UNITED STATES

FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

For the quarterly period ended July 31, 2000April 30, 2001

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)

For the transition period from                   to                   

Commission file number: 1-11592

HAYES LEMMERZ INTERNATIONAL, INC.

15300 CENTENNIAL DRIVE

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

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

     The number of shares of common stock outstanding as of September 13, 2000,June 12, 2001, was 28,899,49528,455,495 shares.

HAYES LEMMERZ INTERNATIONAL, INC.

      UNLESS OTHERWISE INDICATED, REFERENCES TO THE “COMPANY” MEAN HAYES LEMMERZ INTERNATIONAL, INC., AND ITS SUBSIDIARIES AND REFERENCE TO A FISCAL YEAR MEANS THE COMPANY’S YEAR ENDED JANUARY 31 OF THE FOLLOWING YEAR (E.G., FISCAL 20002001 MEANS THE PERIOD BEGINNING FEBRUARY 1, 2000,2001, AND ENDING JANUARY 31, 2001)2002). THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND BUSINESS OF THE COMPANY. THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) COMPETITIVE PRESSURE IN THE COMPANY’S INDUSTRY INCREASES SIGNIFICANTLY; (2) GENERAL ECONOMIC CONDITIONS ARE LESS FAVORABLE THAN EXPECTED; (3) THE COMPANY’S DEPENDENCE ON THE AUTOMOTIVE INDUSTRY (WHICH HAS HISTORICALLY BEEN CYCLICAL); (4) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE COMPANY’S FINANCIAL STRUCTURE AND THE COMPANY’S COST OF CAPITAL AND BORROWED MONEY; AND (5) THE UNCERTAINTIES INHERENT IN INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY FLUCTUATIONS. THE COMPANY HAS NO DUTY UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 TO UPDATE THE FORWARD LOOKING STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE COMPANY DOES NOT INTEND TO PROVIDE SUCH UPDATES.

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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

See accompanying notes to consolidated financial statements.

3

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

See accompanying notes to consolidated financial statements.

4

HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

See accompanying notes to consolidated financial statements.

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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES

(1)  Basis of Presentation

      The accompanying consolidated financial statements have been prepared by management and in the opinion of management, contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of July 31, 2000April 30, 2001 and January 31, 2000,2001, and the results of its operations for the three and six months ended July 31,April 30, 2001, and 2000 and 1999 and cash flows for the sixthree months ended July 31, 2000,April 30, 2001, and 1999.2000. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2000.2001. Results for interim periods are not necessarily indicative of those to be expected for the year.

(2)  Summary of New Accounting PronouncementsDerivative Financial Instruments

      In June 1998, June 1999 and June 2000, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, SFAS 137, “Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133” and SFAS 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133”. These Statements establish accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. These Statements require that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met.

      Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement or as part of accumulated other comprehensive income, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. This accounting is effective for fiscal years beginning after June 15, 2000. The Company anticipates adoptingadopted this standard in its fiscal yearon February 1, 2001 and doesadoption did not at this time, anticipatehave a material impact on the Company’s financial position or results of operations when adopted.

(3)  Inventoriesoperations.

      The major classesCompany has significant investments in foreign subsidiaries. The majority of inventorythese investments are in Europe wherein the Euro is the functional currency. As a result, the Company is exposed to fluctuations in exchange rates between the Euro and the U.S. Dollar. To reduce this exposure, the Company has entered into cross-currency interest rate swap agreements and forward currency hedges having an aggregate notional amount of $281.0 million. The Company has designated these swap agreements as follows:

      The Company records the gain or loss on the derivative financial instruments designated as hedges of the foreign currency exposure of its net investment in foreign operations as currency translation adjustments in Accumulated Other Comprehensive Loss to the extent the hedges are effective. The gain or loss on the hedging instruments offset the change in currency translation adjustments resulting from translating the foreign operations’ financial statements from their respective functional currency to the Dollar. In the first quarter of fiscal 2001, the Company recorded a gain of $21.0 million on the instruments designated as hedges in Accumulated Other Comprehensive Loss. As these derivative financial instruments were accounted for as qualifying hedges prior to adoption of SFAS No. 133, no transition adjustment was recorded at the date of adoption.

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Notes to Consolidated Financial Statements — (Continued)

(3)  Inventories

      The major classes of inventory are as follows:

(4)  Property, plant and equipment

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

(5)  Earnings per share

      SFAS No. 128, “Earnings per Share” (“EPS”), requires two calculations of earnings per share to be disclosed, basic EPS and diluted EPS. Basic EPS is computed using only the weighted average shares outstanding, while diluted EPS is computed considering the dilutive effect of options and warrants.

