|  |
|--|
|  |
|  |
|  |
|  |

UNITEDSTATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934

FOR QUARTERLY PERIOD ENDED MARCH 28, 2004 COMMISSION FILE NUMBER1-12068

METALDYNE CORPORATION(Exact name of registrant as specified in itscharter)

|                                                              |  |                                     |  |  |  |  |
|--------------------------------------------------------------|--|-------------------------------------|--|--|--|--|
| **Delaware**                                                 |  | **38-2513957**                      |
| (Stateor other jurisdiction of incorporation ororganization) |  | (I.R.S.Employer Identification No.) |
| **47659 Halyard Drive,Plymouth, Michigan**                   |  | **48170-2429**                      |
| (Address of principal executiveoffices)                      |  | (ZipCode)                           |
|                                                              |

(734) 207-6200

(Registrant's telephonenumber)

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 filesuch reports), and (2) has been subject to such filing requirements forthe past 90days.    Yes                 No      X   

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

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

Indicate the number of shares outstanding of eachof the issuer's classes of common stock, as of the latestpractical date.

|                                     |  |                                       |            |        |  |  |
|-------------------------------------|--|---------------------------------------|------------|--------|--|--|
| Class                               |  | Sharesoutstanding at November 1, 2004 |
| Common stock,par value $1 per share |  |                                  | 42,844,760 |   |
|                                     |

|  |
|--|
|  |
|  |
|  |
|  |

----

METALDYNE CORPORATION

INDEX

|          |  |                                                                                                   |  |         |       |        |  |  |  |  |
|----------|--|---------------------------------------------------------------------------------------------------|--|---------|-------|--------|--|--|--|--|
|     |  |                                                                                              |  | PageNo. |
| Part I.  |  | FinancialInformation                                                                              |  |
| Item 1.  |  | FinancialStatements                                                                               |  |
|     |  | Consolidated Balance Sheets– March 28, 2004 and December 28, 2003                           |  |    | 2     |   |
|     |  | Consolidated Statements of Operations for the ThreeMonths Ended March  28, 2004 and March 30,2003 |  |    | 3     |   |
|     |  | Consolidated Statements ofCash Flows for the Three Months Ended March  28, 2004 and March30, 2003 |  |    | 4     |   |
|     |  | Notes to ConsolidatedFinancial Statements                                                         |  |    | 5-23  |   |
| Item2.   |  | Management's Discussion and Analysis of FinancialCondition and Results of Operations              |  |    | 24-42 |   |
| Item 3.  |  | Quantitative and Qualitative Disclosure AboutMarket Risk                                          |  |    | 42    |   |
| Item 4.  |  | Controls andProcedures                                                                            |  |    | 43-45 |   |
| Part II. |  | OtherInformation and Signature                                                                    |  |    | 46-47 |   |
|          |

1

----

PART I. FINANCIALINFORMATION ITEM 1. Financial Statements

METALDYNECORPORATION CONSOLIDATED BALANCE SHEET March 28, 2004 andDecember 28, 2003 (Dollars In Thousands Except Per ShareAmounts)

|                                                                         |  |              |           |                 |  |        |           |         |  |  |
|-------------------------------------------------------------------------|--|--------------|-----------|-----------------|--|--------|-----------|---------|--|--|
|                                                                    |  | March28,2004 |           | December28,2003 |
|                                                                    |  | (Unaudited)  |           |
| ASSETS                                                                  |  |         |           |            |
| Currentassets:                                                          |  |         |      |            |  |   |      |    |
| Cash and cashequivalents                                                |  | $            | 45,500    |            |  | $      | 13,820    |    |
| Receivables:                                                            |  |         |      |            |  |   |      |    |
| Trade,net of allowance for doubtful accounts                            |  |         | 95,560    |            |  |   | 139,330   |    |
| TriMas                                                                  |  |         | 10,160    |            |  |   | 15,350    |    |
| Other                                                                   |  |         | 28,870    |            |  |   | 26,440    |    |
| Totalreceivables, net                                                   |  |         | 134,590   |            |  |   | 181,120   |    |
| Inventories                                                             |  |         | 104,740   |            |  |   | 83,680    |    |
| Deferred andrefundable income taxes                                     |  |         | 8,100     |            |  |   | 9,110     |    |
| Prepaid expenses andother assets                                        |  |         | 39,720    |            |  |   | 36,280    |    |
| Totalcurrent assets                                                     |  |         | 332,650   |            |  |   | 324,010   |    |
| Equity and otherinvestments in affiliates                               |  |         | 128,200   |            |  |   | 148,830   |    |
| Property and equipment,net                                              |  |         | 889,460   |            |  |   | 707,450   |    |
| Excess of costover net assets of acquired companies                     |  |         | 581,960   |            |  |   | 584,390   |    |
| Intangible and otherassets                                              |  |         | 235,780   |            |  |   | 247,180   |    |
| Totalassets                                                             |  | $            | 2,168,050 |            |  | $      | 2,011,860 |    |
| **LIABILITIESAND SHAREHOLDERS'EQUITY**                                  |  |         |      |            |  |   |      |    |
|                                                                    |  |
| Currentliabilities:                                                     |  |         |      |            |  |   |      |    |
| Accountspayable                                                         |  | $            | 243,050   |            |  | $      | 201,240   |    |
| Accrued liabilities                                                     |  |         | 131,650   |            |  |   | 136,840   |    |
| Currentmaturities, long-term debt                                       |  |         | 10,770    |            |  |   | 10,880    |    |
| Totalcurrent liabilities                                                |  |         | 385,470   |            |  |   | 348,960   |    |
| Long-termdebt                                                           |  |         | 833,830   |            |  |   | 766,930   |    |
| Deferred incometaxes                                                    |  |         | 121,610   |            |  |   | 121,520   |    |
| Minorityinterest                                                        |  |         | 800       |            |  |   | 800       |    |
| Other long-termliabilities                                              |  |         | 153,270   |            |  |   | 153,760   |    |
| Redeemablepreferred stock, (aggregate liquidation value $144.7 million) |  |         | 142,710   |            |  |   | —   |    |
| Totalliabilities                                                        |  |         | 1,637,690 |            |  |   | 1,391,970 |    |
| Redeemablepreferred stock, (aggregate liquidation value $76.0million)   |  |         | —   |            |  |   | 73,980    |    |
| Preferredstock (non-redeemable), $1 par, Authorized: 25million;         |  |         |      |            |  |   |      |    |
| Outstanding:None                                                        |  |         | —   |            |  |   | —   |    |
| Commonstock, $1 par, Authorized: 250million;                            |  |         |      |            |  |   |      |    |
| Outstanding: 42.8million and 42.7 million shares, respectively          |  |         | 42,830    |            |  |   | 42,730    |    |
| Paid-incapital                                                          |  |         | 693,540   |            |  |   | 692,400   |    |
| Accumulateddeficit                                                      |  |         | (240,000  | )          |  |   | (234,750  | )  |
| Accumulated othercomprehensiveincome                                    |  |         | 33,990    |            |  |   | 45,530    |    |
| Totalshareholders' equity                                               |  |         | 530,360   |            |  |   | 545,910   |    |
| Totalliabilities, redeemable stock and shareholders' equity             |  | $            | 2,168,050 |            |  | $      | 2,011,860 |    |
|                                                                    |  |         |      |            |  |   |      |    |
|                                                                         |

Seeaccompanying notes to the consolidated financial statements.

2

----

METALDYNE CORPORATION CONSOLIDATEDSTATEMENT OF OPERATIONS (Dollars In Thousands Except Per ShareData)

|                                                              |  |                  |          |               |  |        |          |         |  |  |
|--------------------------------------------------------------|--|------------------|----------|---------------|--|--------|----------|---------|--|--|
|                                                         |  | ThreeMonthsEnded |
|                                                         |  | (Unaudited)      |
|                                                         |  | March28, 2004    |          | March 30,2003 |
|                                                         |  |             |          | (Restated)    |
| Netsales                                                     |  | $                | 481,140  |          |  | $      | 381,920  |    |
| Cost ofsales                                                 |  |             | (428,930 | )        |  |   | (340,880 | )  |
| Grossprofit                                                  |  |             | 52,210   |          |  |   | 41,040   |    |
| Selling,general and administrative expenses                  |  |             | (31,220  | )        |  |   | (29,650  | )  |
| Restructuringcharges                                         |  |             | (190     | )        |  |   | (1,530   | )  |
| Loss ondisposition of manufacturing facilities               |  |             | (7,600   | )        |  |   | —  |    |
| Operatingprofit                                              |  |             | 13,200   |          |  |   | 9,860    |    |
| Otherexpense,net:                                            |  |             |     |          |  |   |     |    |
| Interestexpense                                              |  |             | (20,100  | )        |  |   | (17,920  | )  |
| Preferredstock dividends                                     |  |             | (4,260   | )        |  |   | —  |    |
| Non-cash gain onmaturity of interest rate arrangements       |  |             | 6,590    |          |  |   | —  |    |
| Equity income (loss) fromaffiliates, net                     |  |             | 1,460    |          |  |   | (2,630   | )  |
| Other, net                                                   |  |             | (2,380   | )        |  |   | (3,660   | )  |
| Otherexpense, net                                            |  |             | (18,690  | )        |  |   | (24,210  | )  |
| Lossbefore incometaxes                                       |  |             | (5,490   | )        |  |   | (14,350  | )  |
| Income taxbenefit                                            |  |             | (240     | )        |  |   | (3,290   | )  |
| Netloss                                                      |  |             | (5,250   | )        |  |   | (11,060  | )  |
| Preferredstock dividends                                     |  |             | —  |          |  |   | 2,220    |    |
| Lossattributable to common stock                             |  | $                | (5,250   | )        |  | $      | (13,280  | )  |
| Basicand diluted loss per share attributable to common stock |  | $                | (0.12    | )        |  | $      | (0.31    | )  |
|                                                              |

Seeaccompanying notes to the consolidated financial statements.

3

----

METALDYNE CORPORATION CONSOLIDATEDSTATEMENT OF CASH FLOWS (Dollars inthousands)

|                                                                                          |  |                  |          |                |  |        |          |         |  |  |
|------------------------------------------------------------------------------------------|--|------------------|----------|----------------|--|--------|----------|---------|--|--|
|                                                                                     |  | ThreeMonthsEnded |
|                                                                                     |  | (Unaudited)      |
|                                                                                     |  | March28,2004     |          | March 30, 2003 |
|                                                                                     |  |             |          | (Restated)     |
| Operatingactivities:                                                                     |  |             |     |           |  |   |     |    |
| Netloss                                                                                  |  | $                | (5,250   | )         |  | $      | (11,060  | )  |
| Adjustmentsto reconcile net loss to net cash provided by (used for) operatingactivities: |  |             |     |           |  |   |     |    |
| Depreciationandamortization                                                              |  |             | 31,530   |           |  |   | 24,950   |    |
| Non-cashstock award expense                                                              |  |             | 230      |           |  |   | 900      |    |
| Debt feeamortization                                                                     |  |             | 670      |           |  |   | 580      |    |
| Fixed assetlosses                                                                        |  |             | 320      |           |  |   | 1,210    |    |
| Loss ondisposition of manufacturing facilities                                           |  |             | 7,600    |           |  |   | —  |    |
| Deferred incometaxes                                                                     |  |             | 20       |           |  |   | 2,130    |    |
| Preferred stockdividends                                                                 |  |             | 4,260    |           |  |   | —  |    |
| Non-cashinterest expense (interestaccretion)                                             |  |             | —  |           |  |   | 1,720    |    |
| Non-cashgain on maturity of interest ratearrangements                                    |  |             | (6,590   | )         |  |   | —  |    |
| Equity(earnings) losses from affiliates, net ofdividends                                 |  |             | (1,460   | )         |  |   | 2,630    |    |
| Other,net                                                                                |  |             | 50       |           |  |   | 3,110    |    |
| Changes inassets and liabilities, net of acquisition/disposition ofbusiness:             |  |             |     |           |  |
| Receivables,net                                                                          |  |             | (60,280  | )         |  |   | (22,110  | )  |
| Net proceeds(redemption) of accounts receivable securitizationfacility                   |  |             | 98,580   |           |  |   | 29,000   |    |
| Inventories                                                                              |  |             | (11,310  | )         |  |   | (2,720   | )  |
| Refundableincome taxes                                                                   |  |             | —  |           |  |   | 15,260   |    |
| Prepaidexpenses and otherassets                                                          |  |             | (3,650   | )         |  |   | (5,420   | )  |
| Accountspayable and accruedliabilities                                                   |  |             | 34,110   |           |  |   | (24,230  | )  |
| Netcash provided by operatingactivities                                                  |  |             | 88,830   |           |  |   | 15,950   |    |
| Investingactivities:                                                                     |  |             |     |           |  |   |     |    |
| Capitalexpenditures                                                                      |  |             | (29,990  | )         |  |   | (21,750  | )  |
| Proceedsfrom sale/leaseback of fixedassets                                               |  |             | 64,960   |           |  |   | 8,460    |    |
| Proceeds ondisposition of manufacturing facilities                                       |  |             | (500     | )         |  |   | —  |    |
| Acquisition ofbusiness                                                                   |  |             | (217,850 | )         |  |   | —  |    |
| Investmentin jointventure                                                                |  |             | —  |           |  |   | (20,000  | )  |
| Netcash used for investingactivities                                                     |  |             | (183,380 | )         |  |   | (33,290  | )  |
| Financingactivities:                                                                     |  |             |     |           |  |   |     |    |
| Principal payments ofterm loanfacilities                                                 |  |             | (440     | )         |  |   | (500     | )  |
| Proceeds ofrevolving creditfacility                                                      |  |             | 70,000   |           |  |   | 145,000  |    |
| Principalpayments of revolving creditfacility                                            |  |             | (37,900  | )         |  |   | (145,000 | )  |
| Proceedsof senior subordinated notes, due 2014                                           |  |             | 31,750   |           |  |   | —  |    |
| Proceeds of otherdebt                                                                    |  |             | 630      |           |  |   | 1,160    |    |
| Principal payments ofother debt                                                          |  |             | (2,260   | )         |  |   | (2,450   | )  |
| Issuanceof Series A-1 preferred stock                                                    |  |             | 64,450   |           |  |   | —  |    |
| Netcash used for financingactivities                                                     |  |             | 126,230  |           |  |   | (1,790   | )  |
| Netincrease (decrease) incash                                                            |  |             | 31,680   |           |  |   | (19,130  | )  |
| Cash andcash equivalents, beginning ofperiod                                             |  |             | 13,820   |           |  |   | 19,130   |    |
| Cashand cash equivalents, end of period                                                  |  | $                | 45,500   |           |  | $      | —  |    |
| Supplementary cash flowinformation:                                                      |  |             |     |           |  |   |     |    |
| Cash paid (refunded)for income taxes, net                                                |  | $                | 1,510    |           |  | $      | (14,750  | )  |
| Cash paid for interest                                                                   |  | $                | 8,090    |           |  | $      | 8,130    |    |
|                                                                                     |  |             |     |           |  |   |     |    |
|                                                                                          |

Seeaccompanying notes to the consolidated financialstatements.

4

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS   

1.    BUSINESSAND OTHER INFORMATION

Metaldyne Corporation("Metaldyne" or "theCompany") is a leading global manufacturer of highlyengineered metal components for the global light vehicle market. Ourproducts include metal-formed and precision-engineered components andmodular systems used in vehicle transmission, engine and chassisapplications.

The Company maintains a fifty-two/fifty-three weekfiscal year ending on the Sunday nearest to December 31. Fiscal years2004 and 2003 each comprise fifty-two weeks and end on January 2, 2005and December 28, 2003, respectively. All year and quarter referencesrelate to the Company's fiscal year and fiscal quarters unlessotherwise stated.

In the opinion of Company management, theunaudited financial statements contain all adjustments, includingadjustments of a normal recurring nature, necessary to present fairlythe financial position, results of operations and cash flows for theperiods presented. These statements should be read in conjunction withthe Company's financial statements included in the Annual Reporton Form 10-K for the fiscal year ended December 28, 2003 (the"2003 Form 10-K"). The results of operationsfor the period ended March 28, 2004 are not necessarily indicative ofthe results for the full year.

Certain prior year amounts havebeen reclassified to reflect current yearclassification.

2.    RESTATEMENT

In September 2004,the Company announced the completion of an independent investigationinto certain accounting matters ("IndependentInvestigation") and its determination that certainpreviously issued financial statements required restatement. TheCompany's financial statements for fiscal years 2001 and 2002have been restated in the 2003 Form 10-K. In addition, theCompany's quarterly financial information for the first threefiscal quarters of 2003 also has been restated to reflect adjustmentsto previously reported information on Form 10-Q, as described elsewhereherein.

The restatement arose primarily out of informationobtained through an investigation conducted by a special committee ofthe board of directors which was comprised of one independent directorof the Company. The special committee retained independent counsel,Sidley Austin Brown & Wood LLP("Sidley"), and in turn Sidley retainedDeloitte & Touche LLP ("D&T"), a firmwith forensic accounting expertise, to assist Sidley in theinvestigation. The Independent Investigation was initiated as a resultof certain admissions made by an employee of the Company andinformation obtained by the Company's internal audit staff. Theinvestigation expanded beyond its initial focus on thisemployee's admissions of intentional overstatements andunderstatements of income at the Company's Sintered division intoaccounting practices in other areas of the Company concerning thesmoothing of earnings through the use of accrual and allowance accountsand the recognition of tooling income. The restatement resulting fromthe Independent Investigation was limited to the periods from November30, 2000 through 2003.

Specifically, a former Sintered divisioncontroller admitted that, following the acquisition of the Company inNovember 2000, income at the Sintered division from 2000 through 2003was deliberately understated in an effort to disguise thisemployee's previous overstatements of income at the Sintereddivision during the period from 1996 through 1999. There were threeprimary admissions from the former Sintered divisional controllerrelated to the period 1996 to 1999. During this time, he asserted thatincome was overstated by (1)  overstating fixed assets,(2)  understating liabilities (notably accounts payable), and(3)  using a complex set of manual journal entries every month to"disguise" the effects of (1) and (2). Therestatement adjustments reflect the Company's correction of thesematters, based upon the findings of the Independent Investigation. Thecorrections of these Sintered division accounts indicate thatcumulative net losses for the periods investigated were actuallyunderstated as a result of these intentional actions.

Based uponcertain findings within the Sintered division, the investigation wasexpanded to encompass accounting practices in other areas of theCompany concerning the use of accrual and 

5

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

allowance accounts and the recognition oftooling income for the period from 2001 through 2003. Thisinvestigation involved an extensive review of journal entries of over aspecified amount made over a three year period. As a result of theexpanded investigation, the Company became aware of instances ofinappropriate accounting relating to allowances and accruals, which hadthe effect of "smoothing" earnings forcertain periods. Specifically, the Company concluded from theinvestigative findings that there were instances when accruals had beenestablished to cover unanticipated expenses, accruals had beenincreased or decreased based upon performance, and/or accruals had beenrecorded different from estimated or analyzed amounts. The Company alsoidentified from the investigative findings a few instances of incorrecttiming in the recognition of tooling income. The investigationcategorized journal entries from the relevant periods for analysis bythe Company and review by the Company with its current and formerindependent auditors. The Company analyzed those categories of entries,which the investigation determined to be either potentially inaccurate(i.e., warranting further review) or unknown (i.e., insufficientdocumentation for third party evaluation).

The restatementadjustments address (1) inappropriate actions taken at the Sintereddivision by correcting overstated balances for property, plant andequipment, recognizing lower related depreciation expense andrecognizing the continuing effect of adjustments made in prior periodson previously reported balances of other accounts such as accountspayable and accounts receivable; (2) the correction of certain journalentries, primarily relating to certain reserve and tooling accounts,identified as a result of the Independent Investigation; and (3)certain other adjustments not related to the Sintered investigation orthe review of the accrual and tooling accounts.

