##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

Form 10-Q

|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended April 30,
    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
    Northville, Michigan(Address of principal executive
    offices) |  | 48167(Zip Code)                      

Registrants telephone number, including area code:

(734) 737-5000


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

The number of shares of common stock outstanding as of
June 14, 2002 was 28,455,995 shares.



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TABLE OF CONTENTS



|                                                                   |  |  |  |  |  |  |  | 
|------------------------------------------------------------------ |  |  |  |  |  |  |  | 
|CONSOLIDATED STATEMENTS OF OPERATIONS                             
|CONSOLIDATED BALANCE SHEETS                                       
|CONSOLIDATED STATEMENTS OF CASH FLOWS                             
|Notes to Consolidated Financial Statements                        
|CONDENSED COMBINED BALANCE SHEETS As of April 30, 2002            
|CONDENSED COMBINED BALANCE SHEETS As of January 31, 2002          
|CONDENSED COMBINED STATEMENTS OF CASH FLOWS                       
|CONDENSED COMBINED STATEMENTS OF CASH FLOW                        
|Item 3. Quantitative and Qualitative Disclosures about Market Risk
|PART II. OTHER INFORMATION                                        
|Item 1. Legal Proceedings                                         
|Item 2. Changes in Securities and Use of Proceeds                 
|Item 3. Defaults Upon Senior Securities                           
|Item 4. Submission of Matters to a Vote of Security Holders       
|Item 5. Other Information                                         
|Item 6. Exhibits and Reports on Form 8-K                          
|SIGNATURES                                                        
|EXHIBIT INDEX                                                     
|EX-10.41 Critical Employee Retention Plan                         



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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 |    |      | 18 | 
|                             
|                             
|                             
|                             
|Item 3.                       |  | Quantitative and Qualitative Disclosures about
    Market Risk                            |    |      | 26 | 
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION   
|                             
|                             
|                             
|                             
|Item 1.                       |  | Legal Proceedings                                                                         |    |      | 27 | 
|                             
|                             
|                             
|                             
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                 |    |      | 27 | 
|                             
|                             
|                             
|                             
|Item 3.                       |  | Defaults upon Senior Securities                                                           |    |      | 27 | 
|                             
|                             
|                             
|                             
|Item 4.                       |  | Submission of Matters to a Vote of Security
    Holders                                   |    |      | 27 | 
|                             
|                             
|                             
|                             
|Item 5.                       |  | Other Information                                                                         |    |      | 27 | 
|                             
|                             
|                             
|                             
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                          |    |      | 27 | 
|                             
|                             
|                             
|                             
|Signatures                    |  |                                                                                           | 28 |     

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.

1



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

(Debtor-in-Possession as of December 5, 2001)







CONSOLIDATED STATEMENTS OF OPERATIONS


(Millions of dollars, except share amounts)


|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | --------------- | ----- | ----- | - | - | ----- | ----- | -
|                                                                                                                                                   |                                                   |                
|                                                                                                                                                   |                                                   | Three Months   
|                                                                                                                                                   |                                                   | Ended April 30,
|                                                                                                                                                   |                                                   |                
|                                                                                                                                                   |                                                   | 2002            |       | 2001 
|                                                                                                                                                   |                                                   |                 |       |      
|                                                                                                                                                   |                                                   |                
|                                                                                                                                                   |                                                   | (Unaudited)    
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Net sales                                                                                                                                          |                                                   | $               | 486.7 |       |   | $ | 540.9 |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Cost of goods sold                                                                                                                                 |                                                   |                 | 441.6 |       |   |   | 483.3 |      
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|                                                                                                                                                   | Gross profit                                      |                 |       | 45.1  |   |   |       | 57.6  |  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Marketing, general and administration                                                                                                              |                                                   |                 | 27.6  |       |   |   | 26.2  |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Engineering and product development                                                                                                                |                                                   |                 | 5.0   |       |   |   | 5.9   |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Amortization of goodwill                                                                                                                           |                                                   |                 |      |       |   |   | 6.7   |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Equity in losses (earnings) of joint ventures                                                                                                      |                                                   |                 |      |       |   |   | 0.4   |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Asset impairments and other restructuring charges                                                                                                  |                                                   |                 | 7.2   |       |   |   | 31.0  |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Other income, net                                                                                                                                  |                                                   |                 | (2.6  | )     |   |   | (0.2  | )    
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Reorganization items                                                                                                                               |                                                   |                 | 22.5  |       |   |   |      |      
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|                                                                                                                                                   | Earnings (loss) from operations                   |                 |       | (14.6 | ) |   |       | (12.4 | )
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Interest expense, net (excluding
    $28.7 million not accrued on liabilities subject to
    compromise for the three months ended April 30, 2002) |                                                   |                 | 16.8  |       |   |   | 44.2  |      
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|                                                                                                                                                   | Loss before taxes on income and minority interest |                 |       | (31.4 | ) |   |       | (56.6 | )
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Income tax provision                                                                                                                               |                                                   |                 | 0.9   |       |   |   | 6.3   |      
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|                                                                                                                                                   | Loss before minority interest                     |                 |       | (32.3 | ) |   |       | (62.9 | )
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Minority interest                                                                                                                                  |                                                   |                 | 0.7   |       |   |   | 0.8   |      
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|                                                                                                                                                   | Net loss                                          |                 | $     | (33.0 | ) |   | $     | (63.7 | )
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|                                                                                                                                                  
|Basic net loss per share                                                                                                                           |                                                   | $               | (1.16 | )     |   | $ | (2.24 | )    
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      
|Diluted net loss per share                                                                                                                         |                                                   | $               | (1.16 | )     |   | $ | (2.24 | )    
|                                                                                                                                                   |                                                   |                 |       |       |   |   |       |      

See accompanying notes to consolidated financial statements.

2



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

(Debtor-in-Possession as of December 5, 2001)







CONSOLIDATED BALANCE SHEETS


(Millions of dollars, except share amounts)


|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |        |     |         |  
|----------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------- | ----------- | --- | ------- | ------- | ------ | --- | ------- | -
|                                          |                                                                               | April 30,                                                                                          |                                             | January 31,
|                                          |                                                                               | 2002                                                                                               |                                             | 2002       
|                                          |                                                                               |                                                                                                    |                                             |            
|                                          |                                                                               |                                                                                                   
|                                          |                                                                               | (Unaudited)                                                                                       
|                                         
|                                         
|                                         
|                                         
|ASSETS                                   
|                                         
|                                         
|                                         
|                                         
|Current assets:                           |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                         
|                                         
|                                         
|                                         
|                                          | Cash and cash equivalents                                                     |                                                                                                    | $                                           | 64.0        |     |         | $       | 45.2   |    
|                                         
|                                         
|                                         
|                                         
|                                          | Receivables                                                                   |                                                                                                    |                                             | 274.6       |     |         |         | 266.2  |    
|                                         
|                                         
|                                         
|                                         
|                                          | Inventories                                                                   |                                                                                                    |                                             | 162.8       |     |         |         | 155.2  |    
|                                         
|                                         
|                                         
|                                         
|                                          | Prepaid expenses and other                                                    |                                                                                                    |                                             | 35.4        |     |         |         | 36.3   |    
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                          |                                                                               |                                                                                                    | Total current assets                        |             |     | 536.8   |         |        |     | 502.9   |  
|                                         
|                                         
|                                         
|                                         
|Property, plant and equipment, net        |                                                                               |                                                                                                    | 937.3                                       |             |     |         | 965.4   |       
|                                         
|                                         
|                                         
|                                         
|Goodwill and other assets                 |                                                                               |                                                                                                    | 899.0                                       |             |     |         | 889.8   |       
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                          |                                                                               |                                                                                                    | Total assets                                |             | $   | 2,373.1 |         |        | $   | 2,358.1 |  
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                         
|                                         
|                                         
|                                         
|LIABILITIES AND STOCKHOLDERS
    DEFICIT
|                                         
|                                         
|                                         
|                                         
|Current liabilities:                      |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                         
|                                         
|                                         
|                                         
|                                          | Bank borrowings and other notes                                               |                                                                                                    | $                                           | 26.1        |     |         | $       | 25.1   |    
|                                         
|                                         
|                                         
|                                         
|                                          | Current portion of long-term debt                                             |                                                                                                    |                                             | 12.8        |     |         |         | 14.5   |    
|                                         
|                                         
|                                         
|                                         
|                                          | Accounts payable and accrued liabilities                                      |                                                                                                    |                                             | 282.5       |     |         |         | 232.0  |    
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                          |                                                                               |                                                                                                    | Total current liabilities                   |             |     | 321.4   |         |        |     | 271.6   |  
|                                         
|                                         
|                                         
|                                         
|Long-term debt, net of current portion    |                                                                               |                                                                                                    | 79.9                                        |             |     |         | 83.5    |       
|                                         
|                                         
|                                         
|                                         
|Pension and other long-term liabilities   |                                                                               |                                                                                                    | 325.4                                       |             |     |         | 330.2   |       
|                                         
|                                         
|                                         
|                                         
|Minority interest                         |                                                                               |                                                                                                    | 11.4                                        |             |     |         | 11.8    |       
|                                         
|                                         
|                                         
|                                         
|Liabilities subject to compromise         |                                                                               |                                                                                                    | 2,135.8                                     |             |     |         | 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                                                           |                                                                                                    |                                             | (575.4      | )   |         |         | (542.4 | )  
|                                         
|                                         
|                                         
|                                         
|                                          | Accumulated other comprehensive loss                                          |                                                                                                    |                                             | (135.1      | )   |         |         | (127.3 | )  
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                          |                                                                               |                                                                                                    | Total stockholders deficit                 |             |     | (500.8  | )       |        |     | (460.0  | )
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       
|                                          |                                                                               |                                                                                                    | Total liabilities and stockholders deficit |             | $   | 2,373.1 |         |        | $   | 2,358.1 |  
|                                          |                                                                               |                                                                                                    |                                             |             |     |         |         |       

See accompanying notes to consolidated financial statements.

