Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 19992000
OR
OR
[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                     to                                     
Commission file number: 1-11592
HAYES LEMMERZ INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
DELAWARE
DELAWARE13-3384636
13-3384636
(State or Other Jurisdiction of
(IRS Employer
Incorporation or Organization)
Identification No.)
15300 CENTENNIAL DRIVE
NORTHVILLE, MICHIGAN 48167
(Address of Principal Executive Offices)(Zip Code)
Registrant’sRegistrant’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 December 15, 1999,2000, was 30,339,34528,455,495 shares.





TABLE OF CONTENTS
HAYES LEMMERZ INTERNATIONAL, INC. QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Statements Of Operations
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements Three and Nine Months Ended October 31, 1999 and 1998
PART II. OTHER INFORMATION
SIGNATURES
EXHIBIT INDEX
Amended & Restated Credit Agreement
Severance Agreement
Financial Data Schedule




HAYES LEMMERZ INTERNATIONAL, INC.
 
QUARTERLY REPORT ON FORM 10-Q



TABLE OF CONTENTS
 
 
 
 
 
 
 
 
Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
 
Consolidated Statements of Operations
3
PART I. FINANCIAL INFORMATION:

	Item 1.

	Financial Statements
 

	Consolidated Statements of Operations
3
Consolidated Balance Sheets
4
 
Consolidated Statements of Cash Flows
5
 
Notes to Consolidated Financial Statements
6
 
Item 2.

	Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
1614
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
17
PART II. OTHER INFORMATION
19
 
PART II. OTHER INFORMATION:
Item 1.
Legal Proceedings
2018
Item 2.
Changes in Securities and Use of Proceeds
2018
Item 3.
Defaults upon Senior Securities
2018
Item 4.
Submission of Matters to a Vote of Security-HoldersSecurity Holders
2018
Item 5.
Other Information
2018
Item 6.
Exhibits and Reports on Form 8-K
2018
SignaturesSIGNATURES
2119
           UNLESS OTHERWISE INDICATED, REFERENCES TO THE “COMPANY”“COMPANY” MEAN HAYES LEMMERZ INTERNATIONAL, INC., AND ITS SUBSIDIARIES AND REFERENCE TO A FISCAL YEAR MEANS THE COMPANY’SCOMPANY’S YEAR ENDED JANUARY 31 OF THE FOLLOWING YEAR (E.G., FISCAL 19992000 MEANS THE PERIOD BEGINNING FEBRUARY 1, 1999,2000, AND ENDING JANUARY 31, 2000)2001). 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’SCOMPANY’S INDUSTRY INCREASES SIGNIFICANTLY; (2) GENERAL ECONOMIC CONDITIONS ARE LESS FAVORABLE THAN EXPECTED; (3) THE COMPANY’SCOMPANY’S DEPENDENCE ON THE AUTOMOTIVE INDUSTRY (WHICH HAS HISTORICALLY BEEN CYCLICAL); (4) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE COMPANY’SCOMPANY’S FINANCIAL STRUCTURE AND THE COMPANY’SCOMPANY’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.
2

Table of Contents



Item 1.  Financial Statements
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
Consolidated Statements Of Operations
(Millions of dollars, except share amounts)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Nine Months Ended
October 31,
October 31,
1999
1998
1999
1998

	Net sales
$
598.5
$
443.9
$
1,730.8
$
1,240.8

	Cost of goods sold
493.1
361.2
1,425.2
1,024.1

	Gross profit
105.4
82.7
305.6
216.7

	Marketing, general and administration
21.8
16.7
70.7
48.7

	Engineering and product development
4.4
5.7
15.6
15.7

	Amortization of intangibles
8.2
4.6
22.0
12.7

	Other income
(1.5
)
(1.8
)
(5.3
)
(3.9
)

	Equity in losses (earnings) of unconsolidated subsidiaries
(0.8
)
0.4
(2.1
)
(0.6
)

	Earnings from operations
73.3
57.1
204.7
144.1

	Interest expense, net
37.5
22.4
115.5
69.4

	Earnings before taxes on income, minority interest and
	extraordinary loss
35.8
34.7
89.2
74.7

	Income tax provision
15.5
14.6
38.4
31.4

	Earnings before minority interest and extraordinary loss
20.3
20.1
50.8
43.3

	Minority interest
0.4
0.4
1.3
1.4

	Earnings before extraordinary loss
19.9
19.7
49.5
41.9

	Extraordinary loss, net of tax of $6.0 million
—
—
—
(8.3
)