TotalAdjustments.    The following table presents the impact on netloss of the restatement:

|                                           |  |                                                      |         |         |  |  |
|-------------------------------------------|--|------------------------------------------------------|---------|---------|--|--|
|                                      |  | (Inthousands)For the three months endedMarch 30,2003 |
| Net loss as previously reported           |  | $                                                    | (9,370  | )  |
| Sintered adjustments                      |  |                                                 | (2,280  | )  |
| Tooling, accrual and allowanceadjustments |  |                                                 | (380    | )  |
| Other adjustments                         |  |                                                 | (70     | )  |
| Income tax effect                         |  |                                                 | 1,040   |    |
| Restated netloss                          |  | $                                                    | (11,060 | )  |
|                                           |

6

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

The following table summarizes the impacton net income of the restatementadjustments:

|                                                              |  |                                         |          |              |  |            |         |         |  |        |          |         |  |  |
|--------------------------------------------------------------|--|-----------------------------------------|----------|--------------|--|------------|---------|---------|--|--------|----------|---------|--|--|
|                                                         |  | (Inthousands) For the three monthsended |
|                                                         |  | AsPreviouslyReported                    |          | Restatements |  | AsRestated |
| Net sales                                                    |  | $                                       | 381,320  |         |  | $          | 600     |    |  | $      | 381,920  |    |
| Cost ofgoods sold                                            |  |                                    | (340,990 | )       |  |       | 110     |    |  |   | (340,880 | )  |
| Grossprofit                                                  |  |                                    | 40,330   |         |  |       | 710     |    |  |   | 41,040   |    |
| Selling,general and administrative expenses                  |  |                                    | (29,650  | )       |  |       | — |    |  |   | (29,650  | )  |
| Restructuringcharges                                         |  |                                    | (1,530   | )       |  |       | — |    |  |   | (1,530   | )  |
| Operatingprofit                                              |  |                                    | 9,150    |         |  |       | 710     |    |  |   | 9,860    |    |
| Otherexpense,net:                                            |  |                                    |     |         |  |       |    |    |  |   |     |    |
| Interestexpense                                              |  |                                    | (17,880  | )       |  |       | (40     | )  |  |   | (17,920  | )  |
| Equityloss from affiliates, net                              |  |                                    | (2,630   | )       |  |       | — |    |  |   | (2,630   | )  |
| Other,net                                                    |  |                                    | (260     | )       |  |       | (3,400  | )  |  |   | (3,660   | )  |
| Otherexpense, net                                            |  |                                    | (20,770  | )       |  |       | (3,440  | )  |  |   | (24,210  | )  |
| Lossbefore income taxes                                      |  |                                    | (11,620  | )       |  |       | (2,730  | )  |  |   | (14,350  | )  |
| Incometax benefit                                            |  |                                    | (2,250   | )       |  |       | (1,040  | )  |  |   | (3,290   | )  |
| Netloss                                                      |  | $                                       | (9,370   | )       |  | $          | (1,690  | )  |  | $      | (11,060  | )  |
| Basicand diluted loss per share attributable to common stock |  | $                                       | (0.27    | )       |  | $          | (0.04   | )  |  | $      | (0.31    | )  |
|                                                              |

Thefollowing table summarizes the impact on cash flow for the restatementadjustments for the three months ended March 30,2003:

|                                                     |  |                      |          |              |  |            |         |         |  |        |          |         |  |  |
|-----------------------------------------------------|--|----------------------|----------|--------------|--|------------|---------|---------|--|--------|----------|---------|--|--|
|                                                |  | (Inthousands)        |
|                                                |  | AsPreviouslyReported |          | Restatements |  | AsRestated |
| Cash flows from operatingactivities:                |  |                 |     |         |  |       |    |    |  |   |     |    |
| Net cash usedfor operating activities               |  | $                    | 16,440   |         |  | $          | (490    | )  |  | $      | 15,950   |    |
| Cashflows from investingactivities:                 |  |                 |     |         |  |       |    |    |  |   |     |    |
| Capitalexpenditures                                 |  |                 | (22,400  | )       |  |       | 650     |    |  |   | (21,750  | )  |
| Proceedsfrom sale/leaseback of fixed assets         |  |                 | 8,460    |         |  |       | — |    |  |   | 8,460    |    |
| Investmentin joint venture                          |  |                 | (20,000  | )       |  |       | — |    |  |   | (20,000  | )  |
| Netcash provided by (used for) investing activities |  |                 | (33,940  | )       |  |       | 650     |    |  |   | (33,290  | )  |
| Cashflows from financingactivities:                 |  |                 |     |         |  |       |    |    |  |   |     |    |
| Principalpayments of term loan facilities           |  |                 | (500     | )       |  |       | — |    |  |   | (500     | )  |
| Proceeds ofrevolving credit facility                |  |                 | 145,000  |         |  |       | — |    |  |   | 145,000  |    |
| Principalpayments of revolving credit facility      |  |                 | (145,000 | )       |  |       | — |    |  |   | (145,000 | )  |
| Proceedsof other debt                               |  |                 | 1,160    |         |  |       | — |    |  |   | 1,160    |    |
| Principalpayments of other debt                     |  |                 | (2,290   | )       |  |       | (160    | )  |  |   | (2,450   | )  |
| Netcash provided by (used for) financing activities |  |                 | (1,630   | )       |  |       | (160    | )  |  |   | (1,790   | )  |
| Netincrease (decrease) in cash                      |  |                 | (19,130  | )       |  |       | — |    |  |   | (19,130  | )  |
| Cashand cash equivalents, beginning of period       |  |                 | 19,130   |         |  |       | — |    |  |   | 19,130   |    |
| Cashand cash equivalents, end of period             |  | $                    | —  |         |  | $          | — |    |  | $      | —  |    |
|                                                     |

3.    STOCKOPTIONS AND AWARDS

The following disclosure for the financialstatements for the period ended March 28, 2004 is based on the Companycontinuing to account for stock-based employee compensation using theintrinsic value method under Accounting Principles Board("APB") No. 25 and relatedinterpretations.

7

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

The Company has one stock-based employeecompensation plan. No stock-based employee compensation cost isreflected in net income, as all options granted under this plan had anexercise price equal to the market value of the underlying common stockon the date of grant. The following table illustrates the effect on netincome and earnings per share if the Company had applied the fair valuerecognition provisions of SFAS No. 123, "Accounting forStock-Based Compensation," to stock-based employeecompensation.

|                                                                                                                                           |  |                                                         |        |               |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------|--|---------------------------------------------------------|--------|---------------|--|--------|---------|---------|--|--|
|                                                                                                                                      |  | (Inthousands except per share amounts)Three MonthsEnded |
|                                                                                                                                      |  | March 28,2004                                           |        | March 30,2003 |
|                                                                                                                                      |  |                                                    |        | (Restated)    |
| Netloss attributable to common stock, as reported                                                                                         |  | $                                                       | (5,250 | )        |  | $      | (13,280 | )  |
| Deduct: Totalstock-based employee compensation expense determined under fair valuebased method for all awards, net of related tax effects |  |                                                    | (120   | )        |  |   | (470    | )  |
| Proforma net loss attributable to commonstock                                                                                             |  | $                                                       | (5,370 | )        |  | $      | (13,750 | )  |
| Lossper share:                                                                                                                            |  |                                                    |   |          |  |   |    |    |
| Basicand diluted – as reported                                                                                                      |  | $                                                       | (0.12  | )        |  | $      | (0.31   | )  |
| Basicand diluted – pro forma for stock-basedcompensation                                                                            |  | $                                                       | (0.12  | )        |  | $      | (0.32   | )  |
|                                                                                                                                      |  |                                                    |   |          |  |   |    |    |
|                                                                                                                                           |

Beginningin 2004, the Company offered eligible employees the opportunity toparticipate in a new Voluntary Stock Option Exchange Program (the"Program"), to exchange all of theiroutstanding options to purchase shares of the Company's commonstock granted under the Long Term Equity Incentive Plan (the"Plan") for new stock options and restrictedstock units to be granted under the Plan. Participation in the Programis voluntary; however, elections were required to be received byJanuary 14, 2004, with new stock options to be granted on or after July15, 2004 and restricted stock units granted on January 15, 2004.Non-eligible participants in the existing Plan and those eligibleemployees not electing to participate in the new Program will continueto be eligible to participate in the existing Plan. Stock compensationexpense for the quarter ended March 28, 2004 was $0.2 million.

4.    ACCOUNTS RECEIVABLE SECURITIZATION AND FACTORINGAGREEMENTS

The Company has entered into an arrangement to sell,on an ongoing basis, the trade accounts receivable of substantially alldomestic business operations to MTSPC, Inc.("MTSPC"), a wholly owned subsidiary of theCompany. MTSPC from time to time may sell an undivided fractionalownership interest in the pool of receivables up to approximately $225million to a third party multi-seller receivables funding company. TheCompany elected to decrease the maximum amount available for sale toMTSPC from $225 million to $150 million during the quarter ended June27, 2004. The net proceeds of sale are less than the face amount ofaccounts receivable sold by an amount that approximates thepurchaser's financing costs, which amounted to a total of $1.6million and $1.7 million for the three months ended March 28, 2004 andMarch 30, 2003 (as restated), respectively, and is included in otherexpense, net in the Company's consolidated statement ofoperations. At March 28, 2004, the Company's funding under thefacility was $98.6 million with no additional amounts available. Thediscount rate at March 28, 2004 was 2.09% compared to2.14% at December 28, 2003. The usage fee under the facility is1.5%. In addition, the Company is required to pay a fee of0.5% on the unused portion of the facility. This facilityexpires in November 2005.

The Company has entered intoagreements with international invoice factoring companies to sellcustomer accounts receivable of Metaldyne foreign locations in France,Germany, Spain, United Kingdom and Mexico on a non-recourse basis. Asof March 28, 2004, the Company had available approximately $67 millionfrom these commitments, and approximately $52.2 million of receivableswere sold under these programs. The Company pays a commission to thefactoring company plus interest from the date the 

8

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

receivables are sold to the date of customerpayment. Commission expense related to these agreements are recorded inother expense, net on the Company's consolidated statement ofoperations.

To facilitate the collection of funds from operatingactivities, the Company has entered into accelerated payment collectionprograms with its largest customers. At March 28, 2004, the Companyreceived approximately $70 million under the accelerated collectionprograms. The Company was recently notified that a portion of thisprogram would expire in 2004, with the majority of the program expiringin 2005. While the impact of the discontinuance of these programs maybe partially offset by a greater utilization of the accounts receivablesecuritization facility, the Company is examining other alternativeprograms in the marketplace, as well as enhanced terms directly fromits customers. However, the Company may not be able to reach afavorable resolution in a timely manner, and the new arrangements maybe less advantageous to the Company. If the Company is unable toreplace these arrangements, it could adversely affect its liquidity andfuture covenant compliance under its senior secured credit facility. Inaddition, if the Company fails to renew its accounts receivablesecuritization agreement, which expires in November 2005, it could haveadverse effects on the Company's liquidity and future covenantcompliance. However, the Company had $117 million of undrawn andavailable commitments on its revolving credit facility at March 28,2004.

9

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

5.    INVENTORIES

Inventoriesby component are as follows:

|                 |  |               |         |                   |  |        |        |        |  |  |
|-----------------|--|---------------|---------|-------------------|--|--------|--------|--------|--|--|
|            |  | (Inthousands) |
|            |  | March 28,2004 |         | December 28, 2003 |
| Finished goods  |  | $             | 29,070  |              |  | $      | 25,710 |   |
| Work in process |  |          | 28,240  |              |  |   | 29,480 |   |
| Raw materials   |  |          | 47,430  |              |  |   | 28,490 |   |
|            |  | $             | 104,740 |              |  | $      | 83,680 |   |
|                 |

6.    GOODWILLAND OTHER INTANGIBLE ASSETS

At March 28, 2004, the goodwillbalance was approximately $582 million. For purposes of testing thisgoodwill for potential impairment, fair values were determined basedupon the discounted cash flows of the reporting units using a9.5% discount rate as of December 28, 2003. This assessment wascompleted for the year ended December 28, 2003, which indicated thatthe fair value of these units exceeded their carrying values.

Acquired Intangible Assets

The change in the gross carryingamount of acquired intangible assets is primarily attributable to theexchange impact from foreigncurrency.

|                                                           |  |                                            |         |                         |  |                     |         |                     |  |                         |  |                     |         |        |  |        |         |         |  |           |  |        |        |        |  |  |
|-----------------------------------------------------------|--|--------------------------------------------|---------|-------------------------|--|---------------------|---------|---------------------|--|-------------------------|--|---------------------|---------|--------|--|--------|---------|---------|--|-----------|--|--------|--------|--------|--|--|
|                                                      |  | (Inthousands, except weighted averagelife) |
|                                                      |  | As ofMarch 28, 2004                        |         | As of December 28,2003  |
|                                                      |  | GrossCarryingAmount                        |         | AccumulatedAmortization |  | WeightedAverageLife |         | GrossCarryingAmount |  | AccumulatedAmortization |  | WeightedAverageLife |
| AmortizedIntangibleAssets:                                |  |                                       |    |                    |  |                |    |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
| CustomerContracts                                         |  | $                                          | 93,670  |                    |  | $                   | (32,760 | )              |  | 8.2years                |  | $                   | 94,420  |   |  | $      | (31,050 | )  |  | 8.2years  |
| Technology and Other                                      |  |                                       | 163,810 |                    |  |                | (37,750 | )              |  | 14.9years               |  |                | 165,280 |   |  |   | (35,290 | )  |  | 14.9years |
| Total                                                     |  | $                                          | 257,480 |                    |  | $                   | (70,510 | )              |  | 13.6years               |  | $                   | 259,700 |   |  | $      | (66,340 | )  |  | 13.6years |
| AggregateAmortization Expense (Included in Cost ofSales): |  |
| For the three months ended March 28,2004                  |  |                                       |    |                    |  | $                   | 5,950   |                |  |
| EstimatedAmortizationExpense:                             |  |                                       |    |                    |  |                |    |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
| Forthe year ending January 2, 2005                        |  |                                       |    |                    |  |                | 23,500  |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
| Forthe year ending December 31, 2005                      |  |                                       |    |                    |  |                | 23,100  |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
| Forthe year ending December 31, 2006                      |  |                                       |    |                    |  |                | 23,100  |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
| Forthe year ending December 31, 2007                      |  |                                       |    |                    |  |                | 22,300  |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
| Forthe year ending December 31,2008                       |  |                                       |    |                    |  |                | 21,600  |                |  |                    |  |                |    |   |  |   |    |    |  |      |  |   |   |   |
|                                                           |

Goodwill

The changes in the carrying amount of goodwill for the three monthsended March 28, 2004 are asfollows:

|                                      |  |               |         |           |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------|--|---------------|---------|-----------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                 |  | (Inthousands) |
|                                 |  | Chassis       |         | Driveline |  | Engine |         | Total   |
| Balanceas of December 28, 2003       |  | $             | 61,630  |      |  | $      | 371,010 |    |  | $      | 151,750 |    |  | $      | 584,390 |    |
| Exchangeimpact from foreign currency |  |          | — |      |  |   | (1,980  | )  |  |   | (450    | )  |  |   | (2,430  | )  |
| Balanceas of March 28, 2004          |  | $             | 61,630  |      |  | $      | 369,030 |    |  | $      | 151,300 |    |  | $      | 581,960 |    |
|                                      |

7.    DERIVATIVEFINANCIAL INSTRUMENTS

The Company manages its exposure tochanges in interest rates through the use of interest rate protectionagreements. These interest rate derivatives are designated as cash flowhedges. The effective 

10

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

portion of each derivative's gain orloss is initially reported as a component of other comprehensive income(loss) and subsequently reclassified into earnings when the forecastedtransaction affects earnings. The Company does not use derivatives forspeculative purposes.

In February 2001, the Company entered intointerest rate protection agreements with various financial institutionsto hedge a portion of its interest rate risk related to the term loanborrowings under its credit facility. These agreements include twointerest rate collars with a term of three years, a total notionalamount of $200 million as of December 28, 2003, and a three-month LIBORinterest rate cap and floor of 7% and approximately 4.5%,respectively. The agreements also include four interest rate caps at athree-month LIBOR interest rate of 7% with a total notionalamount of $301 million as of December 28, 2003.

All of theCompany's interest rate protection arrangements matured inFebruary 2004 and, as a result of their maturity, a cumulative non-cashpre-tax gain of $6.6 million was recorded and is reflected as anon-cash gain on maturity of interest rate arrangements in theCompany's consolidated statement of operations for the threemonths ended March 28, 2004. Prior to their maturity, this amount wasincluded in accumulated other comprehensive income related to thesearrangements. Prior to the expiration of these agreements, the Companyrecognized additional interest expense of $1.1 million during the threemonths ended March 28, 2004.

8.    SEGMENT INFORMATION

The Company has defined a segment as a component with businessactivity resulting in revenue and expense that has separate financialinformation evaluated regularly by the Company's chief operatingdecision maker and its board of directors in determining resourceallocation and assessing performance.

The Company hasestablished Adjusted Earnings Before Interest Taxes Depreciation andAmortization ("Adjusted EBITDA") as a keyindicator of financial operating performance and as a measure of cashgenerating capability. The Company defines Adjusted EBITDA as netincome (loss) before cumulative effect of accounting change and beforeinterest, taxes, depreciation, amortization, asset impairment, non-cashlosses on sale-leaseback of property and equipment and non-cashrestricted stock award expense. Adjusted EBITDA is a non-GAAP measureand therefore caution must be exercised in using Adjusted EBITDA as ananalytical tool and should not be used in isolation or as a substitutefor analysis of our results as reported under GAAP. In evaluatingAdjusted EBITDA, management deems it important to consider the qualityof the Company's underlying earnings by separately identifyingcertain costs undertaken to improve the Company's results, suchas costs related to consolidating facilities and businesses in aneffort to eliminate duplicative costs or achieve efficiencies, costsrelated to integrating acquisitions and restructuring costs related toexpense reduction efforts.

The Company is comprised of threereportable segments: Chassis, Driveline and Engine. In 2003, theCompany moved one of its European operations that had historically beenpart of the Chassis segment to the Engine segment, and moved one of itsdomestic operations that had historically been part of the Drivelinesegment to the Engine segment. In 2004, the Company moved one of itsNorth American operations that had historically been part of the Enginesegment to the Chassis segment. The prior year amounts have beenrestated to reflect these changes for comparison purposes.

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

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

11

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

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

Segment activity for the three monthsended March 28, 2004 and March 30, 2003 (as restated) is asfollows:

|                                         |  |                                 |         |               |  |        |         |         |  |  |  |  |  |  |
|-----------------------------------------|--|---------------------------------|---------|---------------|--|--------|---------|---------|--|--|--|--|--|--|
|                                    |  | (Inthousands) Three MonthsEnded |         |
|                                    |  | March 28,2004                   |         | March 30,2003 |  |
|                                    |  | (Restated)                      |         |
| **SALES**                               |  |
| Chassis                                 |  | $                               | 128,320 |          |  | $      | 39,870  |    |  |
| Driveline                               |  |                            | 195,430 |          |  |   | 200,320 |    |  |
| Engine                                  |  |                            | 157,390 |          |  |   | 141,730 |    |  |
| Totalsales                              |  | $                               | 481,140 |          |  | $      | 381,920 |    |  |
| **AdjustedEBITDA**                      |  |                            |    |          |  |   |    |    |  |
| Chassis                                 |  | $                               | 9,270   |          |  | $      | 3,690   |    |  |
| Driveline                               |  |                            | 22,270  |          |  |   | 18,790  |    |  |
| Engine                                  |  |                            | 27,080  |          |  |   | 19,580  |    |  |
| OperatingEBITDA                         |  |                            | 58,620  |          |  |   | 42,060  |    |  |
| Centralizedresources ("Corporate")      |  |                            | (6,090  | )        |  |   | (7,430  | )  |  |
| TotalAdjusted EBITDA                    |  |                            | 52,530  |          |  |   | 34,630  |    |  |
| Depreciation &amortization          |  |                            | (31,530 | )        |  |   | (24,950 | )  |  |
| Losson sale of manufacturing facilities |  |                            | (7,600  | )        |  |   | — |    |  |
| Non-cash stock awardexpense             |  |                            | (230    | )        |  |   | (900    | )  |  |
| Other, netincluded in AdjustedEBITDA    |  |                            | 30      |          |  |   | 1,080   |    |  |
| Operatingprofit                         |  | $                               | 13,200  |          |  | $      | 9,860   |    |  |
|                                         |

|                         |  |                  |           |                   |  |        |           |        |  |  |
|-------------------------|--|------------------|-----------|-------------------|--|--------|-----------|--------|--|--|
|                    |  | (Inthousands)    |
|                    |  | March 28,2004    |           | December 28, 2003 |
| **TotalAssets**         |  |             |      |              |  |   |      |   |
| Chassis                 |  | $                | 375,980   |              |  | $      | 121,260   |   |
| Driveline               |  |             | 964,510   |              |  |   | 935,520   |   |
| Engine                  |  |             | 763,880   |              |  |   | 733,920   |   |
| Corporate(1)            |  |             | 63,680    |              |  |   | 203,160   |   |
| Total                   |  | $                | 2,168,050 |              |  | $      | 2,011,860 |   |
|                    |  | ThreeMonthsEnded |
|                    |  | March28, 2004    |           | March 30, 2003    |
| **CapitalExpenditures** |  |             |      |              |  |   |      |   |
| Chassis                 |  | $                | 12,430    |              |  | $      | 2,030     |   |
| Driveline               |  |             | 7,240     |              |  |   | 12,460    |   |
| Engine                  |  |             | 8,530     |              |  |   | 5,700     |   |
| Corporate               |  |             | 1,790     |              |  |   | 1,560     |   |
| Total                   |  | $                | 29,990    |              |  |   | 21,750    |   |
|                         |

Intercompanysales for the quarter ended March  28, 2004 were $1.8 million and$1 million for the Driveline and Engine segments respectively.Intercompany sales for the quarter ended March  30, 2003 were$0.9 million for the Enginesegment.

|     |                                                                                                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Corporatetotal assets reflects the obligations associated with the AccountsReceivable Securitization program as discussed in Note 4 AccountsReceivable Securitization and FactoringAgreements. |

12

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

9.    ACQUISITIONS

In the firstquarter of 2004, effective December 31, 2003, the Company completed atransaction with DaimlerChrysler Corporation("DaimlerChrysler") that transferred fullownership of the New Castle Machining and Forge ("NewCastle") manufacturing operations to Metaldyne. SinceJanuary 2003, New Castle has been managed as a joint venture betweenMetaldyne and DaimlerChrysler; at December 28, 2003, theCompany's investment in this joint venture was approximately $22million. The New Castle facility manufactures suspension and powertraincomponents for Chrysler, Jeep and Dodge vehicles; additionally,Metaldyne has launched initiatives to expand the customer base beyondDaimlerChrysler. The New Castle manufacturing operations are part ofthe Company's Chassis segment.

As part of the New Castletransaction, Metaldyne acquired Class A and Class B units representingDaimlerChrysler's entire joint venture interest in New Castle. Inexchange, Metaldyne delivered to DaimlerChrysler $215 million (beforefees and expenses of approximately $5 million), comprised of $118.8million in cash; $31.7 million in aggregate principal amount of a newissue of its 10% senior subordinated notes; and $64.5 million inaggregate liquidation preference of its Series A-1 preferred stock.Included in the $5 million fees and expenses is a $2.4 milliontransaction fee paid to Heartland Industrial Partners("Heartland") pursuant to the acquisition ofNew Castle. The cash portion of the consideration was funded in part bythe net cash proceeds of approximately $65 million from thesale-leaseback of certain machinery and equipment with a third-partylessor, with the remainder funded through Metaldyne's revolvingcredit facility.

