##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

Form 10-Q

(Mark One)

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

OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended October 31, 2001

OR

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

OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period
from                                     to

Commission file number: 1-11592



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HAYES LEMMERZ INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its
Charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 13-3384636         
|(State or Other Jurisdiction of |  | (IRS Employer      
|Incorporation or Organization)  |  | Identification No.)

15300 Centennial Drive

Northville, Michigan 48167


(Address of Principal Executive Offices) (Zip
Code)


Registrants telephone number, including
area code: (734) 737-5000

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

The number of
shares of common stock outstanding as of April 15, 2002 was
28,455,745 shares.









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TABLE OF CONTENTS



|                                                                                                         |  |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|QUARTERLY REPORT ON FORM 10-Q                                                                           
|PART I. FINANCIAL INFORMATION                                                                           
|Consolidated Statements Of Operations                                                                   
|Consolidated Balance Sheets                                                                             
|Consolidated Statements of Cash Flows                                                                   
|Notes to Consolidated Financial Statements                                                              
|Consolidated Balance Sheet                                                                              
|Condensed Consolidating Statements of Operations For the Nine Months Ended October 31, 2001             
|Condensed Consolidating Statements of Operations For the Nine Months Ended October 31, 2000, As Restated
|Condensed Consolidating Balance Sheets As of October 31, 2001                                           
|Condensed Consolidating Balance Sheet As of January 31, 2001                                            
|Condensed Consolidating Statement of Cash Flows For the Nine Months Ended October 31, 2001              
|Condensed Consolidating Statement of Cash Flows For the Nine Months Ended October 31, 2000, As Restated 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations           
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                                      
|PART II. OTHER INFORMATION                                                                              
|Item 1. Legal Proceedings                                                                               
|Item 2. Changes in Securities and Use of Proceeds                                                       
|Item 3. Defaults Upon Senior Securities                                                                 
|Item 4. Submission of Matters to a Vote of Security Holders                                             
|Item 5. Other Information                                                                               
|Item 6. Exhibits and Reports on Form 8-K                                                                
|SIGNATURES                                                                                              
|EXHIBIT INDEX                                                                                           
|Amendment to the Amended and Restated By-Laws                                                           
|Amended and Restated Employment Agreement                                                               
|Form of Employment Agreement                                                                            



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC.






QUARTERLY REPORT ON FORM 10-Q


TABLE OF CONTENTS

|                              |         |                                            |                                                                                        |      |   |    | 
|----------------------------- | ------- | ------------------------------------------ | -------------------------------------------------------------------------------------- | ---- | - | -- | 
|                              |         |                                            |                                                                                        | Page
|                              |         |                                            |                                                                                        |     
|PART I. FINANCIAL INFORMATION
|                              | Item 1. |                                            | Financial Statements                                                                   |      |   |    | 
|                              |         | Consolidated Statements of Operations      |                                                                                        |      | 2 |   
|                              |         | Consolidated Balance Sheets                |                                                                                        |      | 3 |   
|                              |         | Consolidated Statements of Cash Flows      |                                                                                        |      | 4 |   
|                              |         | Notes to Consolidated Financial Statements |                                                                                        |      | 5 |   
|                              | Item 2. |                                            | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |      |   | 25 | 
|                              | Item 3. |                                            | Quantitative and Qualitative Disclosures about
	Market Risk                            |      |   | 36 | 
|PART II. OTHER INFORMATION   
|                              | Item 1. |                                            | Legal Proceedings                                                                      |      |   | 37 | 
|                              | Item 2. |                                            | Changes in Securities                                                                  |      |   | 37 | 
|                              | Item 3. |                                            | Defaults upon Senior Securities                                                        |      |   | 37 | 
|                              | Item 4. |                                            | Submission of Matters to a Vote of
	Security-Holders                                   |      |   | 37 | 
|                              | Item 5. |                                            | Other Information                                                                      |      |   | 37 | 
|                              | Item 6. |                                            | Exhibits and Reports on Form 8-K                                                       |      |   | 37 | 
|SIGNATURES                    |         |                                            | 38                                                                                     |     

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

EXCEPT AS SPECIFICALLY STATED OTHERWISE IN THIS
FORM 10-Q, THE INFORMATION CONTAINED IN THE 10-Q HAS NOT
BEEN UPDATED TO REFLECT THE MATTERS SET FORTH IN NOTE 13,
SUBSEQUENT EVENTS BELOW.

1



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##### Table of Contents








PART I.     FINANCIAL
INFORMATION


Item 1.     Financial
Statements

HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES






Consolidated Statements Of
Operations


(Millions of dollars, except share
amounts)


(Unaudited)


|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |       |       |  
|------------------------------------------------- | ------------------------------ | ---------------------------------------------------------------------- | ----- | ----------------- | ----- | ---- | ----- | ------------- | ----- | - | ------- | ----- | ------ | - | ------- | ----- | ----- | -
|                                                  |                                |                                                                        |       |                  
|                                                  |                                | Three Months Ended                                                     |       | Nine Months Ended
|                                                  |                                | October 31,                                                            |       | October 31,      
|                                                  |                                |                                                                        |       |                  
|                                                  |                                |                                                                        |       | (As Restated)     |       |      |       | (As Restated)
|                                                  |                                | 2001                                                                   |       | 2000              |       | 2001 |       | 2000         
|                                                  |                                |                                                                        |       |                   |       |      |       |              
|Net sales                                         |                                | $                                                                      | 515.0 |                   |       | $    | 558.0 |               |       | $ | 1,574.5 |       |        | $ | 1,692.0 |      
|Cost of goods sold                                |                                |                                                                        | 476.0 |                   |       |      | 495.2 |               |       |   | 1,444.2 |       |        |   | 1,466.0 |      
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  |                                | Gross profit                                                           |       |                   | 39.0  |      |       |               | 62.8  |   |         |       | 130.3  |   |         |       | 226.0 |  
|Marketing, general and administration             |                                |                                                                        | 27.7  |                   |       |      | 29.9  |               |       |   | 79.9    |       |        |   | 76.5    |      
|Engineering and product development               |                                |                                                                        | 5.3   |                   |       |      | 3.6   |               |       |   | 16.9    |       |        |   | 13.0    |      
|Amortization of intangibles                       |                                |                                                                        | 6.7   |                   |       |      | 6.8   |               |       |   | 20.0    |       |        |   | 20.7    |      
|Equity in losses (earnings) of joint ventures     |                                |                                                                        | 0.4   |                   |       |      | (0.2  | )             |       |   | 0.9     |       |        |   | (0.7    | )    
|Asset impairments and other restructuring charges |                                |                                                                        | 4.6   |                   |       |      | 73.9  |               |       |   | 42.6    |       |        |   | 78.3    |      
|Loss on investment in joint venture               |                                |                                                                        |      |                   |       |      | 1.5   |               |       |   | 3.8     |       |        |   | 1.5     |      
|Other income, net                                 |                                |                                                                        | (5.0  | )                 |       |      | (2.1  | )             |       |   | (3.7    | )     |        |   | (4.1    | )    
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  |                                | Earnings (loss) from operations                                        |       |                   | (0.7  | )    |       |               | (50.6 | ) |         |       | (30.1  | ) |         |       | 40.8  |  
|Interest expense, net                             |                                |                                                                        | 49.1  |                   |       |      | 41.7  |               |       |   | 142.0   |       |        |   | 120.5   |      
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  |                                | Loss before taxes on income, minority interest
	and extraordinary gain |       |                   | (49.8 | )    |       |               | (92.3 | ) |         |       | (172.1 | ) |         |       | (79.7 | )
|Income tax (benefit) provision                    |                                |                                                                        | 4.2   |                   |       |      | (32.8 | )             |       |   | 14.6    |       |        |   | (28.4   | )    
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  |                                | Loss before minority interest and extraordinary
	gain                  |       |                   | (54.0 | )    |       |               | (59.5 | ) |         |       | (186.7 | ) |         |       | (51.3 | )
|Minority interest                                 |                                |                                                                        | 0.8   |                   |       |      | 0.7   |               |       |   | 2.6     |       |        |   | 2.1     |      
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  |                                | Loss before extraordinary gain                                         |       |                   | (54.8 | )    |       |               | (60.2 | ) |         |       | (189.3 | ) |         |       | (53.4 | )
|Extraordinary gain, net of tax                    |                                |                                                                        |      |                   |       |      |      |               |       |   | 2.7     |       |        |   |        |      
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  |                                | Net loss                                                               |       | $                 | (54.8 | )    |       | $             | (60.2 | ) |         | $     | (186.6 | ) |         | $     | (53.4 | )
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|Basic net loss per share:                         |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  | Loss before extraordinary gain |                                                                        | $     | (1.92             | )     |      | $     | (2.06         | )     |   | $       | (6.65 | )      |   | $       | (1.78 | )    
|                                                  | Extraordinary gain, net of tax |                                                                        |       |                  |       |      |       |              |       |   |         | 0.09  |        |   |         |      |      
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|Basic net loss per share                          |                                | $                                                                      | (1.92 | )                 |       | $    | (2.06 | )             |       | $ | (6.56   | )     |        | $ | (1.78   | )    
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|Diluted net loss per share:                       |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|                                                  | Loss before extraordinary gain |                                                                        | $     | (1.92             | )     |      | $     | (2.06         | )     |   | $       | (6.65 | )      |   | $       | (1.78 | )    
|                                                  | Extraordinary gain, net of tax |                                                                        |       |                  |       |      |       |              |       |   |         | 0.09  |        |   |         |      |      
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      
|Diluted net loss per share                        |                                | $                                                                      | (1.92 | )                 |       | $    | (2.06 | )             |       | $ | (6.56   | )     |        | $ | (1.78   | )    
|                                                  |                                |                                                                        |       |                   |       |      |       |               |       |   |         |       |        |   |         |      

See accompanying notes to consolidated financial
statements.

2



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES






Consolidated Balance Sheets


(Millions of dollars, except share
amounts)


|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |         |     |         |  
|----------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------- | --- | ----------- | ------- | ----- | --- | ------- | ------- | ------- | --- | ------- | -
|                                                |                                                                            |                                                                                                                                                          |                                                       | (As Restated) |     |            
|                                                |                                                                            | October 31,                                                                                                                                              |                                                       | October 31,   |     | January 31,
|                                                |                                                                            | 2001                                                                                                                                                     |                                                       | 2000          |     | 2001       
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |            
|                                                |                                                                            | (Unaudited)                                                                                                                                              |                                                       | (Unaudited)   |     |            
|ASSETS                                         
|Current assets:                                 |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                | Cash and cash equivalents                                                  |                                                                                                                                                          | $                                                     | 91.1          |     |             | $       | 23.6  |     |         | $       |        |    
|                                                | Receivables                                                                |                                                                                                                                                          |                                                       | 291.6         |     |             |         | 229.7 |     |         |         | 248.8   |    
|                                                | Inventories                                                                |                                                                                                                                                          |                                                       | 181.8         |     |             |         | 217.5 |     |         |         | 217.3   |    
|                                                | Prepaid expenses and other                                                 |                                                                                                                                                          |                                                       | 33.5          |     |             |         | 46.9  |     |         |         | 38.7    |    
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                |                                                                            |                                                                                                                                                          | Total current assets                                  |               |     | 598.0       |         |       |     | 517.7   |         |         |     | 504.8   |  
|Net property, plant and equipment               |                                                                            |                                                                                                                                                          | 1,058.6                                               |               |     |             | 1,102.5 |       |     |         | 1,104.8 |        
|Goodwill and other assets                       |                                                                            |                                                                                                                                                          | 947.7                                                 |               |     |             | 1,031.4 |       |     |         | 994.3   |        
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                |                                                                            |                                                                                                                                                          | Total assets                                          |               | $   | 2,604.3     |         |       | $   | 2,651.6 |         |         | $   | 2,603.9 |  
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY
	(DEFICIT)
|Current liabilities:                            |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                | Bank borrowings                                                            |                                                                                                                                                          | $                                                     | 36.7          |     |             | $       | 85.4  |     |         | $       | 79.6    |    
|                                                | Current portion of long-term debt                                          |                                                                                                                                                          |                                                       | 1,914.0       |     |             |         | 72.5  |     |         |         | 1,613.7 |    
|                                                | Accounts payable and accrued liabilities                                   |                                                                                                                                                          |                                                       | 450.7         |     |             |         | 428.4 |     |         |         | 491.6   |    
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                |                                                                            |                                                                                                                                                          | Total current liabilities                             |               |     | 2,401.4     |         |       |     | 586.3   |         |         |     | 2,184.9 |  
|Long-term debt, net of current portion          |                                                                            |                                                                                                                                                          | 91.1                                                  |               |     |             | 1,600.9 |       |     |         | 94.6    |        
|Pension and other long-term liabilities         |                                                                            |                                                                                                                                                          | 327.9                                                 |               |     |             | 346.8   |       |     |         | 335.6   |        
|Minority interest                               |                                                                            |                                                                                                                                                          | 11.9                                                  |               |     |             | 10.1    |       |     |         | 10.6    |        
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                |                                                                            |                                                                                                                                                          | Total liabilities                                     |               |     | 2,832.3     |         |       |     | 2,544.1 |         |         |     | 2,625.7 |  
|Commitments and Contingencies                   |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|Stockholders equity (deficit):                 |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                | Preferred stock, 25,000,000 shares
	authorized, none issued or outstanding |                                                                                                                                                          |                                                       |              |     |             |         |      |     |         |         |        |    
|                                                | Common stock, par value $0.01 per share:                                   |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |         |    
|                                                |                                                                            | Voting  authorized 99,000,000 shares;
	27,708,169, 27,707,919, and 27,707,919 shares issued;
	25,806,719, 25,806,469, and 25,806,469 shares outstanding |                                                       |               | 0.3 |             |         |       | 0.3 |         |         |         | 0.3 |        
|                                                |                                                                            | Nonvoting  authorized 5,000,000
	shares; issued and outstanding, 2,649,026 shares                                                                       |                                                       |               |    |             |         |       |    |         |         |         |    |        
|                                                | Additional paid in capital                                                 |                                                                                                                                                          |                                                       | 235.1         |     |             |         | 235.1 |     |         |         | 235.1   |    
|                                                | Common stock in treasury at cost, 1,901,450 shares                         |                                                                                                                                                          |                                                       | (25.7         | )   |             |         | (25.7 | )   |         |         | (25.7   | )  
|                                                | Accumulated deficit                                                        |                                                                                                                                                          |                                                       | (332.3        | )   |             |         | (12.9 | )   |         |         | (145.7  | )  
|                                                | Accumulated other comprehensive loss                                       |                                                                                                                                                          |                                                       | (105.4        | )   |             |         | (89.3 | )   |         |         | (85.8   | )  
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                |                                                                            |                                                                                                                                                          | Total stockholders equity (deficit)                  |               |     | (228.0      | )       |       |     | 107.5   |         |         |     | (21.8   | )
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        
|                                                |                                                                            |                                                                                                                                                          | Total liabilities and stockholders equity
	(deficit) |               | $   | 2,604.3     |         |       | $   | 2,651.6 |         |         | $   | 2,603.9 |  
|                                                |                                                                            |                                                                                                                                                          |                                                       |               |     |             |         |       |     |         |         |        

See accompanying notes to consolidated financial
statements.