	Net income
$
19.9
$
19.7
$
49.5
$
33.6

	Per share information:

	Earnings before extraordinary loss
$
0.66
$
0.65
$
1.63
$
1.39

	Extraordinary loss, net of tax
—
—
—
(0.28
)

	Basic net income per share
$
0.66
$
0.65
$
1.63
$
1.11

	Basic average shares outstanding (in thousands)
30,337
30,180
30,333
30,134

	Earnings before extraordinary loss
$
0.63
$
0.62
$
1.55
$
1.29

	Extraordinary loss, net of tax
—
—
—
(0.26
)

	Diluted net income per share
$
0.63
$
0.62
$
1.55
$
1.03

	Diluted average shares outstanding (in thousands)
31,678
32,004
31,880
32,482
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Nine Months Ended
October 31,
October 31,
2000
1999
2000
1999
Net sales
 
$
558.3
 
 
$
598.5
 
 
$
1,695.9
 
 
$
1,730.8
 
Cost of goods sold
 
 
485.1
 
 
 
493.1
 
 
 
1,436.4
 
 
 
1,425.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
73.2
 
 
 
105.4
 
 
 
259.5
 
 
 
305.6
 
Marketing, general and administration
 
 
28.3
 
 
 
21.8
 
 
 
76.8
 
 
 
70.7
 
Engineering and product development
 
 
3.6
 
 
 
4.4
 
 
 
13.0
 
 
 
15.6
 
Amortization of intangibles
 
 
7.0
 
 
 
8.2
 
 
 
21.3
 
 
 
22.0
 
Other (income) expense
 
 
73.6
 
 
 
(2.0
)
 
 
68.7
 
 
 
(6.8
)
Equity in earnings of unconsolidated subsidiaries
 
 
(0.2
)
 
 
(0.3
)
 
 
(0.7
)
 
 
(0.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from operations
 
 
(39.1
)
 
 
73.3
 
 
 
80.4
 
 
 
204.7
 
Interest expense, net
 
 
41.6
 
 
 
37.5
 
 
 
120.4
 
 
 
115.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before taxes on income and minority interest
 
 
(80.7
)
 
 
35.8
 
 
 
(40.0
)
 
 
89.2
 
Income tax (benefit) provision
 
 
(33.9
)
 
 
15.5
 
 
 
(16.8
)
 
 
38.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before minority interest
 
 
(46.8
)
 
 
20.3
 
 
 
(23.2
)
 
 
50.8
 
Minority interest
 
 
0.7
 
 
 
0.4
 
 
 
2.1
 
 
 
1.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(47.5
)
 
$
19.9
 
 
$
(25.3
)
 
$
49.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss) per share
 
$
(1.63
)
 
$
0.66
 
 
$
(0.85
)
 
$
1.63
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic average shares outstanding (in thousands)
 
 
29,189
 
 
 
30,337
 
 
 
29,965
 
 
 
30,333
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income (loss) per share
 
$
(1.62
)
 
$
0.63
 
 
$
(0.84
)
 
$
1.55
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted average shares outstanding (in thousands)
 
 
29,237
 
 
 
31,678
 
 
 
30,089
 
 
 
31,880
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to consolidated financial statements.
3

Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
October 31,
January 31,
1999
1999
(Unaudited)
Assets

	Current assets:

	Cash and cash equivalents
$
50.6
$
51.3

	Receivables (less allowance of $6.3 million at October 
	 31, 1999 and $4.0 million at January 31, 1999)
246.7
181.6

	Inventory
184.7
166.6

	Prepaid expenses and other
17.9
22.8

	Total current assets
499.9
422.3

	Net property, plant and equipment
1,155.2
878.0

	Goodwill and other assets
1,176.9
810.6

	Total assets
$
2,832.0
$
2,110.9
Liabilities and Stockholders’ Equity

	Current liabilities:

	Bank borrowings
$
89.2
$
44.8

	Current portion of long-term debt
18.5
12.3

	Accounts payable and accrued liabilities
502.3
456.7

	Total current liabilities
610.0
513.8

	Long-term debt
1,571.3
976.1

	Pension and other long-term liabilities
339.0
329.1

	Deferred income taxes
76.6
58.4

	Minority interest
13.0
12.6

	Total liabilities
2,609.9
1,890.0

	Commitments and Contingencies:

	Stockholders’ equity:

	Preferred stock, 25,000,000 shares authorized, none issued or
	outstanding
—
—

	Common stock, par value $0.01 per share:

	Voting — authorized 99,000,000 shares; issued and
	outstanding 27,690,069 at October 31, 1999 and 27,675,209 at
	 January 31, 1999
0.3
0.3

	Nonvoting — authorized 5,000,000 shares; issued and
	outstanding, 2,649,026 at October 31 1999 and
	January 31, 1999
—
—

	Additional paid in capital
237.1
236.8

	Retained earnings (accumulated deficit)
42.4
(7.1
)

	Accumulated other comprehensive income
(57.7
)
(9.1
)

	Total stockholders’ equity
222.1
220.9

	Total liabilities and stockholders’ equity
$
2,832.0
$
2,110.9

See accompanying notes to consolidated financial statements.

4

Table of Contents



HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Millions of Dollars)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
October 31,
1999
1998

	Cash flows from operating activities:

	Net income
$
49.5
$
33.6

	Adjustments to reconcile net income to net cash provided by
	operating activities:

	Depreciation and tooling amortization
79.8
49.6

	Amortization of intangibles
22.0
13.6

	Amortization of deferred financing fees
4.9
3.6

	Increase (decrease) in deferred taxes
(2.0
)
12.9

	Increase in minority interest
1.3
3.6

	Equity in earnings of subsidiaries
(2.1
)
(0.6
)

	Extraordinary loss
—
14.4

	Gain on disposal of assets/business
(8.0
)
—

	Changes in operating assets and liabilities that increase
	(decrease) cash flows:

	Receivables
(112.8
)
(40.6
)

	Inventories
(0.6
)
(2.7
)

	Prepaid expenses and other
3.2
(1.8
)

	Accounts payable and accrued liabilities
6.1
7.5

	Other long-term liabilities
(6.2
)
(27.0
)

	Cash provided by operating activities
35.1
66.1

	Cash flows from investing activities:

	Acquisition of property, plant and equipment
(136.1
)
(88.9
)

	Tooling expenditures
(9.2
)
(6.6
)

	Purchase of businesses, net of cash received
(630.1
)
(79.3
)

	Proceeds from disposal of assets/business
40.0
—

	Other, net
(12.1
)
(26.7
)

	Cash used for investing activities
(747.5
)
(201.5
)

	Cash flows from financing activities:

	Net change in bank borrowings and revolver
630.3
10.7

	Proceeds from accounts receivable securitization
99.4
120.8

	Stock options exercised
0.2
1.7

	Fees paid to issue long term debt
(15.2
)
(1.4
)

	Cash provided by financing activities
714.7
131.8

	Effect of exchange rate changes on cash and cash equivalents
(3.0
)
(1.7
)

	Decrease in cash and cash equivalents
(0.7
)
(5.3
)

	Cash and cash equivalents at beginning of year
51.3
23.1

	Cash and cash equivalents at end of period
$
50.6
$
17.8

	Supplemental data:

	Cash paid for interest
$
17.2
$
56.2

	Cash paid for income taxes
$
12.5
$
6.9

See accompanying notes to consolidated financial statements.

5

Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 



Consolidated Balance Sheets
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
October 31,
January 31,
2000
2000
(Unaudited)
Assets
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
23.6
 
 
$
25.9
 
 
Receivables (less allowance of $8.0 million at October  31, 2000 and $6.3 million at January 31, 2000)
 
 
240.5
 
 
 
188.7
 
 
Inventory
 
 
201.2
 
 
 
175.6
 
 
Prepaid expenses and other
 
 
16.9
 
 
 
9.4
 
 
 
 
 
 
 
 
 
 
Total current assets
 
 
482.2
 
 
 
399.6
 
Property, plant and equipment, net
 
 
1,108.6
 
 
 
1,178.4
 
Goodwill and other assets
 
 
1,183.1
 
 
 
1,198.8
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
2,773.9
 
 
$
2,776.8
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Bank borrowings
 
$
85.4
 
 
$
73.6
 
 
Current portion of long-term debt
 
 
72.5
 
 
 
69.6
 
 
Accounts payable and accrued liabilities
 
 
446.6
 
 
 