13

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

The assets and liabilities of New Castleat December 31, 2003 consisted of the following (inthousands):

|                            |  |        |         |        |  |  |
|----------------------------|--|--------|---------|--------|--|--|
| Currentassets              |  | $      | 13,370  |   |
| Property and equipment,net |  |   | 240,720 |   |
| Totalassets                |  |   | 254,090 |   |
| Total liabilities          |  |   | 14,110  |   |
| Net assets                 |  | $      | 239,980 |   |
|                            |

The above assetsand liabilities at the acquisition date, and are subject to changebased upon the final valuation and allocation of purchase price.

On May 30, 2003, the Company acquired a facility in Greensboro,North Carolina, from Dana Corporation("Dana") for approximately $7.7 million atclosing and agreed to pay an additional $1.4 million in cash over aperiod of time ending on December 31, 2004. The Company may also beobligated to pay up to an additional $1.4 million in cash on December31, 2004 depending upon the extent of new business awards at thefacility. The Greensboro facility became part of the Drivelinesegment's Transmission and Program Management division. TheGreensboro operation, which employs approximately 150 people, machinescast iron and aluminum castings, including various steering knucklesand aluminum carriers for light truck applications. The results ofoperations of the facility have been included in the consolidatedfinancial statements since that date.

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

In addition, the Company signed a seven-year supplyagreement with Dana covering all existing business at Greensboro,including a right of last refusal on successor programs, as well as acommitment to award $20 million of new forging business to the Company.Dana has also issued purchase orders, to be satisfied at other of ourfacilities, for incremental other tube, gear and carrier business for anumber of platforms. In September 2004, the Company terminated thesupply agreement with Dana.

10.    ASSET IMPAIRMENTS ANDRESTRUCTURING RELATED INTEGRATION ACTIONS

In fiscal 2003, theCompany entered into several restructuring arrangements whereby itincurred approximately $13.1 million of costs associated with severanceand facility closures. These actions include the completion of theEngine segment's European operation reorganization that wasinitiated in fiscal 2002 and completed in the first quarter of 2003 andactions within the Driveline segment's forging operations andadministrative departments to eliminate redundant headcount and adjustcosts to reflect the decline in the Company's forging revenue in2003. Also included in this charge are the severance costs to replacecertain members of the Company's executive management team andthe costs to restructure several departments in the Company'scorporate office, including the sales, human resources and informationtechnology departments. Restructuring costs incurred for the threemonths ended March 28, 2004 were $0.2 million and primarily reflect theheadcount reduction activities initiated during the quarter in theCompany's Driveline segment. The Company expects to realizeadditional savings from these restructuring actions in 2004 asreductions in employee-related expenses recognized in both cost ofgoods sold and selling, general and administrative expense.

Inthe fourth quarter of 2003, the Company performed its FAS 144long-lived asset impairment test and recorded a pre-tax, non-cashimpairment write-down of $4.9 million. This charge was recorded toreduce the net book value of two facilities with negative operatingperformance to their current fair 

14

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

market value. These two facilities were soldon February 1, 2004 to an independent third party of whom this salesprice was used to determine the fair market value of these twofacilities. This assessment did not result in any asset impairment forthe remaining Metaldyne locations (see Note 11 to the consolidatedfinancial statements).

The below amounts represent totalestimated cash payments, of which $5.0 million and $6.5 million arerecorded in accrued liabilities, with $2.0 million (which willprimarily be paid out in 2005) and $2.6 million recorded in otherlong-term liabilities in the Company's consolidated balance sheetat March 28, 2004 and December 28, 2003, respectively. This tableprovides a rollforward of the restructuring accrual related to theabove restructuring actions as of March 28, 2004.

|                             |  |                                                                    |         |                                             |  |                                              |                     |                                             |  |        |         |         |  |        |         |         |  |        |         |         |  |        |        |         |  |  |
|-----------------------------|--|--------------------------------------------------------------------|---------|---------------------------------------------|--|----------------------------------------------|---------------------|---------------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                        |  | (Inthousands)                                                      |
|                        |  |         AcquisitionRelated |         | 2002AdditionalSeverance and Other ExitCosts |  | 2003Additional Severance andOther Exit Costs |                     | 2004AdditionalSeverance and Other ExitCosts |  | Total  |
|                        |  | SeveranceCosts                                                     |         | ExitCosts                                   |  |
| Balance at December 28,2003 |  | $                                                                  | 1,380   |                                        |  | $                                            |   — |                                        |  | $      | 360     |    |  | $      | 7,310   |    |  | $      | — |    |  | $      | 9,050  |    |
| Charges toexpense           |  |                                                               | — |                                        |  |                                         | —             |                                        |  |   | — |    |  |   | — |    |  |   | 190     |    |  |   | 190    |    |
| Cashpayments                |  |                                                               | (220    | )                                      |  |                                         | —             |                                        |  |   | (150    | )  |  |   | (1,660  | )  |  |   | (190    | )  |  |   | (2,220 | )  |
| Balanceat March 28, 2004    |  | $                                                                  | 1,160   |                                        |  | $                                            | —             |                                        |  | $      | 210     |    |  | $      | 5,650   |    |  | $      | — |    |  | $      | 7,020  |    |
|                             |

11.    DISPOSITIONS

On February 1, 2004, the Company sold its ownership of its BedfordHeights, Ohio and Rome, Georgia manufacturing operations to Lester PDC,a Kentucky-based aluminum die casting and machining company. These twoplants had combined 2003 sales of approximately $62 million and anoperating loss of approximately $14 million. For the first quarter of2003, these plants had sales of approximately $15 million and anoperating loss of approximately $1.5 million. The Company retained aninterest in approximately $5.6 million in working capital (principallyaccounts receivable). Cash paid in the transaction to buy out theremaining portion of the equipment that had previously been sold underan operating lease arrangement by the Company was approximately $6.1million, net of proceeds from Lester PDC of $4.1 million. The buyeralso agreed to sub-lease both the Bedford Heights, Ohio and the Rome,Georgia facilities from the Company for an annual lease payment ofapproximately $600,000. Both manufacturing operations were part of theCompany's Driveline segment. In connection with the dispositionof these manufacturing facilities, the Company recognized a charge of$7.6 million on the Company's consolidated statement ofoperations as of March 28, 2004. The charge represents the book valueof approximately $12 million in fixed assets and deferred financingfees offset by the $4.1 million in cash consideration paid by LesterPDC for the assets.

On May 9, 2003, the Company sold its ChassisGroup's Fittings division to TriMas Corporation("TriMas") for $22.6 million plus theassumption of an operating lease. This transaction was accounted for asa sale of entities under common control, due to common ownershipbetween TriMas and the Company. Therefore, the proceeds, in excess ofthe book value, amounting to $6.3 million were recorded as equity andother investments in affiliates in the Company's consolidatedbalance sheet as of December 28, 2003. The Fittings division, which isa leading manufacturer of specialized fittings and cold-headed partsused in automotive and industrial applications, became part of theTriMas Fastening Systems Group.

In April 2003, TriMas exercisedits right to repurchase 1 million shares of its common stock from theCompany at $20 per share, the same price that it was valued on June 6,2002, the date of the Company's sale of TriMas. As a result ofthis repurchase by TriMas, and as a result of acquisitions performed byTriMas in 2003, the Company's ownership in TriMas decreased to5.75 million shares or approximately 28% of TriMas as of March28, 2004.

15

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

12.    MANDATORILY REDEEMABLEPREFERRED STOCK

As part of the New Castle transaction,Metaldyne issued 644,540 shares of $64.5 million in liquidation valueof redeemable Series A-1 preferred stock in exchange for interests inNew Castle held by DaimlerChrysler Corporation. The redeemable SeriesA-1 preferred shares are mandatorily redeemable on December 31, 2013.The Series A-1 preferred stockholders are entitled to receive, when, asand if declared by the Company's Board of Directors, cumulativequarterly cash dividends at a rate of 11% per annum plus2% per annum for any period for which there are any accrued andunpaid dividends. The preferred stock issued was valued at $64.5million as a preliminary estimate of the fair value of this security,pending the final valuation.

The Company has outstanding 361,001shares of $36.1 million in liquidation value ($34.1 million estimatedcarrying value for accounting purposes) of Series A preferred stock parvalue $1 and authorized 370,000 shares to Masco Corporation. TheCompany will accrete from the carrying value to the liquidation valueratably over the twelve-year period. The preferred stock is mandatorilyredeemable on December 31, 2012. Series A preferred stockholders areentitled to receive, when, as and if declared by the Company'sboard of directors, cumulative quarterly cash dividends at a rate of13% per annum for periods ending on or prior to December 31,2005 and 15% per annum for periods after December 31, 2005 plus2% per annum for any period for which there are any accrued andunpaid dividends.

The Company has outstanding 184,153 sharesvalued at $18.5 million of redeemable Series B preferred stock inexchange for interests in GMTI. The redeemable Series B preferredshares issued are mandatory redeemable on June 15, 2013. The Series Bpreferred stockholders are entitled to receive, when, as and ifdeclared by the Company's Board of Directors, cumulativesemi-annual cash dividends at a rate of 11.5% per annum. OnDecember 31, 2003, Heartland Industrial Partners, L.P.,Metaldyne's parent company, purchased all of the outstanding184,153 shares of redeemable Series B preferred stock from former GMTIshareholders.

Preferred stock dividends were $4.3 million and$2.2 million, while dividend cash payment were zero, for the threemonths ended March 28, 2004 and March 30, 2003, respectively. Unpaidaccrued dividends were $25.7 million and $18.4 million as of March 28,2004 and December 28, 2003, respectively. Redeemable preferred stock,consisting of outstanding shares and unpaid dividends, was $142.7million and $74.0 million in the Company's consolidated balancesheet at March 28, 2004 and December 28, 2003, respectively. As aresult of the Company's implementation of SFAS No. 150,"Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity,"redeemable preferred stock has been reclassified as a long-termliability effective beginning in 2004.

16

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

13.    EARNINGS PER SHARE

Thefollowing reconciles the numerators and denominators used in thecomputations of basic and diluted earnings per common share:

|                                                               |  |                                                         |         |               |  |        |         |         |  |  |  |  |  |  |
|---------------------------------------------------------------|--|---------------------------------------------------------|---------|---------------|--|--------|---------|---------|--|--|--|--|--|--|
|                                                          |  | (Inthousands except per share amounts)Three MonthsEnded |         |          |
|                                                          |  | March28, 2004                                           |         | March 30,2003 |  |
|                                                          |  |                                                    |         | (Restated)    |  |
| Weightedaverage number of shares outstanding                  |  |                                                    | 42,800  |          |  |   | 42,720  |    |  |
| Netloss                                                       |  | $                                                       | (5,250  | )        |  | $      | (11,060 | )  |  |
| Less:Preferred stock dividends                                |  |                                                    | — |          |  |   | 2,220   |    |  |
| Lossused for basic and diluted earnings per share computation |  | $                                                       | (5,250  | )        |  | $      | (13,280 | )  |  |
| Basicloss per share attributable to common stock              |  | $                                                       | (0.12   | )        |  | $      | (0.31   | )  |  |
| Totalshares used for basic earnings per share computation     |  |                                                    | 42,800  |          |  |   | 42,720  |    |  |
| Contingently issuableshares                                   |  |                                                    | — |          |  |   | — |    |  |
| Totalshares used for diluted earnings per share computation   |  |                                                    | 42,800  |          |  |   | 42,720  |    |  |
| Dilutedloss per share attributable to common stock            |  | $                                                       | (0.12   | )        |  | $      | (0.31   | )  |  |
|                                                               |

Excluded from thecalculation of diluted loss per share are stock options representing911,700 and 2,520,000 of common shares as they are anti-dilutive atMarch 28, 2004 and March 30, 2003 (as restated), respectively.

Contingently issuable shares, representing approximately 50,000 and990,000 restricted common shares, have an anti-dilutive effect onearnings per share for the three months ended March 28, 2004 and March30, 2003 (as restated), respectively.

14.    COMPREHENSIVEINCOME (LOSS)

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

|                                                                  |  |                                 |         |               |  |        |         |         |  |  |  |  |  |  |
|------------------------------------------------------------------|--|---------------------------------|---------|---------------|--|--------|---------|---------|--|--|--|--|--|--|
|                                                             |  | (Inthousands) Three MonthsEnded |         |
|                                                             |  | March 28,2004                   |         | March 30,2003 |  |
|                                                             |  |                            |         | (Restated)    |  |
| Netloss                                                          |  | $                               | (5,250  | )        |  | $      | (11,060 | )  |  |
| Othercomprehensive income(loss):                                 |  |                            |    |          |  |   |    |    |  |
| Foreigncurrency translationadjustment                            |  |                            | (4,950  | )        |  |   | 6,700   |    |  |
| Interestrate agreements fair value adjustments (realized in2004) |  |                            | (6,590  | )        |  |   | 300     |    |  |
| Totalother comprehensive income (loss)                           |  |                            | (11,540 | )        |  |   | 7,000   |    |  |
| Totalcomprehensive loss                                          |  | $                               | (16,790 | )        |  | $      | (4,060  | )  |  |
|                                                                  |

17

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

15.    EMPLOYEE BENEFITPLANS

|                                            |  |                                           |        |                                        |  |                |        |               |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------|--|-------------------------------------------|--------|----------------------------------------|--|----------------|--------|---------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                       |  | (Inthousands)                             |
|                                       |  | PensionBenefitsFor the three months ended |        | OtherBenefitsFor the three monthsended |
|                                       |  | March 28,2004                             |        | March 30, 2003                         |  | March 28, 2004 |        | March 30,2003 |
| **Components of Net Periodic BenefitCost** |  |                                      |   |                                   |  |           |   |          |  |   |    |    |  |   |    |    |
| Servicecost                                |  | $                                         | 780    |                                   |  | $              | 800    |          |  | $      | 300     |    |  | $      | 260     |    |
| Interestcost                               |  |                                      | 4,340  |                                   |  |           | 4,280  |          |  |   | 780     |    |  |   | 750     |    |
| Expectedreturn on planassets               |  |                                      | (4,350 | )                                 |  |           | (4,140 | )        |  |   | — |    |  |   | — |    |
| Amortizationof prior servicecost           |  |                                      | 40     |                                   |  |           | 30     |          |  |   | (60     | )  |  |   | (30     | )  |
| Amortizationof net (gain)loss              |  |                                      | 620    |                                   |  |           | 170    |          |  |   | 140     |    |  |   | 70      |    |
| Netperiodic benefitcost                    |  | $                                         | 1,430  |                                   |  | $              | 1,140  |          |  | $      | 1,160   |    |  | $      | 1,050   |    |
|                                            |

EmployerContributions

Metaldyne previously disclosed in its financialstatements for the year ended December 28, 2003, that it expected tocontribute $17.5 million to its defined benefit pension plans in 2004.As of March 28, 2004, approximately $0.4 million of contributions havebeen made.

The Company also disclosed in its financialstatements for the year ended December 28, 2003, that it expected tocontribute approximately $9.1 million to its defined contribution(profit-sharing and 401(k) matching contribution) plans in 2004. TheCompany has not made a contribution to its defined contribution plansas of March 28, 2004.

16.    COMMITMENTS ANDCONTINGENCIES

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

There are nomaterial pending legal proceedings, other than ordinary routinelitigation incidental to the Company's business, to which it isaware that would have a material adverse effect on the Company'sfinancial position or results of operations.

17.    NEWACCOUNTING PRONOUNCEMENTS

In May 2003, the FASB issued SFAS No.150, "Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity." ThisStatement establishes standards for how an issuer classifies andmeasures certain financial instruments with characteristics of bothliabilities and equity. This Statement is effective for financialinstruments entered into or modified after May 31, 2003, and otherwiseis effective at the beginning of the first interim period beginningafter June 15, 2003, except for mandatorily redeemable financialinstruments of nonpublic entities, for which it is effective for thefirst fiscal period beginning after December 15, 2003. Due to theCompany being a nonpublic entity as defined in SFAS No. 150, it hasadopted this Statement effective for the quarter ended March 28, 2004.As a result of the Company's adoption of SFAS No. 150, theCompany's redeemable preferred stock is classified as a long-termliability on the Company's consolidated balance sheet effectiveas of the quarter ended March 28, 2004, and preferred stock dividendsassociated with this redeemable preferred stock are classified as otherexpense, net on the Company's consolidated statement ofoperations beginning with the quarter ended March 28, 2004.

18.    SUBSEQUENT EVENTS

On June 17, 2004, the Companyentered into a sale-leaseback transaction for machinery and equipmentwith a third party lessor. The Company received $7.5 million cash aspart of this transaction.

18

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

In July 2004, the Company received an IRStax refund of $27 million that resulted from a claim filed in 2002.This claim was based upon a 2002 change in the US Treasury Regulationsthat permitted the Company to utilize a previously disallowed capitalloss that primarily resulted from the sale of a subsidiary in 2000. Theamount received in excess of the refund previously recorded will beconsidered in the tax provision for the third quarter of 2004.

19.    CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORSOF            SENIOR SUBORDINATED NOTES

Thefollowing condensed consolidating financial informationpresents:

|           |                                                                                                                                                                                                                                                                                                                                            |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)  | Condensed consolidatingfinancial statements as of March 28, 2004 and December 28, 2003, andfor the three months ended March 28, 2004 and March 30, 2003 (asrestated) of (a) Metaldyne Corporation, the parent and issuer, (b) theguarantor subsidiaries, (c) the non-guarantor subsidiaries and (d) theCompany on a consolidated basis,and |

|           |                                                                                                                              |
|-----------|------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Elimination entries necessary toconsolidate Metaldyne Corporation, the parent, with guarantor andnon-guarantor subsidiaries. |

The condensed consolidatingfinancial statements are presented on the equity method. Under thismethod, the investments in subsidiaries are recorded at cost andadjusted for the Company's share of the subsidiaries'cumulative results of operations, capital contributions, distributionsand other equity changes. The principal elimination entries eliminateinvestments in subsidiaries and intercompany balances andtransactions.

All investments in non-domestic subsidiaries areheld directly at Metaldyne Company LLC, a wholly owned subsidiary ofMetaldyne Corporation and the guarantor subsidiaries. Equity innon-domestic subsidiary investees is included in the guarantor columnof the accompanying consolidating financial information.

