---

Exhibit 3

Auditors' Report

To the Shareholders of Wescast Industries Inc.

We have audited the consolidated balance sheet
of Wescast Industries Inc. (the "Company") as at December 28, 2003 and the
consolidated statements of earnings and retained earnings and of cash flows for
the 52 week period then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with
Canadian generally accepted auditing standards. Those standards require that we
plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.

In our opinion, these consolidated financial
statements present fairly, in all material respects, the financial position of
the Company as at December 28, 2003 and the results of its operations and its
cash flows for the 52 week period then ended in accordance with Canadian
generally accepted accounting principles.

The consolidated financial statements as at
December 29, 2002 and for the 52 week periods ended December 29, 2002 and
December 30, 2001, prior to the adjustments described in the reconciliation to
accounting principles generally accepted in the United States of America in Note
24, were audited by other auditors who expressed an opinion without reservation
on those statements in their report dated January 27, 2003. We have audited the
adjustments to Note 24 as at December 29, 2002 and for the 52 week periods ended
December 29, 2002 and December 30, 2001 and in our opinion, such adjustments, in
all material respects, are appropriate and have been properly applied.

Chartered Accountants 
Kitchener, Ontario 
January 30, 2004, except as to Note 25, which is as of March 10, 2004

---



Comments by Auditor on Canada-United States of America Reporting Difference

In the United States, reporting standards for
auditors require the addition of an explanatory paragraph following the opinion
paragraph to identify circumstances in which accounting changes affect
consistency such as the matters described in Notes 2 and 24 to the consolidated
financial statements. Our report to the shareholders dated January 30, 2004,
except as to Note 25, which is as of March 10, 2004, is expressed in accordance
with Canadian reporting standards which do not require reference to such
circumstances in the auditors' report when the items are properly accounted for
and disclosed in the consolidated financial statements.

Chartered Accountants 
Kitchener, Ontario 
January 30, 2004, except as to Note 25, which is as of March 10, 2004

---

Consolidated Statements of Earnings and Retained Earnings(in thousands of Canadian Dollars, except per
share amounts)

|                                                         | 2003     | 2002                                                                | 2001    
|-------------------------------------------------------- | -------- | ------------------------------------------------------------------- | --------
|                                                         |          |                                                                     |         
|                                                         |          |                                                                     |         
|Sales                                                    | $475,800 | $424,207                                                            | $383,502
|Cost of
    sales                                        | 370,960  | 294,293                                                             | 255,386 
|                                                         |          |                                                                     |         
|Gross
    profit                                         | 104,840  | 129,914                                                             | 128,116 
|Selling, general and administration                      | 37,545   | 31,589                                                              | 26,547  
|Stock-based compensation (Note 23)                       | 779      | 5,277                                                               | -       
|Research, development and design                         | 7,820    | 8,281                                                               | 6,077   
|                                                         |          |                                                                     |         
|                                                         | 58,696   | 84,767                                                              | 95,492  
|Other
    (income) expense                               |          |                                                                     |         
|Interest - long-term                                     | 1,082    | 810                                                                 | 409     
|Interest - short-term                                    | 296      | -                                                                   | -       
|Goodwill impairment (Note 3b)                            | 41,485   | -                                                                   | -       
|Other (Note 14)                                          | 1,718    | (1,271)                                                             | (5,195) 
|                                                         |          |                                                                     |         
|                                                         | 44,581   | (461)                                                               | (4,786) 
|                                                         |          |                                                                     |         
|Earnings from continuing operations before income tax    | 14,115   | 85,228                                                              | 100,278 
|Income
    taxes (Note 15)                               | 5,847    | 25,188                                                              | 34,240  
|                                                         |          |                                                                     |         
|Earnings from continuing operations                      | 8,268    | 60,040                                                              | 66,038  
|Loss
    from discontinued operations (Note 17)          | -        | -                                                                   | (24,768)
|                                                         |          |                                                                     |         
|Net
    earnings                                         | $8,268   | $60,040                                                             | $41,270 
|                                                         |          |                                                                     |         
|Earnings from continuing operations per share (Note 18)  |          |                                                                     |         
|Basic                                                    | $0.63    | $4.59                                                               | $5.11   
|Diluted                                                  | $0.63    | $4.59                                                               | $5.01   
|Net
    earnings per Share (Note 18)                     |          |                                                                     |         
|Basic                                                    | $0.63    | $4.59                                                               | $3.19   
|Diluted                                                  | $0.63    | $4.59                                                               | $3.12   
|                                                         |          |                                                                     |         
|Retained earnings, beginning of year                     | $326,686 | $272,922                                                            | $238,052
|Net
    earnings                                         | 8,268    | 60,040                                                              | 41,270  
|Dividends paid                                           | (6,285)  | (6,276)                                                             | (6,209) 
|Excess
    of cost over assigned value of Class A common |          |                                                                     |         
|shares
    purchased and cancelled                       | -        | -                                                                   | (191)   
|                                                         |          |                                                                     |         
|Retained earnings, end
    of year                       | $328,669 | $326,686                                                            | $272,922
|                                                         |          |                                                                     |         
|                                                         |          | See accompanying notes to the
    consolidated financial statements
|                                                         |         

---

Consolidated Balance Sheets(in thousands of Canadian Dollars)

|                                                                                    |                                 | December 28,                                                         | December 29,
|----------------------------------------------------------------------------------- | ------------------------------- | -------------------------------------------------------------------- | ------------
|                                                                                    |                                 | 2003                                                                 | 2002        
|                                                                                    |                                 |                                                                      |             
|ASSETS                                                                              |                                 |                                                                      |             
|Current                                                                             |                                 |                                                                      |             
|Cash and cash equivalents                                                           |                                 | $28,699                                                              | $9,984      
|Short-term investments                                                              |                                 | -                                                                    | 11,909      
|Receivables (net of allowance for bad debts of $2,333 and $2,239,
    respectively) | 73,073                          | 73,095                                                              
|Income taxes receivable                                                             |                                 | -                                                                    | 5,578       
|Inventories (Note 5)                                                                |                                 | 33,232                                                               | 38,412      
|Prepaids                                                                            |                                 | 3,049                                                                | 2,526       
|Future income taxes (Note 15b)                                                      | 2,043                           | 1,192                                                               
|Current assets - discontinued operations (Note 17)                                  | 215                             | 265                                                                 
|                                                                                    |                                 |                                                                      |             
|                                                                                    |                                 | 140,311                                                              | 142,961     
|                                                                                    |                                 |                                                                      |             
|Property and equipment (Note 6)                                                     |                                 | 375,060                                                              | 382,718     
|Future
    income taxes (Note 15b)                                                  |                                 | 29,716                                                               | 8,645       
|Goodwill (Note 3)                                                                   |                                 | -                                                                    | 41,485      
|Other
    (Note 7)                                                                  |                                 | 10,468                                                               | 15,708      
|Long-term assets -
    discontinued operations (Note 17)                            | 5,580                           | 5,237                                                               
|                                                                                    |                                 |                                                                      |             
|                                                                                    |                                 | $561,135                                                             | $596,754    
|                                                                                    |                                 |                                                                      |             
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                |                                 |                                                                     
|Current                                                                             |                                 |                                                                      |             
|Payables and accruals                                                               |                                 | $45,158                                                              | $75,873     
|Income taxes payable                                                                |                                 | 32                                                                   | -           
|Current portion of long-term debt (Note 9)                                          | 4,368                           | 6,190                                                               
|Current portion of stock appreciation rights                                        | 3,651                           | 3,213                                                               
|Future income taxes (Note 15b)                                                      |                                 | 118                                                                  | 427         
|                                                                                    |                                 |                                                                      |             
|                                                                                    |                                 | 53,327                                                               | 85,703      
|                                                                                    |                                 |                                                                      |             
|Long-term debt (Note 9)                                                             |                                 | 36,072                                                               | 46,576      
|Long-term stock appreciation rights                                                 |                                 | 62                                                                   | 105         
|Future
    income taxes (Note 15b)                                                  |                                 | 22,271                                                               | 18,574      
|Employee benefits (Note 10)                                                         |                                 | 12,182                                                               | 9,533       
|                                                                                    |                                 |                                                                      |             
|                                                                                    |                                 | 123,914                                                              | 160,491     
|                                                                                    |                                 |                                                                      |             
|Commitments and
    contingencies (Note 13)                                         |                                 |                                                                     
|                                                                                    |                                 |                                                                      |             
|Shareholders Equity                                                                 |                                 |                                                                      |             
|Capital
    stock (Note 11)                                                         |                                 | 110,049                                                              | 109,596     
|Retained earnings                                                                   |                                 | 328,669                                                              | 326,686     
|Share
    purchase loans (Note 12)                                                  |                                 | (1,031)                                                              | -           
|Cumulative translation adjustment                                                   |                                 | (466)                                                                | (19)        
|                                                                                    |                                 |                                                                      |             
|                                                                                    |                                 | 437,221                                                              | 436,263     
|                                                                                    |                                 |                                                                      |             
|                                                                                    |                                 | $561,135                                                             | $596,754    
|                                                                                    |                                 |                                                                      |             
|Approved by the Board:                                                              |                                 | See accompanying notes to the 
    consolidated financial statements
|                                                                                    |                                 |                                                                      |             
|Edward G. Frackowiak,
    Executive Chairman                                        | J.
    Emilien Bolduc, Director |                                                                     

