---

Exhibit 2

Discussion and Analysis

Management's Discussion and Analysis of 
Results of Operations and Financial Condition 
for the Year Ended December 28, 2003

All amounts in this Management's Discussion and
Analysis of Results of Operations and Financial Condition ("MD&A") of Wescast
Industries Inc. ("Wescast" or the Company") are in Canadian dollars unless
otherwise noted. This MD&A should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December 28, 2003,
which are prepared in accordance with Canadian generally accepted accounting
principles (GAAP).

For a discussion of the principal differences
between Canadian and US GAAP, as they apply to the presentation of Wescast's
consolidated financial statements; see Note 24 to the Company's consolidated
financial statements. This MD&A contains commentary from Wescast's management
regarding strategy, operating results and financial condition. Management is
responsible for its accuracy, integrity and objectivity, and has developed,
maintains and supports the necessary systems and controls to provide reasonable
assurance as to the accuracy of the comments contained herein. This MD&A is
current as of March 10, 2004. Additional information relating to the Company,
including the Company's Annual Information Form ("AIF"), is available online at
sedar.com.

Company Overview

Wescast designs, casts, machines and assembles
high-quality engineered iron products for the automotive industry. Its resources
are strategically aligned to meet the customer-specific requirements within two
product segments, powertrain and chassis components. The Company believes that
the combination of its design and high-quality manufacturing creates unique
value for the customers in the markets that it serves. The Company believes that
this is the reason for the Company being the world's largest supplier of exhaust
manifolds for passenger cars and light truck applications.

The Powertrain segment is focused on the design
and manufacture of exhaust system components for sale primarily to original
equipment manufacturers ("OEMs") and Tier 1 customers for car and light truck
markets in North America and Europe. The Company's Powertrain operations in
North America, leaders in the design, manufacture and sale of exhaust manifolds,
are well established and in 2003 represented 87.0% of consolidated sales. The
segment's European operations are conducted through Weslin Industries Inc. ("Weslin"),
a relatively new operation constructed and jointly owned by Wescast and Linamar
Corporation. The European operation, which was in pre-production mode in 2002,
represents a developing business and comprised 4.3% of the Company's
consolidated sales in 2003. On March 10, 2004 the Company and Linamar
Corporation announced Wescast's intention to sell its 50% interest in Weslin
Industries Inc. to Linamar Corporation, pursuant to the terms of a
joint-venture agreement between the parties. Negotiations between the parties
are ongoing, and as a result the financial impact of the transaction is not yet
known.

---

The Company views the market in Europe as a key
strategic opportunity and is evaluating various alternatives to continue its
participation in this market once the divestiture of the Company's interest in Weslin has been completed. It is expected that some of the resources generated
from the Weslin transaction will be redeployed towards other initiatives aimed
at maintaining the Company's presence in Europe.
In this MD&A, reference is made
to Weslin and its impact on the historical results of the Company, as this
information is relevant to understanding and assessing the Company's historic
performance.
The Chassis segment is focused on the design
and manufacture of brake and suspension components for sale to OEM and Tier 1
customers in the car and light truck markets. The Company entered the segment on
September 12, 2002, with the acquisition of Georgia Ductile Foundries, LLC,
renamed Wescast Industries Cordele, LLC ("Cordele"). This business, which was
acquired while it was still in a start-up phase, is also a developing business,
serving a North American customer base. In 2003, the Chassis segment represented
8.7% of the Company's consolidated sales.Overview of OperationsWescast experienced significant revenue growth
in 2003, due to the inclusion of revenues from both its developing businesses,
Weslin in Europe and its Chassis group. While the performance of the Company's
core Powertrain segment in North America remained strong in 2003, the Company's
consolidated net earnings experienced a significant decline. This decline was
largely due to start-up costs associated with the development of its new
businesses and challenging market conditions that contributed to the incurrence
of a non-cash charge to reflect the impairment of goodwill associated with its
Cordele operation.
Overall consolidated sales revenues in 2003 of
$475.8 million represented a 12.2% increase over the $424.2 million reported in
2002. The revenue growth was primarily the result of three factors:
  Sales from the
  Company's Chassis segment accounted for revenue growth of $26.7 million. The
  expansion into chassis components in 2002 took place in September of that year
  and, as a result, the sales in 2002 represented only a partial year of
  activity.

Wescast's
  proportionate share of sales from Weslin, the joint venture operation that
  constitutes the Company's Powertrain segment in Europe, represented a sales
  increase of $20.4 million. Fiscal 2003 marks the first year that Weslin sales
  are reflected in the Company's revenue base as the Weslin operation was in a
  pre-production phase in 2002. As a result, approximately $10.0 million, our
  proportion of sales for that year, were netted against operating expenditures
  and deferred as pre-production costs.

---

Growth in the Company's machining activity in the North American Powertrain
  business was strong. In 2003, the number of units machined increased by 11.0%,
  and the percentage of North American powertrain sales representing both cast
  and machined components was 77.6% in 2003, compared with 63.0% in 2002.
  

The Company's net earnings in 2003 were $8.3
million, down $51.7 million compared to the $60.0 million reported in 2002.
While the Company's North American Powertrain segment produced strong earnings,
this performance was offset by the impact of the Company's developing businesses
as follows:The
  Chassis segment had a year-over-year negative impact on net earnings of $38.4
  million, representing 74.5% of the total decline in net earnings. This
  included the charge for the goodwill impairment of $27.4 million, after tax.The
  European Powertrain operations, in its first year of commercial production,
  had a year-over-year negative impact on net earnings of $6.1 million, 11.8% of
  the total decline.Position in the IndustryIn its core Powertrain segment, Wescast is the
world's largest producer of exhaust manifolds. The worldwide demand for exhaust
manifolds is basically satisfied by two distinct types or styles of manifold
designs: fabricated and cast. Wescast's manifold production is exclusively
focused on cast manifolds. A cast manifold is produced using various grades of
ductile iron, each with different temperature and performance characteristics,
using a green sand mould process. The manufacture of fabricated manifolds
involves the bending and welding of steel tubes to meet the shape and style of
the product design.
In North America, the use of cast iron
manifolds has traditionally dominated the marketplace. Cast manifold designs are
currently estimated to represent over 70% of the overall demand for manifolds in
North America. In other parts of the world fabricated manifolds command a far
greater share of the marketplace. It is estimated that 50% of the current
worldwide demand for exhaust manifold production is represented by fabricated
designs. The difference in demand is influenced by customer preferences,
historical use and production volume levels.
The supply base for fabricated manifolds in
areas such as Europe, where historically the market comprised a larger number of
automakers with smaller individual platform volumes, has evolved to include a
large number of suppliers and a very fragmented market. The market is not
dominated by any one supplier. The Company has remained focused on cast manifold designs, primarily
because it has been able to demonstrate to the market that by applying its
design capabilities it can design and manufacture a cast manifold that meets or
improves the performance characteristics offered by a fabricated manifold
design, generally at a lower total cost.