19

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIALSTATEMENTS    (CONTINUED)

Guarantor/Non-Guarantor CondensedConsolidating Balance Sheets March 28, 2004 (Unaudited)

(Inthousands)

|                                                             |  |        |          |           |  |               |           |              |  |              |         |        |  |        |          |         |  |        |           |         |  |  |
|-------------------------------------------------------------|--|--------|----------|-----------|--|---------------|-----------|--------------|--|--------------|---------|--------|--|--------|----------|---------|--|--------|-----------|---------|--|--|
|                                                        |  | Parent |          | Guarantor |  | Non-Guarantor |           | Eliminations |  | Consolidated |
| **Assets**                                                  |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Currentassets:                                              |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Cashand cash equivalents                                    |  | $      | —  |      |  | $             | 43,000    |         |  | $            | 2,500   |   |  | $      | —  |    |  | $      | 45,500    |    |
| Totalreceivables, net                                       |  |   | —  |      |  |          | 59,910    |         |  |         | 74,680  |   |  |   | —  |    |  |   | 134,590   |    |
| Inventories                                                 |  |   | —  |      |  |          | 74,730    |         |  |         | 30,010  |   |  |   | —  |    |  |   | 104,740   |    |
| Deferredand refundable income taxes                         |  |   | —  |      |  |          | 6,950     |         |  |         | 1,150   |   |  |   | —  |    |  |   | 8,100     |    |
| Prepaidexpenses and other assets                            |  |   | —  |      |  |          | 33,590    |         |  |         | 6,130   |   |  |   | —  |    |  |   | 39,720    |    |
| Totalcurrent assets                                         |  |   | —  |      |  |          | 218,180   |         |  |         | 114,470 |   |  |   | —  |    |  |   | 332,650   |    |
| Equityinvestments in affiliates                             |  |   | 128,200  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 128,200   |    |
| Propertyand equipment, net                                  |  |   | —  |      |  |          | 664,220   |         |  |         | 225,240 |   |  |   | —  |    |  |   | 889,460   |    |
| Excessof cost over net assets of acquired companies         |  |   | —  |      |  |          | 442,770   |         |  |         | 139,190 |   |  |   | —  |    |  |   | 581,960   |    |
| Investmentin subsidiaries                                   |  |   | 544,870  |      |  |          | 230,890   |         |  |         | — |   |  |   | (775,760 | )  |  |   | —   |    |
| Intangibleand other assets                                  |  |   | —  |      |  |          | 215,640   |         |  |         | 20,140  |   |  |   | —  |    |  |   | 235,780   |    |
| Totalassets                                                 |  | $      | 673,070  |      |  | $             | 1,771,700 |         |  | $            | 499,040 |   |  | $      | (775,760 | )  |  | $      | 2,168,050 |    |
| **LiabilitiesAnd Shareholders'Equity**                      |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Currentliabilities:                                         |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Accountspayable                                             |  | $      | —  |      |  | $             | 173,880   |         |  | $            | 69,170  |   |  | $      | —  |    |  | $      | 243,050   |    |
| Accruedliabilities                                          |  |   | —  |      |  |          | 95,200    |         |  |         | 36,450  |   |  |   | —  |    |  |   | 131,650   |    |
| Currentmaturities, long-term debt                           |  |   | —  |      |  |          | 4,370     |         |  |         | 6,400   |   |  |   | —  |    |  |   | 10,770    |    |
| Totalcurrent liabilities                                    |  |   | —  |      |  |          | 273,450   |         |  |         | 112,020 |   |  |   | —  |    |  |   | 385,470   |    |
| Long-termdebt                                               |  |   | 431,750  |      |  |          | 396,530   |         |  |         | 5,550   |   |  |   | —  |    |  |   | 833,830   |    |
| Deferredincome taxes                                        |  |   | —  |      |  |          | 96,380    |         |  |         | 25,230  |   |  |   | —  |    |  |   | 121,610   |    |
| Minorityinterest                                            |  |   | —  |      |  |          | —   |         |  |         | 800     |   |  |   | —  |    |  |   | 800       |    |
| Otherlong-term liabilities                                  |  |   | —  |      |  |          | 146,080   |         |  |         | 7,190   |   |  |   | —  |    |  |   | 153,270   |    |
| Redeemablepreferred stock                                   |  |   | 142,710  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 142,710   |    |
| Intercompanyaccounts,net                                    |  |   | (431,750 | )    |  |          | 314,390   |         |  |         | 117,360 |   |  |   | —  |    |  |   | —   |    |
| Totalliabilities                                            |  |   | 142,710  |      |  |          | 1,226,830 |         |  |         | 268,150 |   |  |   | —  |    |  |   | 1,637,690 |    |
| Shareholders'equity:                                        |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Preferredstock                                              |  |   | —  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | —   |    |
| Commonstock                                                 |  |   | 42,830   |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 42,830    |    |
| Paid-incapital                                              |  |   | 693,540  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 693,540   |    |
| Accumulateddeficit                                          |  |   | (240,000 | )    |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | (240,000  | )  |
| Accumulatedother comprehensiveincome                        |  |   | 33,990   |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 33,990    |    |
| Investmentby Parent/Guarantor                               |  |   | —  |      |  |          | 544,870   |         |  |         | 230,890 |   |  |   | (775,760 | )  |  |   | —   |    |
| Totalshareholders' equity                                   |  |   | 530,360  |      |  |          | 544,870   |         |  |         | 230,890 |   |  |   | (775,760 | )  |  |   | 530,360   |    |
| Totalliabilities, redeemable stock and shareholders' equity |  | $      | 673,070  |      |  | $             | 1,771,700 |         |  | $            | 499,040 |   |  | $      | (775,760 | )  |  | $      | 2,168,050 |    |
|                                                             |

20

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Guarantor/Non-GuarantorCondensed Consolidating Balance Sheets December 28, 2003

(Inthousands)

|                                                             |  |        |          |           |  |               |           |              |  |              |         |        |  |        |          |         |  |        |           |         |  |  |
|-------------------------------------------------------------|--|--------|----------|-----------|--|---------------|-----------|--------------|--|--------------|---------|--------|--|--------|----------|---------|--|--------|-----------|---------|--|--|
|                                                        |  | Parent |          | Guarantor |  | Non-Guarantor |           | Eliminations |  | Consolidated |
|                                                        |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| **Assets**                                                  |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Currentassets:                                              |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Cashand cash equivalents                                    |  | $      | —  |      |  | $             | 10,750    |         |  | $            | 3,070   |   |  | $      | —  |    |  | $      | 13,820    |    |
| Totalreceivables, net                                       |  |   | —  |      |  |          | 151,940   |         |  |         | 29,180  |   |  |   | —  |    |  |   | 181,120   |    |
| Inventories                                                 |  |   | —  |      |  |          | 54,080    |         |  |         | 29,600  |   |  |   | —  |    |  |   | 83,680    |    |
| Deferredand refundable income taxes                         |  |   | —  |      |  |          | 7,900     |         |  |         | 1,210   |   |  |   | —  |    |  |   | 9,110     |    |
| Prepaidexpenses and other assets                            |  |   | —  |      |  |          | 27,880    |         |  |         | 8,400   |   |  |   | —  |    |  |   | 36,280    |    |
| Totalcurrent assets                                         |  |   | —  |      |  |          | 252,550   |         |  |         | 71,460  |   |  |   | —  |    |  |   | 324,010   |    |
| Equityand other investments in affiliates                   |  |   | 148,830  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 148,830   |    |
| Propertyand equipment, net                                  |  |   | —  |      |  |          | 478,760   |         |  |         | 228,690 |   |  |   | —  |    |  |   | 707,450   |    |
| Excessof cost over net assets of acquired companies         |  |   | —  |      |  |          | 441,920   |         |  |         | 142,470 |   |  |   | —  |    |  |   | 584,390   |    |
| Investmentin subsidiaries                                   |  |   | 471,060  |      |  |          | 229,590   |         |  |         | — |   |  |   | (700,650 | )  |  |   | —   |    |
| Intangibleand other assets                                  |  |   | —  |      |  |          | 225,400   |         |  |         | 21,780  |   |  |   | —  |    |  |   | 247,180   |    |
| Totalassets                                                 |  | $      | 619,890  |      |  | $             | 1,628,220 |         |  | $            | 464,400 |   |  | $      | (700,650 | )  |  | $      | 2,011,860 |    |
|                                                        |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| **LiabilitiesAnd Shareholders'Equity**                      |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Currentliabilities:                                         |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Accountspayable                                             |  | $      | —  |      |  | $             | 128,960   |         |  | $            | 72,280  |   |  | $      | —  |    |  | $      | 201,240   |    |
| Accruedliabilities                                          |  |   | —  |      |  |          | 96,040    |         |  |         | 40,800  |   |  |   | —  |    |  |   | 136,840   |    |
| Currentmaturities, long-term debt                           |  |   | —  |      |  |          | 4,820     |         |  |         | 6,060   |   |  |   | —  |    |  |   | 10,880    |    |
| Totalcurrent liabilities                                    |  |   | —  |      |  |          | 229,820   |         |  |         | 119,140 |   |  |   | —  |    |  |   | 348,960   |    |
| Long-termdebt                                               |  |   | 400,000  |      |  |          | 360,740   |         |  |         | 6,190   |   |  |   | —  |    |  |   | 766,930   |    |
| Deferredincome taxes                                        |  |   | —  |      |  |          | 95,530    |         |  |         | 25,990  |   |  |   | —  |    |  |   | 121,520   |    |
| Minorityinterest                                            |  |   | —  |      |  |          | —   |         |  |         | 800     |   |  |   | —  |    |  |   | 800       |    |
| Otherlong-term liabilities                                  |  |   | —  |      |  |          | 148,620   |         |  |         | 5,140   |   |  |   | —  |    |  |   | 153,760   |    |
| Intercompanyaccounts, net                                   |  |   | (400,000 | )    |  |          | 322,450   |         |  |         | 77,550  |   |  |   | —  |    |  |   | —   |    |
| Totalliabilities                                            |  |   | —  |      |  |          | 1,157,160 |         |  |         | 234,810 |   |  |   | —  |    |  |   | 1,391,970 |    |
| Redeemablepreferred stock                                   |  |   | 73,980   |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 73,980    |    |
|                                                        |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Shareholders'equity:                                        |  |   |     |      |  |          |      |         |  |         |    |   |  |   |     |    |  |   |      |    |
| Preferredstock                                              |  |   | —  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | —   |    |
| Commonstock                                                 |  |   | 42,730   |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 42,730    |    |
| Paid-incapital                                              |  |   | 692,400  |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 692,400   |    |
| Accumulateddeficit                                          |  |   | (234,750 | )    |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | (234,750  | )  |
| Accumulatedother comprehensive income                       |  |   | 45,530   |      |  |          | —   |         |  |         | — |   |  |   | —  |    |  |   | 45,530    |    |
| Investmentby Parent/Guarantor                               |  |   | —  |      |  |          | 471,060   |         |  |         | 229,590 |   |  |   | (700,650 | )  |  |   | —   |    |
| Totalshareholders' equity                                   |  | $      | 545,910  |      |  | $             | 471,060   |         |  | $            | 229,590 |   |  | $      | (700,650 | )  |  | $      | 545,910   |    |
| Totalliabilities, redeemable stock and shareholders' equity |  | $      | 619,890  |      |  | $             | 1,628,220 |         |  | $            | 464,400 |   |  | $      | (700,650 | )  |  | $      | 2,011,860 |    |
|                                                             |

19

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Guarantor/Non-Guarantor CondensedConsolidating Statement Of Operations Three Months Ended March 28,2004 (Unaudited)

(Inthousands)

|                                                |  |        |         |           |  |               |          |              |  |              |         |         |  |        |         |         |  |        |          |         |  |  |
|------------------------------------------------|--|--------|---------|-----------|--|---------------|----------|--------------|--|--------------|---------|---------|--|--------|---------|---------|--|--------|----------|---------|--|--|
|                                           |  | Parent |         | Guarantor |  | Non-Guarantor |          | Eliminations |  | Consolidated |
| Netsales                                       |  | $      | — |      |  | $             | 378,510  |         |  | $            | 102,630 |    |  | $      | — |    |  | $      | 481,140  |    |
| Costof sales                                   |  |   | — |      |  |          | (346,560 | )       |  |         | (82,370 | )  |  |   | — |    |  |   | (428,930 | )  |
| Grossprofit                                    |  |   | — |      |  |          | 31,950   |         |  |         | 20,260  |    |  |   | — |    |  |   | 52,210   |    |
| Selling,general and administrative expenses    |  |   | — |      |  |          | (25,730  | )       |  |         | (5,490  | )  |  |   | — |    |  |   | (31,220  | )  |
| Restructuringcharges                           |  |   | — |      |  |          | (190     | )       |  |         | — |    |  |   | — |    |  |   | (190     | )  |
| Losson disposition of manufacturing facilities |  |   | — |      |  |          | (7,600   | )       |  |         | — |    |  |   | — |    |  |   | (7,600   | )  |
| Operatingprofit                                |  |   | — |      |  |          | (1,570   | )       |  |         | 14,770  |    |  |   | — |    |  |   | 13,200   |    |
| Otherexpensenet:                               |  |   |    |      |  |          |     |         |  |         |    |    |  |   |    |    |  |   |     |    |
| Interestexpense                                |  |   | — |      |  |          | (17,990  | )       |  |         | (2,110  | )  |  |   | — |    |  |   | (20,100  | )  |
| Preferredstock dividends                       |  |   | (4,260  | )    |  |          | —  |         |  |         | — |    |  |   | — |    |  |   | (4,260   | )  |
| Non-cashgain on interest rate arrangements     |  |   | — |      |  |          | 6,590    |         |  |         | — |    |  |   | — |    |  |   | 6,590    |    |
| Equityincome (loss) from affiliates, net       |  |   | 1,460   |      |  |          | —  |         |  |         | — |    |  |   | — |    |  |   | 1,460    |    |
| Other,net                                      |  |   | — |      |  |          | 190      |         |  |         | (2,570  | )  |  |   | — |    |  |   | (2,380   | )  |
| Otherexpense, net                              |  |   | (2,800  | )    |  |          | (11,210  | )       |  |         | (4,680  | )  |  |   | — |    |  |   | (18,690  | )  |
| Income(loss) before incometaxes                |  |   | (2,800  | )    |  |          | (12,780  | )       |  |         | 10,090  |    |  |   | — |    |  |   | (5,490   | )  |
| Incometax expense (benefit)                    |  |   | — |      |  |          | (3,360   | )       |  |         | 3,120   |    |  |   | — |    |  |   | (240     | )  |
| Equityin net income of subsidiaries            |  |   | (2,450  | )    |  |          | 6,970    |         |  |         | — |    |  |   | (4,520  | )  |  |   | —  |    |
| Earnings(loss) attributable to common stock    |  | $      | (5,250  | )    |  | $             | (2,450   | )       |  | $            | 6,970   |    |  | $      | (4,520  | )  |  | $      | (5,250   | )  |
|                                                |

20

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Guarantor/Non-Guarantor CondensedConsolidating Statement Of Operations Three Months Ended March 30,2003 (Unaudited) (Restated)

(Inthousands)

|                                             |  |        |         |           |  |               |          |              |  |              |         |         |  |        |         |        |  |        |          |         |  |  |
|---------------------------------------------|--|--------|---------|-----------|--|---------------|----------|--------------|--|--------------|---------|---------|--|--------|---------|--------|--|--------|----------|---------|--|--|
|                                        |  | Parent |         | Guarantor |  | Non-Guarantor |          | Eliminations |  | Consolidated |
| Netsales                                    |  | $      | — |      |  | $             | 295,470  |         |  | $            | 86,450  |    |  | $      | — |   |  | $      | 381,920  |    |
| Costof sales                                |  |   | — |      |  |          | (272,440 | )       |  |         | (68,440 | )  |  |   | — |   |  |   | (340,880 | )  |
| Grossprofit                                 |  |   | — |      |  |          | 23,030   |         |  |         | 18,010  |    |  |   | — |   |  |   | 41,040   |    |
| Selling,general and administrative expenses |  |   | — |      |  |          | (25,830  | )       |  |         | (3,820  | )  |  |   | — |   |  |   | (29,650  | )  |
| Restructuringcharges                        |  |   | — |      |  |          | —  |         |  |         | (1,530  | )  |  |   | — |   |  |   | (1,530   | )  |
| Operatingprofit                             |  |   | — |      |  |          | (2,800   | )       |  |         | 12,660  |    |  |   | — |   |  |   | 9,860    |    |
| Otherexpense,net:                           |  |   |    |      |  |          |     |         |  |         |    |    |  |   |    |   |  |   |     |    |
| Interestexpense                             |  |   | — |      |  |          | (17,430  | )       |  |         | (490    | )  |  |   | — |   |  |   | (17,920  | )  |
| Equityincome (loss) from affiliates, net    |  |   | (2,630  | )    |  |          | —  |         |  |         | — |    |  |   | — |   |  |   | (2,630   | )  |
| Other,net                                   |  |   | — |      |  |          | 320      |         |  |         | (3,980  | )  |  |   | — |   |  |   | (3,660   | )  |
| Otherincome (expense), net                  |  |   | (2,630  | )    |  |          | (17,110  | )       |  |         | (4,470  | )  |  |   | — |   |  |   | (24,210  | )  |
| Income(loss) before incometaxes             |  |   | (2,630  | )    |  |          | (19,910  | )       |  |         | 8,190   |    |  |   | — |   |  |   | (14,350  | )  |
| Incometax expense (benefit)                 |  |   | — |      |  |          | (8,420   | )       |  |         | 5,130   |    |  |   | — |   |  |   | (3,290   | )  |
| Equityin net income ofsubsidiaries          |  |   | (8,430  | )    |  |          | 3,060    |         |  |         | — |    |  |   | 5,370   |   |  |   | —  |    |
| Netincome (loss)                            |  | $      | (11,060 | )    |  | $             | (8,430   | )       |  | $            | 3,060   |    |  | $      | 5,370   |   |  | $      | (11,060  | )  |
| Preferredstock dividends                    |  |   | 2,220   |      |  |          | —  |         |  |         | — |    |  |   | — |   |  |   | 2,220    |    |
| Earnings(loss) attributable to common stock |  | $      | (13,280 | )    |  | $             | (8,430   | )       |  | $            | 3,060   |    |  | $      | 5,370   |   |  | $      | (13,280  | )  |
|                                             |

21

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Guarantor/Non-Guarantor CondensedConsolidating Statement Of Cash Flows Three Months Ended March 28,2004 (Unaudited)

(Inthousands)

|                                                     |  |        |         |           |  |               |          |              |  |              |         |         |  |        |                                             |        |  |        |          |         |  |  |
|-----------------------------------------------------|--|--------|---------|-----------|--|---------------|----------|--------------|--|--------------|---------|---------|--|--------|---------------------------------------------|--------|--|--------|----------|---------|--|--|
|                                                |  | Parent |         | Guarantor |  | Non-Guarantor |          | Eliminations |  | Consolidated |
| Cashflows from operatingactivities:                 |  |   |    |      |  |          |     |         |  |         |    |    |  |   |                                        |   |  |   |     |    |
| Netcash provided by (used for) operating activities |  | $      | — |      |  | $             | 122,970  |         |  | $            | (34,140 | )  |  | $      |       — |   |  | $      | 88,830   |    |
| Cashflows from investingactivities:                 |  |   |    |      |  |          |     |         |  |         |    |    |  |   |                                        |   |  |   |     |    |
| Capitalexpenditures                                 |  |   | — |      |  |          | (24,500  | )       |  |         | (5,490  | )  |  |   | —                                     |   |  |   | (29,990  | )  |
| Proceedsfrom sale/leaseback of fixedassets          |  |   | — |      |  |          | 64,960   |         |  |         | — |    |  |   | —                                     |   |  |   | 64,960   |    |
| Proceedson disposition of manufacturingfacilities   |  |   | — |      |  |          | (500     | )       |  |         | — |    |  |   | —                                     |   |  |   | (500     | )  |
| Acquisitionof business                              |  |   | — |      |  |          | (217,850 | )       |  |         | — |    |  |   | —                                     |   |  |   | (217,850 | )  |
| Netcash used for investing activities               |  |   | — |      |  |          | (177,890 | )       |  |         | (5,490  | )  |  |   | —                                     |   |  |   | (183,380 | )  |
| Cashflows from financingactivities:                 |  |   |    |      |  |          |     |         |  |         |    |    |  |   |                                        |   |  |   |     |    |
| Principalpayments of term loan facilities           |  |   | — |      |  |          | (440     | )       |  |         | — |    |  |   | —                                     |   |  |   | (440     | )  |
| Proceedsof revolving credit facility                |  |   | — |      |  |          | 70,000   |         |  |         | — |    |  |   | —                                     |   |  |   | 70,000   |    |
| Principalpayments of revolving credit facility      |  |   | — |      |  |          | (37,900  | )       |  |         | — |    |  |   | —                                     |   |  |   | (37,900  | )  |
| Proceedsof senior subordinated notes, due 2014      |  |   | 31,750  |      |  |          | —  |         |  |         | — |    |  |   | —                                     |   |  |   | 31,750   |    |
| Proceedsof other debt                               |  |   | — |      |  |          | —  |         |  |         | 630     |    |  |   | —                                     |   |  |   | 630      |    |
| Principalpayments of other debt                     |  |   | — |      |  |          | (1,300   | )       |  |         | (960    | )  |  |   | —                                     |   |  |   | (2,260   | )  |
| Issuanceof Series A-1 preferred stock               |  |   | 64,450  |      |  |          | —  |         |  |         | — |    |  |   |                                        |   |  |   | 64,450   |    |
| Changein intercompany accounts                      |  |   | (96,200 | )    |  |          | 56,810   |         |  |         | 39,390  |    |  |   | —                                     |   |  |   | —  |    |
| Netcash provided by financing activities            |  |   | — |      |  |          | 87,170   |         |  |         | 39,060  |    |  |   | —                                     |   |  |   | 126,230  |    |
| Netincrease (decrease) in cash                      |  |   | — |      |  |          | 32,250   |         |  |         | (570    | )  |  |   | —                                     |   |  |   | 31,680   |    |
| Cashand cash equivalents, beginning ofperiod        |  |   | — |      |  |          | 10,750   |         |  |         | 3,070   |    |  |   | —                                     |   |  |   | 13,820   |    |
| Cashand cash equivalents, end of period             |  | $      | — |      |  | $             | 43,000   |         |  | $            | 2,500   |    |  | $      | —                                     |   |  | $      | 45,500   |    |
|                                                     |

22

----

METALDYNECORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)

Guarantor/Non-Guarantor CondensedConsolidating Statement Of Cash Flows Three Months Ended March 30,2003 (Unaudited) (Restated)

(Inthousands)

|                                                     |  |        |                                             |           |  |               |          |              |  |              |         |         |  |        |                                             |        |  |        |          |         |  |  |
|-----------------------------------------------------|--|--------|---------------------------------------------|-----------|--|---------------|----------|--------------|--|--------------|---------|---------|--|--------|---------------------------------------------|--------|--|--------|----------|---------|--|--|
|                                                |  | Parent |                                             | Guarantor |  | Non-Guarantor |          | Eliminations |  | Consolidated |
| Cashflows from operatingactivities:                 |  |   |                                        |      |  |          |     |         |  |         |    |    |  |   |                                        |   |  |   |     |    |
| Netcash provided by (used for) operating activities |  | $      |       — |      |  | $             | 48,530   |         |  | $            | (32,580 | )  |  | $      |       — |   |  | $      | 15,950   |    |
| Cashflows from investingactivities:                 |  |   |                                        |      |  |          |     |         |  |         |    |    |  |   |                                        |   |  |   |     |    |
| Capitalexpenditures                                 |  |   | —                                     |      |  |          | (16,500  | )       |  |         | (5,250  | )  |  |   | —                                     |   |  |   | (21,750  | )  |
| Proceedsfrom sale/leaseback of fixed assets         |  |   | —                                     |      |  |          | 8,460    |         |  |         | — |    |  |   | —                                     |   |  |   | 8,460    |    |
| Investmentin joint venture                          |  |   | —                                     |      |  |          | (20,000  | )       |  |         | — |    |  |   | —                                     |   |  |   | (20,000  | )  |
| Netcash used for investing activities               |  |   | —                                     |      |  |          | (28,040  | )       |  |         | (5,250  | )  |  |   | —                                     |   |  |   | (33,290  | )  |
| Cashflows from financingactivities:                 |  |   |                                        |      |  |          |     |         |  |         |    |    |  |   |                                        |   |  |   |     |    |
| Principalpayments of term loan facilities           |  |   | —                                     |      |  |          | (500     | )       |  |         | — |    |  |   | —                                     |   |  |   | (500     | )  |
| Proceedsof revolving credit facility                |  |   | —                                     |      |  |          | 145,000  |         |  |         | — |    |  |   | —                                     |   |  |   | 145,000  |    |
| Principalpayments of revolving credit facility      |  |   | —                                     |      |  |          | (145,000 | )       |  |         | — |    |  |   | —                                     |   |  |   | (145,000 | )  |
| Proceedsof other debt                               |  |   | —                                     |      |  |          | 70       |         |  |         | 1,090   |    |  |   | —                                     |   |  |   | 1,160    |    |
| Principalpayments of other debt                     |  |   | —                                     |      |  |          | (1,040   | )       |  |         | (1,410  | )  |  |   | —                                     |   |  |   | (2,450   | )  |
| Changein intercompany accounts                      |  |   | —                                     |      |  |          | (33,260  | )       |  |         | 33,260  |    |  |   | —                                     |   |  |   | —  |    |
| Netcash provided by (used for) financing activities |  |   | —                                     |      |  |          | (34,730  | )       |  |         | 32,940  |    |  |   | —                                     |   |  |   | (1,790   | )  |
| Netincrease (decrease) in cash                      |  |   | —                                     |      |  |          | (14,240  | )       |  |         | (4,890  | )  |  |   | —                                     |   |  |   | (19,130  | )  |
| Cashand cash equivalents, beginning of period       |  |   | —                                     |      |  |          | 14,240   |         |  |         | 4,890   |    |  |   | —                                     |   |  |   | 19,130   |    |
| Cashand cash equivalents, end of period             |  | $      | —                                     |      |  | $             | —  |         |  | $            | — |    |  | $      | —                                     |   |  | $      | —  |    |
|                                                     |

23

----

|              |                                                                                      |
|--------------|--------------------------------------------------------------------------------------|
| ITEM2.  | MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS |

ExecutiveSummary

We are a leading global manufacturer of highlyengineered metal components for the global light vehicle market with2003 sales of approximately $1.5 billion. We operate three segmentsfocused on the global light vehicle market. The Chassis, Driveline andEngine segments manufacture, design, engineer and assemble metal-formedand precision-engineered components and modular systems used in thetransmissions, engines and chassis of vehicles. We serve approximately200 automotive and industrial customers and our top ten customersrepresent approximately 65% of total 2003 sales. Prior toNovember 2000, we were a public company. Since we were acquired inNovember 2000 by a private investor group, we have actively pursuedopportunities for internal growth and strategic acquisitions that wereunavailable to us when the majority of our shares were publicly traded.Since November 2000, we have completed four acquisitions —Simpson in December 2000, GMTI effective January 2001, DanaCorporation's Greensboro, NC operation in May 2003, andDaimlerChrysler's New Castle operation at the beginning of ourfiscal 2004. Each of these acquisitions has added to the full service,integrated metal supply capabilities of our automotive operations.Additionally we split off our non-automotive operations, divesting ourformer TriMas subsidiary in June 2002 and our Fittings operation inApril 2003.

