##### Table of Contents



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



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Form 10-Q

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                         
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
|           |  |                                                                                         
|           |  | For the quarterly period ended July 31, 2002                                            
|           |  | 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
incorporation or organization) |  | (IRS Employer
Identification No.)
|                                                               |  |                                  
|15300 Centennial Drive                                         |  | 48167                            
|Northville, Michigan                                           |  | (Zip Code)                       
|(Address of principal executive offices)                       |  |                                  

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 x     No o

The number of shares of common stock outstanding as of September 16, 2002
was 28,455,995 shares.



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TABLE OF CONTENTS



|                                                                                              |                                            |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                                                
|Item 1. Financial Statements                                                                 
|                                                                                              | Consolidated Statements of Operations     
|                                                                                              | Consolidated Balance Sheets               
|                                                                                              | Consolidated Statements of Cash Flows     
|                                                                                              | Notes to Consolidated Financial Statements
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|Item 4. Controls and Procedures                                                              
|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                                                                                   
|Certifications                                                                               
|EX-99.1 Certification of Curtis J. Clawson                                                   
|EX-99.2 Certification of James A. Yost                                                       



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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 |  |  |  | 20  
|                              |  |                                                                                       |  |  |  |     
|Item 3.                       |  | Quantitative and Qualitative
Disclosures about Market Risk                            |  |  |  | 30  
|                              |  |                                                                                       |  |  |  |     
|Item 4.                       |  | Controls and Procedures                                                               |  |  |  | 30  
|                              |  |                                                                                       |  |  |  |     
|PART II. OTHER INFORMATION    |  |                                                                                       |  | 
|                              |  |                                                                                       |  |  |  |     
|Item 1.                       |  | Legal Proceedings                                                                     |  |  |  | 31  
|                              |  |                                                                                       |  |  |  |     
|Item 2.                       |  | Changes in Securities and Use of
Proceeds                                             |  |  |  | 32  
|                              |  |                                                                                       |  |  |  |     
|Item 3.                       |  | Defaults upon Senior Securities                                                       |  |  |  | 32  
|                              |  |                                                                                       |  |  |  |     
|Item 4.                       |  | Submission of Matters to a Vote of
Security Holders                                   |  |  |  | 32  
|                              |  |                                                                                       |  |  |  |     
|Item 5.                       |  | Other Information                                                                     |  |  |  | 32  
|                              |  |                                                                                       |  |  |  |     
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                      |  |  |  | 32  
|                              |  |                                                                                       |  |  |  |     
|Signatures                    |  |                                                                                       |  |  |  | 33  
|                              |  |                                                                                       |  |  |  |     
|Certifications                |  |                                                                                       |  |  |  | 34  



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 2002
MEANS THE PERIOD BEGINNING FEBRUARY 1, 2002, AND ENDING JANUARY 31, 2003). 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.

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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(Debtor-in-Possession as of December 5, 2001)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions of dollars, except share amounts)
(Unaudited)

|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |       |   |   |         |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | - | -------------- | ----- | - | -------------- | ----- | ----- | ---- | - | ----- | ----- | - | - | ------- | ------ | -
|                                                                                                                                                                                         |                                                                       |   | Three Months   |       |   | Six Months     |      
|                                                                                                                                                                                         |                                                                       |   | Ended July 31, |       |   | Ended July 31, |      
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |      
|                                                                                                                                                                                         |                                                                       |   | 2002           |       |   | 2001           |       |       | 2002 |   |       | 2001  |  
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |       |  
|Net sales                                                                                                                                                                                |                                                                       | $ | 504.0          |       |   | $              | 518.5 |       |      | $ | 990.7 |       |   | $ | 1,059.5 |       
|Cost of goods sold                                                                                                                                                                       |                                                                       |   | 465.7          |       |   |                | 484.9 |       |      |   | 907.3 |       |   |   | 968.2   |       
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|                                                                                                                                                                                         | Gross profit                                                          |   |                | 38.3  |   |                |       | 33.6  |      |   |       | 83.4  |   |   |         | 91.3   |  
|Marketing, general and administration                                                                                                                                                    |                                                                       |   | 23.0           |       |   |                | 25.9  |       |      |   | 50.6  |       |   |   | 52.2    |       
|Engineering and product development                                                                                                                                                      |                                                                       |   | 5.5            |       |   |                | 5.7   |       |      |   | 10.5  |       |   |   | 11.6    |       
|Amortization of goodwill                                                                                                                                                                 |                                                                       |   |               |       |   |                | 6.6   |       |      |   |      |       |   |   | 13.3    |       
|Equity in losses of joint ventures                                                                                                                                                       |                                                                       |   |               |       |   |                | 0.2   |       |      |   |      |       |   |   | 0.5     |       
|Asset impairments and other restructuring charges                                                                                                                                        |                                                                       |   | 18.1           |       |   |                | 7.0   |       |      |   | 25.3  |       |   |   | 38.0    |       
|Loss on investment in joint venture                                                                                                                                                      |                                                                       |   |               |       |   |                | 3.8   |       |      |   |      |       |   |   | 3.8     |       
|Other (income) expense, net                                                                                                                                                              |                                                                       |   | (1.1           | )     |   |                | 1.4   |       |      |   | (3.7  | )     |   |   | 1.3     |       
|Reorganization items                                                                                                                                                                     |                                                                       |   | 5.4            |       |   |                |      |       |      |   | 27.9  |       |   |   |        |       
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|                                                                                                                                                                                         | Loss from operations                                                  |   |                | (12.6 | ) |                |       | (17.0 | )    |   |       | (27.2 | ) |   |         | (29.4  | )
|Interest expense, net (excluding $29.6 million and $58.3 million not accrued on
liabilities subject to compromise for the three months and six months ended
July 31, 2002, respectively) |                                                                       |   | 17.9           |       |   |                | 48.8  |       |      |   | 34.7  |       |   |   | 92.9    |       
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |       |  
|                                                                                                                                                                                         | Loss before taxes on income, minority interest and
extraordinary gain |   |                | (30.5 | ) |                |       | (65.8 | )    |   |       | (61.9 | ) |   |         | (122.3 | )
|Income tax provision (benefit)                                                                                                                                                           |                                                                       |   | (3.3           | )     |   |                | 4.1   |       |      |   | (2.4  | )     |   |   | 10.4    |       
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|                                                                                                                                                                                         | Loss before minority interest and extraordinary gain                  |   |                | (27.2 | ) |                |       | (69.9 | )    |   |       | (59.5 | ) |   |         | (132.7 | )
|Minority interest                                                                                                                                                                        |                                                                       |   | 0.8            |       |   |                | 1.0   |       |      |   | 1.5   |       |   |   | 1.8     |       
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|                                                                                                                                                                                         | Loss before extraordinary gain                                        |   |                | (28.0 | ) |                |       | (70.9 | )    |   |       | (61.0 | ) |   |         | (134.5 | )
|Extraordinary gain, net of tax                                                                                                                                                           |                                                                       |   |               |       |   |                | 2.7   |       |      |   |      |       |   |   | 2.7     |       
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|                                                                                                                                                                                         | Net loss                                                              |   | $              | (28.0 | ) |                | $     | (68.2 | )    |   | $     | (61.0 | ) |   | $       | (131.8 | )
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|Basic net loss per share:                                                                                                                                                                |                                                                       |   |                |       |   |                |       |       |      |   |       |       |   |   |         |       
|                                                                                                                                                                                         | Loss before extraordinary gain                                        |   | $              | (0.98 | ) |                | $     | (2.49 | )    |   | $     | (2.14 | ) |   | $       | (4.73  | )
|                                                                                                                                                                                         | Extraordinary gain, net of tax                                        |   |                |      |   |                |       | 0.09  |      |   |       |      |   |   |         | 0.09   |  
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|Basic net loss per share                                                                                                                                                                 |                                                                       | $ | (0.98          | )     |   | $              | (2.40 | )     |      | $ | (2.14 | )     |   | $ | (4.64   | )     
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|Diluted net loss per share:                                                                                                                                                              |                                                                       |   |                |       |   |                |       |       |      |   |       |       |   |   |         |       
|                                                                                                                                                                                         | Loss before extraordinary gain                                        |   | $              | (0.98 | ) |                | $     | (2.49 | )    |   | $     | (2.14 | ) |   | $       | (4.73  | )
|                                                                                                                                                                                         | Extraordinary gain, net of tax                                        |   |                |      |   |                |       | 0.09  |      |   |       |      |   |   |         | 0.09   |  
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      
|Diluted net loss per share                                                                                                                                                               |                                                                       | $ | (0.98          | )     |   | $              | (2.40 | )     |      | $ | (2.14 | )     |   | $ | (4.64   | )     
|                                                                                                                                                                                         |                                                                       |   |                |       |   |                |       |       |      |   |       |      

See accompanying notes to consolidated financial statements.

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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(Debtor-in-Possession as of December 5, 2001)

CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share amounts)

|                                        |                                                                           |                                                                                                |                                             |                                       |     |             |         |        |             |         |   | 
|--------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------- | --- | ----------- | ------- | ------ | ----------- | ------- | - | 
|                                        |                                                                           |                                                                                                |                                             |                                       |     | July 31,    |         |        | January 31, |        
|                                        |                                                                           |                                                                                                |                                             |                                       |     | 2002        |         |        | 2002        |        
|                                        |                                                                           |                                                                                                |                                             |                                       |     |             |         |        |             |        
|                                        |                                                                           |                                                                                                |                                             |                                       |     | (Unaudited) |         |        |             |         |  
|                                        |                                                                           |                                                                                                |                                             | ASSETS                                |     |             |         |        |             |         |   | 
|Current assets:                         |                                                                           |                                                                                                |                                             |                                       |     |             |         |       
|                                        | Cash and cash equivalents                                                 |                                                                                                | $                                           | 43.7                                  |     |             | $       | 45.2   |            
|                                        | Receivables                                                               |                                                                                                |                                             | 272.7                                 |     |             |         | 266.2  |            
|                                        | Inventories                                                               |                                                                                                |                                             | 179.5                                 |     |             |         | 155.2  |            
|                                        | Prepaid expenses and other                                                |                                                                                                |                                             | 43.2                                  |     |             |         | 36.3   |            
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            
|                                        |                                                                           |                                                                                                | Total current assets                        |                                       |     | 539.1       |         |        |             | 502.9   |  
|Property, plant and equipment, net      |                                                                           |                                                                                                | 958.6                                       |                                       |     |             | 965.4   |       
|Goodwill and other assets               |                                                                           |                                                                                                | 912.4                                       |                                       |     |             | 889.8   |       
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            
|                                        |                                                                           |                                                                                                | Total assets                                |                                       | $   | 2,410.1     |         |        | $           | 2,358.1 |  
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            
|                                        |                                                                           |                                                                                                |                                             | LIABILITIES AND STOCKHOLDERS DEFICIT |     |             |         |        |             |         |   | 
|Current liabilities:                    |                                                                           |                                                                                                |                                             |                                       |     |             |         |       
|                                        | DIP facility                                                              |                                                                                                | $                                           | 6.8                                   |     |             | $       |       |            
|                                        | Bank borrowings and other notes                                           |                                                                                                |                                             | 22.0                                  |     |             |         | 25.1   |            
|                                        | Current portion of long-term debt                                         |                                                                                                |                                             | 38.1                                  |     |             |         | 14.5   |            
|                                        | Accounts payable and accrued liabilities                                  |                                                                                                |                                             | 308.1                                 |     |             |         | 250.0  |            
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            
|                                        |                                                                           |                                                                                                | Total current liabilities                   |                                       |     | 375.0       |         |        |             | 289.6   |  
|Long-term debt, net of current portion  |                                                                           |                                                                                                | 57.9                                        |                                       |     |             | 83.5    |       
|Pension and other long-term liabilities |                                                                           |                                                                                                | 310.6                                       |                                       |     |             | 312.2   |       
|Minority interest                       |                                                                           |                                                                                                | 14.3                                        |                                       |     |             | 11.8    |       
|Liabilities subject to compromise       |                                                                           |                                                                                                | 2,138.5                                     |                                       |     |             | 2,121.0 |       
|Commitments and contingencies           |                                                                           |                                                                                                |                                             |                                       |     |             |         |       
|Stockholders 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; 27,708,419
shares issued; 25,806,969 shares outstanding |                                             |                                       | 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  |            
|                                        | Common stock in treasury at cost, 1,901,450 shares                        |                                                                                                |                                             | (25.7                                 | )   |             |         | (25.7  | )          
|                                        | Accumulated deficit                                                       |                                                                                                |                                             | (603.4                                | )   |             |         | (542.4 | )          
|                                        | Accumulated other comprehensive loss                                      |                                                                                                |                                             | (92.5                                 | )   |             |         | (127.3 | )          
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            
|                                        |                                                                           |                                                                                                | Total stockholders deficit                 |                                       |     | (486.2      | )       |        |             | (460.0  | )
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            
|                                        |                                                                           |                                                                                                | Total liabilities and stockholders deficit |                                       | $   | 2,410.1     |         |        | $           | 2,358.1 |  
|                                        |                                                                           |                                                                                                |                                             |                                       |     |            

See accompanying notes to consolidated financial statements.

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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(Debtor-in-Possession as of December 5, 2001)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(Unaudited)