---

Consolidated Statements of Cash Flows(in thousands of Canadian Dollars)

|                                                           | 2003     | 2002                                                                 | 2001    
|---------------------------------------------------------- | -------- | -------------------------------------------------------------------- | --------
|                                                           |          |                                                                      |         
|                                                           |          |                                                                      |         
|Cash
    derived from (applied to)                         |          |                                                                      |         
|                                                           |          |                                                                      |         
|Operating                                                  |          |                                                                      |         
|Earnings from continuing operations                        | $8,268   | $60,040                                                              | $66,038 
|Depreciation and amortization                              | 43,123   | 30,911                                                               | 27,883  
|Goodwill impairment (Note 3b)                              | 41,485   | -                                                                    | -       
|Future income taxes                                        | (19,602) | (1,935)                                                              | 2,368   
|Gain on disposal of investments                            | (13)     | (195)                                                                | -       
|Loss on disposal of equipment                              | 915      | 490                                                                  | 1,338   
|Stock-based compensation, net of payments                  | 395      | 3,318                                                                | -       
|Employee benefits, net of payments                         | 2,649    | 1,569                                                                | 1,304   
|                                                           |          |                                                                      |         
|                                                           | 77,220   | 94,198                                                               | 98,931  
|                                                           |          |                                                                      |         
|Change
    in non-cash operating working capital (Note 19) | (23,190) | (3,796)                                                              | 2,387   
|                                                           |          |                                                                      |         
|                                                           | 54,030   | 90,402                                                               | 101,318 
|Discontinued operations                                    | (352)    | (760)                                                                | (5,190) 
|                                                           |          |                                                                      |         
|                                                           | 53,678   | 89,642                                                               | 96,128  
|                                                           |          |                                                                      |         
|Financing                                                  |          |                                                                      |         
|Issue of long-term debt                                    | 2,335    | 1,764                                                                | 1,553   
|Repayment of long-term debt                                | (5,593)  | (26,441)                                                             | (2,432) 
|Payments of obligations under capital lease                | (1,002)  | (854)                                                                | (701)   
|Employee share loan repayments                             | 579      | 439                                                                  | 571     
|Dividends paid                                             | (6,285)  | (6,276)                                                              | (6,209) 
|Repurchase of common shares                                | -        | -                                                                    | (340)   
|Issue of common shares                                     | 452      | 2,742                                                                | 3,331   
|                                                           |          |                                                                      |         
|                                                           | (9,514)  | (28,626)                                                             | (4,227) 
|                                                           |          |                                                                      |         
|Investing                                                  |          |                                                                      |         
|Purchase of property, equipment and other assets           | (39,380) | (83,015)                                                             | (54,610)
|Purchase of short-term investments                         | -        | (48,236)                                                             | (29,575)
|Purchase of subsidiary, net of cash acquired (Note 3a)     | -        | (39,521)                                                             | -       
|Deferred pre-production costs                              | -        | (3,881)                                                              | (4,347) 
|Redemption of short-term investments                       | 11,905   | 65,149                                                               | 30,000  
|Proceeds on disposal of equipment                          | 2,026    | 251                                                                  | 26      
|Discontinued operations                                    |          | (358)                                                                | (9,244) 
|                                                           |          |                                                                      |         
|                                                           | (25,449) | (109,611)                                                            | (67,750)
|                                                           |          |                                                                      |         
|Net
    increase (decrease) in cash and cash equivalents   | 18,715   | (48,595)                                                             | 24,151  
|Cash
    and cash equivalents                              |          |                                                                      |         
|Beginning of year                                          | 9,984    | 58,579                                                               | 34,428  
|                                                           |          |                                                                      |         
|End of year                                                | $28,699  | $9,984                                                               | $58,579 
|                                                           |          |                                                                      |         
|                                                           |          | See accompanying notes to the 
    consolidated financial statements
|                                                           |          |                                                                      |         

---

Notes to the Consolidated Financial Statements(in thousands of Canadian Dollars, except per
share amounts)1. Nature of operationsThe major operations of Wescast Industries Inc. are the design and
manufacture of cast iron parts for the automotive industry.2. Summary of significant accounting policies
Basis of presentationThe consolidated financial statements have been prepared in Canadian dollars
following Canadian generally accepted accounting principles. These financial
statements are also in conformity, in all material respects, with financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America, except as described in Note 24.Fiscal yearThe fiscal year of the Company consists of a 52- or 53-week period ending on
the Sunday closest to December 31. The fiscal year for the consolidated
financial statements presented for 2003, 2002 and 2001 are the 52-week periods
ended December 28, 2003, December 29, 2002, and December 30, 2001, respectively.Principles of consolidationThe consolidated financial statements include the accounts of Wescast
Industries Inc. and its subsidiaries (the "Company"). The Company accounts for
its jointly controlled entities, United Machining Inc. (49%) and Weslin
Industries Inc. (50%), using the proportionate consolidation method. All
significant inter-company balances and transactions have been eliminated.
All amounts disclosed in the notes to the consolidated financial statements
related to the Company's jointly controlled entities are the Company's
proportionate share.Revenue recognitionRevenue is recognized when the price is fixed or determinable, collectability
is reasonably assured and products are delivered to customers. Tooling and
prototype revenue is recognized when the customer has received, tested and
accepted the tooling or prototype.Cash and cash equivalentsCash and cash equivalents includes cash and investments that have a maturity
of three months or less from the date of acquisition.Short-term investmentsShort-term investments are carried at cost, which approximates market value,
may be liquidated promptly and have maturities greater than three months and
less than one year.

---

InventoriesRaw materials and supplies are valued at the lower of cost or
replacement cost. Tooling and finished goods are valued at the lower of cost or
net realizable value. Cost includes material, labour and manufacturing overhead.
Cost is determined on a first-in, first-out basis.DepreciationRates of depreciation are applied to write off the cost less estimated
salvage value of property and equipment over their estimated useful lives.
Buildings and improvements have an estimated useful life of 10 to 30 years and
are depreciated on a declining-balance basis at 3% to 10% per year or on a
straight-line basis over their respective lives. Machinery, equipment and
vehicles have an estimated useful life of 2 to 15 years and are depreciated on a
diminishing-balance basis at 10% to 50%, a straight-line basis up to 15 years or
on a unit-of-production basis calculated on the estimated volume over the life
of the product.GoodwillGoodwill represents the excess of the purchase price of the Company's
subsidiary, Wescast Industries Cordele, LLC, over the fair value of the
identified assets in the acquisition. Goodwill is not amortized. The carrying
value of goodwill is compared to its fair value on an annual basis to determine
if there is any impairment, at which time any impairment will be recorded as a
charge to earnings.Amortization of other long-term assetsLicences are being amortized on the straight-line method over their estimated
lives of 10 years. Bond issue costs are amortized over the term of the related
bonds.Deferred pre-production costsCosts incurred in the pre-production or start-up period of new facilities and
new businesses are deferred until commercial production levels are attained.
These costs are amortized over a period not to exceed five years commencing on
completion of the pre-production or start-up period.Maintenance and repairsAll maintenance and repair costs are expensed as incurred.Research, development and designAll research, development and design costs are expensed as incurred.Income taxesThe Company provides for income taxes using the liability method of tax
allocation. Under this method, future income tax assets and liabilities are
determined based on deductible or taxable temporary differences between
financial statement values and tax values of assets and liabilities using
enacted income tax rates expected to be in effect for the year in which the
differences are expected to reverse.

---

The Company establishes a
valuation allowance against future income tax assets, if based on available
information; it is more likely than not that one or all of the future income tax
assets will not be realized.
Investment tax credits relating to capital
asset purchases and research and development expenditures are accounted for as a
reduction of the cost of such assets and expenses, respectively. Investment tax
credits are recorded when there is reasonable assurance they will be realized.Employee benefit plansThe Company accrues its obligations under employee benefit plans and the
related costs, net of plan assets as follows:The cost
  of pensions and other retirement benefits earned by employees is actuarially
  determined using the projected-benefit method prorated on service and
  management's best estimate of expected plan investment performance for funded
  plans, salary escalation, retirement ages of employees and expected health
  care costs.For the
  purpose of calculating the expected return on plan assets, those assets are
  valued at fair value.Past
  service costs from plan amendments are amortized on a straight-line basis over
  the average remaining service period of employees active at the date of
  amendment.The
  excess of the net actuarial gain (loss) over 10% of the greater of the benefit
  obligation or the fair value of plan assets is amortized over the average
  remaining service period of active employees.Stock-based compensation plansThe Company's stock-based compensation plans
are described in Note 23. Prior to 2002, no compensation expense was recognized
with respect to the employee share purchase plan or the stock option plan. Any
consideration paid upon exercise of options and issue of shares is credited to
share capital.
The expenses recognized with
respect to the deferred stock unit plan and the restricted share unit plan are
reported as components of employee and director compensation and included in
cost of sales and selling, general and administration expenses.
In 2002, the Company's stock option plan was
amended to authorize the grant of tandem stock appreciation rights. The annual
increase or decrease in the intrinsic value of the stock options is included as
stock-based compensation in the statements of earnings. For options that have
not fully vested, the change in intrinsic value is amortized over the remaining
vesting period. The corresponding liability is reported on the balance sheet.Translation of foreign currenciesTransactions and balances denominated in currencies other than Canadian
dollars are translated on the following basis. Current assets and current
liabilities are translated at the year-end rate of exchange. Revenue and
expenses are translated at monthly average rates of exchange. Fixed assets and depreciation are translated at
rates prevailing when the related assets are acquired. Translation gains and
losses are included in earnings.