As discussed elsewhere in this filing or in our 2003Form 10K, an independent investigation into certain accounting mattersat the Company was completed in late September 2004. TheCompany's quarterly financial information for the first threefiscal quarters of 2003 have been restated to reflect adjustments tothe Company's previously reported financial information on Form10-Q for the first three fiscal quarters of 2003. The restatement aroseprimarily out of information obtained through an independentinvestigation. The investigation was initiated as a result of certainallegations made by an employee of the Company and information obtainedby the Company's internal audit staff. This investigationexpanded beyond its initial allegations into overstatements andunderstatements of income at the Company's Sintered Division intoaccounting practices in other areas of the Company concerning the useof reserves and accrual accounts and the recognition of tooling income.Refer to Item 4 for a discussion of the investigation, its findings andactions taken and to be taken by the Company in response thereto.

Key Factors Affecting our Reported Results

We operate inextremely competitive markets. Our customers select us based uponnumerous factors including technology, quality and price. Supplierselection is generally finalized several years prior to the start ofvehicle production, and as a result business that we win will generallynot start production for two years or beyond. In addition, our resultsare heavily dependent on global vehicle production, and in particularthe North American vehicle production of the Big 3 domesticmanufacturers (GM, Ford, and DaimlerChrysler). Our customers generallyrequire that we offer annual productivity and efficiency related pricedecreases on products we sell them. Critical factors to be successfulin this market include global low cost production facilities, leadingservice and parts quality, and differentiated product and processtechnology. Thus, we focus on managing our global manufacturingfootprint in line with our customer needs and local marketmanufacturing cost differences, improving operating efficiency andproduction quality of our plants, fixing or eliminating unprofitablefacilities and reducing our overall material costs. In addition, wespend considerable time and resources developing new technology andproducts to enhance performance and/or decrease cost of the products wesell to our customers. See "Results ofOperations" for more details as to the factors that driveyear over year performance.

The rise in material costs,especially steel, continues to negatively impact our results. This andother increases in our raw material costs increased our cost of goodssold by approximately $3.5 million in the first quarter of 2004(approximately $2 million related to steel cost increases). Note thatthe steel price increases primarily relate to our Forging operationswithin the Driveline Group while the remaining increases are spreadacross all of our other businesses and is related to numerous rawmaterial increases such as energy, Molybdenum and casting components wepurchase. Raw material costs have continued to 

24

----

increase throughout the year and we currentlyexpect these costs to increase our cost of goods sold by approximately$50 million in 2004. However, we currently anticipate recoveringapproximately $30 million of this increase through steel scrap sales,steel resourcing efforts and negotiated or contractual price recoveryfrom our customers. However, our ability to fully execute this recoveryis not guaranteed. Additionally, it appears that raw material costswill continue to increase in 2005 and although we have initiatives inplace to offset these expected increases, there is no guarantee thatthese efforts will be successful.

Our strategy is centered ongrowth through new business awards and acquisitions. We have asignificant new project backlog and have completed several recentacquisitions that we believe will enable us to better serve ourcustomer base and provide enhanced returns for our stakeholders. Inorder to finance a large portion of this activity, we incurredsignificant issuance of new debt. As such, we have significant leverageand are constrained by various covenant limitations (see"— Financial Covenants" for moredetails surrounding these covenants). As we continue to invest in theresources to produce our new business backlog and thus grow ourbusiness, a significant portion of our operating cash flow will be usedto buy new capital equipment, expand production capacity and invest innew technology in addition to servicing principal and interest paymentson our debt obligations. Therefore, we are focused on our cashgeneration ability (we monitor this internally through"Adjusted EBITDA." See discussion below in"Non GAAP Financial Measures" forexplanation), and working capital and fixed asset efficiency to assessour ability to profitably finance our new business backlog.

Ourfirst quarter 2004 net sales were $481 million versus first quarter2003 (as restated) net sales of $382 million. The primary driver of theincrease in our 2004 sales was our New Castle acquisition, whichcontributed $93 million in the first quarter of 2004. In addition wehad approximately $17 million in additional volume related to newproduct launches and ramp up of existing programs as well as a $12million benefit from foreign exchange movements. However, theseincreases were partially offset by approximately $15 million related toour divestiture of two aluminum die casting facilities within ourDriveline segment, and a 4.5% decrease in North Americanvehicles production from our three largest customers (Ford, GM andDaimlerChrysler). Operating profit increased from $9.9 million in 2003(as restated) to $13.2 million in 2004. The increase in 2004 operatingprofit is primarily the result of our New Castle acquisition but issomewhat offset by a $7.6 million charge taken in connection with ourdivestiture of two manufacturing facilities within our Drivelinesegment.

Key Indicators of Performance (Non-GAAP FinancialMeasures)

In evaluating our business, our management considersAdjusted EBITDA as a key indicator of financial operatingperformance.

We define Adjusted EBITDA as net income (loss)before cumulative effect of accounting change and before interest,taxes, depreciation, amortization, asset impairment, preferred stockdividends, non-cash losses on sale-leaseback of property and equipmentand non-cash restricted stock award expense. In evaluating AdjustedEBITDA, our management deems it important to consider the quality ofour underlying earnings by separately identifying certain costsundertaken to improve our results, such as costs related toconsolidating facilities and businesses in an effort to eliminateduplicative costs or achieve efficiencies, costs related to integratingacquisitions and restructuring costs related to expense reductionefforts. Although our consolidation, restructuring and integrationefforts are continuing and driven in part by our acquisition activity,our management eliminates these costs to evaluate underlying businessperformance. Caution must be exercised in eliminating these items asthey include substantially (but not necessarily entirely) cash costsand there can be no assurance that we will ultimately realize thebenefits of these efforts. Moreover, even if the anticipated benefitsare realized, they may be offset by other business performance orgeneral economic issues.

By selecting Adjusted EBITDA,management believes that it is the best indicator (together with acareful review of the aforementioned items) of our ability to serviceand/or incur indebtedness as we are a highly leveraged company. We useAdjusted EBITDA as a key performance measure because we believe itfacilitates operating performance comparisons from period to period andcompany to company by backing out potential differences caused byvariations in capital structures (affecting interest expense),

25

----

tax positions (such as the impact on periodsor companies of changes in effective tax rates or net operatinglosses), and the impact of purchase accounting and SFAS No. 142(affecting depreciation and amortization expense). Because AdjustedEBITDA facilitates internal comparisons of our historical operatingperformance on a more consistent basis, we also use Adjusted EBITDA forbusiness planning purposes, to incent and compensate our managementpersonnel, in measuring our performance relative to that of ourcompetitors and in evaluating acquisition opportunities. In addition,we believe Adjusted EBITDA and similar measures are widely used byinvestors, securities analysts, ratings agencies and other interestedparties as a measure of financial performance and debt-servicecapabilities. Our use of Adjusted EBITDA has limitations as ananalytical tool, and you should not consider it in isolation or as asubstitute for analysis of our results as reported under GAAP. Some ofthese limitations are:

|              |                                                                                           |
|--------------|-------------------------------------------------------------------------------------------|
| •  | It does notreflect our cash expenditures for capital equipment or contractualcommitments; |

|              |                                                                                                                                                                                                                          |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Although depreciation andamortization are non-cash charges, the assets being depreciated andamortized may have to be replaced in the future, and Adjusted EBITDAdoes not reflect cash requirements for suchreplacements; |

|              |                                                                                    |
|--------------|------------------------------------------------------------------------------------|
| •  | It does not reflectchanges in, or cash requirements for, our working capitalneeds; |

|              |                                                                                                                                         |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------|
| •  | It does not reflect the interestexpense or the cash requirements necessary to service interest orprincipal payments on ourindebtedness; |

|              |                                                                                                                                                                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | It includes amountsresulting from matters we consider not to be indicative of underlyingperformance of our fundamental business operations, as discussed in"Management's Discussion and Analysis of FinancialCondition and Results of Operations";and |

|              |                                                                                                                                                              |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Other companies, includingcompanies in our industry, may calculate these measures differentlythan we do, limiting their usefulness as a comparative measure. |

Because of these limitations, Adjusted EBITDA should not beconsidered as a measure of discretionary cash available to us to investin the growth of our business. We compensate for these limitations byrelying primarily on our GAAP results and using Adjusted EBITDA onlysupplementally. We carefully review our operating profit margins(operating profit as a percentage of net sales) at a segment level,which are discussed in detail in our year-to-year comparison ofoperating results.

26

----

The following is a reconciliationof our Adjusted EBITDA to net income (loss) for the three months endedMarch 28, 2004 and March 30, 2003 (asrestated):

|                                                       |  |               |        |            |  |        |         |         |  |  |
|-------------------------------------------------------|--|---------------|--------|------------|--|--------|---------|---------|--|--|
|                                                  |  | (Inthousands) |
|                                                  |  | 2004          |        | 2003       |
|                                                  |  |          |        | (Restated) |
| Netloss                                               |  | $             | (5,250 | )     |  | $      | (11,060 | )  |
| Income taxbenefit                                     |  |          | (240   | )     |  |   | (3,290  | )  |
| Interestexpense                                       |  |          | 20,100 |       |  |   | 17,920  |    |
| Depreciationand amortization in operating profit      |  |          | 31,530 |       |  |   | 24,950  |    |
| Non-cash stock awardexpense                           |  |          | 230    |       |  |   | 900     |    |
| Preferred stockdividend                               |  |          | 4,260  |       |  |   | — |    |
| Non-cash gainon maturity of interest ratearrangements |  |          | (6,590 | )     |  |   | — |    |
| Loss ondisposition of manufacturing facilities        |  |          | 7,600  |       |  |   | — |    |
| Equity (gain) loss fromaffiliates,net                 |  |          | (1,460 | )     |  |   | 2,630   |    |
| Certain itemswithin Other, Net(1)                     |  |          | 2,350  |       |  |   | 2,580   |    |
| AdjustedEBITDA                                        |  | $             | 52,530 |       |  | $      | 34,630  |    |
|                                                       |

|  |
|--|
|  |  |
|  |

|     |                                |
|-----|--------------------------------|
| (1) | Reconciliationof Other Expense |

|                                                                                                                       |  |               |       |            |  |        |       |        |  |  |
|-----------------------------------------------------------------------------------------------------------------------|--|---------------|-------|------------|--|--------|-------|--------|--|--|
|                                                                                                                  |  | (Inthousands) |
|                                                                                                                  |  | 2004          |       | 2003       |
|                                                                                                                  |  |          |       | (Restated) |
| Itemsdeducted from net loss in determining Adjusted EBITDA (amortization offinancing fees and A/R securitizationfees) |  | $             | 2,350 |       |  | $      | 2,580 |   |
| Items includedin determining Adjusted EBITDA (includes foreign currency, royaltiesand interestincome)                 |  |          | 30    |       |  |   | 1,080 |   |
| Totalother, net                                                                                                       |  | $             | 2,380 |       |  | $      | 3,660 |   |
|                                                                                                                       |

Thefollowing details certain items relating to our consolidation,restructuring and integration efforts and other charges not eliminatedin determining Adjusted EBITDA, but that we would eliminate inevaluating the quality of our Adjusted EBITDA:

|                               |  |               |        |            |  |        |         |         |  |  |
|-------------------------------|--|---------------|--------|------------|--|--------|---------|---------|--|--|
|                          |  | (Inthousands) |
|                          |  | 2004          |        | 2003       |
|                          |  |          |        | (Restated) |
| Restructuringcharges          |  | $             | (190   | )     |  | $      | (1,530  | )  |
| Fixed assetdisposal losses    |  |          | (320   | )     |  |   | (1,210  | )  |
| Foreign currencylosses        |  |          | (430   | )     |  |   | (1,230  | )  |
| Independentinvestigation fees |  |          | (1,170 | )     |  |   | — |    |
|                               |

Results ofOperations

Quarter Ended March 28, 2004 versus March30, 2003 (As Restated)

Net Sales.    Netsales by segment and in total for the three months ended March 28, 2004and March  30, 2003 (as restated)were:

|                  |  |                                  |         |                                  |  |        |         |        |  |  |
|------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|--------|--|--|
|             |  | (Inthousands)                    |
|             |  | ThreeMonths Ended March 28, 2004 |         | Three Months Ended March30, 2003 |
|             |  |                             |         | (Restated)                       |
| **Segment**      |  |
| ChassisSegment   |  | $                                | 128,320 |                             |  | $      | 39,870  |   |
| DrivelineSegment |  |                             | 195,430 |                             |  |   | 200,320 |   |
| EngineSegment    |  |                             | 157,390 |                             |  |   | 141,730 |   |
| TotalCompany     |  | $                                | 481,140 |                             |  | $      | 381,920 |   |
|                  |

27

----

Our first quarter 2004 net sales were $481million versus first quarter 2003 (as restated) net sales of $382million. The primary driver of the increase in our 2004 automotivesales was our New Castle acquisition, which contributed $93 million inthe first quarter of 2004. In addition, we had approximately $17million in additional volume related to new product launches and rampup of existing programs as well as a $12 million benefit from foreignexchange movements. However, these increases were partially offset byapproximately a $15 million decrease related to our divestiture of twoaluminum die casting facilities within our Driveline segment and a4.5% decrease in North American vehicles production from ourthree largest customers (Ford, GM and DaimlerChrysler). The specificsales differences are further explained in the segment informationsection.

Gross profit.    Gross profit by segment andin total for the three months ended March 28, 2004 and March 30, 2003(as restated)were:

|                                |  |                                  |        |                                  |  |        |        |         |  |  |
|--------------------------------|--|----------------------------------|--------|----------------------------------|--|--------|--------|---------|--|--|
|                           |  | (Inthousands)                    |
|                           |  | ThreeMonths Ended March 28, 2004 |        | Three Months Ended March30, 2003 |
|                           |  |                             |        | (Restated)                       |
| **Segment**                    |  |
| ChassisSegment                 |  | $                                | 7,330  |                             |  | $      | 4,130  |    |
| DrivelineSegment               |  |                             | 20,690 |                             |  |   | 18,680 |    |
| EngineSegment                  |  |                             | 28,520 |                             |  |   | 22,040 |    |
| Corporate/centralizedresources |  |                             | (4,330 | )                           |  |   | (3,810 | )  |
| TotalCompany                   |  | $                                | 52,210 |                             |  | $      | 41,040 |    |
|                                |

Ourgross profit was $52.2 million, or 10.9% of net sales for 2004compared to $41.0 million or 10.7% of net sales for 2003 (asrestated). The increase of $11.2 million was primarily due to the salesincrease noted above. The approximate $3.5 million increase in rawmaterials noted earlier was primarily offset by cost reductionactivities across the Company and, in some cases, increases in pricescharged to our customers.

Selling, General andAdministrative.    Selling, general and administrative expenseswere $31.2 million, or 6.5% of net sales, for 2004 compared to$29.7 million, or 7.8% of sales in 2003. The $1.5 millionincrease from 2003 to 2004 is primarily explained by approximately $1million in fees and expenses in 2004 related to the IndependentInvestigation described in Note 2 to the consolidated financialstatements contained herein. The reduction in selling, general andadministrative expenses as a percentage of net sales additionallyreflects the fact that the New Castle facility was able to integrateinto our operation without significant additional investment in theseactivities.

Depreciation andAmortization**.**    Depreciation and amortization expense bysegment and in total for the three months ended March 28, 2004 andMarch 30, 2003 (as restated)was:

|                                |  |                                  |        |                                  |  |        |        |        |  |  |
|--------------------------------|--|----------------------------------|--------|----------------------------------|--|--------|--------|--------|--|--|
|                           |  | (Inthousands)                    |
|                           |  | ThreeMonths Ended March 28, 2004 |        | Three Months Ended March30, 2003 |
|                           |  |                             |        | (Restated)                       |
| **Segment**                    |  |
| ChassisSegment                 |  | $                                | 6,190  |                             |  | $      | 1,880  |   |
| DrivelineSegment               |  |                             | 13,350 |                             |  |   | 12,910 |   |
| EngineSegment                  |  |                             | 8,850  |                             |  |   | 8,250  |   |
| Corporate/centralizedresources |  |                             | 3,140  |                             |  |   | 1,910  |   |
| TotalCompany                   |  | $                                | 31,530 |                             |  | $      | 24,950 |   |
|                                |

Thenet increase in depreciation and amortization of approximately $6.6million is principally explained by $4.5 million of depreciation andamortization expense associated with our New Castle acquisition.Additionally, for the past several years capital spending has been inexcess of our depreciation expense. Thus, the additional capitalspending accounts for the remaining increase in depreciationexpense.

28

----

RestructuringCharges**.**    We incurred $0.2 million of additionalrestructuring charges in the first quarter of 2004 compared to $1.5million incurred in the first quarter of 2003. The 2004 charges areprimarily as a result of headcount reductions initiated in ourDriveline segment. Net restructuring activity in the first quarter of2004 is asfollows:

|                          |  |                |        |         |  |  |
|--------------------------|--|----------------|--------|---------|--|--|
|                     |  | (Inthousands)  |
|                     |  | SeveranceCosts |
| BalanceDecember 28, 2003 |  | $              | 7,670  |    |
| Charges toexpense        |  |           | 190    |    |
| Cashpayments             |  |           | (2,000 | )  |
| Balanceat March 28,2004  |  | $              | 5,860  |    |
|                          |

Dispositionof Manufacturing Facilities**.**    In connection with oursale of two aluminum die casting facilities in our Driveline segment,we incurred a $7.6 million charge in the first quarter of 2004 . Thischarge represents the book value of approximately $12 million in fixedassets and deferred financing fees offset by the $4.1 million in cashconsideration paid by Lester PDC for the assets. See Note 11 to theconsolidated financial statements included herein.

OperatingProfit.    Operating profit was $13.2 million, or 2.7% ofsales, for the first quarter of 2004 compared to $9.9 million, or2.6% of sales (as restated), for the same period in 2003. Thisincludes a $7.6 million charge relating to the disposition of twomanufacturing facilities discussed above from 2004. This resultingincrease is principally explained by the significant increase in salesand the decrease in selling, general and administrative expenses as apercentage of sales. The makeup of each of these differences isdiscussed in greater detail above. Operating profit by segment for thethree months ended March 28, 2004 and March 30, 2003 (as restated) isasfollows:

|                                |  |                                  |        |                                  |  |        |        |         |  |  |
|--------------------------------|--|----------------------------------|--------|----------------------------------|--|--------|--------|---------|--|--|
|                           |  | (Inthousands)                    |
|                           |  | ThreeMonths Ended March 28, 2004 |        | Three Months Ended March30, 2003 |
|                           |  |                             |        | (Restated)                       |
| **Segment**                    |  |
| ChassisSegment                 |  | $                                | 3,080  |                             |  | $      | 1,810  |    |
| DrivelineSegment               |  |                             | 1,320  |                             |  |   | 5,880  |    |
| EngineSegment                  |  |                             | 18,230 |                             |  |   | 11,330 |    |
| Corporate/centralizedresources |  |                             | (9,430 | )                           |  |   | (9,160 | )  |
| TotalCompany                   |  | $                                | 13,200 |                             |  | $      | 9,860  |    |
|                                |

AdjustedEBITDA**.**    Management reviews our segment operatingresults based upon the Adjusted EBITDA definition as discussed in the"Key Indicators of Performance (Non-GAAP FinancialMeasures)" section. Accordingly, we have separatelypresented such amounts in the table below. Adjusted EBITDA increased to$52.5 million in the first three months of 2004 from $34.6 millionduring the same period in 2003 (as restated). The primary drivers ofthis increase are explained above in the operating profit anddepreciation and amortization discussions, and will be further detailedin the segment detail that follows. Additionally, in"— Segment Information" below, weprovide a reconciliation between Adjusted EBITDA and operatingprofit.