---

The Company's primary customer base, the
domestic Big 3 automakers, has experienced market share declines in recent
years. The Company is focused on expanding its sales base by targeting growth in
North America with new domestic customers, many of whom currently use fabricated
manifolds in their engine designs. In addition, the Company is targeting
strategic international growth to meet the demand requirements in markets
outside of North America where the Company believes it can demonstrate that
superior performance characteristics exist in cast manifold designs.
The engineering and design capabilities of the
Company are well suited to meet the changing needs of its current and potential
customers. Such customers are faced with the following specific needs:The need
  to reduce engine emission levels;The need
  to deal with higher engine temperatures;The need
  to meet customer-driven demand for high horsepower levels, given the
  constraints above; andThe
  potential for an increased use of diesel-powered vehicles in North America to
  help meet fleet emission levels.

The Company's engineering and design efforts
aimed at developing new higher- temperature alloys, its "hot-end solutions"
efforts aimed at integrating the exhaust manifold with the catalytic converter,
and the further expansion of integrated exhaust manifold-turbocharger designs
for diesel engine applications that are already in use in Europe, all support
the Company's current strategic direction.Risks and UncertaintiesDescribed below are some of the more
significant risks and trends relating to the overall economy, the automotive
industry and Company-specific matters that could affect the Company's results.An
  economic downturn could have a negative impact on the Company's profitability.
  The global automotive industry is cyclical and is sensitive to changes in
  economic conditions such as interest rates, consumer demand, oil prices and
  international conflicts. The current consensus of industry forecasts project
  relatively stable markets in Europe and North America in 2004.Increasing price reduction pressures from the Company's customers could reduce
  profit margins. Historically, the Company has entered into, and will continue
  to enter into, supply agreements with its customers that provide for, among
  other things, price concessions over the term of the agreement. In the past
  these concessions have been largely offset by cost reductions resulting from
  product and process improvements. The competitive global automotive industry
  environment has caused these pricing pressures to intensify. To the extent
  that these price reductions continue in the future and are not offset through
  cost reductions, the Company's future profit margins may be adversely
  affected.

---

The
  Company is currently dependent on one class of products, cast iron manifolds,
  and could be negatively impacted by heightened competition, including the
  intensification of price competition and the entry of new competitors, both
  domestic and foreign, particularly those based in low-cost countries such as
  China. The introduction by competitors of new manufacturing techniques or
  types of products could also have an adverse impact on the Company's results.

Estimated 2003 
Total North American Manifold Production 
(24.2 million units)



Estimated 2003 
Total Europe Manifold Production 
(20.8 million units)



---

The
  Company is largely dependent upon three customers, the domestic Big 3
  automakers. As a result, it is exposed to any loss in market share or
  less-than-projected light vehicle sales by General Motors, Ford and
  DaimlerChrysler, for which the Company supplies powertrain components.



The Company's top five North American powertrain programs projected for 2004,
based on unit production, are represented by the following customer platforms:

|OEM    | Platform/Program            | Vehicle
    Application(s)                            
|------ | --------------------------- | ------------------------------------------------------
|GM     | 4.8/5.3/6.0L GEN
    III V8 | Silverado, Sierra,
    Suburban, Tahoe, Escalade, etc.
|Ford   | 5.4 L 3V V8                 | F150, Expedition,
    Econoline, Navigator            
|GM     | L850                        | Cavalier, Sunfire,
    GrandAm, Alero, Saturn, etc.   
|Nissan | 3.5 L ZV5 V6                | Maxima, Altima,
    Quest                             
|DCX    | 4.7 L Truck V8              | Ram, Durango,
    Dakota, Ram Van, etc.               

Penetration of non-Big 3 customers and future
revenue expansion in the Chassis component segment will help Wescast
diversify its revenue base and reduce this concentration of risk.

- 

---





- 

---

Selected Annual InformationThe following table sets forth for the years
ended 2003, 2002 and 2001 selected information from the Company's consolidated
financial statements.
Fiscal Year Ended 
(in thousands of Canadian Dollars, except per share amounts and where otherwise
noted)

|                                                     | 2003     | 2002     | 2001    
|---------------------------------------------------- | -------- | -------- | --------
|                                                     |          |          |         
|                                                     |          |          |         
|                                                     |          |          |         
|Sales                                                | $475,800 | $424,207 | $383,502
|                                                     |          |          |         
|Earnings from
    continuing operations              | $8,268   | $60,040  | $66,038 
|                                                     |          |          |         
|Net earnings                                         | $8,268   | $60,040  | $41,270 
|                                                     |          |          |         
|Earnings from
    continuing operations per share    |          |          |         
|Basic                                                | $0.63    | $4.59    | $5.11   
|Diluted                                              | $0.63    | $4.59    | $5.01   
|Net earnings per share                               |          |          |         
|Basic                                                | $0.63    | $4.59    | $3.19   
|Diluted                                              | $0.63    | $4.59    | $3.12   
|                                                     |          |          |         
|Total assets                                         | $561,135 | $596,754 | $452,762
|                                                     |          |          |         
|Total long-term
    interest-bearing debt            | $36,072  | $46,576  | $4,614  
|                                                     |          |          |         
|Dividends declared per
    Glass A and               |          |          |         
|Class B
    common share                             | $0.48    | $0.48    | $0.48   
|                                                     |          |          |         
|Issued and outstanding
    capital stock (thousands) |          |          |         
|Class A
    common shares                            | 5,722    | 5,707    | 5,627   
|Class B
    common shares                            | 7,377    | 7,377    | 7,377   
|                                                     |          |          |         
|Stock options
    outstanding                        |          |          |         
|Class A
    common shares                            | 931      | 944      | 973     
|                                                     |          |          |         

---

Results of Operations: 2002 to 2003Net EarningsNet earnings decreased from $60.0 million in
2002 to $8.3 million in 2003.
In comparing the level of earnings in 2003 to
2002, the following highlights should be considered:The
  Company's North American Powertrain operations delivered strong financial
  performance under challenging market conditions, generating net earnings of
  $60.1 million in 2003.The
  European Powertrain operations had a negative impact on net earnings of $8.9
  million in 2003, compared to a negative impact of $2.8 million in 2002.The
  Chassis operations had a negative impact on net earnings of $42.9 million in
  2003, compared to a negative impact of $4.5 million in 2002. Included in the
  2003 impact was a goodwill impairment charge of $27.4 million, after tax.Stock-based compensation expense for 2003 was $0.8 million, compared to $5.3
  million in 2002.SalesConsolidated sales for 2003 increased by 12.2% over 2002 due to strong growth
in machining volumes in the Company's North American Powertrain operations, the
inclusion of Weslin sales in 2003 and the reporting of a full year of sales by
the Chassis segment compared to 2002.