---

For self-sustaining subsidiaries, all of the assets and
liabilities are translated at the year end rate of exchange. Revenues and
expenses are translated at the average rate of exchange for the year. Gains and
losses are recorded as an adjustment to shareholders' equity.
For integrated subsidiaries, monetary assets
and liabilities are translated at the year-end rate of exchange. Fixed assets
and depreciation are translated at rates prevailing when the related assets are
acquired. Revenue and expenses are translated at monthly average rates of
exchange. Translation gains and losses are included in earnings.
As a result of the growing independence of
Weslin Industries Inc., management determined during the year that it was
appropriate to treat the subsidiary as self-sustaining. Effective June 30, 2003,
the net assets of this operation are translated using the current rate method
and adjustments arising from the translation are deferred and recorded as a
separate component of shareholders' equity. This change has been applied
prospectively, resulting in an increase to equity of $3,831 at June 30, 2003.Derivative financial instrumentsThe Company's use of derivative instruments is
intended to manage the risk of foreign currency fluctuations and the cost
volatility of electricity and natural gas. The Company does not hold or issue
derivative instruments for trading purposes. Accordingly, the Company accounts
for exchange gains and losses on forward exchange contracts at the time of
occurrence of the hedged transaction.
Gains and losses on forward exchange contracts
cancelled prior to maturity are deferred and recognized at the time the
originally hedged transactions occur.Use of estimatesIn preparing the Company's consolidated financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, and reported revenues and expenses
during the reporting period. Actual results could differ from those estimates.3. Business acquisition
(a) Acquisition in the year ended December 29, 2002On September 12, 2002, the Company acquired 100% of Georgia Ductile
Foundries, LLC. During 2003, the Company renamed Georgia Ductile Foundries, LLC
to Wescast Industries Cordele, LLC ("Cordele"). Cordele is a manufacturer of
sand cast iron components primarily for the automotive industry, focusing on
suspension and brake components. The results of Cordele's operations have been
included in the consolidated financial statements since the date of acquisition.

---

The total consideration paid in connection with
the acquisition amounted to $39,521 (net of cash acquired of $2,800).
The following table summarizes the estimated
fair value of the assets acquired and liabilities assumed at the date of
acquisition:

|Non-cash current assets                                                             | $9,720 
|----------------------------------------------------------------------------------- | -------
|Property and equipment                                                              | 71,523 
|Other
    long-term assets                                                          | 729    
|Goodwill(1)                                                                         | 41,485 
|                                                                                    |        
|Total assets acquired                                                               | 123,457
|                                                                                    |        
|Current
    liabilities                                                             | 21,932 
|Long-term debt                                                                      | 58,875 
|Future
    income taxes                                                             | 3,129  
|                                                                                    |        
|Total liabilities
    assumed                                                       | 83,936 
|                                                                                    |        
|Total consideration
    paid, net of cash acquired                                  | $39,521
|                                                                                    |        
|                                                                                    |        
|(1) The
    tax value of goodwill acquired was approximately $50,404.              
|                                                                                    |        
|Subsequent
    to the acquisition, the Company paid down $22,000 of long-term debt.

If this acquisition had occurred on December 31, 2001, the
unaudited pro forma sales of the Company for fiscal 2002 would have been
$449,043 and net earnings and basic net earnings per share would have decreased
by $10,853 and $0.83, respectively.

(b) Goodwill impairment

Cordele's operations constitute a separate reporting unit and reportable
segment (the "chassis segment" - see Note 21). During the fourth quarter of
2003, the Company performed its annual impairment test of the goodwill that was
acquired in conjunction with the above acquisition, which requires management to
estimate the fair value of the reporting unit. The fair value of the reporting
unit was estimated using the expected present value of future cash flows. Based
on changes in the current business environment and future outlook for the
chassis segment since the date of acquisition, the impairment analysis indicated
that the full carrying value of the goodwill was impaired. As a result, a total
non-cash charge of $41,485, or $27,380 after tax, was recognized. The key
factors that impacted the impairment test and affected the outlook for the
chassis segment included: 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; and inconsistent operating performance of equipment.

---

4. Interest in jointly controlled entities

The following is the Company's proportionate
share of the major components of its jointly controlled entities (before
eliminations):

|                                         | December 28, | December 29,
|---------------------------------------- | ------------ | ------------
|                                         | 2003         | 2002        
|                                         |              |             
|Balance sheets                           |              |             
|Current
    assets                       | $13,363      | $13,599     
|Long-term assets                         | 63,536       | 58,437      
|Current
    liabilities                  | 9,366        | 9,061       
|Long-term liabilities                    | 2,618        | 3,074       
|Equity                                   | 64,915       | 59,901      
|                                         |              |             
|                                         |              |             
|Statements of earnings                   |              |             
|Sales                                    | 34,571       | 14,008      
|Cost
    of
    sales and expenses       | 43,192       | 16,659      
|Net
    loss                             | (8,621)      | (2,651)     
|                                         |              |             
|                                         |              |             
|Statements of cash flows                 |              |             
|Cash
    derived from (applied to)       |              |             
|Cash
    flows from operating activities | (2,768)      | (3,866)     
|Cash
    flows from financing activities | (879)        | 2,173       
|Cash flows from
    investing activities | $(3,531)     | $(10,696)   



|5.
    Inventories         |              |             
|-------------------------- | ------------ | ------------
|                           | December 28, | December 29,
|                           | 2003         | 2002        
|                           |              |             
|Finished goods             |              |             
|Castings                   | $6,760       | $8,294      
|Tooling                    | 7,631        | 16,527      
|Raw materials and supplies | 18,841       | 13,591      
|                           |              |             
|                           | $33,232      | $38,412     
|                           |              |             

---



|6. Property
    and equipment         |              |             
|------------------------------------- | ------------ | ------------
|                                      | December 28, | December 29,
|                                      | 2003         | 2002        
|                                      |              |             
|Cost                                  |              |             
|Land                                  | $5,683       | $5,529      
|Buildings and improvements            | 164,222      | 158,996     
|Machinery, equipment and
    vehicles | 394,013      | 379,580     
|                                      |              |             
|                                      | 563,918      | 544,105     
|                                      |              |             
|Accumulated
    depreciation          |              |             
|Buildings and improvements            | 25,544       | 19,723      
|Machinery, equipment and
    vehicles | 163,314      | 141,664     
|                                      |              |             
|                                      | 188,858      | 161,387     
|Net book
    value                    |              |             
|Land                                  | 5,683        | 5,529       
|Buildings and improvements            | 138,678      | 139,273     
|Machinery, equipment and
    vehicles | 230,699      | 237,916     
|                                      |              |             
|                                      | $375,060     | $382,718    

At December 28, 2003, assets under capital lease amounted to $2,331 (2002 -
$3,299) less accumulated depreciation of $986 (2002 - $1,318).

|7. Other                                            |              |             
|--------------------------------------------------- | ------------ | ------------
|                                                    | December 28, | December 29,
|                                                    | 2003         | 2002        
|                                                    |              |             
|                                                    |              |             
|                                                    |              |             
|Deferred pre-production costs                       | $9,826       | $ 13,436    
|Director and employee share
    purchase plan loans | -            | 1,448       
|Bond issue costs                                    | 597          | 771         
|Licence                                             | 45           | 53          
|                                                    |              |             
|                                                    | $10,468      | $15,708     
|                                                    |              |             

During 2003, the Company changed its accounting
treatment 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. During 2002, the Company ceased the practice of
extending any further director and employee share purchase plan loans.

The director and employee share purchase plan
loans are non-interest-bearing, repayable over 10 years and are secured by the
underlying shares. The total market value of the underlying shares was $2,453 at
December 29, 2002.

---

8. Bank indebtedness

The Company has uncommitted demand operating
facilities totalling US$36.5 million. At December 28, 2003, all facilities were
undrawn.
The Company has provided covenants to certain
of its lenders and was in full compliance throughout 2002 and 2003.

|                                           | December 28, | December 29,
|------------------------------------------ | ------------ | ------------
|                                           | 2003         | 2002        
|                                           |              |             
|                                           |              |             
|Balance
    at end of period               | $-           | $-          
|Weighted average interest rate             | 3.93%        | 4.25%       
|                                           |              |             
|                                           |              |             
|9.
    Long-term debt                      |              |             
|                                           |              |             
|                                           | December 28, | December 29,
|                                           | 2003         | 2002        
|                                           |              |             
|a)
    Obligations under capital leases    | $1,421       | $2,294      
|b)
    Limited-obligation revenue bonds    | 2,561        | 3,842       
|c)
    Revolving bank note                 | 1,100        | 757         
|d)
    Revenue bonds                       | 35,281       | 45,873      
|e)
    Variable rate installment note      | 77           | -           
|                                           |              |             
|                                           | 40,440       | 52,766      
|Less
    current portion of long-term debt | 4,368        | 6,190       
|                                           |              |             
|                                           | $36,072      | $46,576     

a) Obligations under capital leases

The obligations under capital leases are
payable in monthly installments with interest at rates from 3.8% to 8.0%,
maturing at various dates to the year 2007, and secured by vehicles and
equipment. The carrying value of the vehicles and equipment was approximately
$1,345 at December 28, 2003. In 2003, the Company acquired vehicles and
equipment for $304 through capital lease obligations (2002 - $1,687; 2001 -
$452).