3



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES






Consolidated Statements of Cash
Flows


(Millions of dollars)


(Unaudited)


|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |        |        |        |  
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------------------------------ | ------------- | ----- | ------ | ----- | ------ | ------ | ------ | -
|                                                                                            |                                                                                   |                                         
|                                                                                            |                                                                                   | Nine Months Ended                       
|                                                                                            |                                                                                   | October 31,                             
|                                                                                            |                                                                                   |                                         
|                                                                                            |                                                                                   |                                          |                                                  | (As Restated)
|                                                                                            |                                                                                   | 2001                                     |                                                  | 2000         
|                                                                                            |                                                                                   |                                          |                                                  |              
|Cash flows from operating activities:                                                       |                                                                                   |                                          |                                                  |               |       |        |       |       
|Net loss                                                                                    |                                                                                   | $                                        | (186.6                                           | )             |       | $      | (53.4 | )     
|Adjustments to reconcile net loss to net cash
	provided by (used for) operating activities: |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            | Depreciation and tooling amortization                                             |                                          |                                                  | 93.2          |       |        |       | 90.7   |       
|                                                                                            | Amortization of intangibles                                                       |                                          |                                                  | 20.0          |       |        |       | 20.7   |       
|                                                                                            | Amortization of deferred financing fees                                           |                                          |                                                  | 5.9           |       |        |       | 4.8    |       
|                                                                                            | Deferred taxes                                                                    |                                          |                                                  | 5.3           |       |        |       | 8.1    |       
|                                                                                            | Asset impairments and other restructuring charges                                 |                                          |                                                  | 42.6          |       |        |       | 78.3   |       
|                                                                                            | Loss on investment in joint venture                                               |                                          |                                                  | 3.8           |       |        |       | 1.5    |       
|                                                                                            | Minority interest                                                                 |                                          |                                                  | 2.6           |       |        |       | 2.1    |       
|                                                                                            | Equity in losses (earnings) of joint ventures                                     |                                          |                                                  | 0.9           |       |        |       | (0.7   | )     
|                                                                                            | Gain on sale of joint venture                                                     |                                          |                                                  | (0.6          | )     |        |       |       |       
|                                                                                            | Extraordinary gain                                                                |                                          |                                                  | (2.7          | )     |        |       |       |       
|                                                                                            | Changes in operating assets and liabilities that
	increase (decrease) cash flows: |                                          |                                                  |               |       |        |       |        |       
|                                                                                            |                                                                                   | Receivables                              |                                                  |               | 21.8  |        |       |        | (46.1  | )     
|                                                                                            |                                                                                   | Inventories                              |                                                  |               | 31.3  |        |       |        | (31.7  | )     
|                                                                                            |                                                                                   | Prepaid expenses and other               |                                                  |               | 5.0   |        |       |        | (5.0   | )     
|                                                                                            |                                                                                   | Accounts payable and accrued liabilities |                                                  |               | (29.4 | )      |       |        | (138.6 | )     
|                                                                                            |                                                                                   | Other long-term liabilities              |                                                  |               | (6.7  | )      |       |        | (9.7   | )     
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            |                                                                                   |                                          | Cash provided by (used for) operating activities |               |       | 6.4    |       |        |        | (79.0  | )
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|Cash flows from investing activities:                                                       |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            | Acquisition of property, plant and equipment                                      |                                          |                                                  | (104.3        | )     |        |       | (123.8 | )     
|                                                                                            | Tooling expenditures                                                              |                                          |                                                  | (9.9          | )     |        |       | (10.2  | )     
|                                                                                            | Net proceeds from termination of cross-currency
	swap agreements                  |                                          |                                                  | 10.1          |       |        |       | 26.4   |       
|                                                                                            | Increased investment in majority-owned subsidiary                                 |                                          |                                                  |              |       |        |       | (7.2   | )     
|                                                                                            | Purchase of business, net of cash acquired                                        |                                          |                                                  |              |       |        |       | (6.4   | )     
|                                                                                            | Proceeds from sale of joint venture                                               |                                          |                                                  | 9.5           |       |        |       |       |       
|                                                                                            | Other, net                                                                        |                                          |                                                  | (9.6          | )     |        |       | (5.9   | )     
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            |                                                                                   |                                          | Cash used for investing activities               |               |       | (104.2 | )     |        |        | (127.1 | )
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|Cash flows from financing activities:                                                       |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            | Increase in bank borrowings and revolving facility                                |                                          |                                                  | 246.7         |       |        |       | 250.7  |       
|                                                                                            | Proceeds from refinancing, net of related fees                                    |                                          |                                                  | 435.4         |       |        |       |       |       
|                                                                                            | Repayment of bank borrowings and revolving
	facility from refinancing             |                                          |                                                  | (381.3        | )     |        |       |       |       
|                                                                                            | Repayment of long-term debt from refinancing                                      |                                          |                                                  | (36.6         | )     |        |       |       |       
|                                                                                            | Payments on accounts receivable securitization                                    |                                          |                                                  | (71.6         | )     |        |       | (17.2  | )     
|                                                                                            | Purchase of treasury stock                                                        |                                          |                                                  |              |       |        |       | (25.7  | )     
|                                                                                            | Fees to amend Credit Agreement                                                    |                                          |                                                  | (2.7          | )     |        |       |       |       
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            |                                                                                   |                                          | Cash provided by financing activities            |               |       | 189.9  |       |        |        | 207.8  |  
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|Effect of exchange rate changes on cash and cash
	equivalents                               |                                                                                   |                                          | (1.0                                             | )             |       |        | (4.0  | )     
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            | Increase in cash and cash equivalents                                             |                                          |                                                  | 91.1          |       |        |       | (2.3   | )     
|Cash and cash equivalents at beginning of year                                              |                                                                                   |                                          |                                                 |               |       |        | 25.9  |       
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|Cash and cash equivalents at end of period                                                  |                                                                                   | $                                        | 91.1                                             |               |       | $      | 23.6  |       
|                                                                                            |                                                                                   |                                          |                                                  |               |       |        |       |       
|Supplemental data:                                                                          |                                                                                   |                                          |                                                  |               |       |        |       |       
|                                                                                            | Cash paid for interest                                                            |                                          | $                                                | 102.8         |       |        | $     | 110.5  |       
|                                                                                            | Cash paid for income taxes                                                        |                                          | $                                                | 9.8           |       |        | $     | 10.9   |       

See accompanying notes to consolidated financial
statements.

4



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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES






Notes to Consolidated Financial
Statements


Nine Months Ended October 31, 2001 and
2000


(Unaudited)


(Millions of Dollars Unless Otherwise
Stated)


(1) Description of Business and Basis of
Presentation

Description
of Business

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

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

Basis of
Presentation

The accompanying consolidated financial
statements have been prepared on a going concern basis which
contemplates continuity of operations, realization of assets,
and payment of liabilities in the ordinary course of business
and do not reflect adjustments that might result if the Company
is unable to continue as a going concern. The Companys
recent history of significant losses, deficit in
stockholders equity and issues related to compliance with
debt covenants raise substantial doubt about the Companys
ability to continue as a going concern. As is more fully
discussed in Note 13, the Company filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code in
December 2001. Continuing as a going concern is dependent upon,
among other things, the Companys formulation of a plan of
reorganization that is confirmed by the Bankruptcy Court, the
success of future business operations, and the generation of
sufficient cash from operations and financing sources to meet
the Companys obligations.

The Companys unaudited interim consolidated
financial statements do not include all of the disclosures
required by accounting principles generally accepted in the
United States of America for annual financial statements. In the
opinion of management, all adjustments considered necessary for
a fair presentation of the interim period results have been
included. Operating results for the nine months ended
October 31, 2001 are not necessarily indicative of the
results that may be expected for the full fiscal year ending
January 31, 2002.

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

(2) Restatement of Consolidated Financial
Statements

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

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

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

The primary categories of restatement adjustments
are discussed more fully in the Companys Annual Report on
Form 10-K/ A and the notes to the consolidated financial
statements included therein. Following are the primary
categories of restatement adjustments to the Companys
previously reported financial results for the three month and
nine month periods ended October 31, 2000 ($ in millions):

|                                                           |                                      |                  |                                                       |                   |      |      |   |       |      |      | 
|---------------------------------------------------------- | ------------------------------------ | ---------------- | ----------------------------------------------------- | ----------------- | ---- | ---- | - | ----- | ---- | ---- | 
|                                                           |                                      | Quarter Ended    |                                                       | Nine Months Ended
|                                                           |                                      | October 31, 2000 |                                                       | October 31, 2000 
|                                                           |                                      |                  |                                                       |                  
|Adjustments (increasing) decreasing net
	income:           |                                      |                  |                                                       |                   |      |      |   |      
|                                                           | Deferred operating expenditures      |                  | $                                                     | 4.1               |      |      | $ | 11.0  |     
|                                                           | Unrecorded trade payables and claims |                  |                                                       | 3.2               |      |      |   | 7.7   |     
|                                                           | Acquisition accounting               |                  |                                                       | 5.1               |      |      |   | 15.3  |     
|                                                           | Customer credits and other           |                  |                                                       | 0.4               |      |      |   | 4.8   |     
|                                                           | Asset impairment losses              |                  |                                                       | (1.2              | )    |      |   | 0.9   |     
|                                                           |                                      |                  |                                                       |                   |      |      |   |      
|                                                           |                                      |                  | Total adjustments to earnings (loss) from
	operations |                   |      | 11.6 |   |       |      | 39.7 | 
|                                                           | Income taxes                         |                  |                                                       | 1.1               |      |      |   | (11.6 | )   
|                                                           |                                      |                  |                                                       |                   |      |      |   |      
|                                                           |                                      |                  | Total adjustment to net loss                          |                   |      | 12.7 |   |       |      | 28.1 | 
|Adjustments (increasing) decreasing
	stockholders equity: |                                      |                  |                                                       |                   |      |      |   |      
|                                                           | Tax effect of net investment hedges  |                  |                                                       | 7.1               |      |      |   | 17.4  |     
|                                                           |                                      | Other            |                                                       |                   | (2.3 | )    |   |       | (1.8 | )   
|                                                           |                                      |                  |                                                       |                   |      |      |   |      
|                                                           |                                      |                  | Total decrease in stockholders equity                |                   | $    | 17.5 |   |       | $    | 43.7 | 
|                                                           |                                      |                  |                                                       |                   |      |      |   |      

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

For purposes of these consolidated financial
statements, certain non-current deferred income tax assets and
liabilities as previously reported at October 31, 2000 were
reclassified either as part of the previously reported amounts
or as restatement adjustments. These reclassifications, which
did not affect previously reported net income (loss), have been
made to the consolidated financial statements and are included
in the accompanying tables.

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

Consolidated Statement of Operations

(Millions of dollars, except per share
amounts)


|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |       |  
|------------------------------------------------- | ------------------------------------------------- | ------------------------------ | ----- | ------------ | - | -------- | ----- | ----- | - | - | ----- | ----- | -
|                                                  |                                                   |                               
|                                                  |                                                   | Quarter Ended October 31, 2000
|                                                  |                                                   |                               
|                                                  |                                                   | As                             |       |             
|                                                  |                                                   | Previously                     |       |              |   | As      
|                                                  |                                                   | Reported                       |       | Restatements |   | Restated
|                                                  |                                                   |                                |       |              |   |         
|Net sales                                         |                                                   | $                              | 558.3 |              |   | $        | (0.3  | )     |   | $ | 558.0 |      
|Cost of goods sold                                |                                                   |                                | 485.1 |              |   |          | 10.1  |       |   |   | 495.2 |      
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|                                                  | Gross profit                                      |                                |       | 73.2         |   |          |       | (10.4 | ) |   |       | 62.8  |  
|Marketing, general and administration             |                                                   |                                | 28.3  |              |   |          | 1.6   |       |   |   | 29.9  |      
|Engineering and product development               |                                                   |                                | 3.6   |              |   |          |      |       |   |   | 3.6   |      
|Amortization of intangible assets                 |                                                   |                                | 7.0   |              |   |          | (0.2  | )     |   |   | 6.8   |      
|Equity in earnings of joint ventures              |                                                   |                                | (0.2  | )            |   |          |      |       |   |   | (0.2  | )    
|Asset impairments and other restructuring charges |                                                   |                                | 74.1  |              |   |          | (0.2  | )     |   |   | 73.9  |      
|Loss on investment in joint venture               |                                                   |                                | 1.5   |              |   |          |      |       |   |   | 1.5   |      
|Other (income) expense, net                       |                                                   |                                | (2.0  | )            |   |          | (0.1  | )     |   |   | (2.1  | )    
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|                                                  | Loss from operations                              |                                |       | (39.1        | ) |          |       | (11.5 | ) |   |       | (50.6 | )
|Interest expense, net                             |                                                   |                                | 41.6  |              |   |          | 0.1   |       |   |   | 41.7  |      
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|                                                  | Loss before taxes on income and minority interest |                                |       | (80.7        | ) |          |       | (11.6 | ) |   |       | (92.3 | )
|Income tax benefit                                |                                                   |                                | (33.9 | )            |   |          | 1.1   |       |   |   | (32.8 | )    
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|                                                  | Loss before minority interest                     |                                |       | (46.8        | ) |          |       | (12.7 | ) |   |       | (59.5 | )
|Minority interest                                 |                                                   |                                | 0.7   |              |   |          |      |       |   |   | 0.7   |      
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|                                                  | Net loss                                          |                                | $     | (47.5        | ) |          | $     | (12.7 | ) |   | $     | (60.2 | )
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|Basic net loss per share                          |                                                   | $                              | (1.63 | )            |   | $        | (0.43 | )     |   | $ | (2.06 | )    
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      
|Diluted net loss per share                        |                                                   | $                              | (1.63 | )            |   | $        | (0.43 | )     |   | $ | (2.06 | )    
|                                                  |                                                   |                                |       |              |   |          |       |       |   |   |       |      

