. At June 29, 2003, the goodwill balance was
            approximately $552 million. For purposes of testing this goodwill for potential
            impairment, fair values were determined based upon the discounted cash flows of
            the reporting units using a 9.5% discount rate. The initial assessment for the
            Automotive Group indicated that the fair value of the reporting units within
            the Automotive Group exceeded their corresponding carrying value. This analysis
            was completed again for the year ended December 29, 2002, which indicated that
            the fair value of these units continued to exceed their carrying values.

The initial assessment for the Company's former TriMas Group indicated
            the carrying value of these units exceeded their fair value. A non-cash, after
            tax charge of $36.6 million was taken as of January 1,

7

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

2002, related to the industrial fasteners business of TriMas. Sales,
            operating profits and cash flows for this TriMas owned business were lower than
            expected beginning in the first quarter of 2001, due to the overall economic
            downturn and cyclical declines in certain markets for industrial fastener
            products. Based on that trend, the earnings and cash flow forecasts for the
            next five years indicated the goodwill impairment loss. Consistent with the
            requirements of SFAS No. 142, the Company recognized this impairment charge as
            the cumulative effect of change in accounting principle as of January 1, 2002.

Acquired Intangible Assets

The change in the gross carrying amount of acquired intangible assets is
            primarily attributable to the exchange impact from foreign currency.

(In thousands, except weighted
                        average life)As of June 29, 2003
                   
                   As of December 29, 2002Gross CarryingAmount
                   
                   AccumulatedAmortization
                   
                   WeightedAverageLife
                   
                   Gross CarryingAmount
                   
                   Accumulated Amortization
                   
                   WeightedAverageLifeAmortized Intangible Assets:Customer Contracts
                   
                   $
                   93,470
                   
                   
                   $
                   (25,500
                   )
                   
                   8.2 years
                   
                   $
                   91,000
                   
                   
                   $
                   (20,920
                   )
                   
                   8.2 yearsTechnology and Other
                   
                   
                   163,620
                   
                   
                   
                   (29,010
                   )
                   
                   14.9 years
                   
                   
                   160,820
                   
                   
                   
                   (23,790
                   )
                   
                   14.9 yearsTotal
                   
                   $
                   257,090
                   
                   
                   $
                   (54,510
                   )
                   
                   13.6 years
                   
                   $
                   251,820
                   
                   
                   $
                   (44,710
                   )
                   
                   13.6 yearsAggregate Amortization Expense
                        (Included in Cost of Sales):For the six months ended June 29, 2003
                   
                   
                   
                   
                   
                   $
                   10,800Estimated Amortization Expense:For the year ending December 28, 2003
                   
                   
                   
                   
                   
                   
                   21,460For the year ending December 31, 2004
                   
                   
                   
                   
                   
                   
                   21,460For the year ending December 31, 2005
                   
                   
                   
                   
                   
                   
                   21,060For the year ending December 31, 2006
                   
                   
                   
                   
                   
                   
                   21,060


Goodwill

The changes in the carrying amount of goodwill for the six months ended
            June 29, 2003 are as follows:

Chassis
                   
                   Driveline
                   
                   Engine
                   
                   TotalBalance as of December 29, 2002
                   
                   $
                   66,590
                   
                   
                   $
                   361,470
                   
                   
                   $
                   124,040
                   
                   
                   $
                   552,100Disposition of Fittings
                   
                   
                   (5,210
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (5,210
                   )Impact from foreign currency
                   
                   
                   —
                   
                   
                   
                   3,390
                   
                   
                   
                   1,950
                   
                   
                   
                   5,340Balance as of June 29, 2003
                   
                   $
                   61,380
                   
                   
                   $
                   364,860
                   
                   
                   $
                   125,990
                   
                   
                   $
                   552,230


8

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

|   |                                             
|-- | --------------------------------------------
|7. | Disposition
                   of Businesses

On June 6, 2002, the Company sold TriMas Corporation ("TriMas") common
            stock to Heartland Industrial Partners, L.P. ("Heartland") and other investors
            amounting to approximately 66% of the fully diluted common equity of TriMas.
            The Company retained approximately 34% of the fully diluted common equity of
            TriMas in the form of common stock and a presently exercisable warrant to
            purchase shares of TriMas common stock at a nominal exercise price. Pursuant to
            the terms of a stock purchase agreement, Heartland and the other investors
            invested approximately $265 million in cash in TriMas to acquire the 66%
            interest. In connection with the investment, TriMas entered into a senior
            credit facility and a receivables facility and issued senior subordinated notes
            due 2012. TriMas used borrowings under the senior credit facility and proceeds
            from the issuance of the notes to repay borrowings made by its subsidiaries
            under the Company's credit agreement, to repay certain debt that was owed to
            the Company and to repurchase TriMas originated receivables balances under the
            Company's receivables facility. In addition, prior to the closing, TriMas
            declared and paid a cash dividend to the Company equal to the difference
            between $840 million and the aggregate amount of such debt repayment and
            receivables repurchase. Consequently, as a result of the investment and the
            other transactions, the Company (1) received $840 million in the form of cash,
            debt reduction and reduced receivables facility balances and (2) received or
            retained common stock and a warrant in TriMas representing the Company's 34%
            retained interest.

As Heartland is the Company's controlling shareholder, this transaction
            was accounted for as a reorganization of entities under common control and
            accordingly no gain or loss has been recognized. Since the date of disposition,
            the Company has accounted for its retained interest in TriMas under the equity
            method of accounting.

On April 2, 2003, TriMas exercised its right to repurchase 1 million
            shares of its common stock from the Company at $20 per share, the same price as
            it was valued on June 6, 2002. As a result of this sale, and as a result of
            acquisitions performed by TriMas in 2003, Metaldyne's ownership percentage in
            TriMas decreased from approximately 31% to approximately 28% as of June 29,
            2003.

On May 9, 2003, the Company sold its Chassis Group's Fittings division to
            TriMas for $22.6 million. This transaction was accounted for as a sale of
            entities under common control. Therefore, the proceeds in excess of the book
            value of $6.3 million were recorded as additional paid-in capital in the
            Company's consolidated balance sheet. The Fittings division, which is a leading
            manufacturer of specialized fittings and cold-headed parts used in automotive
            and industrial applications, became part of the TriMas Fastening Systems Group.

|   |                                         
|-- | ----------------------------------------
|8. | Restructuring
                   Actions

In 2001, the Company began to implement plans to integrate the three
            legacy companies into the Company's new vision and align the business units
            under the Company's new operating structure and leadership team in an effort to
            reformulate a cost structure more competitive in the marketplace. To facilitate
            these initiatives, the Company terminated 292 employees and closed unprofitable
            businesses and plants. The majority of these actions were completed in 2001 and
            2002, but some are ongoing as of June 29, 2003. All employees have been
            terminated under this integration action. The amounts reflected below represent
            total estimated cash payments, of which $2.5 million and $1.9 million are
            recorded in "other long-term liabilities" in the Company's consolidated balance
            sheet at June 29, 2003 and December 29, 2002, respectively. The remaining $5.6
            million and $10.9 million are recorded in "accrued liabilities" in the
            Company's consolidated balance sheet at June 29, 2003 and December 29, 2002,
            respectively.

9

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

The following table provides a rollforward of the restructuring accrual
            related to the above restructuring actions as of June 29, 2003.

(In thousands)Acquisition Related
                   
                   2002AdditionalSeveranceand OtherExit Costs
                   
                   2003AdditionalSeveranceand OtherExit Costs
                   
                   TotalSeveranceCosts
                   
                   Exit
                        andIntegrationCostsBalance at December 29, 2002
                   
                   $
                   9,880
                   
                   
                   $
                   540
                   
                   
                   $
                   2,380
                   
                   
                   $
                   —
                   
                   
                   $
                   12,800Cash payments
                   
                   
                   (5,320
                   )
                   
                   
                   (270
                   )
                   
                   
                   (1,750
                   )
                   
                   
                   (1,180
                   )
                   
                   
                   (8,520
                   )Charges to expense
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   3,860
                   
                   
                   
                   3,860Balance at June 29, 2003
                   
                   $
                   4,560
                   
                   
                   $
                   270
                   
                   
                   $
                   630
                   
                   
                   $
                   2,680
                   
                   
                   $
                   8,140


In June 2002, the Company announced the reorganization of its Engine
            Group's European operations, to streamline the engineering, manufacturing and
            reporting structure of its European operations. This restructuring included the
            closure of a manufacturing facility in Halifax, England and termination of
            approximately 25 employees. In addition, the Company closed a small
            manufacturing location in Memphis, Tennessee and restructured management within
            its North American engine operations, resulting in the termination of 12
            employees. In the first six months of 2003, the Company recorded additional
            restructuring charges relating to the termination of an additional 20 employees
            and the completion of the European operations' reorganization.

|   |                                                      
|-- | -----------------------------------------------------
|9. | Accounts
                   Receivable Securitization

The Company has entered into an arrangement to sell, on an ongoing basis,
            the trade accounts receivable of substantially all domestic business operations
            to MTSPC, Inc. ("MTSPC"), a wholly owned subsidiary of the Company. MTSPC from
            time to time may sell an undivided fractional ownership interest in the pool of
            receivables up to approximately $225 million to a third party multi-seller
            receivables funding company. The net proceeds of sale are less than the face
            amount of accounts receivable sold by an amount that approximates the
            purchaser's financing costs, which amounted to a total of $2.0 million and $3.3
            million for the six months ended June 29, 2003 and June 30, 2002, respectively,
            and is included in "other expense, net" in the Company's consolidated statement
            of operations. At June 29, 2003, the Company's funding under the facility was
            zero with an additional $89 million available but not utilized. The discount
            rate at June 29, 2003 was 2.19% compared to 2.48% at December 29, 2002. The
            usage fee under the facility is 1.5%. In addition, the Company is required to
            pay a fee of 0.5% on the unused portion of the facility. This facility expires
            in November 2005.

|    |            
|--- | -----------
|10. | Inventories

Inventories by component are as follows:

(In thousands)June 29, 2003
                   
                   December 29, 2002Finished goods
                   
                   $
                   22,170
                   
                   
                   $
                   25,720Work in process
                   
                   
                   31,330
                   
                   
                   
                   26,230Raw materials
                   
                   
                   27,350
                   
                   
                   
                   24,870$
                   80,850
                   
                   
                   $
                   76,820


10

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

|    |                                                    
|--- | ---------------------------------------------------
|11. | Derivative
                   Financial Instruments

The Company manages its exposure to changes in interest rates through the
            use of interest rate protection agreements. These interest rate derivatives are
            designated as cash flow hedges. The effective portion of each derivative's gain
            or loss is initially reported as a component of other comprehensive income
            (loss) and subsequently reclassified into earnings when the forecasted
            transaction affects earnings. The Company does not use derivatives for
            speculative purposes.

In February 2001, the Company entered into interest rate protection
            agreements with various financial institutions to hedge a portion of its
            interest rate risk related to the term loan borrowings under its credit
            facility. These agreements include two interest rate collars with a term of
            three years, a total notional amount of $200 million, and a three-month LIBOR
            interest rate cap and floor of 7% and approximately 4.5%, respectively. The
            agreements also include four interest rate caps at a three-month LIBOR interest
            rate of 7% with a total notional amount of $314 million. The two interest rate
            collars and two of the interest rate caps totaling $200 million were
            redesignated to the Company's new term note in June 2002. The remaining two
            interest rate caps totaling $114 million no longer qualify for hedge
            accounting. Therefore, any unrealized gain or loss is recorded as other income
            or expense in the consolidated statement of operations beginning June 20, 2002.

Under these agreements, the Company recognized additional interest
            expense of $3.2 million during the six months ended June 29, 2003. The Company
            expects to recognize a portion of the $0.4 million currently included in other
            comprehensive income into earnings as quarterly interest payments are made.

|    |                                               
|--- | ----------------------------------------------
|12. | Comprehensive
                   Income (Loss)

The Company's total comprehensive income (loss) for the period was as
            follows:

(In thousands)Three Months Ended
                   
                   Six Months EndedJune 29, 2003
                   
                   June 30, 2002
                   
                   June 29, 2003
                   
                   June 30, 2002Income (loss) before cumulative effect
                        of change in accounting principle
                   
                   $
                   480
                   
                   
                   $
                   (14,790
                   )
                   
                   $
                   (8,890
                   )
                   
                   $
                   (8,930
                   )Cumulative effect of change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (36,630
                   )Net income (loss)
                   
                   
                   480
                   
                   
                   
                   (14,790
                   )
                   
                   
                   (8,890
                   )
                   
                   
                   (45,560
                   )Other comprehensive income
                        (loss):Impact of TriMas disposition on
                        foreign currency translation
                   
                   
                   —
                   
                   
                   
                   (1,910
                   )
                   
                   
                   —
                   
                   
                   
                   (1,910
                   )Foreign currency translation
                        adjustment
                   
                   
                   20,160
                   
                   
                   
                   47,630
                   
                   
                   
                   23,850
                   
                   
                   
                   39,660Interest rate agreements
                   
                   
                   90
                   
                   
                   
                   5,200
                   
                   
                   
                   390
                   
                   
                   
                   6,850Total other comprehensive income
                   
                   
                   20,250
                   
                   
                   
                   50,920
                   
                   
                   
                   24,240
                   
                   
                   
                   44,600Total comprehensive income (loss)
                   
                   $
                   20,730
                   
                   
                   $
                   36,130
                   
                   
                   $
                   15,350
                   
                   
                   $
                   (960
                   )


11

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

|    |                                                 
|--- | ------------------------------------------------
|13. | Commitments
                   and Contingencies

The Company is subject to claims and litigation in the ordinary course of
            our business, but does not believe that any such claim or litigation will have
            a material adverse effect on its financial position or results of operation.

|    |                                       
|--- | --------------------------------------
|14. | Segment
                   Information

The Company has defined a segment as a component with business activity
            resulting in revenue and expense that has separate financial information
            evaluated regularly by the Company's chief operating decision maker and its
            board of directors in determining resource allocation and assessing
            performance.

The Company has established Adjusted Earnings Before Interest, Taxes,
            Depreciation and Amortization ("Adjusted EBITDA") as an indicator of our
            operating performance and as a measure of our cash generating capabilities. The
            Company defines Adjusted EBITDA as operating profit plus depreciation and
            amortization plus legacy stock award expense (contractual obligation from
            November 2000 acquisition, which will runoff completely by 2003).

In the second quarter of 2002, the Company modified its organizational
            structure. As a result, the Company is now comprised of three reportable
            segments: Chassis, Driveline and Engine. Accordingly, the Company has restated
            sales for all prior periods to reflect this change. Adjusted EBITDA is
            presented using the Company's modified segment structure beginning in 2002. In
            addition, in 2003 the Company moved one of its European operations that had
            historically been part of the Chassis segment to the Engine segment. Both
            periods have been adjusted to reflect this change.