The principal payments for the next five years
are as follows:

2004
      $7552005
      4632006
      1702007
      33Total
      1,421Less
      current portion
      755$666


---

b) Limited-obligation revenue bonds

The limited-obligation revenue bonds are
payable in annual installments of principal of US$490 with a variable interest
rate, which at December 28, 2003, was 1.45%, and mature in the year 2010. As
security, United Machining Inc., the Company's 49%-owned joint venture, has
provided a first charge over its receivables, inventory, machinery and
equipment, which had an approximate carrying value of US$4,412 at December 28,
2003. Also, the Company has provided a US$4,000 guarantee of the bonds, and any
of the Company's inter-company loans with United Machining Inc. are subordinate
to the bonds.
c) Revolving bank note

The revolving bank note is
payable on demand, bears interest at US prime less 0.5%, and security is
provided by a charge on the assets of United Machining Inc. The Company has
provided a full guarantee of the amount outstanding.
d) Revenue bonds

The revenue bonds are payable in annual
installments of US$1,500 with a variable interest rate, which at December 28,
2003, was 1.32%, and mature in the year 2022. The Company paid US$2,250 in 2003
and US$1,500 will be paid annually in 2004 through 2008. The assets of Cordele,
which had an approximate carrying value of $56,040 at December 28, 2003, have
been pledged as security for these bonds.
e) Variable-rate installment note

The variable-rate installment note is payable
in monthly installments commencing in 2003, bears interest at US prime less
1.00% and matures in the year 2006. Security is provided by a charge on the
assets of United Machining Inc. The Company has provided a full guarantee of the
amount outstanding.
10. Employee benefits

The Company has a number of defined benefit and
defined contribution plans providing pension and other retirement benefits to
most of its employees.
Defined contribution plans

The Company's defined contribution plans
expense is recorded in cost of sales, selling, general and administration, and
research, development and design within the statement of earnings. The total
expense for the Company's defined contribution plans is as follows:
2003
    2002
    2001Plans providing pension
    benefits
    $5,544
    $5,614
    $4,499

---



|                                                                                   
|-----------------------------------------------------------------------------------
|Defined benefit plans                                                              
|Information about the Company's defined benefit plans, In aggregate, is as
follows:
|                                                                                   
|                                                                                   
|                                                                                   
|Accrued
    benefit obligation                                                     
|Balance at beginning of year                                                       
|Current service cost                                                               
|Interest cost                                                                      
|Benefits paid                                                                      
|Plan initiation                                                                    
|Actuarial losses (gain)                                                            
|                                                                                   
|Balance at end of year                                                             
|                                                                                   
|Plan assets                                                                        
|Fair value at beginning of
    year                                                
|Actual return on plan assets                                                       
|Benefits paid                                                                      
|                                                                                   
|Fair value at end of year                                                          
|                                                                                   
|Funded
    status                                                                  
|Plan deficit                                                                       
|Unamortized net actuarial
    (gain) loss                                          
|Unamortized past service costs                                                     
|Unamortized transitional
    obligation                                            
|                                                                                   
|Accrued benefit liability                                                          
|Valuation allowance                                                                
|                                                                                   
|Accrued benefit liability, net of valuation
    allowance                          
|                                                                                   

---

Only one of the Company's pension plans is funded.
Included in the above
accrued benefit obligation at year-end are the following amounts in respect of
plans that are not funded:

|                               | Pension Benefit Plans | Other Benefit Plans
|------------------------------ | --------------------- | -------------------
|                               | 2003                  | 2002               
|Accrued benefit
    obligation | $18,666               | $16,632            

|                                                                                                                                                                      |                       |                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | -------------------
|The significant actuarial assumptions adopted in measuring the Company's
accrued benefit obligations are as follows (weighted-average assumptions as of
December 28):
|                                                                                                                                                                      |                       |                    
|                                                                                                                                                                      | Pension Benefit Plans | Other Benefit Plans
|                                                                                                                                                                      | 2003                  | 2002               
|                                                                                                                                                                      |                       |                    
|Discount rate                                                                                                                                                         | 6.5%                  | 6.5%               
|Expected long-term rate of return on plan assets                                                                                                                      | 6.5%                  | 7.0%               
|Rate of
    compensation increase                                                                                                                                     | 5.0%                  | 5.5%               

For measurement purposes, a 3% annual rate of
increase in the per capita cost of covered health care benefits was assumed, a
rate that is expected to be slightly in excess of inflation. The effect of a 1%
variance in the assumed health care trend rates would be approximately $120 on
the annual health care benefit cost and $672 on the accrued benefit obligation
for other benefit plans. The average remaining service period of the active
employees covered by the pension benefit plans and other benefit plans is 16
years and 15 years, respectively.

The Company's net benefit plan expense, which
is recorded in cost of sales and selling, general and administration expenses,
is as follows:

|                                          |        | Pension Benefit Plans | Other Benefit Plans
|----------------------------------------- | ------ | --------------------- | -------------------
|                                          | 2003   | 2002                  | 2001               
|                                          |        |                       |                    
|                                          |        |                       |                    
|                                          |        |                       |                    
|Current
    service cost                  | $925   | $583                  | $507               
|Interest cost                             | 1,174  | 1,085                 | 1,028              
|Expected return on plan assets            | (43)   | (53)                  | (78)               
|Amortization of past service costs        | 628    | 590                   | 588                
|Amortization of net actuarial (gain) loss | (139)  | 2                     | -                  
|Amortization of transitional obligation   | (27)   | (28)                  | (28)               
|Valuation allowance provided against      |        |                       |                    
|accrued benefit asset                     | 27     | (54)                  | 4                  
|                                          |        |                       |                    
|Net
    benefit plan expense              | $2,545 | $2,125                | $2,021             
|                                          |        |                       |                    

---

11. Capital stock
Authorized: 
Unlimited      Preference shares, no par value 
Unlimited      Class A subordinate, voting common
shares, no par value 
9,000,000       Class B multiple voting common shares,
no par value

|                        |                           | December 28, | December 29,
|----------------------- | ------------------------- | ------------ | ------------
|                        |                           | 2003         | 2002        
|                        |                           |              |             
|                        |                           |              |             
|                        |                           |              |             
|Issued and outstanding: |                           |             
|                        |                           |              |             
|5,721,662               | Class A
    common shares | $97,622      | $97,169     
|                        | (2002-5,707,111)          |              |             
|7,376,607               | Class B
    common shares | 12,427       | 12,427      
|                        | (2002-
    7,376,607)     |              |             
|                        |                           | $110,049     | $109,596    

|                                                                                                             
|-------------------------------------------------------------------------------------------------------------
|The following transactions occurred with respect to the Company's Class A
common shares during 2003 and 2002:
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Shares outstanding, beginning
    of year                                                                    
|Issued                                                                                                       
|Employee
    share purchase plan                                                                             
|Stock
    option plan                                                                                        
|For service                                                                                                  
|                                                                                                             
|Shares outstanding, end of
    year                                                                          

12. Share purchase loans

The director and employee share purchase plan
loans are non-interest bearing, repayable over 10 years and secured by the
underlying shares. The total market value of the underlying shares was $1,743 at
December 28, 2003.

13. Commitments and contingencies

(a) Through its jointly controlled entity,
United Machining Inc., the Company is committed to annual rental payments on
buildings, machinery and equipment. The Company has provided a US$5,000
guarantee to support the machinery and equipment lease arrangements of United
Machining Inc.

---

(b) As a result of its ongoing expansion
programs, the Company has committed an additional $5.2 million to acquire
capital assets in 2004.
(c) The Company is committed to future minimum
annual lease payments under various operating leases as follows:

2004
      $1,9182005
      1,6082006
      1,3582007
      1,0462008
      319$6,249


(d) In the normal course of operations the Company may be subject to
litigation and claims from customers, suppliers and former employees. Management
believes that adequate provisions have been recorded in the accounts where
required. Although it is not possible to estimate the extent of potential costs,
if any, management believes that the ultimate resolution of such contingencies
would not have a materially adverse effect on the financial position of the
Company.

|14. Other
    (income) expense               |         |          |         
|-------------------------------------------- | ------- | -------- | --------
|                                             | 2003    | 2002     | 2001    
|                                             |         |          |         
|Foreign exchange translation
    loss (gain) | $1,910  | $387     | $(2,606)
|Interest and miscellaneous                   | (1,107) | (2,148)  | (3,927) 
|Loss on disposal of equipment                | 915     | 490      | 1,338   
|                                             |         |          |         
|                                             | $1,718  | $(1,271) | $(5,195)
|                                             |         |          |         

---

15. Income taxes

(a) The following table reconciles the
statutory federal and provincial income taxes to the effective income tax on
earnings before taxes.

|                                                                          | 2003     | 2002    | 2001   
|------------------------------------------------------------------------- | -------- | ------- | -------
|                                                                          |          |         |        
|                                                                          |          |         |        
|                                                                          |          |         |        
|Statutory income tax                                                      | $5,169   | $32,916 | $42,859
|Manufacturing and processing deduction                                    | (494)    | (4,688) | (8,895)
|Tax
    effect of non-deductible expenses                                 | 162      | 119     | 346    
|Difference between Canadian and foreign tax rates                         | 712      | 385     | 417    
|Unrecognized losses to jointly controlled entities                        | 1,666    | 536     | 156    
|Tax
    effect of cost-sharing arrangement with jointly controlled entity | (1,515)  | (3,274) | -      
|Rate
    changes on future income taxes                                   | 628      | (1,000) | (643)  
|Investment tax credits not subject to provincial income tax               | (452)    | -       | -      
|Other                                                                     | (29)     | 194     | -      
|                                                                          |          |         |        
|Effective income tax                                                      | $5,847   | $25,188 | $34,240
|                                                                          |          |         |        
|The
    income tax provision consists of:                                 |          |         |        
|                                                                          |          |         |        
|Current
    income taxes                                                  | $25,449  | $27,123 | $31,872
|Future
    income taxes                                                   | (19,602) | (1,935) | 2,368  
|                                                                          |          |         |        
|                                                                          | $5,847   | $25,188 | $34,240

|                                                                             |              |             
|---------------------------------------------------------------------------- | ------------ | ------------
|(b) The future income taxes assets and liabilities consist of the following:
|                                                                             |              |             
|                                                                             | December 28, | December 29,
|                                                                             | 2003         | 2002        
|                                                                             |              |             
|Current
    future income tax assets                                         |              |             
|Stock appreciation rights                                                    | $1,383       | $1,099      
|Other non-deductible accruals                                                | 660          | 93          
|                                                                             |              |             
|                                                                             | $2,043       | $1,192      
|                                                                             |              |             
|Long-term future income tax assets                                           |              |             
|Loss carryforwards                                                           | $10,648      | $3,888      
|Tax goodwill in excess of accounting goodwill                                | 13,020       | -           
|Accrued costs of discontinued operations                                     | 1,892        | 2,007       
|Accrued pension costs                                                        | 4,156        | 2,871       
|                                                                             |              |             
|                                                                             | 29,716       | 8,766       
|Valuation allowance against tax benefit of loss carryforwards                | -            | (121)       
|                                                                             |              |             
|                                                                             | $29,716      | $8,645      