583.9
 
 
 
 
 
 
 
 
 
 
Total current liabilities
 
 
604.5
 
 
 
727.1
 
Long-term debt
 
 
1,600.9
 
 
 
1,384.6
 
Pension and other long-term liabilities
 
 
290.3
 
 
 
316.3
 
Deferred income taxes
 
 
94.4
 
 
 
115.6
 
Minority interest
 
 
10.1
 
 
 
14.3
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
 
2,600.2
 
 
 
2,557.9
 
Commitments and Contingencies
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
 
Preferred stock, 25,000,000 shares authorized, none issued or outstanding
 
 
—
 
 
 
—
 
 
Common stock, par value $0.01 per share:
 
 
 
 
 
 
 
 
 
 
Voting — authorized 99,000,000 shares; issued and outstanding, 25,806,469 at October 31, 2000 and 27,705,019 at January 31, 2000
 
 
0.3
 
 
 
0.3
 
 
 
Nonvoting — authorized 5,000,000 shares; issued and outstanding, 2,649,026 at October 31, 2000 and January 31, 2000
 
 
—
 
 
 
—
 
 
Additional paid in capital
 
 
237.1
 
 
 
237.1
 
 
Retained earnings
 
 
32.7
 
 
 
58.0
 
 
Common Stock in treasury at cost, 1,901,450 shares
 
 
(26.3
)
 
 
—
 
 
Accumulated other comprehensive loss
 
 
(70.1
)
 
 
(76.5
)
 
 
 
 
 
 
 
 
 
Total stockholders’ equity
 
 
173.7
 
 
 
218.9
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
2,773.9
 
 
$
2,776.8
 
 
 
 
 
 
 
 
See accompanying notes to consolidated financial statements.
4
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
Consolidated Statements of Cash Flows
(Millions of Dollars)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
October 31,
2000
1999
Cash flows from operating activities:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(25.3
)
 
$
49.5
 
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and tooling amortization
 
 
90.8
 
 
 
79.8
 
 
Amortization of intangibles
 
 
21.3
 
 
 
22.0
 
 
Amortization of deferred financing fees
 
 
4.8
 
 
 
4.9
 
 
Decrease in deferred taxes
 
 
(14.4
)
 
 
(2.0
)
 
Increase in minority interest
 
 
3.9
 
 
 
1.3
 
 
Impairment of long-lived assets and restructuring charges
 
 
75.6
 
 
 
—
 
 
Equity in earnings of subsidiaries
 
 
(0.7
)
 
 
(0.6
)
 
Gain on disposal of assets/business
 
 
—
 
 
 
(8.0
)
 
Changes in operating assets and liabilities that increase (decrease) cash flows:
 
 
 
 
 
 
 
 
 
 
Receivables
 
 
(49.9
)
 
 
(112.8
)
 
 
Inventories
 
 
(31.1
)
 
 
(0.6
)
 
 
Prepaid expenses and other
 
 
(7.9
)
 
 
3.2
 
 
 
Accounts payable and accrued liabilities
 
 
(116.1
)
 
 
6.1
 
 
 
Other long-term liabilities
 
 
(9.5
)
 
 
(6.2
)
 
 
 
 
 
 
 
 
 
Cash provided by (used for) operating activities
 
 
(58.5
)
 
 
36.6
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Acquisition of property, plant and equipment
 
 
(123.8
)
 
 
(136.1
)
 
Tooling expenditures
 
 
(1.9
)
 
 
(9.2
)
 
Purchase of businesses, net of cash received
 
 
(6.4
)
 
 
(630.1
)
 
Increased investment in majority-owned subsidiary
 
 
(7.3
)
 
 
—
 
 
Proceeds from disposal of assets/business
 
 
—
 
 
 
40.0
 
 
Other, net
 
 
(15.6
)
 
 
(13.6
)
 
 
 
 
 
 
 
 
 
 
Cash used for investing activities
 
 
(155.0
)
 
 
(749.0
)
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Increase in bank borrowings and revolver
 
 
250.7
 
 
 
630.3
 
 
Proceeds (payments) from accounts receivable securitization
 
 
(17.2
)
 
 
99.4
 
 
Purchase of treasury stock
 
 
(26.3
)
 
 
—
 
 
Stock options exercised
 
 
—
 
 
 
0.2
 
 
Fees paid to issue long term debt
 
 
—
 
 
 