3



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

(Debtor-in-Possession as of December 5, 2001)







CONSOLIDATED STATEMENTS OF CASH FLOWS


(Millions of dollars)


|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |       |       |       |  
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------- | ------------------------------------------------ | ----- | ----- | ----- | ----- | ----- | ----- | ----- | -
|                                                                                               |                                                                                      |                                         
|                                                                                               |                                                                                      | Three Months                            
|                                                                                               |                                                                                      | Ended April 30,                         
|                                                                                               |                                                                                      |                                         
|                                                                                               |                                                                                      | 2002                                     |                                                  | 2001 
|                                                                                               |                                                                                      |                                          |                                                  |      
|                                                                                               |                                                                                      |                                         
|                                                                                               |                                                                                      | (Unaudited)                             
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Cash flows from operating activities:                                                          |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net loss                                                                                       |                                                                                      | $                                        | (33.0                                            | )     |       | $     | (63.7 | )    
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Adjustments to reconcile net loss to net cash
    provided by (used for) operating activities: |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Depreciation and tooling amortization                                                |                                          |                                                  | 33.5  |       |       |       | 30.8  |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Amortization of goodwill                                                             |                                          |                                                  |      |       |       |       | 6.7   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Amortization of deferred financing fees                                              |                                          |                                                  | 1.3   |       |       |       | 1.8   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Increase in deferred income taxes                                                    |                                          |                                                  |      |       |       |       | 3.6   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Asset impairments and other restructuring charges                                    |                                          |                                                  | 7.2   |       |       |       | 31.0  |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Minority interest                                                                    |                                          |                                                  | 0.7   |       |       |       | 0.8   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Reorganization items                                                                 |                                          |                                                  | 22.5  |       |       |       |      |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Equity in losses (earnings) of joint ventures                                        |                                          |                                                  |      |       |       |       | 0.4   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Gain on sale of assets and businesses                                                |                                          |                                                  | (1.6  | )     |       |       |      |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Changes in operating assets and liabilities that
    increase (decrease) cash flows: |                                          |                                                  |       |       |       |       |       |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                                                      | Receivables                              |                                                  |       | (10.4 | )     |       |       | (53.1 | )    
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                                                      | Inventories                              |                                                  |       | (8.5  | )     |       |       | 3.8   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                                                      | Prepaid expenses and other               |                                                  |       | 1.0   |       |       |       | 0.8   |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                                                      | Accounts payable and accrued liabilities |                                                  |       | 42.1  |       |       |       | (14.5 | )    
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                                                      | Other long-term liabilities              |                                                  |       | (3.4  | )     |       |       | (3.8  | )    
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                                                      | Payments for reorganization items        |                                                  |       | (1.4  | )     |       |       |      |      
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                               |                                                                                      |                                          | Cash provided by (used for) operating activities |       |       | 50.0  |       |       |       | (55.4 | )
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|Cash flows from investing activities:                                                          |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Purchase of property, plant and equipment                                            |                                          |                                                  | (22.4 | )     |       |       | (31.1 | )    
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Proceeds from sale of assets and businesses                                          |                                          |                                                  | 6.7   |       |       |       |      |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Cash paid for purchase of Wheland Foundry                                            |                                          |                                                  | (2.1  | )     |       |       |      |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Other, net                                                                           |                                          |                                                  | (9.2  | )     |       |       | (1.3  | )    
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                               |                                                                                      |                                          | Cash used for investing activities               |       |       | (27.0 | )     |       |       | (32.4 | )
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|Cash flows from financing activities:                                                          |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Decrease in borrowings under DIP facility                                            |                                          |                                                  | (1.0  | )     |       |       |      |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Changes in bank borrowings and revolving facility                                    |                                          |                                                  | (2.7  | )     |       |       | 73.1  |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Payments on accounts receivable securitization                                       |                                          |                                                  |      |       |       |       | 47.6  |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Fees to amend Credit Agreement                                                       |                                          |                                                  |      |       |       |       | (2.3  | )    
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                               |                                                                                      |                                          | Cash provided by (used for) financing activities |       |       | (3.7  | )     |       |       | 118.4 |  
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|Effect of exchange rate changes on cash and cash
    equivalents                               |                                                                                      |                                          | (0.5                                             | )     |       |       | (1.7  | )    
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                               | Increase in cash and cash equivalents                                                |                                          |                                                  | 18.8  |       |       |       | 28.9  |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Cash and cash equivalents at beginning of year                                                 |                                                                                      |                                          | 45.2                                             |       |       |       |      |      
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|Cash and cash equivalents at end of period                                                     |                                                                                      | $                                        | 64.0                                             |       |       | $     | 28.9  |      
|                                                                                               |                                                                                      |                                          |                                                  |       |       |       |       |      
|Supplemental data:                                                                             |                                                                                      |                                          |                                                  |       |       |       |       |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Cash paid for interest                                                               |                                          | $                                                | 2.8   |       |       | $     | 22.0  |      
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Cash paid for income taxes                                                           |                                          | $                                                | 1.5   |       |       | $     | 0.4   |      

See accompanying notes to consolidated financial statements.

4



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##### Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES






Notes to Consolidated Financial Statements


Three Months Ended April 30, 2002 and 2001


(Unaudited)


(Millions of Dollars Unless Otherwise Stated)


(1)     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. 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. 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

5



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##### Table of Contents





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
estimatable.

Reorganization items as reported in the accompanying
consolidated statement of operations for the three months ended
April 30, 2002 is comprised of:

|                                                                 |       |   |      |      | 
|---------------------------------------------------------------- | ----- | - | ---- | ---- | 
|                                                                
|                                                                
|                                                                
|                                                                
|Critical employee retention plan provision                       |       | $ | 2.5  |     
|                                                                
|                                                                
|                                                                
|                                                                
|Estimated accrued liability for rejected
    prepetition leases  |       |   | 12.5 |     
|                                                                
|                                                                
|                                                                
|                                                                
|Professional fees directly related to the filing                 |       |   | 7.6  |     
|                                                                
|                                                                
|                                                                
|                                                                
|Interest earned during Chapter 11
    reorganization proceedings |       |   | (0.1 | )   
|                                                                 |       |   |      |     
|                                                                 | Total |   | $    | 22.5 | 
|                                                                 |       |   |      |     

Cash payments of $1.4 million were paid during this period
with respect to such reorganization items.

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 three months ended April 30, 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.

6



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##### Table of Contents



(3)     Inventories

The major classes of inventory are as follows:

|                         |       |           |      |             |  |   |      |       | 
|------------------------ | ----- | --------- | ---- | ----------- |  | - | ---- | ----- | 
|                         |       | April 30, |      | January 31,
|                         |       | 2002      |      | 2002       
|                         |       |           |      |            
|Raw materials            |       | $         | 37.3 |             |  | $ | 38.7 |      
|                        
|                        
|                        
|                        
|Work-in-process          |       |           | 47.2 |             |  |   | 39.2 |      
|                        
|                        
|                        
|                        
|Finished goods           |       |           | 39.4 |             |  |   | 41.4 |      
|                        
|                        
|                        
|                        
|Spare parts and supplies |       |           | 38.9 |             |  |   | 35.9 |      
|                         |       |           |      |             |  |   |      |      
|                         | Total |           | $    | 162.8       |  |   | $    | 155.2 | 
|                         |       |           |      |             |  |   |      |      

(4)     Property, Plant and
Equipment

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

|                         |                                    |           |         |             |  |   |         |       | 
|------------------------ | ---------------------------------- | --------- | ------- | ----------- |  | - | ------- | ----- | 
|                         |                                    | April 30, |         | January 31,
|                         |                                    | 2002      |         | 2002       
|                         |                                    |           |         |            
|Land                     |                                    | $         | 30.0    |             |  | $ | 29.9    |      
|                        
|                        
|                        
|                        
|Buildings                |                                    |           | 243.4   |             |  |   | 240.6   |      
|                        
|                        
|                        
|                        
|Machinery and equipment  |                                    |           | 1,053.8 |             |  |   | 1,063.3 |      
|                         |                                    |           |         |             |  |   |         |      
|                         |                                    |           | 1,327.2 |             |  |   | 1,333.8 |      
|                        
|                        
|                        
|                        
|Accumulated depreciation |                                    |           | (389.9  | )           |  |   | (368.4  | )    
|                         |                                    |           |         |             |  |   |         |      
|                         | Property, plant and equipment, net |           | $       | 937.3       |  |   | $       | 965.4 | 
|                         |                                    |           |         |             |  |   |         |      

(5)     Asset Impairments and Other
Restructuring Charges

Asset impairments and other restructuring charges recorded by
the Company during the three months ended April 30, 2002
and 2001 are as follows (millions of dollars):

|                                       |       |      |     |      |  |   |      |      | 
|-------------------------------------- | ----- | ---- | --- | ---- |  | - | ---- | ---- | 
|                                       |       | 2002 |     | 2001
|                                       |       |      |     |     
|Impairment of manufacturing facilities |       | $    |    |      |  | $ | 28.5 |     
|                                      
|                                      
|                                      
|                                      
|Impairment of machinery and equipment  |       |      |    |      |  |   | 2.5  |     
|                                      
|                                      
|                                      
|                                      
|Facility closures                      |       |      | 6.7 |      |  |   |     |     
|                                      
|                                      
|                                      
|                                      
|Other restructuring                    |       |      | 0.5 |      |  |   |     |     
|                                       |       |      |     |      |  |   |      |     
|                                       | Total |      | $   | 7.2  |  |   | $    | 31.0 | 
|                                       |       |      |     |      |  |   |      |     

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.