CHASSIS — Manufactures components, modules and systems used in a
            variety of engineered chassis applications, including wheel-ends, axle shaft,
            knuckles and mini-corner assemblies. This segment utilizes a variety of
            processes including hot, warm and cold forging, powder metal forging and
            machinery and assembly.

DRIVELINE — Manufactures components, modules and systems, including
            precision shafts, hydraulic controls, hot and cold forgings and integrated
            program management used in a broad range of transmission applications. These
            applications include transmission and transfer case shafts, transmission valve
            bodies, cold extrusion and Hatebur hot forgings.

ENGINE — Manufactures a broad range of engine components, modules
            and systems, including sintered metal, powder metal, forged and tubular
            fabricated products used for a variety of applications. These applications
            include balance shaft modules and front cover assemblies.

As discussed in Note 7, the Company completed a divestiture of a portion
            of its TriMas Group on June 6, 2002. The TriMas Group is presented at the group
            level, rather than by segment, for all periods presented.

12

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Segment activity for the three and six months ended June 29, 2003 and
            June 30, 2002 is as follows:

(In thousands)Three Months Ended
                   
                   Six Months EndedJune 29, 2003
                   
                   June 29, 2002
                   
                   June 29, 2003
                   
                   June 30, 2002SalesAutomotive GroupChassis
                   
                   $
                   30,550
                   
                   
                   $
                   42,010
                   
                   
                   $
                   63,050
                   
                   
                   $
                   78,890Driveline
                   
                   
                   203,110
                   
                   
                   
                   217,940
                   
                   
                   
                   403,760
                   
                   
                   
                   421,270Engine
                   
                   
                   156,630
                   
                   
                   
                   132,870
                   
                   
                   
                   304,800
                   
                   
                   
                   261,590Automotive Group
                   
                   
                   390,290
                   
                   
                   
                   392,820
                   
                   
                   
                   771,610
                   
                   
                   
                   761,750TriMas Group
                   
                   
                   —
                   
                   
                   
                   137,640
                   
                   
                   
                   —
                   
                   
                   
                   328,580Total sales
                   
                   $
                   390,290
                   
                   
                   $
                   530,460
                   
                   
                   $
                   771,610
                   
                   
                   $
                   1,090,330Adjusted EBITDAAutomotive GroupChassis
                   
                   $
                   2,360
                   
                   
                   $
                   4,600
                   
                   
                   $
                   4,120
                   
                   
                   $
                   7,880Driveline
                   
                   
                   22,950
                   
                   
                   
                   28,450
                   
                   
                   
                   41,850
                   
                   
                   
                   51,660Engine
                   
                   
                   27,200
                   
                   
                   
                   19,760
                   
                   
                   
                   48,040
                   
                   
                   
                   38,090Automotive Operating
                   
                   
                   52,510
                   
                   
                   
                   52,810
                   
                   
                   
                   94,010
                   
                   
                   
                   97,630Automotive/centralized resources
                        ("Corporate")
                   
                   
                   (3,760
                   )
                   
                   
                   (4,100
                   )
                   
                   
                   (8,920
                   )
                   
                   
                   (8,980
                   )Automotive Group
                   
                   
                   48,750
                   
                   
                   
                   48,710
                   
                   
                   
                   85,090
                   
                   
                   
                   88,650TriMas Group
                   
                   
                   —
                   
                   
                   
                   26,230
                   
                   
                   
                   —
                   
                   
                   
                   62,410Total Adjusted EBITDA
                   
                   
                   48,750
                   
                   
                   
                   74,940
                   
                   
                   
                   85,090
                   
                   
                   
                   151,060Depreciation & amortization
                   
                   
                   (27,620
                   )
                   
                   
                   (30,170
                   )
                   
                   
                   (52,710
                   )
                   
                   
                   (63,550
                   )Legacy stock award expense
                   
                   
                   (580
                   )
                   
                   
                   (1,080
                   )
                   
                   
                   (1,480
                   )
                   
                   
                   (3,160
                   )Operating profit
                   
                   $
                   20,550
                   
                   
                   $
                   43,690
                   
                   
                   $
                   30,900
                   
                   
                   $
                   84,350


|    |                                                 
|--- | ------------------------------------------------
|15. | New
                   Accounting Pronouncements

On December 30, 2002, the Company adopted SFAS No. 145, "Rescission of
            FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
            Technical Corrections." With the rescission of SFAS No. 4 and 64, only gains
            and losses from extinguishments of debt that meet the criteria of APB Opinion
            No. 30 are classified as extraordinary items. This statement also rescinds SFAS
            No. 44, "Accounting for Intangible Assets of Motor Carriers." This statement
            amends SFAS No. 13, "Accounting for Leases," to eliminate the inconsistency
            between the required accounting for sale-leaseback transactions and the
            required accounting for certain lease modifications that have economic effects
            that are similar to sale-leaseback transactions. SFAS No. 145 also amends other
            existing authoritative pronouncements to make various technical corrections,
            clarify meanings or describe their applicability under changed conditions. As a
            result of the Company's adoption of SFAS No. 145, $62 million ($38 million, net
            of taxes of $24 million) extraordinary loss on early extinguishment of debt
            recorded for the six months ended June 30, 2002 has been reclassified as "loss
            on repurchase of debentures and early retirement of term loans" in other
            expense, net.

On December 30, 2002, the Company adopted SFAS No. 146, "Accounting for
            Costs Associated with Exit or Disposal Activities." SFAS No. 146 requires
            companies to recognize costs associated with exit or disposal activities when
            they are incurred rather than at the date of the commitment to an exit or
            disposal plan. Accordingly, all costs associated with exit or disposal
            activities will be recognized when they are incurred effective with the
            Company's 2003 fiscal year. This Statement did not have a material effect on
            the Company's financial condition or results of operations.

13

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

On December 30, 2002, the Company also adopted Financial Accounting
            Standards Board ("FASB") Interpretation ("FIN") No. 45, "Guarantors Accounting
            and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
            Indebtedness of Others." FIN No. 45 clarifies disclosures that are required to
            be made for certain guarantees and establishes a requirement to record a
            liability at fair value for certain guarantees at the time of the guarantee's
            issuance. FIN No. 45 did not have any impact on the Company's financial
            condition, results of operations or required disclosures.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
            Interest Entities, an Interpretation of ARB 51." FIN No. 46 requires that the
            primary beneficiary in a variable interest entity consolidate the entity even
            if the primary beneficiary does not have a majority voting interest. The
            consolidation requirements of this Interpretation are required to be
            implemented for any variable interest entity created on or after January 31,
            2003. In addition, FIN No. 46 requires disclosure of information regarding
            guarantees or exposures to loss relating to any variable interest entity
            existing prior to January 31, 2003 in financial statements issued after January
            31, 2003. The Company completed its review of certain potential variable
            interest entities, which are lessors under some of its operating lease
            agreements, as well as the accounts receivable securitization facility, to
            determine the impact of FIN No. 46. The Company has determined that there will
            be no impact on the financial position or results of operations due to the
            adoption of this Interpretation.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
            on Derivative Instruments and Hedging Activities." This Statement amends
            Statement 133 for certain decisions made as part of the Derivatives
            Implementation Group process that effectively required amendments to Statement
            133, in connection with other FASB projects dealing with financial instruments
            and in connection with implementation issues raised in relation to the
            application of the definition of a derivative. This Statement is effective for
            contracts entered into or modified after June 30, 2003 (with exceptions) and
            for hedging relationships designated after June 30, 2003. The Company is
            currently reviewing the provisions of this Statement and will adopt it
            effective with the quarter ending September 28, 2003.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
            Financial Instruments with Characteristics of both Liabilities and Equity."
            This Statement establishes standards for how an issuer classifies and measures
            certain financial instruments with characteristics of both liabilities and
            equity. This Statement is effective for financial instruments entered into or
            modified after May 31, 2003, and otherwise is effective at the beginning of the
            first interim period beginning after June 15, 2003. The Company is currently
            reviewing the provisions of this Statement and will adopt it effective with the
            quarter ending September 28, 2003.

|    |                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------
|16. | Condensed
                   Consolidating Financial Statements of Guarantors of Senior Subordinated
                   Notes

The following condensed consolidating financial information presents:

| | (1) | Condensed
                   consolidating financial statements as of June 29, 2003 and December 29, 2002,
                   and for the three and six months ended June 29, 2003 and June 30, 2002 of (a)
                   Metaldyne Corporation, the parent and issuer, (b) the guarantor subsidiaries,
                   (c) the non-guarantor subsidiaries and (d) the Company on a consolidated basis,
                   and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Elimination
                   entries necessary to consolidate Metaldyne Corporation, the parent, with
                   guarantor and non-guarantor subsidiaries.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

14

METALDYNE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Balance Sheets June
            29, 2003

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   Consolidated(In thousands)AssetsCurrent assets:Cash and cash equivalents
                   
                   $
                   —
                   
                   
                   $
                   3,460
                   
                   
                   $
                   3,620
                   
                   
                   $
                   —
                   
                   
                   $
                   7,080Total receivables, net
                   
                   
                   —
                   
                   
                   
                   26,270
                   
                   
                   
                   171,190
                   
                   
                   
                   —
                   
                   
                   
                   197,460Inventories
                   
                   
                   —
                   
                   
                   
                   55,710
                   
                   
                   
                   25,140
                   
                   
                   
                   —
                   
                   
                   
                   80,850Deferred and refundable income
                        taxes
                   
                   
                   —
                   
                   
                   
                   3,550
                   
                   
                   
                   960
                   
                   
                   
                   —
                   
                   
                   
                   4,510Prepaid expenses and other assets
                   
                   
                   —
                   
                   
                   
                   27,880
                   
                   
                   
                   6,290
                   
                   
                   
                   —
                   
                   
                   
                   34,170Total current assets
                   
                   
                   —
                   
                   
                   
                   116,870
                   
                   
                   
                   207,200
                   
                   
                   
                   —
                   
                   
                   
                   324,070Equity investments in affiliates
                   
                   
                   149,510
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   149,510Property and equipment, net
                   
                   
                   —
                   
                   
                   
                   491,640
                   
                   
                   
                   218,730
                   
                   
                   
                   —
                   
                   
                   
                   710,370Excess of cost over net assets of
                        acquired companies
                   
                   
                   —
                   
                   
                   
                   423,600
                   
                   
                   
                   128,630
                   
                   
                   
                   —
                   
                   
                   
                   552,230Investment in subsidiaries
                   
                   
                   534,390
                   
                   
                   
                   233,270
                   
                   
                   
                   —
                   
                   
                   
                   (767,660
                   )
                   
                   
                   —Intangible and other assets
                   
                   
                   —
                   
                   
                   
                   253,460
                   
                   
                   
                   20,770
                   
                   
                   
                   —
                   
                   
                   
                   274,230Total assets
                   
                   $
                   683,900
                   
                   
                   $
                   1,518,840
                   
                   
                   $
                   575,330
                   
                   
                   $
                   (767,660
                   )
                   
                   $
                   2,010,410Liabilities And Shareholders'
                        EquityCurrent liabilities:Accounts payable
                   
                   $
                   —
                   
                   
                   $
                   140,170
                   
                   
                   $
                   45,100
                   
                   
                   $
                   —
                   
                   
                   $
                   185,270Accrued liabilities
                   
                   
                   —
                   
                   
                   
                   93,980
                   
                   
                   
                   19,690
                   
                   
                   
                   —
                   
                   
                   
                   113,670Current maturities, long-term
                        debt
                   
                   
                   —
                   
                   
                   
                   99,050
                   
                   
                   
                   2,790
                   
                   
                   
                   —
                   
                   
                   
                   101,840Total current liabilities
                   
                   
                   —
                   
                   
                   
                   333,200
                   
                   
                   
                   67,580
                   
                   
                   
                   —
                   
                   
                   
                   400,780Long-term debt
                   
                   
                   250,000
                   
                   
                   
                   407,960
                   
                   
                   
                   11,040
                   
                   
                   
                   —
                   
                   
                   
                   669,000Deferred income taxes
                   
                   
                   —
                   
                   
                   
                   94,580
                   
                   
                   
                   22,620
                   
                   
                   
                   —
                   
                   
                   
                   117,200Long-term liabilities
                   
                   
                   —
                   
                   
                   
                   133,290
                   
                   
                   
                   6,240
                   
                   
                   
                   —
                   
                   
                   
                   139,530Intercompany accounts, net
                   
                   
                   (250,000
                   )
                   
                   
                   15,420
                   
                   
                   
                   234,580
                   
                   
                   
                   —
                   
                   
                   
                   —Total liabilities
                   
                   
                   —
                   
                   
                   
                   984,450
                   
                   
                   
                   342,060
                   
                   
                   
                   —
                   
                   
                   
                   1,326,510Total redeemable stock
                   
                   
                   84,980
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   84,980Shareholders' equity:Preferred stock
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Common stock
                   
                   
                   42,730
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   42,730Paid-in capital
                   
                   
                   692,430
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   692,430Accumulated deficit
                   
                   
                   (160,490
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (160,490
                   )Accumulated other comprehensive
                        income
                   
                   
                   24,250
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   24,250Investment by Parent/Guarantor
                   
                   
                   —
                   
                   
                   
                   534,390
                   
                   
                   
                   233,270
                   
                   
                   
                   (767,660
                   )
                   
                   
                   —Total shareholders' equity
                   
                   
                   598,920
                   
                   
                   
                   534,390
                   
                   
                   
                   233,270
                   
                   
                   
                   (767,660
                   )
                   
                   
                   598,920Total liabilities, redeemable stock
                        and shareholders' equity
                   
                   $
                   683,900
                   
                   
                   $
                   1,518,840
                   
                   
                   $
                   575,330
                   
                   
                   $
                   (767,660
                   )
                   
                   $
                   2,010,410


15

METALDYNE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Balance Sheets
            December 29, 2002

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedAssetsCurrent assets:Cash and cash equivalents
                   
                   $
                   —
                   
                   
                   $
                   14,610
                   
                   
                   $
                   4,520
                   
                   
                   $
                   —
                   
                   
                   $
                   19,130Total receivables, net
                   
                   
                   —
                   
                   
                   
                   33,610
                   
                   
                   
                   153,260
                   
                   
                   
                   —
                   
                   
                   
                   186,870Inventories
                   
                   
                   —
                   
                   
                   
                   55,700
                   
                   
                   
                   21,120
                   
                   
                   
                   —
                   
                   
                   
                   76,820Deferred and refundable income
                        taxes
                   
                   
                   —
                   
                   
                   
                   22,620
                   
                   
                   
                   930
                   
                   
                   
                   —
                   
                   
                   
                   23,550Prepaid expenses and other assets
                   
                   
                   —
                   
                   
                   
                   23,620
                   
                   
                   
                   5,520
                   
                   
                   
                   —
                   
                   
                   
                   29,140Total current assets
                   
                   
                   —
                   
                   
                   
                   150,160
                   
                   
                   
                   185,350
                   
                   
                   
                   —
                   
                   
                   
                   335,510Equity investments in affiliates
                   
                   
                   147,710
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   147,710Property and equipment, net
                   