7



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

Consolidated Statement of Operations

(Millions of dollars, except per share
amounts)


|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |       |  
|------------------------------------------------- | ------------------------------------------------- | ---------------------------------- | ------- | ------------ | - | -------- | ----- | ----- | - | - | ------- | ----- | -
|                                                  |                                                   |                                   
|                                                  |                                                   | Nine Months Ended October 31, 2000
|                                                  |                                                   |                                   
|                                                  |                                                   | As                                 |         |             
|                                                  |                                                   | Previously                         |         |              |   | As      
|                                                  |                                                   | Reported                           |         | Restatements |   | Restated
|                                                  |                                                   |                                    |         |              |   |         
|Net sales                                         |                                                   | $                                  | 1,695.9 |              |   | $        | (3.9  | )     |   | $ | 1,692.0 |      
|Cost of goods sold                                |                                                   |                                    | 1,436.4 |              |   |          | 29.6  |       |   |   | 1,466.0 |      
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|                                                  | Gross profit                                      |                                    |         | 259.5        |   |          |       | (33.5 | ) |   |         | 226.0 |  
|Marketing, general and administration             |                                                   |                                    | 76.8    |              |   |          | (0.3  | )     |   |   | 76.5    |      
|Engineering and product development               |                                                   |                                    | 13.0    |              |   |          |      |       |   |   | 13.0    |      
|Amortization of intangible assets                 |                                                   |                                    | 21.3    |              |   |          | (0.6  | )     |   |   | 20.7    |      
|Equity in earnings of joint ventures              |                                                   |                                    | (0.7    | )            |   |          |      |       |   |   | (0.7    | )    
|Asset impairments and other restructuring charges |                                                   |                                    | 74.1    |              |   |          | 4.2   |       |   |   | 78.3    |      
|Loss on investment in joint venture               |                                                   |                                    | 1.5     |              |   |          |      |       |   |   | 1.5     |      
|Other (income) expense, net                       |                                                   |                                    | (6.9    | )            |   |          | 2.8   |       |   |   | (4.1    | )    
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|                                                  | Earnings from operations                          |                                    |         | 80.4         |   |          |       | (39.6 | ) |   |         | 40.8  |  
|Interest expense, net                             |                                                   |                                    | 120.4   |              |   |          | 0.1   |       |   |   | 120.5   |      
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|                                                  | Loss before taxes on income and minority interest |                                    |         | (40.0        | ) |          |       | (39.7 | ) |   |         | (79.7 | )
|Income tax benefit                                |                                                   |                                    | (16.8   | )            |   |          | (11.6 | )     |   |   | (28.4   | )    
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|                                                  | Loss before minority interest                     |                                    |         | (23.2        | ) |          |       | (28.1 | ) |   |         | (51.3 | )
|Minority interest                                 |                                                   |                                    | 2.1     |              |   |          |      |       |   |   | 2.1     |      
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|                                                  | Net loss                                          |                                    | $       | (25.3        | ) |          | $     | (28.1 | ) |   | $       | (53.4 | )
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|Basic net loss per share                          |                                                   | $                                  | (0.85   | )            |   | $        | (0.93 | )     |   | $ | (1.78   | )    
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      
|Diluted net loss per share                        |                                                   | $                                  | (0.85   | )            |   | $        | (0.93 | )     |   | $ | (1.78   | )    
|                                                  |                                                   |                                    |         |              |   |          |       |       |   |   |         |      

8



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Consolidated Balance Sheet

(Millions of dollars, except share
amounts)


|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |       |     |         | 
|--------------------------------------- | ---------------------------------------- | ---------------------- | ------------------------------------------ | ------------ | --- | -------- | ------ | ----- | - | ------ | ------- | ----- | --- | ------- | 
|                                        |                                          |                       
|                                        |                                          | As of October 31, 2000
|                                        |                                          |                       
|                                        |                                          | As                     |                                            |             
|                                        |                                          | Previously             |                                            |              |     | As      
|                                        |                                          | Reported               |                                            | Restatements |     | Restated
|                                        |                                          |                        |                                            |              |     |         
|ASSETS                                 
|Current assets:                         |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        | Cash and cash equivalents                |                        | $                                          | 23.6         |     |          | $      |      |   |        | $       | 23.6  |    
|                                        | Receivables                              |                        |                                            | 240.5        |     |          |        | (10.8 | ) |        |         | 229.7 |    
|                                        | Inventories                              |                        |                                            | 201.2        |     |          |        | 16.3  |   |        |         | 217.5 |    
|                                        | Deferred tax assets                      |                        |                                            |             |     |          |        | 32.2  |   |        |         | 32.2  |    
|                                        | Prepaid expenses and other               |                        |                                            | 16.9         |     |          |        | (2.2  | ) |        |         | 14.7  |    
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        |                                          |                        | Total current assets                       |              |     | 482.2    |        |       |   | 35.5   |         |       |     | 517.7   | 
|Property, plant and equipment, net      |                                          |                        | 1,108.6                                    |              |     |          | (6.1   | )     |   |        | 1,102.5 |      
|Deferred tax assets                     |                                          |                        | 62.6                                       |              |     |          | (35.2  | )     |   |        | 27.4    |      
|Goodwill and other assets               |                                          |                        | 1,120.5                                    |              |     |          | (116.5 | )     |   |        | 1,004.0 |      
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        |                                          |                        | Total assets                               |              | $   | 2,773.9  |        |       | $ | (122.3 | )       |       | $   | 2,651.6 | 
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|LIABILITIES AND STOCKHOLDERS
	EQUITY  
|Current liabilities:                    |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        | Bank borrowings                          |                        | $                                          | 85.4         |     |          | $      |      |   |        | $       | 85.4  |    
|                                        | Current portion of long-term debt        |                        |                                            | 72.5         |     |          |        |      |   |        |         | 72.5  |    
|                                        | Accounts payable and accrued liabilities |                        |                                            | 446.6        |     |          |        | (18.2 | ) |        |         | 428.4 |    
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        |                                          |                        | Total current liabilities                  |              |     | 604.5    |        |       |   | (18.2  | )       |       |     | 586.3   | 
|Long-term debt, net of current portion  |                                          |                        | 1,600.9                                    |              |     |          |       |       |   |        | 1,600.9 |      
|Deferred tax liabilities                |                                          |                        | 94.4                                       |              |     |          | (24.8  | )     |   |        | 69.6    |      
|Pension and other long-term liabilities |                                          |                        | 290.3                                      |              |     |          | (13.1  | )     |   |        | 277.2   |      
|Minority interest                       |                                          |                        | 10.1                                       |              |     |          |       |       |   |        | 10.1    |      
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        |                                          |                        | Total liabilities                          |              |     | 2,600.2  |        |       |   | (56.1  | )       |       |     | 2,544.1 | 
|Commitments and contingencies           |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|Stockholders equity:                   |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        | Preferred stock                          |                        |                                            |             |     |          |        |      |   |        |         |      |    
|                                        | Common stock:                            |                        |                                            |              |     |          |        |       |   |        |         |       |    
|                                        |                                          | Voting                 |                                            |              | 0.3 |          |        |       |  |        |         |       | 0.3 |        
|                                        |                                          | Nonvoting              |                                            |              |    |          |        |       |  |        |         |       |    |        
|                                        | Additional paid in capital               |                        |                                            | 237.1        |     |          |        | (2.0  | ) |        |         | 235.1 |    
|                                        | Common stock in treasury at cost         |                        |                                            | (26.3        | )   |          |        | 0.6   |   |        |         | (25.7 | )  
|                                        | Retained earnings(deficit)               |                        |                                            | 32.7         |     |          |        | (45.6 | ) |        |         | (12.9 | )  
|                                        | Accumulated other comprehensive loss     |                        |                                            | (70.1        | )   |          |        | (19.2 | ) |        |         | (89.3 | )  
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        |                                          |                        | Total stockholders equity                 |              |     | 173.7    |        |       |   | (66.2  | )       |       |     | 107.5   | 
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      
|                                        |                                          |                        | Total liabilities and stockholders equity |              | $   | 2,773.9  |        |       | $ | (122.3 | )       |       | $   | 2,651.6 | 
|                                        |                                          |                        |                                            |              |     |          |        |       |   |        |         |      

9



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

(3) Bank Borrowings and Long-Term
Debt



| |            
| | -----------
| | Refinancing

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

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

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

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

The 11 7/8% Notes mature on June 15,
2006 and require interest payments semi-annually on each
June 15 and December 15 commencing December 15,
2001. The 11 7/8% Notes may not be redeemed prior to
June 15, 2005; provided, however, that the Company may, at
any time and from time to time prior to June 15, 2004,
redeem up to 35% of the aggregate principal amount of the
11 7/8% Notes at a price equal to 111.875% of the aggregate
principal amount so redeemed, plus accrued and unpaid interest
to the date of redemption, with the Net Cash Proceeds (as
defined) of one or more Equity Offerings (as defined), provided
that at least $195.0 million aggregate principal amount of
the 11 7/8% Notes remain outstanding. On or after
June 15, 2005,

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

the Company may, at its option, redeem the
11 7/8% Notes upon the terms and conditions set forth in
the indenture.

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

Pursuant to an Exchange Offer Registration Rights
Agreement (the Registration Rights Agreement), the
Company agreed to use its best efforts to file and have declared
effective an Exchange Offer Registration Statement with respect
to an offer to exchange the 11 7/8% Notes for other notes
of the Company with terms substantially identical to the
11 7/8% Notes. The Company also agreed to consummate such
exchange offer on or prior to December 19, 2001. As a
result of the Chapter 11 Filings by the Company on
December 5, 2001 as discussed in Note 13, such
registration has not occurred.

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

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

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

Trade
Securitization Agreement

In April 1998, the Company entered into a
three-year trade securitization agreement pursuant to which the
Company and certain of its subsidiaries sold, and continued to
sell on an ongoing basis, a portion of their accounts
receivables to a special purpose entity (Funding
Co.), which is wholly owned by the Company. Accordingly,
the Company and such subsidiaries, irrevocably and without
recourse, transferred and continued to transfer substantially
all of their U.S. dollar denominated trade accounts receivable
to Funding Co. Funding

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

Co. then sold and continued to sell such trade
accounts receivable to an independent issuer of
receivable-backed commercial paper. The Company has collection
and administrative responsibilities with respect to all the
receivables that are sold.

This trade securitization agreement expired on
May 1, 2001 and as such, there were no receivables sold at
October 31, 2001. From the expiration date to
October 31, 2001, the Company financed the amount of
receivables previously sold under the securitization agreement
with its revolving credit facility. The impact of the
discontinued securitization program had an adverse impact on
liquidity of approximately $71.6 million for the nine month
period ended October 31, 2001.

(4) Derivative Financial
Instruments

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

The Company has significant investments in
foreign subsidiaries. The majority of these investments are in
Europe wherein the Euro is the functional currency. As a result,
the Company is exposed to fluctuations in exchange rates between
the Euro and the U.S. Dollar. To reduce this exposure, the
Company entered into cross-currency interest rate swap
agreements. At January 31, 2001, the Company held
$281 million notional amount of cross-currency interest
rate swaps, which are recorded in the accompanying consolidated
balance sheet at fair value. At January 31, 2001, the
Company had an unrealized loss of approximately
$0.4 million. The fair value of the Companys
cross-currency interest rate swaps is the estimated amount the
Company would receive or pay to terminate the agreement based on
third party market quotes. During the nine months ended
October 31, 2001, the Company received net cash in the
amount of $10.1 million in connection with the early
termination of all cross-currency interest rate swap agreements.
These payments reduced the fair market value recorded by the
Company resulting from accounting for mark-to-market adjustments
during the terms of the agreements. As such, the Company held no
cross-currency interest rate swaps at October 31, 2001.

The Company designated these swap agreements as
hedges of the foreign currency exposure of its net investment in
foreign operations. In addition, the Company has designated a
term loan, totaling 30.5 million Euro at October 31,
2001, as a hedge of foreign currency exposure of its net
investment in its European operations.

The Company records the gain or loss on the
derivative financial instruments designated as hedges of the
foreign currency exposure of its net investment in foreign
operations as currency translation adjustments in Accumulated
Other Comprehensive Loss to the extent the hedges are effective.
The gain or loss on the hedging instruments offset the change in
currency translation adjustments resulting from translating the
foreign operations financial statements from their
respective functional currency to the Dollar. In the third
quarter of fiscal 2001, the Company recorded a loss of $7.5
million on the instruments designated as hedges in Accumulated
Other Comprehensive Loss. The tax effect of this loss was offset
by a reversal of the deferred tax asset valuation allowance,
such that there was no net tax benefit in the quarter ended
October 31, 2001. As these derivative financial instruments
were accounted for as qualifying hedges prior to adoption of
SFAS No. 133, no transition adjustment was recorded at the
date of adoption.