Facility Closures

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 leases was

7



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##### Table of Contents





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 April 30,
2002:

|                    |  |             |      |               |  |                  |     |          |  |           |      |   |  |   |      |   |  |   |      | 
|------------------- |  | ----------- | ---- | ------------- |  | ---------------- | --- | -------- |  | --------- | ---- | - |  | - | ---- | - |  | - | ---- | 
|                    |  |             |      | Severance     |  |                  |     |          |  |          
|                    |  | January 31, |      | and Other     |  |                  |     |          |  | April 30,
|                    |  | 2002        |      | Restructuring |  |                  |     | Cash     |  | 2002     
|                    |  | Accrual     |      | Charges       |  | Reclassification |     | Payments |  | Accrual  
|                    |  |             |      |               |  |                  |     |          |  |          
|Facility exit costs |  | $           | 11.7 |               |  | $                | 6.7 |          |  | $         | (3.5 | ) |  | $ | (0.6 | ) |  | $ | 14.3 | 
|                   
|                   
|                   
|                   
|Severance           |  |             | 6.0  |               |  |                  | 0.5 |          |  |           |     |   |  |   | (1.7 | ) |  |   | 4.8  | 
|                    |  |             |      |               |  |                  |     |          |  |           |      |   |  |   |      |   |  |   |      | 
|                    |  | $           | 17.7 |               |  | $                | 7.2 |          |  | $         | (3.5 | ) |  | $ | (2.3 | ) |  | $ | 19.1 | 
|                    |  |             |      |               |  |                  |     |          |  |           |      |   |  |   |      |   |  |   |      | 

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)     Sale and Purchase of Assets
and Businesses

Purchase of Wheland
Foundry

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

Sales of Assets and
Businesses

Other income, net in the consolidated statement of operations of
$2.6 million includes a gain on the sale of the Companys
Brazilian agricultural business of approximately
$0.9 million. The Company received $5.2 million in
cash in connection with this sale. Gains on the sale of
equipment at various other locations accounted for most of the
remainder of the balance in this account.

(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 ended April 30,
2002 and 2001, were as follows (thousands of shares):

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

8



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##### Table of Contents



For the three months ending April 30, 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

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 three months
ended April 30, 2002 and 2001 are as follows:

|                                   |                          |      |       |       |   |   |       |       |  
|---------------------------------- | ------------------------ | ---- | ----- | ----- | - | - | ----- | ----- | -
|                                   |                          | 2002 |       | 2001 
|                                   |                          |      |       |      
|Net loss                           |                          | $    | (33.0 | )     |   | $ | (63.7 | )    
|                                  
|                                  
|                                  
|                                  
|Cumulative translation adjustments |                          |      | (7.8  | )     |   |   | (5.7  | )    
|                                   |                          |      |       |       |   |   |       |      
|                                   | Total comprehensive loss |      | $     | (40.8 | ) |   | $     | (69.4 | )
|                                   |                          |      |       |       |   |   |       |      

(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):

|                                                                |                    |           |       |             |         |   |       |         |         | 
|--------------------------------------------------------------- | ------------------ | --------- | ----- | ----------- | ------- | - | ----- | ------- | ------- | 
|                                                                |                    | April 30, |       | January 31,
|                                                                |                    | 2002      |       | 2002       
|                                                                |                    |           |       |            
|Accounts payable and accrued liabilities,
    principally trade |                    | $         | 156.2 |             |         | $ | 155.2 |        
|                                                               
|                                                               
|                                                               
|                                                               
|Credit Agreement:                                               |                    |           |       |             |         |   |       |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Term loans         |           |       | 176.8       |         |   |       | 176.8   |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Revolving facility |           |       | 572.8       |         |   |       | 572.1   |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accrued interest   |           |       | 26.5        |         |   |       | 13.4    |        
|                                                               
|                                                               
|                                                               
|                                                               
|Senior Notes and Senior Subordinated Notes:                     |                    |           |       |             |         |   |       |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Face value         |           |       | 1,152.8     |         |   |       | 1,152.8 |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accrued interest   |           |       | 50.7        |         |   |       | 50.7    |        
|                                                                |                    |           |       |             |         |   |       |        
|                                                                |                    | Total     |       | $           | 2,135.8 |   |       | $       | 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.

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

9



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##### Table of Contents





The DIP Facility provides for the postpetition cash payment at
certain intervals of interest and fees 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, a payment of $2.1 million for a portion of accrued
interest was made 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 April 30, 2002
was $47.4 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
$50.7 million, which has been classified as a liability
subject to compromise in the accompanying consolidated balance
sheet at April 30, 2002.

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
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 for the three months ended
April 30:

|                  |       |         |       |                   |  |              |       |       |  |      |       |       |   |   |       |       |   |   |         |         |  |   |         |         | 
|----------------- | ----- | ------- | ----- | ----------------- |  | ------------ | ----- | ----- |  | ---- | ----- | ----- | - | - | ----- | ----- | - | - | ------- | ------- |  | - | ------- | ------- | 
|                  |       |         |       |                   |  |             
|                  |       | Revenue |       | Net Income (Loss) |  | Total Assets
|                  |       |         |       |                   |  |             
|                  |       | 2002    |       | 2001              |  | 2002         |       | 2001  |  | 2002 |       | 2001 
|                  |       |         |       |                   |  |              |       |       |  |      |       |      
|Automotive Wheels |       | $       | 285.4 |                   |  | $            | 324.3 |       |  | $    | (13.1 | )     |   | $ | (9.5  | )     |   | $ | 1,180.9 |         |  | $ | 1,336.0 |        
|                 
|                 
|                 
|                 
|Components        |       |         | 176.5 |                   |  |              | 176.9 |       |  |      | (3.2  | )     |   |   | (4.0  | )     |   |   | 872.5   |         |  |   | 917.3   |        
|                 
|                 
|                 
|                 
|Other             |       |         | 24.8  |                   |  |              | 39.7  |       |  |      | (16.7 | )     |   |   | (50.2 | )     |   |   | 319.7   |         |  |   | 293.9   |        
|                  |       |         |       |                   |  |              |       |       |  |      |       |       |   |   |       |       |   |   |         |         |  |   |         |        
|                  | Total |         | $     | 486.7             |  |              | $     | 540.9 |  |      | $     | (33.0 | ) |   | $     | (63.7 | ) |   | $       | 2,373.1 |  |   | $       | 2,547.2 | 
|                  |       |         |       |                   |  |              |       |       |  |      |       |       |   |   |       |       |   |   |         |         |  |   |         |        

The net income (loss) amounts for the three months ended
April 30, 2002 presented in the above table include
reorganization items of $12.5 million and
$10.0 million in Automotive Wheels 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

10



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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 11 7/8% Notes (the
Conformed Guarantor Subsidiaries). The list of
guarantor subsidiaries of the Companys 11% Senior
Subordinated Notes (the 11% Notes) was not conformed.

The condensed consolidating financial information as of and for
the three months ended April 30, 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% Notes.

At April 30, 2001, the 8 1/4% Notes, the 9 1/8%
Notes, and the 11% Notes were guaranteed by the Guarantor
Subsidiaries. Certain other domestic subsidiaries and the
foreign subsidiaries did not guarantee these notes.

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 (the
Nonguarantor Debtor) 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 three months ended
April 30, 2002.

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CONDENSED COMBINED STATEMENTS OF OPERATIONS

For the Three Months Ended April 30, 2002


|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |       |  
|------------------------------------------------------------------ | ---------------------------------------------------------------- | ------- | ---- | ------------ | - | ------------ | ----- | ---------- | - | ------------ | ----- | ------------ | - | ------------ | ---- | --- |  | - | ----- | ---- |  | - | ----- | ---- |  | - | ----- | ----- | -
|                                                                   |                                                                  |         |      |              |   |              |       |           
|                                                                   |                                                                  | Debtors |      | Non-Debtors  |   |              |       |           
|                                                                   |                                                                  |         |      |              |   |              |       |           
|                                                                   |                                                                  |         |      | Conformed    |   | Nonguarantor |       |            |   |              |       |             
|                                                                   |                                                                  |         |      | Guarantor    |   | Guarantor    |       | Debtor     |   | Nonguarantor |       |              |   | Consolidated
|                                                                   |                                                                  | Parent  |      | Subsidiaries |   | Subsidiaries |       | Subsidiary |   | Subsidiaries |       | Eliminations |   | Total       
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |             
|Net sales                                                          |                                                                  | $       | 64.0 |              |   | $            | 122.8 |            |   | $            | 125.8 |              |   | $            | 11.0 |     |  | $ | 170.7 |      |  | $ | (7.6  | )    |  | $ | 486.7 |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Cost of goods sold                                                 |                                                                  |         | 61.2 |              |   |              | 110.4 |            |   |              | 121.5 |              |   |              | 11.0 |     |  |   | 145.1 |      |  |   | (7.6  | )    |  |   | 441.6 |      
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |      
|                                                                   | Gross profit                                                     |         |      | 2.8          |   |              |       | 12.4       |   |              |       | 4.3          |   |              |      |    |  |   |       | 25.6 |  |   |       |     |  |   |       | 45.1  |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Marketing, general and administration                              |                                                                  |         | 6.3  |              |   |              | 6.9   |            |   |              | 4.8   |              |   |              |     |     |  |   | 9.6   |      |  |   |      |      |  |   | 27.6  |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Engineering and product development                                |                                                                  |         | 0.8  |              |   |              | 1.9   |            |   |              | 0.9   |              |   |              |     |     |  |   | 1.4   |      |  |   |      |      |  |   | 5.0   |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Amortization of goodwill                                           |                                                                  |         |     |              |   |              |      |            |   |              |      |              |   |              |     |     |  |   |      |      |  |   |      |      |  |   |      |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Equity in (earnings) losses of subsidiaries
    and joint ventures |                                                                  |         | 21.8 |              |   |              | 4.5   |            |   |              | (2.4  | )            |   |              | (0.1 | )   |  |   |      |      |  |   | (23.8 | )    |  |   |      |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Asset impairments and other restructuring charges                  |                                                                  |         |     |              |   |              |      |            |   |              | 6.7   |              |   |              |     |     |  |   | 0.5   |      |  |   |      |      |  |   | 7.2   |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Loss on investment in joint venture                                |                                                                  |         |     |              |   |              |      |            |   |              |      |              |   |              |     |     |  |   |      |      |  |   |      |      |  |   |      |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Other expense (income), net                                        |                                                                  |         |     |              |   |              | 0.1   |            |   |              | (0.1  | )            |   |              |     |     |  |   | (2.6  | )    |  |   |      |      |  |   | (2.6  | )    
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Reorganization items                                               |                                                                  |         | 10.0 |              |   |              | 12.5  |            |   |              |      |              |   |              |     |     |  |   |      |      |  |   |      |      |  |   | 22.5  |      
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |      
|                                                                   | Earnings (loss) from operations                                  |         |      | (36.1        | ) |              |       | (13.5      | ) |              |       | (5.6         | ) |              |      | 0.1 |  |   |       | 16.7 |  |   |       | 23.8 |  |   |       | (14.6 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Interest expense, net                                              |                                                                  |         | 0.9  |              |   |              | 6.0   |            |   |              | 4.5   |              |   |              |     |     |  |   | 5.4   |      |  |   |      |      |  |   | 16.8  |      
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |      
|                                                                   | Earnings (loss) before taxes on income and
    minority interest |         |      | (37.0        | ) |              |       | (19.5      | ) |              |       | (10.1        | ) |              |      | 0.1 |  |   |       | 11.3 |  |   |       | 23.8 |  |   |       | (31.4 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Income tax provision                                               |                                                                  |         | (4.0 | )            |   |              | 0.2   |            |   |              | 0.3   |              |   |              | 0.1  |     |  |   | 4.3   |      |  |   |      |      |  |   | 0.9   |      
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |      
|                                                                   | Earnings (loss) before minority interest                         |         |      | (33.0        | ) |              |       | (19.7      | ) |              |       | (10.4        | ) |              |      |    |  |   |       | 7.0  |  |   |       | 23.8 |  |   |       | (32.3 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Minority interest                                                  |                                                                  |         |     |              |   |              |      |            |   |              |      |              |   |              |     |     |  |   | 0.7   |      |  |   |      |      |  |   | 0.7   |      
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |      
|                                                                   | Net income (loss)                                                |         | $    | (33.0        | ) |              | $     | (19.7      | ) |              | $     | (10.4        | ) |              | $    |    |  |   | $     | 6.3  |  |   | $     | 23.8 |  |   | $     | (33.0 | )
|                                                                   |                                                                  |         |      |              |   |              |       |            |   |              |       |              |   |              |      |     |  |   |       |      |  |   |       |      |  |   |       |      