                   
                   —
                   
                   
                   
                   496,670
                   
                   
                   
                   200,840
                   
                   
                   
                   —
                   
                   
                   
                   697,510Excess of cost over net assets of
                        acquired companies
                   
                   
                   —
                   
                   
                   
                   355,560
                   
                   
                   
                   196,540
                   
                   
                   
                   —
                   
                   
                   
                   552,100Investment in subsidiaries
                   
                   
                   517,900
                   
                   
                   
                   234,980
                   
                   
                   
                   —
                   
                   
                   
                   (752,880
                   )
                   
                   
                   —Intangible and other assets
                   
                   
                   —
                   
                   
                   
                   284,320
                   
                   
                   
                   1,900
                   
                   
                   
                   —
                   
                   
                   
                   286,220Total assets
                   
                   $
                   665,610
                   
                   
                   $
                   1,521,690
                   
                   
                   $
                   584,630
                   
                   
                   $
                   (752,880
                   )
                   
                   $
                   2,019,050Liabilities And Shareholders'
                        EquityCurrent liabilities:Accounts payable
                   
                   $
                   —
                   
                   
                   $
                   133,920
                   
                   
                   $
                   52,520
                   
                   
                   $
                   —
                   
                   
                   $
                   186,440Accrued liabilities
                   
                   
                   —
                   
                   
                   
                   78,980
                   
                   
                   
                   29,350
                   
                   
                   
                   —
                   
                   
                   
                   108,330Current maturities, long-term
                        debt
                   
                   
                   —
                   
                   
                   
                   95,030
                   
                   
                   
                   4,870
                   
                   
                   
                   —
                   
                   
                   
                   99,900Total current liabilities
                   
                   
                   —
                   
                   
                   
                   307,930
                   
                   
                   
                   86,740
                   
                   
                   
                   —
                   
                   
                   
                   394,670Long-term debt
                   
                   
                   250,000
                   
                   
                   
                   409,190
                   
                   
                   
                   9,770
                   
                   
                   
                   —
                   
                   
                   
                   668,960Deferred income taxes
                   
                   
                   —
                   
                   
                   
                   126,520
                   
                   
                   
                   19,990
                   
                   
                   
                   —
                   
                   
                   
                   146,510Long-term liabilities
                   
                   
                   —
                   
                   
                   
                   137,810
                   
                   
                   
                   5,490
                   
                   
                   
                   —
                   
                   
                   
                   143,300Intercompany accounts, net
                   
                   
                   (250,000
                   )
                   
                   
                   22,340
                   
                   
                   
                   227,660
                   
                   
                   
                   —
                   
                   
                   
                   —Total liabilities
                   
                   
                   —
                   
                   
                   
                   1,003,790
                   
                   
                   
                   349,650
                   
                   
                   
                   —
                   
                   
                   
                   1,353,440Total redeemable stock
                   
                   
                   85,180
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   85,180Shareholders' equity:Preferred stock
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Common stock
                   
                   
                   42,650
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   42,650Paid-in capital
                   
                   
                   684,870
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   684,870Accumulated deficit
                   
                   
                   (147,100
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (147,100
                   )Accumulated other comprehensive
                        income
                   
                   
                   10
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   10Investment by Parent/Guarantor
                   
                   
                   —
                   
                   
                   
                   517,900
                   
                   
                   
                   234,980
                   
                   
                   
                   (752,880
                   )
                   
                   
                   —Total shareholders' equity
                   
                   
                   580,430
                   
                   
                   
                   517,900
                   
                   
                   
                   234,980
                   
                   
                   
                   (752,880
                   )
                   
                   
                   580,430Total liabilities, redeemable stock
                        and shareholders' equity
                   
                   $
                   665,610
                   
                   
                   $
                   1,521,690
                   
                   
                   $
                   584,630
                   
                   
                   $
                   (752,880
                   )
                   
                   $
                   2,019,050


16

METALDYNE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Statement Of
            Operations Three Months Ended June 29, 2003

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedNet sales
                   
                   $
                   —
                   
                   
                   $
                   300,250
                   
                   
                   $
                   90,040
                   
                   
                   $
                   —
                   
                   
                   $
                   390,290Cost of sales
                   
                   
                   —
                   
                   
                   
                   (268,300
                   )
                   
                   
                   (71,480
                   )
                   
                   
                   —
                   
                   
                   
                   (339,780
                   )Gross profit
                   
                   
                   —
                   
                   
                   
                   31,950
                   
                   
                   
                   18,560
                   
                   
                   
                   —
                   
                   
                   
                   50,510Selling, general and administrative
                        expenses
                   
                   
                   —
                   
                   
                   
                   (25,470
                   )
                   
                   
                   (1,580
                   )
                   
                   
                   —
                   
                   
                   
                   (27,050
                   )Restructuring charges
                   
                   
                   —
                   
                   
                   
                   (2,330
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (2,330
                   )Legacy restricted stock award
                        expense
                   
                   
                   —
                   
                   
                   
                   (460
                   )
                   
                   
                   (120
                   )
                   
                   
                   —
                   
                   
                   
                   (580
                   )Operating profit
                   
                   
                   —
                   
                   
                   
                   3,690
                   
                   
                   
                   16,860
                   
                   
                   
                   —
                   
                   
                   
                   20,550Other income (expense), net:Interest expense
                   
                   
                   —
                   
                   
                   
                   (16,910
                   )
                   
                   
                   (330
                   )
                   
                   
                   —
                   
                   
                   
                   (17,240
                   )Equity earnings (loss) from
                        affiliates
                   
                   
                   (80
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (80
                   )Other, net
                   
                   
                   —
                   
                   
                   
                   (1,850
                   )
                   
                   
                   (1,910
                   )
                   
                   
                   —
                   
                   
                   
                   (3,760
                   )Other expense, net
                   
                   
                   (80
                   )
                   
                   
                   (18,760
                   )
                   
                   
                   (2,240
                   )
                   
                   
                   —
                   
                   
                   
                   (21,080
                   )Income (loss) before income taxes
                   
                   
                   (80
                   )
                   
                   
                   (15,070
                   )
                   
                   
                   14,620
                   
                   
                   
                   —
                   
                   
                   
                   (530
                   )Income tax expense (benefit)
                   
                   
                   —
                   
                   
                   
                   (5,140
                   )
                   
                   
                   4,130
                   
                   
                   
                   —
                   
                   
                   
                   (1,010
                   )Equity in net income of
                        subsidiaries
                   
                   
                   560
                   
                   
                   
                   (560
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Net income (loss)
                   
                   $
                   480
                   
                   
                   $
                   (10,490
                   )
                   
                   $
                   10,490
                   
                   
                   $
                   —
                   
                   
                   $
                   480Preferred stock dividends
                   
                   
                   2,280
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2,280Earnings (loss) attributable to common
                        stock
                   
                   $
                   (1,800
                   )
                   
                   $
                   (10,490
                   )
                   
                   $
                   10,490
                   
                   
                   $
                   —
                   
                   
                   $
                   (1,800
                   )


17

METALDYNE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Statement Of
            Operations Three Months Ended June 30, 2002

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedNet sales
                   
                   $
                   —
                   
                   
                   $
                   318,490
                   
                   
                   $
                   212,180
                   
                   
                   $
                   (210
                   )
                   
                   $
                   530,460Cost of sales
                   
                   
                   —
                   
                   
                   
                   (275,170
                   )
                   
                   
                   (157,560
                   )
                   
                   
                   210
                   
                   
                   
                   (432,520
                   )Gross profit
                   
                   
                   —
                   
                   
                   
                   43,320
                   
                   
                   
                   54,620
                   
                   
                   
                   —
                   
                   
                   
                   97,940Selling, general and administrative
                        expenses
                   
                   
                   —
                   
                   
                   
                   (28,560
                   )
                   
                   
                   (24,610
                   )
                   
                   
                   —
                   
                   
                   
                   (53,170
                   )Legacy restricted stock award
                        expense
                   
                   
                   —
                   
                   
                   
                   (1,080
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (1,080
                   )Operating profit
                   
                   
                   —
                   
                   
                   
                   13,680
                   
                   
                   
                   30,010
                   
                   
                   
                   —
                   
                   
                   
                   43,690Other income (expense), net:Interest expense
                   
                   
                   —
                   
                   
                   
                   (28,220
                   )
                   
                   
                   (280
                   )
                   
                   
                   —
                   
                   
                   
                   (28,500
                   )Loss on repurchase of debentures and
                        early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )Loss on interest rate arrangements
                        upon early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )Equity earnings (loss) from
                        affiliates
                   
                   
                   2,780
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2,780Other, net
                   
                   
                   —
                   
                   
                   
                   (2,620
                   )
                   
                   
                   (2,340
                   )
                   
                   
                   —
                   
                   
                   
                   (4,960
                   )Other income (expense), net
                   
                   
                   2,780
                   
                   
                   
                   (100,390
                   )
                   
                   
                   (2,620
                   )
                   
                   
                   —
                   
                   
                   
                   (100,230
                   )Income (loss) before income taxes
                   
                   
                   2,780
                   
                   
                   
                   (86,710
                   )
                   
                   
                   27,390
                   
                   
                   
                   —
                   
                   
                   
                   (56,540
                   )Income tax expense (benefit)
                   
                   
                   —
                   
                   
                   
                   (53,380
                   )
                   
                   
                   11,630
                   
                   
                   
                   —
                   
                   
                   
                   (41,750
                   )Equity in net income of
                        subsidiaries
                   
                   
                   (17,570
                   )
                   
                   
                   17,570
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Net income (loss)
                   
                   $
                   (14,790
                   )
                   
                   $
                   (15,760
                   )
                   
                   $
                   15,760
                   
                   
                   $
                   —
                   
                   
                   $
                   (14,790
                   )Preferred stock dividends
                   
                   
                   1,700
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   1,700Earnings (loss) attributable to common
                        stock
                   
                   $
                   (16,490
                   )
                   
                   $
                   (15,760
                   )
                   
                   $
                   15,760
                   
                   
                   $
                   0
                   
                   
                   $
                   (16,490
                   )


18

METALDYNE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Statement Of
            Operations Six Months Ended June 29, 2003

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedNet sales
                   
                   $
                   —
                   
                   
                   $
                   595,960
                   
                   
                   $
                   175,650
                   
                   
                   $
                   —
                   
                   
                   $
                   771,610Cost of sales
                   
                   
                   —
                   
                   
                   
                   (540,090
                   )
                   
                   
                   (139,490
                   )
                   
                   
                   —
                   
                   
                   
                   (679,580
                   )Gross profit
                   
                   
                   —
                   
                   
                   
                   55,870
                   
                   
                   
                   36,160
                   
                   
                   
                   —
                   
                   
                   
                   92,030Selling, general and administrative
                        expenses
                   
                   
                   —
                   
                   
                   
                   (50,570
                   )
                   
                   
                   (5,220
                   )
                   
                   
                   —
                   
                   
                   
                   (55,790
                   )Restructuring charges
                   
                   
                   —
                   
                   
                   
                   (2,560
                   )
                   
                   
                   (1,300
                   )
                   
                   
                   —
                   
                   
                   
                   (3,860
                   )Legacy restricted stock award
                        expense
                   
                   
                   —
                   
                   
                   
                   (1,180
                   )
                   
                   
                   (300
                   )
                   
                   
                   —
                   
                   
                   
                   (1,480
                   )Operating profit
                   
                   
                   —
                   
                   
                   
                   1,560
                   
                   
                   
                   29,340
                   
                   
                   
                   —
                   
                   
                   
                   30,900Other income (expense), net:Interest expense
                   
                   
                   —
                   
                   
                   
                   (34,340
                   )
                   
                   
                   (780
                   )
                   
                   
                   —
                   
                   
                   
                   (35,120
                   )Equity earnings (loss) from
                        affiliates
                   
                   
                   (2,710
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (2,710
                   )Other, net
                   
                   
                   —
                   
                   
                   
                   (2,710
                   )
                   
                   
                   (2,510
                   )
                   
                   
                   —
                   
                   
                   
                   (5,220
                   )Other expense, net
                   
                   
                   (2,710
                   )
                   
                   
                   (37,050
                   )
                   
                   
                   (3,290
                   )
                   
                   
                   —
                   
                   
                   
                   (43,050
                   )Income (loss) before income taxes
                   
                   
                   (2,710
                   )
                   
                   
                   (35,490
                   )
                   
                   
                   26,050
                   
                   
                   
                   —
                   
                   
                   
                   (12,150
                   )Income tax expense (benefit)
                   
                   
                   —
                   
                   
                   
                   (12,520
                   )
                   
                   
                   9,260
                   
                   
                   
                   —
                   
                   
                   
                   (3,260
                   )Equity in net income of
                        subsidiaries
                   
                   
                   (6,180
                   )
                   
                   
                   6,350
                   
                   
                   
                   —
                   
                   
                   
                   (170
                   )
                   
                   
                   —Net income (loss)
                   
                   $
                   (8,890
                   )
                   
                   $
                   (16,620
                   )
                   
                   $
                   16,790
                   
                   
                   $
                   (170
                   )
                   
                   $
                   (8,890
                   )Preferred stock dividends
                   
                   
                   4,500
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   4,500Earnings (loss) attributable to common
                        stock
                   
                   $
                   (13,390
                   )
                   
                   $
                   (16,620
                   )
                   
                   $
                   16,790
                   
                   
                   $
                   (170
                   )
                   
                   $
                   (13,390
                   )


19

METALDYNE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Statement Of
            Operations Six Months Ended June 30, 2002

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedNet sales
                   
                   $
                   —
                   
                   
                   $
                   620,760
                   
                   
                   $
                   469,950
                   
                   
                   $
                   (380
                   )
                   
                   $
                   1,090,330Cost of sales
                   
                   
                   —
                   
                   
                   
                   (547,200
                   )
                   
                   
                   (342,750
                   )
                   
                   
                   380
                   
                   
                   
                   (889,570
                   )Gross profit
                   
                   
                   —
                   
                   
                   
                   73,560
                   
                   
                   
                   127,200
                   
                   
                   
                   —
                   
                   
                   
                   200,760Selling, general and administrative
                        expenses
                   
                   
                   —
                   
                   
                   
                   (49,010
                   )
                   
                   
                   (64,240
                   )
                   
                   
                   —
                   
                   
                   
                   (113,250
                   )Legacy restricted stock award
                        expense
                   
                   
                   —
                   
                   
                   
                   (3,160
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (3,160
                   )Operating profit
                   
                   
                   —
                   
                   
                   
                   21,390
                   
                   
                   
                   62,960
                   
                   
                   
                   —
                   
                   
                   
                   84,350Other income (expense), net:Interest expense
                   
                   
                   —
                   
                   
                   
                   (55,960
                   )
                   
                   
                   (660
                   )
                   
                   
                   —
                   
                   
                   
                   (56,620
                   )Loss on repurchase of debentures and
                        early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )Loss on interest rate arrangements
                        upon early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )Equity earnings (loss) from
                        affiliates
                   