|                                                             |                                                                                            |                                                                                  |      |                |       |   |      |        |       |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ---- | -------------- | ----- | - | ---- | ------ | ----- | -
|                                                             |                                                                                            |                                                                                  |      | Six Months     |      
|                                                             |                                                                                            |                                                                                  |      | Ended July 31, |      
|                                                             |                                                                                            |                                                                                  |      |                |      
|                                                             |                                                                                            |                                                                                  |      | 2002           |       |   | 2001 |       
|                                                             |                                                                                            |                                                                                  |      |                |       |   |      |       
|Cash flows from operating activities:                        |                                                                                            |                                                                                  |      |                |       |   |      |       
|                                                             | Net loss                                                                                   |                                                                                  | $    | (61.0          | )     |   | $    | (131.8 | )    
|                                                             | Adjustments to reconcile net loss to net cash provided by
(used for) operating activities: |                                                                                  |      |                |       |   |      |        |      
|                                                             |                                                                                            | Depreciation and tooling amortization                                            |      |                | 65.0  |   |      |        | 61.2  |  
|                                                             |                                                                                            | Amortization of goodwill                                                         |      |                |      |   |      |        | 13.3  |  
|                                                             |                                                                                            | Amortization of deferred financing fees                                          |      |                | 2.6   |   |      |        | 3.8   |  
|                                                             |                                                                                            | Change in deferred income taxes                                                  |      |                | 0.5   |   |      |        | 6.0   |  
|                                                             |                                                                                            | Asset impairments and other restructuring charges                                |      |                | 25.3  |   |      |        | 38.0  |  
|                                                             |                                                                                            | Loss on investment in joint venture                                              |      |                |      |   |      |        | 3.8   |  
|                                                             |                                                                                            | Minority interest                                                                |      |                | 1.5   |   |      |        | 1.8   |  
|                                                             |                                                                                            | Equity in losses (earnings) of joint ventures                                    |      |                |      |   |      |        | 0.5   |  
|                                                             |                                                                                            | Gain on sale of assets and businesses                                            |      |                | (0.3  | ) |      |        |      |  
|                                                             |                                                                                            | Extraordinary gain                                                               |      |                |      |   |      |        | (4.2  | )
|                                                             |                                                                                            | Changes in operating assets and liabilities that increase
(decrease) cash flows: |      |                |       |   |      |        |      
|                                                             |                                                                                            | Receivables                                                                      |      |                | 1.3   |   |      |        | (9.4  | )
|                                                             |                                                                                            | Inventories                                                                      |      |                | (21.1 | ) |      |        | 2.7   |  
|                                                             |                                                                                            | Prepaid expenses and other                                                       |      |                | (6.3  | ) |      |        | 1.2   |  
|                                                             |                                                                                            | Accounts payable and accrued liabilities                                         |      |                | 26.6  |   |      |        | (10.2 | )
|                                                             |                                                                                            | Chapter 11 items:                                                                |      |                |       |   |      |        |      
|                                                             |                                                                                            | Reorganization items                                                             |      |                | 27.9  |   |      |        |      |  
|                                                             |                                                                                            | Accrued interest on Credit Agreement                                             |      |                | 25.9  |   |      |        |      |  
|                                                             |                                                                                            | Payments related to Chapter 11 Filings                                           |      |                | (36.8 | ) |      |        |      |  
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|                                                             | Cash provided by (used for) operating activities                                           |                                                                                  |      | 51.1           |       |   |      | (23.3  | )    
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|Cash flows from investing activities:                        |                                                                                            |                                                                                  |      |                |       |   |      |       
|                                                             | Purchase of property, plant, equipment and tooling                                         |                                                                                  |      | (44.8          | )     |   |      | (76.7  | )    
|                                                             | Proceeds from sale of assets and businesses                                                |                                                                                  |      | 9.0            |       |   |      |       |      
|                                                             | Purchase of businesses                                                                     |                                                                                  |      | (7.2           | )     |   |      |       |      
|                                                             | Proceeds from termination of cross-currency swap
agreements                                |                                                                                  |      |               |       |   |      | 14.6   |      
|                                                             | Other, net                                                                                 |                                                                                  |      | (1.5           | )     |   |      | (12.9  | )    
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|                                                             |                                                                                            | Cash used for investing activities                                               |      |                | (44.5 | ) |      |        | (75.0 | )
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|Cash flows from financing activities:                        |                                                                                            |                                                                                  |      |                |       |   |      |       
|                                                             | Change in borrowings under DIP facility                                                    |                                                                                  |      | 5.8            |       |   |      |       |      
|                                                             | Changes in bank borrowings and revolving facility                                          |                                                                                  |      | (17.6          | )     |   |      | 192.8  |      
|                                                             | Proceeds from refinancing, net of related fees                                             |                                                                                  |      |               |       |   |      | 435.4  |      
|                                                             | Repayment of bank borrowings and revolving facility from
refinancing                       |                                                                                  |      |               |       |   |      | (371.3 | )    
|                                                             | Repayment of long-term debt from refinancing                                               |                                                                                  |      |               |       |   |      | (36.6  | )    
|                                                             | Payments on accounts receivable securitization                                             |                                                                                  |      |               |       |   |      | (71.6  | )    
|                                                             | Fees to amend Credit Agreement                                                             |                                                                                  |      |               |       |   |      | (2.7   | )    
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|                                                             |                                                                                            | Cash provided by (used for) financing activities                                 |      |                | (11.8 | ) |      |        | 146.0 |  
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|Effect of exchange rate changes on cash and cash equivalents |                                                                                            |                                                                                  | 3.7  |                |       |   | (2.3 | )     
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|                                                             | Increase (decrease) in cash and cash equivalents                                           |                                                                                  |      | (1.5           | )     |   |      | 45.4   |      
|Cash and cash equivalents at beginning of period             |                                                                                            |                                                                                  | 45.2 |                |       |   |     |       
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|Cash and cash equivalents at end of period                   |                                                                                            | $                                                                                | 43.7 |                |       | $ | 45.4 |       
|                                                             |                                                                                            |                                                                                  |      |                |       |   |     
|Supplemental data:                                           |                                                                                            |                                                                                  |      |                |       |   |      |       
|                                                             | Cash
paid for interest, excluding adequate protection payments in 2002                     |                                                                                  | $    | 6.3            |       |   | $    | 84.0   |      
|                                                             | Cash paid for income taxes                                                                 |                                                                                  | $    | 3.3            |       |   | $    | 4.4    |      

See accompanying notes to consolidated financial statements.

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##### Table of Contents






HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
Six Months Ended July 31, 2002 and 2001
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)

(1) Description of Business and Chapter 11 Filings

These financial statements should be read in conjunction with the
Companys Annual Report on Form 10-K for the fiscal year 2001 as filed with the
Securities and Exchange Commission on May 1, 2002.

Description of Business

Unless otherwise indicated, references to Company mean Hayes Lemmerz
International, Inc. and its subsidiaries and references to fiscal year means
the Companys year ended January 31 of the following year (e.g., fiscal 2002
refers to the period beginning February 1, 2002 and ending January 31, 2003,
fiscal 2001 refers to the period beginning February 1, 2001 and ending
January 31, 2002).

The Company is a leading supplier of wheels, wheel-end attachments,
aluminum structural components and automotive brake components. The Company is
the worlds largest manufacturer of automotive wheels. In addition, the Company
also designs and manufactures wheels and brake components for commercial
highway vehicles, and powertrain components and aluminum non-structural
components for the automotive, commercial highway, heating and general
equipment industries.

Chapter 11 Filings

On December 5, 2001, Hayes Lemmerz International, Inc., 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 pendency 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.

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. Pursuant to an order
entered by the Bankruptcy Court on August 19, 2002, the periods during which
the Company has the exclusive rights to propose a plan of reorganization and
solicit acceptances of a plan of reorganization expire on December 15, 2002 and
January 16, 2003, respectively. Under the priority scheme established by the
Bankruptcy Code, certain post-petition liabilities and pre- petition
liabilities need to be satisfied before shareholders can receive any
distribution pursuant to a plan of reorganization. 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.

On May 30, 2002, an order was entered with the Bankruptcy Court approving,
among other things, a critical employee retention plan filed with the
Bankruptcy Court in February, 2002 which is designed to compensate certain
critical employees in order to assure their retention and availability during
the Companys restructuring. The plan has two components which will (i) reward
critical employees who remain with the Company (and certain affiliates of the
Company who are not directly involved in the restructuring) during and through
the completion of the restructuring (the Retention Bonus) and (ii) provide
additional incentives to a more limited group of the most senior critical
employees if the enterprise value upon completing the restructuring exceeds an
established baseline (the Restructuring Performance Bonus).

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The maximum possible aggregate amount of Retention Bonus is approximately
$8.5 million and is payable in cash and is due upon the consummation of the
restructuring, provided, however, that 35% of such bonus will be paid on
October 1, 2002, if the restructuring has not been consummated by that date.
The maximum possible aggregate amount of any Restructuring Performance Bonus is
$37.5 million and will be payable as soon as reasonably practicable after the
consummation of the restructuring. Up to 70% of the amount by which a
Restructuring Performance Bonus exceeds a participants Retention Bonus may be
paid in restricted shares or units of any common stock of the Company that is
issued as part of a confirmed plan of reorganization in connection with the
restructuring, if the Companys Board of Directors elects, within the time
period specified in the plan, to elect such option. The amount of any
Restructuring Performance Bonus to be earned is not currently estimable and
will not be determined until confirmation of a plan or plans of reorganization.

As of July 31, 2002, there were $6.8 million of outstanding borrowings and
$4.7 million in letters of credit issued under the Companys
Debtor-In-Possession revolving credit facility (the DIP Facility). As of
September 12, 2002, there were $40.8 million of outstanding borrowings and $4.7
million in letters of credit issued in connection with the DIP Facility. The
amount of availability under the DIP Facility as of September 12, 2002 was
$76.6 million, net of the aforementioned borrowings and issued letters of
credit.

Reorganization items as reported in the accompanying consolidated
statement of operations for the three months and six months ended July 31, 2002
is comprised of:

|                                                                          |       |   |              |     |  |            |      |      | 
|------------------------------------------------------------------------- | ----- | - | ------------ | --- |  | ---------- | ---- | ---- | 
|                                                                          |       |   | Three Months |     |  | Six Months |     
|                                                                          |       |   | Ended        |     |  | Ended      |     
|                                                                          |       |   |              |     |  |            |     
|Critical employee retention plan provision                                |       | $ | 2.7          |     |  | $          | 5.2  |     
|Estimated accrued liability for rejected prepetition
leases and contracts |       |   | (3.0         | )   |  |            | 9.5  |     
|Professional fees directly related to the Filing                          |       |   | 7.0          |     |  |            | 14.6 |     
|Gain on settlement of prepetition liabilities                             |       |   | (1.2         | )   |  |            | (1.2 | )   
|Interest earned during Chapter 11 reorganization
proceedings              |       |   | (0.1         | )   |  |            | (0.2 | )   
|                                                                          |       |   |              |     |  |           
|                                                                          | Total |   | $            | 5.4 |  |            | $    | 27.9 | 
|                                                                          |       |   |              |     |  |           

Cash payments with
respect to such reorganization items of $11.0 million made during the six months ended July
31, 2002 consisted solely of professional fees.

The condensed financial statements of the Debtors are presented in Note
11, Condensed Combined Financial Statements.

(2) Basis of Presentation

As discussed in Note 1, the Company filed a voluntary petition for
reorganization relief under Chapter 11 of the Bankruptcy Code in December 2001.
The accompanying consolidated financial statements have been prepared in
accordance with AICPA Statement of Position 90-7 (SOP 90-7), Financial
Reporting by Entities in Reorganization under the Bankruptcy Code, and on a
going concern basis. Continuing as a going concern contemplates continuity of
operations, realization of assets, and payment of liabilities in the ordinary
course of business. The accompanying consolidated financial statements 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 non-compliance with debt covenants,
raise substantial doubt about the Companys ability to continue as a going
concern. 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. SOP 90-7 requires the 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 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 six months ended July 31, 2002 are not necessarily indicative
of the results that may be expected for the full fiscal year ending January 31,
2003.

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

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(3) Inventories

The major classes of inventory are as follows:

|                         |       |   |          |       |  |             |      |       | 
|------------------------ | ----- | - | -------- | ----- |  | ----------- | ---- | ----- | 
|                         |       |   | July 31, |       |  | January 31, |     
|                         |       |   | 2002     |       |  | 2002        |     
|                         |       |   |          |       |  |             |     
|Raw materials            |       | $ | 39.1     |       |  | $           | 38.7 |      
|Work-in-process          |       |   | 54.0     |       |  |             | 39.2 |      
|Finished goods           |       |   | 47.5     |       |  |             | 41.4 |      
|Spare parts and supplies |       |   | 38.9     |       |  |             | 35.9 |      
|                         |       |   |          |       |  |            
|                         | Total |   | $        | 179.5 |  |             | $    | 155.2 | 
|                         |       |   |          |       |  |            

(4) Property, Plant and Equipment

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

|                         |                                    |   |          |       |  |             |         |       | 
|------------------------ | ---------------------------------- | - | -------- | ----- |  | ----------- | ------- | ----- | 
|                         |                                    |   | July 31, |       |  | January 31, |        
|                         |                                    |   | 2002     |       |  | 2002        |        
|                         |                                    |   |          |       |  |             |        
|Land                     |                                    | $ | 30.8     |       |  | $           | 29.9    |      
|Buildings                |                                    |   | 255.4    |       |  |             | 240.6   |      
|Machinery and equipment  |                                    |   | 1,092.7  |       |  |             | 1,063.3 |      
|                         |                                    |   |          |       |  |            
|                         |                                    |   | 1,378.9  |       |  |             | 1,333.8 |      
|Accumulated depreciation |                                    |   | (420.3   | )     |  |             | (368.4  | )    
|                         |                                    |   |          |       |  |            
|                         | Property, plant and equipment, net |   | $        | 958.6 |  |             | $       | 965.4 | 
|                         |                                    |   |          |       |  |            

(5) Asset Impairments and Other Restructuring Charges

Asset impairments and other restructuring charges recorded by the Company
during the three months and six months ended July 31, 2002 and 2001 are as
follows (millions of dollars):

|                                       |       |   |              |      |  |              |  |  |  |      |     |     |      |   |      |      |  |  |  |      |  |   |      |      | 
|-------------------------------------- | ----- | - | ------------ | ---- |  | ------------ |  |  |  | ---- | --- | --- | ---- | - | ---- | ---- |  |  |  | ---- |  | - | ---- | ---- | 
|                                       |       |   | Three        |      |  | Six          | 
|                                       |       |   | Months Ended |      |  | Months Ended | 
|                                       |       |   |              |      |  |              | 
|                                       |       |   | 2002         |      |  |              |  |  |  | 2001 |     |     | 2002 |   |      |      |  |  |  | 2001 | 
|                                       |       |   |              |      |  |              |  |  |  |      |     |     |      |   |      |      |  |  |  |     
|Impairment of manufacturing facilities |       | $ | 0.3          |      |  |              |  |  |  | $    | 0.6 |     |      | $ | 0.3  |      |  |  |  |      |  | $ | 28.5 |     
|Impairment of machinery and equipment  |       |   | 17.3         |      |  |              |  |  |  |      | 6.4 |     |      |   | 17.3 |      |  |  |  |      |  |   | 8.9  |     
|Facility closures                      |       |   |             |      |  |              |  |  |  |      |    |     |      |   | 6.7  |      |  |  |  |      |  |   | 0.6  |     
|Other restructuring                    |       |   | 0.5          |      |  |              |  |  |  |      |    |     |      |   | 1.0  |      |  |  |  |      |  |   |     |     
|                                       |       |   |              |      |  |              |  |  |  |      |     |     |      |   |      |      |  |  |  |     
|                                       | Total |   | $            | 18.1 |  |              |  |  |  |      | $   | 7.0 |      |   | $    | 25.3 |  |  |  |      |  |   | $    | 38.0 | 
|                                       |       |   |              |      |  |              |  |  |  |      |     |     |      |   |      |      |  |  |  |     

Impairment of Manufacturing Facilities

As a consequence of the notifications received in April 2001 by the
Company from certain customers of its Petersburg, Michigan manufacturing
facility regarding significantly lower future product orders and the failure to
obtain adequate customer support required to relocate production, management
revised its estimate of future undiscounted cash flows expected to be generated
by the facility. The Company concluded that this estimated amount was less than
the carrying value of the long-lived assets related to the Petersburg facility
and, accordingly, recognized an impairment charge of $28.5 million in the first
six months of fiscal 2001. An additional impairment charge of $0.3 million was
recorded in the second quarter of fiscal 2002 to further write down the
Petersburg facility to fair value based on current real estate market
conditions.

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Impairment of Machinery and Equipment

In the second quarter of fiscal 2002, the Company determined, based on its
most recent sales projections for the facility, that its current estimate of
the future undiscounted cash flows from its manufacturing facility in La
Mirada, California will not be sufficient to recover the carrying value of the
facilitys fixed assets and production tooling. Accordingly, the Company has
recorded an estimated impairment loss of $15.5 million in the second quarter of
fiscal 2002 on those assets.

During the second quarter of fiscal 2002, the Company also recognized
asset impairment losses of $1.8 million on certain machinery and equipment due
primarily to a change in managements plan for the future use of idled
machinery and equipment.

During the second quarter of fiscal 2001, the company recognized an
impairment loss of $6.4 million related principally to a change in managements
plan for future use of idled machinery and equipment in the Automotive Wheel
segment, and to investments in machinery, equipment and tooling at its
Somerset, Kentucky facility. Such assets were written down to fair value based
on the expected scrap value, if any, of such machinery, equipment, and tooling.
During the first quarter of fiscal 2001, the Company recognized an asset
impairment loss of $2.5 million related to the abandonment of plans to continue
to invest in the start-up of certain single-purpose equipment.

Facility Closures

In the fourth quarter of fiscal 2001, the Company committed to a plan to
close its manufacturing facility in Bowling Green, Kentucky and recorded a
restructuring charge of $10.7 million. This charge relates to the termination
of leases and other closure costs, including security and maintenance costs
subsequent to the shutdown date. Originally planned to begin during July 2002,
the closure of the plant has been temporarily delayed, and as such, no costs
have been paid related to the shutdown. The closure costs are expected to be
paid in late fiscal 2002 and in fiscal 2003.

In February 2002, the Company committed to a plan to close its
manufacturing facility in Somerset, Kentucky. In connection with the closure of
the Somerset facility (which commenced during February 2002), the Company
recorded an estimated restructuring charge of $6.7 million in the first quarter
of fiscal 2002. This charge includes amounts related to lease termination costs
and other closure costs including security and maintenance costs subsequent to
the shut down date. The amount of the charge related to lease
terminations of
$3.5 million has been classified as a liability subject to compromise at July 31,
2002 and has been excluded from the table below. Of the other closure costs, approximately $2.1 million remained unpaid
at July 31, 2002, and is expected to be paid during fiscal 2002 and 2003.

In June 2001, the Company committed to a plan to close the Petersburg
facility, and accordingly recorded an estimated restructuring charge of $0.6
million. This charge includes amounts related to security and other
maintenance costs subsequent to the shutdown date. Of this charge, $0.6
million remained unpaid at July 31, 2002, and is expected to be paid during
fiscal 2002.