29

----

|                                                                                             |  |                                  |        |                                  |  |        |        |         |  |  |
|---------------------------------------------------------------------------------------------|--|----------------------------------|--------|----------------------------------|--|--------|--------|---------|--|--|
|                                                                                        |  | (Inthousands)                    |
|                                                                                        |  | ThreeMonths Ended March 28, 2004 |        | Three Months Ended March30, 2003 |
|                                                                                        |  |                             |        | (Restated)                       |
| **Segment**                                                                                 |  |
| ChassisSegment                                                                              |  | $                                | 9,270  |                             |  | $      | 3,690  |    |
| DrivelineSegment                                                                            |  |                             | 22,270 |                             |  |   | 18,790 |    |
| EngineSegment                                                                               |  |                             | 27,080 |                             |  |   | 19,580 |    |
| Corporate/centralizedresources                                                              |  |                             | (6,090 | )                           |  |   | (7,430 | )  |
| TotalCompany                                                                                |  | $                                | 52,530 |                             |  | $      | 34,630 |    |
| Memo:Fixed asset losses included in calculation of both operating profit andAdjusted EBITDA |  | $                                | 320    |                             |  | $      | 1,210  |    |
| Memo:Other, net loss included in calculation of AdjustedEBITDA                              |  | $                                | 30     |                             |  | $      | 1,080  |    |
|                                                                                             |

InterestExpense.    Interest expense increased from $17.9 million in thefirst quarter of 2003 (as restated) to approximately $20.1 million in2004. The increase is principally due to $0.8 million in interestarising from additional indebtedness from our New Castle acquisitionand $3.8 million in interest arising from our 10% senior notesissued in October 2003. These increases were offset by a decrease of$1.1 million in interest expense related to the redemption of the $98.5million outstanding balance on the 4.5% subordinated debenturesand a decrease of $0.4 million in interest expense related to therepayment of $46.6 million of term loan debt in the fourth quarter of2004.

Equity Loss from Affiliates.    Equity earnings(loss) from affiliates were $1.5 million in the first quarter of 2004.The improvement versus our first quarter 2003 loss of $2.6 millionreflects the improved operating results of our equity affiliates.

Other, Net.    Other, net decreased to $2.4 million inthe first quarter of 2004 versus a loss of approximately $3.7 millionin the first quarter of 2003 (as restated). The primary reason for thedecline is a $0.8 million reduction in foreign currency losses in 2004versus 2003.

Preferred Stock Dividends.    Preferredstock dividends were $4.3 million in the first quarter of 2004 ascompared to $2.2 million for the same period in 2003. This increase isdue to dividends on the $64.5 million of preferred stock issued inconnection with the New Castle acquisition and compounded interest onpreexisting preferred stock. Due to our adoption of SFAS No. 150,"Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity" as of thequarter ended March 28, 2004, preferred stock dividends are included asother expense, net on our consolidated statement of operationsbeginning in 2004.

Taxes.    The provision for incometaxes for the first quarter of 2004 was a benefit of $0.2 million ascompared with a benefit of $3.3 million for the first quarter of 2003(as restated). The primary reasons for the Company's effectivetax rate being different from its statutory rate are non-deductiblepreferred stock dividends, foreign losses for which losses are notrecognized and foreign tax rates in excess of the U.S. rate as well asthe provision for unremitted earnings of a foreign subsidiary.

Segment Information

Chassis Segment.    Sales forour Chassis Segment increased in the first quarter of 2004 to $128.3million versus $39.9 million in the prior period (as restated). Theprimary driver of the approximate $88 million increase in sales is a$93 million increase from the acquisition of New Castle offset by $4.2million decrease due to the divestiture of our Fittings operation inApril 2003. Adjusted EBITDA for the segment increased from $3.7 millionin the first quarter of 2003 (as restated) to $9.3 million in 2004. Theincrease is primarily due to an approximate $7 million increase fromour New Castle acquisition (results are net of approximately $2.5million in operating leases used to finance the acquisition), offsetpartially by approximately $1 million from the divestiture of ourFittings operation and $0.1 million in fixed asset losses in 2003.Operating profit increased by $1.3 million in the first quarter of 2004due to the above 

30

----

factors but was offset by an increase of $4.3million in depreciation and amortization expense primarily relating tothe New Castle acquisition.

|                                                                                             |  |                                  |         |                                  |  |        |        |        |  |  |
|---------------------------------------------------------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|--------|--------|--|--|
|                                                                                        |  | (Inthousands)                    |
|                                                                                        |  | ThreeMonths Ended March 28, 2004 |         | Three Months Ended March30, 2003 |
|                                                                                        |  |                             |         | (Restated)                       |
| **ChassisSegment**                                                                          |  |
| Sales                                                                                       |  | $                                | 128,320 |                             |  | $      | 39,870 |   |
| Operatingprofit                                                                             |  | $                                | 3,080   |                             |  | $      | 1,810  |   |
| Depreciationand amortization                                                                |  |                             | 6,190   |                             |  |   | 1,880  |   |
| AdjustedEBITDA                                                                              |  | $                                | 9,270   |                             |  | $      | 3,690  |   |
| Memo:Fixed asset losses included in calculation of both operating profit andAdjusted EBITDA |  | $                                | — |                             |  | $      | 140    |   |
|                                                                                             |

DrivelineSegment.    Sales for our Driveline segment were $195.4 millionin the first quarter of 2004 versus $200.3 million in 2003 (asrestated). Sales decreased $15 million related to the divestiture oftwo aluminum die casting facilities but were offset by a $6.4 millionbenefit in foreign exchange fluctuations. The remaining net increase isprimarily attributable to higher sales volume from existing customersand products launched in 2003. Adjusted EBITDA for the segmentincreased to $22.3 million versus $18.8 million in the prior year (asrestated). Approximately $2.2 million of the increase relates to thesale of the two aluminum die casting facilities discussed above thathad a negative Adjusted EBITDA in 2003 (as restated). Additionally,$1.5 million of the increase relates to foreign exchange fluctuations,but is more than offset by approximately $2 million in higher steelprocurement costs and $0.2 million in fixed asset losses in 2004. Theremaining net increase is primarily driven by cost reductions and, insome cases, increased prices from our customers that reflect the risein our material prices. Operating profit decreased from $5.9 million in2003 (as restated) to $1.3 million in 2004. In addition to the factorsdiscussed above influencing Adjusted EBITDA, the decrease in 2004 isprimarily attributable to the $7.6 million disposition of twomanufacturing facilities discussed earlier.

|                                                                                             |  |                                  |         |                                  |  |        |         |        |  |  |
|---------------------------------------------------------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|--------|--|--|
|                                                                                        |  | (Inthousands)                    |
|                                                                                        |  | ThreeMonths Ended March 30, 2004 |         | Three Months Ended March30, 2003 |
|                                                                                        |  |                             |         | (Restated)                       |
| **DrivelineSegment**                                                                        |  |
| Sales                                                                                       |  | $                                | 195,430 |                             |  | $      | 200,320 |   |
| Operatingprofit                                                                             |  | $                                | 1,320   |                             |  | $      | 5,880   |   |
| Assetimpairment                                                                             |  |                             | 7,600   |                             |  |   | — |   |
| Depreciation andamortization                                                                |  |                             | 13,350  |                             |  |   | 12,910  |   |
| AdjustedEBITDA                                                                              |  | $                                | 22,270  |                             |  | $      | 18,790  |   |
| Memo:Fixed asset losses included in calculation of both operating profit andAdjusted EBITDA |  | $                                | 240     |                             |  | $      | — |   |
|                                                                                             |

31

----

Engine Segment.    Sales for ourEngine Segment increased to $157.4 million in the first quarter of 2004or 11.1% over 2003 (as restated) sales of $141.7 million**.**The $16 million increase primarily reflects additional volume fromnew product launches and a $5.3 million benefit related to foreignexchange movements. Adjusted EBITDA increased from $19.6 million in thefirst quarter of 2003 (as restated) to $27.1 million in 2004. Theincrease primarily relates to additional sales volume, but is alsoaided by an approximate $4 million in cost reductions, an approximate$0.2 million benefit related to foreign exchange movements and areduction in fixed asset losses of approximately 0.1 million in 2004versus 2003. Operating profit increased to $18.2 million in the firstquarter of 2004 from $11.3 million in 2003 (as restated). In additionto the factors discussed above, operating profit was negativelyaffected by a $0.6 million increase in depreciation and amortizationexpense.

|                                                                                             |  |                                  |         |                                  |  |        |         |        |  |  |
|---------------------------------------------------------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|---------|--------|--|--|
|                                                                                        |  | (Inthousands)                    |
|                                                                                        |  | ThreeMonths Ended March 28, 2004 |         | Three Months Ended March30, 2003 |
|                                                                                        |  |                             |         | (Restated)                       |
| **Engine Segment**                                                                          |  |
| Sales                                                                                       |  | $                                | 157,390 |                             |  | $      | 141,730 |   |
| Operatingprofit                                                                             |  | $                                | 18,230  |                             |  | $      | 11,330  |   |
| Depreciationand amortization                                                                |  |                             | 8,850   |                             |  |   | 8,250   |   |
| AdjustedEBITDA                                                                              |  | $                                | 27,080  |                             |  | $      | 19,580  |   |
| Memo:Fixed asset losses included in calculation of both operating profit andAdjusted EBITDA |  | $                                | 80      |                             |  | $      | 170     |   |
|                                                                                             |

Corporate/CentralizedResources.    Adjusted EBITDA for Corporate/CentralizedResources was a loss of $6.1 million in the first quarter of 2004versus a loss of $7.4 million in the prior period (as restated). Thisdecrease in expense is primarily attributable to savings fromrestructuring activities initiated in 2003 to streamline corporatefunctions such as information technology, human resources, and customersales. Additionally, 2003 expense was negatively impacted by a $0.9million fixed asset loss and an approximate $1.1 million loss in otherexpense, net primarily related to foreign currency exchange losses.However, the savings in 2004 were somewhat offset by approximately $1million of expenses associated with our Independent Investigationdiscussed in Note 2 to the Company's consolidated financialstatements contained herein. Operating profit decreased by $0.3 millionin 2004 due to the factors discussed above.

|                                                                                             |  |                                  |         |                                  |  |        |        |         |  |  |
|---------------------------------------------------------------------------------------------|--|----------------------------------|---------|----------------------------------|--|--------|--------|---------|--|--|
|                                                                                        |  | (Inthousands)                    |
|                                                                                        |  | ThreeMonths Ended March 28, 2004 |         | Three Months Ended March30, 2003 |
|                                                                                        |  |                             |         | (Restated)                       |
| **Corporate/CentralizedResources**                                                          |  |
| Operating profit                                                                            |  | $                                | (9,430  | )                           |  | $      | (9,160 | )  |
| Non-cash stock awardexpense                                                                 |  |                             | 230     |                             |  |   | 900    |    |
| Depreciation andamortization                                                                |  |                             | 3,140   |                             |  |   | 1,910  |    |
| Other,net                                                                                   |  |                             | (30     | )                           |  |   | (1,080 | )  |
| AdjustedEBITDA                                                                              |  | $                                | (6,090  | )                           |  | $      | (7,430 | )  |
| Memo:Fixed asset losses included in calculation of both operating profit andAdjusted EBITDA |  | $                                | — |                             |  | $      | 900    |    |
| Memo:Other, net loss included in calculation of Adjusted EBITDA                             |  | $                                | 30      |                             |  | $      | 1,080  |    |
|                                                                                             |

Liquidityand Capital Resources

Overview of CapitalStructure.    Our objective is to appropriately finance ourbusiness through a mix of long-term and short-term debt and to ensurethat we have adequate access to liquidity. Our principal sources ofliquidity are cash flow from operations, our revolving credit facilityand our accounts receivable 

32

----

securitization facility. We have significantunutilized capacity under our revolving credit facility that may beutilized for acquisitions, investments or capital expenditure needs.Our cash flows during the year are impacted by the volume and timing ofvehicle production, which includes a halt in our North Americancustomers for approximately two weeks in July and one week in Decemberand reduced production in July and August for certain Europeancustomers. We believe that our liquidity and capital resourcesincluding anticipated cash flow from operations will be sufficient tomeet debt service, capital expenditure and other short-term andlong-term obligations and needs, but we are subject to unforeseeableevents and the risk that we are not successful in implementing ourbusiness strategies.

To facilitate the collection of funds fromoperating activities, we have sold receivables under our accountsreceivable facility and have entered into accelerated paymentcollection programs with our largest customers. If these additionalliquidity sources were to become unavailable or limited by customerconcentration, credit quality or otherwise, we would require additionalborrowing capacity through similar means or other lines of credit. AtMarch 28, 2004, we received approximately $70 million under theaccelerated collection programs. We were recently notified that aportion of this program will expire in 2004, with the majority of theprogram expiring in 2005. While the impact of the discontinuance ofthese programs may be partially offset by a greater utilization of ouraccounts receivable securitization facility, we are examining otheralternative programs in the marketplace, as well as enhanced termsdirectly from our customers. However, we may not be able to reach afavorable resolution in a timely manner, and the new arrangements maybe less advantageous to the Company. If we are unable to replace thesearrangements, it could adversely affect our liquidity and futurecovenant compliance under our senior secured credit facility. Inaddition, if we fail to renew our accounts receivable securitizationagreement, which expires in November 2005, we could have adverseeffects on our liquidity and future covenant compliance. However, wehad $117 million of undrawn and available commitments on our revolvingcredit facility at March 28, 2004.

Our capital planning processis focused on ensuring that we use our cash flow generated from ouroperations in ways that enhance the value of our company. Historically,we have used our cash for a mix of activities focused on revenuegrowth, cost reduction and balance sheet strengthening. In the firstquarter of 2004, we have used our cash primarily to service our debtobligations, fund our capital expenditure requirements, and make theNew Castle acquisition.

Liquidity**.**    We hadapproximately $55 million of cash deposits at March 28, 2004 (afternetting outstanding checks, our balance sheet reflects $46 million).Additionally, we had $117 million of undrawn and available commitmentsfrom our revolving credit facility. Thus, our total liquidity includingcash deposits and the revolving credit facility was approximately $163million (net of outstanding checks) at March 28, 2004.

Effect of Independent Investigation on Covenants andLiquidity.    Due to the delay in filing our financialstatements as a result of the Independent Investigation and therestatement (see Note 2 to the consolidated financial statementsincluded herein), we were required to seek waivers from our senior bankgroup, accounts receivable financing providers and certain lessorsunder sale-leaseback arrangements. Furthermore, prior to this filing,we did not comply with a covenant related to the delivery of financialstatements for our 11% senior subordinated notes due in 2012 andthe 10% subordinated notes due in 2013. However, we have notreceived a notice of default from either the trustee or the holders ofsuch notes for either of these two securities. During this time periodwe have continued to have adequate access to our accounts receivablesecuritization and revolving credit facilities. Upon completion anddelivery of our financial statements with the SEC (Form 10K for 2003and Form 10Q for the first and second quarters of 2004) , we will nolonger require extensions of these waivers, or be in violation of anycovenants on our notes discussed above.

TriMas CommonStock.    As of March 28, 2004, our remaining shares outstandingin TriMas were 5.75 million, representing a book value of $121 million,that are recorded as "equity and other investments inaffiliates" in the Company's consolidated balancesheet as of March 28, 2004. We continue to monitor opportunities toliquidate all or a portion of this interest to assist in fundingoperations, repaying debt and making strategic investments and/oracquisitions.

33

----

Debt, Capitalization and AvailableFinancing Sources.    On October 20, 2003, we issued $150million of 10% senior notes due 2013 in a private placementunder Rule 144A and Regulation S of the Securities Act of 1933, asamended. As these notes were not registered within 210 days from theclosing date, the annual interest rate increased by 1% and willremain so until the registration statement is declared effective. Thenet proceeds from this offering were used to redeem the balance of the$98.5 million aggregate principal amount of the outstanding 4.5%subordinated debentures that were due in December 2003, and to repay$46.6 million of term loan debt under our credit facility. As a resultof this term loan repayment, our semi-annual principal installments onthe term loan facility were decreased to $0.4 million with theremaining outstanding balance due December 31, 2009. Due to thisfinancing, we agreed with our banks to decrease our revolver facilityto $200million.

|                                                                             |  |               |        |                   |  |        |         |        |  |  |
|-----------------------------------------------------------------------------|--|---------------|--------|-------------------|--|--------|---------|--------|--|--|
|                                                                        |  | (Inmillions)  |
|                                                                        |  | March 28,2004 |        | December 28, 2003 |
| Seniorcredit facilities:                                                    |  |          |   |              |  |   |    |   |
| Termloan                                                                    |  | $             | 352    |              |  | $      | 352     |   |
| Revolvingcredit facility                                                    |  |          | 32     |              |  |   | — |   |
| Totalsenior credit facility                                                 |  | $             | 384    |              |  | $      | 352     |   |
| 11% senior subordinatednotes, with interest payable semi-annually, due 2012 |  |          | 250    |              |  |   | 250     |   |
| 10% senior notes, withinterest payable semi-annually, due2013               |  |          | 150    |              |  |   | 150     |   |
| 10% seniorsubordinated notes, with interest payable semi-annually, due2014  |  |          | 32     |              |  |   | — |   |
| Other debt                                                                  |  |          | 29     |              |  |   | 26      |   |
| Total                                                                       |  | $             | 845    |              |  | $      | 778     |   |
| Less current maturities                                                     |  |          | 11     |              |  |   | 11      |   |
| Long-termdebt                                                               |  | $             | 834    |              |  | $      | 767     |   |
|                                                                             |

AtMarch 28, 2004, we were contingently liable for standby letters ofcredit totaling $50.6 million issued on our behalf by financialinstitutions. These letters of credit are used for a variety ofpurposes, including meeting requirements to self-insure workers'compensation claims.

Our senior credit facility containscovenants and requirements affecting us and our subsidiaries, includinga financial covenant requirement for an EBITDA to cash interest expensecoverage ratio to exceed 2.00 through March 28, 2004, increasing to2.25 through July 3, 2005; and a debt to EBITDA leverage ratio not toexceed 5.25 through March 28, 2004, decreasing to 5.00 and 4.75 for thequarters ending June 27, 2004 and October 3, 2004, respectively. Theaccounts receivable facility is included in computing debt for thepurposes of these covenant calculations. We were in compliance with thepreceding financial covenants throughout the quarter and obtainedwaivers associated with the timely submission of financial statementsand associated representations and warranties through November 15,2004. Our most restrictive covenant is the leverage ratio. Thepermitted leverage ratio (as modified on September 30, 2004) becomesmore restrictive in future periods, declining to 5.00 in the secondfiscal quarter of 2004, 4.75 in the third fiscal quarter of 2004, 4.50in the first fiscal quarter of 2005, 4.25 in the third fiscal quarterof 2005, 3.75 in the fourth fiscal quarter of 2005, 3.00 in the firstfiscal quarter of 2006 and 2.75 in the fourth fiscal quarter of 2006and thereafter.

New Castle Acquisition.    Wesuccessfully completed our purchase of DaimlerChrysler's commonand preferred interests in NC-M Chassis ("NewCastle") on December 31, 2003 (subsequent to our 2003 yearend of December 28th). We financed this acquisition with $118.8 millionin cash, $31.7 million in aggregate principal amount of a new issue of10% senior subordinated notes and $64.5 million in aggregateliquidation preference Series A-1 redeemable preferred stock. The cashportion of the consideration was funded in part with the net cashproceeds of approximately $65 million from the sale to and subsequentleaseback of certain equipment from General Electric CapitalCorporation, and the remainder was funded through the Company'srevolving credit facility.

34

----

Interest Rate HedgingArrangements**.**    In February 2001, we entered intointerest rate protection agreements with various financial institutionsto hedge a portion of our interest rate risk related to the term loanborrowings under our credit facility. These agreements included twointerest rate collars with a term of three years, a total notionalamount of $200 million and a three month LIBOR interest rate cap andfloor of 7% and 4.5%, respectively, and four interestrate caps at a three month LIBOR interest rate of 7% with atotal notional amount of $301 million. As a result of our earlyretirement of our term loans in June 2002, we recorded a cumulativenon-cash loss of $7.5 million, which is included in our consolidatedstatement of operations for the year ended December 29, 2002. The twointerest rate collars and two of the interest rate caps totaling $200million were immediately redesignated to our new term loan borrowingsin June 2002. The remaining two interest rate caps totaling $101million no longer qualify for hedge accounting. Therefore, anyunrealized gain or loss is recorded as other income or expense in theconsolidated statement of operations beginning June 20, 2002.

The two interest rate collars expired in the first quarter of 2004,and accordingly we recognized a pre-tax non-cash gain of approximately$6.6 million, which reflects the reversal of the majority of thenon-realized charge reflected in our 2002 results and explained in theabove paragraph. Prior to the expiration of these interest ratecollars, we recognized approximately $1.1 million as additionalinterest expense in 2004. Prior to their maturity, $6.6 million wasincluded in accumulated other comprehensive income related to thesearrangements.