                   
                   2,330
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2,330Other, net
                   
                   
                   —
                   
                   
                   
                   (6,420
                   )
                   
                   
                   (1,260
                   )
                   
                   
                   —
                   
                   
                   
                   (7,680
                   )Other income (expense), net
                   
                   
                   2,330
                   
                   
                   
                   (131,930
                   )
                   
                   
                   (1,920
                   )
                   
                   
                   —
                   
                   
                   
                   (131,520
                   )Income (loss) before income taxes and
                        cumulative effect of a change in accounting principle
                   
                   
                   2,330
                   
                   
                   
                   (110,540
                   )
                   
                   
                   61,040
                   
                   
                   
                   —
                   
                   
                   
                   (47,170
                   )Income tax expense (benefit)
                   
                   
                   —
                   
                   
                   
                   (62,740
                   )
                   
                   
                   24,500
                   
                   
                   
                   —
                   
                   
                   
                   (38,240
                   )Income (loss) before cumulative effect
                        of a change in accounting principle
                   
                   
                   2,330
                   
                   
                   
                   (47,800
                   )
                   
                   
                   36,540
                   
                   
                   
                   —
                   
                   
                   
                   (8,930
                   )Cumulative effect of a change in
                        recognition and measurement of goodwill impairment
                   
                   
                   —
                   
                   
                   
                   (36,630
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (36,630
                   )Equity in net income of
                        subsidiaries
                   
                   
                   (47,890
                   )
                   
                   
                   38,800
                   
                   
                   
                   —
                   
                   
                   
                   9,090
                   
                   
                   
                   —Net income (loss)
                   
                   $
                   (45,560
                   )
                   
                   $
                   (45,630
                   )
                   
                   $
                   36,540
                   
                   
                   $
                   9,090
                   
                   
                   $
                   (45,560
                   )Preferred stock dividends
                   
                   
                   3,410
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   3,410Earnings (loss) attributable to common
                        stock
                   
                   $
                   (48,970
                   )
                   
                   $
                   (45,630
                   )
                   
                   $
                   36,540
                   
                   
                   $
                   9,090
                   
                   
                   $
                   (48,970
                   )


20

METALDYNE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONTINUED)

Guarantor/Non-Guarantor Condensed Consolidating Statement Of Cash
            Flows Six Months Ended June 29, 2003

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedCash flows from operating
                        activities:Net cash provided by (used for)
                        operating activities
                   
                   $
                   —
                   
                   
                   $
                   39,550
                   
                   
                   $
                   (15,650
                   )
                   
                   $
                   —
                   
                   
                   $
                   23,900Cash flows from investing
                        activities:Capital expenditures
                   
                   
                   —
                   
                   
                   
                   (45,460
                   )
                   
                   
                   (12,330
                   )
                   
                   
                   —
                   
                   
                   
                   (57,790
                   )Proceeds from sale/leaseback of fixed
                        assets
                   
                   
                   —
                   
                   
                   
                   8,460
                   
                   
                   
                   —
                   
                   
                   
                   
                   
                   
                   
                   8,460Disposition of business
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   22,570
                   
                   
                   
                   
                   
                   
                   
                   22,570Proceeds from sale of TriMas
                        shares
                   
                   
                   20,000
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   
                   
                   
                   
                   20,000Acquisition of business, net
                   
                   
                   —
                   
                   
                   
                   (7,650
                   )
                   
                   
                   —
                   
                   
                   
                   
                   
                   
                   
                   (7,650
                   )Investment in joint venture
                   
                   
                   —
                   
                   
                   
                   (20,000
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (20,000
                   )Net cash provided by (used for)
                        investing activities
                   
                   
                   20,000
                   
                   
                   
                   (64,650
                   )
                   
                   
                   10,240
                   
                   
                   
                   —
                   
                   
                   
                   (34,410
                   )Cash flows from financing
                        activities:Principal payments of term loan
                        facilities
                   
                   
                   —
                   
                   
                   
                   (500
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (500
                   )Proceeds of revolving credit
                        facility
                   
                   
                   —
                   
                   
                   
                   180,000
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   180,000Principal payments of revolving credit
                        facility
                   
                   
                   —
                   
                   
                   
                   (180,000
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (180,000
                   )Proceeds of other debt
                   
                   
                   —
                   
                   
                   
                   1,690
                   
                   
                   
                   1,420
                   
                   
                   
                   —
                   
                   
                   
                   3,110Principal payments of other debt
                   
                   
                   —
                   
                   
                   
                   (1,850
                   )
                   
                   
                   (2,300
                   )
                   
                   
                   —
                   
                   
                   
                   (4,150
                   )Change in intercompany accounts
                   
                   
                   (20,000
                   )
                   
                   
                   14,610
                   
                   
                   
                   5,390
                   
                   
                   
                   —
                   
                   
                   
                   —Net cash provided by (used for)
                        financing activities
                   
                   
                   (20,000
                   )
                   
                   
                   13,950
                   
                   
                   
                   4,510
                   
                   
                   
                   —
                   
                   
                   
                   (1,540
                   )Net increase (decrease) in cash
                   
                   
                   —
                   
                   
                   
                   (11,150
                   )
                   
                   
                   (900
                   )
                   
                   
                   —
                   
                   
                   
                   (12,050
                   )Cash and cash equivalents, beginning
                        of period
                   
                   
                   —
                   
                   
                   
                   14,610
                   
                   
                   
                   4,520
                   
                   
                   
                   —
                   
                   
                   
                   19,130Cash and cash equivalents, end of
                        period
                   
                   $
                   —
                   
                   
                   $
                   3,460
                   
                   
                   $
                   3,620
                   
                   
                   $
                   —
                   
                   
                   $
                   7,080


21

METALDYNE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (CONCLUDED)

Guarantor/Non-Guarantor Condensed Consolidating Statement Of Cash
            FlowsSix Months Ended June 30, 2002

(In thousands)

Parent
                   
                   Guarantor
                   
                   Non-Guarantor
                   
                   Eliminations
                   
                   ConsolidatedCash flows from operating
                        activities:Net cash used for operating
                        activities
                   
                   $
                   —
                   
                   
                   $
                   (3,970
                   )
                   
                   $
                   (113,780
                   )
                   
                   $
                   —
                   
                   
                   $
                   (117,750
                   )Cash flows from investing
                        activities:Capital expenditures
                   
                   
                   —
                   
                   
                   
                   (34,640
                   )
                   
                   
                   (22,570
                   )
                   
                   
                   —
                   
                   
                   
                   (57,210
                   )Proceeds from sale/leaseback of fixed
                        assets
                   
                   
                   —
                   
                   
                   
                   33,370
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   33,370Disposition of business
                   
                   
                   
                   
                   
                   
                   —
                   
                   
                   
                   840,000
                   
                   
                   
                   
                   
                   
                   
                   840,000Other, net
                   
                   
                   —
                   
                   
                   
                   (2,010
                   )
                   
                   
                   1,510
                   
                   
                   
                   —
                   
                   
                   
                   (500
                   )Net cash provided by (used for)
                        investing activities
                   
                   
                   —
                   
                   
                   
                   (3,280
                   )
                   
                   
                   818,940
                   
                   
                   
                   —
                   
                   
                   
                   815,660Cash flows from financing
                        activities:Proceeds of term loan facilities
                   
                   
                   —
                   
                   
                   
                   400,000
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   400,000Principal payments of term loan
                        facilities
                   
                   
                   —
                   
                   
                   
                   (671,850
                   )
                   
                   
                   (440,600
                   )
                   
                   
                   —
                   
                   
                   
                   (1,112,450
                   )Proceeds of revolving credit
                        facility
                   
                   
                   —
                   
                   
                   
                   275,400
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   275,400Principal payments of revolving credit
                        facility
                   
                   
                   —
                   
                   
                   
                   (275,400
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (275,400
                   )Proceeds of senior subordinated notes
                        due 2012
                   
                   
                   250,000
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   250,000Principal payments of convertible
                        subordinated debentures, due 2003 (net of $1.2 million non-cash portion
                        of repurchase)
                   
                   
                   —
                   
                   
                   
                   (128,280
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (128,280
                   )Principal payments of other debt
                   
                   
                   —
                   
                   
                   
                   (2,720
                   )
                   
                   
                   (1,100
                   )
                   
                   
                   —
                   
                   
                   
                   (3,820
                   )Restricted cash related to the
                        convertible subordinated notes
                   
                   
                   —
                   
                   
                   
                   (77,000
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (77,000
                   )Capitalization of debt refinancing
                        fees
                   
                   
                   —
                   
                   
                   
                   (11,590
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (11,590
                   )Penalties on early extinguishment of
                        debt
                   
                   
                   —
                   
                   
                   
                   (6,480
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (6,480
                   )Other, net
                   
                   
                   —
                   
                   
                   
                   (2,710
                   )
                   
                   
                   5,180
                   
                   
                   
                   —
                   
                   
                   
                   2,470Change in intercompany accounts
                   
                   
                   (250,000
                   )
                   
                   
                   518,390
                   
                   
                   
                   (268,390
                   )
                   
                   
                   —
                   
                   
                   
                   —Net cash provided by (used for)
                        financing activities
                   
                   
                   —
                   
                   
                   
                   17,760
                   
                   
                   
                   (704,910
                   )
                   
                   
                   —
                   
                   
                   
                   (687,150
                   )Net increase (decrease) in cash
                   
                   
                   —
                   
                   
                   
                   10,510
                   
                   
                   
                   250
                   
                   
                   
                   —
                   
                   
                   
                   10,760Cash and cash equivalents, beginning
                        of period
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Cash and cash equivalents, end of
                        period
                   
                   $
                   —
                   
                   
                   $
                   10,510
                   
                   
                   $
                   250
                   
                   
                   $
                   —
                   
                   
                   $
                   10,760


22

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

In addition to net income and other financial measures, the Company uses
            Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
            ("Adjusted EBITDA") as an indicator of our operating performance and as a
            measure of our cash generating capabilities. Adjusted EBITDA is the financial
            performance measure used by the Chief Executive Officer, Chief Financial
            Officer and management to evaluate the Company's operating performance. The
            Company defines Adjusted EBITDA as operating profit plus depreciation and
            amortization plus legacy stock award expense (representing contractual
            obligations from the November 2000 acquisition, which will runoff completely in
            2003).

Adjusted EBITDA does not represent and should not be considered as an
            alternative to net income, operating income, net cash provided by operating
            activities or any other measure for determining operating performance or
            liquidity that is calculated in accordance with generally accepted accounting
            principles. Further, Adjusted EBITDA, as we calculate it, may not be comparable
            to calculations of similarly titled measures by other companies.

23

Results of Operations

Quarter Ended June 29, 2003 Versus June 30, 2002

(In thousands)Three Months
                        EndedJune 29, 2003
                   
                   June 30, 2002SalesAutomotive GroupChassis
                   
                   $
                   30,550
                   
                   
                   $
                   42,010Driveline
                   
                   
                   203,110
                   
                   
                   
                   217,940Engine
                   
                   
                   156,630
                   
                   
                   
                   132,870Automotive Group
                   
                   
                   390,290
                   
                   
                   
                   392,820TriMas Group (1)
                   
                   
                   —
                   
                   
                   
                   137,640Total Company
                   
                   $
                   390,290
                   
                   
                   $
                   530,460Adjusted EBITDA and Operating
                        Profit (2)Automotive GroupChassis
                   
                   $
                   2,360
                   
                   
                   $
                   4,600Driveline
                   
                   
                   22,950
                   
                   
                   
                   28,450Engine
                   
                   
                   27,200
                   
                   
                   
                   19,760Automotive Operating Adjusted
                        EBITDA
                   
                   
                   52,510
                   
                   
                   
                   52,810Automotive/centralized resources
                        ("Corporate")
                   
                   
                   (3,760
                   )
                   
                   
                   (4,100
                   )Automotive Group Adjusted EBITDA
                   
                   
                   48,750
                   
                   
                   
                   48,710Depreciation and amortization
                   
                   
                   (27,620
                   )
                   
                   
                   (24,090
                   )Legacy stock award expense
                   
                   
                   (580
                   )
                   
                   
                   (1,200
                   )Automotive Group operating profit
                   
                   
                   20,550
                   
                   
                   
                   23,420TriMas Group Adjusted EBITDA (1)
                   
                   
                   —
                   
                   
                   
                   26,230Depreciation and amortization (1)
                   
                   
                   —
                   
                   
                   
                   (6,080
                   )Legacy stock award expense (1)
                   
                   
                   —
                   
                   
                   
                   120Total Company operating profit
                   
                   $
                   20,550
                   
                   
                   $
                   43,690Total Company Adjusted EBITDA
                   
                   $
                   48,750
                   
                   
                   $
                   74,940Other Income and Expense and Net
                        LossOther expense, net:Interest expense
                   
                   $
                   (17,240
                   )
                   
                   $
                   (28,500
                   )Loss on repurchase of debentures and
                        early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )Loss on interest rate arrangements
                        upon early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )Equity gain (loss) from affiliates,
                        net
                   
                   
                   (80
                   )
                   
                   
                   2,780Other, net
                   
                   
                   (3,760
                   )
                   
                   
                   (4,960
                   )Other expense, net
                   
                   
                   (21,080
                   )
                   
                   
                   (100,230
                   )Loss before income taxes
                   
                   
                   (530
                   )
                   
                   
                   (56,540
                   )Income taxes (credit)
                   
                   
                   (1,010
                   )
                   
                   
                   (41,750
                   )Net income (loss)
                   
                   $
                   480
                   
                   
                   $
                   (14,790
                   )


|
|
|
|

|(1) | TriMas
                   Group is included in our financial results through June 6, 2002, the date of
                   our divestiture.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Adjusted
                   EBITDA is defined as operating profit before depreciation, amortization and
                   legacy restricted stock award expense. Adjusted EBITDA-related information is
                   presented in the manner as defined herein because we believe it is a widely
                   accepted financial indicator of a company's ability to service and/or incur
                   indebtedness. Adjusted EBITDA is the financial performance measure used by the
                   Chief Executive Officer, Chief Financial Officer and management to evaluate the
                   Company's operating performance. Operating profit is the most closely
                   applicable financial measure calculated based on generally accepted accounting
                   principles. However, Adjusted EBITDA-related information should not be
                   considered as an alternative to net income as a measure of operating results or
                   to cash flows as a measure of liquidity in accordance with generally accepted
                   accounting principles. Because Adjusted EBITDA-related information is not
                   calculated identically by all companies, the presentation in this report is not
                   likely to be comparable to those disclosed by other companies.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

Reconciliation of Operating Profit to Adjusted EBITDA

Three Months EndedJune 29, 2003
                   
                   June 30, 2002Automotive GroupChassisOperating profit
                   
                   $
                   1,040
                   
                   
                   $
                   3,450Depreciation and amortization
                   
                   
                   1,320
                   
                   
                   
                   1,150Adjusted EBITDA
                   
                   
                   2,360
                   
                   
                   