The following table describes the activity in the balance sheet accounts
affected by the severance and other restructuring charges noted above during
the six months ended July 31, 2002:

|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |               |   |  |   |      | 
|------------------- |  | ---------------- | ---- |  | ------------- | --------- | --- | ---------------- |  | - | -------- | ---- |  | ------- | ------------- | - |  | - | ---- | 
|                    |  |                  |      |  |               | Severance |     |                  |  |   |          |      |  |         |               |   |  |   |     
|                    |  |                  |      |  |               | and Other |     |                  |  |   |          |      |  |         |               |   |  |   |     
|                    |  | January 31, 2002 |      |  | Restructuring |           |     |                  |  |   |          | Cash |  |         | July 31, 2002 |  
|                    |  | Accrual          |      |  | Charges       |           |     | Reclassification |  |   | Payments |      |  | Accrual |              
|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |              
|Facility exit costs |  | $                | 11.7 |  |               | $         | 6.7 |                  |  | $ | (3.5     | )    |  | $       | (1.1          | ) |  | $ | 13.8 | 
|Severance           |  |                  | 6.0  |  |               |           | 1.0 |                  |  |   |         |      |  |         | (2.9          | ) |  |   | 4.1  | 
|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |              
|Total               |  | $                | 17.7 |  |               | $         | 7.7 |                  |  | $ | (3.5     | )    |  | $       | (4.0          | ) |  | $ | 17.9 | 
|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |              

In connection with an early retirement program in the fourth quarter of
fiscal 2001, a charge of $3.8 million related to supplemental retirement
benefits was included in the above table at January 31, 2002. This amount is
recorded as a component of the Companys accrued benefit cost of the applicable
defined benefit plans and will be funded as part of the requirements of the
entire plans. Accordingly, for purposes of the current presentation of the
above table, this amount has not been included.

(6) Purchase and Sale of Assets and Businesses

Purchase of Businesses

In May 2002, the Company acquired the remaining 24% minority interest in
its South African subsidiary for $5.1 million. In connection with the
acquisition of these minority shares, the Company recorded goodwill of $7.5
million related to the now wholly-owned subsidiary.

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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, into the Companys Commercial
Highway operations. The purchase price for this business included cash
payments and a note payable in the amount of $2.0 million due in March 2003.
Of the purchase price, $2.6 million was allocated to the fair value of the
land, building, and machinery and equipment purchase and $1.5 million was
allocated to goodwill.

Sale of Assets and Businesses

During the second quarter of fiscal 2002, the Company sold various
non-core assets, including a foundry located in Maulbronn, Germany, its
interest in a Portuguese joint venture and various equipment and land.
Aggregate proceeds from the aforementioned items were $2.3 million, resulting in
a net loss of $2.1 million, which is included in Other Income, net in the
consolidated statement of operations.

During the first quarter of fiscal 2002, the Company sold its Brazilian
agricultural business and various equipment for $6.7 million in
cash, resulting in a net gain on sale of
$1.6 million. Upon settlement of terms of the Brazilian
agricultural business sale agreement during the second
quarter of fiscal 2002, the Company recognized an additional gain of $0.8
million, which is included in Other Income, net in the consolidated statement
of operations.

(7) 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, so long as they are not
anti-dilutive.

Shares outstanding for the three months and six months ended July 31, 2002
and 2001, were as follows (thousands of shares):

|                                        |  |                    |        |  |                  |  |        |      |  |  |        |  |  |  |        | 
|--------------------------------------- |  | ------------------ | ------ |  | ---------------- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                                        |  | Three Months Ended |        |  | Six Months Ended | 
|                                        |  |                    |        |  |                  | 
|                                        |  | 2002               |        |  | 2001             |  |        | 2002 |  |  | 2001   | 
|                                        |  |                    |        |  |                  |  |        |      |  |  |        | 
|Weighted average shares outstanding     |  |                    | 28,456 |  |                  |  | 28,455 |      |  |  | 28,456 |  |  |  | 28,455 | 
|Dilutive effect of options and warrants |  |                    |       |  |                  |  |       |      |  |  |       |  |  |  |       | 
|                                        |  |                    |        |  |                  |  |        |      |  |  |        | 
|Diluted shares outstanding              |  |                    | 28,456 |  |                  |  | 28,455 |      |  |  | 28,456 |  |  |  | 28,455 | 
|                                        |  |                    |        |  |                  |  |        |      |  |  |        | 

For the three month
and six month periods ending July 31, 2002 and 2001,
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.

(8) Comprehensive Income

Statement of Financial Accounting Standards (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 loss for the six months ended July 31,
2002 and 2001 are as follows:

|                                 |                          |   |       |       |   |      |        |        |  
|-------------------------------- | ------------------------ | - | ----- | ----- | - | ---- | ------ | ------ | -
|                                 |                          |   | 2002  |       |   | 2001 |       
|                                 |                          |   |       |       |   |      |       
|Net loss                         |                          | $ | (61.0 | )     |   | $    | (131.8 | )     
|Currency translation adjustments |                          |   | 34.8  |       |   |      | (22.1  | )     
|                                 |                          |   |       |       |   |     
|                                 | Total comprehensive loss |   | $     | (26.2 | ) |      | $      | (153.9 | )
|                                 |                          |   |       |       |   |     

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(9) Liabilities Subject to Compromise

The principal categories of claims classified as liabilities subject to
compromise under reorganization proceedings are identified below. All amounts
below may be subject to future adjustment depending on Bankruptcy Court action,
further developments with respect to disputed claims, or other events,
including the reconciliation of claims filed with the Bankruptcy Court to
amounts included in the Companys records. Additional pre-petition claims may
arise from rejection of additional executory contracts or unexpired leases by
the Company. Under a confirmed plan of reorganization, all pre-petition claims
may be paid and discharged at amounts substantially less than their allowed
amounts.

Recorded Liabilities

On a consolidated basis, recorded liabilities subject to compromise under
Chapter 11 proceedings consisted of the following (millions of dollars):

|                                                            |                    |       |       |          |         |   |             |         |         | 
|----------------------------------------------------------- | ------------------ | ----- | ----- | -------- | ------- | - | ----------- | ------- | ------- | 
|                                                            |                    |       |       | July 31, |         |   | January 31, |        
|                                                            |                    |       |       | 2002     |         |   | 2002        |        
|                                                            |                    |       |       |          |         |   |             |        
|Accounts payable and accrued liabilities, principally
trade |                    | $     | 157.2 |          |         | $ | 156.9       |        
|Credit Agreement:                                           |                    |       |       |          |         |   |             |        
|                                                            | Term loans         |       |       | 176.8    |         |   |             | 176.8   |        
|                                                            | Revolving facility |       |       | 573.8    |         |   |             | 572.1   |        
|                                                            | Accrued interest   |       |       | 28.9     |         |   |             | 13.4    |        
|Senior Notes and Senior Subordinated Notes:                 |                    |       |       |          |         |   |             |        
|                                                            | Face value         |       |       | 1,152.8  |         |   |             | 1,152.8 |        
|                                                            | Accrued interest   |       |       | 49.0     |         |   |             | 49.0    |        
|                                                            |                    |       |       |          |         |  
|                                                            |                    | Total |       | $        | 2,138.5 |   |             | $       | 2,121.0 | 
|                                                            |                    |       |       |          |         |  

The increase in accounts payable and accrued liabilities in the above
table is due primarily to additional accruals for rejected lease obligations
net of payments to certain vendors pursuant to procedures approved by the
Bankruptcy Court.

During the first six months of fiscal 2002, there were $1.7 million in
letters of credit drawn against the Credit Agreement. Accordingly, the
prepetition claim under the Credit Agreement was increased by this amount.
While any additional availability under the Credit Agreement has been
terminated, letters of credit amounting to approximately $9.7 million remain
outstanding.

The Bankruptcy Code generally disallows the payment of interest that would
otherwise accrue postpetition with respect to unsecured or undersecured claims.
The Company has continued to record interest expense accruing postpetition with
respect to the Credit Agreement because the Company currently estimates that
such accrued interest will be an allowed claim as part of a plan or plans of
reorganization. The amount of such unpaid interest recorded at July 31, 2002
was $28.9 million, net of the May and July payments noted below. This amount
has been classified as a liability subject to compromise in the accompanying
consolidated balance sheet.

The DIP Facility provides for the postpetition cash payment at certain
intervals of interest and fees accrued at the filing date and accruing
postpetition under the Companys prepetition credit agreements, if certain
tests are satisfied relating to the liquidity position and earnings of the
Company and its subsidiaries, and the repatriation of funds from foreign
subsidiaries. On May 1, 2002, July 1, 2002 and August 1, 2002, payments of $2.1
million, $10.0 million and $8.3 million, respectively, were made for a portion
of accrued interest and fees with respect to this provision.

The Company has not continued to record interest expense accruing
postpetition with respect to the Senior Notes and the Senior Subordinated Notes
because the Company cannot currently reasonably estimate the amount of such
interest, if any, that will be an allowed claim as part of a plan or plans of
reorganization. The amount of such interest accruing postpetition that has not
been recorded at July 31, 2002 was $77.0 million. If it is determined that
such interest is allowable as a claim, the amount might include some or all
interest accruing from the date of the Chapter 11 Filing. The recorded amount
of prepetition accrued interest was $49.0 million, which has been classified as
a liability subject to compromise in the accompanying consolidated balance
sheet at July 31, 2002.

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Contingent Liabilities

Contingent liabilities of the Debtors as of the Chapter 11 Filing date are
also subject to compromise. The Company is a party to litigation matters and
claims that are normal in the course of its operations. Generally, litigation
related to prepetition claims, as defined by the Bankruptcy Code, is stayed.
Also, as a normal part of their operations, the Companys subsidiaries
undertake certain contractual obligations, warranties and guarantees in
connection with the sale of products or services. The outcome of the bankruptcy
process on these matters cannot be predicted with certainty.

(10) 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 as of and for the six months ended July 31:

|                  |       |   |         |       |  |          |       |         |              |   |       |       |   |   |       |        |   |      |         |         |  |   |         |         | 
|----------------- | ----- | - | ------- | ----- |  | -------- | ----- | ------- | ------------ | - | ----- | ----- | - | - | ----- | ------ | - | ---- | ------- | ------- |  | - | ------- | ------- | 
|                  |       |   | Revenue |       |  | Net Loss |       |         | Total Assets |  
|                  |       |   |         |       |  |          |       |         |              |  
|                  |       |   | 2002    |       |  | 2001     |       |         | 2002         |   |       | 2001  |   |   | 2002  |        |   | 2001 |        
|                  |       |   |         |       |  |          |       |         |              |   |       |       |   |   |       |        |   |      |        
|Automotive Wheels |       | $ | 572.6   |       |  | $        | 636.8 |         |              | $ | (30.2 | )     |   | $ | (38.7 | )      |   | $    | 1,247.0 |         |  | $ | 1,286.0 |        
|Components        |       |   | 364.8   |       |  |          | 339.9 |         |              |   | (7.1  | )     |   |   | (10.8 | )      |   |      | 875.7   |         |  |   | 897.2   |        
|Other             |       |   | 53.3    |       |  |          | 82.8  |         |              |   | (23.7 | )     |   |   | (82.3 | )      |   |      | 287.4   |         |  |   | 421.5   |        
|                  |       |   |         |       |  |          |       |         |              |   |       |       |   |   |       |        |   |     
|                  | Total |   | $       | 990.7 |  |          | $     | 1,059.5 |              |   | $     | (61.0 | ) |   | $     | (131.8 | ) |      | $       | 2,410.1 |  |   | $       | 2,604.7 | 
|                  |       |   |         |       |  |          |       |         |              |   |       |       |   |   |       |        |   |     

The net loss amounts for the six months ended July 31, 2002 presented in
the above table include reorganization items of $9.2 million, $(1.0) million
and $19.7 million in Automotive Wheels, Components and Other, respectively.

(11) Condensed Combined Financial Statements

The following condensed combined financial statements present in one
format the financial information required for entities that have filed for
reorganization relief under Chapter 11 of the Bankruptcy Code pursuant to SOP
90-7, and the financial information required with respect to those entities
which guarantee certain of the Companys debt.

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.

Guarantor and Nonguarantor Financial Statements

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 the 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 Companys 11 7/8% Senior 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 six
months ended July 31, 2002 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% Senior Notes.

Financial Statements for Entities in Reorganization Under Chapter 11

As discussed in Note 1, Hayes Lemmerz International, Inc. (the Parent),
30 of its wholly-owned domestic subsidiaries, and one wholly-owned Mexican
subsidiary filed voluntary petitions for
reorganization relief under Chapter 11. In accordance with SOP 90-7, condensed
consolidating financial information is presented below as of and for the six
months ended July 31, 2002.

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CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Six Months Ended July 31, 2002

|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |       |   |              |      |  |   |       |       |  
|-------------------------------------------------------------- | ------------------------------------------------------------ | - | ------- | ----- | - | ------------ | --------- | ----- | ------------ | --------- | --------- | ------------ | ------ | ------------ | ------------ | ------------ | - | ------------ | ----- | ---- | ----- | - | ------------ | ---- |  | - | ----- | ----- | -
|                                                               |                                                              |   | Debtors |       |   | Non-Debtors  |           |       |              |           |           |              |        |              |             
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |             
|                                                               |                                                              |   |         |       |   |              |           |       |              |           | Conformed |              |        | Nonguarantor |              |              |   |              |       |      |       |   |              |      |  |   |      
|                                                               |                                                              |   |         |       |   |              | Guarantor |       |              | Guarantor |           |              | Debtor |              |              | Nonguarantor |   |              |       |      |       |   | Consolidated |     
|                                                               |                                                              |   | Parent  |       |   | Subsidiaries |           |       | Subsidiaries |           |           | Subsidiaries |        |              | Subsidiaries |              |   | Eliminations |       |      | Total |  
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |       |  
|Net sales                                                      |                                                              | $ | 117.6   |       |   | $            | 238.8     |       |              | $         | 251.6     |              |        | $            | 20.5         |              |   | $            | 376.6 |      |       | $ | (14.4        | )    |  | $ | 990.7 |      
|Cost of goods sold                                             |                                                              |   | 121.9   |       |   |              | 219.6     |       |              |           | 237.9     |              |        |              | 23.5         |              |   |              | 319.2 |      |       |   | (14.8        | )    |  |   | 907.3 |      
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |      
|                                                               | Gross profit (loss)                                          |   |         | (4.3  | ) |              |           | 19.2  |              |           |           | 13.7         |        |              |              | (3.0         | ) |              |       | 57.4 |       |   |              | 0.4  |  |   |       | 83.4  |  
|Marketing, general and
administration                          |                                                              |   | 8.1     |       |   |              | 13.2      |       |              |           | 9.7       |              |        |              |             |              |   |              | 19.6  |      |       |   |             |      |  |   | 50.6  |      
|Engineering and product
development                            |                                                              |   | 2.2     |       |   |              | 3.7       |       |              |           | 1.6       |              |        |              |             |              |   |              | 3.0   |      |       |   |             |      |  |   | 10.5  |      
|Amortization of
goodwill                                       |                                                              |   |        |       |   |              |          |       |              |           | (0.2      | )            |        |              |             |              |   |              | 0.2   |      |       |   |             |      |  |   |      |      
|Equity in (earnings)
losses of subsidiaries
and joint ventures |                                                              |   | 31.3    |       |   |              | (1.7      | )     |              |           | (5.9      | )            |        |              | (0.5         | )            |   |              | (0.4  | )    |       |   | (22.8        | )    |  |   |      |      
|Asset impairments and
other restructuring
charges              |                                                              |   | 1.0     |       |   |              | 15.5      |       |              |           | 7.8       |              |        |              |             |              |   |              | 1.0   |      |       |   |             |      |  |   | 25.3  |      
|Other expense (income),
net                                    |                                                              |   | 4.3     |       |   |              | (0.3      | )     |              |           | (3.0      | )            |        |              |             |              |   |              | (4.7  | )    |       |   |             |      |  |   | (3.7  | )    
|Reorganization items                                           |                                                              |   | 19.7    |       |   |              | 9.2       |       |              |           | (1.0      | )            |        |              |             |              |   |              |      |      |       |   |             |      |  |   | 27.9  |      
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |      
|                                                               | Earnings (loss) from
operations                              |   |         | (70.9 | ) |              |           | (20.4 | )            |           |           | 4.7          |        |              |              | (2.5         | ) |              |       | 38.7 |       |   |              | 23.2 |  |   |       | (27.2 | )
|Interest expense, net                                          |                                                              |   | 2.8     |       |   |              | 12.2      |       |              |           | 9.1       |              |        |              |             |              |   |              | 10.6  |      |       |   |             |      |  |   | 34.7  |      
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |      
|                                                               | Earnings (loss) before
taxes on income and
minority interest |   |         | (73.7 | ) |              |           | (32.6 | )            |           |           | (4.4         | )      |              |              | (2.5         | ) |              |       | 28.1 |       |   |              | 23.2 |  |   |       | (61.9 | )
|Income tax provision
(benefit)                                 |                                                              |   | (12.7   | )     |   |              | 0.3       |       |              |           | 0.6       |              |        |              | 0.5          |              |   |              | 8.9   |      |       |   |             |      |  |   | (2.4  | )    
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |      
|                                                               | Earnings (loss) before
minority interest                     |   |         | (61.0 | ) |              |           | (32.9 | )            |           |           | (5.0         | )      |              |              | (3.0         | ) |              |       | 19.2 |       |   |              | 23.2 |  |   |       | (59.5 | )
|Minority interest                                              |                                                              |   |        |       |   |              |          |       |              |           |          |              |        |              |             |              |   |              | 1.5   |      |       |   |             |      |  |   | 1.5   |      
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |      
|                                                               | Net income (loss)                                            |   | $       | (61.0 | ) |              | $         | (32.9 | )            |           | $         | (5.0         | )      |              | $            | (3.0         | ) |              | $     | 17.7 |       |   | $            | 23.2 |  |   | $     | (61.0 | )
|                                                               |                                                              |   |         |       |   |              |           |       |              |           |           |              |        |              |              |              |   |              |       |      |      