---

The sale of powertrain products in North America, comprised mainly of cast
and machined iron manifolds, decreased by 2.1% in 2003 compared to 2002.
However, several positive trends emerged during 2003, including improved
machining penetration and a favourable product mix. In addition, sales with a
new domestic customer increased significantly in 2003. Sales of internally
machined powertrain products increased 11.0%

The Company's proportionate share of powertrain
component sales, excluding prototype and tooling sales, generated by its
European Powertrain operations through Weslin totalled $19.6 million. The
Company did not report any sales for Weslin in 2002 as the operation was in a
pre-production phase.

The Company entered the Chassis component
marketplace in September 2002 by way of an acquisition. This business generated
$37.9 million in sales of brake and suspension components in 2003, compared to
$13.9 million in the post-acquisition period in 2002. The level of sales in 2003
was lower due to the discontinuation of programs in early 2003, including
programs that were selectively culled as they did not align with the strategic
focus established for the Chassis segment. In addition, the impact of a stronger
Canadian dollar in 2003 reduced Chassis segment sales on translation to Canadian
dollars by approximately $4.0 million or 9.5%.

Consolidated prototype and tooling sales was
$32.2 million in 2003, up $16.5 million from the $15.7 million reported in 2002,
reflecting a significant increase in the number of new program launches in 2003
versus 2002. Prototype and tooling sales by the Chassis segment and Weslin
accounted for $2.8 million and $0.8 million of the increase, respectively.

---

Gross ProfitConsolidated gross profit for 2003 was $104.8
million or 22.0% of sales, compared to $129.9 million or 30.6% of sales in 2002.
The profitability of the Company's North
American Powertrain operations has remained strong compared to 2002 in spite of
lower casting volumes. The negative pressure on gross profit during 2003 due to
lower volumes, market- driven price concessions, significant increases of raw
material costs, and increased depreciation and amortization charges was
partially offset by strong operating performance and the positive impact of
cost-reduction activities in the Company's manufacturing facilities. Wescast's
strategy to increase machining penetration volume also resulted in a
significantly increased contribution to gross profit. In addition, the Company
revised its estimate of government investment tax credits realized on qualifying
scientific research and development expenditures of prior periods. This resulted
in a positive impact on gross profit of $2.4 million for 2003. There were no
similar adjustments in 2002.
The majority of the decline in gross profit,
compared to 2002, was as a result of the negative impact on earnings to support
the ramp-up efforts at Weslin and Cordele. Weslin had a negative impact on gross
profit of $6.8 million during 2003. This operation was in a pre-production phase
during 2002. During 2003, Weslin has begun to demonstrate improved operating
performance in terms of foundry equipment uptime rates, finishing throughput and
scrap levels. These improvements did not translate into improved financial
performance due to the costs associated with a significant number of new product
launches and other start-up-related expenses. The Chassis segment, while in
commercial production, is still in the process of ramping up its foundry
operation. This segment had a negative impact on gross profit of $20.9 million
in 2003, compared to a negative impact of $5.3 million in 2002 from the date of
acquisition in September 2002. During 2003, this operation has also shown
improved operating performance in the areas of output, measured in moulds per
hour, finishing throughput rates and scrap levels. Unfortunately, these
improvements were disrupted throughout the year by unexpected equipment downtime
of the facility. Management believes that unplanned equipment downtime is part
of the start-up phase of a major foundry and machining facility.
Depreciation and amortization charges, included
in cost of sales, increased by $10.1 million from $26.2 million in 2002 to $36.3
million in 2003. The majority of the increase relates to depreciation charges on
new machine lines, increased depreciation associated with Cordele and the
amortization of the Weslin deferred pre-production costs.
The gross profit on prototype
and tooling sales in 2003 was $4.2 million or 13.0% of sales, down from $4.5
million or 28.6% of sales in 2002. The level of gross profit on prototype and
tooling sales depends on the type of program launch and the volume of prototype
tooling and castings required to validate production.

---

Selling, General and AdministrationSelling, general and administration expenses were $37.5 million in 2003
compared to $31.6 million in 2002. The Company's fixed-cost base has increased
over the 2002 level in support of its growth and diversification initiatives,
specifically the absorption of the sales force supporting the Company's Chassis
segment and the depreciation and operating costs associated with the new
technical development centre and corporate office. Cost-reduction efforts within
the administrative departments have offset a portion of the fixed-cost base
increase. In addition, lower profit-sharing and variable compensation payments
compared to 2002 also partially offset the increase. Depreciation charges,
included in selling, general and administration expenses, accounted for $2.7
million of the increase in 2003.Stock-based CompensationDuring 2002 the Company amended its stock
option plan to authorize the grant of tandem stock appreciation rights in
connection with options granted under the plan at or after the time of the grant
of such options. Under the amended plan, participants have the choice of
exercising stock options or receiving cash from the Company for the options
equal to their intrinsic value, being the difference between the option exercise
price and the current market value of the shares.
The increase or decrease in the intrinsic value
of the stock options is reported as stock-based compensation expense. As a
result of the market price of the Company's shares increasing by approximately
$1 during 2003, the impact for that year was an expense of $0.8 million. The
initial impact of the amendment to the plan, recorded in 2002 when the share
market price was $56.47, was a non-cash charge to earnings of $14.9 million
reported as stock-based compensation expense for options issued in prior
periods. The market price of the Company's shares at December 29, 2002, was
$37.81, resulting in a full-year impact of only $5.3 million related to the
amendment of the stock option plan.Research, Development and DesignResearch, development and design expenses decreased in 2003 by $0.5 million
or 5.6% from 2002. The Company remains committed to funding research and
development activities, including its "hot-end solutions" strategy and the
continued development of high-temperature alloys. The "hot-end solutions"
program has successfully moved through the research-intense process and
product-development phase. The Company is quoting on specific customer
applications that could benefit from this technology. As a result, expenses
related to this activity have declined from those incurred during 2002. In
addition, the Company-wide focus on cost-reduction initiatives has resulted in
lower discretionary spending.