                   4,600DrivelineOperating profit
                   
                   
                   10,180
                   
                   
                   
                   16,140Depreciation and amortization
                   
                   
                   12,770
                   
                   
                   
                   12,310Adjusted EBITDA
                   
                   
                   22,950
                   
                   
                   
                   28,450EngineOperating profit
                   
                   
                   15,590
                   
                   
                   
                   13,390Depreciation and amortization
                   
                   
                   11,610
                   
                   
                   
                   6,370Engine Adjusted EBITDA
                   
                   
                   27,200
                   
                   
                   
                   19,760AutomotiveOperating profit
                   
                   
                   26,810
                   
                   
                   
                   32,980Depreciation and amortization
                   
                   
                   25,700
                   
                   
                   
                   19,830Adjusted EBITDA
                   
                   
                   52,510
                   
                   
                   
                   52,810Automotive/centralized resources
                        ("Corporate")Operating loss
                   
                   
                   (6,260
                   )
                   
                   
                   (9,560
                   )Depreciation and amortization
                   
                   
                   1,920
                   
                   
                   
                   4,260Legacy stock award expense
                   
                   
                   580
                   
                   
                   
                   1,200Adjusted EBITDA
                   
                   
                   (3,760
                   )
                   
                   
                   (4,100
                   )Total Automotive GroupOperating profit
                   
                   
                   20,550
                   
                   
                   
                   23,420Depreciation and amortization
                   
                   
                   27,620
                   
                   
                   
                   24,090Legacy stock award expense
                   
                   
                   580
                   
                   
                   
                   1,200Adjusted EBITDA
                   
                   
                   48,750
                   
                   
                   
                   48,710TriMas GroupOperating profit
                   
                   
                   —
                   
                   
                   
                   20,270Depreciation and amortization
                   
                   
                   —
                   
                   
                   
                   6,080Legacy stock award expense
                   
                   
                   —
                   
                   
                   
                   (120
                   )Adjusted EBITDA
                   
                   
                   —
                   
                   
                   
                   26,230Total CompanyOperating profit
                   
                   
                   20,550
                   
                   
                   
                   43,690Depreciation and amortization
                   
                   
                   27,620
                   
                   
                   
                   30,170Legacy stock award expense
                   
                   
                   580
                   
                   
                   
                   1,080Adjusted EBITDA
                   
                   $
                   48,750
                   
                   
                   $
                   74,940


Due to the divestiture of our TriMas subsidiary in June 2002, the
            consolidated results for the second quarter of 2003 and 2002 are not
            comparable. For purposes of the following discussion, TriMas results are

25

excluded, where applicable and quantifiable, and the performance of our
            Automotive Group operations is discussed on a comparable basis between periods.

Our Automotive Group sales for the second quarter of 2003 were $390.3
            million, a decrease of approximately $2.5 million or 0.6% versus the comparable
            period of 2002. The primary drivers of this decrease were an approximate 13.0%
            and 11.3% decline in North American production for our two largest customers,
            combined with a 2.7% decline in European vehicle production. Additionally, 2003
            sales were negatively impacted by customer pricing concessions and, in the
            Chassis segment, the sale of our Fitting's business of $3.0 million in May
            2003. Offsetting this decrease were new business launches in the Engine segment
            of approximately $18.0 million, $6.3 million incremental sales associated with
            the acquisition of the Greensboro facility and a $12.7 million increase related
            to the relative strength of the euro versus the dollar in the second quarter of
            2003 compared to the second quarter of 2002.

Gross profit was $50.5 million in the second quarter of 2003 versus $97.9
            million in the comparable period in 2002. Excluding our former TriMas
            subsidiary, gross profit was $50.5 million or 12.9% of net sales in the second
            quarter of 2003 versus an approximate $54.4 million or 13.8% of net sales for
            the second quarter of 2002. The $3.9 million decrease is the net result of the
            sale of Fittings and pricing concessions discussed above, and $3.5 million of
            incremental depreciation expense.

Selling, general and administrative expenses were $27.1 million for the
            second quarter of 2003 versus $53.2 million in the comparable period in 2002.
            Excluding TriMas, selling, general and administrative charges approximated
            $29.7 million in the second quarter of 2002, or 7.6% of Automotive Group sales,
            versus an approximate $27.1 million in the second quarter of 2003, or 6.9% of
            Automotive Group sales. The net decrease in selling, general and administrative
            expenses is primarily related to net cost saving initiatives such as the Engine
            segment restructuring and the movement towards shared/centralized services.

Operating profit for the Automotive Group decreased to $20.6 million, or
            5.3% of sales, in the second quarter of 2003 versus $23.4 million, or 6.0% of
            sales, in the second quarter of 2002. The primary drivers of the decrease were
            a $3.2 million increase in depreciation expense, $0.9 million of incremental
            lease expense and a $2.3 million restructuring charge related to headcount
            reductions.

Adjusted EBITDA for the Automotive Group was $48.8 million for the second
            quarter of 2003 versus $48.7 million for the second quarter of 2002.
            Restructuring efforts of $2.3 million and incremental lease expense of $0.9
            million explained above were the primary contributors to the decline. Other
            factors such as cost increases for steel and aluminum and price concessions to
            customers were mostly offset by operational efficiencies and reductions in our
            selling, general and administrative expenses.

Interest expense was approximately $17.2 million for the second quarter
            of 2003 versus $28.5 million for the comparable period in 2002. This decrease
            is primarily due to a reduction in interest resulting from a lower average debt
            balance due to the sale of TriMas and an approximate 0.5% reduction in average
            LIBOR for the comparable periods in 2003 as compared to 2002. See "Liquidity
            and Capital Resources" section below for additional discussion of the reduction
            in debt levels from fiscal 2002.

Equity loss from affiliates was approximately $0.1 million for the second
            quarter of 2003 versus a gain of $2.8 million for the comparable period in
            2002. Other, net was approximately $3.8 million in the second quarter of 2003
            versus $5.0 million in the comparable period of 2002. This is the result of a
            decrease in debt fee amortization due to our debt refinancing in 2002 and a
            decrease in accounts receivable securitization financing fees due to decreased
            usage of our securitization facility in the second quarter of 2003 compared
            with the same period of 2002.

The provision for income taxes for the second quarter of 2003 was a
            benefit of $1.0 million as compared with a benefit of $41.8 million for the
            same period of 2002. The 2002 tax amount includes a tax benefit of $24.0
            million for the loss on repurchase of debentures and early retirement of term
            loans as a result of our debt restructuring efforts in the second quarter of
            2002. The provision for both years reflects the impact of foreign income taxed
            at rates greater than U.S. statutory rates, as well as state income taxes
            payable, even though the Company incurred a loss for U.S. tax purposes.

Net income was approximately $0.5 million for the second quarter of 2003
            compared with a net loss of approximately $14.8 million for the same period of
            2002, or a $15.3 million increase. This increase is due to the factors
            discussed above.

26

Segment Information

Sales for our Chassis segment decreased 27.3% in the second quarter of
            2003 versus the comparable period of 2002, primarily driven by the closure in
            June 2002 of one of its manufacturing facilities and the sale in May 2003 of
            its Fittings business, which resulted in a $4.4 million and $3.0 million
            decrease in sales period over period, respectively. Excluding the effect of
            this closed facility and sale of business, the Chassis segment's revenue
            decreased slightly quarter over quarter. The remaining decrease is due to lower
            volumes in both the heavy truck and brake bracket business and customer pricing
            concessions. Operating profit for the Chassis segment declined from $3.4
            million in the second quarter of 2002 to $1.0 million for the same period in
            2003, while Adjusted EBITDA declined from $4.6 million to $2.4 million for the
            same period. The vast majority of this decrease related to the closure of the
            manufacturing facility, the 2003 sale of the Fittings business, customer
            pricing concessions and decrease in volumes for the quarter.

Our Engine segment revenue increased approximately 17.9% over the prior
            year due principally to new product launches. Adjusting for the impact of
            currency fluctuations, the Engine segment's revenues increased by approximately
            14.1% over the same period in 2002. Operating profit for the segment increased
            from $13.4 million in the second quarter of 2002 to $15.6 million for the same
            period in 2003, while Adjusted EBITDA increased from $19.8 million to $27.2
            million for the same period. The increase is primarily attributable to the
            increase in sales and cost reduction efforts but is offset by customer pricing
            concessions, increased launch and development costs and approximately $0.5
            million of incremental leasing expense.

Our Driveline segment revenue decreased 6.8% versus the comparable period
            of 2002, or approximately 10.4% after adjusting for currency fluctuations. In
            addition to the decrease in North American vehicle build for our largest two
            customers, the loss of certain customer contracts and continued pricing
            pressure from our core North American customer base contributed to the decline.
            Offsetting this decrease was the incremental sales associated with the
            acquisition of the Greensboro facility in May 2003.

The Driveline segment is rapidly working to replace the lost sales and
            has received contracts beginning in 2003 that are expected to help mitigate the
            effect of the lost business. Operating profit for the segment decreased from
            $16.1 million in the second quarter of 2002 to $10.2 million in the second
            quarter of 2003, while Adjusted EBITDA decreased from $28.5 million to $23.0
            million in the first quarter of 2002 and 2003, respectively. In addition to
            volume declines, the primary drivers of this decrease relate to material price
            increases for steel and aluminum combined with price concessions to customers
            outweighing the manufacturing cost reductions and efficiencies we were able to
            achieve during the quarter. Historically, price concessions to customers have
            been offset by advancements in engineering or manufacturing processes that
            allow us to reduce costs and selling prices. However, in 2003 the impact of the
            Section 201 steel tariffs and increases in our cost to procure aluminum
            negatively impacted this historical relationship and negatively impacted our
            2003 performance.

Automotive/centralized resources ("Corporate") operating loss was $6.3
            million in the second quarter of 2003 versus $9.6 million for the comparable
            period in 2002, while Adjusted EBITDA was $(3.8) million and $(4.1) million for
            the second quarter of 2003 and 2002, respectively. We are beginning to realize
            the benefits of our shared services initiatives to centralize standard
            processes and reduce redundant costs throughout our Company (e.g. capability in
            sales, procurement, IT infrastructure, finance expertise, etc.). The majority
            of shared services initiatives were completed in the fourth quarter of 2002,
            and as a result, we have started to see a decrease in selling, general and
            administrative costs in the Automotive segments in 2003.

27

Six Months Ended June 29, 2003 Versus June 30, 2002

(In thousands)Six Months
                        EndedJune 29, 2003
                   
                   June 30, 2002SalesAutomotive GroupChassis
                   
                   $
                   63,050
                   
                   
                   $
                   78,890Driveline
                   
                   
                   403,760
                   
                   
                   
                   421,270Engine
                   
                   
                   304,800
                   
                   
                   
                   261,590Automotive Group
                   
                   
                   771,610
                   
                   
                   
                   761,750TriMas Group (1)
                   
                   
                   —
                   
                   
                   
                   328,580Total Company
                   
                   $
                   771,610
                   
                   
                   $
                   1,090,330Adjusted EBITDA and Operating
                        Profit (2)Automotive GroupChassis
                   
                   $
                   4,120
                   
                   
                   $
                   7,880Driveline
                   
                   
                   41,850
                   
                   
                   
                   51,660Engine
                   
                   
                   48,040
                   
                   
                   
                   38,090Automotive Operating Adjusted
                        EBITDA
                   
                   
                   94,010
                   
                   
                   
                   97,630Automotive/centralized resources
                        ("Corporate")
                   
                   
                   (8,920
                   )
                   
                   
                   (8,980
                   )Automotive Group Adjusted EBITDA
                   
                   
                   85,090
                   
                   
                   
                   88,650Depreciation and amortization
                   
                   
                   (52,710
                   )
                   
                   
                   (47,540
                   )Legacy stock award expense
                   
                   
                   (1,480
                   )
                   
                   
                   (2,900
                   )Automotive Group operating profit
                   
                   
                   30,900
                   
                   
                   
                   38,210TriMas Group Adjusted EBITDA (1)
                   
                   
                   —
                   
                   
                   
                   62,410Depreciation and amortization (1)
                   
                   
                   —
                   
                   
                   
                   (16,010
                   )Legacy stock award expense (1)
                   
                   
                   —
                   
                   
                   
                   (260
                   )Total Company operating profit
                   
                   $
                   30,900
                   
                   
                   $
                   84,350Total Company Adjusted EBITDA
                   
                   $
                   85,090
                   
                   
                   $
                   151,060Other Income and Expense and Net
                        LossOther expense, net:Interest expense
                   
                   $
                   (35,120
                   )
                   
                   $
                   (56,620
                   )Loss on repurchase of debentures and
                        early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (62,000
                   )Loss on interest rate arrangements
                        upon early retirement of term loans
                   
                   
                   —
                   
                   
                   
                   (7,550
                   )Equity gain (loss) from affiliates,
                        net
                   
                   
                   (2,710
                   )
                   
                   
                   2,330Other, net
                   
                   
                   (5,220
                   )
                   
                   
                   (7,680
                   )Other expense, net
                   
                   
                   (43,050
                   )
                   
                   
                   (131,520
                   )Loss before income taxes
                   
                   
                   (12,150
                   )
                   
                   
                   (47,170
                   )Income taxes (credit)
                   
                   
                   (3,260
                   )
                   
                   
                   (38,240
                   )Net income (loss)
                   
                   $
                   (8,890
                   )
                   
                   $
                   (8,930
                   )


|
|
|
|

|(1) | TriMas
                   Group is included in our financial results through June 6, 2002, the date of
                   our divestiture.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Adjusted
                   EBITDA is defined as operating profit before depreciation, amortization and
                   legacy restricted stock award expense. Adjusted EBITDA-related information is
                   presented in the manner as defined herein because we believe it is a widely
                   accepted financial indicator of a company's ability to service and/or incur
                   indebtedness. Adjusted EBITDA is the financial performance measure used by the
                   Chief Executive Officer, Chief Financial Officer and management to evaluate the
                   Company's operating performance. Operating profit is the most closely
                   applicable financial measure calculated based on generally accepted accounting
                   principles. However, Adjusted EBITDA-related information should not be
                   considered as an alternative to net income as a measure of operating results or
                   to cash flows as a measure of liquidity in accordance with generally accepted
                   accounting principles. Because Adjusted EBITDA-related information is not
                   calculated identically by all companies, the presentation in this report is not
                   likely to be comparable to those disclosed by other companies.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28

Reconciliation of Operating Profit to Adjusted EBITDA



Six Months EndedJune 29, 2003
                   
                   June 30, 2002Automotive GroupChassisOperating profit
                   
                   $
                   1,350
                   
                   
                   $
                   4,820Depreciation and amortization
                   
                   
                   2,770
                   
                   
                   
                   3,060Adjusted EBITDA
                   
                   
                   4,120
                   
                   
                   
                   7,880DrivelineOperating profit
                   
                   
                   16,480
                   
                   
                   
                   28,820Depreciation and amortization
                   
                   
                   25,370
                   
                   
                   