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

(5) Inventories

The major classes of inventory are as follows:

|                         |       |             |      |             |  |   |      |       | 
|------------------------ | ----- | ----------- | ---- | ----------- |  | - | ---- | ----- | 
|                         |       | October 31, |      | January 31,
|                         |       | 2001        |      | 2001       
|                         |       |             |      |            
|Raw materials            |       | $           | 42.3 |             |  | $ | 49.7 |      
|Work-in-process          |       |             | 45.8 |             |  |   | 60.1 |      
|Finished goods           |       |             | 56.8 |             |  |   | 72.4 |      
|Spare parts and supplies |       |             | 36.9 |             |  |   | 35.1 |      
|                         |       |             |      |             |  |   |      |      
|                         | Total |             | $    | 181.8       |  |   | $    | 217.3 | 
|                         |       |             |      |             |  |   |      |      

(6) Property, Plant and
Equipment

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

|                         |                                   |             |         |             |  |   |         |         | 
|------------------------ | --------------------------------- | ----------- | ------- | ----------- |  | - | ------- | ------- | 
|                         |                                   | October 31, |         | January 31,
|                         |                                   | 2001        |         | 2001       
|                         |                                   |             |         |            
|Land                     |                                   | $           | 30.7    |             |  | $ | 31.2    |        
|Buildings                |                                   |             | 249.5   |             |  |   | 248.7   |        
|Machinery and equipment  |                                   |             | 1,156.4 |             |  |   | 1,134.9 |        
|                         |                                   |             |         |             |  |   |         |        
|                         |                                   |             | 1,436.6 |             |  |   | 1,414.8 |        
|Accumulated depreciation |                                   |             | (378.0  | )           |  |   | (310.0  | )      
|                         |                                   |             |         |             |  |   |         |        
|                         | Net property, plant and equipment |             | $       | 1,058.6     |  |   | $       | 1,104.8 | 
|                         |                                   |             |         |             |  |   |         |        

(7) Asset Impairments and Other
Restructuring Charges

During the third quarter of fiscal 2001 the
Company recognized asset impairment losses of $4.6 million
related principally to $2.3 million due to the
discontinuance of the Companys Equipment and Engineering
business located in Montague, Michigan, $0.9 million
related to the abandonment of a greenfield project in Thailand,
and impairments of investments in other fixed assets. Such
investments in fixed assets were written down to fair value
based on the expected scrap value, if any, of such machinery,
equipment and tooling.

In the third quarter of fiscal 2000, the Company
recorded asset impairment and other restructuring charges of
$73.9 million. These charges relate principally to
$63.6 million in impairment of excess and obsolete
machinery and equipment, $7.6 million in severance and
facility closure costs, and $2.7 million for the termination of
certain contractual obligations.

(8) Sale of Non-Core Business

During the third quarter of fiscal 2001, the
Company sold its 25% interest in a Canadian joint venture for
cash proceeds of $9.5 million. In connection with the sale,
the Company recognized a gain of $0.6 million, which is
included in Other income, net, on the accompanying consolidated
statement of operations.

(9) Earnings Per Share

Basic earnings (loss) per share are
calculated by dividing net income (loss) by the weighted
average number of common shares outstanding. Diluted earnings
(loss) per share are computed by dividing net income
(loss) by the diluted weighted average shares outstanding.
Diluted weighted average shares assume the exercise of stock
options and warrants.

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

Shares outstanding for the three months and nine
months ended October 31, 2001 and 2000, were as follows:

|                                        |  |              |        |             |  |      |        |      |  |  |        |  |  |  |        | 
|--------------------------------------- |  | ------------ | ------ | ----------- |  | ---- | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                                        |  |              |        |            
|                                        |  | Three Months |        | Nine Months
|                                        |  | Ended        |        | Ended      
|                                        |  |              |        |            
|                                        |  | 2001         |        | 2000        |  | 2001 |        | 2000
|                                        |  |              |        |             |  |      |        |     
|Weighted average shares outstanding     |  |              | 28,456 |             |  |      | 29,189 |      |  |  | 28,456 |  |  |  | 29,965 | 
|Dilutive effect of options and warrants |  |              |       |             |  |      |       |      |  |  |       |  |  |  |       | 
|                                        |  |              |        |             |  |      |        |      |  |  |        |  |  |  |        | 
|Diluted shares outstanding              |  |              | 28,456 |             |  |      | 29,189 |      |  |  | 28,456 |  |  |  | 29,965 | 
|                                        |  |              |        |             |  |      |        |      |  |  |        |  |  |  |        | 

For the three months and nine months ending
October 31, 2001 and 2000, respectively, all options and
warrants were excluded from the calculation of diluted earnings
(loss) per share as the effect was anti-dilutive due to the
net loss reflected for such periods.

(10) Comprehensive Income

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

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

|                                   |                          |      |        |        |   |   |       |       |  
|---------------------------------- | ------------------------ | ---- | ------ | ------ | - | - | ----- | ----- | -
|                                   |                          | 2001 |        | 2000  
|                                   |                          |      |        |       
|Net loss                           |                          | $    | (186.6 | )      |   | $ | (53.4 | )    
|Cumulative translation adjustments |                          |      | (19.6  | )      |   |   | (7.8  | )    
|                                   |                          |      |        |        |   |   |       |      
|                                   | Total comprehensive loss |      | $      | (206.2 | ) |   | $     | (61.2 | )
|                                   |                          |      |        |        |   |   |       |      

(11) Contingencies

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

Following the September 5, 2001 announcement
of the restatements, several lawsuits were filed by and
purportedly on behalf of the shareholders of the Company naming
as defendants a combination of the Company, Mr. Cucuz and
Mr. Shovers. These lawsuits are seeking class action
status, but no class has yet been certified in these actions.
Due to the Companys bankruptcy filing, this litigation
against the Company is subject to the automatic stay.

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

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

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

(12) Segment Reporting

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

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

|                  |       |         |       |                   |  |              |         |               |  |      |        |               |   |   |       |       |   |   |         |         |  |   |         |         | 
|----------------- | ----- | ------- | ----- | ----------------- |  | ------------ | ------- | ------------- |  | ---- | ------ | ------------- | - | - | ----- | ----- | - | - | ------- | ------- |  | - | ------- | ------- | 
|                  |       |         |       |                   |  |             
|                  |       | Revenue |       | Net Income (Loss) |  | Total Assets
|                  |       |         |       |                   |  |             
|                  |       |         |       | (As Restated)     |  |              |         | (As Restated) |  |      |        | (As Restated)
|                  |       | 2001    |       | 2000              |  | 2001         |         | 2000          |  | 2001 |        | 2000         
|                  |       |         |       |                   |  |              |         |               |  |      |        |              
|Automotive wheels |       | $       | 952.0 |                   |  | $            | 1,054.7 |               |  | $    | (51.4  | )             |   | $ | 10.7  |       |   | $ | 1,282.0 |         |  | $ | 1,417.7 |        
|Components        |       |         | 503.1 |                   |  |              | 506.3   |               |  |      | (19.2  | )             |   |   | (7.0  | )     |   |   | 884.7   |         |  |   | 964.5   |        
|Other             |       |         | 119.4 |                   |  |              | 131.0   |               |  |      | (116.0 | )             |   |   | (57.1 | )     |   |   | 437.6   |         |  |   | 269.4   |        
|                  |       |         |       |                   |  |              |         |               |  |      |        |               |   |   |       |       |   |   |         |         |  |   |         |        
|                  | Total |         | $     | 1,574.5           |  |              | $       | 1,692.0       |  |      | $      | (186.6        | ) |   | $     | (53.4 | ) |   | $       | 2,604.3 |  |   | $       | 2,651.6 | 
|                  |       |         |       |                   |  |              |         |               |  |      |        |               |   |   |       |       |   |   |         |         |  |   |         |        

(13) Subsequent Events

Chapter 11
Filings

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

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

Shortly after the commencement of the
Chapter 11 Filings, on December 21, 2001, the
Bankruptcy Court granted interim approval for the Debtors to
obtain $45 million in debtor-in-possession financing (the
DIP facility). Subsequently, on January 28,
2002, the Bankruptcy Court granted final approval of a
$200 million DIP facility for the Debtors. The amounts that
the Company is able to borrow under the DIP facility are
determined by a borrowing base formula based on certain eligible
assets of the Company. As of April 10, 2002, the Company
had $4.0 million in cash borrowings and had issued
$4.7 million in letters of credit pursuant to this
financing. The amount available under the DIP facility as of
April 10, 2002, after taking into account the
aforementioned borrowings and letters of credit, was
$87.0 million.

The Bankruptcy Court has approved payment of
certain of the Debtors pre-petition liabilities, such as
employee wages, benefits, and certain customer, vendor and
freight program related payments. In addition, the Bankruptcy
Court authorized the Debtors to continue and maintain the
majority of their employee benefit programs. Pension and savings
plan funds are in trusts and protected under federal
regulations. All required

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

contributions are current in the respective
plans. The Debtors have received Bankruptcy Court approval for
the retention of legal, financial and management consulting
professionals, and from time to time may seek Bankruptcy Court
approval for the retention of additional financial and
management consulting professionals, to advise the Debtors in
the bankruptcy proceedings and the restructuring of its
businesses.

Pursuant to the automatic stay provisions of
Section 362 of the Bankruptcy Code, actions to collect
pre-petition indebtedness and virtually all litigation against
the Debtors that was, or could have been, brought prior to the
commencement of the Chapter 11 Filings are stayed, and
other contractual obligations of the Debtors may not be enforced
against them. In addition, under Section 365 of the
Bankruptcy Code, subject to the approval of the Bankruptcy
Court, the Debtors may assume or reject executory contracts and
unexpired leases. As of the date of this filing, the Debtors had
not yet completed their review of all contracts and leases for
assumption or rejection, but ultimately will assume or reject
all such contracts and leases. The Debtors cannot presently
determine or reasonably predict the ultimate liability that may
result from rejecting such contracts or leases or from the
filing of rejection damage claims, but such rejections could
result in additional liabilities subject to compromise.

Parties with claims against the Debtors,
including, among other things, claims for damages resulting from
the rejection of executory contracts or unexpired leases, may
file proofs of claim with the Bankruptcy Court in accordance
with the reorganization process. Proofs of claims generally must
be filed with the Bankruptcy Court by the later of
(a) June 3, 2002, which is the general claims bar date
established by the Bankruptcy Court in the Debtors cases,
or (b) the date that is thirty days after entry of order
approving the rejection.

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

The consummation of a plan or plans of
reorganization is the principal objective of the Chapter 11
Filings. A plan of reorganization sets forth the means for
satisfying claims against and interests in the Company and its
Debtor subsidiaries, including the liabilities subject to
compromise. Generally, pre-petition liabilities are subject to
settlement under such a plan or plans of reorganization, which
must be voted upon by certain creditors and approved by the
Bankruptcy Court. Pursuant to an Order of the Bankruptcy Court
in the Debtors cases, the Debtors have the exclusive right
through September 3, 2002 to submit a plan or plans of
reorganization. Such exclusive period may be lengthened (or
shortened) by Bankruptcy Court order pursuant to the request of
the Debtors or a party-in-interest. The Debtors have retained
Lazard Freres & Co. LLC, as financial advisors and
investment bankers for the purpose of providing financial
advisory and investment banking services during the Chapter 11
reorganization process. The Company anticipates that any plan or
plans of reorganization it may propose, if ultimately approved
by the Bankruptcy Court, would result in substantial dilution of
the interest of existing equity holders, so that they would hold
little, if any, meaningful stake in the reorganized enterprise.

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

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

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

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

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

Facility
Closures

In February 2002, the Company committed to a plan
to close its manufacturing facility in Somerset, Kentucky. The
Company will record asset impairment losses of $5.8 million
in the fourth quarter of fiscal 2001 related to the Somerset
facilitys machinery and equipment, which are in addition
to asset impairment losses previously recorded in the second
quarter of 2001. In connection with the closure of the Somerset
facility (which commenced during February 2002), the Company
will record a restructuring charge of $4.4 million in the
first quarter of fiscal 2002. This charge relates to the
termination of leases and other closure costs, including
security and maintenance costs subsequent to the shutdown date,
and is expected to be paid during fiscal 2002 and 2003.

Acquisition

In March 2002, the Company purchased the facility
and assets of a foundry in Chattanooga, Tennessee for
$4.1 million. This purchase integrates the foundry, which
produces brake drum castings for the Company, into the
Companys commercial highway operations.

Other
Subsequent Events

Other events occurring subsequent to
October 31, 2001 regarding the market for the
Companys common stock, other facility closures, a
reduction of the Companys North American salaried
workforce, and sale of non-core businesses are more fully
discussed in the Companys Annual Report on Form 10-K/
A for the year ended January 31, 2001, and the notes to the
consolidated financial statements contained therein.

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)

(14) Guarantor and Non-Guarantor
Financial Statements

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

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

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

The following condensed consolidating financial
information presents:



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

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

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HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Condensed Consolidating Statements of
Operations