---



|Current future
    income tax
    liabilities             |         |        
|--------------------------------------------------------- | ------- | -------
|Investment tax
    credit                                 | $118    | $427   
|                                                          |         |        
|Long-term future income tax
    liabilities               |         |        
|Tax depreciation
    in excess of accounting depreciation | $21,717 | $17,542
|Deferred
    pre-production costs                         | 554     | 1,032  
|                                                          |         |        
|                                                          | $22,271 | $18,574

(c) At December 28, 2003, the
Company has income tax loss carryforwards of $31,316, which relate primarily to
a foreign subsidiary. Of the total losses, $887 expire between 2006 and 2009,
$30,092 expire between 2019 and 2023, and $337 have no expiry date.

Management has determined that it is more
likely than not that the tax benefits of the loss carryforwards will be realized
in the future.

16. Investment tax credits

During the year the Company recorded investment
tax credits of $3,315 (2002 - $1,289; 2001 - $4,066). Of this amount, $2,883
(2002 - $1,289; 2001- $2,865) is included in net earnings for the year as a
reduction of cost of sales and research, development and design expenses. For
the years 2003 and 2001, the balance of the investment tax credit related to
capital assets and deferred pre-production costs and reduced the carrying value
of the related assets.

17. Discontinued operations

On September 13, 2001, the Board of Directors
approved a plan to shut down the Company's stainless steel manifold business and
transfer existing programs to other manufacturers. As of June 30, 2002, all
production programs were transferred to other manufacturers. Several of the
related manufacturing assets have been transferred to other operating
facilities. The Company is currently pursuing buyers for the remainder of the
manufacturing assets.

The results from discontinued operations have
been reported separately within these financial statements. The current year
operating losses and closing costs have been offset against the provisions
established in 2001. Prior year comparative amounts have also been reclassified.

Summarized financial information for the
discontinued operations are as follows:

---



|                                                         | 2003 | 2002 | 2001     
|-------------------------------------------------------- | ---- | ---- | ---------
|                                                         |      |      |          
|                                                         |      |      |          
|                                                         |      |      |          
|Sales                                                    | $-   | $-   | $9,483   
|                                                         |      |      |          
|Loss
    before income taxes prior to September 13, 2001 | $-   | $-   | $(6,060) 
|Income
    tax recovery                                  | -    | -    | 2,068    
|                                                         |      |      |          
|                                                         | -    | -    | (3,992)  
|                                                         |      |      |          
|Provision for discontinued operations                    | -    | -    | (31,536) 
|Income
    tax recovery                                  | -    | -    | 10,760   
|                                                         |      |      |          
|                                                         | -    | -    | (20,776) 
|                                                         |      |      |          
|Loss
    from discontinued operations                    | $-   | $-   | $(24,768)

|                                          |              |             
|----------------------------------------- | ------------ | ------------
|Net
    assets of discontinued operations |              |             
|                                          |              |             
|                                          | December 28, | December 29,
|                                          | 2003         | 2002        
|                                          |              |             
|                                          |              |             
|Current
    assets                        | $215         | $265        
|                                          |              |             
|Property and equipment                    | 8,090        | 8,308       
|Provision for discontinued operations     | (2,510)      | (3,071)     
|                                          |              |             
|Net
    property and equipment            | 5,580        | 5,237       
|                                          |              |             
|Total
    assets                          | $5,795       | $5,502      

18. Earnings per share

Basic earnings from continuing operations per
share and basic net earnings per share are based on the weighted average common
shares outstanding. Weighted average common shares used in the computation of
basic earnings from continuing operations per share and basic net earnings per
share were 13,047,889, 13,067,996 and 12,936,908 in 2003, 2002 and 2001,
respectively. The shares used in the computation of diluted earnings from
continuing operations per share and diluted net earnings per share were
13,047,889, 13,067,996 and 13,173,627 in 2003, 2002 and 2001, respectively.

During 2002 the stock option plan was amended
to authorize the grant of tandem stock appreciation rights in connection with
options granted under the plan, at or after the time of grant of such options.

As a result of this amendment, no dilution was
calculated in 2003 and 2002. In 2001, all of the dilution was caused by the
effect of stock options outstanding.

---



19. Consolidated statements of cash flows

The following is additional information to the
statements of cash flows.

Change in non-cash operating working capital:

|                                    | 2003      | 2002     | 2001   
|----------------------------------- | --------- | -------- | -------
|                                    |           |          |        
|                                    |           |          |        
|Receivables                         | $22       | $(8,754) | $4,074 
|Inventories                         | 5,180     | (17,202) | (2,224)
|Prepaids                            | (523)     | (705)    | (146)  
|Payables and accruals               | (33,479)  | 32,695   | (2,767)
|Income
    taxes receivable/payable | 5,610     | (9,830)  | 3,450  
|                                    |           |          |        
|                                    | $(23,190) | $(3,796) | $2,387 
|                                    |           |          |        
|Cash
    paid for interest          | $1,609    | $959     | $411   
|                                    |           |          |        
|Cash
    paid for income taxes      | $22,021   | $35,596  | $25,331

20. Related-party transactions

The Company paid freight of $4,896 in 2003 (2002 - $5,061; 2001 - $4,692) to
a related company, 30% of whose shares are owned by a Class B shareholder of the
Company. Payables and accruals include $779 (2002 - $504; 2001 - $367), which is
owed to this company.

21. Segment information

(a) Operating segments

The Company operates within two reportable
segments, both in the automotive industry. The powertrain segment is focused on
the design, manufacture and sale of exhaust system components. The chassis
segment is focused on the design, manufacture and sale of brake and suspension
components.

The Company's manufacturing facilities, where
appropriate, are geographically situated to align with the physical location of
its customer base. The powertrain segment has operations in North America and
Europe, while the chassis segment maintains operations in North America only.
The powertrain segment's European operations are conducted primarily through the
Company's jointly controlled entity, Weslin Industries Inc. Weslin was in a
start-up period in 2001 and 2002, and the majority of its expenses, net of
incidental sales for those years, were deferred and reported as pre-production
costs.

---

The accounting policies for the segments are
the same as those described in Note 2 to the consolidated financial statements.
The Company evaluates the performance of each segment based on earnings or loss
before income taxes.
There were no intersegment sales during 2003
and 2002.
All Corporate costs that are not directly
allocable to the European powertrain operation or the chassis segment have been
allocated to the North American powertrain segment.
December 28, 2003Powertrain
    ChassisNorth
    America
    Europe
    North
    America
    TotalSales
    to external customers
    $413,912
    $20,412
    $41,476
    $475,800Earnings (loss) from continuing operations
    60,142
    (8,951)
    (42,923)
    8,268Interest revenue
    232
    -
    -
    232Interest expense
    555
    -
    823
    1,378Depreciation and amortization
    32,611
    4,919
    5,593
    43,123Goodwill impairment
    -
    -
    41,485
    41,485Income taxes
    27,892
    69
    (22,114)
    5,847Total
    assets
    393,639
    71,506
    95,990
    561,135Property and equipment
    265,198
    52,263
    57,599
    375,060Deferred pre-production costs
    1,625
    8,201
    -
    9,826Purchase of property, equipment and other assets
    $33,007
    $3,421
    $2,952
    $39,380



|                                                 | December 29, 2002
|------------------------------------------------ | -----------------
|                                                 | Powertrain       
|                                                 | North America    
|                                                 |                  
|                                                 |                  
|Sales to external
    customers                  | $409,459         
|Earnings (loss) from
    continuing operations   | 67,333           
|Interest revenue                                 | 2,075            
|Interest expense                                 | 266              
|Depreciation and amortization                    | 27,403           
|Income
    taxes                                 | 27,422           
|Total
    assets                                 | 402,273          
|Property and equipment                           | 265,953          
|Deferred pre-production costs                    | 3,185            
|Goodwill                                         | -                
|Purchase of property, equipment and other assets | $74,255          