12



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##### Table of Contents



CONDENSED COMBINED STATEMENTS OF OPERATIONS

For the Three Months Ended April 30, 2001


|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |       |  
|---------------------------------------------------------------- | ---------------------------------------------------------------- | ------ | ----- | ------------ | - | ------------ | ----- | ------------ | - | ------------ | ----- | ----- | - | - | ----- | ---- |  | - | ----- | ----- | -
|                                                                 |                                                                  |        |       | Guarantor    |   | Nonguarantor |       |              |   | Consolidated
|                                                                 |                                                                  | Parent |       | Subsidiaries |   | Subsidiaries |       | Eliminations |   | Total       
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |             
|Net sales                                                        |                                                                  | $      | 70.4  |              |   | $            | 123.6 |              |   | $            | 349.2 |       |   | $ | (2.3  | )    |  | $ | 540.9 |      
|                                                                
|                                                                
|                                                                
|                                                                
|Cost of goods sold                                               |                                                                  |        | 61.0  |              |   |              | 113.9 |              |   |              | 310.7 |       |   |   | (2.3  | )    |  |   | 483.3 |      
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |      
|                                                                 | Gross profit                                                     |        |       | 9.4          |   |              |       | 9.7          |   |              |       | 38.5  |   |   |       |     |  |   |       | 57.6  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Marketing, general and administration                            |                                                                  |        | 3.9   |              |   |              | 6.4   |              |   |              | 15.9  |       |   |   |      |      |  |   | 26.2  |      
|                                                                
|                                                                
|                                                                
|                                                                
|Engineering and product development                              |                                                                  |        | 0.9   |              |   |              | 1.8   |              |   |              | 3.2   |       |   |   |      |      |  |   | 5.9   |      
|                                                                
|                                                                
|                                                                
|                                                                
|Amortization of goodwill                                         |                                                                  |        | 0.3   |              |   |              | 1.9   |              |   |              | 4.5   |       |   |   |      |      |  |   | 6.7   |      
|                                                                
|                                                                
|                                                                
|                                                                
|Equity in (earnings) loss of subsidiaries
    and joint ventures |                                                                  |        | 53.2  |              |   |              | 12.4  |              |   |              |      |       |   |   | (65.2 | )    |  |   | 0.4   |      
|                                                                
|                                                                
|                                                                
|                                                                
|Asset impairments and other restructuring charges                |                                                                  |        |      |              |   |              |      |              |   |              | 31.0  |       |   |   |      |      |  |   | 31.0  |      
|                                                                
|                                                                
|                                                                
|                                                                
|Other income, net                                                |                                                                  |        | (0.1  | )            |   |              |      |              |   |              | (0.1  | )     |   |   |      |      |  |   | (0.2  | )    
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |      
|                                                                 | Earnings (loss) from operations                                  |        |       | (48.8        | ) |              |       | (12.8        | ) |              |       | (16.0 | ) |   |       | 65.2 |  |   |       | (12.4 | )
|                                                                
|                                                                
|                                                                
|                                                                
|Interest expense, net                                            |                                                                  |        | 14.8  |              |   |              | 11.0  |              |   |              | 18.4  |       |   |   |      |      |  |   | 44.2  |      
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |      
|                                                                 | Earnings (loss) before taxes on income and
    minority interest |        |       | (63.6        | ) |              |       | (23.8        | ) |              |       | (34.4 | ) |   |       | 65.2 |  |   |       | (56.6 | )
|                                                                
|                                                                
|                                                                
|                                                                
|Income tax provision                                             |                                                                  |        | 0.1   |              |   |              | 0.2   |              |   |              | 6.0   |       |   |   |      |      |  |   | 6.3   |      
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |      
|                                                                 | Earnings (loss) before minority
    interest                     |        |       | (63.7        | ) |              |       | (24.0        | ) |              |       | (40.4 | ) |   |       | 65.2 |  |   |       | (62.9 | )
|                                                                
|                                                                
|                                                                
|                                                                
|Minority interest                                                |                                                                  |        |      |              |   |              |      |              |   |              | 0.8   |       |   |   |      |      |  |   | 0.8   |      
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |      
|Net income (loss)                                                |                                                                  | $      | (63.7 | )            |   | $            | (24.0 | )            |   | $            | (41.2 | )     |   | $ | 65.2  |      |  | $ | (63.7 | )    
|                                                                 |                                                                  |        |       |              |   |              |       |              |   |              |       |       |   |   |       |      |  |   |       |      

13



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CONDENSED COMBINED BALANCE SHEETS