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CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Six Months Ended July 31, 2001

|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |       |        |              |  |   |         |        |  
|------------------------------------------------------------ | --------------------------------------------------------------------------------- | - | ------ | ------ | - | ------------ | --------- | ----- | ------------ | --------- | --------- | ------------ | ------------ | - | ------------ | ---- |  | ----- | ------ | ------------ |  | - | ------- | ------ | -
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           | Conformed |              |              |   |              |      |  |       |        |              |  |   |         |       
|                                                             |                                                                                   |   |        |        |   |              | Guarantor |       |              | Guarantor |           |              | Nonguarantor |   |              |      |  |       |        | Consolidated | 
|                                                             |                                                                                   |   | Parent |        |   | Subsidiaries |           |       | Subsidiaries |           |           | Subsidiaries |              |   | Eliminations |      |  | Total |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|Net sales                                                    |                                                                                   | $ | 135.0  |        |   | $            | 252.4     |       |              | $         | 251.7     |              |              | $ | 425.6        |      |  | $     | (5.2   | )            |  | $ | 1,059.5 |       
|Cost of goods sold                                           |                                                                                   |   | 124.5  |        |   |              | 232.0     |       |              |           | 264.5     |              |              |   | 352.4        |      |  |       | (5.2   | )            |  |   | 968.2   |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|                                                             | Gross profit (loss)                                                               |   |        | 10.5   |   |              |           | 20.4  |              |           |           | (12.8        | )            |   |              | 73.2 |  |       |        |             |  |   |         | 91.3   |  
|Marketing, general and
administration                        |                                                                                   |   | 8.3    |        |   |              | 12.6      |       |              |           | 10.0      |              |              |   | 21.3         |      |  |       |       |              |  |   | 52.2    |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|Engineering and product
development                          |                                                                                   |   | 1.7    |        |   |              | 3.7       |       |              |           | 1.6       |              |              |   | 4.6          |      |  |       |       |              |  |   | 11.6    |       
|Amortization of intangibles                                  |                                                                                   |   | 0.5    |        |   |              | 3.9       |       |              |           | 5.4       |              |              |   | 3.5          |      |  |       |       |              |  |   | 13.3    |       
|Equity in (earnings) loss of
subsidiaries and joint ventures |                                                                                   |   | 91.8   |        |   |              | 31.0      |       |              |           | 0.8       |              |              |   | (0.1         | )    |  |       | (123.0 | )            |  |   | 0.5     |       
|Asset impairments and other
restructuring charges            |                                                                                   |   | 4.7    |        |   |              |          |       |              |           | 33.3      |              |              |   |             |      |  |       |       |              |  |   | 38.0    |       
|Loss on investment in joint venture                          |                                                                                   |   | 3.8    |        |   |              |          |       |              |           |          |              |              |   |             |      |  |       |       |              |  |   | 3.8     |       
|Other (income) expense, net                                  |                                                                                   |   | 1.1    |        |   |              |          |       |              |           | (0.1      | )            |              |   | 0.3          |      |  |       |       |              |  |   | 1.3     |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|                                                             | Earnings (loss) from operations                                                   |   |        | (101.4 | ) |              |           | (30.8 | )            |           |           | (63.8        | )            |   |              | 43.6 |  |       |        | 123.0        |  |   |         | (29.4  | )
|Interest expense, net                                        |                                                                                   |   | 34.3   |        |   |              | 21.9      |       |              |           | 19.7      |              |              |   | 17.0         |      |  |       |       |              |  |   | 92.9    |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|                                                             | Earnings (loss) before taxes on
income, minority interest, and
extraordinary gain |   |        | (135.7 | ) |              |           | (52.7 | )            |           |           | (83.5        | )            |   |              | 26.6 |  |       |        | 123.0        |  |   |         | (122.3 | )
|Income tax (benefit) provision                               |                                                                                   |   | (1.2   | )      |   |              | 0.3       |       |              |           | 0.5       |              |              |   | 10.8         |      |  |       |       |              |  |   | 10.4    |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|                                                             | Earnings (loss) before minority
interest and extraordinary gain                   |   |        | (134.5 | ) |              |           | (53.0 | )            |           |           | (84.0        | )            |   |              | 15.8 |  |       |        | 123.0        |  |   |         | (132.7 | )
|Minority interest                                            |                                                                                   |   |       |        |   |              |          |       |              |           |          |              |              |   | 1.8          |      |  |       |       |              |  |   | 1.8     |       
|                                                             | Earnings (loss) before
extraordinary gain                                         |   |        | (134.5 | ) |              |           | (53.0 | )            |           |           | (84.0        | )            |   |              | 14.0 |  |       |        | 123.0        |  |   |         | (134.5 | )
|Extraordinary gain, net of tax                               |                                                                                   |   | 2.7    |        |   |              |          |       |              |           |          |              |              |   |             |      |  |       |       |              |  |   | 2.7     |       
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      
|                                                             | Net income (loss)                                                                 |   | $      | (131.8 | ) |              | $         | (53.0 | )            |           | $         | (84.0        | )            |   | $            | 14.0 |  |       | $      | 123.0        |  |   | $       | (131.8 | )
|                                                             |                                                                                   |   |        |        |   |              |           |       |              |           |           |              |              |   |              |      |  |      

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CONDENSED COMBINED BALANCE SHEETS
As of July 31, 2002

|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |       |   |              |        |   |   |         |         |  
|---------------------------------------- | ---------------------------------------------------- | - | ------- | ------- | - | ------------ | --------- | ----- | ------------ | --------- | --------- | ------------ | ------ | ------------ | ------------ | ------------ |  | ------------ | ----- | ------- | ----- | - | ------------ | ------ | - | - | ------- | ------- | -
|                                         |                                                      |   | Debtors |         |   | Non-Debtors  |           |       |              |           |           |              |        |              |             
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |             
|                                         |                                                      |   |         |         |   |              |           |       |              |           | Conformed |              |        | Nonguarantor |              |              |  |              |       |         |       |   |              |        |   |   |        
|                                         |                                                      |   |         |         |   |              | Guarantor |       |              | Guarantor |           |              | Debtor |              |              | Nonguarantor |  |              |       |         |       |   | Consolidated |       
|                                         |                                                      |   | Parent  |         |   | Subsidiaries |           |       | Subsidiaries |           |           | Subsidiaries |        |              | Subsidiaries |              |  | Eliminations |       |         | Total |  
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |       |  
|Cash and cash
equivalents                |                                                      | $ | 10.7    |         |   | $            | 0.1       |       |              | $         | (0.3      | )            |        | $            | 0.6          |              |  | $            | 32.6  |         |       | $ |             |        |   | $ | 43.7    |        
|Receivables                              |                                                      |   | 20.8    |         |   |              | 34.3      |       |              |           | 61.1      |              |        |              | 1.5          |              |  |              | 155.0 |         |       |   |             |        |   |   | 272.7   |        
|Inventories                              |                                                      |   | 20.8    |         |   |              | 26.9      |       |              |           | 47.5      |              |        |              | 2.0          |              |  |              | 82.3  |         |       |   |             |        |   |   | 179.5   |        
|Prepaid expenses and
other               |                                                      |   | 17.0    |         |   |              | 5.2       |       |              |           | 10.0      |              |        |              | 0.5          |              |  |              | 17.4  |         |       |   | (6.9         | )      |   |   | 43.2    |        
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      
|                                         | Total current
assets                                 |   |         | 69.3    |   |              |           | 66.5  |              |           |           | 118.3        |        |              |              | 4.6          |  |              |       | 287.3   |       |   |              | (6.9   | ) |   |         | 539.1   |  
|Net property, plant and
equipment        |                                                      |   | 117.4   |         |   |              | 159.9     |       |              |           | 243.5     |              |        |              | 7.2          |              |  |              | 431.2 |         |       |   | (0.6         | )      |   |   | 958.6   |        
|Goodwill and other
assets                |                                                      |   | 924.6   |         |   |              | 239.6     |       |              |           | 388.5     |              |        |              | 24.8         |              |  |              | 304.2 |         |       |   | (969.3       | )      |   |   | 912.4   |        
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      
|                                         | Total assets                                         |   | $       | 1,111.3 |   |              | $         | 466.0 |              |           | $         | 750.3        |        |              | $            | 36.6         |  |              | $     | 1,022.7 |       |   | $            | (976.8 | ) |   | $       | 2,410.1 |  
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      
|DIP facility                             |                                                      | $ | 6.8     |         |   | $            |          |       |              | $         |          |              |        | $            |             |              |  | $            |      |         |       | $ |             |        |   | $ | 6.8     |        
|Bank borrowings and other
notes          |                                                      | $ |        |         |   | $            | 2.0       |       |              | $         |          |              |        | $            |             |              |  | $            | 20.0  |         |       | $ |             |        |   | $ | 22.0    |        
|Current portion of long-
term debt       |                                                      |   |        |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              | 38.1  |         |       |   |             |        |   |   | 38.1    |        
|Accounts payable and
accrued liabilities |                                                      |   | 65.0    |         |   |              | 29.3      |       |              |           | 47.0      |              |        |              | 3.0          |              |  |              | 173.3 |         |       |   | (9.5         | )      |   |   | 308.1   |        
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      
|                                         | Total current
liabilities                            |   |         | 71.8    |   |              |           | 31.3  |              |           |           | 47.0         |        |              |              | 3.0          |  |              |       | 231.4   |       |   |              | (9.5   | ) |   |         | 375.0   |  
|Long-term debt, net of
current portion   |                                                      |   |        |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              | 57.9  |         |       |   |             |        |   |   | 57.9    |        
|Pension and other
long-term
liabilities  |                                                      |   | 64.8    |         |   |              | 48.1      |       |              |           | 12.7      |              |        |              |             |              |  |              | 185.0 |         |       |   |             |        |   |   | 310.6   |        
|Minority interest                        |                                                      |   |        |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              | 14.3  |         |       |   |             |        |   |   | 14.3    |        
|Intercompany accounts                    |                                                      |   | (573.5  | )       |   |              | 355.5     |       |              |           | 27.5      |              |        |              | (4.8         | )            |  |              | 195.3 |         |       |   |             |        |   |   |        |        
|Liabilities subject to
compromise        |                                                      |   | 2,034.4 |         |   |              | 45.0      |       |              |           | 57.6      |              |        |              | 1.5          |              |  |              |      |         |       |   |             |        |   |   | 2,138.5 |        
|Common stock                             |                                                      |   | 0.3     |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              |      |         |       |   |             |        |   |   | 0.3     |        
|Additional paid-in
capital               |                                                      |   | 235.1   |         |   |              | 197.2     |       |              |           | 905.3     |              |        |              | 53.5         |              |  |              | 317.1 |         |       |   | (1,473.1     | )      |   |   | 235.1   |        
|Common stock in treasury
at cost         |                                                      |   | (25.7   | )       |   |              |          |       |              |           |          |              |        |              |             |              |  |              |      |         |       |   |             |        |   |   | (25.7   | )      
|Retained earnings
(accumulated
deficit)  |                                                      |   | (603.4  | )       |   |              | (206.4    | )     |              |           | (222.5    | )            |        |              | (18.3        | )            |  |              | 85.6  |         |       |   | 361.6        |        |   |   | (603.4  | )      
|Accumulated other
comprehensive loss     |                                                      |   | (92.5   | )       |   |              | (4.7      | )     |              |           | (77.3     | )            |        |              | 1.7          |              |  |              | (63.9 | )       |       |   | 144.2        |        |   |   | (92.5   | )      
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      
|                                         | Total stockholders
equity
(deficit)                 |   |         | (486.2  | ) |              |           | (13.9 | )            |           |           | 605.5        |        |              |              | 36.9         |  |              |       | 338.8   |       |   |              | (967.3 | ) |   |         | (486.2  | )
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      
|                                         | Total liabilities and
stockholders equity
(deficit) |   | $       | 1,111.3 |   |              | $         | 466.0 |              |           | $         | 750.3        |        |              | $            | 36.6         |  |              | $     | 1,022.7 |       |   | $            | (976.8 | ) |   | $       | 2,410.1 |  
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |         |      