---

Interest ExpenseInterest expense in 2003 was significantly higher than in 2002. This was
mainly attributable to interest related to short-term borrowings of the Company
during 2003 and increased interest on the long-term debt that was assumed on the
acquisition of Cordele in September 2002.Goodwill ImpairmentDuring the fourth quarter of 2003, the Company
completed its impairment test of the goodwill acquired in conjunction with the
2002 acquisition of Cordele. The impairment test was carried out to determine
whether the fair value of the Cordele operation supported the carrying value of
the operation's net assets including goodwill. As a result of the review it was
concluded that the goodwill was fully impaired. The Company recorded a pre-tax
non-cash goodwill impairment charge of $41.5 million related to its Chassis
segment. The goodwill impairment charge reflects the ongoing volatility
associated with the business outlook for the Chassis segment. Some of the key
factors that had an impact on the impairment test and affect the outlook for the
Chassis segment include:Challenging market conditions that include a growing amount of open foundry
  capacity in the industry, combined with increased offshore competition based
  in low-cost countries and pricing pressures;The
  escalation in raw material and electricity costs; andInconsistent operating performance of equipment.

As a result of these factors,
it is taking longer to achieve the financial performance targets originally
projected. This delay has changed the original outlook for the Chassis segment
and has resulted in the goodwill impairment charge.Other IncomeOther income and expense represented a net
expense of $1.7 million in 2003, compared to income of $1.3 million in 2002. The
change was due to:
  Foreign exchange
  losses on working capital in 2003 were $1.9 million as compared to losses of
  $0.4 million in 2002, attributed primarily to the significant strengthening of
  the Canadian dollar.

Interest
  and miscellaneous income of $1.1 million in 2003 was less than $2.1 million in
  2002 as a result of lower cash and investment balances throughout 2003.

Losses on
  disposal of property and equipment in 2003 were $0.4 million higher than in
  2002.

---

Income TaxesWescast's effective income tax rate increased
to 41.4% in 2003 compared to 29.6% in 2002. The higher rate was due to:Ontario
  provincial statutory income tax rates increased, impacting future tax levels.A tax
  benefit has not been recognized with respect to the loss realized by Weslin as
  the operation is subject to a tax holiday during the first ten years of
  operations.Payments
  were lower in 2003 compared to 2002 under the cost- sharing arrangements with
  Weslin. Under these arrangements certain technology development, marketing and
  human resource development costs are funded by the Company. The tax holiday
  applicable to these amounts in Hungary results in a lower effective tax rate
  upon consolidation.Results of Operations: 2001 to 2002The following discussion provides significant highlights in comparing the
Company's results of operations from 2001 to 2002. A more detailed discussion is
included in the Company's Management Discussion and Analysis for the year ended
December 29, 2002 contained in the 2002 Annual Report.SalesConsolidated sales in 2002 increased by 10.6%
over 2001. The sale of exhaust manifolds by the Company's Powertrain group
accounted for 9% of the increase. Exhaust manifold sales volume of 15.3 million
units increased by 6% over 2001. This increase compared favourably to the 5%
increase in North American light vehicle production over 2001. Wescast's primary
customers, the domestic Big 3 automakers, experienced a 4.7% increase in
production levels. The Company recorded a slight increase in its overall North
American market share to 61%, which represented continued strong performance
with the Company's domestic Big 3 customers and growth with new domestic
customers. The increase in manifold sales dollars in 2002, up 9% over 2001
compared to a unit volume increase of 6% over 2001, reflected a richer mix of
higher-valued parts sold, primarily related to the light truck market.
Sales of internally machined manifolds
increased 10.2% from 8.8 million units in 2001 to 9.7 million units in 2002. The
percentage of manifolds sold that were also internally machined increased from
61.0% in 2001 to 63.0% in 2002.
The Company's Cordele operation generated $13.9
million in sales of brake and suspension components in the post-acquisition
period in 2002.
Tooling and prototype sales of $15.7 million in
2002 were down 30% from 2001.

---

Several program launches were delayed in 2002 and the corresponding tooling
and prototype sales were realized in 2003.Earnings from Continuing OperationsEarnings from continuing operations decreased
from $66.0 million in 2001 to $60.0 million in 2002, a year-over-year decrease
of 9.1%. In comparing the level of earnings in 2002 to 2001, the following items
should be considered:

- The
  Company's North American Powertrain segment delivered strong financial results
  during 2002, contributing $67.3 million to earnings from continuing
  operations. This level of earnings was consistent with 2001.
- Stock-based compensation expense of $5.3 million, or $3.5 million after tax,
  was recorded in 2002 but there was no such expense recorded in 2001.
- Weslin was in a
  start-up phase during 2002. The majority of expenses were deferred as
  pre-production costs; however, the European Powertrain operations had a
  negative impact on earnings of $2.8 million in 2002 versus $1.6 million in
  2001.
- The
  Chassis segment had a negative impact on earnings of $4.5 million after tax in
  2002.

Net Earnings

Net earnings for 2002 were $60.0 million, up
from $41.3 million in 2001.

In 2001 a loss from discontinued operations of
$24.8 million, related to the shutdown of the Company's stainless steel
business, was reported.

Other Balance Sheet Items

Total assets increased from $452.8 million in 2001 to $596.8 million in 2002.
Total long-term interest-bearing debt increased from $4.6 million in 2001 to
$46.6 million in 2002. These year-over-year increases were primarily due to the
acquisition of Cordele in September 2002.

Fourth Quarter 2003

The 2003 fourth quarter results were significantly impacted by the goodwill
impairment charge of $41.5 million, or $27.4 million after tax, related to the
Chassis segment.