      Shares outstanding for the three and six months ended July 31,April 30, 2001 and 2000, and 1999, were as follows:

(6)  Comprehensive Income

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

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Notes to Consolidated Financial Statements — (Continued)

(6)  Comprehensive Income — (Continued)

      The components of comprehensive income (loss) for the sixthree months ended July 31,April 30, 2001 and 2000 and 1999 are as follows:

(7)  Commitments and Contingencies

      The Company is party to various litigation. Management believes that the outcome of these lawsuits will not have a material adverse effect on the consolidated operations or financial condition of the Company.

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Notes to Consolidated Financial Statements — (Continued)

(8)  Segment Reporting

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

      The following table represents revenues and other financial information by business segment for the sixthree months ended July 31:April 30:

(9)  Reclassifications

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

(10)  Non-Recurring Charges

      During the third quarter of fiscal 2000, the company recorded a non-recurring charge of $87.8 million related to restructuring activities initiated in response to continued softening in the heavy truck and light vehicle markets. Of the $87.8 million, $64.4 million was for long-lived asset impairment relating principally to excess and obsolete machinery and equipment removed from service due to the aforementioned softening market conditions. Inventory and other current asset write-offs totaling $10.1 were recorded to reduce the carrying value of excess and obsolete inventory, customer tooling and accounts receivable. Other asset write-offs, including an investment in a joint venture, totaled $6.6 million.

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Notes to Consolidated Financial Statements — (Continued)

      In addition, as a result of the market conditions and resulting restructuring initiative, the Company implemented a workforce reduction program. A charge of $6.7 million was recorded in the third quarter of fiscal 2000, which relates to 387 employees and is expected to be paid in the ensuing 12-18 months. At April 30, 2001 and January 31, 2001, $4.7 million and $5.0 million, respectively, was unpaid and is included in accrued liabilities in the Consolidated Balance Sheet.

(11)  Bank Borrowings and Long-Term Debt

      In April 1998, the Company entered into a three-year trade securitization agreement pursuant to which the Company and certain of its subsidiaries sold, and continued to sell on an ongoing basis, a portion of their accounts receivables to a special purpose entity (“Funding Co.”), which is wholly owned by the Company. Accordingly, the Company and such subsidiaries, irrevocably and without recourse, transferred and continued to transfer substantially all of their U.S. dollar denominated trade accounts receivable to Funding Co. Funding Co. then sold and continued to sell such trade accounts receivable to an independent issuer of receivable-backed commercial paper. The Company has collection and administrative responsibilities with respect to all the receivables which are sold. Receivables sold at April 30, 2001 total $119.2 million.

      This trade securitization agreement expired on May 1, 2001. At that time, the Company financed the amount of receivables sold totaling $119.2 million with its revolving credit facility. On May 10, 2001, the Company signed a commitment letter for a replacement trade securitization program and is currently in the process of reviewing the proposed arrangement.

(12)  Guarantor and Nonguarantor Financial Statements

      The Company’s senior subordinated notes are guaranteed by certain of the Company’s domestic subsidiaries. Certain other domestic subsidiaries and the foreign subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the senior subordinated notes.

      The following condensed consolidating financial information presents:

	(1)  Condensed consolidating financial statements as of July 31, 2000,April 30, 2001 and January 31, 2000,2001 and for the six-monththree month periods ended July 31,April 30, 2001, and 2000 and 1999, of (a) Hayes Lemmerz International, Inc., the parent (b) the guarantor subsidiaries, (c) the nonguarantor subsidiaries and (d) the Company on a consolidated basis, and
	(2)  Elimination entries necessary to consolidate Hayes Lemmerz International, Inc., the parent, with the guarantor and nonguarantor subsidiaries.

      Investments in foreign subsidiariesThe condensed consolidating financial statements are accounted for by the parentpresented on the equity method. Under this method, (domesticthe investments in subsidiaries are accountedrecorded at cost and adjusted for by the parent on the cost method) for purposesCompany’s share of the consolidating presentation.subsidiaries’ cumulative results of operations, capital contributions, distributions and other equity changes. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

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Notes to Consolidated Financial Statements — (Continued)

Condensed Consolidating Statements of Operations

Condensed Consolidating Statements of Operations

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Notes to Consolidated Financial Statements — (Continued)

Condensed Consolidating Balance SheetStatements of Operations

Condensed Consolidating Statements of July 31,Operations