-15-



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##### Table of Contents



CONDENSED COMBINED BALANCE SHEETS
As of January 31, 2002

|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |       |   |              |        |   |   |         |         |  
|---------------------------------------- | ---------------------------------------------------- | - | ------- | ------- | - | ------------ | --------- | ----- | ------------ | --------- | --------- | ------------ | ------ | ------------ | ------------ | ------------ |  | ------------ | ----- | ----- | ----- | - | ------------ | ------ | - | - | ------- | ------- | -
|                                         |                                                      |   | Debtors |         |   | Non-Debtors  |           |       |              |           |           |              |        |              |             
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |             
|                                         |                                                      |   |         |         |   |              |           |       |              |           | Conformed |              |        | Nonguarantor |              |              |  |              |       |       |       |   |              |        |   |   |        
|                                         |                                                      |   |         |         |   |              | Guarantor |       |              | Guarantor |           |              | Debtor |              |              | Nonguarantor |  |              |       |       |       |   | Consolidated |       
|                                         |                                                      |   | Parent  |         |   | Subsidiaries |           |       | Subsidiaries |           |           | Subsidiaries |        |              | Subsidiaries |              |  | Eliminations |       |       | Total |  
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |       |  
|Cash and cash equivalents                |                                                      | $ | 11.3    |         |   | $            | 0.1       |       |              | $         | 0.3       |              |        | $            | 0.4          |              |  | $            | 33.1  |       |       | $ |             |        |   | $ | 45.2    |        
|Receivables                              |                                                      |   | 19.0    |         |   |              | 48.6      |       |              |           | 57.0      |              |        |              | 10.2         |              |  |              | 131.4 |       |       |   |             |        |   |   | 266.2   |        
|Inventories                              |                                                      |   | 16.2    |         |   |              | 27.1      |       |              |           | 39.9      |              |        |              | 0.3          |              |  |              | 71.7  |       |       |   |             |        |   |   | 155.2   |        
|Prepaid expenses and other               |                                                      |   | 10.9    |         |   |              | 6.5       |       |              |           | 5.2       |              |        |              | 0.2          |              |  |              | 18.9  |       |       |   | (5.4         | )      |   |   | 36.3    |        
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      
|                                         | Total current assets                                 |   |         | 57.4    |   |              |           | 82.3  |              |           |           | 102.4        |        |              |              | 11.1         |  |              |       | 255.1 |       |   |              | (5.4   | ) |   |         | 502.9   |  
|Net property, plant and
equipment        |                                                      |   | 120.9   |         |   |              | 183.1     |       |              |           | 244.0     |              |        |              | 7.3          |              |  |              | 410.1 |       |       |   |             |        |   |   | 965.4   |        
|Goodwill and other assets                |                                                      |   | 932.4   |         |   |              | 230.2     |       |              |           | 395.6     |              |        |              | 22.1         |              |  |              | 282.2 |       |       |   | (972.7       | )      |   |   | 889.8   |        
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      
|                                         | Total assets                                         |   | $       | 1,110.7 |   |              | $         | 495.6 |              |           | $         | 742.0        |        |              | $            | 40.5         |  |              | $     | 947.4 |       |   | $            | (978.1 | ) |   | $       | 2,358.1 |  
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      
|Bank borrowings                          |                                                      | $ |        |         |   | $            |          |       |              | $         |          |              |        | $            |             |              |  | $            | 25.1  |       |       | $ |             |        |   | $ | 25.1    |        
|Current portion of long-term
debt        |                                                      |   |        |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              | 14.5  |       |       |   |             |        |   |   | 14.5    |        
|Accounts payable and accrued
liabilities |                                                      |   | 69.4    |         |   |              | 8.9       |       |              |           | 26.0      |              |        |              | 3.2          |              |  |              | 167.7 |       |       |   | (25.2        | )      |   |   | 250.0   |        
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      
|                                         | Total current
liabilities                            |   |         | 69.4    |   |              |           | 8.9   |              |           |           | 26.0         |        |              |              | 3.2          |  |              |       | 207.3 |       |   |              | (25.2  | ) |   |         | 289.6   |  
|Long-term debt, net of
current portion   |                                                      |   | 1.0     |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              | 82.5  |       |       |   |             |        |   |   | 83.5    |        
|Pension and other long-term
liabilities  |                                                      |   | 65.7    |         |   |              | 61.3      |       |              |           | 11.9      |              |        |              |             |              |  |              | 173.3 |       |       |   |             |        |   |   | 312.2   |        
|Minority interest                        |                                                      |   |        |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              | 11.8  |       |       |   |             |        |   |   | 11.8    |        
|Intercompany accounts                    |                                                      |   | (570.5  | )       |   |              | 364.6     |       |              |           | 38.7      |              |        |              | (3.7         | )            |  |              | 170.9 |       |       |   |             |        |   |   |        |        
|Liabilities subject to
compromise        |                                                      |   | 2,005.1 |         |   |              | 48.7      |       |              |           | 63.2      |              |        |              | 4.0          |              |  |              |      |       |       |   |             |        |   |   | 2,121.0 |        
|Common stock                             |                                                      |   | 0.3     |         |   |              |          |       |              |           |          |              |        |              |             |              |  |              |      |       |       |   |             |        |   |   | 0.3     |        
|Additional paid-in capital               |                                                      |   | 235.1   |         |   |              | 197.2     |       |              |           | 905.4     |              |        |              | 53.4         |              |  |              | 323.8 |       |       |   | (1,479.8     | )      |   |   | 235.1   |        
|Common stock in treasury at
cost         |                                                      |   | (25.7   | )       |   |              |          |       |              |           |          |              |        |              |             |              |  |              |      |       |       |   |             |        |   |   | (25.7   | )      
|Retained earnings
(accumulated deficit)  |                                                      |   | (542.4  | )       |   |              | (173.2    | )     |              |           | (202.9    | )            |        |              | (15.7        | )            |  |              | 55.5  |       |       |   | 336.3        |        |   |   | (542.4  | )      
|Accumulated other
comprehensive loss     |                                                      |   | (127.3  | )       |   |              | (11.9     | )     |              |           | (100.3    | )            |        |              | (0.7         | )            |  |              | (77.7 | )     |       |   | 190.6        |        |   |   | (127.3  | )      
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      
|                                         | Total stockholders
equity (deficit)                 |   |         | (460.0  | ) |              |           | 12.1  |              |           |           | 602.2        |        |              |              | 37.0         |  |              |       | 301.6 |       |   |              | (952.9 | ) |   |         | (460.0  | )
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      
|                                         | Total liabilities and
stockholders equity
(deficit) |   | $       | 1,110.7 |   |              | $         | 495.6 |              |           | $         | 742.0        |        |              | $            | 40.5         |  |              | $     | 947.4 |       |   | $            | (978.1 | ) |   | $       | 2,358.1 |  
|                                         |                                                      |   |         |         |   |              |           |       |              |           |           |              |        |              |              |              |  |              |       |       |      

-16-



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##### Table of Contents



CONDENSED COMBINED STATEMENTS OF CASH FLOWS
For the Six Months Ended July 31, 2002

|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |       |       |   |              |   |   |      |       |       |  
|------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------------------ | ---- | ------- | ---- | - | ------------ | --------- | ---- | ------------ | --------- | --------- | ------------ | ------ | ------------ | ------------ | ------------ | - | ------------ | ----- | ----- | ----- | - | ------------ | - | - | ---- | ----- | ----- | -
|                                                       |                                                                                          |                                                  |      | Debtors |      |   | Non-Debtors  |           |      |              |           |           |              |        |              |             
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |             
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           | Conformed |              |        | Nonguarantor |              |              |   |              |       |       |       |   |              |   |   |      |      
|                                                       |                                                                                          |                                                  |      |         |      |   |              | Guarantor |      |              | Guarantor |           |              | Debtor |              |              | Nonguarantor |   |              |       |       |       |   | Consolidated |  
|                                                       |                                                                                          |                                                  |      | Parent  |      |   | Subsidiaries |           |      | Subsidiaries |           |           | Subsidiaries |        |              | Subsidiaries |              |   | Eliminations |       |       | Total |  
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |       |       |  
|Cash flows provided by (used
for) operating activities |                                                                                          | $                                                | (0.6 | )       |      | $ | 15.5         |           |      | $            | 2.9       |           |              | $      | 1.1          |              |              | $ | 32.2         |       |       | $     |  |              |   | $ | 51.1 |      
|Cash flows from investing
activities:                  |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |       |       |   |              |   |   |      |      
|                                                       | Purchase
of property, plant, equipment, and
tooling                                      |                                                  |      | (4.5    | )    |   |              | (3.7      | )    |              |           | (17.2     | )            |        |              |             |              |   |              | (19.4 | )     |       |   |             |   |   |      | (44.8 | )    
|                                                       | Proceeds from sale of assets
and businesses                                              |                                                  |      |        |      |   |              | 0.2       |      |              |           | 0.6       |              |        |              |             |              |   |              | 8.2   |       |       |   |             |   |   |      | 9.0   |      
|                                                       | Purchase of businesses                                                                   |                                                  |      |        |      |   |              | (2.1      | )    |              |           |          |              |        |              |             |              |   |              | (5.1  | )     |       |   |             |   |   |      | (7.2  | )    
|                                                       | Other, net                                                                               |                                                  |      | 0.7     |      |   |              | (0.8      | )    |              |           | 1.3       |              |        |              | 0.1          |              |   |              | (2.8  | )     |       |   |             |   |   |      | (1.5  | )    
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |      
|                                                       |                                                                                          | Cash provided by (used for)
investing activities |      |         | (3.8 | ) |              |           | (6.4 | )            |           |           | (15.3        | )      |              |              | 0.1          |   |              |       | (19.1 | )     |   |              |  |   |      |       | (44.5 | )
|Cash flows from financing
activities:                  |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |       |       |   |              |   |   |      |      
|                                                       | Increase (decrease) in bank
borrowings, revolving facility,
DIP facility and other notes |                                                  |      | 5.8     |      |   |              |          |      |              |           |          |              |        |              |             |              |   |              | (17.6 | )     |       |   |             |   |   |      | (11.8 | )    
|                                                       | Dividends (paid) received                                                                |                                                  |      |        |      |   |              |          |      |              |           | 1.0       |              |        |              |             |              |   |              | (1.0  | )     |       |   |             |   |   |      |      |      
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |      
|                                                       |                                                                                          | Cash provided by (used for)
financing activities |      |         | 5.8  |   |              |           |     |              |           |           | 1.0          |        |              |              |             |   |              |       | (18.6 | )     |   |              |  |   |      |       | (11.8 | )
|Increase (decrease) in parent
loans and advances       |                                                                                          |                                                  | (2.0 | )       |      |   | (9.1         | )         |      |              | 10.8      |           |              |        | (1.0         | )            |              |   | 1.3          |       |       |       |  |              |   |   |     |      
|Effect of exchange rates of
cash and cash equivalents  |                                                                                          |                                                  |     |         |      |   |             |           |      |              |          |           |              |        |             |              |              |   | 3.7          |       |       |       |  |              |   |   | 3.7  |      
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |      
|                                                       |                                                                                          | Increase (decrease) in
cash and cash
equivalents |      |         | (0.6 | ) |              |           |     |              |           |           | (0.6         | )      |              |              | 0.2          |   |              |       | (0.5  | )     |   |              |  |   |      |       | (1.5  | )
|Cash and cash equivalents at
beginning of period       |                                                                                          |                                                  | 11.3 |         |      |   | 0.1          |           |      |              | 0.3       |           |              |        | 0.4          |              |              |   | 33.1         |       |       |       |  |              |   |   | 45.2 |      
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |      
|Cash and cash equivalents at
end of period             |                                                                                          | $                                                | 10.7 |         |      | $ | 0.1          |           |      | $            | (0.3      | )         |              | $      | 0.6          |              |              | $ | 32.6         |       |       | $     |  |              |   | $ | 43.7 |      
|                                                       |                                                                                          |                                                  |      |         |      |   |              |           |      |              |           |           |              |        |              |              |              |   |              |       |      

-17-



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##### Table of Contents



CONDENSED COMBINED STATEMENTS OF CASH FLOWS
For the Six Months Ended July 31, 2001

|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |   |       |   |              |   |       |        |       |  
|------------------------------------------------------ | ------------------------------------------------------------------------------------- | ------------------------------------- | ------ | ------ | ----- | - | ------------ | --------- | ---- | ------------ | --------- | --------- | ------------ | ------------- | ---- | ------------ | ----- | - | ----- | - | ------------ | - | ----- | ------ | ----- | -
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           | Conformed |              |               |      |              |       |   |       |   |              |   |       |        |      
|                                                       |                                                                                       |                                       |        |        |       |   |              | Guarantor |      |              | Guarantor |           |              | Non-guarantor |      |              |       |   |       |   | Consolidated |  
|                                                       |                                                                                       |                                       |        | Parent |       |   | Subsidiaries |           |      | Subsidiaries |           |           | Subsidiaries |               |      | Eliminations |       |   | Total |  
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |   |       |  
|Cash flows (used for) provided by
operating activities |                                                                                       | $                                     | (15.0  | )      |       | $ | (20.8        | )         |      | $            | (43.1     | )         |              | $             | 55.6 |              |       | $ |      |   |              | $ | (23.3 | )     
|Cash flows from investing activities:                  |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |   |       |   |              |   |       |       
|                                                       | Purchase
of property, plant and
equipment, and tooling                                |                                       |        | (3.3   | )     |   |              | (9.3      | )    |              |           | (21.7     | )            |               |      | (42.4        | )     |   |       |  |              |   |       | (76.7  | )    
|                                                       | Other, net                                                                            |                                       |        | 7.1    |       |   |              | (0.3      | )    |              |           | (16.4     | )            |               |      | 11.3         |       |   |       |  |              |   |       | 1.7    |      
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |  
|                                                       |                                                                                       | Cash used for investing activities    |        |        | 3.8   |   |              |           | (9.6 | )            |           |           | (38.1        | )             |      |              | (31.1 | ) |       |   |             |   |       |        | (75.0 | )
|Cash flows from financing activities:                  |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |   |       |   |              |   |       |       
|                                                       | Increase in bank borrowings and
revolving facility                                    |                                       |        | 184.0  |       |   |              |          |      |              |           | (0.6      | )            |               |      | 9.4          |       |   |       |  |              |   |       | 192.8  |      
|                                                       | 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 | )     |   |              |          |      |              |           |          |              |               |      | (37.0        | )     |   |       |  |              |   |       | (407.9 | )    
|                                                       | Proceeds (payments) on accounts
receivable securitization                             |                                       |        | 43.0   |       |   |              | (47.1     | )    |              |           | (67.5     | )            |               |      |             |       |   |       |  |              |   |       | (71.6  | )    
|                                                       | Fees to amend Credit Agreement                                                        |                                       |        | 2.7    |       |   |              |          |      |              |           |          |              |               |      |             |       |   |       |  |              |   |       | (2.7   | )    
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |  
|                                                       |                                                                                       | Cash provided by financing
activities |        |        | 288.8 |   |              |           | 47.1 |              |           |           | (68.1        | )             |      |              | (27.6 | ) |       |   |             |   |       |        | 146.0 |  
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |  
|Increase (decrease) in parent loans
and advances       |                                                                                       |                                       | (244.5 | )      |       |   | 76.6         |           |      |              | 148.5     |           |              |               | 19.4 |              |       |   |      |   |              |   |      |       
|Effect of exchange rates on cash and
cash equivalents  |                                                                                       |                                       |       |        |       |   |             |           |      |              |          |           |              |               | (2.3 | )            |       |   |      |   |              |   | 2.3   |       
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |  
|                                                       | Increase (decrease) in cash and
cash equivalents                                      |                                       |        | 33.1   |       |   |              | (0.9      | )    |              |           | (0.8      | )            |               |      | 14.0         |       |   |       |  |              |   |       | 45.4   |      
|Cash and cash equivalents at beginning
of period       |                                                                                       |                                       | (19.3  | )      |       |   | 0.2          |           |      |              | 1.8       |           |              |               | 17.3 |              |       |   |      |   |              |   |      |       
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |  
|Cash and cash equivalents at end of
period             |                                                                                       | $                                     | 13.8   |        |       | $ | (0.7         | )         |      | $            | 1.0       |           |              | $             | 31.3 |              |       | $ |      |   |              | $ | 45.4  |       
|                                                       |                                                                                       |                                       |        |        |       |   |              |           |      |              |           |           |              |               |      |              |       |  

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(12) Recent Income Tax Law Changes

On March 9, 2002, the Jobs Creation and Worker Assistance Act of 2002 was
signed into law. Among other provisions, the law permits a five-year carryback
for tax losses generated in tax years ending in 2001 and 2002. As a result of
this tax law change, the Company is entitled to file a claim for a refund of
federal income taxes. The Companys preliminary estimate of the amount of
carryback refunds recorded in the first quarter aggregated $4.1 million. Upon
further analysis and finalization of the estimated fiscal 2001
federal income tax loss,
the Company has determined that additional losses can be carried back to prior
years, resulting in an additional refund of $8.9 million. This amount has been
recorded during the current period and has reduced the current provision for
income taxes in the consolidated statement of operations.

(13) Goodwill and Other Intangible Assets

Effective February 1, 2002, the Company adopted SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 142 requires that goodwill and
indefinite-lived intangible assets be reviewed for impairment annually, rather
than amortized into earnings, and that any impairment to the amount of goodwill
existing at the date of adoption be recognized as a cumulative effect of a
change in accounting principle on that date. The Company has discontinued
amortizing goodwill and indefinite-lived intangible assets into earnings. As of
February 1, 2002, the Company had unamortized goodwill and other intangibles of
approximately $822.4 million which will be subject to the transition provisions
of SFAS No. 142. Management has determined that it will incur a significant
write-down in the value of its goodwill upon completion of the adoption of SFAS
No. 142. Pursuant to an order entered by the Bankruptcy Court on August 19,
2002, the periods during which the Company has the exclusive rights to propose
a plan of reorganization and solicit acceptances of a plan of reorganization
expire on December 15, 2002 and January 16, 2003, respectively. In conjunction
with the development of such plan or plans, the Company, among other things, is
currently in the process of determining the value of its operations for
reorganization plan purposes. The Company has not yet recorded a write-down in
goodwill as of February 1, 2002 as is required by the pronouncement because it
has not yet completed these valuations required for the adjustment.