For the Nine Months Ended October 31,
2001


|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |        |  
|------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------ | ----- | ------------ | - | ------------ | ----- | ------------- | - | ------------ | ----- | ------------ | - | - | ----- | ----- |  | - | ------ | ----- |  | - | ------- | ------ | -
|                                                              |                                                                                    |        |       |              |   | Conformed    |       |               |   |              |       |             
|                                                              |                                                                                    |        |       | Guarantor    |   | Guarantor    |       | Non-guarantor |   |              |       | Consolidated
|                                                              |                                                                                    | Parent |       | Subsidiaries |   | Subsidiaries |       | Subsidiaries  |   | Eliminations |       | Total       
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |             
|Net sales                                                     |                                                                                    | $      | 199.3 |              |   | $            | 389.6 |               |   | $            | 379.1 |              |   | $ | 614.2 |       |  | $ | (7.7   | )     |  | $ | 1,574.5 |       
|Cost of goods sold                                            |                                                                                    |        | 185.6 |              |   |              | 364.8 |               |   |              | 387.8 |              |   |   | 513.7 |       |  |   | (7.7   | )     |  |   | 1,444.2 |       
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       
|                                                              | Gross profit                                                                       |        |       | 13.7         |   |              |       | 24.8          |   |              |       | (8.7         | ) |   |       | 100.5 |  |   |        |      |  |   |         | 130.3  |  
|Marketing, general and administration                         |                                                                                    |        | 14.5  |              |   |              | 18.9  |               |   |              | 15.4  |              |   |   | 31.1  |       |  |   |       |       |  |   | 79.9    |       
|Engineering and product development                           |                                                                                    |        | 2.8   |              |   |              | 5.6   |               |   |              | 2.1   |              |   |   | 6.4   |       |  |   |       |       |  |   | 16.9    |       
|Amortization of
	intangibles                                  |                                                                                    |        | 0.9   |              |   |              | 5.8   |               |   |              | 8.0   |              |   |   | 5.3   |       |  |   |       |       |  |   | 20.0    |       
|Equity in (earnings) loss of subsidiaries
	and joint ventures |                                                                                    |        | 122.8 |              |   |              | 35.0  |               |   |              | 3.5   |              |   |   | (0.1  | )     |  |   | (160.3 | )     |  |   | 0.9     |       
|Asset impairments and other restructuring charges             |                                                                                    |        | 4.7   |              |   |              | 0.7   |               |   |              | 36.4  |              |   |   | 0.8   |       |  |   |       |       |  |   | 42.6    |       
|Loss on investment in joint venture                           |                                                                                    |        | 3.8   |              |   |              |      |               |   |              |      |              |   |   |      |       |  |   |       |       |  |   | 3.8     |       
|Other (income) expense, net                                   |                                                                                    |        | (1.4  | )            |   |              |      |               |   |              | (0.8  | )            |   |   | (1.5  | )     |  |   |       |       |  |   | (3.7    | )     
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       
|                                                              | Earnings (loss) from operations                                                    |        |       | (134.4       | ) |              |       | (41.2         | ) |              |       | (73.3        | ) |   |       | 58.5  |  |   |        | 160.3 |  |   |         | (30.1  | )
|Interest expense, net                                         |                                                                                    |        | 56.0  |              |   |              | 32.8  |               |   |              | 29.5  |              |   |   | 23.7  |       |  |   |       |       |  |   | 142.0   |       
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       
|                                                              | Earnings (loss) before taxes on income,
	minority interest, and extraordinary gain |        |       | (190.4       | ) |              |       | (74.0         | ) |              |       | (102.8       | ) |   |       | 34.8  |  |   |        | 160.3 |  |   |         | (172.1 | )
|Income tax provision (benefit)                                |                                                                                    |        | (1.1  | )            |   |              | 0.5   |               |   |              | 0.8   |              |   |   | 14.4  |       |  |   |       |       |  |   | 14.6    |       
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       
|                                                              | Earnings (loss) before minority interest and
	extraordinary gain                   |        |       | (189.3       | ) |              |       | (74.5         | ) |              |       | (103.6       | ) |   |       | 20.4  |  |   |        | 160.3 |  |   |         | (186.7 | )
|Minority interest                                             |                                                                                    |        |      |              |   |              |      |               |   |              |      |              |   |   | 2.6   |       |  |   |       |       |  |   | 2.6     |       
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       
|                                                              | Earnings (loss) before extraordinary gain                                          |        |       | (189.3       | ) |              |       | (74.5         | ) |              |       | (103.6       | ) |   |       | 17.8  |  |   |        | 160.3 |  |   |         | (189.3 | )
|Extraordinary gain, net of tax                                |                                                                                    |        | 2.7   |              |   |              |      |               |   |              |      |              |   |   |      |       |  |   |       |       |  |   | 2.7     |       
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       
|                                                              | Net income (loss)                                                                  |        | $     | (186.6       | ) |              | $     | (74.5         | ) |              | $     | (103.6       | ) |   | $     | 17.8  |  |   | $      | 160.3 |  |   | $       | (186.6 | )
|                                                              |                                                                                    |        |       |              |   |              |       |               |   |              |       |              |   |   |       |       |  |   |        |       |  |   |         |       

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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Condensed Consolidating Statements of
Operations


For the Nine Months Ended October 31,
2000, As Restated


|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |       |  
|------------------------------------------------------------- | ------------------------------------------------- | ------ | ----- | ------------ | - | ------------- | ----- | ------------ | - | ------------ | ----- | ----- | - | - | ----- | ---- |  | - | ------- | ----- | -
|                                                              |                                                   |        |       | Guarantor    |   | Non-guarantor |       |              |   | Consolidated
|                                                              |                                                   | Parent |       | Subsidiaries |   | Subsidiaries  |       | Eliminations |   | Total       
|                                                              |                                                   |        |       |              |   |               |       |              |   |             
|Net sales                                                     |                                                   | $      | 239.6 |              |   | $             | 475.4 |              |   | $            | 989.9 |       |   | $ | (12.9 | )    |  | $ | 1,692.0 |      
|Cost of goods sold                                            |                                                   |        | 204.7 |              |   |               | 416.3 |              |   |              | 857.9 |       |   |   | (12.9 | )    |  |   | 1,466.0 |      
|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |      
|                                                              | Gross profit                                      |        |       | 34.9         |   |               |       | 59.1         |   |              |       | 132.0 |   |   |       |     |  |   |         | 226.0 |  
|Marketing, general and administration                         |                                                   |        | 11.9  |              |   |               | 17.4  |              |   |              | 47.2  |       |   |   |      |      |  |   | 76.5    |      
|Engineering and product development                           |                                                   |        | 1.2   |              |   |               | 5.5   |              |   |              | 6.3   |       |   |   |      |      |  |   | 13.0    |      
|Amortization of intangibles                                   |                                                   |        | 0.8   |              |   |               | 5.8   |              |   |              | 14.1  |       |   |   |      |      |  |   | 20.7    |      
|Equity in (earnings) loss of subsidiaries
	and joint ventures |                                                   |        | 50.3  |              |   |               | 14.3  |              |   |              | (0.3  | )     |   |   | (65.0 | )    |  |   | (0.7    | )    
|Asset impairments and other restructuring charges             |                                                   |        | 2.9   |              |   |               | 54.5  |              |   |              | 20.9  |       |   |   |      |      |  |   | 78.3    |      
|Loss on investment in joint venture                           |                                                   |        | 1.5   |              |   |               |      |              |   |              |      |       |   |   |      |      |  |   | 1.5     |      
|Other (income) expense, net                                   |                                                   |        | (0.8  | )            |   |               |      |              |   |              | (3.3  | )     |   |   |      |      |  |   | (4.1    | )    
|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |      
|                                                              | Earnings (loss) from operations                   |        |       | (32.9        | ) |               |       | (38.4        | ) |              |       | 47.1  |   |   |       | 65.0 |  |   |         | 40.8  |  
|Interest expense, net                                         |                                                   |        | 21.9  |              |   |               | 42.6  |              |   |              | 56.0  |       |   |   |      |      |  |   | 120.5   |      
|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |      
|                                                              | Loss before taxes on income and minority interest |        |       | (54.8        | ) |               |       | (81.0        | ) |              |       | (8.9  | ) |   |       | 65.0 |  |   |         | (79.7 | )
|Income tax benefit                                            |                                                   |        | (1.4  | )            |   |               | (23.7 | )            |   |              | (3.3  | )     |   |   |      |      |  |   | (28.4   | )    
|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |      
|                                                              | Loss before minority interest                     |        |       | (53.4        | ) |               |       | (57.3        | ) |              |       | (5.6  | ) |   |       | 65.0 |  |   |         | (51.3 | )
|Minority interest                                             |                                                   |        |      |              |   |               |      |              |   |              | 2.1   |       |   |   |      |      |  |   | 2.1     |      
|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |      
|                                                              | Net loss                                          |        | $     | (53.4        | ) |               | $     | (57.3        | ) |              | $     | (7.7  | ) |   | $     | 65.0 |  |   | $       | (53.4 | )
|                                                              |                                                   |        |       |              |   |               |       |              |   |              |       |       |   |   |       |      |  |   |         |      

20



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Condensed Consolidating Balance
Sheets

As of October 31, 2001


|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |         |  
|---------------------------------------- | ------------------------------------------ | ------ | ------- | ------------ | - | ------------ | ----- | ------------- |  | ------------ | ------ | ------------ |  | - | ----- | ------- |  | - | -------- | -------- | - | - | ------- | ------- | -
|                                         |                                            |        |         |              |   | Conformed    |       |               |  |              |        |             
|                                         |                                            |        |         | Guarantor    |   | Guarantor    |       | Non-guarantor |  |              |        | Consolidated
|                                         |                                            | Parent |         | Subsidiaries |   | Subsidiaries |       | Subsidiaries  |  | Eliminations |        | Total       
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |             
|Cash and cash equivalents                |                                            | $      | 66.8    |              |   | $            | 0.1   |               |  | $            | 1.9    |              |  | $ | 22.3  |         |  | $ |         |          |   | $ | 91.1    |        
|Receivables                              |                                            |        | 12.0    |              |   |              | 45.6  |               |  |              | 68.7   |              |  |   | 165.3 |         |  |   |         |          |   |   | 291.6   |        
|Inventories                              |                                            |        | 20.2    |              |   |              | 33.2  |               |  |              | 44.8   |              |  |   | 83.6  |         |  |   |         |          |   |   | 181.8   |        
|Prepaid expenses and other               |                                            |        | 7.5     |              |   |              | 7.4   |               |  |              | 18.3   |              |  |   | 26.3  |         |  |   | (26.0    | )        |   |   | 33.5    |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total current assets                       |        |         | 106.5        |   |              |       | 86.3          |  |              |        | 133.7        |  |   |       | 297.5   |  |   |          | (26.0    | ) |   |         | 598.0   |  
|Net property, plant and equipment        |                                            |        | 125.1   |              |   |              | 233.8 |               |  |              | 257.1  |              |  |   | 442.6 |         |  |   |         |          |   |   | 1,058.6 |        
|Goodwill and other assets                |                                            |        | 1,075.7 |              |   |              | 255.1 |               |  |              | 412.9  |              |  |   | 294.0 |         |  |   | (1,090.0 | )        |   |   | 947.7   |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total assets                               |        | $       | 1,307.3      |   |              | $     | 575.2         |  |              | $      | 803.7        |  |   | $     | 1,034.1 |  |   | $        | (1,116.0 | ) |   | $       | 2,604.3 |  
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|Bank borrowings                          |                                            | $      |        |              |   | $            |      |               |  | $            |       |              |  | $ | 36.7  |         |  | $ |         |          |   | $ | 36.7    |        
|Current portion of long-term debt        |                                            |        | 1,900.1 |              |   |              |      |               |  |              |       |              |  |   | 13.9  |         |  |   |         |          |   |   | 1,914.0 |        
|Accounts payable and accrued liabilities |                                            |        | 39.3    |              |   |              | 92.8  |               |  |              | 146.0  |              |  |   | 191.8 |         |  |   | (19.2    | )        |   |   | 450.7   |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total current liabilities                  |        |         | 1,939.4      |   |              |       | 92.8          |  |              |        | 146.0        |  |   |       | 242.4   |  |   |          | (19.2    | ) |   |         | 2,401.4 |  
|Long-term debt, net of current portion   |                                            |        |        |              |   |              |      |               |  |              |       |              |  |   | 91.1  |         |  |   |         |          |   |   | 91.1    |        
|Pension and other long-term liabilities  |                                            |        | 67.0    |              |   |              | 49.1  |               |  |              | 20.2   |              |  |   | 191.6 |         |  |   |         |          |   |   | 327.9   |        
|Minority interest                        |                                            |        |        |              |   |              |      |               |  |              |       |              |  |   | 11.9  |         |  |   |         |          |   |   | 11.9    |        
|Parent loans                             |                                            |        | (471.1  | )            |   |              | 317.5 |               |  |              | (25.9  | )            |  |   | 179.5 |         |  |   |         |          |   |   |        |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total liabilities                          |        |         | 1,535.3      |   |              |       | 459.4         |  |              |        | 140.3        |  |   |       | 716.5   |  |   |          | (19.2    | ) |   |         | 2,832.3 |  
|Common stock                             |                                            |        | 0.3     |              |   |              |      |               |  |              |       |              |  |   |      |         |  |   |         |          |   |   | 0.3     |        
|Additional paid-in capital               |                                            |        | 235.1   |              |   |              | 198.5 |               |  |              | 912.5  |              |  |   | 339.7 |         |  |   | (1,450.7 | )        |   |   | 235.1   |        
|Common stock in treasury at cost         |                                            |        | (25.7   | )            |   |              |      |               |  |              |       |              |  |   |      |         |  |   |         |          |   |   | (25.7   | )      
|Retained earnings (accumulated deficit)  |                                            |        | (332.3  | )            |   |              | (76.5 | )             |  |              | (157.5 | )            |  |   | 60.3  |         |  |   | 173.7    |          |   |   | (332.3  | )      
|Accumulated other comprehensive loss     |                                            |        | (105.4  | )            |   |              | (6.2  | )             |  |              | (91.6  | )            |  |   | (82.4 | )       |  |   | 180.2    |          |   |   | (105.4  | )      
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total stockholders equity (deficit)       |        |         | (228.0       | ) |              |       | 115.8         |  |              |        | 663.4        |  |   |       | 317.6   |  |   |          | (1,096.8 | ) |   |         | (228.0  | )
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total liabilities and stockholders equity |        | $       | 1,307.3      |   |              | $     | 575.2         |  |              | $      | 803.7        |  |   | $     | 1,034.1 |  |   | $        | (1,116.0 | ) |   | $       | 2,604.3 |  
|                                         |                                            |        |         |              |   |              |       |               |  |              |        |              |  |   |       |         |  |   |          |          |   |   |         |        

21



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Condensed Consolidating Balance
Sheet