As of April 30, 2002


|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |        |  
|---------------------------------------- | -------------------------------------------------------- | ------- | ------- | ------------ | - | ------------ | ------ | ---------- | - | ------------ | ------ | ------------ |  | - | ----- | ---- | - | - | ----- | ----- |  | - | -------- | ------ | -
|                                         |                                                          |         |         |              |   |             
|                                         |                                                          | Debtors |         | Non-Debtors  |   |             
|                                         |                                                          |         |         |              |   |             
|                                         |                                                          |         |         | Conformed    |   | Nonguarantor |        |            |   |             
|                                         |                                                          |         |         | Guarantor    |   | Guarantor    |        | Debtor     |   | Nonguarantor |        |             
|                                         |                                                          | Parent  |         | Subsidiaries |   | Subsidiaries |        | Subsidiary |   | Subsidiaries |        | Eliminations
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |             
|Cash and cash equivalents                |                                                          | $       | 21.9    |              |   | $            | 0.2    |            |   | $            |       |              |  | $ | 0.7   |      |   | $ | 41.2  |       |  | $ |         |       
|                                        
|                                        
|                                        
|                                        
|Receivables                              |                                                          |         | 23.7    |              |   |              | 40.5   |            |   |              | 66.3   |              |  |   | 8.9   |      |   |   | 135.2 |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Inventories                              |                                                          |         | 18.3    |              |   |              | 26.9   |            |   |              | 40.2   |              |  |   | 1.4   |      |   |   | 76.0  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Prepaid expenses and other               |                                                          |         | 8.7     |              |   |              | 4.8    |            |   |              | 6.3    |              |  |   | 0.5   |      |   |   | 15.3  |       |  |   | (0.2     | )     
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       
|                                         | Total current assets                                     |         |         | 72.6         |   |              |        | 72.4       |   |              |        | 112.8        |  |   |       | 11.5 |   |   |       | 267.7 |  |   |          | (0.2   | )
|                                        
|                                        
|                                        
|                                        
|Net property, plant and equipment        |                                                          |         | 120.4   |              |   |              | 179.6  |            |   |              | 241.4  |              |  |   | 7.3   |      |   |   | 389.0 |       |  |   | (0.4     | )     
|                                        
|                                        
|                                        
|                                        
|Goodwill and other assets                |                                                          |         | 902.2   |              |   |              | 226.0  |            |   |              | 397.1  |              |  |   | 21.7  |      |   |   | 291.9 |       |  |   | (939.9   | )     
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       
|                                         | Total assets                                             |         | $       | 1,095.2      |   |              | $      | 478.0      |   |              | $      | 751.3        |  |   | $     | 40.5 |   |   | $     | 948.6 |  |   | $        | (940.5 | )
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       
|Bank borrowings and other notes          |                                                          | $       |        |              |   | $            | 2.0    |            |   | $            |       |              |  | $ |      |      |   | $ | 24.1  |       |  | $ |         |       
|                                        
|                                        
|                                        
|                                        
|Current portion of long-term debt        |                                                          |         |        |              |   |              |       |            |   |              |       |              |  |   |      |      |   |   | 12.8  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Accounts payable and accrued liabilities |                                                          |         | 74.6    |              |   |              | 16.4   |            |   |              | 42.0   |              |  |   | (1.5  | )    |   |   | 171.1 |       |  |   | (20.1    | )     
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       
|                                         | Total current liabilities                                |         |         | 74.6         |   |              |        | 18.4       |   |              |        | 42.0         |  |   |       | (1.5 | ) |   |       | 208.0 |  |   |          | (20.1  | )
|                                        
|                                        
|                                        
|                                        
|Long-term debt, net of current portion   |                                                          |         |        |              |   |              |       |            |   |              |       |              |  |   |      |      |   |   | 79.9  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Pension and other long-term liabilities  |                                                          |         | 81.0    |              |   |              | 59.0   |            |   |              | 13.9   |              |  |   |      |      |   |   | 171.5 |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Minority interest                        |                                                          |         |        |              |   |              |       |            |   |              |       |              |  |   |      |      |   |   | 11.4  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Intercompany accounts                    |                                                          |         | (572.7  | )            |   |              | 354.5  |            |   |              | 45.2   |              |  |   | (0.5  | )    |   |   | 173.5 |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Liabilities subject to compromise        |                                                          |         | 2,013.1 |              |   |              | 54.7   |            |   |              | 62.5   |              |  |   | 5.5   |      |   |   |      |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Common stock                             |                                                          |         | 0.3     |              |   |              |       |            |   |              |       |              |  |   |      |      |   |   |      |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Additional paid-in capital               |                                                          |         | 235.1   |              |   |              | 197.2  |            |   |              | 905.4  |              |  |   | 53.4  |      |   |   | 323.8 |       |  |   | (1,479.8 | )     
|                                        
|                                        
|                                        
|                                        
|Common stock in treasury at cost         |                                                          |         | (25.7   | )            |   |              |       |            |   |              |       |              |  |   |      |      |   |   |      |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Retained earnings (accumulated deficit)  |                                                          |         | (575.4  | )            |   |              | (192.9 | )          |   |              | (213.3 | )            |  |   | (15.7 | )    |   |   | 61.8  |       |  |   | 360.1    |       
|                                        
|                                        
|                                        
|                                        
|Accumulated other comprehensive loss     |                                                          |         | (135.1  | )            |   |              | (12.9  | )          |   |              | (104.4 | )            |  |   | (0.7  | )    |   |   | (81.3 | )     |  |   | 199.3    |       
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       
|                                         | Total stockholders equity (deficit)                     |         |         | (500.8       | ) |              |        | (8.6       | ) |              |        | 587.7        |  |   |       | 37.0 |   |   |       | 304.3 |  |   |          | (920.4 | )
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       
|                                         | Total liabilities and stockholders equity
    (deficit) |         | $       | 1,095.2      |   |              | $      | 478.0      |   |              | $      | 751.3        |  |   | $     | 40.5 |   |   | $     | 948.6 |  |   | $        | (940.5 | )
|                                         |                                                          |         |         |              |   |              |        |            |   |              |        |              |  |   |       |      |   |   |       |       |  |   |          |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                         |                                                          |              |         |         |  
|---------------------------------------- | -------------------------------------------------------- | ------------ | ------- | ------- | -
|                                         |                                                          | Consolidated
|                                         |                                                          | Total       
|                                         |                                                          |             
|Cash and cash equivalents                |                                                          | $            | 64.0    |        
|                                        
|                                        
|                                        
|                                        
|Receivables                              |                                                          |              | 274.6   |        
|                                        
|                                        
|                                        
|                                        
|Inventories                              |                                                          |              | 162.8   |        
|                                        
|                                        
|                                        
|                                        
|Prepaid expenses and other               |                                                          |              | 35.4    |        
|                                         |                                                          |              |         |        
|                                         | Total current assets                                     |              |         | 536.8   |  
|                                        
|                                        
|                                        
|                                        
|Net property, plant and equipment        |                                                          |              | 937.3   |        
|                                        
|                                        
|                                        
|                                        
|Goodwill and other assets                |                                                          |              | 899.0   |        
|                                         |                                                          |              |         |        
|                                         | Total assets                                             |              | $       | 2,373.1 |  
|                                         |                                                          |              |         |        
|Bank borrowings and other notes          |                                                          | $            | 26.1    |        
|                                        
|                                        
|                                        
|                                        
|Current portion of long-term debt        |                                                          |              | 12.8    |        
|                                        
|                                        
|                                        
|                                        
|Accounts payable and accrued liabilities |                                                          |              | 282.5   |        
|                                         |                                                          |              |         |        
|                                         | Total current liabilities                                |              |         | 321.4   |  
|                                        
|                                        
|                                        
|                                        
|Long-term debt, net of current portion   |                                                          |              | 79.9    |        
|                                        
|                                        
|                                        
|                                        
|Pension and other long-term liabilities  |                                                          |              | 325.4   |        
|                                        
|                                        
|                                        
|                                        
|Minority interest                        |                                                          |              | 11.4    |        
|                                        
|                                        
|                                        
|                                        
|Intercompany accounts                    |                                                          |              |        |        
|                                        
|                                        
|                                        
|                                        
|Liabilities subject to compromise        |                                                          |              | 2,135.8 |        
|                                        
|                                        
|                                        
|                                        
|Common stock                             |                                                          |              | 0.3     |        
|                                        
|                                        
|                                        
|                                        
|Additional paid-in capital               |                                                          |              | 235.1   |        
|                                        
|                                        
|                                        
|                                        
|Common stock in treasury at cost         |                                                          |              | (25.7   | )      
|                                        
|                                        
|                                        
|                                        
|Retained earnings (accumulated deficit)  |                                                          |              | (575.4  | )      
|                                        
|                                        
|                                        
|                                        
|Accumulated other comprehensive loss     |                                                          |              | (135.1  | )      
|                                         |                                                          |              |         |        
|                                         | Total stockholders equity (deficit)                     |              |         | (500.8  | )
|                                         |                                                          |              |         |        
|                                         | Total liabilities and stockholders equity
    (deficit) |              | $       | 2,373.1 |  
|                                         |                                                          |              |         |        

14



---



##### Table of Contents








CONDENSED COMBINED BALANCE SHEETS


As of January 31, 2002


|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |        |  
|---------------------------------------- | -------------------------------------------------------- | ------- | ------- | ------------ | - | ------------ | ------ | ---------- |  | ------------ | ------ | ------------ |  | - | ----- | ---- |  | - | ----- | ----- |  | - | -------- | ------ | -
|                                         |                                                          |         |         |              |   |             
|                                         |                                                          | Debtors |         | Non-Debtors  |   |             
|                                         |                                                          |         |         |              |   |             
|                                         |                                                          |         |         | Conformed    |   | Nonguarantor |        |            |  |             
|                                         |                                                          |         |         | Guarantor    |   | Guarantor    |        | Debtor     |  | Nonguarantor |        |             
|                                         |                                                          | Parent  |         | Subsidiaries |   | Subsidiaries |        | Subsidiary |  | Subsidiaries |        | Eliminations
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |             
|Cash and cash equivalents                |                                                          | $       | 11.3    |              |   | $            | 0.1    |            |  | $            | 0.3    |              |  | $ | 0.4   |      |  | $ | 33.1  |       |  | $ |         |       
|                                        
|                                        
|                                        
|                                        
|Receivables                              |                                                          |         | 19.0    |              |   |              | 48.6   |            |  |              | 57.0   |              |  |   | 10.2  |      |  |   | 131.4 |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Inventories                              |                                                          |         | 16.2    |              |   |              | 27.1   |            |  |              | 39.9   |              |  |   | 0.3   |      |  |   | 71.7  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Prepaid expenses and other               |                                                          |         | 10.9    |              |   |              | 6.5    |            |  |              | 5.2    |              |  |   | 0.2   |      |  |   | 18.9  |       |  |   | (5.4     | )     
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       
|                                         | Total current assets                                     |         |         | 57.4         |   |              |        | 82.3       |  |              |        | 102.4        |  |   |       | 11.1 |  |   |       | 255.1 |  |   |          | (5.4   | )
|                                        
|                                        
|                                        
|                                        
|Net property, plant and equipment        |                                                          |         | 120.9   |              |   |              | 183.1  |            |  |              | 244.0  |              |  |   | 7.3   |      |  |   | 410.1 |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Goodwill and other assets                |                                                          |         | 932.4   |              |   |              | 230.2  |            |  |              | 395.6  |              |  |   | 22.1  |      |  |   | 282.2 |       |  |   | (972.7   | )     
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       
|                                         | Total assets                                             |         | $       | 1,110.7      |   |              | $      | 495.6      |  |              | $      | 742.0        |  |   | $     | 40.5 |  |   | $     | 947.4 |  |   | $        | (978.1 | )
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       
|Bank borrowings                          |                                                          | $       |        |              |   | $            |       |            |  | $            |       |              |  | $ |      |      |  | $ | 25.1  |       |  | $ |         |       
|                                        
|                                        
|                                        
|                                        
|Current portion of long-term debt        |                                                          |         |        |              |   |              |       |            |  |              |       |              |  |   |      |      |  |   | 14.5  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Accounts payable and accrued liabilities |                                                          |         | 51.4    |              |   |              | 8.9    |            |  |              | 26.0   |              |  |   | 3.2   |      |  |   | 167.7 |       |  |   | (25.2    | )     
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       
|                                         | Total current liabilities                                |         |         | 51.4         |   |              |        | 8.9        |  |              |        | 26.0         |  |   |       | 3.2  |  |   |       | 207.3 |  |   |          | (25.2  | )
|                                        
|                                        
|                                        
|                                        
|Long-term debt, net of current portion   |                                                          |         | 1.0     |              |   |              |       |            |  |              |       |              |  |   |      |      |  |   | 82.5  |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Pension and other long-term liabilities  |                                                          |         | 83.7    |              |   |              | 61.3   |            |  |              | 11.9   |              |  |   |      |      |  |   | 173.3 |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Minority interest                        |                                                          |         |        |              |   |              |       |            |  |              |       |              |  |   |      |      |  |   | 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   |      |  |   |      |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Common stock                             |                                                          |         | 0.3     |              |   |              |       |            |  |              |       |              |  |   |      |      |  |   |      |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Additional paid-in capital               |                                                          |         | 235.1   |              |   |              | 197.2  |            |  |              | 905.4  |              |  |   | 53.4  |      |  |   | 323.8 |       |  |   | (1,479.8 | )     
|                                        
|                                        
|                                        
|                                        
|Common stock in treasury at cost         |                                                          |         | (25.7   | )            |   |              |       |            |  |              |       |              |  |   |      |      |  |   |      |       |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Retained earnings (accumulated deficit)  |                                                          |         | (542.4  | )            |   |              | (173.2 | )          |  |              | (202.9 | )            |  |   | (15.7 | )    |  |   | 55.5  |       |  |   | 336.3    |       
|                                        
|                                        
|                                        
|                                        
|Accumulated other comprehensive loss     |                                                          |         | (127.3  | )            |   |              | (11.9  | )          |  |              | (100.3 | )            |  |   | (0.7  | )    |  |   | (77.7 | )     |  |   | 190.6    |       
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       
|                                         | Total stockholders equity (deficit)                     |         |         | (460.0       | ) |              |        | 12.1       |  |              |        | 602.2        |  |   |       | 37.0 |  |   |       | 301.6 |  |   |          | (952.9 | )
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       
|                                         | Total liabilities and stockholders equity
    (deficit) |         | $       | 1,110.7      |   |              | $      | 495.6      |  |              | $      | 742.0        |  |   | $     | 40.5 |  |   | $     | 947.4 |  |   | $        | (978.1 | )
|                                         |                                                          |         |         |              |   |              |        |            |  |              |        |              |  |   |       |      |  |   |       |       |  |   |          |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                         |                                                          |              |         |         |  
|---------------------------------------- | -------------------------------------------------------- | ------------ | ------- | ------- | -
|                                         |                                                          | Consolidated
|                                         |                                                          | Total       
|                                         |                                                          |             
|Cash and cash equivalents                |                                                          | $            | 45.2    |        
|                                        
|                                        
|                                        
|                                        
|Receivables                              |                                                          |              | 266.2   |        
|                                        
|                                        
|                                        
|                                        
|Inventories                              |                                                          |              | 155.2   |        
|                                        
|                                        
|                                        
|                                        
|Prepaid expenses and other               |                                                          |              | 36.3    |        
|                                         |                                                          |              |         |        
|                                         | Total current assets                                     |              |         | 502.9   |  
|                                        
|                                        
|                                        
|                                        
|Net property, plant and equipment        |                                                          |              | 965.4   |        
|                                        
|                                        
|                                        
|                                        
|Goodwill and other assets                |                                                          |              | 889.8   |        
|                                         |                                                          |              |         |        
|                                         | Total assets                                             |              | $       | 2,358.1 |  
|                                         |                                                          |              |         |        
|Bank borrowings                          |                                                          | $            | 25.1    |        
|                                        
|                                        
|                                        
|                                        
|Current portion of long-term debt        |                                                          |              | 14.5    |        
|                                        
|                                        
|                                        
|                                        
|Accounts payable and accrued liabilities |                                                          |              | 232.0   |        
|                                         |                                                          |              |         |        
|                                         | Total current liabilities                                |              |         | 271.6   |  
|                                        
|                                        
|                                        
|                                        
|Long-term debt, net of current portion   |                                                          |              | 83.5    |        
|                                        
|                                        
|                                        
|                                        
|Pension and other long-term liabilities  |                                                          |              | 330.2   |        
|                                        
|                                        
|                                        
|                                        
|Minority interest                        |                                                          |              | 11.8    |        
|                                        
|                                        
|                                        
|                                        
|Intercompany accounts                    |                                                          |              |        |        
|                                        
|                                        
|                                        
|                                        
|Liabilities subject to compromise        |                                                          |              | 2,121.0 |        
|                                        
|                                        
|                                        
|                                        
|Common stock                             |                                                          |              | 0.3     |        
|                                        
|                                        
|                                        
|                                        
|Additional paid-in capital               |                                                          |              | 235.1   |        
|                                        
|                                        
|                                        
|                                        
|Common stock in treasury at cost         |                                                          |              | (25.7   | )      
|                                        
|                                        
|                                        
|                                        
|Retained earnings (accumulated deficit)  |                                                          |              | (542.4  | )      
|                                        
|                                        
|                                        
|                                        
|Accumulated other comprehensive loss     |                                                          |              | (127.3  | )      
|                                         |                                                          |              |         |        
|                                         | Total stockholders equity (deficit)                     |              |         | (460.0  | )
|                                         |                                                          |              |         |        
|                                         | Total liabilities and stockholders equity
    (deficit) |              | $       | 2,358.1 |  
|                                         |                                                          |              |         |        