---

The table at right sets forth selected financial information of the Company
for the specified periods.

|Quarterly Results of Operations                              |               |                |               |                |          |         |          
|------------------------------------------------------------ | ------------- | -------------- | ------------- | -------------- | -------- | ------- | ---------
|(in thousands of Canadian dollars, except per share amounts) |               |                |               |                |         
|                                                             |               |                |               |                |          |         |          
|                                                             | First Quarter | Second Quarter | Third Quarter | Fourth Quarter
|                                                             | 2003          | 2002           | 2003          | 2002           | 2003     | 2002    | 2003     
|                                                             |               |                |               |                |          |         |          
|                                                             |               |                |               |                |          |         |          
|Sales                                                        | $125,159      | $104,900       | $116,851      | $112,140       | $110,088 | $97,260 | $123,702 
|                                                             |               |                |               |                |          |         |          
|Gross profit                                                 | 26,749        | 36,477         | 28,910        | 40,199         | 20,819   | 27,097  | 28,362   
|                                                             |               |                |               |                |          |         |          
|Net earnings
    (loss)                                      | $10,695       | $18,493        | $10,599       | $12,143        | $4,975   | $12,020 | ($18,001)
|                                                             |               |                |               |                |          |         |          
|Net earnings
    (loss) per share                            |               |                |               |                |          |         |          
|Basic                                                        | $0.81         | $1.42          | $0.82         | $0.93          | $0.38    | $0.92   | ($1.38)  
|Diluted                                                      | $0.76         | $1.39          | $0.82         | $0.93          | $0.38    | $0.91   | ($1.39)  
|                                                             |               |                |               |                |          |         |          

Notes:

1. 

Liquidity and Capital Resources

The Company ended 2003 in a very strong financial position. Cash and
short-term investments were $28.7 million at the end of 2003 versus $21.9
million a year earlier. Cash generated from continuing operations and
dispositions exceeded capital spending and dividend requirements by $10.4
million and the Company reduced debt by $4.3 million, before currency
adjustments, to account for the majority of the increase in liquidity for the
year.

---



|Financial Condition
    Highlights                                                                              |          |         
|--------------------------------------------------------------------------------------------------------------- | -------- | --------
|(in thousands of Canadian
    Dollars, except where otherwise noted)                                            |         
|                                                                                                                |          |         
|Fiscal Year Ended                                                                                               | 2003     | 2002    
|Cash and cash equivalents                                                                                       | $28,699  | $9,984  
|Short-term investments                                                                                          | $-       | $11,909 
|Total debt(1)                                                                                                   | $40,440  | $52,766 
|Net debt(2)                                                                                                     | $11,741  | $30,873 
|                                                                                                                |          |         
|Current assets                                                                                                  | $140,311 | $142,961
|Current liabilities                                                                                             | $53,327  | $85,703 
|Current ratio                                                                                                   | 2.6:1    | 1.7:1   
|Net working capital                                                                                             | $86,984  | $57,258 
|                                                                                                                |          |         
|Shareholders' equity                                                                                            | $437,221 | $436,263
|Total capital(3)                                                                                                | $477,661 | $489,029
|Ratio of total debt to total capital                                                                            | 8.5%     | 10.8%   
|                                                                                                                |          |         
|(1) Total debt defined as the sum of short-term and long-term
    interest-bearing debt.                       
|(2) Net debt is defined as total debt minus cash and cash equivalents and
    short- and long-term investments.
|(3) Total capital is defined as total debt plus shareholders' equity.                                          

Higher cash balances and reduced total debt arising from scheduled repayments
and the translation impact of the strengthening Canadian dollar resulted in a
decrease in net debt to $11.7 million at the end of 2003 from $30.9 million at
the end of 2002. Net working capital and the current ratio are used to monitor
the Company's ability to meet its short-term obligations. Both measures
increased year over year due to a significant reduction in payables and accruals
in 2003. Significant capital spending near the end of 2002 comprised a large
part of payables and accruals at the end of that year. Wescast uses the ratio of
total debt to total capital to monitor the capitalization of the Company. As a
result of the reduction in the Company's debt and the net earnings contribution
to shareholders' equity, the ratio of total debt to total capital fell year over
year to 8.5% at the end of 2003 from 10.8% at the end of 2002.

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The following charts show the Company's cash and short-term investments and
net debt positions in 2003 versus 2002:



The Company is well positioned to fund its short- and long-term growth
objectives through positive operating cash flows, efficient working capital
management and the financial flexibility that accompanies a conservative capital
structure.

---

The following chart shows the Company's ratio of total debt to total capital
in 2003 versus 2002:



Available Financing Sources

The Company has uncommitted demand operating facilities totalling US$36.5
million. At December 28, 2003, all facilities were undrawn. The Company's
balance sheet is very strong, and management believes it could arrange committed
lines of credit should the need arise.

Cash Flows

The table below provides information from the Company's statements of cash
flows.

|Fiscal Year Ended                           |         |         
|------------------------------------------- | ------- | --------
|(in thousands of Canadian
    Dollars)      |         |         
|                                            | 2003    | 2002    
|                                            |         |         
|Cash derived from continuing
    operations | $54,030 | $90,402 
|Cash used for investing
    activities      | $25,449 | $109,611
|Cash used in financing
    activities       | $9,514  | $28,626 
|                                            |         |         

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Operating ActivitiesCash flows from continuing operations were $54.0 million in 2003 versus $90.4
million in 2002, reflecting the continuing ramp-up of the Cordele and Weslin
facilities and an increase in non-cash working capital. The change in non-cash
working capital was primarily the result of significant payments made in 2003
relating to 2002 spending. The prior year activities included the addition of
new machine lines, the construction of the Company's technical development
centre and corporate office complex, and payment of customer-related liabilities
that were included in payables and accruals at the end of 2002.
During 2003, the Company established new standard payment terms with its
suppliers, the effect of which was a lengthening of average payment terms of
approximately ten days.Investing ActivitiesCash flows used in investing activities were
$25.4 million in 2003, down from $109.6 million in 2002, due mainly to lower
capital expenditures in 2003 compared to 2002 and the acquisition of Cordele in
2002.
Capital expenditures in 2003 were $39.4 million
compared to $83.0 million in 2002. The decrease was due primarily to:A
  year-over-year reduction in capital spending on the Company's technical
  development centre and corporate office complex of $18.2 million;The
  purchase of an aircraft in 2002 for $12.4 million;Lower
  capital spending on new machine lines in 2003 of $4.9 million; andLower capital spending at Weslin in 2003 of $3.2 million.

As a result of ongoing expansion programs, the
Company has commitments to acquire capital assets of $5.2 million in 2004. Total
capital expenditures, including the committed amount of $5.2 million, are
expected to be approximately $70.0 million in 2004, but this includes $12.0
million related to Weslin, a portion of which may not be spent in light of the
expected Weslin divestiture. These expenditures will be funded by cash on hand,
internally generated funds from operations and, if required, unutilized
operating lines of credit. Capital expenditures for 2004 will consist primarily
of machining expansion in the Powertrain operations in North America and
productivity projects exhibiting less than two-year paybacks across all Wescast
facilities.
In 2002, the cash consideration paid to acquire
Cordele was $39.5 million. There were no acquisitions in 2003.