Off-Balance Sheet Arrangements

OurReceivables Facility.    We have entered into an agreement tosell, on an ongoing basis, the trade accounts receivable of certainbusiness operations to a bankruptcy-remote, special purposessubsidiary, MTSPC, wholly owned by us. MTSPC has sold and, subject tocertain conditions, may from time to time sell an undivided fractionalownership interest in the pool of domestic receivables, up toapproximately $150 million, to a third party multi-seller receivablesfunding company, or conduit. Upon sale to the conduit, MTSPC holds asubordinated retained interest in the receivables. Under the terms ofthe agreement, new receivables are added to the pool as collectionsreduce previously sold receivables. We service, administer and collectthe receivables on behalf of MTSPC and the conduit. The facility is animportant source of liquidity to the Company. The receivables facilityresulted in net expense of $1.6 million in the first quarter of2004.

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 thecollectibility of receivables or performance by a seller and certainevents of bankruptcy or insolvency. At March 28, 2004, we had fullyutilized the facility with $98.6 million outstanding. The proceeds ofsale are less than the face amount of accounts receivable sold by anamount that approximates the purchaser's financing costs. Theagreement expires in November 2005. If we are unable to renew orreplace this facility, it could adversely affect our liquidity andcapital resources.

We have entered into agreements withinternational invoice factoring companies to sell customer accountsreceivable of Metaldyne foreign locations in France, Germany, Spain,United Kingdom and Mexico on a non-recourse basis. As of March 28,2004, we had available approximately $67 million from thesecommitments, and approximately $52.2 million of receivables were soldunder these programs. We pay a commission to the factoring company plusinterest from the date the receivables are sold to the date of customerpayment. Commission expense related to these agreements are recorded inother expense, net on the Company's consolidated statement ofoperations.

Certain Other Commitments.    We haveother cash commitments not relating to debt as well, such as those inrespect of leases and redeemable preferred stock.

Sale-Leaseback Arrangements.    In the first quarter of2004, we entered into two sale-leaseback arrangements. On December 31,2003 we entered into a sale-leaseback with proceeds of approximately$4.5 million. This lease was accounted for as a capital lease and thepresent value of our lease payments is therefore reflected in our debtbalance. We also entered into a $65 million sale-leaseback on December31, 2003, as part of our financing related to the purchase of NewCastle. This lease for New Castle equipment is accounted for as anoperating lease and the annual lease expense is approximately $10million

35

----

In March 2003, we entered into asale-leaseback transaction with respect to certain manufacturingequipment for proceeds of approximately $8.5 million, and in October2003, we entered into a sale-leaseback transaction for machinery andequipment for additional proceeds of $8.5 million. In July 2003, weentered into an approximate $10 million operating lease associated withthe acquisition of our Greensboro, North Carolina facility. Theproceeds from this lease were used to finance a portion of theacquisition of this facility from Dana Corporation. All of these leasesare accounted for as operating leases. The sale-leasebacks initiated in2003 contribute an additional $3.8 million in annualized lease expensegoing forward, which is included in our "Contractual CashObligations," below. We continue to look to sale-leasebackand other leasing opportunities as a source of cash for debt reductionand other uses. Our total obligations under lease agreements aresummarized in the Contractual Cash Obligations table that follows.

Redeemable Preferred Stock.    We have outstanding $143million in aggregate liquidation value of Series A, B and A-1redeemable preferred stock in respect of which we have the option topay cash dividends, subject to the terms of our debt instruments, atrates of 13%, 11.5% and 11%, respectively, perannum initially and to effect a mandatory redemption in December 2012,June 2013 and December 2013, respectively. For periods that we do notpay cash dividends on the Series A and Series A-1 preferred stock, anadditional 2% per annum of dividends is accrued. No cashdividends were paid in 2003 or 2004. In the event of a change incontrol or certain qualified equity offerings, we may be required tomake an offer to repurchase our outstanding preferred stock. We may notbe permitted to do so and may lack the financial resources to satisfythese obligations. Consequently, upon these events, it may becomenecessary to recapitalize our company or secure consents.

Saturn-Related Obligations.    In the November 2000recapitalization of the Company, our shares were converted into theright to receive $16.90 in cash plus additional cash amounts based uponthe net proceeds of the disposition of the stock of Saturn Electronics& Engineering Inc. held by Metaldyne. We hold 1,796,800 shares ofClass A common stock and 1,796,800 shares of Class B common stock ofSaturn, a privately held corporation. As such, there is no readilyavailable market value of these shares. However, the value of thisinvestment as recorded on the Company's books was $6.0 million asof December 28, 2003 and $6.8 million at March 28, 2004. We have notidentified any indicators of impairment.

Although no dispositionof the stock of Saturn was made prior to the recapitalization or hasbeen made to date, former holders of our common stock as of the mergerwill be entitled to amounts based upon the net proceeds, if any, fromany future disposition of that stock if and when a disposition iscompleted. The amount which will be paid to such former stockholderswill equal the proceeds in excess of $18 million and less than or equalto $40 million, any proceeds in excess of $55.7 million and less thanor equal to $56.7 million as well as 60% of any such proceeds inexcess of $56.7 million. We are not responsible to disburse any fundsto the previous holders of the Company's common stock if the saleproceeds are less than $18 million. Any sale of the stock of Saturnrequires approval from a committee representing the interests of theformer shareholders of the Company. Thus, the Company does not controlthe timing of the sale of Saturn's stock. It is possible that theCompany may choose to agree to accept an amount less than thatindicated above to accelerate a disposition of the holdings of thisstock.

Credit Rating.    Metaldyne is rated byStandard & Poor's and Moody's Ratings. We currentlyhave long-term ratings of BB/B2 on our senior credit facility, B/B3 onour 10% senior notes due 2013 and B/Caa1 on our 11%senior subordinated notes due 2012. Our goal is to decrease our totalleverage and thus improve our credit ratings. In the event of a creditdowngrade, we believe we would continue to have access to additionalcredit sources. However, our borrowing costs would further increase andour ability to tap certain financial markets may be limited.

36

----

Capital Expenditures.    Ourcapital expenditure program promotes our growth-oriented businessstrategy by investing in our core areas, where efficiencies andprofitability can be enhanced. Capital expenditures by product segmentfor the periods presentedwere:

|                      |  |               |        |                |  |        |        |        |  |  |
|----------------------|--|---------------|--------|----------------|--|--------|--------|--------|--|--|
|                 |  | (Inthousands) |
|                 |  | March 28,2004 |        | March 30, 2003 |
|                 |  |          |        | (Restated)     |
| CapitalExpenditures: |  |          |   |           |  |   |   |   |
| Chassis              |  | $             | 12,430 |           |  | $      | 2,030  |   |
| Driveline            |  |          | 7,240  |           |  |   | 12,460 |   |
| Engine               |  |          | 8,530  |           |  |   | 5,700  |   |
| Corporate            |  |          | 1,790  |           |  |   | 1,560  |   |
| Total                |  | $             | 29,990 |           |  | $      | 21,750 |   |
|                      |

CashFlows

Operating activities — Net cash provided byoperating activities totaled $88.8 million for the quarter ended March28, 2004, compared to a $16 million increase in 2003 (as restated).Adjusting the 2004 results for the approximate $70 million increaseduse of the accounts receivable securitization facility, the 2004operating cash flow would have approximated $19 million, orapproximately $3 million higher than 2003 results. The improvedoperating results in 2004 were partially offset by a slight increase inworking capital usage in 2004 (excluding the accounts receivablesecuritization facility).

Investing activities —Cash flows used in investing activities totaled $183.4 million for thequarter ended March 28, 2004, compared to a use of cash of $33.3million in 2003 (as restated). Capital expenditures were higher in 2004by approximately $8 million than in 2003 primarily related to increasednew business launch activity. Additionally, we acquired the New Castlefacility in 2004 for approximately $218 million including fees andoffset by proceeds from a sale-leaseback of approximately $65 millionon New Castle's equipment. In 2003, we invested $20 million inNC-M Chassis Systems, LLC, a joint venture with DaimlerChryslerCorporation. Proceeds from sale-leaseback transactions with respect toequipment and real property represented a source of cash of $8.5million in 2003.

Financing activities — Cash flowsfrom financing activities totaled $126.2 million for the quarter endedMarch 28, 2004, compared to a use of cash of $1.8 million in 2003 (asrestated). In 2004, we issued $96 million in new debt and preferredstock to acquire New Castle and ended the quarter with approximately$32 million outstanding on our revolving credit facility versus zerooutstanding in the prior year. Cash and cash equivalents increased $46million in the quarter.

Outlook

Automotive vehicleproduction in 2004 is expected to be slightly below 2003 productionlevels in North America and slightly higher in Europe, but there areseveral factors that could alter this outlook, including a change ininterest rates or an increase in vehicle incentives offered toconsumers.

Consistent with operating in the global vehicleindustry, we anticipate competitive pressures and thus expect to facesignificant price reduction pressures from our customer base. In 2003,though, we invested significantly in automation and underwentrestructuring activities to help offset these pricing pressures. Inaddition, we are facing significant increases in the cost to procurecertain materials utilized in our manufacturing processes such assteel, energy, Molybdenum and nickel. In general, steel prices haverecently risen by as much as 60-100% and have thus createdsignificant tension between steel producers, suppliers and endcustomers. Based on current prices, our steel costs could increaseapproximately $50 million in 2004. However, we anticipate severalinitiatives such as steel scrap sales, steel resourcing efforts,contractual steel surcharge pass through agreements with customers andreducing or eliminating 2004 scheduled price downs to our customerswill offset approximately $30 million of these increased costs.Additionally, we are actively working with our customers to 1) obtainadditional business to help offset these prices through betterutilization of our capacity, 2) negotiate a surcharge for customerswithout a 

37

----

contractual pass-through arrangement toreflect the increased material costs, and/or 3) resource certain of ourproducts made unprofitable by these increases in material costs. Wewill actively work to mitigate the effect of these steel increasesthroughout 2004.

Two of our largest suppliers have recentlydeclared bankruptcy and are in the process of reorganizing. The effecton the Company from these bankruptcies is unknown, but they couldresult in the Company paying higher prices, having less favorablepayment terms and/or having interrupted supply of parts.

OnDecember 31, 2003, we completed our acquisition ofDaimlerChrysler's New Castle facility. Based on our new, morefavorable agreement with the UAW and the supply contract with DaimlerChrysler, we anticipate 2004 Adjusted EBITDA for this facility ofbetween $35 and $40 million, net of approximately $10 million inoperating lease expense associated with a $65 million sale-leaseback ofNew Castle equipment used to finance the acquisition.

Ourprincipal use of funds from operating activities and borrowings for thenext several years are expected to fund interest and principal paymentson our indebtedness, growth related capital expenditures and workingcapital increases, strategic acquisitions and lease expense. Managementbelieves cash flow from operations and debt financing and refinancingthat occurred in October 2003 will provide us with adequate sources ofliquidity for the foreseeable future. However, our sources of liquiditymay be inadequate if we are unable to obtain operating targets, whichwould cause us to seek covenant relief from existing lenders in thenear future. In addition, matters affecting the credit quality of oursignificant customers could adversely impact the availability of ourreceivables arrangements and our liquidity. We continue to exploreother sources of liquidity, including additional debt, but existingdebt instruments may limit our ability to incur additional debt.Therefore, we may be unable to secure equity or other financing. Wewere recently notified that a portion of the accelerated accountsreceivable programs with our largest customers will expire in 2004,while the majority will expire in 2005. These programs acceleratedapproximately $70 million at March 28, 2004. We are actively working tofind substitutes to replace these programs, but there is no certaintythat we will be successful. However, we had $117 million of undrawn andavailable commitments on our revolving credit facility at March 28,2004.

Contractual Cash Obligations

Under variousagreements, we are obligated to make future cash payments in fixedamounts. These include payments under our long-term debt agreements,rent payments required under lease agreements and various severanceobligations undertaken. The following table summarizes our fixed cashobligations over various future periods as of March 28,2004.

|                                                       |  |        |       |                        |  |          |         |          |  |             |         |        |  |        |         |        |  |        |         |        |  |  |
|-------------------------------------------------------|--|--------|-------|------------------------|--|----------|---------|----------|--|-------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                                  |  |   |       | (Inmillions)           |
|                                                  |  |   |       | Payments Due byPeriods |
|                                                  |  | Total  |       | LessThanOneYear        |  | 1-3Years |         | 3-5Years |  | After5Years |
| Long-term debt                                        |  | $      | 384   |                   |  | $        | 1       |     |  | $           | 2       |   |  | $      | 34      |   |  | $      | 347     |   |
| 11%Senior subordinated notes due2012                  |  |   | 250   |                   |  |     | — |     |  |        | — |   |  |   | — |   |  |   | 250     |   |
| 10%Senior notes due2013                               |  |   | 150   |                   |  |     | — |     |  |        | — |   |  |   | — |   |  |   | 150     |   |
| 10%Senior subordinated notes due 2014                 |  |   | 32    |                   |  |     | — |     |  |        | — |   |  |   | — |   |  |   | 32      |   |
| Otherdebt                                             |  |   | 16    |                   |  |     | 5       |     |  |        | 2       |   |  |   | 1       |   |  |   | 8       |   |
| Capitallease obligations                              |  |   | 13    |                   |  |     | 5       |     |  |        | 6       |   |  |   | 1       |   |  |   | 1       |   |
| Operatinglease obligations(1)                         |  |   | 336   |                   |  |     | 47      |     |  |        | 83      |   |  |   | 76      |   |  |   | 130     |   |
| Redeemablepreferred stock, including accrueddividends |  |   | 143   |                   |  |     | — |     |  |        | — |   |  |   | — |   |  |   | 143     |   |
| Pensioncontributions (data available through 2004)    |  |   | 38    |                   |  |     | 18      |     |  |        | 20      |   |  |   | — |   |  |   | — |   |
| Contractualseverance                                  |  |   | 7     |                   |  |     | 5       |     |  |        | 2       |   |  |   | — |   |  |   | — |   |
| Totalcontractual obligations                          |  | $      | 1,369 |                   |  | $        | 81      |     |  | $           | 115     |   |  | $      | 112     |   |  | $      | 1,061   |   |
|                                                       |

|  |
|--|
|  |  |
|  |

|     |                                                                            |
|-----|----------------------------------------------------------------------------|
| (1) | Operatinglease expense is included in the determination of AdjustedEBITDA. |

38

----

At March 28, 2004, we were contingentlyliable for standby letters of credit totaling $51 million issued on ourbehalf by financial institutions. We are also contingently liable forfuture product warranty claims. We believe that our product warrantyexposure is immaterial; however, it is continuously monitored forpotential warranty implications of new and current business.

Critical Accounting Policies

The expenses and accruedliabilities or allowances related to certain policies are initiallybased on our best estimates at the time of original entry in ouraccounting records. Adjustments are recorded when our actual experiencediffers from the expected experience underlying the estimates. We makefrequent comparisons of actual versus expected experience to mitigatethe likelihood of material adjustments.

Goodwill.    In June 2001, the Financial AccountingStandards Board ("FASB") approved Statementof Financial Accounting Standards ("SFAS")No. 142 "Goodwill and Other IntangibleAssets" which was effective for us on January 1, 2002.Under SFAS No. 142, we ceased the amortization of goodwill. Beginningin 2002, we test goodwill for impairment on an annual basis, unlessconditions exist which would require a more frequent evaluation. Inassessing the recoverability of goodwill, projections regardingestimated future cash flows and other factors are made to determine thefair value of the respective assets. We may be required to recordimpairment charges for goodwill if these estimates or relatedprojections change in the future.

At adoption and again during2002 and 2003, we determined that our goodwill was not impaired as fairvalues continue to exceed their carrying value. Fair value of ourgoodwill is determined based upon the discounted cash flows of thereporting units using a 9.5% discount. Assuming an increase inthe discount rate to 12%, fair value would continue to exceedthe respective carrying value of each automotive segment.

Receivables And Revenue Recognition.    The Companyrecognizes revenue when there is evidence of a sale, the delivery hasoccurred or services have been rendered, the sales price is fixed ordeterminable and the collectibility of receivables is reasonablyassured. Consequently, sales are generally recorded upon shipment ofproduct to customers and transfer of title under standard commercialterms. Significant retroactive price adjustments are recognized in theperiod in which such amounts become probable.

Valuation ofLong-Lived Assets.    Metaldyne periodically evaluates thecarrying value of long-lived assets to be held and used includingintangible assets, when events or circumstances warrant such a review.The carrying value of a long-lived asset to be held and used isconsidered impaired when the anticipated separately identifiableundiscounted cash flows from such an asset are less than the carryingvalue of the asset. In that event, a loss is recognized based on theamount by which the carrying value exceeds that fair value of thelong-lived asset. Fair value is determined primarily using theanticipated cash flows discounted at a rate commensurate with the riskinvolved. Impairment losses on long-lived assets are held for sale aredetermined in a similar manner, except that fair values are reduced forthe cost to dispose of the assets.

Pension andPostretirement Benefits Other Than Pensions.    Thedetermination of our obligation and expense for our pension andpostretirement benefits, such as retiree healthcare and life insurance,is dependent on our selection of certain assumptions used by actuariesin calculating such amounts. These assumptions are described in Note25, Employee Benefit Plans, of our consolidated financial statementsfor the year ended December 28, 2003, which include, among others,discount rate, expected long-term rate of return on plan assets andrate of increase in compensation and health care costs. While webelieve that our assumptions are appropriate, significant differencesin our actual experience or assumptions may materially affect ourpension and postretirement benefits other than benefits and our futureexpense. Our actual return on pension plan assets was 6.5% forthe year ended December 28, 2003. In comparison, our expected long-termreturn on pension plan assets was 8.96% for the year endedDecember 28, 2003. The expected return on plan assets was establishedby analyzing the long-term returns for similar assets, and as such, norevisions have been made to adjust to actual performance of the planassets.

New Accounting Pronouncements.

In May 2003, theFASB issued SFAS No. 150, "Accounting for CertainFinancial Instruments with Characteristics of both Liabilities andEquity." This Statement establishes standards for how anissuer 

39

----

classifies and measures certain financialinstruments with characteristics of both liabilities and equity. ThisStatement is effective for financial instruments entered into ormodified after May 31, 2003, and otherwise is effective at thebeginning of the first interim period beginning after June 15, 2003,except for mandatorily redeemable financial instruments of nonpublicentities, for which it is effective for the first fiscal periodbeginning after December 15, 2003. Due to the Company being a nonpublicentity as defined in SFAS No. 150, we have adopted this Statementeffective for the quarter ended March 28, 2004. As a result of theCompany's adoption of SFAS No. 150, the Company'sredeemable preferred stock is classified as a long-term liability onthe Company's consolidated balance sheet effective as of thequarter ended March 28, 2004, and preferred stock dividends associatedwith this redeemable preferred stock are classified as other expense,net on the Company's consolidated statement of operationsbeginning with the quarter ended March 28, 2004.

On December 8,2003, the Medicare Prescription Drug, Improvement and Modernization Actwas signed into law. This law provides for a federal subsidy tosponsors of retiree health care benefit plans that provide a benefitthat is at least actuarially equivalent to the benefit established bythe law. The Company provides retiree drug benefits that exceed thevalue of the benefits that will be provided by Medicare Part D, and theCompany's eligible retirees generally pay a premium for thisbenefit that is less than the Part D premium. Therefore, the Companyhas concluded that these benefits are at least actuarially equivalentto the Part D program so that Metaldyne will be eligible for the basicMedicare Part D subsidy.

In the second quarter of 2004, aFinancial Accounting Board (FASB) Staff Position (FSP FAS 106-2,"Accounting and Disclosure Requirements Related to theMedicare Prescription Drug Improvement and Modernization Act of2003") was issued providing guidance on the accounting forthe effects of the Act for employers that sponsor postretirement healthcare plans that provide prescription drug benefits. The FSP iseffective for the first interim or annual period beginning after June15, 2004. The Company estimates the federal subsidy included in the lawwill ultimately result in an approximate $4.5 million to $6.0 millionreduction in Metaldyne's postretirement benefit obligation.However, the reduction is not reflected in the Company'spostretirement benefit obligation at the balance sheet date, since thisinformation is as of the Company's September  30, 2003measurement date. For 2004, the Company expects a net reduction in ourpostretirement expense when compared to 2003. This decrease reflectsthe favorable impact of the Medicare legislation and changes to theplans that eliminated some coverage, offset by a 50 basis point declinein the discount rate and adverse experience in health care trends.

Other Matters

Fiscal Year

Effective beginning in2002, our fiscal year will end on the Sunday nearest to December31.