As of January 31, 2001


|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |         |  
|---------------------------------------- | ------------------------------------------ | ------ | ------- | ------------ | - | ------------ | ----- | ------------- |  | ------------ | ------- | ------------ | - | - | ----- | ------- |  | - | -------- | -------- | - | - | ------- | ------- | -
|                                         |                                            |        |         |              |   | Conformed    |       |               |  |              |         |             
|                                         |                                            |        |         | Guarantor    |   | Guarantor    |       | Non-guarantor |  |              |         | Consolidated
|                                         |                                            | Parent |         | Subsidiaries |   | Subsidiaries |       | Subsidiaries  |  | Eliminations |         | Total       
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |             
|Cash and cash equivalents                |                                            | $      | (19.3   | )            |   | $            | 0.2   |               |  | $            | 1.9     |              |   | $ | 17.2  |         |  | $ |         |          |   | $ |        |        
|Receivables                              |                                            |        | 68.2    |              |   |              | 2.6   |               |  |              | 9.7     |              |   |   | 168.3 |         |  |   |         |          |   |   | 248.8   |        
|Inventories                              |                                            |        | 34.4    |              |   |              | 41.9  |               |  |              | 50.9    |              |   |   | 90.1  |         |  |   |         |          |   |   | 217.3   |        
|Prepaid expenses and other               |                                            |        | 7.0     |              |   |              | 8.7   |               |  |              | 17.1    |              |   |   | 27.3  |         |  |   | (21.4    | )        |   |   | 38.7    |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total current assets                       |        |         | 90.3         |   |              |       | 53.4          |  |              |         | 79.6         |   |   |       | 302.9   |  |   |          | (21.4    | ) |   |         | 504.8   |  
|Net property, plant and equipment        |                                            |        | 143.3   |              |   |              | 240.0 |               |  |              | 271.2   |              |   |   | 450.3 |         |  |   |         |          |   |   | 1,104.8 |        
|Goodwill and other assets                |                                            |        | 1,220.9 |              |   |              | 274.5 |               |  |              | 482.2   |              |   |   | 320.3 |         |  |   | (1,303.6 | )        |   |   | 994.3   |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total assets                               |        | $       | 1,454.5      |   |              | $     | 567.9         |  |              | $       | 833.0        |   |   | $     | 1,073.5 |  |   | $        | (1,325.0 | ) |   | $       | 2,603.9 |  
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|Bank borrowings                          |                                            | $      |        |              |   | $            |      |               |  | $            |        |              |   | $ | 79.6  |         |  | $ |         |          |   | $ | 79.6    |        
|Current portion of long-term debt        |                                            |        | 1,597.5 |              |   |              |      |               |  |              | 0.5     |              |   |   | 15.1  |         |  |   | 0.6      |          |   |   | 1,613.7 |        
|Accounts payable and accrued liabilities |                                            |        | 29.0    |              |   |              | 98.1  |               |  |              | 147.4   |              |   |   | 235.6 |         |  |   | (18.5    | )        |   |   | 491.6   |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total current liabilities                  |        |         | 1,626.5      |   |              |       | 98.1          |  |              |         | 147.9        |   |   |       | 330.3   |  |   |          | (17.9    | ) |   |         | 2,184.9 |  
|Long-term debt, net of current portion   |                                            |        |        |              |   |              |      |               |  |              |        |              |   |   | 94.6  |         |  |   |         |          |   |   | 94.6    |        
|Pension and other long-term liabilities  |                                            |        | 72.5    |              |   |              | 56.1  |               |  |              | 37.9    |              |   |   | 169.1 |         |  |   |         |          |   |   | 335.6   |        
|Minority interest                        |                                            |        |        |              |   |              |      |               |  |              |        |              |   |   | 10.6  |         |  |   |         |          |   |   | 10.6    |        
|Parent loans                             |                                            |        | (222.7  | )            |   |              | 245.4 |               |  |              | (218.3  | )            |   |   | 195.6 |         |  |   |         |          |   |   |        |        
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total liabilities                          |        |         | 1,476.3      |   |              |       | 399.6         |  |              |         | (32.5        | ) |   |       | 800.2   |  |   |          | (17.9    | ) |   |         | 2,625.7 |  
|Common stock                             |                                            |        | 0.3     |              |   |              |      |               |  |              |        |              |   |   |      |         |  |   |         |          |   |   | 0.3     |        
|Additional paid-in capital               |                                            |        | 235.1   |              |   |              | 173.4 |               |  |              | 1,002.5 |              |   |   | 294.7 |         |  |   | (1,470.6 | )        |   |   | 235.1   |        
|Common stock in treasury at cost         |                                            |        | (25.7   | )            |   |              |      |               |  |              |        |              |   |   |      |         |  |   |         |          |   |   | (25.7   | )      
|Retained earnings (accumulated deficit)  |                                            |        | (145.7  | )            |   |              | (1.9  | )             |  |              | (53.9   | )            |   |   | 42.3  |         |  |   | 13.5     |          |   |   | (145.7  | )      
|Accumulated other comprehensive loss     |                                            |        | (85.8   | )            |   |              | (3.2  | )             |  |              | (83.1   | )            |   |   | (63.7 | )       |  |   | 150.0    |          |   |   | (85.8   | )      
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total stockholders equity (deficit)       |        |         | (21.8        | ) |              |       | 168.3         |  |              |         | 865.5        |   |   |       | 273.3   |  |   |          | (1,307.1 | ) |   |         | (21.8   | )
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        
|                                         | Total liabilities and stockholders equity |        | $       | 1,454.5      |   |              | $     | 567.9         |  |              | $       | 833.0        |   |   | $     | 1,073.5 |  |   | $        | (1,325.0 | ) |   | $       | 2,603.9 |  
|                                         |                                            |        |         |              |   |              |       |               |  |              |         |              |   |   |       |         |  |   |          |          |   |   |         |        

22



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Condensed Consolidating Statement of Cash
Flows


For the Nine Months Ended October 31,
2001


|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |        |        |       | 
|------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------------- | ------------ | --- | ------------ | ----- | ------------- | ----- | ------------ | ----- | ------------ | ----- | ------ | ---- | ----- | ----- | --- | - | - | - | - | ---- | ------ | ------ | ----- | 
|                                                        |                                                                                        |                                                  |                                                       |              |     | Conformed    |       |               |       |              |       |             
|                                                        |                                                                                        |                                                  |                                                       | Guarantor    |     | Guarantor    |       | Non-guarantor |       |              |       | Consolidated
|                                                        |                                                                                        | Parent                                           |                                                       | Subsidiaries |     | Subsidiaries |       | Subsidiaries  |       | Eliminations |       | Total       
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |             
|Cash flows provided by (used for) operating
	activities |                                                                                        | $                                                | (4.8                                                  | )            |     | $            | (10.9 | )             |       | $            | (41.4 | )            |       | $      | 63.5 |       |       | $   |  |   |   | $ | 6.4  |       
|Cash flows from investing activities:                   |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|                                                        | Acquisition of property, plant, equipment, and
	tooling                                |                                                  |                                                       | (6.3         | )   |              |       | (13.9         | )     |              |       | (33.0        | )     |        |      | (61.0 | )     |     |   |  |   |   |      | (114.2 | )     
|                                                        | Proceeds from sale of joint venture                                                    |                                                  |                                                       | 9.5          |     |              |       |              |       |              |       |             |       |        |      |      |       |     |   |  |   |   |      | 9.5    |       
|                                                        | Other, net                                                                             |                                                  |                                                       | (1.4         | )   |              |       | (0.2          | )     |              |       | (5.0         | )     |        |      | 7.1   |       |     |   |  |   |   |      | 0.5    |       
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|                                                        |                                                                                        | Cash provided by (used for) investing activities |                                                       |              | 1.8 |              |       |               | (14.1 | )            |       |              | (38.0 | )      |      |       | (53.9 | )   |   |   |  |   |      |        | (104.2 | )    
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|Cash flows from financing activities:                   |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|                                                        | Increase (decrease) in bank borrowings and
	revolving facility                         |                                                  |                                                       | 242.1        |     |              |       |              |       |              |       | (0.5         | )     |        |      | 5.1   |       |     |   |  |   |   |      | 246.7  |       
|                                                        | Proceeds from refinancing, net of related fees                                         |                                                  |                                                       | 435.4        |     |              |       |              |       |              |       |             |       |        |      |      |       |     |   |  |   |   |      | 435.4  |       
|                                                        | Repayment of bank borrowings, revolving facility,
	and long term debt from refinancing |                                                  |                                                       | (370.9       | )   |              |       |              |       |              |       |             |       |        |      | (47.0 | )     |     |   |  |   |   |      | (417.9 | )     
|                                                        | Proceeds (payments) on accounts receivable
	securitization                             |                                                  |                                                       | 43.1         |     |              |       | (47.1         | )     |              |       | (67.6        | )     |        |      |      |       |     |   |  |   |   |      | (71.6  | )     
|                                                        | Capital contribution                                                                   |                                                  |                                                       |             |     |              |       |              |       |              |       | (44.0        | )     |        |      | 44.0  |       |     |   |  |   |   |      |       |       
|                                                        | Fees to amend Credit Agreement                                                         |                                                  |                                                       | (2.7         | )   |              |       |              |       |              |       |             |       |        |      |      |       |     |   |  |   |   |      | (2.7   | )     
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|                                                        |                                                                                        |                                                  | Cash provided by (used for) financing activities      |              |     | 347.0        |       |               |       | (47.1        | )     |              |       | (112.1 | )    |       |       | 2.1 |   |   |   |  |      |        |        | 189.9 | 
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|Increase (decrease) in parent loans and
	advances       |                                                                                        |                                                  | (257.8                                                | )            |     |              | 72.0  |               |       |              | 191.4 |              |       |        | (5.6 | )     |       |     |  |   |   |   |     |       
|Effect of exchange rates of cash and cash
	equivalents  |                                                                                        |                                                  |                                                      |              |     |              |      |               |       |              |      |              |       |        | (1.0 | )     |       |     |  |   |   |   | (1.0 | )     
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|                                                        |                                                                                        |                                                  | Net increase (decrease) in cash and cash
	equivalents |              |     | 86.2         |       |               |       | (0.1         | )     |              |       | (0.1   | )    |       |       | 5.1 |   |   |   |  |      |        |        | 91.1  | 
|Cash and cash equivalents at beginning of period        |                                                                                        |                                                  | (19.3                                                 | )            |     |              | 0.2   |               |       |              | 1.9   |              |       |        | 17.2 |       |       |     |  |   |   |   |     |       
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       
|Cash and cash equivalents at end of period              |                                                                                        | $                                                | 66.9                                                  |              |     | $            | 0.1   |               |       | $            | 1.8   |              |       | $      | 22.3 |       |       | $   |  |   |   | $ | 91.1 |       
|                                                        |                                                                                        |                                                  |                                                       |              |     |              |       |               |       |              |       |              |       |        |      |       |       |     |   |   |   |   |      |       

23



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






Condensed Consolidating Statement of Cash
Flows


For the Nine Months Ended October 31,
2000, As Restated


|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |        |        |  
|------------------------------------------------------ | ------------------------------------------------------------ | ----------------------------------------------------- | ------ | ------------ | ----- | ------------- | ----- | ------------ | ----- | ------------ | ----- | ----- | ------ | - | - | - | - | - | ----- | ------ | ------ | -
|                                                       |                                                              |                                                       |        | Guarantor    |       | Non-guarantor |       |              |       | Consolidated
|                                                       |                                                              | Parent                                                |        | Subsidiaries |       | Subsidiaries  |       | Eliminations |       | Total       
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |             
|Cash flows used for operating activities               |                                                              | $                                                     | (1.0   | )            |       | $             | (64.6 | )            |       | $            | (13.4 | )     |        | $ |  |   |   | $ | (79.0 | )     
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|Cash flows from investing activities:                  |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|                                                       | Acquisition of property, plant, equipment, and
	tooling      |                                                       |        | (12.8        | )     |               |       | (21.8        | )     |              |       | (99.4 | )      |   |   |  |   |   |       | (134.0 | )     
|                                                       | Increased investment in majority owned subsidiary            |                                                       |        |             |       |               |       |             |       |              |       | (7.2  | )      |   |   |  |   |   |       | (7.2   | )     
|                                                       | Purchase of business, net of cash acquired                   |                                                       |        |             |       |               |       |             |       |              |       | (6.4  | )      |   |   |  |   |   |       | (6.4   | )     
|                                                       | Other, net                                                   |                                                       |        | 19.3         |       |               |       | (0.3         | )     |              |       | 1.5   |        |   |   |  |   |   |       | 20.5   |       
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|                                                       |                                                              | Cash provided by (used for) investing activities      |        |              | 6.5   |               |       |              | (22.1 | )            |       |       | (111.5 | ) |   |   |  |   |       |        | (127.1 | )
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|Cash flows from financing activities:                  |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|                                                       | Increase in bank borrowings and revolving facility           |                                                       |        | 216.7        |       |               |       |             |       |              |       | 34.0  |        |   |   |  |   |   |       | 250.7  |       
|                                                       | Proceeds (payments) from accounts receivable
	securitization |                                                       |        | (11.2        | )     |               |       | 0.9          |       |              |       | (6.9  | )      |   |   |  |   |   |       | (17.2  | )     
|                                                       | Purchase of treasury stock                                   |                                                       |        | (25.7        | )     |               |       |             |       |              |       |      |        |   |   |  |   |   |       | (25.7  | )     
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|                                                       |                                                              | Cash provided by financing activities                 |        |              | 179.8 |               |       |              | 0.9   |              |       |       | 27.1   |   |   |   |  |   |       |        | 207.8  |  
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|Increase (decrease) in parent loans and
	advances      |                                                              |                                                       | (185.2 | )            |       |               | 85.8  |              |       |              | 99.4  |       |        |   |  |   |   |   |      |       
|Effect of exchange rates of cash and cash
	equivalents |                                                              |                                                       |       |              |       |               |      |              |       |              | (4.0  | )     |        |   |  |   |   |   | (4.0  | )     
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|                                                       |                                                              | Net increase (decrease) in cash and cash
	equivalents |        |              | 0.1   |               |       |              |      |              |       |       | (2.4   | ) |   |   |  |   |       |        | (2.3   | )
|Cash and cash equivalents at beginning of period       |                                                              |                                                       | 6.8    |              |       |               | 0.1   |              |       |              | 19.0  |       |        |   |  |   |   |   | 25.9  |       
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       
|Cash and cash equivalents at end of period             |                                                              | $                                                     | 6.9    |              |       | $             | 0.1   |              |       | $            | 16.6  |       |        | $ |  |   |   | $ | 23.6  |       
|                                                       |                                                              |                                                       |        |              |       |               |       |              |       |              |       |       |        |   |   |   |   |   |       |       

24



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

The following discussion and analysis should be
read in conjunction with the Companys Consolidated
Financial Statements, related notes thereto and the other
information included elsewhere herein, and in the Companys
Annual Report on Form 10-K/ A for the year ended
January 31, 2001 filed with the SEC on February 19,
2002. The financial information included in the following
discussion and analysis reflects the results of the restatements
of the consolidated financial statements for the three month and
nine month periods ended October 31, 2000 discussed more
fully below.