(15.2
)
 
 
 
 
 
 
 
 
 
 
Cash provided by financing activities
 
 
207.2
 
 
 
714.7
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
 
4.0
 
 
 
(3.0
)
 
 
 
 
 
 
 
 
Decrease in cash and cash equivalents
 
 
(2.3
)
 
 
(0.7
)
Cash and cash equivalents at beginning of year
 
 
25.9
 
 
 
51.3
 
 
 
 
 
 
 
 
Cash and cash equivalents at end of period
 
$
23.6
 
 
$
50.6
 
 
 
 
 
 
 
 
Supplemental data:
 
 
 
 
 
 
 
 
 
Cash paid for interest
 
$
110.5
 
 
$
83.9
 
 
Cash paid for income taxes
 
$
10.9
 
 
$
12.5
 
See accompanying notes to consolidated financial statements.
5
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Three and Nine Months Ended October 31, 19992000 and 19981999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(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 October 31, 1999,2000, and January 31, 1999,2000, and the results of its operations for the three and nine months ended October 31, 1999,2000, and 19981999 and cash flows for the nine months ended October 31, 1999,2000, and 1998.1999. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’sCompany’s Annual Report on Form 10-K for the fiscal year ended January 31, 1999.2000. Results for interim periods are not necessarily indicative of those to be expected for the year.
(2)  Acquisitions/Divestitures
     
On February 3, 1999, the Company completed the acquisition
of CMI International, Inc. (“CMI”). The purchase price
for CMI was $605 million in cash, of which approximately
$129 million was used to repay CMI’s outstanding
indebtedness existing at the time of the acquisition, and of
which approximately $476 million was paid to the
shareholders of CMI. The cash portion of the consideration, the
refinancing of the existing debt of CMI and the fees and expenses
 of the acquisition of CMI were financed with the proceeds of the
 Company’s senior secured credit facilities and the issuance
 by the Company of $250 million in aggregate principal
amount of 8 1/4% senior subordinated notes due 2008
(the “8 1/4% Notes”).

     
On April 21, 1999, the Company completed the acquisition of
Metaalindustrie Bergen B.V. (“MIB”). MIB is a full
service machining supplier, specializing in the machining of
large aluminum castings for a variety of automotive and
industrial applications located in Bergen, the Netherlands.

     
On July 1, 1999, the Company acquired an additional 45% of
the equity of its joint venture Siam Lemmerz Co., Limited in
Thailand. This transaction increased the Company’s ownership
 from 25% to 70%.

     
On July 30, 1999, the Company completed the sale of its
equity interests in A-CMI and A-CMI Scandinavia Casting Center
ANS, two joint ventures formerly owned by CMI. The equity
interests were purchased by ALCOA Inc., CMI’s partner in
these joint ventures, for net proceeds of $37 million.

     
The following unaudited pro forma financial data illustrates the
estimated effects as if the above-mentioned acquisitions had been
 completed as of the beginning of the periods presented, after
including the impact of certain adjustments, such as
amortization, depreciation, interest expense and the related
income tax effects:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months
Nine Months
Ended
Ended
1999
1998
1999
1998

	Sales
$
598.5
$
573.9
$
1,730.8
$
1,703.9

	Net income
$
19.9
$
19.7
$
49.5
$
29.3

	Basic net income per share
$
0.66
$
0.65
$
1.63
$
0.97

	Diluted net income per share
$
0.63
$
0.62
$
1.55
$
0.92
     
The pro forma results are not necessarily indicative of the
actual results as if the transactions had been in effect for the
entire periods presented. In addition, they are not intended to
be a projection of future results and do not reflect, among other
 things, any synergies that might have been achieved from
combined operations.

6


Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements — (Continued)
Three and Nine Months Ended October 31, 1999 and 1998
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(3)  Summary of New Accounting Pronouncements
     
In 1998, the American Institute of Certified Public Accountants
issued Statement of Position (“SOP”) 98-5,
“Reporting the Costs of Start-Up Activities.”
SOP 98-5 is effective January 1, 1999 and requires that
 start-up costs capitalized prior to January 1, 1999 be
written off and any future start-up costs be expensed as
incurred. The Company adopted this standard on February 1,
1999 and adoption did not have a material impact on the
Company’s results of operations.