---



|                                                                                                                                                                                      | December 30, 2001
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------
|                                                                                                                                                                                      | Powertrain       
|                                                                                                                                                                                      | North America    
|                                                                                                                                                                                      |                  
|                                                                                                                                                                                      |                  
|Sales
    to external customers                                                                                                                                                       | $383,502         
|Earnings (loss) from continuing operations                                                                                                                                            | 67,670           
|Interest revenue                                                                                                                                                                      | 3,889            
|Interest expense                                                                                                                                                                      | 409              
|Depreciation and amortization                                                                                                                                                         | 27,129           
|Income
    taxes                                                                                                                                                                      | 34,194           
|Total
    assets                                                                                                                                                                      | 400,243          
|Property and equipment                                                                                                                                                                | 211,591          
|Deferred pre-production costs                                                                                                                                                         | 4,544            
|Purchase of property, equipment and other assets                                                                                                                                      | $24,667          
|                                                                                                                                                                                      |                  
|(1)
    The Company began operations in the chassis segment during 2002.                                                                                                             
|                                                                                                                                                                                      |                  
|For the 2003 fiscal
    year, sales to the Company's three largest customers amounted to 46%, 28%
    and 10% of total sales (2002 - 46%, 33% and 16%; 2001 -  46%; 37% and
    16%).
|                                                                                                                                                                                      |                  
|(b)
    Geographic information                                                                                                                                                       
|The following tables
    show certain information with respect to geographic segmentation:                                                                                           



|                                                                                      | December 28, 2003
|------------------------------------------------------------------------------------- | -----------------
|                                                                                      | Canada           
|                                                                                      |                  
|Sales(1)                                                                              | $575             
|Property and equipment                                                                | $261,905         
|                                                                                      |                  
|                                                                                      |                  
|                                                                                      | December 29, 2002
|                                                                                      | Canada           
|                                                                                      |                  
|Sales(1)                                                                              | $255             
|Property and equipment                                                                | $261,448         
|Goodwill                                                                              | $-               
|                                                                                      |                  
|                                                                                      | December 29, 2002
|                                                                                      | Canada           
|                                                                                      |                  
|Sales(1)                                                                              | $-               
|Property and equipment                                                                | $206,967         
|                                                                                      |                  
|(1)Sales are attributed to countries
    based on invoicing location of the customer.

22. Financial instruments

Foreign exchange contracts

The Company uses foreign currency forward contracts to hedge portions of its
forecasted revenue and expenditures denominated in foreign currencies. These
forward contracts are designated and documented as cash flow hedges. As a matter
of policy, the Company does not enter into speculative hedge contracts.

---



As at December 28, 2003, the Company had designated as cash flow hedges a
commitment to buy US$3,500 at a weighted average rate of exchange of CAD$1.5136.
The estimated fair value of the outstanding foreign currency forward contracts
was US$(534) at December 28, 2003.

Other derivative instruments

To manage the electricity cost volatility that may arise since the Ontario,
Canada, electricity market was deregulated in May 2002, the Company entered into
fixed-price forward contracts to purchase electricity. The current contracts
expire April 30, 2004, and there are approximately 50,375 megawatt-hours (MWhr)
at a weighted average price of $49.35 per MWhr remaining. The Company does not
enter into electricity contracts for speculative purposes. The estimated fair
market value of these contracts as at December 28, 2003 was $(68). The Company
has estimated fair market value based on available broker quotes and independent
consulting advice. Given the current lack of liquidity in the market and other
influencing factors, the fair market value is subject to significant measurement
uncertainty.

To manage natural gas cost volatility, the Company enters into fixed-price
forward contracts to purchase natural gas.

The current contracts expire August 31, 2004, and October 31, 2004. There are
approximately 238,328 gigajoules (GJ) at a weighted average price of $5.99 per
GJ remaining. The Company does not enter into natural gas contracts for
speculative purposes. The estimated fair market value of these contracts as at
December 28, 2003 was $60. The Company has estimated fair market value based on
available indicative pricing.

The above contracts have been accounted for as executory contracts.

Fair value of other financial instruments

The methods and assumptions used to estimate the fair value of financial
instruments are described below:

Cash and cash equivalents, short-term investments, receivables, and payables
and accruals

Due to the short-term period to maturity of the instruments, the carrying
values as presented in the consolidated balance sheets are reasonable estimates
of fair value.

Long-term debt

The fair values of the Company's long-term debt, based on current rates for
debt with similar terms and maturities, are not materially different from their
carrying value.

---



Credit risk

The Company's financial assets that are exposed
to credit risk consist primarily of cash and cash equivalents, short-term
investments, accounts receivable, director and employee share purchase plan
loans, foreign exchange forward contracts, and electricity and natural gas
contracts.

Cash, cash equivalents and short-term
investments include investments in commercial paper and corporate bonds of
governments and corporations with an investment grade credit rating. Credit risk
is further reduced by limiting the amount that is invested in any one government
or corporation.

The majority of the Company's receivables are
from the Big Three auto manufacturers. Exposure to any particular customer is
significant, but the Company does not believe that any material credit risk
exists.

The Company also has receivables from Tier 1
suppliers, some of which may represent a credit risk. The Company believes that
this exposure has been adequately reflected in these financial statements. Any
potential future risk will be mitigated by customer credit assessments, credit
insurance purchased on selected customer accounts and strict adherence to
negotiated terms and conditions on sale, including cash on delivery.

The director and employee share purchase plan
loans are secured by the underlying shares.

The Company is also exposed to credit risk from
the potential default by any of its counterparties on its foreign exchange
forward contracts and electricity and natural gas contracts. The Company
mitigates this credit risk by dealing with counterparties who are major
financial institutions and/or are included on an authorized list of
counterparties maintained by the Company.

Interest rates

The Company's exposure to interest rate risk
relates to its variable interest rate revenue bond financing. At December 28,
2003, the increase or decrease in annual interest costs on the variable interest
rate revenue bond financing amounts to $378 for each one per cent absolute
change in interest rates.

23. Stock-based compensation plans

Employee Share Purchase Plan

Under the Employee Share Purchase Plan, the
Company is authorized to issue up to 500,000 Class A common shares to employees
with not less than three months service

---

and to directors. Under the terms of the plan,
employees may acquire shares annually up to an amount not exceeding 10% of their
annual compensation. Shares are acquired under the plan at a price equal to 85%
of the market value of such shares. Under the plan, the Company issued 14,551
shares in 2003 and 17,370 shares in 2002. The aggregate amount of shares issued
under the plan was 166,861 at December 28, 2003 and 152,310 at December 29,
2002.
No compensation cost has been recorded for this
plan. If compensation cost had been determined based on the fair value of the
shares, consistent with the fair-value-based method of accounting for
stock-based compensation, the Company's net earnings for 2003 would have been
$8,188 (2002 - $59,905). Basic net earnings per share and diluted net earnings
per share for 2003, would have been $0.63 (2002 - $4.58).
Deferred Stock Unit Plan

The Company offers a Deferred Stock Unit ("DSU")
plan for members of the Board of Directors. Under the DSU plan, each director
must receive the annual board retainer in the form of DSUs. Also, each director
may elect to receive all or a portion of the other board compensation in the
form of DSUs. Each DSU reflects the notional value of the Class A common shares
of the Company. The issue price of the DSU is equal to the weighted average
share price of the Company's Class A common shares as traded on the Toronto
Stock Exchange during the five-day period prior to the last day of the quarter
in which the DSU is issued. The DSU account of each director is marked to market
each quarter and includes the value of dividends, if any, as if reinvested.
Directors are not permitted to convert DSUs into cash until retirement from the
Board. The value of the DSU when converted to cash will be equal to the weighted
average share price of the Class A common shares of the Company as traded on the
Toronto Stock Exchange during the five-day period prior to payment. The value of
the outstanding liability related to the DSUs as at December 28, 2003, was
$1,039 (2002 - $735).
Restricted Share Units

During the fourth quarter of 2003, the Company
established a new Restricted Share Unit ("RSU") plan. Under the plan the Company
has granted RSUs to certain employees, which 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 on and the cash value is paid on
the third anniversary date of being granted. The related compensation expense is
recognized over this period. The value of RSUs outstanding is marked to market
each quarter and includes the value of dividends, if any, as if reinvested. At
December 28, 2003 there were 34,622 RSUs outstanding (2002 - nil).
The compensation expense reported for the 2003
fiscal year in respect of the RSU plan was $37 (2002 - nil; 2001 - nil).

---

Stock Option Plan

The Company has a stock option plan, which
grants options to employees up to an aggregate of 1.5 million Class A common
shares. The options, which have a term not exceeding 10 years when issued, vest
immediately for directors and over five years for all others at a rate of
one-third for each year over three years commencing on the third anniversary.
The exercise price of each option equals the market price of the Company's stock
on the date of grant.
During 2002 the stock option plan was amended
to authorize the grant of tandem stock appreciation rights (a "SAR" or "SARs")
in connection with options granted under the plan, at or after the time of grant
of such options. Under the amended plan, participants have the choice of
exercising stock options or receiving a cash amount equal to the excess of the
market price of the shares covered by the options over the exercise price of the
related options. The impact of the amendment to the plan, recognized in 2002,
was a one-time non-cash charge to earnings of $14,905, reported as stock-based
compensation expense, for options issued in prior periods. As a result of the
decline in the share market price subsequent to the amendment of the plan, total
stock-based compensation expense was $5,277 for 2002.
A summary of the status of the Company's stock option plan as
of the fiscal year-ends of 2003, 2002 and 2001 and changes during each fiscal
year is presented below:

|                                    | Shares |                                    
|----------------------------------- | ------ | -----------------------------------
|                                    | (000)  | Weighted Average
    Exercise Price
|                                    | 2003   | 2002                               
|                                    |        |                                    
|Outstanding, beginning of year      | 944    | 973                                
|Granted                             | 25     | 155                                
|Exercised                           |        |                                    
|Shares                              | -      | (62)                               
|Cash                                | (23)   | (88)                               
|Cancelled                           | (15)   | (34)                               
|                                    |        |                                    
|Outstanding, end of year            | 931    | 944                                
|                                    |        |                                    
|Options
    exercisable at year-end | 617    | 543                                

|                                                                              
|------------------------------------------------------------------------------
|The following information applies to options outstanding at December 28,
2003:
|                                                                              
|                                                                              
|                                                                              
|Range of                                                                      
|Exercise Prices                                                               
|                                                                              
|$1 to $12                                                                     
|$13 to $24                                                                    
|$25 to $36                                                                    
|$37 to $48                                                                    
|                                                                              
|                                                                              
|                                                                              