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By the end of 2002, Weslin's operations had achieved commercial production
status. Consequently, the Company ceased deferring pre-production costs at that
time. The Company incurred deferred pre-production costs of $3.9 million in 2002
related to this business. These costs began to be amortized in 2003 at a rate of
about $2.0 million per annum.Financing ActivitiesCash flows used in financing activities decreased to $9.5
million in 2003 from $28.6 million in 2002. In 2002, subsequent to the
acquisition of Cordele, the Company paid down $22.0 million of long-term debt
assumed on the acquisition.Off-Balance Sheet FinancingThe Company's off-balance sheet financing arrangements are limited to
standard operating lease contracts with various commercial enterprises relating
primarily to equipment and office space. As at December 28, 2003, operating
lease commitments totalled $1.9 million for 2004. The leases expire at various
times through 2008, but will likely be renewed or replaced upon expiration.
Management does not believe that the early termination of any of these lease
contracts would have a material impact on its consolidated financial statements.Contractual ObligationsThe following table summarizes the expected
cash outflows resulting from certain financial contracts and commitments:
Payments Due by Period 
(in thousands of Canadian Dollars)

|                                  |         | Less than |           |           |              
|--------------------------------- | ------- | --------- | --------- | --------- | -------------
|                                  | Total   | 1 year    | 1-3 years | 4-5 years | After 5 years
|                                  |         |           |           |           |              
|Revenue bond
    obligations      | $37,842 | $2,600    | $5,200    | $4,561    | $25,481      
|Capital lease
    obligations     | 1,421   | 591       | 797       | 33        | -            
|Operating leases                  | 6,127   | 1,837     | 2,925     | 1,365     | -            
|Bank loans                        | 1,177   | 1,177     | -         | -         | -            
|Operating leases (Weslin)         | 122     | 81        | 41        | -         | -            
|                                  |         |           |           |           |              
|Total contractual
    obligations | $46,689 | $6,286    | $8,963    | $5,959    | $25,481      
|                                  |         |           |           |           |              



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The revenue bond obligations relate to financings for Cordele and the
Company's jointly controlled entity, United Machining Inc., and are more fully
described in Note 9 to the consolidated financial statements. The capital lease obligations relate to
the Company's fleet of vehicles provided to sales staff and executives.
The
operating leases are primarily for equipment and office space. The bank loans
relate to certain equipment financings of United Machining Inc. The above table
includes amounts for Weslin which is expected to be divested in 2004.Other ObligationsThe Company's employee benefit plans are described in Note 10 to the
consolidated financial statements. Only one of the Company's defined benefit
plans is registered and funded. The most significant plans are not funded or
registered. The total defined benefit plan deficit of the Company was $23.6
million at December 28, 2003. The benefit payments required during 2004 are not
expected to be of a material amount and will be funded through cash flow from
operations.
During the fourth quarter of 2003, the Company established a
Restricted Share Unit ("RSU") plan. Under the RSU plan the Company has granted
RSUs to certain employees. This entitles the employee to receive a cash payment
for each RSU granted in an amount equal to the weighted average closing price of
the Company's Class A common shares as traded on the Toronto Stock Exchange
during the five-day period prior to the third anniversary date on which the RSU
was granted. The RSUs vest, and the cash value is paid, on the third anniversary
of the date on which such RSUs were granted. The related compensation expense is
accrued over this period. As at December 28, 2003, there were 34,622 RSUs
outstanding. Based on the year-end closing price of the Company's Class A common
shares, the payments required to settle the RSUs would total $1.3 million.Shareholders' EquityShareholders' equity increased $1.0 million in 2003 as compared to 2002.
During the year, 14,551 Class A common shares were issued under the Employee
Share Purchase Plan, adding $0.5 million to shareholders' equity. Net earnings
contributed $8.3 million to shareholders' equity. Dividends of $6.3 million or
$0.48 per share on Class A and Class B common shares were paid during 2003.
Director and employee share purchase plan loans reduced shareholders' equity by
$1.0 million. The decrease in the cumulative translation adjustment of $0.4
million represents the change in the unrealized foreign exchange loss on the
Company's net investment in its self-sustaining foreign subsidiaries.
During 2003, the Company changed its accounting treatment with respect to
director and employee share purchase plan loans to comply with recent changes in
Canadian accounting standards. Share purchase plan loans are now reported as a
deduction from shareholders' equity as compared to other assets.
As a result of the
growing independence of Weslin, management determined during the year that, for
accounting purposes, it is appropriate to treat this investment as
self-sustaining and thereby use the current rate method to translate the net
assets of the operation. This change was applied prospectively, resulting in an
increase to the cumulative translation adjustment account of $3.8 million at
June 30, 2003.

---

Financial InstrumentsThe Company negotiates sales contracts with customers in a number of
currencies. To the extent sales are made in U.S. dollars, the Company has a
partial natural hedge against exchange rate fluctuations due to the purchase of
certain raw materials and other inputs to the manufacturing process in U.S.
dollars.
The Company believes its exposure to exchange rate fluctuations on these
working capital items is not significant.
The Company also purchases
certain capital equipment denominated in U.S. dollars and provides financial
support to Cordele during the foundry ramp-up phase in U.S. dollars. In order to
manage the exposure to exchange rate fluctuations on these expenditures, the
Company employs a hedging program primarily through the use of foreign exchange
forward contracts. The contracts are purchased based on committed purchase
orders for capital equipment denominated in U.S. dollars and an estimate of the
U.S. dollar requirements of Cordele on a rolling fifteen-month basis.
The
Company does not use derivative instruments to hedge the long-term investments
in its self-sustaining foreign subsidiaries. Accordingly, the Company's
cumulative translation adjustment account could be affected by a significant
change in the relative values of the Canadian dollar, U.S. dollar and Hungarian
forint.
Effective for the 2004 fiscal year, the Company is required under
Canadian GAAP to adopt Accounting Guideline, AcG-13, "Hedging Relationships."
The Company has performed a thorough review of its hedging program and has
implemented measures to ensure compliance with the new guideline.
Note 22 to the consolidated financial statements provides additional
information about financial instruments.Related-Party TransactionsIn 2003, the Company paid freight and logistics charges of $4.9 million to a
related company, 30% of whose shares are owned by a Class B shareholder of
Wescast. These transactions were negotiated at fair value. As at December 28,
2003, $0.8 million was owed to this company. The current freight and logistics
agreement was entered into by Wescast and the company in 1999 and expires at the
end of 2004.Critical Accounting EstimatesThe significant accounting policies of the Company are described in Note 2 to
the consolidated financial statements. Note 24 to the Company's consolidated
financial statements sets out the material differences between Canadian and US GAAP.