The pro forma effect of SFAS No. 142 on the Companys earnings for the
three months and six months ended July 31, 2002 and 2001 is as follows:

|                                  |  |                    |       |   |                  |   |       |      |  |   |       |   |  |   |        |  
|--------------------------------- |  | ------------------ | ----- | - | ---------------- | - | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                                  |  | Three Months Ended |       |   | Six Months Ended |  
|                                  |  |                    |       |   |                  |  
|                                  |  | 2002               |       |   | 2001             |   |       | 2002 |  |   | 2001  |  
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Reported net loss                 |  | $                  | (28.0 | ) |                  | $ | (68.2 | )    |  | $ | (61.0 | ) |  | $ | (131.8 | )
|Addback goodwill amortization     |  |                    |      |   |                  |   | 6.6   |      |  |   |      |   |  |   | 13.3   |  
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Adjusted net loss                 |  | $                  | (28.0 | ) |                  | $ | (61.6 | )    |  | $ | (61.0 | ) |  | $ | (118.5 | )
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Basic and diluted loss per share: |  |                    |       |   |                  |   |       |      |  |   |       |   |  |   |        |  
|Reported net loss                 |  | $                  | (0.98 | ) |                  | $ | (2.40 | )    |  | $ | (2.14 | ) |  | $ | (4.64  | )
|Addback goodwill amortization     |  |                    |      |   |                  |   | 0.23  |      |  |   |      |   |  |   | 0.47   |  
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Adjusted net loss                 |  | $                  | (0.98 | ) |                  | $ | (2.17 | )    |  | $ | (2.14 | ) |  | $ | (4.17  | )
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  

(14) New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. Examples of costs covered by this
standard include lease termination costs and certain employee severance costs
associated with a restructuring or plant closing, or other exit or disposal
activity. Previous guidance for such costs was provided by EITF Issue No.
94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring) (EITF 94-3). SFAS No. 146 replaces EITF 94-3, and is to be
applied prospectively to exit or disposal activities initiated after December
31, 2002. Liabilities recorded under EITF 94-3 prior to adoption of SFAS No.
146 are grandfathered, and thus, adoption of this standard is not anticipated
to have a material effect on the Companys financial position or results of
operations.

In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS No. 145 eliminates the requirement that gains and losses from
the extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. However, an entity is
not prohibited from classifying such gains and losses as extraordinary items,
so long as they meet the criteria outlined in Accounting Principles Board
Opinion No. 30, Reporting the Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions. SFAS No. 145 also eliminates
the inconsistency

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between the accounting for sale-leaseback transactions and certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. This statement is effective for financial statements issued for
fiscal years beginning after May 15, 2002. The Company will adopt SFAS No. 145
in the fiscal year beginning February 1, 2003, and adoption of this standard is
not anticipated to have a material effect on the Companys financial position
or results of operations.

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 reconciliation 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.




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

Business and Chapter 11 Filings

This discussion should be read in conjunction with the Companys Annual
Report on Form 10-K for the fiscal year 2001 as filed with the Securities and
Exchange Commission on May 1, 2002 and the other information included herein.

Description of Business

Unless otherwise indicated, references to Company mean Hayes Lemmerz
International, Inc. and its subsidiaries and references to fiscal year means
the Companys year ended January 31 of the following year (e.g., fiscal 2002
refers to the period beginning February 1, 2002 and ending January 31, 2003,
fiscal 2001 refers to the period beginning February 1, 2001 and ending
January 31, 2002.

The Company is a leading supplier of wheels, wheel-end attachments,
aluminum structural components and automotive brake components. The Company is
the worlds largest manufacturer of automotive wheels. In addition, the Company
also designs and manufactures wheels and brake components for commercial
highway vehicles, and powertrain components and aluminum non-structural
components for the automotive, commercial highway, heating and general
equipment industries.

Chapter 11 Filings

On December 5, 2001, Hayes Lemmerz International, Inc., 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 pendency 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.

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. Pursuant to an order
entered by the Bankruptcy Court on August 19, 2002, the periods during which
the Company has the exclusive rights to propose a plan of reorganization and
solicit acceptances of a plan of reorganization expire on December 15, 2002 and
January 16, 2003, respectively. Under the priority scheme established by the
Bankruptcy Code, certain post-petition liabilities and pre- petition
liabilities need to be satisfied before shareholders can receive any
distribution pursuant to a plan of reorganization. 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.

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On May 30, 2002, an order was entered with the Bankruptcy Court approving,
among other things, a critical employee retention plan filed with the
Bankruptcy Court in February, 2002 which is designed to compensate certain
critical employees in order to assure their retention and availability during
the Companys restructuring. The plan has two components which will (i) reward
critical employees who remain with the Company (and certain affiliates of the
Company who are not directly involved in the restructuring) during and through
the completion of the restructuring (the Retention Bonus) and (ii) provide
additional incentives to a more limited group of the most senior critical
employees if the enterprise value upon completing the restructuring exceeds an
established baseline (the Restructuring Performance Bonus).

The maximum possible aggregate amount of Retention Bonus is approximately
$8.5 million and is payable in cash and is due upon the consummation of the
restructuring, provided, however, that 35% of such bonus will be paid on
October 1, 2002, if the restructuring has not been consummated by that date.
The maximum possible aggregate amount of any Restructuring Performance Bonus is
$37.5 million and will be payable as soon as reasonably practicable after the
consummation of the restructuring. Up to 70% of the amount by which a
Restructuring Performance Bonus exceeds a participants Retention Bonus may be
paid in restricted shares or units of any common stock of the Company that is
issued as part of a confirmed plan of reorganization in connection with the
restructuring, if the Companys Board of Directors elects, within the time
period specified in the plan, to elect such option. The amount of any
Restructuring Performance Bonus to be earned is not currently estimable and
will not be determined until confirmation of a plan or plans of reorganization.

Reorganization items as reported in the accompanying consolidated
statement of operations for the three months and six months ended July 31, 2002
is comprised of:

|                                                                          |       |   |              |     |  |            |      |      | 
|------------------------------------------------------------------------- | ----- | - | ------------ | --- |  | ---------- | ---- | ---- | 
|                                                                          |       |   | Three Months |     |  | Six Months |     
|                                                                          |       |   | Ended        |     |  | Ended      |     
|                                                                          |       |   |              |     |  |            |     
|Critical employee retention plan provision                                |       | $ | 2.7          |     |  | $          | 5.2  |     
|Estimated accrued liability for rejected prepetition
leases and contracts |       |   | (3.0         | )   |  |            | 9.5  |     
|Professional fees directly related to the Filing                          |       |   | 7.0          |     |  |            | 14.6 |     
|Gain on settlement of prepetition liabilities                             |       |   | (1.2         | )   |  |            | (1.2 | )   
|Interest earned during Chapter 11 reorganization
proceedings              |       |   | (0.1         | )   |  |            | (0.2 | )   
|                                                                          |       |   |              |     |  |           
|                                                                          | Total |   | $            | 5.4 |  |            | $    | 27.9 | 
|                                                                          |       |   |              |     |  |           

Cash payments with
respect to such reorganization items of $11.0 million made during the six months ended July
31, 2002 consisted solely of professional fees.

The condensed financial statements of the Debtors are presented in Note
11, Condensed Combined Financial Statements.

Results of Operations

Sales of the Companys wheels, wheel-end attachments, aluminum structural
components 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 and the relative performance of its
customers product lines in the North American market. The Companys sales of
its wheels and automotive castings in foreign locations are directly affected
by the overall vehicle production in those locations and the relative
performance of its customers product lines in the those markets. 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 design and manufacture 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 design and manufacture
suspension, brake and powertrain components for original equipment
manufacturers and Tier 1 suppliers in the global passenger car and light
vehicle markets. The Other segment includes results from the Companys
operations that primarily design and manufacture wheel and brake products for
commercial highway and aftermarket customers in North America. 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.

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Three Months Ended July 31, 2002 Compared to Three Months Ended July 31, 2001

Net Sales

|                  |       |   |       |       |  |      |            |       |          |  |       |      |   
|----------------- | ----- | - | ----- | ----- |  | ---- | ---------- | ----- | -------- |  | ----- | ---- | --
|                  |       |   |       |       |  |      |            |       |          |  |       |     
|                  |       |   | 2002  |       |  | 2001 |            |       | % Change | 
|                  |       |   |       |       |  |      |            |       |          | 
|                  |       |   |       |       |  |      | (millions) |       |          |  |       |     
|Automotive Wheels |       | $ | 287.2 |       |  | $    | 312.5      |       |          |  | (8.1  | %)  
|Components        |       |   | 188.3 |       |  |      | 163.0      |       |          |  | 15.5  | %   
|Other             |       |   | 28.5  |       |  |      | 43.0       |       |          |  | (33.7 | %)  
|                  |       |   |       |       |  |      |            |       |          | 
|                  | Total |   | $     | 504.0 |  |      | $          | 518.5 |          |  |       | (2.8 | %)
|                  |       |   |       |       |  |      |            |       |          | 

Net sales for the Company decreased $14.5 million to $504.0 million in the
three months ended July 31, 2002 from $518.5 million in the three months ended
July 31, 2001.

The Companys Automotive Wheels operations recorded $25.3 million lower
net sales during the second quarter of fiscal 2002 compared to the same period
in fiscal 2001 primarily due to lower sales in its North American operations.
Lower unit sales from the Companys North American operations and the closure
of the Companys Somerset, Kentucky facility during the first quarter of fiscal
2002 accounted for approximately $18 million of this decrease. The remainder
of the decrease was primarily due to increased pricing pressures from
customers, the impact of lower aluminum pass-through pricing and the sale of
the Companys Brazilian agricultural wheel business during the first quarter of
fiscal 2002.

Net sales from Components increased $25.3 million to $188.3 million in the
second quarter of fiscal 2002 from $163.0 million in the same period in fiscal
2001. This increase is primarily due to over $30 million of new program
launches at the Companys Montague, Michigan facility and at certain of the
Companys other suspension component operations. The closure of the Companys
Petersburg, Michigan facility and the sale of the Companys Maulbronn, Germany
foundry during the second quarter of fiscal 2002 resulted in nearly $10 million
lower net sales in the second quarter of fiscal 2002 compared to the same
period in the prior year.

Other net sales decreased $14.5 million to $28.5 million in the second
quarter of fiscal 2002 from $43.0 million in the second quarter of fiscal 2001.
The decline in North American heavy-duty trailer production, which decreased
40% year-over-year, negatively impacted Other net sales by approximately $7
million in the second quarter of fiscal 2002. The sale of the Companys
European System Service business during the fourth quarter of fiscal 2001
reduced Other net sales by over $7 million in the second quarter of fiscal 2002
compared to the same period in fiscal 2001.

Gross Profit

The Companys gross profit increased $4.7 million to $38.3 million in the
second quarter of fiscal 2002 from $33.6 million in the second quarter of
fiscal 2001.

Gross profit from the Companys Wheels operations increased during the
second quarter of fiscal 2002 compared to the same period in fiscal 2001 due
primarily to the successful execution of certain strategic initiatives in the
Companys North American operations. First, the Company closed its Somerset,
Kentucky facility during the first quarter of fiscal 2002. This closure
resulted in higher gross profit in the second quarter of fiscal 2002 due to the
significantly large losses recorded at that facility during the second quarter
of fiscal 2001. Second, the Company announced the downsizing and closure of
its Bowling Green, Kentucky facility during the fourth quarter of fiscal 2001.
Although the closure of the plant has been temporarily delayed, the Company did
record higher gross profit due to cost savings realized by the downsizing of
that facility subsequent to the closure announcement. The favorable impact of
these initiatives was partially offset by lower production volumes and
unfavorable pricing in its North American operations. Gross profit in the
Companys European operations was relatively unchanged in the second quarter of
fiscal 2002 compared to the same period in fiscal 2001.

Gross profit from Components decreased $4.6 million during the second
quarter of fiscal 2002 compared to the same period in fiscal 2001. Gross
profit at the Companys Montague, Michigan facility decreased during the second
quarter of fiscal 2002 due primarily to significantly excessive program launch
and start-up costs. The Company believes that these launch costs will be
significantly reduced in the third quarter of fiscal 2002. These decreases
were partially offset by higher gross profit arising from the closure of the
Petersburg, Michigan facility and improved operating performance at certain
other plants.

Other gross profit decreased $5.1 million from the second quarter of
fiscal 2001 to the same period in fiscal 2002. The impact of lower sales in
the Companys commercial highway operations and the sale of the Companys
European Systems Service business during the fourth quarter of fiscal 2001
negatively impacted Other gross profit in the second quarter of fiscal 2002
compared to the same period in fiscal 2001.

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Marketing, General and Administrative Expenses

Marketing, general and administrative expenses decreased $2.9 million to
$23.0 million in the three months ended July 31, 2002 from $25.9 million in the
three months ended July 31, 2001. This decrease is primarily due to an
increase in the Companys provisions for past due accounts receivable recorded
during the second quarter of fiscal 2001.

Engineering and Product Development Expenses

The Companys engineering and product development expenses decreased $0.2
million to $5.5 million in the three months ended July 31, 2002 from $5.7
million in the three months ended July 31, 2001. This decrease is primarily
due to the impact of certain restructuring initiatives which lowered expenses
at the Companys European wheel operations.

Equity in Losses (Earnings) of Joint Ventures

The Company did not record equity in losses of joint ventures in the
second quarter of fiscal 2002 due to the permanent impairment and sale of such
investments.

Asset Impairments and Other Restructuring Charges

Asset impairments and other restructuring charges recorded by the Company
during the three months ended July 31, 2002 and 2001 are as follows (millions
of dollars):

|                                       |       |   |      |      |  |      |     |     | 
|-------------------------------------- | ----- | - | ---- | ---- |  | ---- | --- | --- | 
|                                       |       |   | 2002 |      |  | 2001 |    
|                                       |       |   |      |      |  |      |    
|Impairment of manufacturing facilities |       | $ | 0.3  |      |  | $    | 0.6 |    
|Impairment of machinery and equipment  |       |   | 17.3 |      |  |      | 6.4 |    
|Facility closures                      |       |   |     |      |  |      |    |    
|Other restructuring                    |       |   | 0.5  |      |  |      |    |    
|                                       |       |   |      |      |  |     
|                                       | Total |   | $    | 18.1 |  |      | $   | 7.0 | 
|                                       |       |   |      |      |  |     

Impairment of Manufacturing Facilities

As a consequence of the notifications received in April 2001 by the
Company from certain customers of its Petersburg, Michigan manufacturing
facility regarding significantly lower future product orders and the failure to
obtain adequate customer support required to relocate production, management
revised its estimate of future undiscounted cash flows expected to be generated
by the facility. The Company concluded that this estimated amount was less than
the carrying value of the long-lived assets related to the Petersburg facility
and, accordingly, recognized an impairment charge of $28.5 million in the first
six months of fiscal 2001. An additional impairment charge of $0.3 million was
recorded in the second quarter of fiscal 2002 to further write down the
Petersburg facility to fair value.

Impairment of Machinery and Equipment

In the second quarter of fiscal 2002, the Company determined, based on its
most recent sales projections for the facility, that its current estimate of
the future undiscounted cash flows from its manufacturing facility in La
Mirada, California will not be sufficient to recover the carrying value of the
facilitys fixed assets and production tooling. Accordingly, the Company has
recorded an estimated impairment loss of $15.5 million in the second quarter of
fiscal 2002 on those assets.

During the second quarter of fiscal 2002, the Company recognized asset
impairment losses of $1.8 million on certain machinery and equipment due
primarily to a change in managements plan for the future use of idled
machinery and equipment.

During the second quarter of fiscal 2001, the company recognized an
impairment loss of $6.4 million related principally to a change in managements
plan for future use of idled machinery and equipment in the Automotive Wheel
segment, and to investments in machinery, equipment and tooling at its
Somerset, Kentucky facility. Such assets were written down to fair value based
on the expected scrap value, if any, of such machinery, equipment, and tooling.

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Facility Closures

In the fourth quarter of fiscal 2001, the Company committed to a plan to
close its manufacturing facility in Bowling Green, Kentucky and recorded a
restructuring charge of $10.7 million. This charge relates to the termination
of leases and other closure costs, including security and maintenance costs
subsequent to the shutdown date. Originally planned to begin during July 2002,
the closure of the plant has been temporarily delayed, and as such, no costs
have been paid related to the shutdown. The closure costs are expected to be
paid in late fiscal 2002 and in fiscal 2003.

In February 2002, the Company committed to a plan to close its
manufacturing facility in Somerset, Kentucky. In connection with the closure of
the Somerset facility (which commenced during February 2002), the Company
recorded an estimated restructuring charge of $6.7 million in the first quarter
of fiscal 2002. This charge includes amounts related to lease termination costs
and other closure costs including security and maintenance costs subsequent to
the shutdown date. The amount of the charge related to lease
terminations of $3.5 million has been classified as a liability subject to compromise at July 31,
2002 and has been excluded from the table below. Of the other closure costs, approximately $2.1 million remained unpaid
at July 31, 2002, and is expected to be paid during fiscal 2002 and 2003.