Organization, Chapter 11 Filings and
Other Recent Developments

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

Chapter 11
Filings

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

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

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

Pursuant to the automatic stay provisions of
Section 362 of the Bankruptcy Code, actions to collect
pre-petition indebtedness and virtually all litigation against
the Debtors that was, or could have been, brought prior to the
commencement of the Chapter 11 Filings are stayed, and
other contractual obligations of the Debtors may not be enforced
against them. In addition, under Section 365 of the
Bankruptcy Code, subject to the approval of the Bankruptcy
Court, the Debtors may assume or reject executory contracts and
unexpired leases. As of the date of this filing, the Debtors had
not yet completed their review of all contracts and leases for
assumption or rejection, but ultimately will assume or reject
all such contracts and leases. The Debtors cannot presently
determine or reasonably predict the ultimate liability that may
result from rejecting such contracts or leases or from the
filing of rejection damage claims, but such rejections could
result in additional liabilities subject to compromise.

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Parties with claims against the Debtors,
including, among other things, claims for damages resulting from
the rejection of executory contracts or unexpired leases, may
file proofs of claim with the Bankruptcy Court in accordance
with the reorganization process. Proofs of claims generally must
be filed with the Bankruptcy Court by the later of
(a) June 3, 2002, which is the general claims bar date
established by the Bankruptcy Court in the Debtors cases,
or (b) the date that is thirty days after entry of order
approving the rejection.

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

The consummation of a plan or plans of
reorganization is the principal objective of the Chapter 11
Filings. A plan of reorganization sets forth the means for
satisfying claims against and interests in the Company and its
Debtor subsidiaries, including the liabilities subject to
compromise. Generally, pre-petition liabilities are subject to
settlement under such a plan or plans of reorganization, which
must be voted upon by certain creditors and approved by the
Bankruptcy Court. Pursuant to an Order of the Bankruptcy Court
in the Debtors cases, the Debtors have the exclusive right
through September 3, 2002 to submit a plan or plans of
reorganization. Such exclusive period may be lengthened (or
shortened) by Bankruptcy Court order pursuant to the request of
the Debtors or a party-in-interest. The Debtors have retained
Lazard Freres & Co. LLC, as financial advisors and
investment bankers for the purpose of providing financial
advisory and investment banking services during the Chapter
11 reorganization process. The Company anticipates that any
plan or plans of reorganization it may propose, if ultimately
approved by the Bankruptcy Court, would result in substantial
dilution of the interest of existing equity holders, so that
they would hold little, if any, meaningful stake in the
reorganized enterprise.

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

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

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

The accompanying consolidated financial
statements do not reflect: (a) the requirements of
SOP 90-7, (b) the realizable value of assets on a
liquidation basis or their availability to satisfy liabilities;
(c) aggregate

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pre-petition liability amounts that may be
allowed for unrecorded claims or contingencies, or their status
or priority; (d) the effect of any changes to the
Debtors capital structure or in the Debtors business
operations as the result of an approved plan of reorganization;
or (e) adjustments to the carrying value of assets
(including goodwill and other intangibles) or liability amounts
that may be necessary as the result of actions by the Bankruptcy
Court.


Restatement
of Consolidated Financial Statements

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

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

Facility
Closures

As more fully discussed in Note 13 to the
consolidated financial statements included herein, in February
2002, the Company committed to a plan to close its manufacturing
facility in Somerset, Kentucky.

Bank
Borrowings and Long-Term Debt

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

Results of Operations

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

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

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

Net
Sales

|                  |       |               |       |       |  |          |       |       |  |  |       |      |  
|----------------- | ----- | ------------- | ----- | ----- |  | -------- | ----- | ----- |  |  | ----- | ---- | -
|                  |       |              
|                  |       | (As Restated)
|                  |       |              
|                  |       | 2001          |       | 2000  |  | % Change
|                  |       |               |       |       |  |         
|                  |       |               |       |      
|                  |       | (millions)    |       |      
|Automotive Wheels |       | $             | 315.2 |       |  | $        | 355.0 |       |  |  | (11.2 | )%  
|Components        |       |               | 163.3 |       |  |          | 164.0 |       |  |  | (0.4  | )   
|Other             |       |               | 36.5  |       |  |          | 39.0  |       |  |  | (6.4  | )   
|                  |       |               |       |       |  |          |       |       |  |  |       |     
|                  | Total |               | $     | 515.0 |  |          | $     | 558.0 |  |  |       | (7.7 | )
|                  |       |               |       |       |  |          |       |       |  |  |       |     

The Companys net sales for the third
quarter of fiscal 2001 were $515.0 million, a decrease of
7.7% as compared to net sales of $558.0 million for the
third quarter of fiscal 2000. This decrease is primarily due to
the impact of lower light vehicle and heavy-duty vehicle
production levels in North America and the build-out and
termination of certain original equipment manufacturer
(OEM) platforms on the Companys North American
operations.

Net sales from the Companys Automotive
Wheels segment decreased 11.2% from $355.0 million in the
third quarter of fiscal 2000 to $315.2 million in the third
quarter of fiscal 2001. This was primarily due to a
$37.0 million reduction in sales from the Companys
North American operations arising from lower OEM production
levels and lower market share in 2001 compared to 2000. Sales
from the Companys European operations decreased by
$2.8 million, including the effect of an approximate
$9.4 million decrease in the value of European currencies
relative to the U.S. dollar. Of this decrease, sales for the
Companys European fabricated wheels business unit declined
$13.5 million in the three months ended October 31,
2001 compared to the same period in 2000 due primarily to lower
customer production requirements in Europe and in Brazil and
lower penetration rates. Sales for the Companys European
aluminum wheels business unit partially offset the fabricated
wheel decline, increasing $10.7 million primarily due to
increasing penetration rates of aluminum wheels in the European
light vehicle market.

Components net sales were relatively unchanged
from the three months ending October 31, 2000 to the same
period in 2001. The Companys North American
operations sales declined by $11.6 million due
primarily to lower OEM production levels and the build-out and
termination of certain customer platforms, while the
Companys European operations sales increased by
$10.9 million, of which $7.3 million resulted from the
Schenk acquisition in September 2000 and $3.6 million from
the Companys MGG operations in Europe.

Other net sales decreased 6.4% from
$39.0 million in the three months ending October 31,
2000 to $36.5 million in the same period in 2001. This
decrease is primarily due to the significant decrease in heavy
duty Class 8 truck and trailer production in North America
between those time periods.

Gross
Profit

The Companys gross profit margin for the
third quarter of fiscal 2001 decreased by $23.8 million, to
$39.0 million or 7.6% of net sales, as compared to
$62.8 million or 11.3% of net sales for the third quarter
of fiscal 2000.

The Companys gross profit from Automotive
Wheels decreased $24.0 million from third quarter of fiscal
2000 to the same period in fiscal 2001. Gross profit from the
Companys North American operations decreased
$20.4 million from the three months ended October 31,
2000 compared to the same period in 2001. This decrease is
primarily due to recurring manufacturing difficulties and lower
operating performance at various facilities in North America
which reduced gross profit by approximately $17.4 million.
Lower OEM production requirements in North America reduced gross
profit by approximately $3.0 million. Additionally, gross profit
from the Companys foreign wheel operations decreased by
$3.6 million.

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Gross profit from Components decreased
$5.4 million from the third quarter of fiscal 2000 to the
same period in fiscal 2001. This decrease is primarily due to
lower operating performance, higher customer program start-up
costs, and lower OEM production requirements.

Other gross profit increased $5.6 million
from the third quarter of fiscal 2000 to the same period in
fiscal 2001. This increase is primarily due to inventory and
other charges taken in the third quarter of fiscal 2000, and was
partially offset by lower sales in the commercial highway market.

Marketing,
General and Administrative

Marketing, general and administrative expenses
for the three months ended October 31, 2001 decreased by
$2.2 million as compared to the same period in fiscal 2000.
These expenses for the third quarter of fiscal 2001 included
approximately $6.3 million of costs related to the
engagement of certain management consulting professionals,
higher auditing and legal costs related to the financial
restatement discussed earlier in the footnotes to the
accompanying consolidated financial statements, and
non-recurring costs related to employee agreements for certain
new senior management executives. The financial results for the
third quarter of fiscal 2000 included non-recurring charges of
approximately $7.2 million related primarily to a provision
for past due accounts receivable and certain employee severance
costs.

Engineering
and Product Development

Engineering and product development expenses
increased from $3.6 million or 0.6% of net sales in the
third quarter of fiscal 2000 to $5.3 million or 1.0% of net
sales for the third quarter of fiscal 2001. This increase is
primarily related to higher engineering spending net of customer
recoveries in the Companys fabricated wheel operations in
both North America and Europe.

Equity
in Losses (Earnings) of Joint Ventures

Equity in losses (earnings) of joint
ventures decreased $0.6 million to $0.4 million of
losses for the third quarter of fiscal 2001 as compared to $0.2
million of earnings for the same period in fiscal 2000.

Asset
Impairments and Other Restructuring Charges

During the third quarter of fiscal 2001 the
Company recognized asset impairment losses of $4.6 million
related principally to $2.3 million due to the
discontinuance of the Companys Equipment and Engineering
business located in Montague, Michigan, $0.9 million
related to the abandonment of a greenfield project in Thailand,
and impairments of investments in other fixed assets. Such
investments in fixed assets were written down to fair value
based on the expected scrap value, if any, of such machinery,
equipment and tooling.

In the third quarter of fiscal 2000, the Company
recorded asset impairment and other restructuring charges of
$73.9 million. These charges relate principally to
$63.6 million in impairment of excess and obsolete
machinery and equipment, $7.6 million in severance and
facility closure costs, and $2.7 million for the termination of
certain contractual obligations.

Loss
on Investment in Joint Venture

In the third quarter of fiscal 2000, the Company
recorded a $1.5 million loss on investment in joint venture
related to its Venezuelan joint venture.

Interest
Expense, net

Interest expense was $49.1 million for the
third quarter of fiscal 2001 compared to $41.7 million for
the third quarter of fiscal 2000. This increase reflects higher
outstanding borrowings and increased interest rates on the
refinanced debt.

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Income
Taxes

The Company established a full valuation
allowance with respect to net domestic deferred income tax
assets as of January 31, 2001. Accordingly, any income tax
provision during the quarter ended October 31, 2001 is
related primarily to the Companys foreign operations.

Nine Months
Ended October 31, 2001 Compared to Nine Months Ended
October 31, 2000

Net
Sales

|                  |       |               |       |         |  |          |         |         |  |  |      |      |  
|----------------- | ----- | ------------- | ----- | ------- |  | -------- | ------- | ------- |  |  | ---- | ---- | -
|                  |       |              
|                  |       | (As Restated)
|                  |       | 2001          |       | 2000    |  | % Change
|                  |       |               |       |         |  |         
|                  |       |               |       |        
|                  |       | (millions)    |       |        
|Automotive Wheels |       | $             | 952.0 |         |  | $        | 1,054.7 |         |  |  | (9.7 | )%  
|Components        |       |               | 503.1 |         |  |          | 506.3   |         |  |  | (0.6 | )   
|Other             |       |               | 119.4 |         |  |          | 131.0   |         |  |  | (8.9 | )   
|                  |       |               |       |         |  |          |         |         |  |  |      |     
|                  | Total |               | $     | 1,574.5 |  |          | $       | 1,692.0 |  |  |      | (6.9 | )
|                  |       |               |       |         |  |          |         |         |  |  |      |     

The Companys net sales for the nine months
ended October 31, 2001 were $1,574.5 million, a
decrease of 6.9% as compared to net sales of $1,692.0 million in
the same period in 2000. This decrease is primarily due to the
impact of lower sales to light vehicle OEMs and heavy-duty
vehicle manufacturers in North America and the build-out and
termination of certain OEM platforms on the Companys North
American operations.

Net sales from the Companys Automotive
Wheels segment decreased 9.7% from $1,054.7 million in the
nine months ended October 31, 2000 to $952.0 million
in the same period in 2001. This was primarily due to a
$110.6 million reduction in sales from the Companys
North American operations arising from lower OEM production
levels and lower market share in 2001 compared to 2000. Sales
from the Companys European operations increased by
$7.9 million, net of the effect of an approximate
$39.4 million decrease in the value of European currencies
relative to the U.S. dollar. Of the net increase, sales for the
Companys European aluminum wheels business unit increased
by $33.2 million, primarily due to increasing penetration
rates of aluminum wheels in the European light vehicle market.
Sales for the Companys European fabricated wheels business
unit partially offset this increase, decreasing by
$25.3 million primarily due to lower customer production
requirements and lower penetration rates.

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

Other net sales decreased 8.9% from
$131.0 million in the nine months ended October 31,
2000 to $119.4 million in the same period in 2001. This
decrease is primarily due to the significant decrease in heavy
duty Class 8 truck and trailer production in North America
between those time periods. This decrease was partially offset
by higher sales from the Companys system service business
in Europe.

Gross
Profit

The Companys gross profit margin for the
nine months ended October 31, 2001 decreased by
$95.7 million, to $130.3 million or 8.3% of net sales,
as compared to $226.0 million or 13.4% of net sales for the
first nine months of fiscal 2000.

The Companys gross profit from Automotive
Wheels decreased $82.0 million from the first nine months
of fiscal 2000 compared to the same period in fiscal 2001. Gross
profit from the Companys North American operations
decreased $83.5 million from the nine months ended
October 31, 2000 compared to the same period in 2001. This
decrease is primarily due to recurring manufacturing
difficulties at the Companys Somerset, Kentucky facility
and lower operating performance at various facilities in North
America, which

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reduced gross profit by approximately
$30.8 million and $40.6 million, respectively. Lower
OEM production requirements in North America reduced gross
profit by approximately $12.1 million. Conversely, gross
profit from the Companys European wheel operations
increased by $1.5 million.


Gross profit from Components decreased
$16.1 million from the first nine months of fiscal 2000
compared to the same period in fiscal 2001. This decrease is
primarily due to lower operating performance, lower OEM
production requirements and the inefficiencies arising from
lower production in the North American operations. The decrease
was partially offset by improved operating performance at the
Companys MGG operations in Europe and the Schenk
acquisition, which collectively increased gross profit by
approximately $0.8 million in the nine months ended
October 31, 2001 compared to the same period in fiscal 2000.

Other gross profit increased $2.4 million
from the first nine months of fiscal 2000 compared to the same
period in fiscal 2001. This increase is primarily due to higher
inventory and other charges in the first nine months of fiscal
2000, and was partially offset by lower sales and lower
operating margins in the commercial highway market.