---

24. Reconciliation to accounting principles
generally accepted in the United States of America

The consolidated financial statements are
prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP") which differ in certain respects from accounting principles
generally accepted in the United States of America ("US GAAP"). The following
reconciliation identifies the material differences on the Company's consolidated
statements of earnings and retained earnings and consolidated balance sheets.
The information below does not contain all disclosures required by US GAAP.
Subsequent to the issuance of the Company's
financial statements for the year ended December 29, 2002, the US GAAP
reconciliation for 2002 and 2001 was restated to correct the accounting for the
following material items: fixed-price forward contracts for energy commodities;
foreign exchange forward contracts and minimum pension liabilities. The impact
on net earnings of all restatements, including the pension valuation allowance
described in Note 24 (a) (viii), was an increase in earnings of $1,576 in 2002
and a decrease in earnings of $992 in 2001. The impact on basic net earnings per
share was an increase if $0.12 in 2002 and a decrease of $0.08 in 2001.
Fixed-price forward contracts for energy
commodities

The US GAAP reconciliation for 2002 and 2001
was restated to account for mark to market adjustments for the Company's fixed
price forward contracts to purchase electricity and natural gas (see Note 22).
Such contracts are considered derivatives under US GAAP and are recorded on the
balance sheet at fair value, unless certain criteria are met. The impact of the
restatement associated with the energy contracts, net of taxes, is an increase
in net earnings in 2002 of $1,135 and a decrease in net earnings of $269 in
2001.
Foreign exchange forward contracts

The US GAAP reconciliation for 2002 and 2001
has been restated to treat the foreign exchange forward contracts as non-hedging
derivatives. The impact of this restatement, net of taxes, on net earnings for
2002 was an increase to earnings of $495 and a decrease in net earnings for 2001
of $727.
Minimum pension liabilities

The US GAAP balance sheet reconciliation for
2002 has been restated to recognize minimum pension liabilities associated with
the Company's defined benefit plans (see Note 10). Under US GAAP, an additional
minimum pension liability is recorded to the

---

extent that a plan's accumulated benefit obligation exceeds the plan's assets
at fair value. An intangible asset is recorded at an amount that is equal to the
additional minimum liability recorded, to the extent of unrecognized prior
service cost and unrecognized transition obligation. This restatement resulted
in the recognition of a minimum pension liability of $4,615 and a corresponding
intangible asset of the same amount as at December 29, 2002.(a) Statement of earnings and retained earnings (ix)

|                                                                   | 2003     | 2002       | 2001      
|------------------------------------------------------------------ | -------- | ---------- | ----------
|                                                                   |          | (restated) | (restated)
|                                                                   |          |            |           
|Earnings from continuing
    operations according to Canadian GAAP | $8,268   | $60,040    | $66,038   
|                                                                   |          |            |           
|Depreciation effect of
    interest capitalization (i)             | -        | (33)       | (3)       
|Deferred pre-production costs
    (ii)                             | 3,611    | (2,522)    | (2,936)   
|Mark to market adjustments
    (iii)                               |          |            |           
|foreign exchange
    derivatives                                   | (553)    | 750        | (894)     
|energy
    derivatives                                             | (1,319)  | 1,719      | (408)     
|Pension valuation allowance
    (viii)                             | 27       | (54)       | 4         
|Decrease (increase) in income
    tax expense (iv)                 | 151      | (1,318)    | 139       
|                                                                   |          |            |           
|                                                                   | 1,917    | (1,458)    | (4,098)   
|                                                                   |          |            |           
|Earnings from continuing
    operations according to US GAAP       | 10,185   | 58,582     | 61,940    
|                                                                   |          |            |           
|Loss from discontinued
    operations according to Canadian GAAP   | -        | -          | (24,768)  
|Deferred pre-production costs
    (v)                              | -        | -          | 4,394     
|Increase in income tax expense
    (vi)                            | -        | -          | (1,493)   
|                                                                   |          |            |           
|Loss from discontinued
    operations according to US GAAP         | -        | -          | (21,867)  
|                                                                   |          |            |           
|                                                                   |          |            |           
|Net earnings according to US
    GAAP                              | 10,185   | 58,582     | 40,073    
|Retained earnings, beginning
    of year                           | 314,892  | 262,586    | 228,913   
|Dividends                                                          | (6,285)  | (6,276)    | (6,209)   
|Excess of cost over assigned
    value of Class A common shares    |          |            |           
|purchased and
    cancelled                                        | -        | -          | (191)     
|                                                                   |          |            |           
|Retained earnings, end of year                                     | $318,792 | $314,892   | $262,586  
|                                                                   |          |            |           
|Earnings from continuing
    operations per share (Note 18)        |          |            |           
|Basic                                                              | $0.78    | $4.48      | $4.79     
|Diluted                                                            | $0.78    | $4.48      | $4.70     
|Net earnings per share (Note
    18)                               |          |            |           
|Basic                                                              | $0.78    | $4.48      | $3.10     
|Diluted                                                            | $0.78    | $4.48      | $3.04     

Under United States generally accepted accounting principles, the weighted
average common shares outstanding for basic earnings per share and diluted
earnings per share are the same as under Canadian GAAP.

---



|                                                        | 2003    | 2002    | 2001   
|------------------------------------------------------- | ------- | ------- | -------
|                                                        |         |         |        
|Net earnings according to US
    GAAP                   | $10,185 | $58,582 | $40,073
|Other comprehensive income:
    (vii)                   |         |         |        
|Net FAS 133 transition
    adjustment, net of tax (iii) | 6       | 56      | (62)   
|Foreign currency translation
    adjustment             | (447)   | 57      | (64)   
|                                                        |         |         |        
|Comprehensive income according
    to US GAAP           | $9,744  | $58,695 | $39,947

(i) Under Canadian GAAP, the Company does not
capitalize interest. US GAAP requires interest incurred as part of the costs of
constructing assets to be capitalized. 
(ii) Under Canadian GAAP, pre-production costs
are deferred and amortized. Under US GAAP, pre-production costs must be expensed
as incurred. The adjustment also reflects the add-back of the amortization
charge deducted in determining earnings for Canadian GAAP. 
(iii) Effective January 1, 2001, the Company
adopted FASB Statement ("FAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," and related amendments for the accounting for
derivative instruments and hedging activities. FAS 133 requires that all
derivative instruments be recorded as assets or liabilities on the balance sheet
at fair value. Changes in the fair value of derivatives are recorded in each
period in earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction, and the type of hedge
transaction. The cumulative effect of the adoption of FAS 133 at January 1, 2001
resulted in a charge to comprehensive income of $378, net of taxes, and the
recognition of derivative liabilities of $574 for foreign exchange forward
contracts. The charge to comprehensive income of $378 was released to earnings
as the related forward contracts matured. Foreign exchange forward contracts are
designated as cash flow hedges for Canadian GAAP and gains and losses resulting
from these arrangements are recognized in earnings at the time of occurrence of
the hedged transaction. Under US GAAP, the Company does not meet all of the
criteria for hedge accounting and therefore outstanding forward exchange
contracts have been marked to market through earnings. In addition, under US
GAAP, the Company's fixed price forward contracts for the purchase of
electricity and natural gas are considered derivatives and have been marked to
market through earnings. The FAS 133 adjustments for 2002 and 2001 for foreign
exchange hedges and energy derivatives have been restated to the amounts
disclosed above. Mark to market adjustments for derivatives that do not meet the
requirements for hedge accounting under FAS 133 would be classified with other
income for US GAAP. 
(iv) Income tax effect of items in (i), (ii)
and (iii). Deferred pre-production costs of Weslin Industries Inc. expensed for
US GAAP purposes were not tax effected as the operation is subject to a tax
holiday. 
(v) Deferred pre-production costs relating to
discontinued operations were expensed in 1999 and 2000 for US GAAP purposes. 
(vi) Income tax effect of (v).