                   22,840Adjusted EBITDA
                   
                   
                   41,850
                   
                   
                   
                   51,660EngineOperating profit
                   
                   
                   27,290
                   
                   
                   
                   22,140Depreciation and amortization
                   
                   
                   20,750
                   
                   
                   
                   15,950Engine Adjusted EBITDA
                   
                   
                   48,040
                   
                   
                   
                   38,090AutomotiveOperating profit
                   
                   
                   45,120
                   
                   
                   
                   55,780Depreciation and amortization
                   
                   
                   48,890
                   
                   
                   
                   41,850Adjusted EBITDA
                   
                   
                   94,010
                   
                   
                   
                   97,630Automotive/centralized resources
                        ("Corporate")Operating loss
                   
                   
                   (14,220
                   )
                   
                   
                   (17,570
                   )Depreciation and amortization
                   
                   
                   3,820
                   
                   
                   
                   5,690Legacy stock award expense
                   
                   
                   1,480
                   
                   
                   
                   2,900Adjusted EBITDA
                   
                   
                   (8,920
                   )
                   
                   
                   (8,980
                   )Total Automotive GroupOperating profit
                   
                   
                   30,900
                   
                   
                   
                   38,210Depreciation and amortization
                   
                   
                   52,710
                   
                   
                   
                   47,540Legacy stock award expense
                   
                   
                   1,480
                   
                   
                   
                   2,900Adjusted EBITDA
                   
                   
                   85,090
                   
                   
                   
                   88,650TriMas GroupOperating profit
                   
                   
                   —
                   
                   
                   
                   46,140Depreciation and amortization
                   
                   
                   —
                   
                   
                   
                   16,010Legacy stock award expense
                   
                   
                   —
                   
                   
                   
                   260Adjusted EBITDA
                   
                   
                   —
                   
                   
                   
                   62,410Total CompanyOperating profit
                   
                   
                   30,900
                   
                   
                   
                   84,350Depreciation and amortization
                   
                   
                   52,710
                   
                   
                   
                   63,550Legacy stock award expense
                   
                   
                   1,480
                   
                   
                   
                   3,160Adjusted EBITDA
                   
                   $
                   85,090
                   
                   
                   $
                   151,060


Due to the divestiture of our TriMas subsidiary in June 2002, the
            consolidated results for the first six months of 2003 and 2002 are not
            comparable. For purposes of the following discussion, TriMas results are

29

excluded, where applicable and quantifiable, and the performance of our
            Automotive Group operations is discussed on a comparable basis between periods.

Our Automotive Group sales for the first six months of 2003 were $771.6
            million, an increase of approximately $9.9 million or 1.3% versus the
            comparable period of 2002. The primary drivers of this increase were new
            business launches in the Engine segment, incremental sales associated with the
            acquisition of the Greensboro facility in May 2003 and a $23.9 million increase
            related to the relative strength of the euro versus the dollar in the first six
            months of 2003 compared to the same period in 2002. Offsetting this increase
            was an approximate 7.2% and 7.3% decline in North American production of our
            two largest customers, combined with a 1.5% decline in our customers' European
            vehicle production. Additionally, 2003 sales were negatively impacted by
            customer pricing concessions and the loss of certain customer contracts in our
            Driveline segment.

Gross profit was $92.0 million in the first six months of 2003 versus
            $200.8 million in the comparable period in 2002. Excluding our former TriMas
            subsidiary, gross profit was $92.0 million or 11.9% of net sales in the first
            six months of 2003 versus an approximate $100.2 million or 13.2% of net sales
            for the first six months of 2002. The $8.2 million decrease is the net
            combination of several offsetting factors, but primarily represents an
            incremental $5.2 million in depreciation expense and $1.7 million of
            incremental lease expense for the period.

Selling, general and administrative expenses were $55.8 million for the
            first six months of 2003 versus $113.3 million in the comparable period in
            2002. Excluding TriMas, selling, general and administrative charges
            approximated $59.1 million in the first six months of 2002, or 7.8% of
            Automotive Group sales, versus an approximate $55.8 million in the first six
            months of 2003, or 7.2% of Automotive Group sales. The net decrease in selling,
            general and administrative expenses is primarily related to net cost saving
            initiatives such as the Engine segment restructuring and the movement towards
            shared/centralized services.

Operating profit for the Automotive Group decreased to $30.9 million, or
            4.0% of sales, in the first six months of 2003 versus $38.2 million, or 5.0% of
            sales, in the first six months of 2002. In addition to the above discussion,
            incremental depreciation expense of $5.2 million, incremental lease expense of
            $1.7 million and restructuring efforts of $3.9 million negatively impacted 2003
            results offset by operational efficiencies.

Adjusted EBITDA for the Automotive Group was $85.1 million in the first
            six months of 2003 versus $88.7 million in the comparable period of 2002.
            Restructuring efforts of $3.9 million and incremental lease expense of $1.7
            million were mostly made up with improvements in our Engine segment. Other
            factors such as cost increases for steel and aluminum and price concessions to
            customers were mostly offset by operational efficiencies and reductions in our
            selling, general and administrative expenses.

Interest expense was approximately $35.1 million for the first six months
            of 2003 versus $56.6 million for the comparable period in 2002. This decrease
            is primarily due to a reduction in interest resulting from a lower average debt
            balance and an approximate 0.5% reduction in average LIBOR for the comparable
            periods in 2003 as compared to 2002. See "Liquidity and Capital Resources"
            section below for additional discussion of the reduction in debt levels from
            fiscal 2002.

Equity loss from affiliates was approximately $2.7 million for the first
            six months of 2003 versus a gain of $2.3 million for the comparable period in
            2002. Other, net expense was approximately $5.2 million in the first six months
            of 2003 versus $7.7 million in the comparable period of 2002. This is the
            result of a decrease in debt fee amortization due to our debt refinancing in
            2002 and a decrease in accounts receivable securitization financing fees due to
            decreased usage of our securitization facility in the first six months of 2003
            compared with the same period of 2002.

The provision for income taxes for the first six months of 2003 was a
            benefit of $3.3 million as compared with a benefit of $38.2 million for the
            same period of 2002. The 2002 tax amount includes a tax benefit of $24.0
            million for the loss on repurchase of debentures and early retirement of term
            loans as a result of our debt restructuring efforts in the second quarter of
            2002. The provision for both years reflects the impact of foreign income taxed
            at rates greater than U.S. statutory rates, as well as state income taxes
            payable, even though the Company incurred a loss for U.S. tax purposes.

30

Net loss before cumulative effect of change in accounting principle was
            approximately $8.9 million for the first six months of 2003, which is
            consistent with the same period of 2002. These results are due to the factors
            discussed above.

A non-cash, after-tax charge of $36.6 million was taken as of January 1,
            2002 resulting from our transitional impairment test required to measure the
            amount of any goodwill impairment of our former TriMas subsidiary, as required
            by SFAS No. 142, "Goodwill and Other Intangible Assets." Consistent with the
            requirements of SFAS No. 142, we recognized this impairment charge as the
            cumulative effect of change in accounting principle as of January 1, 2002.

Segment Information

Sales for our Chassis segment decreased 20.1% in the first six months of
            2003 versus the comparable period of 2002, primarily driven by the closure in
            June 2002 of one of its manufacturing facilities and sale of the Fittings
            business in May 2003 which resulted in a $8.5 million and $3.0 million decrease
            in sales period over period, respectively. Excluding the effect of this closed
            facility and sale of business, the Chassis segment's revenue decreased $4.3
            million period over period due to volume reductions and customer pricing
            concessions. Operating profit for the Chassis segment declined from $4.8
            million in the first six months of 2002 to $1.4 million for the same period in
            2003, while Adjusted EBITDA declined from $7.9 million to $4.1 million for the
            same period. The vast majority of the decrease related to the closure of the
            manufacturing facility and sale of business.

Our Engine segment revenue increased approximately 16.5% over the prior
            year due principally to new product launches. Adjusting for the impact of
            currency fluctuations, the Engine segment's revenues increased by approximately
            13.1% over the same period in 2002. Operating profit for the segment increased
            from $22.1 million in the first six months of 2002 to $27.3 million for the
            same period in 2003, while Adjusted EBITDA increased from $38.1 million to
            $48.0 million for the same period. The increase is primarily attributable to
            the increase in sales and cost reduction efforts in the first six months of
            2003 but is offset by customer pricing concessions, increased launch and
            development costs, $1.5 million of charges related to the completion of its
            restructuring actions initiated in mid-2002 and approximately $1.0 million of
            incremental leasing expense.

Our Driveline segment revenue decreased 4.2% versus the comparable period
            of 2002, or approximately 7.7% after adjusting for currency fluctuations. In
            addition to the decrease in North American vehicle build for our largest two
            customers, the loss of certain customer contracts and continued pricing
            pressure from our core North American customer base contributed to the decline.
            Offsetting this decrease was the incremental sales associated with the
            acquisition of the Greensboro facility in May 2003.

The Driveline segment is rapidly working to replace the lost sales and
            has received contracts beginning in 2003 that are expected to help mitigate the
            effect of the lost business. Operating profit for the segment decreased from
            $28.8 million in the first six months of 2002 to $16.5 million in the first six
            months of 2003, while Adjusted EBITDA decreased from $51.7 million to $41.9
            million in the first six months of 2002 and 2003, respectively. In addition to
            volume declines, the primary drivers of this decrease relate to material price
            increases for steel and aluminum combined with price concessions to customers
            outweighing the manufacturing cost reductions and efficiencies we were able to
            achieve during the quarter. Historically, price concessions to customers have
            been offset by advancements in engineering or manufacturing processes that
            allow us to reduce costs and selling prices. However, in 2003 the impact of the
            Section 201 steel tariffs and increases in our cost to procure aluminum
            negatively impacted this historical relationship and negatively impacted our
            2003 performance. Further impacting our Driveline segment were several
            operational issues experienced during the quarter ended March 30, 2003,
            including difficulty in launching two new products, unexpected maintenance
            issues in one of its high volume manufacturing facilities and the consolidation
            of two of its manufacturing facilities.

Automotive/centralized resources ("Corporate") operating loss was $14.2
            million in the first six months of 2003 versus $17.6 million for the comparable
            period in 2002, while Adjusted EBITDA was $(8.9) million and $(9.0) million for
            the first six months of 2003 and 2002, respectively. However, we are beginning
            to realize the benefits of our shared services initiatives to centralize
            standard processes and reduce redundant costs throughout our Company (e.g.
            capability in sales, procurement, IT infrastructure,

31

finance expertise, etc.). The majority of shared services initiatives
            were completed in the fourth quarter of 2002, and as a result, we have started
            to see a decrease in selling, general and administrative costs in the
            Automotive segments in 2003.

Liquidity and Capital Resources

Liquidity.    On
            July 15, 2003, our credit agreement was amended, resulting in an increase in
            future available liquidity. In accordance with the amended credit agreement,
            liquidity is anticipated to increase to approximately $140 million in the third
            quarter. At June 29, 2003, we had $7.1 million in cash and our funding under
            the accounts receivable securitization facility and revolving credit facility
            was zero.

Principal Sources of
            Liquidity.    Our principal sources of liquidity
            are cash flow from operations, our revolving credit facility and our accounts
            receivable securitization facility. We have significant unutilized capacity
            under our revolving credit facility and accounts receivable facility that may
            be utilized for acquisitions, investments or capital expenditure needs. We
            believe that our liquidity and capital resources including anticipated cash
            flow from operations will be sufficient to meet debt service, capital
            expenditure and other short-term and long-term obligations and needs, but we
            are subject to unforeseeable events and the risk that we are not successful in
            implementing our business strategies.

Debt, Capitalization and Available
            Financing Sources.    In 2002, we entered into
            two arrangements to refinance our long-term debt. In the first arrangement, we
            issued $250 million aggregate principal amount of 11% senior subordinated notes
            due 2012. In connection with the 11% senior subordinated notes offering
            described above, we also amended and restated our credit facility to replace
            the original tranche A, B and C term loans with a new $400 million tranche D
            term loan payable in semi-annual installments of $0.5 million with the
            remaining outstanding balance due December 31, 2009. In addition to the term
            loan, the credit facility also includes a revolving credit facility with a
            principal commitment of $250 million. The revolving credit facility matures on
            May 28, 2007. The obligations under the credit facility are collateralized by
            substantially all of our assets and are guaranteed by substantially all of our
            domestic subsidiaries.

Our debt as of June 29, 2003 and December 29, 2002 is summarized below.

(In millions)June 29,2003
                   
                   December 29,2002Senior credit facilities:Tranche D term loan facility
                   
                   $
                   399
                   
                   
                   $
                   399Revolving credit facility
                   
                   
                   —
                   
                   
                   
                   —Total senior credit facility
                   
                   $
                   399
                   
                   
                   $
                   39911% senior subordinated notes, due
                        2012
                   
                   
                   250
                   
                   
                   
                   250Other debt
                   
                   
                   20
                   
                   
                   
                   20Total long-term debt
                   
                   
                   669
                   
                   
                   
                   6694.5% subordinated debentures, due 2003
                        (face value $98.5 million)
                   
                   
                   95
                   
                   
                   
                   91Other current maturities
                   
                   
                   7
                   
                   
                   
                   9Total debt
                   
                   $
                   771
                   
                   
                   $
                   769


Our working capital revolver facility has a blocked availability amount
            sufficient to meet our 2003 maturity of the $98.5 million face value 4.5%
            subordinated debentures. Further, we expect to have available liquidity from
            our revolver and accounts receivable securitization facility to repay our
            current debt maturities.

At June 29, 2003, we were contingently liable for standby letters of
            credit totaling $43 million (including $10 million related to the acquisition
            of the Greensboro facility) issued on our behalf by financial institutions.
            These letters of credit are used for a variety of purposes, including meeting
            various states' requirements in order to self-insure workers' compensation
            claims, including incurred but not reported claims.

32

Cash Flows

Operating activities
            — Operating activities provided $23.9 million of cash for the first six
            months of 2003 as compared with a use of cash of $117.8 million in the
            comparable period of 2002. In 2002, we had a net payback of $167.4 million on
            the accounts receivable facility. Excluding this payment, operating activities
            decreased by $25.7 million over the comparable period, primarily due to the
            June 6, 2002 divestiture of TriMas. Additionally, cash flows for both periods
            were negatively impacted by the restricted stock award program of which final
            payment for this program will be made in the first quarter of 2004.

Investing activities
            — Investing activities resulted in a use of cash of $34.4 million for the
            first six months of 2003 as compared with a source of cash of $815.7 million
            for the comparable period of 2002. Our 2002 results are impacted by our
            disposition of TriMas for $840 million. Our 2003 results include the investment
            of $20 million in NC-M Chassis Systems, LLC joint venture, the acquisition of
            the Greensboro facility from Dana Corporation of $7.7 million and a reduction
            in sale-leaseback transactions in the first six months of 2003 as compared with
            2002. These activities were offset by the disposition of our Fittings division
            for $22.6 million and proceeds from the sale of part of our equity investment
            in TriMas for $20 million. Proceeds from sale-leaseback transactions were $8.5
            million for the first six months of 2003 as compared with $33.4 million for the
            comparable period in 2002. Capital expenditures were $57.8 million for the
            first six months of 2003 as compared with $57.2 million for the comparable
            period of 2002, or an increase of $0.6 million. 2002 capital expenditures
            include approximately $10 million related to TriMas prior to its disposition.