Marketing,
General and Administration

Marketing, general and administrative expenses
increased slightly from the nine months ended October 31,
2000 to the nine months ended October 31, 2001. This is
primarily due to increased provisions for past due accounts
receivable in the Companys North American operations.

Engineering and
Product Development

Engineering and product development expenses
increased from $13.0 million or 0.8% of net sales in the
nine months ended October 31, 2000 to $16.9 million or
1.1% of net sales in the same period in fiscal 2001. Lower
engineering and product development spending, net of customer
recoveries, in the Companys wheel operations in fiscal
2000 is the primary reason for this variance.

Equity in Losses
(Earnings) of Joint Ventures

Equity in losses (earnings) of joint
ventures decreased $1.6 million to $0.9 million of
losses for the first nine months of fiscal 2001 as compared to
$0.7 million of earnings for the same period in fiscal 2000.

Asset
Impairments and Other Restructuring Charges

In the nine months ended October 31, 2001,
the Company recognized asset impairment losses and other
restructuring charges of $42.6 million. These charges are
primarily comprised of asset impairment losses of
$28.5 million related to the Companys Petersburg,
Michigan facility, $2.5 million related to the abandonment
of plans to continue to invest in the start-up of certain
single-purpose equipment at another facility, $0.6 million
of closure costs related to the Petersburg facility,
$6.4 million related principally to a change in
managements plan for future use of idled machinery and
equipment and to investments in machinery, equipment and tooling
at its Somerset, Kentucky facility, and an additional
$4.6 million recognized in the three months ended
October 31, 2001 as discussed above.

In the nine months ended October 31, 2000,
the Company recognized asset impairment losses and other
restructuring charges of $78.3 million. These charges are
primarily comprised of asset impairment losses of
$2.1 million related to excess and obsolete machinery and
equipment, severance and facility closure costs of
$2.3 million, and an additional $73.9 million
recognized in the three months ended October 31, 2000 as
discussed above.

Loss on
Investment in Joint Venture

In the second quarter of fiscal 2001, the Company
recorded a $3.8 million loss on investment in joint venture
related to its Mexican joint venture, which had incurred and
expects to continue to incur significant operating losses.

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In the third quarter of fiscal 2000, the Company
recorded a $1.5 million loss on investment in joint venture
related to its Venezuelan joint venture.

Interest
Expense, net

Interest expense was $142.0 million for the
third quarter of fiscal 2001 compared to $120.5 million for
the third quarter of fiscal 2000. This increase primarily
reflects higher outstanding borrowings and higher interest rates
on the refinanced debt.

Income
Taxes

The Company established a full valuation
allowance with respect to net domestic deferred income tax
assets as of January 31, 2001. Accordingly, any income tax
provision during the nine months ended October 31, 2001 is
related primarily to the Companys foreign operations.

Liquidity and Capital Resources

Chapter 11
Filings

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

DIP
Facility

The Bankruptcy Court has approved the
Companys request for a total of $200 million in
debtor-in-possession financing (the DIP facility).
The amounts that the Company is able to borrow under the DIP
facility are determined by a borrowing base formula based on
certain eligible assets of the Company. As of April 10,
2002, the Company had $4.0 million in cash borrowings and
had issued $4.7 million in letters of credit pursuant to
this financing. The amount available under the DIP facility as
of April 10, 2002, after taking into account the
aforementioned borrowings and letters of credit, was $87.0
million.

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

Refinancing

On June 22, 2001, the Company received
$291.1 million in net proceeds from the issuance of
11 7/8% senior unsecured notes due 2006 in the original
principal amount of $300 million (the 11 7/8%
Notes). In

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addition, on July 2, 2001, the Company
received $144. 3 million in net proceeds from the issuance
of the B Term Loan. These aggregate net proceeds totaled
$435.4 million and were used as follows ($ in millions):


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

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

The Credit Agreement, as amended, contains
certain financial covenants regarding interest coverage ratios,
fixed charge coverage ratios, leverage ratios and capital
spending limitations. As of October 31, 2001, there was
$177.8 million outstanding under the term loan facilities
of the Credit Agreement, which amount represents the total
amount available under the facility. At October 31, 2001,
there was $572.1 million outstanding under the revolving
credit facility and $77.9 million available. As a result of
the Debtors Chapter 11 Filings, all additional
availability under the Credit Agreement has been terminated,
although letters of credit amounting to approximately
$11.0 million remain outstanding.

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

Trade
Securitization Agreement

In April 1998, the Company entered into a
three-year trade securitization agreement pursuant to which the
Company and certain of its subsidiaries sold, and continued to
sell on an ongoing basis, a portion of their accounts
receivables to a special purpose entity (Funding
Co.), which is wholly owned by the Company. Accordingly,
the Company and such subsidiaries, irrevocably and without
recourse, transferred and continued to transfer substantially
all of their U.S. dollar denominated trade accounts receivable
to Funding Co. Funding Co. then sold and continued to sell such
trade accounts receivable to an independent issuer of
receivable-backed commercial paper. The Company has collection
and administrative responsibilities with respect to all the
receivables that are sold.

This trade securitization agreement expired on
May 1, 2001 and as such, there were no receivables sold at
October 31, 2001. From the expiration date to
October 31, 2001, the Company financed the amount of
receivables previously sold under the securitization agreement
with its revolving credit facility. The impact of the
discontinued securitization program had an adverse impact on
liquidity of approximately $71.6 million.

Other
Liquidity Matters

During the third quarter of fiscal 2001, the
Company sold its interest in its Canadian joint venture for cash
proceeds of $9.5 million.

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The Company received net cash in the amount of
$10.1 million during the nine months ended October 31,
2001 in connection with the early termination of all of its
cross-currency interest rate swap agreements. These payments
reduced the fair market value recorded by the Company at the
time of the early terminations resulting from accounting for
mark-to-market adjustments during the terms of the agreements.

During the second quarter of fiscal 2000, the
Board of Directors approved the repurchase of up to an aggregate
of $30.0 million of the Companys outstanding common
stock. The Company repurchased approximately 1.9 million
shares of its common stock for an aggregate purchase price of
approximately $25.7 million during the third quarter of
fiscal 2000.

Certain of the operating leases covering leased
assets with an original cost of approximately
$68.0 million, contain provisions which, if certain events
occur or conditions are met, including termination of the lease,
might require the Company to purchase or re-sell the leased
assets within a specified period of time, generally one year,
based on amounts specified in the lease agreements. On
July 18, 2001, the Company received notification of
termination from a lessor with respect to leased assets having
approximately $25.0 million of original cost (which
termination was not to be effective for one year). The Company
has not agreed with the lessor that a termination has occurred
at the time of the notice and has continued to use the leased
assets.

Cash
Flows

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

Since the Chapter 11 Filings, the Company
believes its operating cash flows will be impacted by, among
other things, (i) the need to fund the significant
professional fees and other costs directly related to the
Chapter 11 Filings, (ii) the cash requirements for the
closure and restructuring of certain facilities, and
(iii) the rate and level post-petition trade credit
available to the Company. The amount of interest expense should
be substantially less due to the effect of the stay on payment
of pre-petition obligations.

The Companys operations provided
$6.4 million in cash in the first nine months of fiscal
2001 compared to a use of $79.0 million in the same period
of fiscal 2000. This increase is primarily due to the working
capital improvements during this period exceeding the effect of
lower operating profits.

Capital expenditures for the first nine months of
fiscal 2001 were $104.3 million. These expenditures were
primarily for additional machinery and equipment to improve
productivity and reduce costs, to meet demand for new vehicle
platforms, and to meet expected requirements for the
Companys products.

Market Risks

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

Foreign
Exchange

The Company has global operations and thus makes
investments and enters into transactions in various foreign
currencies. In order to minimize the risks associated with
global diversification, the Company first seeks to internally
net foreign exchange exposures, and uses derivative financial
instruments to hedge any remaining net exposure. The Company
uses forward foreign currency exchange contracts on a limited
basis to reduce the earnings and cash flow impact of
non-functional currency denominated transactions. The gains and
losses from these hedging instruments generally offset the gains
or losses from the hedged items and are recognized in the same
period the hedged items are settled. In addition, the Company
may enter into cross currency interest rate swaps to hedge a
portion of its investments in Europe. The currency effects of
these

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swaps are reflected in the cumulative translation
adjustments component of other accumulated comprehensive income,
where they offset the gain or loss associated with the
investments in Europe. In addition, the Company has designated a
term loan, totaling 30.5 million Euro at October 31,
2001, as a hedge of foreign currency exposure of its net
investment in its European operations.


Commodities

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

Other Matters

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

The value of the Companys consolidated
assets and liabilities located outside the United States (which
are translated at period end exchange rates) and income and
expenses (which are translated using average rates prevailing
during the period) have been affected by the translation values,
particularly the Euro (as defined under Euro
Conversion) and the Brazilian Real. Such translation
adjustments are reported as a separate component of
stockholders equity. Foreign exchange rate fluctuations
could have an increased impact on the Companys reported
results of operations. However, due to the self-sustaining
nature of the Companys foreign operations (which maintain
their own credit facilities, enter into borrowings and swap
agreements and incur costs in their respective local
currencies), the Company believes it can effectively manage the
effect of these currency fluctuations. In addition, in order to
further hedge against such currency rate fluctuations, the
Company has entered into certain foreign currency swap
arrangements.

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

New Accounting Pronouncements

In August 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 144 supersedes FASB No. 121,
Accounting for the Impairment of Long-lived assets and for
Long-lived Assets to be Disposed Of. The statement retains
the previously existing accounting requirements related to the
recognition and measurement of the impairment of long-lived
assets to be held and used while expanding the measurement
requirements of long-lived assets to be disposed of by sale to
include discontinued operations. It also expands the previously
existing reporting requirements for discontinued operations to
include a component of an entity that either has been disposed
of or is classified as held for sale. The provisions of this
Statement are effective for fiscal years beginning after
December 15, 2001. The Company has not yet completed its
analysis of the impact of SFAS No. 144 on its consolidated
financial position or results of operations upon adoption.

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

In June 2001, the FASB issued SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 142 requires that goodwill be reviewed for impairment
annually, rather than amortized into earnings. The provisions of
this Statement are effective for fiscal years beginning after
December 15, 2001. Amortization of goodwill will cease upon
adoption of the Statement by the Company on February 1,
2002. At that valuation date, the Company will test goodwill for
impairment, and any losses will be recognized as a cumulative
effect of a change in accounting principle. Other acquired
identifiable intangible assets having estimable useful lives
will be separately stated from goodwill, and will continue to be
amortized over their estimated useful lives. As of
February 1, 2002, the Company expects to have unamortized
goodwill and other intangible assets of approximately
$873.6 million, which will be subject to the transition
provisions of SFAS No. 142. Amortization expense related to
goodwill and other intangible assets was $27.4 million,
$27.5 million and $16.6 million for fiscal 2000, 1999
and 1998, respectively. The Company believes it will likely
incur a significant write-down in the value of its goodwill at
the earlier of its emergence from bankruptcy, as provided by
SOP 90-7, or the adoption of SFAS No. 142.

In June 2001, the FASB issued SFAS No. 141,
Business Combinations. SFAS No. 141 requires
that all business combinations (initiated after June 30,
2001) be accounted for under the purchase method of accounting.
Use of the pooling-of-interests method is no longer permitted.
Adoption of this standard is not anticipated to have a material
effect on the Companys financial position or results of
operations as a result of future business combinations, as the
Company has historically accounted for such transactions under
the purchase method.

In September 2000, the FASB issued SFAS
No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities 
a replacement of FASB Statement No. 125. This
statement revises the standards for accounting for
securitizations and other transfers of financial assets and
collateral and requires certain financial statement disclosures.
SFAS 140 is effective for transactions occurring after
March 31, 2001. The new disclosure requirements are
effective for fiscal years ending after December 15, 2000.
Adoption of this replacement standard did not have a material
effect on the Companys financial position or results of
operations.






|        |                                                            
|------- | -----------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures about
	Market Risk

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

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PART II.     OTHER
INFORMATION







Item 1.     Legal
Proceedings


Following the September 5, 2001 announcement
of the restatements, several lawsuits were filed by and
purportedly on behalf of the shareholders of the Company naming
as defendants a combination of the Company, Mr. Cucuz and
Mr. Shovers. These lawsuits are seeking class action
status, but no class has yet been certified in these actions.
Due to the Companys bankruptcy filing, this litigation
against the Company is subject to the automatic stay.






Item 2.     Changes
in Securities and Use of Proceeds


None






Item 3.     Defaults
Upon Senior Securities


As a result of the Chapter 11 Filings by the
Debtors on December 5, 2001, the following required
interest payments were not made by the Company:

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






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


None






Item 5.     Other
Information


None






Item 6.     Exhibits
and Reports on Form 8-K


(a) Exhibits

|               |       |             |  |                                                                                                               
|-------------- | ----- | ----------- |  | --------------------------------------------------------------------------------------------------------------
|Exhibit Number |       | Description
|               |       |            
|               | 3.5   |             |  | Amendment to the Amended and Restated By-Laws of
	the Company dated August 1, 2001                            
|               | 10.38 |             |  | Amended and Restated Employment Agreement between
	the Company and Curtis J. Clawson dated September 26,
	2001
|               | 10.39 |             |  | Form of Employment Agreement between the Company
	and certain of its officers                                 

(b) Reports on Form 8-K

During the fiscal quarter ended October 31,
2001, the Company filed Current Reports on Form 8-K with
the Securities and Exchange Commission on August 3, 2001
and September 6, 2001.

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SIGNATURES

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



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

April 17, 2002

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EXHIBIT INDEX


|        |       |  |  |                                                                                                               
|------- | ----- |  |  | --------------------------------------------------------------------------------------------------------------
|Exhibit |       | 
|Number  |       | 
|        |       | 
|        | 3.5   |  |  | Amendment to the Amended and Restated By-Laws of
	the Company dated August 1, 2001                            
|        | 10.38 |  |  | Amended and Restated Employment Agreement between
	the Company and Curtis J. Clawson dated September 26,
	2001
|        | 10.39 |  |  | Form of Employment Agreement between the Company
	and certain of its officers                                 

39