In June 2001, the Company committed to a plan to close the Petersburg
facility, and accordingly recorded an estimated restructuring charge of $0.6
million. This charge includes amounts related to security and other
maintenance costs subsequent to the shutdown date. Of this charge, $0.6
million remained unpaid at July 31, 2002, and is expected to be paid during
fiscal 2002.

The following table describes the activity in the balance sheet accounts
affected by the severance and other restructuring charges noted above during
the three months ended July 31, 2002:

|                    |  |           |      |  |               |           |     |          |  |   |         |          |  |   |      | 
|------------------- |  | --------- | ---- |  | ------------- | --------- | --- | -------- |  | - | ------- | -------- |  | - | ---- | 
|                    |  |           |      |  |               | Severance |     |          |  |   |         |          |  |   |     
|                    |  | April 30, |      |  | and Other     |           |     |          |  |   |         | July 31, | 
|                    |  | 2002      |      |  | Restructuring |           |     | Cash     |  |   | 2002    |         
|                    |  | Accrual   |      |  | Charges       |           |     | Payments |  |   | Accrual |         
|                    |  |           |      |  |               |           |     |          |  |   |         |         
|Facility exit costs |  | $         | 14.3 |  |               | $         |    |          |  | $ | (0.5    | )        |  | $ | 13.8 | 
|Severance           |  |           | 4.8  |  |               |           | 0.5 |          |  |   | (1.2    | )        |  |   | 4.1  | 
|                    |  |           |      |  |               |           |     |          |  |   |         |         
|Total               |  | $         | 19.1 |  |               | $         | 0.5 |          |  | $ | (1.7    | )        |  | $ | 17.9 | 
|                    |  |           |      |  |               |           |     |          |  |   |         |         

Other Income, net

For three months ended July 31, 2002, Other income, net in the
consolidated statement of operations of $1.1 million includes
the recovery of tooling costs of $1.3 million, technical assistance fees of $0.5 million, and various export
sales incentives and other miscellaneous income, which were offset by losses on
sales of various non-core assets and businesses of $1.3 million. The Company
received $2.3 million in cash in connection with these sales.

Interest Expense, net

Interest expense was $17.9 million for the second quarter of fiscal 2002
compared to $48.8 million for the second quarter of fiscal 2001. This decrease
reflects the discontinuation of interest accrued on the Companys subordinated
debt as well as lower interest rates.

Income Taxes

The income tax benefit for the quarter is the result of loss carryback
claims resulting from recent income tax law changes, offset by tax expense in
foreign jurisdictions and various states. The Company has determined that a
valuation allowance is required against all net deferred tax assets in the
United States and certain deferred tax assets in foreign jurisdictions. As
such, there is no United States federal income tax benefit recorded against
current losses.

On March 9, 2002, the Jobs Creation and Worker Assistance Act of 2002 was
signed into law. Among other provisions, the law permits a five-year carryback
for tax losses generated in tax years ending in 2001 and 2002. As a result of
this tax law change, the Company is entitled to file a claim for a refund of
federal income taxes. The Companys preliminary estimate of the amount of
carryback refunds recorded in the first quarter aggregated $4.1 million. Upon
further analysis and finalization of the estimated fiscal 2001
federal income tax loss,
the Company has determined that additional losses can be carried back to prior
years, resulting in an additional refund of $8.9 million. This amount has been
recorded during the current period and has reduced the current provision for
income taxes in the consolidated statement of operations.

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Six Months Ended July 31, 2002, Compared to Six Months Ended July 31, 2001

Net Sales

|                  |       |   |            |       |  |      |       |         |          |  |       |      |   
|----------------- | ----- | - | ---------- | ----- |  | ---- | ----- | ------- | -------- |  | ----- | ---- | --
|                  |       |   | 2002       |       |  | 2001 |       |         | % Change | 
|                  |       |   |            |       |  |      |       |         |          | 
|                  |       |   | (millions) |       |  |      |       |        
|Automotive Wheels |       | $ | 572.6      |       |  | $    | 636.8 |         |          |  | (10.0 | %)  
|Components        |       |   | 364.8      |       |  |      | 339.9 |         |          |  | 7.3   | %   
|Other             |       |   | 53.3       |       |  |      | 82.8  |         |          |  | (35.6 | %)  
|                  |       |   |            |       |  |      |       |         |          | 
|                  | Total |   | $          | 990.7 |  |      | $     | 1,059.5 |          |  |       | (6.5 | %)
|                  |       |   |            |       |  |      |       |         |          | 

Net sales for the Company decreased $68.8 million to $990.7 million in the
three months ended July 31, 2002 from $1,059.5 million in the three months
ended July 31, 2001.

The Companys Wheels operations recorded $64.2 million lower net sales
during the first six months of fiscal 2002 compared to the same period in
fiscal 2001. The closure of the Companys Somerset, Kentucky facility during
the first quarter of fiscal 2002 and lower unit sales from the Companys North
American wheel operations in the first half of fiscal 2002 compared to the same
period last year resulted in a sales reduction of over $25 million. The
Companys European operations also recorded approximately $28 million lower net
sales during the first six months of fiscal 2002 compared to the same period in
fiscal 2001 due primarily to lower unit volumes and the impact of foreign
currency fluctuations. The remainder of the sales reductions was due primarily
to increased pricing pressures from customers and the impact of lower aluminum
pass-through pricing in North American operations.

Revenues from Components increased $24.9 million to $364.8 million in the
second quarter of fiscal 2001 from $339.9 million in the same period in fiscal
2002. This increase is primarily due to new program launches at the Companys
Montague, Michigan facility and at certain of the Companys other suspension
component operations that increased sales by approximately $45 million. This
was partially offset by the impact of the closure of the Companys Petersburg,
Michigan facility and the sale of the Maulbronn, Germany foundry during the
second quarter of fiscal 2002.

Other net sales decreased $29.5 million to $53.3 million in the six months
ended July 31, 2002 from $82.8 million in the six months ended July 31, 2001.
Lower North American heavy-duty trailer production negatively impacted Other
net sales by approximately $15 million. The remaining decrease in Other net
sales is due primarily to the sale of the Companys European System Service
business during the fourth quarter of fiscal 2001.

Gross Profit

The Companys gross profit decreased $7.9 million to $83.4 million in the
six months ended July 31, 2002 from $91.3 million in the six months ended July
31, 2001.

Gross profit from the Companys Wheels operations increased by $9.4
million during the first half of fiscal 2002 compared to the same period in
fiscal 2001. This increase was primarily due to the closure of the Companys
Somerset, Kentucky facility during the first quarter of fiscal 2002 and the
downsizing of its Bowling Green, Kentucky facility. The remaining difference
in Automotive Wheels gross profit from the first half of fiscal 2001 to fiscal
2002 is due primarily to lower operating performance at certain facilities,
lower production volumes and unfavorable pricing.

Gross profit from Components decreased $9.0 million during the first half
of fiscal 2002 compared to the same period in fiscal 2001 due primarily to
significantly excessive program launch and start-up costs at the Companys
Montague, Michigan facility. The Company believes that these launch costs will
be significantly reduced in the third quarter of fiscal 2002.

Other gross profit decreased $8.4 million during the first half of fiscal
2002 compared to the same period in fiscal 2001. The impact of lower sales in
the Companys commercial highway operations negatively impacted gross profit in
the first half of fiscal 2002 compared to the same period in fiscal 2001. The
Company also recorded higher operating costs due primarily to higher pension
and post-retiree medical expenses related to the Companys North American
operations. The remaining decrease in Other gross profit is due to the sale of
the Companys European Systems Service business during the fourth quarter of
fiscal 2001.

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Marketing, General and Administrative

Marketing, general and administrative expenses decreased $1.6 million to
$50.6 million in the six months ended July 31, 2002 from $52.2 million in the
six months ended July 31, 2001. This decrease is primarily due to an increase
in the Companys provisions for past due accounts receivable recorded during
the second quarter of fiscal 2001 and partially offset by higher auditing and
consulting fees incurred in the first quarter of fiscal 2002 compared to the
same period in fiscal 2001.

Engineering and Product Development

The Companys engineering and product development expenses decreased $1.1
million to $10.5 million in the six months ended July 31, 2002 from $11.6
million in the six months ended July 31, 2001. This decrease is due primarily
to savings achieved from certain restructuring initiatives in the European
wheel operations.

Equity in Losses (Earnings) of Joint Ventures

The Company did not record equity in losses (earnings) of joint ventures
during the first six months of fiscal 2002 due to the permanent impairment and
sale of such investments.

Asset Impairments and Other Restructuring Charges

Asset impairments and other restructuring charges recorded by the Company
during the six months ended July 31, 2002 and 2001 are as follows (millions of
dollars):

|                                       |       |   |      |      |  |      |      |      | 
|-------------------------------------- | ----- | - | ---- | ---- |  | ---- | ---- | ---- | 
|                                       |       |   | 2002 |      |  | 2001 |     
|                                       |       |   |      |      |  |      |     
|Impairment of manufacturing facilities |       | $ | 0.3  |      |  | $    | 28.5 |     
|Impairment of machinery and equipment  |       |   | 17.3 |      |  |      | 8.9  |     
|Facility closures                      |       |   | 6.7  |      |  |      | 0.6  |     
|Other restructuring                    |       |   | 1.0  |      |  |      |     |     
|                                       |       |   |      |      |  |     
|                                       | Total |   | $    | 25.3 |  |      | $    | 38.0 | 
|                                       |       |   |      |      |  |     

Impairment of Manufacturing Facilities

As a consequence of the notifications received in April 2001 by the
Company from certain customers of its Petersburg, Michigan manufacturing
facility regarding significantly lower future product orders and the failure to
obtain adequate customer support required to relocate production, management
revised its estimate of future undiscounted cash flows expected to be generated
by the facility. The Company concluded that this estimated amount was less than
the carrying value of the long-lived assets related to the Petersburg facility
and, accordingly, recognized an impairment charge of $28.5 million in the first
quarter of fiscal 2001. An additional impairment charge of $0.3 million was
recorded in the second quarter of fiscal 2002 to write down the Petersburg
facility to fair value.

Impairment of Machinery and Equipment

In the second quarter of fiscal 2002, the Company determined, based on its
most recent sales projections for the facility, that its current estimate of
the future undiscounted cash flows from its manufacturing facility in La
Mirada, California will not be sufficient to recover the carrying value of the
facilitys fixed assets and production tooling. Accordingly, the Company has
recorded an estimated impairment loss of $15.5 million in the second quarter of
fiscal 2002 on those assets.

During the second quarter of fiscal 2002, the Company recognized asset
impairment losses of $1.8 million on certain machinery and equipment due
primarily to a change in managements plan for the future use of idled
machinery and equipment, and to the identification of obsolete machinery and
equipment.

During the second quarter of fiscal 2001, the company recognized an
impairment loss of $6.4 million related principally to a change in managements
plan for future use of idled machinery and equipment in the Automotive Wheel
segment, and to investments in machinery, equipment and tooling at its
Somerset, Kentucky facility. Such assets were written down to fair value based
on the expected scrap value, if any, of such machinery, equipment, and tooling.
During the first quarter of fiscal 2001, the Company recognized an asset
impairment loss of $2.5 million related to the abandonment of plans to continue
to invest in the start-up of certain single-purpose equipment.

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Facility Closures

In the fourth quarter of fiscal 2001, the Company committed to a plan to
close its manufacturing facility in Bowling Green, Kentucky and recorded a
restructuring charge of $10.7 million. This charge relates to the termination
of leases and other closure costs, including security and maintenance costs
subsequent to the shutdown date. Originally planned to begin during July 2002,
the closure of the plant has been temporarily delayed, and as such, no costs
have been paid related to the shutdown. The closure costs are expected to be
paid in late fiscal 2002 and in fiscal 2003.

In February 2002, the Company committed to a plan to close its
manufacturing facility in Somerset, Kentucky. In connection with the closure of
the Somerset facility (which commenced during February 2002), the Company
recorded an estimated restructuring charge of $6.7 million in the first quarter
of fiscal 2002. This charge includes amounts related to lease termination costs
and other closure costs including security and maintenance costs subsequent to
the shut down date. The amount of the charge related to lease
terminations of $3.5 million has been classified as a liability subject to compromise at July 31,
2002 and has been excluded from the table below. Of the other closure costs, approximately $2.1 million remained unpaid
at July 31, 2002, and is expected to be paid during fiscal 2002 and 2003.

In June 2001, the Company committed to a plan to close the Petersburg
facility, and accordingly recorded an estimated restructuring charge of $0.6
million. This charge includes amounts related to security and other
maintenance costs subsequent to the shutdown date. Of this charge, $0.6
million remained unpaid at July 31, 2002, and is expected to be paid during
fiscal 2002.

The following table describes the activity in the balance sheet accounts
affected by the severance and other restructuring charges noted above during
the six months ended July 31, 2002:

|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |               |   |  |   |      | 
|------------------- |  | ---------------- | ---- |  | ------------- | --------- | --- | ---------------- |  | - | -------- | ---- |  | ------- | ------------- | - |  | - | ---- | 
|                    |  |                  |      |  |               | Severance |     |                  |  |   |          |      |  |         |               |   |  |   |     
|                    |  |                  |      |  |               | and Other |     |                  |  |   |          |      |  |         |               |   |  |   |     
|                    |  | January 31, 2002 |      |  | Restructuring |           |     |                  |  |   |          | Cash |  |         | July 31, 2002 |  
|                    |  | Accrual          |      |  | Charges       |           |     | Reclassification |  |   | Payments |      |  | Accrual |              
|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |              
|Facility exit costs |  | $                | 11.7 |  |               | $         | 6.7 |                  |  | $ | (3.5     | )    |  | $       | (1.1          | ) |  | $ | 13.8 | 
|Severance           |  |                  | 6.0  |  |               |           | 1.0 |                  |  |   |         |      |  |         | (2.9          | ) |  |   | 4.1  | 
|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |              
|Total               |  | $                | 17.7 |  |               | $         | 7.7 |                  |  | $ | (3.5     | )    |  | $       | (4.0          | ) |  | $ | 17.9 | 
|                    |  |                  |      |  |               |           |     |                  |  |   |          |      |  |         |              

In connection with an early retirement program in the fourth quarter of
fiscal 2001, a charge of $3.8 million related to supplemental retirement
benefits was included in the above table at January 31, 2002. This amount is
recorded as a component of the Companys accrued benefit cost of the applicable
defined benefit plans and will be funded as part of the requirements of the
entire plans. Accordingly, for purposes of the current presentation of the
above table, this amount has not been included.

Other Income, net

For the six months ended July 31, 2002, Other income, net in the
consolidated statement of operations of $3.7 million is comprised primarily of
the recovery of $1.6 million of tooling costs, technical assistance fees of $0.5 million, and
net gains on sales of various non-core assets and businesses of $0.3 million.
The Company received $9.0 million in cash in connection with these sales. The
remaining Other income, net includes various export sales incentives and other
miscellaneous income.

Interest Expense, net

Interest expense was $34.7 million for the first six months of fiscal 2002
compared to $92.9 million for the same period of fiscal 2001. This decrease
reflects the discontinuation of interest accrued on the Companys subordinated
debt, as well as lower interest rates.

Income Taxes

The income tax benefit for the first six months of fiscal 2002 is the
result of loss carryback claims resulting from recent income tax law changes,
offset by tax expense in foreign jurisdictions and various states. The Company
has determined that a valuation allowance is required against all net deferred
tax assets in the United States and certain deferred tax assets in foreign
jurisdictions. As such, there is no United States federal income tax benefit
recorded against current losses.

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Liquidity and Capital Resources

Chapter 11 Filings

As discussed above, the Company and certain subsidiaries filed voluntary
petitions for reorganization relief 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.

Cash Flows

The Companys operations provided $51.1 million in cash in the first six
months of fiscal 2002 compared to a use of $23.3 million in the first six
months of fiscal 2001. This improvement resulted primarily from the effect of
lower interest payments during the current period and increases in
certain accrued operating liabilities.