Financing activities
            — Financing activities resulted in a use of cash of $1.5 million for the
            first six months of 2003 as compared to $687.1 million in the comparable period
            of 2002. Our 2002 results were impacted by our disposition of TriMas, repayment
            of term debt, issuance of senior subordinated debt and a $38 million (net of
            taxes of $24 million) loss on the repurchase of the debentures and early
            retirement of the term loans. Cash of $77 million held in part to repay a
            portion of the 4.5% convertible subordinated debentures was restricted as to
            its use at June 30, 2002 and was reflected as an outflow of cash for the period
            presented. Our 2003 results reflect a net repayment of debt of $1.5 million for
            the first six months of the period.

Interest Rate Hedging
            Arrangements.    In February 2001, we entered
            into interest rate protection agreements with various financial institutions to
            hedge a portion of our interest rate risk related to the term loan borrowings
            under our credit facility. These agreements include two interest rate collars
            with a term of three years, a total notional amount of $200 million and a three
            month LIBOR interest rate cap and floor of 7% and 4.5%, respectively, and four
            interest rate caps at a three month LIBOR interest rate of 7% with a total
            notional amount of $314 million. The two interest rate collars and two of the
            interest rate caps totaling $200 million were redesignated to our new term loan
            borrowings in June 2002. The remaining two interest rate caps totaling $114
            million no longer qualify for hedge accounting. Therefore, the unrealized gain
            or loss is recorded as other income or expense in the consolidated statement of
            operations beginning June 20, 2002.

Off-Balance Sheet Arrangements

Our Receivables
            Facility.    We have entered into an agreement
            to sell, on an ongoing basis, the trade accounts receivable of certain business
            operations to our wholly owned bankruptcy-remote, special purposes subsidiary,
            or MTSPC. MTSPC has sold and, subject to certain conditions, may from time to
            time sell an undivided fractional ownership interest in the pool of domestic
            receivables, up to approximately $225 million, to a third party multi-seller
            receivables funding company, or conduit. Upon sale to the conduit, MTSPC holds
            a subordinated retained interest in the receivables. Under the terms of the
            agreement, new receivables are added to the pool as collections reduce
            previously sold receivables. We service, administer and collect the receivables
            on behalf of MTSPC and the conduit. The facility is an important source of
            liquidity to the Company. The receivables facility resulted in net expense of
            $2.0 million for the first six months of 2003.

The facility is subject to customary termination events, including, but
            not limited to, breach of representations or warranties, the existence of any
            event that materially adversely affects the collectibility of receivables or
            performance by a seller and certain events of bankruptcy or insolvency. At June
            29, 2003,

33

none of our $225 million receivables facility was utilized, with $89
            million available based upon the amount of our outstanding eligible
            receivables. The proceeds of sale are less than the face amount of accounts
            receivable sold by an amount that approximates the purchaser's financing costs.
            The agreement expires in November 2005. If we are unable to renew or replace
            this facility, it could adversely affect our liquidity and capital resources.

Sale-Leaseback
            Arrangements.    We have engaged in a number of
            sale-leaseback transactions since 2001. In March 2003, we entered into a
            sale-leaseback transaction with respect to certain manufacturing equipment for
            proceeds of approximately $8.5 million. All of our sale-leasebacks are
            accounted for as operating leases and the associated rent expense is included
            in our financial results on a straight-line basis.

Certain Other
            Commitments.    We have other cash commitments
            not relating to debt as well, such as those in respect to leases, preferred
            stock and restricted stock awards.

In November 2000, a group of investors led by Heartland and CSFB Private
            Equity acquired control of Metaldyne. Immediately following the November 2000
            acquisition, we made restricted stock awards to certain employees of shares of
            our common stock. Under their terms, 25% of those shares became free of
            restriction, or vested upon the closing of the November 2000 acquisition and
            one quarter of the shares were due to vest on each January 14, 2002, 2003, and
            2004. Holders of restricted stock are entitled to elect cash in lieu of 40% of
            their restricted stock which vested at closing and 100% of their restricted
            stock on each of the other dates with the shares valued at $16.90 per share,
            together with cash accruing at approximately 6% per annum; to the extent that
            cash is not elected, additional common stock valued at $16.90 per share is
            issuable in lieu of the 6% accretion. As a result of the elections made for the
            January 14, 2003 payment and restrictions under our credit facility, we paid
            approximately $16.3 million in cash to vested holders of restricted stock in
            January 2003. We are entitled to reimbursement of certain amounts from our
            former subsidiary TriMas, representing approximately 50% of our obligations
            related to these restricted stock awards and, accordingly, a receivable from
            TriMas is included in our consolidated balance sheet at June 29, 2003.

We also have outstanding $69.1 million in aggregate liquidation value of
            Series A and Series B preferred stock in respect of which we have the option to
            pay cash dividends, subject to the terms of our debt instruments, at rates of
            13% and 11.5%, respectively, per annum initially and to effect a mandatory
            redemption in December 2012 and June 2013, respectively. For periods that we do
            not pay cash dividends on the Series A preferred stock, an additional 2% per
            annum of dividends is accrued. In the event of a change in control or certain
            qualified equity offerings, we may be required to make an offer to repurchase
            our outstanding preferred stock. We may not be permitted to do so and may lack
            the financial resources to satisfy these obligations. Consequently, upon these
            events, it may become necessary to recapitalize our company or secure consents.

In the November 2000 recapitalization of the Company, our shares were
            converted into the right to receive $16.90 in cash plus additional cash amounts
            based upon the net proceeds of the disposition of the stock of Saturn
            Electronics & Engineering Inc. held by Metaldyne. Although no disposition
            of the stock of Saturn was made prior to the merger or has been made to date,
            former holders of our common stock as of the merger will be entitled to amounts
            based upon the net proceeds, if any, from any future disposition of that stock
            if and when a disposition is completed. The amount, which will be paid to such
            former stockholders will equal the proceeds in excess of $18 million and less
            than or equal to $40 million, any proceeds in excess of $55.7 million and less
            than or equal to $56.7 million as well as 60% of any such proceeds in excess of
            $56.7 million. All other amounts of the proceeds will be retained by us. We may
            seek to monetize our share of this investment in the future.

Contractual Cash
            Obligations.    Under various agreements, we are
            obligated to make future cash payments in fixed amounts. These include payments
            under our long-term debt agreements, rent payments required under lease
            agreements and various severance obligations related to our recent
            acquisitions. The following table summarizes our fixed cash obligations over
            various future periods as of June 29, 2003.

34

(In millions)Payments Due by PeriodsTotal
                   
                   Less ThanOne Year
                   
                   1-3Years
                   
                   3-5Years
                   
                   After5 YearsLong-term debt
                   
                   $
                   399
                   
                   
                   $
                   1
                   
                   
                   $
                   2
                   
                   
                   $
                   2
                   
                   
                   $
                   39411% Senior subordinated notes
                   
                   
                   250
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2504.5% Convertible subordinated
                        debentures
                   
                   
                   98
                   
                   
                   
                   98
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Other debt
                   
                   
                   18
                   
                   
                   
                   3
                   
                   
                   
                   7
                   
                   
                   
                   8
                   
                   
                   
                   —Capital lease obligations
                   
                   
                   9
                   
                   
                   
                   4
                   
                   
                   
                   5
                   
                   
                   
                   —
                   
                   
                   
                   —Operating lease obligations
                        (1)
                   
                   
                   240
                   
                   
                   
                   31
                   
                   
                   
                   59
                   
                   
                   
                   49
                   
                   
                   
                   101Redeemable preferred stock, including
                        accrued dividends
                   
                   
                   69
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   69Redeemable restricted common stock
                        (2)
                   
                   
                   16
                   
                   
                   
                   16
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —Pension contributions (data available
                        through 2004)
                   
                   
                   32
                   
                   
                   
                   11
                   
                   
                   
                   21
                   
                   
                   
                   —
                   
                   
                   
                   —Contractual severance
                   
                   
                   4
                   
                   
                   
                   2
                   
                   
                   
                   2
                   
                   
                   
                   —
                   
                   
                   
                   —Total contractual obligations
                   
                   $
                   1,135
                   
                   
                   $
                   166
                   
                   
                   $
                   96
                   
                   
                   $
                   59
                   
                   
                   $
                   814


|
|
|
|

|(1) | Operating
                   lease expense is deducted to arrive at operating profit.
|--- | -------------------------------------------------------------------------------------

|(2) | Redeemable
                   restricted common stock includes TriMas' portion, consisting of approximately
                   50% of total obligations, which will be reimbursed to the Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At June 29, 2003, we were contingently liable for standby letters of
            credit totaling $43 million issued on our behalf by financial institutions. We
            are also contingently liable for future product warranty claims. We believe
            that our product warranty exposure is immaterial; however, it is continuously
            monitored for potential warranty implications of new and current business.

U.S. Pension Plans

We have replaced our existing combination of defined benefit plans and
            defined contribution plans for non-union employees with an age-weighted
            profit-sharing plan and a 401(k) plan. Defined benefit plan benefits will no
            longer accrue after 2002. This change affected approximately 1,200 employees.
            The profit-sharing component of the new plan is calculated using allocation
            rates that are integrated with Social Security and that increase with age. Our
            2003 defined benefit pension expense will be approximately $5.1 million and our
            defined contribution (profit-sharing and 401(k) matching contribution) expense
            will be approximately $6.8 million. We anticipate a net benefit expense savings
            of $0.9 million in 2003 as a result of these changes, which were effective
            January 1, 2003. Additional reductions are attributable to the TriMas
            disposition for both 2002 and 2003.

Critical Accounting Policies

Management has determined the following as critical accounting policies:

Use of
            Estimates.    The expenses and accrued
            liabilities or allowances related to certain policies are initially based on
            our best estimates at the time of original entry in our accounting records.
            Adjustments are recorded when our actual experience differs from the expected
            experience underlying the estimates. We make frequent comparisons of actual
            versus expected experience to mitigate the likelihood of material adjustments.

Goodwill.    In
            June 2001, the Financial Accounting Standards Board ("FASB") approved Statement
            of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other
            Intangible Assets" which was effective for us on January 1, 2002. Fair value
            was determined based upon the discounted cash flows of the reporting units
            using a 9.5% discount. Assuming an increase in the discount rate to 12%, fair
            value would continue to exceed the respective carrying value of each automotive
            segment.

Stock-Based
            Compensation.    In December 2002, the FASB
            issued SFAS No. 148, "Accounting for Stock-Based Compensation —
            Transition and Disclosure — an amendment of FASB Statement No 123." SFAS
            No. 148 amends SFAS No. 123, to provide alternative methods of transition for a
            voluntary change to the fair value based method of accounting for stock-based
            employee compensation. In addition, this

35

Statement amends the disclosure requirements of SFAS No. 123 to require
            prominent disclosures in both annual and interim financial statements about the
            method of accounting for stock-based employee compensation and the effect of
            the method used on reported results. We adopted SFAS No. 148 effective for the
            fiscal year ended December 29, 2002.

At June 29, 2003, we have one stock-based employee compensation plan,
            which provides for the issuance of equity-based incentives in various forms to
            key employees of the Company. These options have a ten-year option period and
            vest ratably over a three-year period from date of grant. However, the options'
            exercisability is limited in the circumstances of a public offering whereby the
            shares are required to be held and exercised after the elapse of certain time
            periods. As of June 29, 2003, we had stock options outstanding for 2,570,000
            shares at a price of $16.90 per share.

We account for this plan under the recognition and measurement principles
            of Accounting Principles Board No. 25, "Accounting for Stock Issued to
            Employees," and related Interpretations and, accordingly, no stock option
            compensation expense is included in the determination of net income in the
            consolidated statement of operations. The weighted average fair value on the
            date of grant of options granted for the six months ended June 29, 2003 was
            zero. Had stock option compensation expense been determined pursuant to the
            methodology of SFAS No. 123, "Accounting for Stock-Based Compensation," the pro
            forma effects on our basic and diluted earnings per share would have been a
            reduction of approximately $0.01 and $0.02 for the three and six months ended
            June 29, 2003, respectively.

Receivables and Revenue
            Recognition.    Receivables are presented net of
            allowances for doubtful accounts. We conduct a significant amount of business
            with a number of individual customers in the transportation industry. We
            monitor our exposure for credit losses and maintain adequate allowances for
            doubtful accounts; we do not believe that significant credit risk exists. In
            accordance with our accounts receivable securitization, trade accounts
            receivable of substantially all domestic business operations are sold, on an
            ongoing basis, to MTSPC, Inc., a wholly owned subsidiary. In compliance with
            Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
            Statements," we do not recognize revenue until it is realized or realizable and
            earned. Revenue generally is realized or realizable and earned when all of the
            following criteria are met: persuasive evidence of an arrangement exists;
            delivery has occurred or services have been rendered; the selling price to the
            buyer is fixed or determinable; and collectibility is reasonably assured. We
            are in compliance with SAB No. 101 as of June 29, 2003.

Fixed Assets and Other Intangibles
            Excluding Goodwill.    Depreciation is computed
            principally using the straight-line method over the estimated useful lives of
            the assets. Annual depreciation rates are as follows: buildings and land
            improvements, 2.5% to 10%, and machinery and equipment, 6.7% to 33.3%.
            Amortization expense of other intangibles is approximately $10 million for the
            period ended June 29, 2003. The weighted average useful life of intangible
            assets ranges from 8.2 years to 14.9 years as of June 29, 2003. Potential
            impairment of these assets is evaluated by examining current operating results,
            business prospects, market trends, potential product obsolescence, competitive
            activities and other economic factors.

Foreign Currency
            Translation.    The financial statements of
            subsidiaries outside of the United States (U.S.) located in non-highly
            inflationary economies are measured using the currency of the primary economic
            environment in which they operate as the functional currency, which for the
            most part represents the local currency. Transaction gains and losses are
            included in net earnings. When translating into U.S. dollars, income and
            expense items are translated at average monthly rates of exchange and assets
            and liabilities are translated at the rates of exchange at the balance sheet
            date. Translation adjustments resulting from translating the functional
            currency into U.S. dollars are deferred as a component of accumulated other
            comprehensive income (loss) in shareholders' equity. Other comprehensive income
            (loss), net includes a translation gain of $20.2 million and $23.9 million for
            the three and six months ended June 29, 2003, respectively. For subsidiaries
            operating in highly inflationary economies, non-monetary assets are translated
            into U.S. dollars at historical exchange rates. Translation adjustments for
            these subsidiaries are included in net earnings.