15



---



##### Table of Contents








CONDENSED COMBINED STATEMENTS OF CASH FLOWS


For the Three Months Ended April 30, 2002


|                                                           |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |       |       |  
|---------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------- | ---- | ------------ | ---- | ------------ | ----- | ---------- | ---- | ------------ | --- | ------------ | ---- | ------------ | ---- | --- | --- | - | ---- | ---- | ---- | - | - | - | - | - | ---- | ----- | ----- | -
|                                                           |                                                                                   |                                                          |      |              |      |              |       |           
|                                                           |                                                                                   | Debtors                                                  |      | Non-Debtors  |      |              |       |           
|                                                           |                                                                                   |                                                          |      |              |      |              |       |           
|                                                           |                                                                                   |                                                          |      | Conformed    |      | Nonguarantor |       |            |      |              |     |             
|                                                           |                                                                                   |                                                          |      | Guarantor    |      | Guarantor    |       | Debtor     |      | Nonguarantor |     |              |      | Consolidated
|                                                           |                                                                                   | Parent                                                   |      | Subsidiaries |      | Subsidiaries |       | Subsidiary |      | Subsidiaries |     | Eliminations |      | Total       
|                                                           |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |             
|Cash flows provided by (used for) operating
    activities |                                                                                   | $                                                        | 18.2 |              |      | $            | 15.0  |            |      | $            | 2.3 |              |      | $            | (3.1 | )   |     | $ | 17.6 |      |      | $ |  |   |   | $ | 50.0 |      
|                                                          
|                                                          
|                                                          
|                                                          
|Cash flows from investing activities:                      |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Acquisition of property, plant, equipment, and
    tooling                        |                                                          |      | (4.9         | )    |              |       | (2.4       | )    |              |     | (6.0         | )    |              |      |    |     |   |      | (9.1 | )    |   |   |  |   |   |      | (22.4 | )    
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Proceeds from sale of assets and non-core
    businesses                          |                                                          |      |             |      |              |       | 0.1        |      |              |     |             |      |              |      |    |     |   |      | 6.6  |      |   |   |  |   |   |      | 6.7   |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other, net                                                                        |                                                          |      | (0.2         | )    |              |       | (2.4       | )    |              |     | (3.2         | )    |              |      | 0.2 |     |   |      | (5.7 | )    |   |   |  |   |   |      | (11.3 | )    
|                                                           |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |      
|                                                           |                                                                                   | Cash provided by (used for) investing activities         |      |              | (5.1 | )            |       |            | (4.7 | )            |     |              | (9.2 | )            |      |     | 0.2 |   |      |      | (8.2 | ) |   |   |  |   |      |       | (27.0 | )
|                                                          
|                                                          
|                                                          
|                                                          
|Cash flows from financing activities:                      |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Increase in bank borrowings, revolving facility,
    DIP facility and other notes |                                                          |      | (0.3         | )    |              |       |           |      |              |     |             |      |              |      |    |     |   |      | (3.4 | )    |   |   |  |   |   |      | (3.7  | )    
|                                                           |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |      
|                                                           |                                                                                   | Cash provided by (used for) financing activities         |      |              | (0.3 | )            |       |            |     |              |     |              |     |              |      |     |    |   |      |      | (3.4 | ) |   |   |  |   |      |       | (3.7  | )
|                                                          
|                                                          
|                                                          
|                                                          
|Increase (decrease) in parent loans and
    advances       |                                                                                   |                                                          | (2.2 | )            |      |              | (10.2 | )          |      |              | 6.6 |              |      |              | 3.2  |     |     |   | 2.6  |      |      |   |  |   |   |   |     |      
|                                                          
|                                                          
|                                                          
|                                                          
|Effect of exchange rates of cash and cash
    equivalents  |                                                                                   |                                                          |     |              |      |              |      |            |      |              |    |              |      |              |     |     |     |   | (0.5 | )    |      |   |  |   |   |   | (0.5 | )    
|                                                           |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |      
|                                                           |                                                                                   | Net increase (decrease) in cash and cash
    equivalents |      |              | 10.6 |              |       |            | 0.1  |              |     |              | (0.3 | )            |      |     | 0.3 |   |      |      | 8.1  |   |   |   |  |   |      |       | 18.8  |  
|                                                          
|                                                          
|                                                          
|                                                          
|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                 |                                                                                   | $                                                        | 21.9 |              |      | $            | 0.2   |            |      | $            |    |              |      | $            | 0.7  |     |     | $ | 41.2 |      |      | $ |  |   |   | $ | 64.0 |      
|                                                           |                                                                                   |                                                          |      |              |      |              |       |            |      |              |     |              |      |              |      |     |     |   |      |      |      |   |   |   |   |   |      |      

16



---



##### Table of Contents








CONDENSED COMBINED STATEMENTS OF CASH FLOW


For the three months ended April 30, 2001


|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |       |       |  
|---------------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------------------------- | ----- | ------------ | ---- | ------------ | ----- | ------------ | ---- | ------------ | ----- | ----- | ----- | - | - | - | - | - | ----- | ----- | ----- | -
|                                                           |                                                               |                                                          |       | Guarantor    |      | Nonguarantor |       |              |      | Consolidated
|                                                           |                                                               | Parent                                                   |       | Subsidiaries |      | Subsidiaries |       | Eliminations |      | Total       
|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |             
|Cash flows provided by (used for) operating
    activities |                                                               | $                                                        | 9.9   |              |      | $            | (43.2 | )            |      | $            | (22.1 | )     |       |   |   |   |   | $ | (55.4 | )    
|                                                          
|                                                          
|                                                          
|                                                          
|Cash flows from investing activities:                      |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Acquisition of property, plant and equipment, and
    tooling |                                                          |       | (1.1         | )    |              |       | (1.8         | )    |              |       | (28.2 | )     |   |   |  |   |   |       | (31.1 | )    
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other, net                                                    |                                                          |       | (5.7         | )    |              |       | 4.2          |      |              |       | 0.2   |       |   |   |  |   |   |       | (1.3  | )    
|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      
|                                                           |                                                               | Cash provided by (used for) investing activities         |       |              | (6.8 | )            |       |              | 2.4  |              |       |       | (28.0 | ) |   |   |  |   |       |       | (32.4 | )
|                                                          
|                                                          
|                                                          
|                                                          
|Cash flows from financing activities:                      |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Increase in bank borrowings and revolver                      |                                                          |       | 67.3         |      |              |       |             |      |              |       | 5.8   |       |   |   |  |   |   |       | 73.1  |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Proceeds from accounts receivable securitization              |                                                          |       | 17.6         |      |              |       | 16.9         |      |              |       | 13.1  |       |   |   |  |   |   |       | 47.6  |      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Financing fees                                                |                                                          |       | (2.3         | )    |              |       |             |      |              |       |      |       |   |   |  |   |   |       | (2.3  | )    
|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      
|                                                           |                                                               | Cash provided by financing activities                    |       |              | 82.6 |              |       |              | 16.9 |              |       |       | 18.9  |   |   |   |  |   |       |       | 118.4 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Increase (decrease) in parent loans and
    advances       |                                                               |                                                          | (63.6 | )            |      |              | 23.8  |              |      |              | 39.8  |       |       |   |  |   |   |   |      |      
|                                                          
|                                                          
|                                                          
|                                                          
|Effect of exchange rates of cash and cash
    equivalents  |                                                               |                                                          |      |              |      |              |      |              |      |              | (1.7  | )     |       |   |  |   |   |   | (1.7  | )    
|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      
|                                                           |                                                               | Net increase (decrease) in cash and cash
    equivalents |       |              | 22.1 |              |       |              | (0.1 | )            |       |       | 6.9   |   |   |   |  |   |       |       | 28.9  |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash and cash equivalents at beginning
    of period       |                                                               |                                                          | (19.3 | )            |      |              | 0.2   |              |      |              | 19.1  |       |       |   |  |   |   |   |      |      
|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      
|Cash and cash equivalents at end of period                 |                                                               | $                                                        | 2.8   |              |      | $            | 0.1   |              |      | $            | 26.0  |       |       |   |   |   |   | $ | 28.9  |      
|                                                           |                                                               |                                                          |       |              |      |              |       |              |      |              |       |       |       |   |   |   |   |   |       |      