The principal sources of liquidity for the Companys future operating,
capital expenditure, facility closure and restructuring and
reorganization 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, (iv) borrowings under the DIP Facility,
and (v) any exit financing associated with the
Companys emergence from the Chapter 11 proceedings resulting
from a confirmed plan or plans of reorganization. While the
Company expects that such sources will meet these requirements, there can be no
assurances that such sources will prove to be sufficient, in part,
due to inherent uncertainties about applicable future capital market
conditions.

Capital expenditures and tooling purchases for the first six months of
fiscal 2002 were $44.8 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. The Company anticipates capital expenditures and tooling
purchases for fiscal 2002 will be approximately $110.0 to $115.0 million
relating primarily to new vehicle platforms, and maintenance and cost reduction
programs.

Other Liquidity Matters

As of July 31, 2002, there were $6.8 million of outstanding borrowings and
$4.7 million in letters of credit issued under the Companys DIP Facility. As
of September 12, 2002, there were $40.8 million of outstanding borrowings and
$4.7 million in letters of credit issued in connection with the DIP Facility.
The amount of availability under the DIP Facility as of September 12, 2002 was
$76.6 million, net of the aforementioned borrowings and issued letters of
credit.

The DIP Facility provides for the postpetition cash payment at certain
intervals of interest and fees accrued at the filing date and accruing
postpetition under the Companys prepetition credit agreements, if certain
tests are satisfied relating to the liquidity position and earnings of the
Company and its subsidiaries, and the repatriation of funds from foreign
subsidiaries. On May 1, 2002, July 1, 2002 and August 1, 2002, payments of $2.1
million, $10.0 million and $8.3 million, respectively, were made for a portion
of accrued interest and fees with respect to this provision.

During the first six months of fiscal 2002, the Company received $9.0
million in cash proceeds from the sale of certain non-core assets and
businesses, primarily the sale of the Companys Brazilian agricultural
business, a foundry located in Maulbronn, Germany and the Companys interest in
a Portuguese joint venture. During the second quarter of fiscal 2002, the
Company paid $5.1 million for the remaining 24% interest in its South African
subsidiary.

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.

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Critical Accounting Policies

Asset impairment losses and other restructuring charges

The Companys consolidated statements of operations included herein
reflect an element of operating expenses described as asset impairments and
other restructuring charges. The Company periodically evaluates whether events
and circumstances have occurred that indicate that the remaining useful life of
any of its long lived assets may warrant revision or that the remaining balance
might not be recoverable. When factors indicate that the long lived assets
should be evaluated for possible impairment, the Company uses an estimate of
the future undiscounted cash flows generated by the underlying assets to
determine if a write-down is required. If a write-down is required, the Company
adjusts the book value of the impaired long-lived assets to their estimated
fair values. Fair value is determined, generally, through third party appraisals or
discounted cash flow calculations. The related charges are recorded as an asset
impairment or, in the case of certain exit costs in connection with a plant
closure or restructuring, a restructuring or other charge in the consolidated
statements of operations.

The Company believes that the Chapter 11 Filings in December 2001 and the
ongoing comprehensive review of all of its operations as part of formulating
its plan or plans of reorganization in order to emerge from Chapter 11 will
take some time to complete. As discussed above and in the notes to the
Companys consolidated financial statements included herein, a number of
decisions have occurred or other factors have indicated that these types of
charges are required to be currently recognized. As the review continues during
the Companys reorganization, there can be no assurance that there will not be
additional charges based on future events and that the additional charges would
not have a materially adverse impact on the Companys financial position and
results of operations.

See discussion of SFAS No. 142 below.

Valuation allowances on deferred income tax assets

In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. The Company expects the deferred
tax assets, net of the valuation allowance to be realized as a result of the
reversal of existing taxable temporary differences in the United States and as
a result of projected future taxable income and the reversal of existing
taxable temporary differences in certain foreign locations. As a result of
managements assessment, a valuation allowance was recorded. In view of the
substantial doubt regarding the Companys ability to continue as a going
concern, the Company determined that it could not conclude that it was more
likely than not that the benefits of certain deferred income tax assets would
be realized. The valuation allowance recorded by the Company fully reserves for
all domestic and certain foreign net deferred tax assets.

Use of Estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with accounting principles generally accepted in the United States
of America. Actual results could differ from those estimates.

Generally, assets and liabilities which are subject to managements
estimation and judgment include long-lived assets, due to the use of estimated
economic lives for depreciation purposes and future expected cash flow
information used to evaluate the recoverability of the long-lived assets,
inventory, accounts receivable, deferred tax asset valuation reserves, pension
and post retirement costs, restructuring reserves, self insurance accruals and
environmental remediation accruals.

Under SFAS No. 87,
Employers Accounting for Pensions, an additional minimum
pension liability may need to be recorded at the end of the current
fiscal year of a plan sponsor based on an annual measurement
requirement as of that date. As of January 31, 2002, the Company
recorded an additional minimum pension liability with regard to its
defined benefit pension plans of approximately $35 million. This
additional liability resulted in an increase to the accumulated other
comprehensive loss for fiscal 2001. Due to recent market conditions,
the fair value of the plans assets have declined since the beginning of fiscal
2002. In view of the uncertainty
in predicting market conditions for the remainder of the current
fiscal year, the Company can not assure that there will not be a
requirement to record another additional minimum liability as of
January 31, 2003.

Recently Adopted Accounting Pronouncements

Effective February 1, 2002, the Company adopted SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 142 requires that goodwill and
indefinite-lived intangible assets be reviewed for impairment annually, rather
than amortized into earnings, and that any impairment to the amount of goodwill
existing at the date of adoption be recognized as a cumulative effect of a
change in accounting principle on that date. The Company has discontinued
amortizing goodwill and indefinite-lived intangible assets into earnings. As of
February 1, 2002, the Company had unamortized goodwill and other intangibles of
approximately $822.4 million which will be subject to the transition provisions
of SFAS No. 142. Management has determined that it will incur a significant
write-down in the value of its goodwill upon completion of the adoption of SFAS
No. 142. Pursuant to an order entered by the Bankruptcy Court on August 19,
2002, the periods during which the Company has the exclusive rights to propose
a plan of reorganization and solicit acceptances of a plan of reorganization
expire on December 15, 2002 and January 16, 2003, respectively. In conjunction
with the development of such plan or plans, the Company, among other things, is
currently in the process of determining the value of its operations for
reorganization plan purposes. The Company has not yet recorded a write-down in
goodwill as of February 1, 2002 as is required by the pronouncement because it
has not yet completed these valuations required for the adjustment.

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The pro forma effect of SFAS No. 142 on the Companys earnings for the six
months ended July 31, 2002 and 2001 is as follows:

|                                  |  |                    |       |   |                  |   |       |      |  |   |       |   |  |   |        |  
|--------------------------------- |  | ------------------ | ----- | - | ---------------- | - | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                                  |  | Three Months Ended |       |   | Six Months Ended |  
|                                  |  |                    |       |   |                  |  
|                                  |  | 2002               |       |   | 2001             |   |       | 2002 |  |   | 2001  |  
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Reported net loss                 |  | $                  | (28.0 | ) |                  | $ | (68.2 | )    |  | $ | (61.0 | ) |  | $ | (131.8 | )
|Addback goodwill amortization     |  |                    |      |   |                  |   | 6.6   |      |  |   |      |   |  |   | 13.3   |  
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Adjusted net loss                 |  | $                  | (28.0 | ) |                  | $ | (61.6 | )    |  | $ | (61.0 | ) |  | $ | (118.5 | )
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Basic and diluted loss per share: |  |                    |       |   |                  |   |       |      |  |   |       |   |  |   |        |  
|Reported net loss                 |  | $                  | (0.98 | ) |                  | $ | (2.40 | )    |  | $ | (2.14 | ) |  | $ | (4.64  | )
|Addback goodwill amortization     |  |                    |      |   |                  |   | 0.23  |      |  |   |      |   |  |   | 0.47   |  
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  
|Adjusted net loss                 |  | $                  | (0.98 | ) |                  | $ | (2.17 | )    |  | $ | (2.14 | ) |  | $ | (4.17  | )
|                                  |  |                    |       |   |                  |   |       |      |  |   |       |  

New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. Examples of costs covered by this
standard include lease termination costs and certain employee severance costs
associated with a restructuring or plant closing, or other exit or disposal
activity. Previous guidance for such costs was provided by EITF Issue No.
94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring) (EITF 94-3). SFAS No. 146 replaces EITF 94-3, and is to be
applied prospectively to exit or disposal activities initiated after December
31, 2002. Liabilities recorded under EITF 94-3 prior to adoption of SFAS No.
146 are grandfathered, and thus, adoption of this standard is not anticipated
to have a material effect on the Companys financial position or results of
operations.

In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS No. 145 eliminates the requirement that gains and losses from
the extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. However, an entity is
not prohibited from classifying such gains and losses as extraordinary items,
so long as they meet the criteria outlined in Accounting Principles Board
Opinion No. 30, Reporting the Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions. SFAS No. 145 also eliminates
the inconsistency between the accounting for sale-leaseback transactions and
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This statement is effective for financial
statements issued for fiscal years beginning after May 15, 2002. The Company
will adopt SFAS No. 145 in the fiscal year beginning February 1, 2003, and
adoption of this standard is not anticipated to have a material effect on the
Companys financial position or results of operations.

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 reconciliation 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.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

For the period ended July 31, 2002, 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 for the year ended January 31, 2002.




Item 4. Controls and Procedures

On February 19, 2002, the Company issued restated consolidated financial
statements included in its filings with the Securities and Exchange Commission
(the SEC) 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. As
discussed in the Companys Annual Report On Form 10-K for the fiscal year 2001
filed with the SEC on May 1, 2002, the Company has been advised that the SEC is
conducting an

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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.

Following the commencement of an internal review of its accounting records
and procedures and the investigation initiated by the Companys Audit Committee
of the Board of Directors in connection with the restatement process (the
Audit Committee Investigation), the Company initiated a significant
restructuring which included, among other things, (i) a new management team
under the leadership of a new chief executive officer and the hiring of a new
chief financial officer (initially an interim chief financial officer), (ii) a
number of key operating initiatives including an ongoing process to rationalize
the manufacturing capacity of the Company on a global basis and (iii) the
Chapter 11 Filings. These activities, while critical to the successful
restructuring of the Company, complicate the Companys ability to assess the
overall effectiveness of internal controls.

Since the inception of the restatement process and Audit Committee
Investigation, the Company has made a number of significant changes that
strengthened the internal controls over its financial accounting, reporting and
disclosure procedures (the Reporting and Disclosure Procedures). These
changes included, but were not necessarily limited to, (i) communicating
clearly and consistently a tone from new senior management regarding the proper
conduct in these matters, (ii) terminating or reassigning key managers, (iii)
hiring (or retaining on an interim basis), in addition to the chief financial
officer position noted above, a new chief accounting officer, chief information
officer, and several new experienced business unit controllers, (iv)
strengthening the North American financial management organizational reporting
chain, (v) requiring stricter account reconciliation standards, (vi)
establishing an anonymous TIPLINE monitored by the general counsel of the
Company, (vii) updating and expanding the distribution of the Companys
business conduct questionnaire, (viii) conducting more face-to-face quarterly
financial reviews with business unit management, (ix) requiring quarterly as
well as annual plant and business unit written representations, (x) expanding
the financial accounting procedures in the current year internal audit plan,
(xi) temporarily supplementing the Companys existing staff with additional contractor-based
support to collect and analyze the information necessary to prepare the
Companys financial statements, related disclosures and other information
requirements contained in the Companys SEC periodic reporting until the
Company implements changes to the current organization and staffing,
and (xii) commencing a comprehensive, team-based process to further assess and
enhance the efficiency and effectiveness of the Companys financial processes,
including support efforts which better integrate current and evolving financial
information system initiatives, and addressing any remaining critical
weaknesses including any reported by the Companys internal audit function and
independent public accountants.

The Company will continue the process of identifying and implementing
corrective actions where required to improve the effectiveness of its Reporting
and Control Procedures. Significant supplemental resources will continue to be
required to prepare the required financial and other information during this
process, particularly in view of the Company's current stage of restructuring. The
changes made to date as discussed above have enabled the Company to restate its
previous filings where required, as well as subsequently prepare and file the
remainder of the required periodic reports for fiscal 2001 and 2002 on a
current basis.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

On May 3, 2002, a group of purported purchasers of the Companys bonds
commenced a putative class action lawsuit against thirteen present or former
directors and officers of the Company (but not the Company) and KPMG LLP, the
Companys independent auditor, in the United States District Court for the
Eastern District of Michigan. The complaint seeks damages for an alleged class
of persons who purchased Company bonds between June 3, 1999 and September 5,
2001 and claim to have been injured because they relied on the Companys
allegedly materially false and misleading financial statements. On June 27,
2002, the plaintiffs filed an amended class action complaint adding CIBC World
Markets Corp. and Credit Suisse First Boston Corporation, underwriters for
certain bonds issued by the Company, as defendants.

Additionally, before the date the Company commenced its Chapter 11
Bankruptcy case, four other putative class actions were filed in the United
States District Court for the Eastern District of Michigan against the Company
and certain of its directors and officers, on behalf of a class of purchasers
of Company common stock from June 3, 1999 to December 13, 2001, based on
similar allegations of securities fraud. On May 10, 2002, the plaintiffs filed
a consolidated and amended class action complaint seeking damages against the
Companys present and former officers and directors (but not the Company) and
KPMG.

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On June 13, 2002, the Company filed an adversary complaint and motion for
a preliminary injunction in the Bankruptcy Court requesting the Court to stay
the class action litigation commenced by the bond purchasers and equity
purchasers. Additionally, on July 25, 2002, the Company filed with the
Bankruptcy Court a motion to lift the automatic stay in the
Chapter 11 Filings to
allow the insurance company that provides officer and director liability
insurance to the Company to pay the defense costs of the Companys present and
former officers and directors in such litigation. The Bankruptcy Court
currently is scheduled to hear such matters at a hearing scheduled for
September 30, 2002.




Item 2. Changes in Securities and Use of Proceeds

None




Item 3. Defaults Upon Senior Securities

In accordance with the Senior Notes, the Senior Subordinated Notes and the
note under the Credit Agreement, interest accrues at default rates. However,
the payment of such interest is subject to the Bankruptcy Code and a plan or
plans of reorganization as may be approved by the Bankruptcy Court. See Note
(9), Liabilities Subject To Compromise, to the Consolidated Financial
Statements herein.




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

|     |  |                                                                                                                                                                                                            
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1 |  | Certification of Curtis J. Clawson, Chairman of the Board, President
and Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     |  |                                                                                                                                                                                                            
|99.2 |  | Certification of James A. Yost, Vice President, Finance, and Chief
Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.            

(b)  Reports on Form 8-K

None

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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/ James A. Yost                                   
|                   |  |                                                     
|                   |  | James A. Yost                                       
|                   |  | Vice President, Finance, and Chief Financial Officer
|                  
|                   |  |                                                     
|                   |  | /s/ Herbert S. Cohen                                
|                   |  |                                                     
|                   |  | Herbert S. Cohen                                    
|                   |  | Chief Accounting Officer                            
|September 16, 2002 |  |                                                     

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CERTIFICATIONS

I, Curtis J. Clawson, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Hayes Lemmerz
International, Inc.;                                                                                                                                                                                                                                      
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   

[Items 4, 5, and 6 omitted pursuant to the transition provisions of SEC Release
No. 33-8124.]

Date: September 16, 2002

|                                                            
|------------------------------------------------------------
|/s/ Curtis J. Clawson                                       
|                                                            
|Curtis J. Clawson                                           
|Chairman of the Board, President and Chief Executive Officer

I, James A. Yost, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Hayes Lemmerz
International, Inc.;                                                                                                                                                                                                                                      
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   

[Items 4, 5, and 6 omitted pursuant to the transition provisions of SEC Release
No. 33-8124.]

Date: September 16, 2002

|                                                    
|----------------------------------------------------
|/s/ James A. Yost                                   
|                                                    
|James A. Yost                                       
|Vice President, Finance, and Chief Financial Officer

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Exhibit Index

|     |  |                                                                                                                                                                                                            
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1 |  | Certification of Curtis J. Clawson, Chairman of the Board, President
and Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     |  |                                                                                                                                                                                                            
|99.2 |  | Certification of James A. Yost, Vice President, Finance, and Chief
Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.