Pension and Postretirement Benefits
            Other than Pensions.    Annual net periodic
            expense and benefit liabilities under our defined benefit plans are determined
            on an actuarial basis. Assumptions used in the

36

actuarial calculations have a significant impact on plan obligations and
            expense. Each September, we review the actual experience compared to the more
            significant assumptions used and make adjustments to the assumptions, if
            warranted. The healthcare trend rates are reviewed with the actuaries based
            upon the results of their review of claims experience. Discount rates are based
            upon an expected benefit payments duration analysis and the equivalent average
            yield rate for high-quality fixed-income investments. Pension benefits are
            funded through deposits with trustees and the expected long-term rate of return
            on fund assets is based upon actual historical returns modified for known
            changes in the market and any expected change in investment policy.
            Postretirement benefits are not funded and our policy is to pay these benefits
            as they become due.

Other Loss
            Reserves.    We have other loss exposures, such
            as environmental claims, product liability, litigation, recoverability of
            deferred income tax benefits, and accounts receivable. Establishing loss
            reserves for these matters requires the use of estimates and judgment in
            regards to risk exposure and ultimate liability. We estimate losses under the
            programs using consistent and appropriate methods; however, changes to our
            assumptions could materially affect our recorded liabilities for loss. Where
            available, we utilize published credit ratings for our debtors to assist us in
            determining the amount of required reserves.

New Accounting
            Pronouncements.    On December 30, 2002, we
            adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
            Amendment of FASB Statement No. 13, and Technical Corrections." With the
            rescission of SFAS No. 4 and 64, only gains and losses from extinguishments of
            debt that meet the criteria of APB Opinion No. 30 are classified as
            extraordinary items. This statement also rescinds SFAS No. 44, "Accounting for
            Intangible Assets of Motor Carriers." This statement amends SFAS No. 13,
            "Accounting for Leases," to eliminate the inconsistency between the required
            accounting for sale-leaseback transactions and the required accounting for
            certain lease modifications that have economic effects that are similar to
            sale-leaseback transactions. SFAS No. 145 also amends other existing
            authoritative pronouncements to make various technical corrections, clarify
            meanings or describe their applicability under changed conditions. As a result
            of our adoption of SFAS No. 145, $62 million ($38 million, net of taxes of $24
            million) extraordinary loss on early extinguishment of debt recorded for the
            six months ended June 30, 2002 has been reclassified as "loss on repurchase of
            debentures and early retirement of term loans" in other expense, net.

On December 30, 2002, we adopted SFAS No. 146, "Accounting for Costs
            Associated with Exit or Disposal Activities." SFAS No. 146 requires companies
            to recognize costs associated with exit or disposal activities when they are
            incurred rather than at the date of the commitment to an exit or disposal plan.
            Accordingly, all costs associated with exit or disposal activities will be
            recognized when they are incurred effective with our 2003 fiscal year. This
            Statement did not have a material effect on our financial condition or results
            of operations.

On December 30, 2002, we also adopted Financial Accounting Standards
            Board ("FASB") Interpretation ("FIN") No. 45, "Guarantors Accounting and
            Disclosure Requirements for Guarantees, Including Indirect Guarantees of
            Indebtedness of Others." FIN No. 45 clarifies disclosures that are required to
            be made for certain guarantees and establishes a requirement to record a
            liability at fair value for certain guarantees at the time of the guarantee's
            issuance. FIN No. 45 did not have any impact on our financial condition,
            results of operations or required disclosures.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
            Interest Entities, an Interpretation of ARB 51." FIN No. 46 requires that the
            primary beneficiary in a variable interest entity consolidate the entity even
            if the primary beneficiary does not have a majority voting interest. The
            consolidation requirements of this Interpretation are required to be
            implemented for any variable interest entity created on or after January 31,
            2003. In addition, FIN No. 46 requires disclosure of information regarding
            guarantees or exposures to loss relating to any variable interest entity
            existing prior to January 31, 2003 in financial statements issued after January
            31, 2003. We have completed our review of certain potential variable interest
            entities, which are lessors under some of our operating lease agreements, as
            well as our accounts receivable securitization facility, to determine the
            impact of FIN No. 46. We have determined that there will be no impact on our
            financial position or results of operations due to the adoption of this
            Interpretation.

37

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
            on Derivative Instruments and Hedging Activities." This Statement amends
            Statement 133 for certain decisions made as part of the Derivatives
            Implementation Group process that effectively required amendments to Statement
            133, in connection with other FASB projects dealing with financial instruments
            and in connection with implementation issues raised in relation to the
            application of the definition of a derivative. This Statement is effective for
            contracts entered into or modified after June 30, 2003 (with exceptions) and
            for hedging relationships designated after June 30, 2003. We are currently
            reviewing the provisions of this Statement and will adopt it effective with the
            quarter ending September 28, 2003.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
            Financial Instruments with Characteristics of both Liabilities and Equity."
            This Statement establishes standards for how an issuer classifies and measures
            certain financial instruments with characteristics of both liabilities and
            equity. This Statement is effective for financial instruments entered into or
            modified after May 31, 2003, and otherwise is effective at the beginning of the
            first interim period beginning after June 15, 2003. We are currently reviewing
            the provisions of this Statement and will adopt it effective with the quarter
            ending September 28, 2003.

Outlook

Our principal use of funds from operating activities and borrowings for
            the next several years are expected to fund interest and principal payments on
            our indebtedness, growth related capital expenditures and working capital
            increases, strategic acquisitions and lease expense. We believe that our
            liquidity and capital resources including anticipated cash flow from operations
            will be sufficient to meet debt service, capital expenditure and other
            short-term and long-term obligations and needs, but we are subject to
            unforeseeable events and the risk that we are not successful in implementing
            our business strategies.

Our largest raw material requirement is special bar quality steel. In
            response to the imposed tariffs on imported steel and growing instability in
            the domestic steel industry, Metaldyne has been negotiating with steel vendors
            and customers, petitioning the government to repeal the steel tariffs and
            designing re-sourcing strategies to mitigate the effect of the steel price
            increases.

Other Matters

Forward-Looking Statements

This discussion and other sections of this report contain statements
            reflecting the Company's views about its future performance and constitute
            "forward-looking statements." These views involve risks and uncertainties that
            are difficult to predict and may cause the Company's actual results to differ
            significantly from the results discussed in such forward-looking statements.
            Readers should consider that various factors may affect our ability to attain
            the projected performance, including:

| | • | Dependence
                   on Automotive Industry and Industry Cyclicality — The industries in which
                   we operate depend upon general economic conditions and are highly
                   cyclical.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Customer
                   Concentration — Our base of customers is concentrated and the loss of
                   business from a major customer, the discontinuance of particular vehicle models
                   or a change in auto consumer preferences or regulations could materially
                   adversely affect us.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Challenges
                   of Acquisition Strategy — We intend to actively pursue acquisitions
                   and/or joint ventures but we may not be able to identify attractive acquisition
                   and/or joint venture candidates, successfully integrate our acquired operations
                   or realize the intended benefits of our acquisitions and/or joint
                   ventures.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Liquidity
                   and Capital Resources — If we are unable to meet future capital
                   requirements, our business may be adversely affected.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Dependence
                   on Third-Party Suppliers and Manufacturers — Increases in our raw
                   material or energy costs or the loss of a substantial number of our suppliers
                   could negatively affect our financial health.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

38

| | • | Customer
                   Pricing Pressures — As a result of the current market downturn and the
                   highly competitive nature of the industries that we serve, the current trend
                   among many of our customers is to demand significant price reductions. The
                   commodity sections of our business, such as our forging operations, continue to
                   receive the greatest pressure to reduce their prices.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Changing
                   Technology — Our products are subject to changing technology, which could
                   place us at a competitive disadvantage relative to alternative products
                   introduced by competitors.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Dependence
                   on Key Personnel and Relationships — We depend on the services of key
                   individuals and relationships, the loss of which would materially harm us.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Labor
                   Stoppages Affecting OEMs — We may be subject to work stoppages at our
                   facilities or those of our principal customers, which could seriously impact
                   the profitability of our business.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Outsourcing
                   Trend — Our strategy may not succeed if anticipated outsourcing fails to
                   occur due to union considerations.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | International
                   Sales — A growing portion of our revenue may be derived from
                   international sources, which exposes us to certain risks.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Product
                   Liability — We may incur material losses and costs as a result of product
                   liability and warranty claims that may be brought against us.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Environmental
                   Matters — Our business may be materially and adversely affected by
                   compliance obligations and liabilities under environmental laws and
                   regulations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Control
                   by Principal Stockholder — We are controlled by Heartland, whose
                   interests in our business may be different than yours.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Terms
                   of Shareholders Agreement — Provisions of the shareholders agreement
                   impose significant operating and financial restrictions on our business.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Leverage;
                   Ability to Service Debt — We may not be able to manage our business as we
                   might otherwise do so due to our high degree of leverage.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Substantial
                   Restrictions and Covenants — Restrictions in our credit facility and
                   under the indenture governing the exchange notes limit our ability to take
                   certain actions.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All statements, other than statements of historical fact included in this
            quarterly report, regarding our strategy, future operations, financial
            position, estimated revenues and losses, projected costs, prospects, plans and
            objectives of management are forward-looking statements. When used in this
            quarterly report, the words "will," "believe," "anticipate," "intend,"
            "estimate," "expect," "project" and similar expressions are intended to
            identify forward-looking statements, although not all forward-looking
            statements contain such identifying words. All forward-looking statements speak
            only as of the date of this quarterly report. You should not place undue
            reliance on these forward-looking statements. Although we believe that our
            plans, intentions and expectations reflected in or suggested by the
            forward-looking statements we make in this quarterly report are reasonable, we
            can give no assurance that these plans, intentions or expectations will be
            achieved. We undertake no obligation to update publicly any forward-looking
            statements, whether as a result of new information, future events or otherwise.

Item 3.    Quantitative and Qualitative Disclosures
            about Market Risk

In the normal course of business, we are exposed to market risk
            associated with fluctuations in foreign exchange rates. We are also subject to
            interest risk as it relates to long-term debt. See "Management's Discussion and
            Analysis of Financial Condition and Results of Operations" for details about
            our primary market risks, and the objectives and strategies used to manage
            these risks.

Item 4.    Controls and Procedures

| | (a) | An
                   evaluation was carried out by management with the participation of our Chief
                   Executive Officer and Chief Financial Officer, of the effectiveness of our
                   disclosure controls and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39

| |  | procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) of the
                   Securities Exchange Act of 1934, as amended (the "Exchange Act")) pursuant to
                   Rule 13a-15 of the Exchange Act. Our disclosure controls and procedures are
                   designed only to provide reasonable assurance that they will meet their
                   objectives. Based upon that evaluation, the Chief Executive Officer and Chief
                   Financial Officer concluded that as of the end of the period covered by this
                   report, our disclosure controls and procedures are effective to provide
                   reasonable assurance that they will meet their objectives.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | There
                   have not been any changes in our internal control over financial reporting
                   during the last fiscal quarter to which this report relates that have
                   materially affected or are reasonably likely to materially affect our internal
                   control over financial reporting.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

40

PART II - OTHER INFORMATION

METALDYNE CORPORATION

Items 1, 2, 3, 4 and 5 are not applicable.

Item 6. Exhibits And Reports On Form 8-K

(A) Exhibits:

Exhibit 10.1
                   
                   Amendment No. 1 to the Amended and Restated
                        Credit Agreement.Exhibit 10.2
                   
                   Asset Purchase Agreement by and among TriMas
                        Corporation, Metaldyne Corporation and Metalydyne Company LLC, dated May 9,
                        2003.Exhibit 10.3
                   
                   Fittings Facility Sublease by and between
                        Metaldyne Company LLC and Fittings Products Co., LLC, dated May 9, 2003.Exhibit 12
                   
                   Computation of Ratio of Earnings to Combined
                        Fixed Charges and Preferred Stock Dividends.Exhibit 31.1
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                        2002.Exhibit 31.2
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                        2002.Exhibit 32.1
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002.Exhibit 32.2
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002.


(B) Reports On Form 8-K:

We filed a current report on Form 8-K/A on March 31, 2003, reporting
            under Item 5, Other Events, that on December 8, 2002, Metaldyne Corporation
            filed a Form 8-K (the "Original 8-K") to report that it had entered into a
            Joint Venture Formation Agreement (the "Formation Agreement"), by and among
            NC-M Chassis Systems, LLC, a newly formed Delaware limited liability company,
            DaimlerChrysler Corporation and Metaldyne Corporation. A copy of the Formation
            Agreement, with certain confidential information omitted, was filed as Exhibit
            10.1 to the Original 8-K. The Form 8-K/A amends the Original 8-K to provide a
            copy of the Formation Agreement, filed as Exhibit 10.1 to Form 8-K/A, that
            reflects the Company's revised confidential treatment request filed separately
            with the Securities and Exchange Commission.

We filed a current report on Form 8-K on May 8, 2003, reporting under
            Item 5, Other Events, that on January 2, 2003, Metaldyne Corporation entered
            into a joint venture with DaimlerChrysler Corporation, that was contemplated by
            the Joint Venture Formation Agreement, dated as of December 8, 2002, by and
            among NC-M Chassis Systems, LLC, a newly formed Delaware limited liability
            company, DaimlerChrysler Corporation and Metaldyne Corporation. The Form 8-K
            filed on May 8, 2003 provides a New Castle Pro Forma Statement of Direct
            Revenues and Expenses for the year ended December 31, 2002.

We filed a current report on Form 8-K on June 26, 2003, reporting under
            Item 4, Changes in Registrant's Certifying Accountant, that on June 20, 2003,
            the Audit Committee of the Board of Directors of Metaldyne Corporation approved
            the appointment of KPMG LLP as the Company's independent accountants, and the
            dismissal of PricewaterhouseCoopers LLP, which had previously served in this
            capacity.

41

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.

METALDYNE CORPORATIONRegistrantDate: August 12, 2003BY:
                   
                   /s/    Jeffrey M.
                        StafeilJeffrey M. Stafeil Executive Vice
                        President, and Chief Financial Officer (Chief Accounting Officer and
                        Authorized Signatory)


42

METALDYNE CORPORATION

EXHIBIT INDEX

Exhibit

Exhibit 10.1
                   
                   Amendment No. 1 to the Amended and Restated
                        Credit Agreement.Exhibit 10.2
                   
                   Asset Purchase Agreement by and among TriMas
                        Corporation, Metaldyne Corporation and Metalydyne Company LLC, dated May 9,
                        2003.Exhibit 10.3
                   
                   Fittings Facility Sublease by and between
                        Metaldyne Company LLC and Fittings Products Co., LLC, dated May 9, 2003.Exhibit 12
                   
                   Computation of Ratio of Earnings to Combined
                        Fixed Charges and Preferred Stock Dividends.Exhibit 31.1
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                        2002.Exhibit 31.2
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                        2002.Exhibit 32.1
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002.Exhibit 32.2
                   
                   Certification pursuant to 18 U.S.C. Section
                        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002.


43