Caution Concerning Forward Looking Statements and CertainRisks Related to Our Business and Our Company — Safe HarborStatements

This report contains statements reflecting theCompany's views about its future performance, its financialcondition, its markets and many other matters that constitute"forward-looking statements." These viewsinvolve risks and uncertainties that are difficult to predict and maycause the Company's actual results and/or expectations aboutvarious matters to differ significantly from those discussed in suchforward-looking statements. All statements, other than statements ofhistorical fact included in this quarterly report, regarding ourstrategy, future operations, financial condition, expected results andcosts, new business, estimated revenues and losses, prospects and plansare forward-looking statements. When used in this quarterly report, thewords "will,""believe,""anticipate,""intend,""estimate,""expect," "project"and similar expressions are intended to identify forward-lookingstatements, although not all forward-looking statements contain suchidentifying words. You should not place undue reliance on theseforward-looking statements. All forward-looking statements speak onlyas of the date of this quarterly report and we undertake no obligationto update such information. Readers should consider that variousfactors may affect whether actual results and experience correspondwith our forward-looking statements and that many of these factors alsorepresent risks attendant to owning securities in the Company,including the following:

40

----

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Dependenceon Automotive Industry and Industry Cyclicality — Theindustries in which we operate depend upon general economic conditionsand are highly cyclical. Our performance is affected particularly bynew vehicle sales, which can be highly sensitive to changes in interestrates, consumer confidence and fuel costs. We experience sales declinesduring the third calendar quarter as a result of scheduled OEMshutdowns. |

|              |                                                                                                                                                                                                                                                                                                                                                                        |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | CustomerConcentration — Our base of customers is concentrated amongoriginal equipment manufacturers in North America, particularly thelarge automotive manufacturers, and the loss of business from a majorcustomer, the discontinuance of particular vehicle models or a changein regulations or auto consumer preferences could materially adverselyaffect us. |

|              |                                                                                                                                                                                                                                                                                                                                                                                          |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Ability to FinanceCapital Requirements — Our business is capital intensive. Wehave made substantial capital investments to improve capacity andproductivity and to meet customer requirements. More investment isrequired to maintain and expand our future business awards. If we areunable to meet future capital requirements, our business may bematerially adverselyaffected. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Increases in Costs Due toOur Supply Base and Raw Materials — Increases in our rawmaterial or energy costs or the loss of a substantial number of oursuppliers could negatively affect our financial health and results. Inparticular, we have been recently adversely impacted by steel costs,which we have been unable to wholly mitigate. In addition, certain ofour suppliers have suffered financial distress, which may materiallyadversely impact us as well in terms of the potential for interruptedsupply, unfavorable payment terms and/or higher prices. Specifically,two of our largest suppliers have recently declared bankruptcy, and arein the process of reorganizing. The effect on the Company from thesebankruptcies is unknown, but they could result in the Company payinghigher prices, having less favorable payment terms and/or havinginterrupted supply of parts. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | OurIndustries are Highly Competitive — Continuing trends amongour customers will increase competitive pressures in our businesses.Certain of our competitors have greater financial resources and, insome cases, we compete with our own customers. The continuing trendtowards limiting outside suppliers involves significant risks, as wellas opportunities, and has increased competition. We have experiencedand may continue to experience adverse pricing pressures as aresult. |

|              |                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Changing Technology— Our products are subject to changing technology, which couldplace us at a competitive disadvantage relative to alternative productsintroduced by competitors. We may require significant ongoing andrecurring additional capital expenditures and investment in researchand development, manufacturing and other areas to remaincompetitive. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Challenges ofAcquisition Strategy — We intend to actively pursueacquisitions and/or joint ventures but we may not be able to identifyattractive acquisition and/or joint venture candidates, successfullyintegrate our acquired operations or realize the intended benefits ofour acquisitions and/or joint ventures, particularly with respect toany acquisitions outside NorthAmerica. |

|              |                                                                                                                                                                                                                                                                                                                                 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Dependence on Key Personneland Relationships — We depend on the services of keyindividuals, particularly our executive officers, and our relationshipwith our controlling stockholder. The loss of any key individual orchange in our relationship with our controlling stockholder couldmaterially and adversely harmus. |

|              |                                                                                                                                                                                          |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Labor Stoppages AffectingOEMs — We may be subject to work stoppages at our facilitiesor those of our principal customers or suppliers, which couldmaterially and adversely harmus. |

|              |                                                                                                                                                                                                                                                            |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Outsourcing Trend —Our strategies may not succeed if anticipated outsourcing amongautomotive manufacturers fails to materialize to the extent we haveassumed. Principal risks to continued outsourcing are union/laborconsiderations and objections. |

|              |                                                                                                                                                                                                                                                                                 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | International Sales — Agrowing portion of our revenue may be derived from internationalsources, which exposes us to certain risks, such as foreign traderestrictions, government embargoes, tariffs, foreign currency risks,expatriation risks and political instability. |

41

----

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | ProductLiability and Warranty Claims — We may incur materiallosses and costs as a result of product liability and warranty claimsthat may be brought against us in the event that the use of our currentand formerly manufactured or sold products results, or is alleged toresult, in bodily injury and/or property damage. In addition, claimsmay be asserted against us in respect of formerly owned operations,such as TriMas, for which we are indemnified. In the event of financialdifficulties, TriMas may be unable to satisfy indemnificationclaims. |

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

|              |                                                                                                                                                             |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Control by PrincipalStockholder — We are controlled by Heartland, whose interestsin our business may be different than other investors in theCompany. |

|              |                                                                                                                                                                                                                                                                                                                                                               |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Terms of StockholdersAgreement — Provisions of a stockholders agreement among themajority of our stockholders impose significant operating and financialrestrictions on our business without certain stockholder agreement. Inthe event our significant stockholders are unable to agree on certainactions, we may be materially and adverselyimpacted. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Leverage; Ability toService Debt — We may not be able to manage our business aswe might otherwise do so due to our high degree of leverage. Our highdegree of leverage means that we must dedicate significant cash flow todebt service. By doing so, we will have greater difficulty in meetingother important commercial and financial obligations or in pursuingvarious strategies andopportunities. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | SubstantialRestrictions and Covenants — Restrictions in our debtinstruments limit our ability to take certain actions, including toincur further debt, finance capital expenditures, pay dividends andsell or acquire assets or businesses. These restrictions may prevent usfrom taking actions in the interests of our securityholders. Inaddition, our ability to comply with our financial covenants in ourdebt instruments may be impacted by numerous matters, including mattersbeyond our control. In the event, we are in default, we may bematerially and adverselyimpacted. |

|              |                                                                                                                                                                                                                                                                                                                                                               |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Implementation of ControlImprovements — We have not yet completed implementation ofour current plans to improve our internal controls and may be unable toremedy certain internal control weaknesses identified by ourindependent auditors and take other actions to meet our 2005 compliancedeadline for Section 404 of the Sarbanes-Oxley Act of2002. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Impact of Restatement —The disclosure of the restatement and weaknesses in our internalcontrol over financial reporting may adversely impact the confidence ofthose with whom we have commercial or financial relationships. Ourconclusions and actions relative to the restatement and our controlweaknesses is subject to scrutiny in the future, including review bythe Securities and Exchange Commission in connection with its ordinarycourse review of our public filings and disclosures or otherwise. |

We undertake no obligation to update publicly any forward-lookingstatements, whether as a result of new information, future events orotherwise.

There are few published independent sources for datarelated to the markets for many of our products. To the extent we areable to obtain or derive data from independent sources, we have doneso. In particular, we used a report produced by the Ducker ResearchCompany, Inc. profiling North American Forging, Foundry and MachineryIndustries prepared in 2000 for Heartland Industrial Partners, L.P.,our largest shareholder. To the extent information in the Ducker Reportis dated, we have expressed our belief by extrapolating data from theDucker Report using other publicly available information about thecompetitors and products addressed in the Ducker Report. To the extentinformation is otherwise not obtained or derived from independentsources, we have expressed our belief based on our own internalanalyses and estimates of our and our competitors' products andcapabilities. We note that many of the industries in which we competeare characterized by competition among a small number of largesuppliers. Industry publications and surveys and forecasts that we haveused generally state that the information contained therein has beenobtained from sources believed to be reliable. We have notindependently verified any of the data from third-party sources norhave we ascertained the underlying 

42

----

assumptions or bases for any suchinformation. In general, when we say we are a"leader" or a"leading" manufacturer or make similarstatements about ourselves, we are expressing our belief that weformulated principally from our estimates and experiences in, andknowledge of, the markets in which we compete. In some cases, wepossess independent data to support our position, but that data may notbe sufficient in isolation for us to reach the conclusions that we havereached without our knowledge of our markets and businesses.

Inaddition to the foregoing, readers of this quarterly report arecautioned that, prior to the announcement of the IndependentInvestigation referred to herein, the Commission provided the Companywith comments in the ordinary course on its filings under theSecurities Exchange Act of 1934 as amended. The Company believes thatit has supplementally or in this report adequately responded to theStaff's comments on the Company's filings. However, it isentirely possible that disclosure may change as a result of theCommission's review of this filing and the Company'sresponses to those comments. Further, the Company has not includedcertain historical selected financial data in its Annual Report and theCommission may comment that the Company's Form 10-K must beamended for the inclusion of such information.

|              |                                                           |
|--------------|-----------------------------------------------------------|
| ITEM3.  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK |

In the normal course of business, we are exposed tomarket risk associated with fluctuations in foreign exchange rates. Weare also subject to interest risk as it relates to long-term debt. See"Management's Discussion and Analysis of FinancialCondition and Results of Operations" for details about ourprimary market risks, and the objectives and strategies used to managethese risks. Also see Note 15 "Long-TermDebt" in the notes to the consolidated financialstatements in our 2003 Form 10-K for additional information.

|               |                         |
|---------------|-------------------------|
| ITEM 4.  | CONTROLS AND PROCEDURES |

TheCompany's quarterly financial information has been restated toreflect adjustments to the Company's previously reportedfinancial information on Form 10-Q for the first three fiscal quartersof 2003. Reference is made to Note  2 to the Company'sconsolidated financial statements contained herein, and Note 2 to ourconsolidated financial statements on our 2003 Form 10K, for greaterdetail on the restatement adjustments.

The restatement aroseprimarily out of information obtained through an investigationconducted by an independent director of the Company, Marshall Cohen,with the assistance of an independent counsel, Sidley Austin Brown& Wood LLP, and the forensic accounting group of Deloitte &Touche LLP. The investigation was initiated as a result of certainadmissions made by an employee of the Company and information obtainedby the Company's internal audit staff. As discussed below, theCompany has implemented, or adopted plans to implement, a number ofmeasures intended to address matters of concern that have beenidentified through the investigation and is continuing to considerfurther measures.

In 2003, a plant controller at the Sintereddivision's St. Mary's, Pennsylvania facility encountereddifficulties in understanding certain accounting practices anddocumentation. In December 2003, he notified the Company'sindependent auditors, KPMG LLP, that, among other things, he was unableto reconcile certain of the plant's general ledger accounts andto find appropriate documentation for certain entries and indicatedthat he had concerns regarding the division controller. TheCompany's Chief Financial Officer initiated an immediate reviewby the Company's internal audit department of accountingprocedures and financial accounting at the domestic plants within theSintered division. Shortly thereafter, the Company and its Board ofDirectors authorized the Independent Investigation into certainaccounting practices at the Sintered division from 2001 through2003.

During the initial stages of the investigation, theCompany was made aware of errors with respect to the recording ofcertain entries which it attempted to analyze. While the Company wasperforming these analyses, in February 2004, the Sintered divisioncontroller made the following admissions concerning actions in which headmittedly participated. He admitted that, following the acquisition ofthe Company 

43

----

in November 2000, income at the Sintereddivision from 2000 through 2003 was deliberately understated by up toapproximately $10 million in the aggregate. He admitted that theseunderstatements were part of an effort to disguise previousoverstatements of income by approximately $20 million in aggregate atthe Sintered division during the period from 1996 through 1999, whichwas prior to the acquisition. There were three primary allegations fromthe former Sintered divisional controller related to the period 1996 to1999. During this time, he stated income was overstated by (1)overstating fixed assets, (2)  understating liabilities (notablyaccounts payable), and (3)  using a complex set of manual journalentries every month to "disguise" the effectsof (1) and (2). Following the acquisition in late 2000, he assertedthat income was understated through similar actions. The Companyconcluded that the Sintered division controller's admissionsconcerning these actions were correct, although the amounts impacted bythe actions following the acquisition vary from the allegations. TheSintered division investigation revealed deficiencies, circumventionsand breakdowns that occurred in controls and procedures at theCompany.

Based upon certain findings within the Sintereddivision, the investigation was expanded to encompass accountingpractices in other areas of the Company concerning the use of accrualand allowance accounts and the recognition of tooling income for theperiod from 2001 through 2003. This investigation involved an extensivereview by those conducting the investigation of journal entries of overa specified amount made over a three year period. As a result of theexpanded investigation, the Company became aware of instances ofinappropriate accounting relating to reserves and accruals, which hadthe effect of "smoothing" earnings forcertain periods. Specifically, the Company concluded from theinvestigative findings that there were instances when reserves had beenestablished to cover unanticipated expenses, reserves had beenincreased or decreased based upon performance, and/or accruals orreserves had been recorded different from estimated or analyzedamounts. The Company also identified from the investigative findings afew instances of incorrect timing in the recognition of tooling income.The investigation categorized journal entries from the relevant periodsfor analysis by the Company and review by the Company with its currentand former independent auditors. The Company analyzed those categoriesof entries which the investigation determined to be either potentiallyinaccurate (i.e., warranting further review) or unknown (i.e.,insufficient documentation for third party evaluation). Based upon theCompany's review of these categories of entries, the Companybelieves that the net impact on pretax earnings of the entriesdetermined to be inappropriate and the tooling income issue discussedabove was less than $0.6 million in 2003 and no quarter was affected bymore than that amount.

Through the work of the independentinvestigation, a number of concerns with financial controls andprocedures have been identified. Control concerns specificallyidentified by those conducting the investigation include, but are notlimited to, instances of disregard for, or lack of understanding of,proper accrual accounting under GAAP, particularly in relation toreserve accounts; inconsistent policies and procedures concerning therecognition of tooling income; inadequate training of personnel withinkey accounting and operations functions; undue pressure on certainaccounting personnel relative to operating results; issues in properlyreviewing internal reporting packages and questionnaires; a failure toproperly account for fixed assets; a lack of timely and adequatemonitoring of intercompany balances, management review of generalledger, account reconciliation and manual journal entries; andinsufficient information systems safeguards and security controls.

In October 2004, KPMG advised the Company that the following itemsconstituted material weaknesses: management's focus on internalcontrols, specifically referencing those control issues identified bythe investigation; the extent to which manual journal entries were ableto be made without appropriate review or supporting documentation; theextent to which manual corporate level adjustments were required in theconsolidation and financial reporting/close process; the need toperform regular, detailed account analyses and reconciliations; theneed to improve controls to limit access to accounts payable and vendorfiles; and the need to enhance controls related to fixed and leasedassets to ensure, among other things, timely asset classifications.These material weaknesses, if unaddressed, could result in materialerrors in the Company's financial statements. In addition, KPMGadvised the Company that it had identified reportable conditionsrelating to intercompany account reconciliation; the need to reducedecentralization relative to international subsidiaries; and the needto devote greater resources to income tax accounting. KPMG has made anumber of business recommendations relating to the above-referenced

44

----

reportable conditions and materialweaknesses. The Company has implemented several remedial measures tocompensate for these weaknesses, including additional oversight,centralized reconciliations and personnel reassignments.

TheCompany believes that certain of the issues highlighted by theinvestigation derive from the Company's history of acquisitionsand the attendant employment of personnel from different predecessorcompanies who continued prior accounting practices. In some instances,the Company believes control issues have been exacerbated by thepredecessor companies' previously highly decentralized structurewhich current management has been addressing over time since theacquisition.

The Company has devoted substantial resources tothe improvement and review of its control processes and procedures andsuch review is ongoing. Those conducting the investigation have madeobservations concerning corrective actions based on the matters thathave come to their attention, which the Company has reviewed. TheCompany has taken actions or considered actions to address concerns andissues referred to above, and intends to continue taking actions asnecessary to further address such concerns and issues, by (1)making personnel and organizational changes; (2) improvingcommunications and internal reporting; (3) simplifying and makingconsistent various accounting policies and procedures and enhancingrelated documentation; (4) significantly expanding its trainingprograms for both accounting and non-accounting employees related toaccounting matters; (5) increasing management's focus on internalcontrols and improving the extent and timing of management oversight ina number of areas; and (6) implementing processes and procedures toreduce manual interventions and adjustments and more appropriatelylimit access to certain files and systems. The Company's AuditCommittee and its Board of Directors have reviewed the actionsundertaken to date in response to the findings arising from theinvestigation and authorized other actions to improve control processesand procedures. Specific remedial actions have been undertaken sincethe beginning of 2004 and include thefollowing:

|              |                                                   |
|--------------|---------------------------------------------------|
| •  | the termination orresignation of seven employees; |

|              |                                                                                                                                                 |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | theupgrading of various personnel, including hiring a new Sintereddivision controller, a new corporate controller and a new fixed assetmanager; |

|              |                                                                                                           |
|--------------|-----------------------------------------------------------------------------------------------------------|
| •  | substantial additionaltraining of accounting personnel and non-accounting personnel inaccounting matters; |

|              |                                                                                                                         |
|--------------|-------------------------------------------------------------------------------------------------------------------------|
| •  | revised incentivecompensation system to eliminate plant specific performance criteria infavor of division-widecriteria; |

|              |                                                                                                |
|--------------|------------------------------------------------------------------------------------------------|
| •  | instituted a number of fixedasset inventory and construction-in-progress analysisimprovements; |

|              |                                                                    |
|--------------|--------------------------------------------------------------------|
| •  | improved corporateaccounting policies and proceduresdocumentation; |

|              |                                              |
|--------------|----------------------------------------------|
| •  | enhanced validation ofintercompany balances; |

|              |                                                                                                                 |
|--------------|-----------------------------------------------------------------------------------------------------------------|
| •  | separatedassignments, responsibility and access between the accounts payablegroup and central procurementgroup; |

|              |                                                                                            |
|--------------|--------------------------------------------------------------------------------------------|
| •  | expanded review processes ofinformation supplied by plant and division level personnel;and |

|              |                                                                            |
|--------------|----------------------------------------------------------------------------|
| •  | improved procedures and review ofrelative to plant manual journal entries. |

The Company willcontinue to evaluate the effectiveness of its controls and procedureson an ongoing basis, including consideration of internal controlweaknesses and business recommendations identified by its auditors andsuggestions made by those that conducted the investigation, and,consequently, intends to implement further actions in its continuingefforts to strengthen the control process.

In addition, theCompany is undertaking a thorough review of its internal controls,including information technology systems and financial reporting aspart of the Company's preparation for compliance with therequirements of Section 404 of the Sarbanes-Oxley Act. Given the needto fully remedy the internal control weaknesses identified by KPMG,there can be no assurance that the Company will be able to remedy theseweaknesses and take other actions required for compliance with Section404 of the Sarbanes-Oxley Act by the required compliance date, thefiling date for its fiscal 2005 audit in early 2006.

45

----

Disclosure Controls and Procedures

The evaluation and investigation described above included anevaluation by management with the participation of our Chief ExecutiveOfficer and Chief Financial Officer, of the effectiveness of ourdisclosure controls and procedures (as such term is defined in Rule13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934)pursuant to Rule 13a-15 of the Exchange Act. Our disclosure controlsand procedures are designed only to provide reasonable assurance thatthey will meet their objectives. Based upon that evaluation and theinvestigation, the Chief Executive Officer and Chief Financial Officerconcluded that (a) as of March 28, 2004, the Company's disclosurecontrols and procedures were not effective to provide reasonableassurance that they would meet their objectives, and (b) taking intoaccount the remedial measures implemented by the Company, as ofNovember 10, 2004, notwithstanding the material weaknesses andreportable conditions summarized above, the Company's disclosurecontrols and procedures are effective to provide reasonable assurancethat they will meet theirobjectives.

46

----

PART II. OTHERINFORMATION

METALDYNE CORPORATION

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

Item 6. Exhibits.

|              |  |                                                                                                                       |  |  |  |  |
|--------------|--|-----------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| Exhibit3.1   |  | RestatedCertificate of Incorporation of MascoTech,Inc.(1)                                                             |
| Exhibit 3.2  |  | Bylaws ofMetaldyne Corporation.(2)                                                                                    |
| Exhibit12    |  | Computation of Ratio of Earnings to Combined Fixed Chargesand Preferred Stock Dividends.                              |
| Exhibit31.1  |  | Certification pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of2002. |
| Exhibit 31.2 |  | Certification pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002. |
| Exhibit32.1  |  | Certification pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. |
| Exhibit 32.2 |  | Certification pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of2002.  |
|              |

|  |
|--|
|  |  |
|  |

|           |                                                                                                                                              |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------|
| (1)  | Incorporatedby reference from the Exhibits filed with Metaldyne Corporation'sAnnual Report on Form 10-K for the year ended December 31,2000. |

|           |                                                                                                                                                                        |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Incorporated by referencefrom the Exhibits filed with MascoTech, Inc.'s (now known asMetaldyne Corporation) Registration Statement on Form S-1 filedDecember 27, 2000. |

46

----

SIGNATURE

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

|  | METALDYNE CORPORATION (Registrant) |
|--|------------------------------------|

DATE: November 10, 2004

|  | BY: /s/ Jeffrey M.Stafeil                                                Jeffrey M. Stafeil         Executive VicePresident and Chief        Financial Officer (ChiefAccounting        Officer and AuthorizedSignatory) |
|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

47

----

METALDYNECORPORATION

EXHIBITINDEX

|              |  |                                                                                                                       |  |  |  |  |
|--------------|--|-----------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| **Exhibit**  |  |
| Exhibit3.1   |  | Restated Certificate ofIncorporation of MascoTech, Inc. (1)                                                           |
| Exhibit3.2   |  | Bylaws of Metaldyne Corporation. (2)                                                                                  |
| Exhibit 12   |  | Computation of Ratio of Earnings toCombined 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-OxleyAct of 2002. |
| Exhibit 31.2 |  | Certificationpursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302of the Sarbanes-Oxley Act of 2002. |
| Exhibit32.1  |  | Certification pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. |
| Exhibit 32.2 |  | Certification pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of2002.  |
|              |

|  |
|--|
|  |  |
|  |

|           |                                                                                                                                              |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------|
| (1)  | Incorporatedby reference from the Exhibits filed with Metaldyne Corporation'sAnnual Report on Form 10-K for the year ended December 31,2000. |

|           |                                                                                                                                                                        |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Incorporated by referencefrom the Exhibits filed with MascoTech, Inc.'s (now known asMetaldyne Corporation) Registration Statement on Form S-1 filedDecember 27, 2000. |

----