17



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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 is $4.1 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. The Company is continuing
to study the effect of this change in the law and, upon
completion of the study, the Companys estimate of the
amount of the carryback refunds may increase.

(13)     New 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. The Company has discontinued
amortizing such assets into earnings, but has not yet completed
testing for impairment of the amount of goodwill recorded as of
February 1, 2002 as is required by the pronouncement. 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. The Company believes it will incur a significant
write-down in the value of its goodwill upon completion of the
adoption of SFAS No. 142 and, in accordance with SFAS
No. 142, any loss will be recognized as a cumulative effect
of a change in accounting principle. The pro forma effect of
SFAS No. 142 on the Companys earnings for the three
months ended April 30, 2002 and 2001 is as follows:

|                                  |  |      |       |      |  |   |       |  
|--------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                  |  | 2002 |       | 2001
|                                  |  |      |       |     
|Reported net loss                 |  | $    | (33.0 | )    |  | $ | (63.7 | )
|                                 
|                                 
|                                 
|                                 
|Addback goodwill amortization     |  |      |      |      |  |   | 6.7   |  
|                                  |  |      |       |      |  |   |       |  
|Adjusted net loss                 |  | $    | (33.0 | )    |  | $ | (57.0 | )
|                                  |  |      |       |      |  |   |       |  
|Basic and diluted loss per share: |  |      |       |      |  |   |       |  
|                                 
|                                 
|                                 
|                                 
|Reported net loss                 |  | $    | (1.16 | )    |  | $ | (2.24 | )
|                                 
|                                 
|                                 
|                                 
|Addback goodwill amortization     |  |      |      |      |  |   | 0.24  |  
|                                  |  |      |       |      |  |   |       |  
|Adjusted net loss                 |  | $    | (1.16 | )    |  | $ | (2.00 | )
|                                  |  |      |       |      |  |   |       |  

Effective February 1, 2002, the Company also adopted SFAS
No. 141, Business Combinations and SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The adoption of these pronouncements
did not have a material effect on the Companys
consolidated financial statements.



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

18



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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. 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. 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).

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
estimatable.

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Reorganization items as reported in the accompanying
consolidated statement of operations for the three months ended
April 30, 2002 is comprised of:

|                                                                 |       |   |      |      | 
|---------------------------------------------------------------- | ----- | - | ---- | ---- | 
|                                                                
|                                                                
|                                                                
|                                                                
|Critical employee retention plan provision                       |       | $ | 2.5  |     
|                                                                
|                                                                
|                                                                
|                                                                
|Estimated accrued liability for rejected
    prepetition leases  |       |   | 12.5 |     
|                                                                
|                                                                
|                                                                
|                                                                
|Professional fees directly related to the filing                 |       |   | 7.6  |     
|                                                                
|                                                                
|                                                                
|                                                                
|Interest earned during Chapter 11
    reorganization proceedings |       |   | (0.1 | )   
|                                                                 |       |   |      |     
|                                                                 | Total |   | $    | 22.5 | 
|                                                                 |       |   |      |     

Cash payments of $1.4 million were paid during this period
with respect to such reorganization items.

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, while sales of its wheels and
automotive castings in Europe are directly affected by the
overall vehicle production in Europe. The North American and
European automotive industries are sensitive to the overall
strength of their respective economies.

The Company is organized based primarily on markets served and
products produced. Under this organization structure, the
Companys operating segments have been aggregated into
three reportable segments: Automotive Wheels, Components and
Other. The Automotive Wheels segment includes results from the
Companys operations that primarily 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 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 segment also includes
financial results related to the Companys tire and wheel
operations in Europe, the corporate office and elimination of
certain intercompany activities.

Three Months Ended
April 30, 2002 Compared to Three Months Ended
April 30, 2001

Net Sales

|                  |       |            |       |       |  |          |       |       |  |  |        |        |  
|----------------- | ----- | ---------- | ----- | ----- |  | -------- | ----- | ----- |  |  | ------ | ------ | -
|                  |       | 2002       |       | 2001  |  | % Change
|                  |       |            |       |       |  |         
|                  |       |            |       |      
|                  |       | (millions) |       |      
|                 
|                 
|                 
|                 
|Automotive Wheels |       | $          | 285.4 |       |  | $        | 324.3 |       |  |  | (12.0% | )     
|                 
|                 
|                 
|                 
|Components        |       |            | 176.5 |       |  |          | 176.9 |       |  |  | (0.2%  | )     
|                 
|                 
|                 
|                 
|Other             |       |            | 24.8  |       |  |          | 39.7  |       |  |  | (37.6% | )     
|                  |       |            |       |       |  |          |       |       |  |  |        |       
|                  | Total |            | $     | 486.7 |  |          | $     | 540.9 |  |  |        | (10.0% | )
|                  |       |            |       |       |  |          |       |       |  |  |        |       

The Companys Wheels operations net sales were
$38.9 million lower in the first quarter of fiscal 2002
compared to the same period in fiscal 2001. Net sales from the
North American Wheels business unit were $11.4 million
lower in the first quarter of fiscal 2002 compared to the same
period in fiscal 2001. The ramp-down of production and
subsequent closure of the Companys Somerset, KY facility
accounted for approximately $9.4 million of this decrease.
Higher production volumes in the Companys remaining North
American wheel operations increased sales by $7.0 million
in the first quarter of fiscal 2002, which was offset by
$6.3 million in lower pricing. Lower aluminum pricing,
which is passed on to the Companys customers and therefore
has a minimal effect on profit margins, also decreased sales by
$2.7 million. Net sales from the

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The Companys Components operations net sales were slightly
lower in the first quarter of fiscal 2002 compared to the same
period in fiscal 2001. Net sales from the Companys North
American suspension components operations increased
$8.6 million in the first quarter of fiscal 2002 compared
to the same period in fiscal 2001. Sales from recently launched
new customer programs increased sales by $15.7 million in
the first quarter of fiscal 2002. This was partially offset by
approximately $8.3 million lower sales to Ford related to
the Ranger, F-Series truck and other SUV programs. The remainder
of the sales variance in the suspension operations is due to
changes in volume, pricing and sales mix between periods. Net
sales from the Companys powertrain and brakes operations
were $3.6 million lower in the first quarter of fiscal 2002
compared to the same period in fiscal 2001. The impact of the
closure of the Companys Petersburg, MI facility during the
fourth quarter of fiscal 2001 decreased sales by
$6.0 million in the first quarter of fiscal 2002. Other
volume and pricing variances accounted for the remainder of the
difference in sales in those operations. The Company also
recorded $5.6 million lower net sales from its European
component operations. In the European components operations, the
impact of foreign exchange rate fluctuations relative to the
U.S. dollar decreased sales by $1.8 million. The remaining
differences in the net sales from the European components
operations were due to lower customer demand.

The Companys Other segment recorded $14.9 million
lower net sales in the first quarter of fiscal 2002 compared to
the same period in fiscal 2001. This decrease is primarily due
to the $10.2 million decrease in net sales from the
Companys commercial highway and aftermarket operations.
This decrease was driven by significantly lower production
volumes at the Companys heavy-duty truck and trailer
customers. The impact of the sale of the Companys system
service business in the fourth quarter of fiscal 2001 was the
other primary reason for the decrease in Other sales.

Gross Profit

The Companys gross profit decreased from
$57.6 million in the first quarter of fiscal 2001 to
$45.1 million in the same period in fiscal 2002.

The Companys Wheels segment reported $4.3 million
lower gross profit in the first quarter of fiscal 2002 compared
to the same period in fiscal 2001. Gross profit from the
Companys North American wheels operations increased
$7.0 million from the first quarter of fiscal 2001 to the
first quarter of fiscal 2002. The ramp-down of production and
subsequent closure of the Companys Somerset, KY facility
during the first quarter of fiscal 2002 increased gross profit
by approximately $10.6 million. This increase was primarily
due to the poor operating performance of that facility in fiscal
2001. The Company also reached a favorable settlement agreement
related to a historical dispute with a certain customer that
improved gross profit by $1.9 million during the first
quarter of 2002. The Company also recorded higher depreciation
costs at its Gainesville, GA facility to recognize a change in
its estimate of the remaining useful life of certain assets,
which reduced gross profit by $2.7 million in the first
quarter of fiscal 2002. Higher volumes, manufacturing variances
and lower pricing comprise the remaining differences in gross
profit from the Companys North American wheel operations.
The Companys foreign wheel operations gross profit
decreased $11.3 million during this period. The impact of
lower sales decreased gross profit by $5.3 million in the
Companys foreign wheel operations. The impact of foreign
exchange rate fluctuations relative to the U.S. dollar decreased
gross profit by approximately $1.9 million. The remaining
difference in gross profit is primarily due to lower operating
performance in the Companys foreign fabricated wheel
operations.