---

The Company's financial statements are based on the selection and application of
accounting policies that require management to make significant estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. The Company bases its estimates on historical experience and
various other assumptionsthat are believed to be reasonable in the circumstances. Wescast
evaluates its estimates on an ongoing basis. Actual results may differ from
these estimates under different assumptions or conditions.
The Company believes the following accounting
policies affect its more significant estimates and assumptions used in the
preparation of its consolidated financial statements. Management has discussed
the selection of the following accounting policies with the Audit Committee of
the Board of Directors. The Audit Committee has reviewed the Company's
disclosure related to accounting policies in this MD&A.Deferred Pre-production CostsThe Company capitalizes, as deferred pre-production costs, start-up
expenditures incurred in establishing new facilities that require significant
time to reach commercial production levels. These costs are amortized over a
period not to exceed five years commencing on completion of the pre-production
or start-up period. The application of this policy requires estimates as to when
a new facility or business achieves commercial production status. In estimating
when a new facility or business achieves commercial production status, the
Company considers production volumes, scrap levels, equipment uptime rates and
operating cash flow. During 2003, there were no costs incurred that were
capitalized as deferred pre-production costs. The Company recorded total
amortization of pre-production costs of $3.5 million in 2003 related to two
facilities in North America and its Weslin operation. As at December 28, 2003,
deferred pre-production costs on the Company's balance sheet totalled $9.8
million, of which $8.2 million related to Weslin.

---

GoodwillEffective January 1, 2002, goodwill is subject to an annual impairment test
or more frequently when an event or circumstance occurs that more likely than
not reduces the fair value of a reporting unit below its carrying value. In
assessing goodwill impairment, the Company must make forward-looking assumptions
regarding future industry market conditions and the operating performance of the
reporting unit. These assumptions are subject to significant measurement
uncertainty. As described in the "Goodwill Impairment" section of this MD&A, the
Company recorded a $41.5 million pre-tax goodwill impairment charge in 2003.Future Income Tax AssetsAs at December 28, 2003, the Company had recorded future income tax assets
related to losses available to be carried forward, the tax basis of goodwill in
excess of book value and other deductible temporary differences of $10.6
million, $13.0 million and $8.1 million, respectively. The future income tax
assets with respect to the loss carryforwards and the goodwill tax basis relate
mainly to the Company's Cordele operation. The Company evaluates the carrying
value of its future tax assets by assessing its valuation allowance and by
adjusting the amount of such allowance, if necessary. The factors used to assess
the likelihood of realization include the Company's forecast of future taxable
income and available tax- planning strategies that could be implemented to
realize the future tax assets.Employee BenefitsThe Company has a number of plans providing pension and other retirement
benefits. The determination of the obligation and expense for these plans is
dependent on the selection of certain assumptions used by actuaries. Those
assumptions are included in Note 10 to the Company's consolidated financial
statements and include the discount rate, expected long-term rate of return on
plan assets and the rate of increase in compensation costs. Actual results that
differ from the assumptions used are amortized over future periods and,
therefore, have an impact on the obligation and expense recognized in future
periods. Significant changes in assumptions or significant plan enhancements
could materially affect the Company's future obligation and expense. As at
December 28, 2003, the Company had net unrecognized past service costs,
actuarial losses and transitional obligations totalling $11.4 million, which
will be amortized to future benefit expense over the expected average remaining
service life of the employees.

---

Accounting ChangesIn December 2002, the Emerging Issues Committee
issued Emerging Issues Committee Abstract 132 "Share Purchase Financing" (EIC
132). This Abstract, which is effective for fiscal years beginning on or after
January 1, 2003, addresses issues relating to share purchase loans that are
provided by a company to its directors, officers or employees to assist in the
purchase of shares of a company. The Committee concluded that share purchase
loans should be reported as a deduction from shareholders' equity, as opposed to
an asset, unless the borrower assumes the risk for a decline in the price of the
underlying shares and there is reasonable assurance that the full amount of the
loan will be collected. As a result, the Company changed its accounting
treatment, on a prospective basis, with respect to director and employee share
purchase plan loans such that share purchase loans are reported as a deduction
from shareholders' equity as compared to other assets.
In December 2002, the Canadian Institute of
Chartered Accountants ("CICA") amended Handbook Section 3475, "Disposal of
Long-Lived Assets and Discontinued Operations" ("CICA 3475"). CICA 3475 provides
guidance on differentiating between assets held for sale and held for disposal
other than by sale and on the presentation of discontinued operations. CICA 3475
applies to disposal activities initiated on or after May 1, 2003. The adoption
of CICA 3475 did not have an impact on the Company's consolidated financial
statements during 2003.
In February 2003, the CICA issued Accounting
Guideline AcG-14, "Disclosure of Guarantees" ("AcG-14"). AcG-14 provides
recommendations on disclosures required related to guarantees that a guarantor
has provided. AcG-14 was effective for fiscal years beginning on or after
January 1, 2003. The Company has not provided any guarantees as defined in
AcG-14.New Accounting PronouncementsIn January 2003, the CICA issued Handbook
Section 3063 "Impairment of Long-Lived Assets" ("CICA 3063"). This section
establishes new standards for the recognition, measurement, presentation and
disclosure of the impairment of long-lived assets. An impairment loss is
measured as the amount by which the long-lived asset's carrying value exceeds
its fair value. CICA 3063 is effective for fiscal years beginning on or after
April 1, 2003, and should be applied on a prospective basis. The Company adopted
this standard effective December 29, 2003, and does not expect a material impact
on its consolidated financial statements.
In March 2003, the CICA issued Handbook Section
3110 "Asset Retirement Obligations" ("CICA 3110"). CICA 3110 addresses
obligations required to be settled as a result of an existing law, regulation or
contract related to the retirement of an asset. This section requires that a
liability be recognized at its fair value when a legal obligation is incurred.
The corresponding amount is added to the carrying value of the related asset.
The obligation can no longer be accrued over the
life of the related asset. CICA 3110 requires retroactive application for fiscal
years beginning on or after January 1, 2004. The Company adopted this standard
effective December 29, 2003, and does not expect a material impact on its
consolidated financial statements.