---

(vii) US GAAP requires the disclosure, as other
comprehensive income, of changes in equity during the period from transactions
and other events from non-owner sources. Canadian GAAP does not require similar
disclosure. 
(viii) Canadian GAAP requires recognition of a
pension valuation allowance for any excess of the accrued benefit asset over the
expected future benefit. Changes in the pension valuation allowance are
recognized in earnings. US GAAP does not specifically address pension valuation
allowances. 
(ix) Under US GAAP, the following presentation
differences would exist:
    a. Under
  US GAAP, investment tax credits (see Note 16) are recorded as a reduction of
  income tax expense.
  Under Canadian GAAP, the investment tax credits are
  reflected as a reduction of cost of sales, research and design expenses or
  capital equipment, as appropriate. 
    b.Under
  US GAAP, the charge related to goodwill impairment would be presented in the
  determination of earnings from operations.
(b) Balance sheets

|                                                               |               | December 28,
    2003 |         
|-------------------------------------------------------------- | ------------- | --------------------- | --------
|                                                               | Canadian GAAP | Adjustment            | US GAAP 
|                                                               |               |                       |         
|Current assets (iv)                                            | $140,311      | $(11,590)             | $128,721
|Property and equipment (iv)                                    | 375,060       | (54,893)              | 320,167 
|Future income taxes (iv) and
    (v)                           | 29,716        | (179)                 | 29,537  
|Other long-term assets (iii),
    (iv) and (viii)              | 16,048        | 54,250                | 70,298  
|                                                               |               |                       |         
|                                                               | $561,135      | $(12,412)             | $548,723
|                                                               |               |                       |         
|Current liabilities (iv)                                       | $53,327       | $(4,890)              | $48,437 
|Long-term debt and employee
    benefits (iv), (viii) and (ix) | 48,316        | 3,276                 | 51,592  
|Future income taxes (iv), (v)
    and (vii)                    | 22,271        | (1,089)               | 21,182  
|Shareholders' equity (vi),
    (vii) and (ix)                  | 437,221       | (9,709)               | 427,512 
|                                                               |               |                       |         
|                                                               | $561,135      | $(12,412)             | $548,723

---



|                                                         | December 29, 2002 (restated)
|-------------------------------------------------------- | ----------------------------
|                                                         | Canadian GAAP               
|                                                         |                             
|Current assets (i) and (iv)                              | $142,961                    
|Property and equipment (ii)
    and (iv)                 | 382,718                     
|Future income taxes                                      | 8,645                       
|Other long-term assets (i),
    (iii), (iv) and (viii)   | 62,430                      
|                                                         |                             
|                                                         | $596,754                    
|                                                         |                             
|Current liabilities (iv)                                 | $85,703                     
|Long-term debt and employee
    benefits (iv) and (viii) | 56,214                      
|Future income taxes (iv) and
    (v)                     | 18,574                      
|Shareholders' equity (i), (vi)
    and (vii)             | 436,263                     
|                                                         |                             
|                                                         | $596,754                    
|                                                         |                             

(i) Under Canadian GAAP in 2002, director and
employee share purchase loans were treated as an asset. Under US GAAP, the
shareholders' equity adjustment reflects the reclassification of director and
employee share purchase loans as a reduction of share capital. 
(ii) Property plant and equipment have been
adjusted at each balance sheet date for the effect of capitalized interest,
which is discussed in Note 24 (a) (i). 
(iii) Other long-term assets have been adjusted
such that the deferred pre-production costs are expensed. 
(iv) Under Canadian GAAP, the Company's
interest in its jointly controlled entities has been accounted for using the
proportionate consolidation method. Under US GAAP, these interests must be
accounted for using the equity method. 
(v) This adjustment reflects the cumulative
income tax effects of the adjustments outlined in Note 24 (a). 
(vi) The shareholders' equity adjustment
reflects the aggregate and cumulative effect of the adjustments outlined in Note
24 (a). 
(vii) This adjustment reflects the effect of
the cumulative result of other comprehensive income, net of income tax. 
(viii) Under US GAAP, an additional minimum
pension liability is recorded to the extent that a plan's accumulated benefit
obligation over the plan's assets at fair value exceeds the liability related to
the plan. An intangible asset is recorded at an amount that is equal to the
additional minimum liability recorded, to the extent of unrecognized prior
service costs. Under Canadian GAAP, there is no accounting for additional
minimum pension liabilities. 
(ix) This adjustment reflects the elimination
of the pension valuation allowance recorded for Canadian GAAP as described in
Note 24 (a) (viii).

---

(c) Stock-based compensation plans

The Company accounts for its stock-based
compensation plans disclosed in Note 23 under APB Opinion 25 and related
interpretations.
The employee share purchase plan offers shares
of the Company at 85% of the market value. No compensation cost has been
recorded for the share purchase discount associated with this plan.
The stock option plan was converted from a
fixed plan to a variable plan in 2002 as a result of the granting to employees
the choice of receiving cash or shares on the exercise of their options. The
exercise price of each option equals the market price of the Company's stock on
the date of the grant. Prior to 2002 no compensation cost was recorded for this
plan. For 2003 and 2002, the effect of changes in the intrinsic value of the
stock options is recorded in the statements of earnings.
Had compensation costs for the employee share
purchase plan and the stock options plan been determined based on the fair value of the options and shares as of
their grant dates consistent with the method of Statement of Financial
Accounting Standards 123, "Accounting for Stock-Based Compensation" (SFAS 123),
as amended by SFAS 148, "Accounting for Stock-Based Compensation" - Transition
and Disclosure, the Company's net earnings and earnings per common share would
have been reduced to the pro forma amounts indicated below. The effects of
applying SFAS 123, as amended, are not likely to be representative of the
effects on reported net earnings for future years because options vest over
several years and additional awards may be made each year and employee share
purchases are voluntary. There is no pro forma effect of the stock option plan
in 2003 and 2002.

|                                                     | 2003    | 2002       | 2001      
|---------------------------------------------------- | ------- | ---------- | ----------
|                                                     |         | (restated) | (restated)
|                                                     |         |            |           
|                                                     |         |            |           
|Net earnings - as reported                           | $10,185 | $58,582    | $40,073   
|Stock-based
    compensation - reported, net of tax  | 521     | 3,529      | -         
|Stock-based
    compensation - pro forma, net of tax | (601)   | (3,664)    | (2,332)   
|                                                     |         |            |           
|Net earnings - pro forma                             | $10,105 | $58,447    | $37,741   
|                                                     |         |            |           
|Basic earnings per share                             |         |            |           
|As reported                                          | $0.78   | $4.48      | $3.10     
|Pro forma                                            | $0.77   | $4.47      | $2.92     
|                                                     |         |            |           
|Diluted earnings per share                           |         |            |           
|As reported                                          | $0.78   | $4.48      | $3.04     
|Pro forma                                            | $0.77   | $4.47      | $2.86     
|                                                     |         |            |           

---

In connection with the calculation of the pro forma impact of the stock
option plan for 2001, the fair value of each option grant was estimated on the
date of grant using the bi-nominal options-pricing model with the following
weighted-average assumptions: expected dividend yield of 1.05%; expected
volatility of 29%; risk-free interest rates of 4.70%; and expected lives of 5
years.(d) Recent accounting pronouncements

In August 2001, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS")
No. 143, "Accounting for Asset Retirement Obligations". This Statement addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It is effective for years beginning after June 15, 2002. The adoption of
SFAS No. 143 did not have a material impact on the consolidated financial
statements.
In April 2002, the FASB issued SFAS 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections". SFAS 145 eliminates extraordinary accounting
treatment for reporting gain or loss on debt extinguishment, and amends other
existing authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed conditions. The
provision of SFAS 145 related to the rescission of FASB Statement No. 4 are
applicable in fiscal years beginning after May 15, 2002, the provisions related
to FASB Statement No. 13 are effective for transactions occurring after May 15,
2002, and all other provisions are effective for financial statements issued on
or after May 15, 2002. The adoption of SFAS No. 145 did not have a material
impact on the consolidated financial statements.
In June 2002, the FASB issued SFAS 146,
"Accounting for Costs Associated with Exit or Disposal Activities". SFAS 146
requires recording costs associated with exit or disposal activities at their
fair market values when a liability has been incurred. Under previous guidance,
certain exit costs were accrued upon management's commitment to an exit plan,
which is generally before an actual liability has been incurred. SFAS 146 is
effective prospectively for exit or disposal activities initiated after December
31, 2002. The adoption of SFAS No. 146 did not have a material impact on the
consolidated financial statements.
In November 2002, the FASB issued FASB
Interpretation No. ("FIN") 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others". FIN 45 requires that upon issuance of a guarantee, a guarantor must
recognize a liability for the fair value of an obligation assumed under a
guarantee. The disclosure requirements are effective for financial statements
for periods ending after December 15, 2002. The recognition requirements of FIN
45 are applicable for guarantees issued or modified after December 31, 2002. The
adoption of FIN 45 did not have a materialimpact on the consolidated financial
statements.

---

In December 2002, the FASB issued SFAS 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure". SFAS
148 amends SFAS 123 "Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation and amends the
disclosure requirements of SFAS 123 to require prominent disclosures about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. SFAS 148 is effective for fiscal years
beginning after December 15, 2002. The adoption of SFAS No. 148 did not have a
material impact on the consolidated financial statements.
In January 2003, the FASB issued Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46
requires that the assets, liabilities and results of the activity of variable
interest entities be consolidated into the financial statements of the entity
that is the primary beneficiary. FIN 46 provides the framework for determining
whether a variable interest entity should be consolidated. This interpretation
was effective immediately for variable interest entities created after January
31, 2003. For variable interest entities created before February 1, 2003, FIN
46(R), issued in December 2003, amended the guidance in FIN 46 as well as the
transition guidance. Based on the Company's interpretation of the revised
transition guidance, the Company will be required to adopt the guidance in FIN
46(R) for the year beginning December 29, 2003. The Company is in the process of
assessing the impact of the amended standard on the consolidated financial
statements.
In April 2003, the FASB issued SFAS No. 149,
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
SFAS No. 149 amended and clarified financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities under SFAS No. 133. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003. The
adoption of SFAS No. 149 did not have a material impact on the consolidated
financial statements.
In May 2003, the FASB issued SFAS No. 150,
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity." SFAS No. 150 established standards for classification
of certain financial instruments that have characteristics of both liabilities
and equity but have been presented entirely as equity or between the liabilities
and equity section of the statement of financial position. SFAS No. 150 is
generally effective for financial instruments entered into or modified after May
31, 2003. The adoption of SFAS No. 150 did not have a material impact on the
consolidated financial statements.
25. Subsequent event
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 are

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ongoing with a view to completing the transaction within the next few months
by following the process set out in the joint-venture agreement.26. Comparative figures
Certain of the comparative figures have been
reclassified to conform with the current year's presentation.

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