Gross profit at the Companys Components segment decreased
by $4.3 million in the first quarter of fiscal 2002
compared to the same period in fiscal 2001. The North American
suspension operations recorded $2.8 million lower gross
profit. The favorable impact on gross profit due to higher
production volumes was more than offset by one-time start-up
costs recorded on the many new program launches that took place
in the

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Other gross profit decreased $3.9 million in the first
quarter of fiscal 2002 compared to the same period in fiscal
2001. The Companys commercial highway and aftermarket
operations recorded $1.5 million lower gross profit in the
first quarter of fiscal 2002 due primarily to lower sales and
production volumes. The effects of higher retiree medical costs
during the first quarter of fiscal 2002 combined with the sale
of the Companys system service business in the fourth
quarter of fiscal 2001 are the other primary reasons for the
decrease in Other gross profit.

Marketing, General and
Administrative

The Companys marketing, general and administrative
expenses increased $1.4 million from the first quarter of
fiscal 2001 to the same period in fiscal 2002.

Marketing, general and administrative expenses at the
Companys Wheels segment decreased by $1.9 million.
The Companys North American wheels operations recorded
$0.9 million lower marketing, general and administrative
expenses primarily due to lower headcount arising from the
Reduction-In-Force and Early Retirement Incentive Programs that
the Company implemented in its North American locations during
the fourth quarter of fiscal 2001. The Companys foreign
wheel operations recorded $1.0 million lower marketing,
general and administrative expenses primarily due to exchange
rate fluctuations and the cost reduction impact of various
restructuring initiatives.

The Companys Components segment marketing, general and
administrative expenses were essentially unchanged. The North
American suspension operations marketing, general and
administrative expenses increased $0.3 million in the three
months ended April 30, 2002 compared to the same period in
fiscal 2001 due primarily to higher recruiting, relocation and
other expenses related to the development of a new management
team in the business unit and the many customer program
launches. Marketing, general and administrative expenses at the
Companys powertrain and brakes operations increased
$0.4 million. These increases were offset by lower
marketing, general and administrative expenses at the
Companys foreign component operations.

Marketing, general and administrative expenses in the
Companys other segment increased by $3.3 million from
the first quarter of fiscal 2001 to the first quarter of fiscal
2002. This increase is primarily due to higher auditing,
consulting and legal fees incurred in the first quarter of
fiscal 2002 compared to the same period in fiscal 2001.

Engineering and Product
Development

Engineering expenses were $0.9 million lower in the first
quarter of fiscal 2002 compared to the same period in fiscal
2001. The Wheels segment reported $0.8 million lower
engineering expenses in the first quarter of fiscal 2002
primarily at the Companys foreign fabricated wheel
operations due to the cost reduction impact of various
restructuring initiatives.

Equity in Losses (Earnings) of
Joint Ventures

The Company did not record equity in losses of joint ventures in
the first quarter of fiscal 2002 due to the permanent impairment
of these investments in fiscal 2001.

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##### Table of Contents



Asset Impairments and Other
Restructuring Charges

Asset impairments and other restructuring charges recorded by
the Company during the three months ended April 30, 2002
and 2001 are as follows (millions of dollars):

|                                       |       |      |     |      |  |   |      |      | 
|-------------------------------------- | ----- | ---- | --- | ---- |  | - | ---- | ---- | 
|                                       |       | 2002 |     | 2001
|                                       |       |      |     |     
|Impairment of manufacturing facilities |       | $    |    |      |  | $ | 28.5 |     
|                                      
|                                      
|                                      
|                                      
|Impairment of machinery and equipment  |       |      |    |      |  |   | 2.5  |     
|                                      
|                                      
|                                      
|                                      
|Facility closures                      |       |      | 6.7 |      |  |   |     |     
|                                      
|                                      
|                                      
|                                      
|Other restructuring                    |       |      | 0.5 |      |  |   |     |     
|                                       |       |      |     |      |  |   |      |     
|                                       | Total |      | $   | 7.2  |  |   | $    | 31.0 | 
|                                       |       |      |     |      |  |   |      |     

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.

Facility Closures

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 leases was $3.5 million and is classified as a
liability subject to compromise at April 30, 2002. The
other closure costs are expected to be paid during
fiscal 2002 and 2003.

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 April 30,
2002:

|                    |  |             |      |               |  |                  |     |          |  |           |      |   |  |   |      |   |  |   |      | 
|------------------- |  | ----------- | ---- | ------------- |  | ---------------- | --- | -------- |  | --------- | ---- | - |  | - | ---- | - |  | - | ---- | 
|                    |  |             |      | Severance     |  |                  |     |          |  |          
|                    |  | January 31, |      | and Other     |  |                  |     |          |  | April 30,
|                    |  | 2002        |      | Restructuring |  |                  |     | Cash     |  | 2002     
|                    |  | Accrual     |      | Charges       |  | Reclassification |     | Payments |  | Accrual  
|                    |  |             |      |               |  |                  |     |          |  |          
|Facility exit costs |  | $           | 11.7 |               |  | $                | 6.7 |          |  | $         | (3.5 | ) |  | $ | (0.6 | ) |  | $ | 14.3 | 
|                   
|                   
|                   
|                   
|Severance           |  |             | 6.0  |               |  |                  | 0.5 |          |  |           |     |   |  |   | (1.7 | ) |  |   | 4.8  | 
|                    |  |             |      |               |  |                  |     |          |  |           |      |   |  |   |      |   |  |   |      | 
|                    |  | $           | 17.7 |               |  | $                | 7.2 |          |  | $         | (3.5 | ) |  | $ | (2.3 | ) |  | $ | 19.1 | 
|                    |  |             |      |               |  |                  |     |          |  |           |      |   |  |   |      |   |  |   |      | 

In connection with an early retirement program in the fourth
quarter of fiscal 2001, a charge of $3.9 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

Other income, net in the consolidated statement of operations of
$2.6 million includes a gain on the sale of the
Companys Brazilian agricultural business of approximately
$0.9 million. The Company received $5.2 million in
cash in connection with this sale. Gains on the sale of
equipment at various other locations accounted for most of the
remainder of the balance in this account.

The Companys Suspension business unit recorded
$0.3 million of income during the first quarter of fiscal
2001 related to certain customer tooling agreements.

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Interest Expense, net

Interest expense was $16.8 million for the first quarter
2002 compared to $44.2 million for the first quarter 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 provision for the quarter is primarily the result
of 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 is $4.1 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. The Company is continuing
to study the effect of this change in the law and, upon
completion of the study, the Companys estimate of the
amount of the carryback refunds may increase.

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 $50.0 million in
cash in the first quarter of fiscal 2002 compared to a use of
$55.4 million in the first quarter of fiscal 2001. This
improvement resulted primarily from the effect of (i) lower
supplier payments during the current period, (ii) lower
interest payments during the current period and (iii) a
lower investment in receivables in the current period. These
improvements were partially offset by lower gross profits during
the current period.

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

Capital expenditures for the first quarter of fiscal 2002 were
$22.4 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 for fiscal 2002 will be
approximately $100.0 million relating primarily to new
vehicle platforms, and maintenance and cost reduction programs.

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Other Liquidity Matters

As of April 30, 2002, there were no amounts of outstanding
borrowings under the Companys Debtor-In-Possession
facility (the DIP Facility). As of the date of this
filing $5.2 million in letters of credit were issued in
connection with the DIP Facility and the amount of availability
under the DIP Facility was $109.9 million, net of the
amount of issued letters of credit.

During the current fiscal quarter, the Company received
$6.7 million in cash proceeds from the sale of certain
non-core assets and businesses, primarily the sale of the
Companys Brazilian agricultural business.

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.

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 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

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New 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. The Company has discontinued
amortizing such assets into earnings, but has not yet completed
testing for impairment the amount of goodwill recorded as of
February 1, 2002 as is required by the pronouncement. 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. The Company believes it will incur a significant
write-down in the value of its goodwill upon completion of the
adoption of SFAS No. 142 and, in accordance with SFAS
No. 142, any loss will be recognized as a cumulative effect
of a change in accounting principle. The pro forma effect of
SFAS No. 142 on the Companys earnings for the three
months ended April 30, 2002 and 2001 is as follows:

|                                  |  |      |       |      |  |   |       |  
|--------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                  |  | 2002 |       | 2001
|                                  |  |      |       |     
|Reported net loss                 |  | $    | (33.0 | )    |  | $ | (63.7 | )
|                                 
|                                 
|                                 
|                                 
|Addback goodwill amortization     |  |      |      |      |  |   | 6.7   |  
|                                  |  |      |       |      |  |   |       |  
|Adjusted net loss                 |  | $    | (33.0 | )    |  | $ | (57.0 | )
|                                  |  |      |       |      |  |   |       |  
|Basic and diluted loss per share: |  |      |       |      |  |   |       |  
|                                 
|                                 
|                                 
|                                 
|Reported net loss                 |  | $    | (1.16 | )    |  | $ | (2.24 | )
|                                 
|                                 
|                                 
|                                 
|Addback goodwill amortization     |  |      |      |      |  |   | 0.24  |  
|                                  |  |      |       |      |  |   |       |  
|Adjusted net loss                 |  | $    | (1.16 | )    |  | $ | (2.00 | )
|                                  |  |      |       |      |  |   |       |  

Effective February 1, 2002, the Company also adopted SFAS
No. 141, Business Combinations and SFAS
No. 144, Accounting For the Impairment or Disposal of
Long-Lived Assets. The adoption of this pronouncement did
not have a material effect on the Companys consolidated
financial statements.

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 April 30, 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.

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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.

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 and KPMG.






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

10.41* Critical Employee Retention Plan as entered by the United
States Bankruptcy Court for the District of Delaware on
May 30, 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/ KENNETH A. HILTZ            
| |                                 
| | Kenneth A. Hiltz                
| | Chief Financial Officer         
|
| | /s/ HERBERT S. COHEN            
| |                                 
| | Herbert S. Cohen                
| | Chief Accounting Officer        

June 14, 2002

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EXHIBIT INDEX


|            |       |             |  |                                                                                                                                        
|----------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description
|            |       |            
|            | 10.41 |             |  | Critical Employee Retention Plan as entered by
    the United States Bankruptcy Court for the District of Delaware
    on May 30, 2002.

29