---

In December 2001, the CICA approved amendments
to Accounting Guideline AcG-13, "Hedging Relationships" ("AcG-13"). AcG-13 has
since been revised in January 2002, November 2002 and June 2003. The Guideline
significantly increases the documentation, designation and effectiveness
criteria necessary to achieve hedge accounting. Certain types of hedging
relationships will be specifically prohibited, such as relationships where it is
not highly probable the derivative instrument will be effective, where hedging
net positions or where hedging portfolios of dissimilar items. A derivative that
does not meet the criteria for hedge accounting should be recognized on the
balance sheet and measured at fair value. AcG-13 is effective for fiscal years
beginning on or after July 1, 2003. The Company adopted these recommendations
effective December 29, 2003. The Company has performed a thorough review of its
hedging program and has implemented measures to ensure compliance with this
Guideline.
In June 2003, the CICA issued Accounting
Guideline AcG-15, "Consolidation of Variable Interest Entities" ("AcG-15").
AcG-15 has since been revised in November 2003 and January 2004. This Guideline
provides guidance for determining when an enterprise should consolidate a
variable interest entity, defined as an entity without substantive third-party
equity. The main objective of the Guideline is to identify those entities for
which consolidation will be assessed based on a voting interest framework and
those that require a variable interest framework. AcG-15 is effective for fiscal
years beginning on or after November 1, 2004. The Company is in the process of
assessing the impact of AcG-15 on its consolidated financial statements.OutlookAlthough there can be no certainty as to future
levels of production, based on currently available information the Company views
the economic outlook for the automotive industry in 2004 to be stable. North
American light vehicle production is projected in the range of 16.0 to 16.4
million vehicles in 2004. This represents a slight increase over 2003 levels.
The Company anticipates its 2004 production levels of its North American
Powertrain segment will also remain in a range consistent with those achieved in
2003.
The Company's results are sensitive to raw material prices for scrap steel
and moly. These costs have escalated significantly in recent months, and if this
trend continues it will have a negative impact on future financial results.
The Company's strategic direction remains
unchanged.The focus
  of the core Powertrain segment in North America will be on becoming more
  cost-competitive in an effort to address the significant pressure on pricing
  that is being exerted by the customer base. This pressure has intensified with
  the growing threat from competitors based in low-cost countries, specifically China. To
  meet this challenge the Company will continue to pursue aggressive
  year-over-year cost-reduction targets in these operations. Progress has been
  made toward achieving these targets by applying the Company's HEART
  participative management process and continuous improvement focus. To date
  many cost-reduction initiatives have been proposed and are being implemented.

- The
  Company will continue to focus on growth and diversification through the
  expansion of its customer base, product offerings and geographic coverage.
- 
- 

The Company's product diversification strategy
was accelerated with the addition of the Chassis segment in 2002. Market prices
are under pressure due to foundry industry overcapacity and an increase in
offshore competition. The business is also faced with the typical ramp-up issues
that impact new foundry operations. The primary focus for this operation in 2004
will be on improving manufacturing efficiencies and demonstrating consistent
operating performance. These improvements, if achieved, will yield improved
financial performance.

The Company will continue to evaluate both the
threat and opportunities that may exist in the emerging automotive industry in
Asia, specifically China. The cross-functional team that was assembled in 2002
has visited many customers and prospective business partners in Asia and is
reviewing specific opportunities that would enable Wescast to participate in
this market.

The continued investment in the growth
initiatives in the Company's Chassis segment will impact earnings in 2004. This
operation, while expected to demonstrate improved performance, is not expected
to be profitable in 2004 as it continues to ramp up production.

The Company believes that maintaining the focus
on these areas is the best means to ensure the long-term success of the
business.

---

Forward-Looking InformationCertain information provided by Wescast in this
MD&A and in other documents published throughout the year that is not a
recitation of historical facts may constitute forward-looking information,
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. The words "estimate," "anticipate," "believe," "expect" and similar
expressions are intended to identify forward-looking statements. Such
forward-looking information involves important risks and uncertainties that
could materially alter results in the future from those expressed in any
forward-looking statements made by or on behalf of the Company.
These risks and uncertainties include, but are
not limited to, global economic and industry conditions causing changes to
production volumes, changes in raw material and other input costs, price
reduction pressures, dependence on certain vehicles and major OEM customers,
program launch delays, currency exposure, contract negotiations with the
unionized workforce, failure in implementing Company strategy, technological
developments by the Company's competitors, government and regulatory policies
and changes in the competitive environment in which the Company operates. While
the Company believes that its forecasts and assumptions are reasonable, persons
reading this report are cautioned that such statements are only predictions and
that actual events or results may differ materially. In evaluating such
forward-looking statements readers should specifically consider the various
factors that could cause actual events or results to differ from those indicated
by such forward-looking statements.Management's Responsibility for Financial ReportingThe accompanying financial
statements of Wescast Industries Inc. and all the information in this annual
report are the responsibility of management and have been approved by the Board
of Directors.
The financial statements have been prepared by
management in accordance with Canadian generally accepted accounting
principles. When alternative accounting methods exist, management has chosen
those it deems most appropriate in the circumstances. Financial statements are
not precise since they include certain amounts based on estimates and judgments.
Management has determined such amounts on a
reasonable basis in order to ensure that the financial statements are presented
fairly, in all material respects. Management has prepared the financial
information presented elsewhere in the annual report and has ensured that it is
consistent with that in the financial statements.
Wescast Industries Inc. maintains high-quality,
consistent systems of internal accounting and administrative controls. Such
systems are designed to provide reasonable assurance that the financial
information is relevant, reliable and accurate and that the Company's assets are
appropriately accounted for and adequately safeguarded.

---

The Board of Directors is responsible for
ensuring that management fulfills its responsibilities for financial reporting
and is ultimately responsible for reviewing and approving the financial
statements. The Board is assisted in its responsibility by the Audit Committee
and the external auditors.
The Audit Committee is appointed by the Board,
and all of its members are outside directors. The Committee meets periodically
with management, as well as the external auditors, to discuss internal controls
over the financial reporting process, auditing matters and financial reporting
issues, to satisfy itself that each party is properly discharging its
responsibilities, and to review the annual report, the financial statements and
the external auditors' report.
The findings and recommendations of the
Committee, as with all committees of the Board, are submitted to the full Board
for approval or other disposition. The Committee also considers, for review by
the Board and approval by the shareholders, the engagement or re-appointment of
the external auditors.
The annual financial statements have been
audited by Deloitte & Touche LLP, the external auditors, for the year ended
December 28, 2003, in accordance with Canadian generally accepted auditing
standards on behalf of the shareholders. Deloitte & Touche LLP has full and free
access to the Audit Committee.
Sincerely,
Edward G. Frackowiak 
Executive Chairman 
Chief Executive Officer (Interim) 
March 22, 2004

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