           In June 1998, June 1999 and June 1999,2000, the Financial Accounting Standards Board (“FASB”(“FASB”) issued Statement of Financial Accounting Standards (“SFAS”(“SFAS”) No. 133, “Accounting“Accounting for Derivative Instruments and Hedging Activities” andActivities”, SFAS 137, “Accounting“Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133.”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’sderivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met.
           Special accounting for qualifying hedges allows a derivative’sderivative’s gains and losses to offset related results on the hedged item in the income statement, 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 adoptingwill adopt this standard in its fiscal year 2001 and does not, at this time, anticipate a material impact on the Company’sCompany’s financial position or results of operations when adopted.
     
In September 1999, the Emerging Issues Task Force reached a
consensus for Issue 99-5, “Accounting for
Pre-Production Costs Related to Long-Term Supply
Arrangements.” This consensus may be applied on a
prospective basis for costs incurred after December 31,
1999, or as a cumulative effect adjustment as of the beginning of
 the current fiscal year. The Company is currently reviewing the
potential impact of this statement, but does not anticipate
adoption will have a material impact on the financial statements.

(3)  Inventories
(4) Inventories
           The major classes of inventory are as follows:
 
 
 
 
 
 
 
 
 
 
October 31,
January 31,
1999
1999

	Raw Materials
$
66.6
$
65.2

	Work-in-process
59.3
48.8

	Finished goods
58.8
52.6

	Total
$
184.7
$
166.6
 
 
 
 
 
 
 
 
 
 
October 31,
January 31,
2000
2000
Raw Materials
 
$
68.4
 
 
$
62.3
 
Work-in-process
 
 
60.4
 
 
 
55.9
 
Finished goods
 
 
72.4
 
 
 
57.4
 
 
 
 
 
 
 
 
 
Total
 
$
201.2
 
 
$
175.6
 
 
 
 
 
 
 
 
7


6
Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements —— (Continued)
Three and Nine Months Ended October 31, 19992000 and 19981999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(5) (4)  Property, plant and equipment
           The major classes of property, plant and equipment are as follows:
 
 
 
 
 
 
 
 
 
 
October 31,
January 31,
1999
1999

	Land
$
29.0
$
24.9

	Buildings
262.8
201.1

	Machinery and equipment
1,108.4
832.8
1,400.2
1,058.8

	Accumulated depreciation
(245.0
)
(180.8
)

	Net property, plant and equipment
$
1,155.2
$
878.0
 
 
 
 
 
 
 
 
 
 
October 31,
January 31,
2000
2000
Land
 
$
29.8
 
 
$
30.1
 
Buildings
 
 
260.3
 
 
 
265.5
 
Machinery and equipment
 
 
1,117.6
 
 
 
1,151.6
 
 
 
 
 
 
 
 
 
 
 
1,407.7
 
 
 
1,447.2
 
Accumulated depreciation
 
 
(299.1
)
 
 
(268.8
)
 
 
 
 
 
 
 
 
Net property, plant and equipment
 
$
1,108.6
 
 
$
1,178.4
 
 
 
 
 
 
 
 
(6) (5)  Earnings per share
           SFAS No. 128, “Earnings“Earnings per Share”
(“EPS”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 nine months ended October 31, 19992000 and 1998,1999, were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months
Nine Months
Ended
Ended
1999
1998
1999
1998

	Basic weighted average shares outstanding
30,337
30,180
30,333
30,134

	Dilutive effect of options and warrants
1,341
1,824
1,547
2,348

	Diluted weighted average shares outstanding
31,678
32,004
31,880
32,482
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months
Nine Months
Ended
Ended
2000
1999
2000
1999
Basic weighted average shares outstanding
 
 
29,189
 
 
 
30,337
 
 
 
29,965
 
 
 
30,333
 
Dilutive effect of options and warrants
 
 
48
 
 
 
1,341
 
 
 
124
 
 
 
1,547
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
 
 
29,237
 
 
 
31,678
 
 
 
30,089
 
 
 
31,880
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7) (6)  Comprehensive Income (Loss)
           SFAS No. 130, “Reporting“Reporting Comprehensive Income,”” establishes standards for the reporting and display of comprehensive income. Comprehensive income is defined as all changes in a Company’sCompany’s net assets except changes resulting from transactions with shareholders. It differs from net income in that certain items currently recorded to equity would be a part of comprehensive income.
           The components of comprehensive income (loss) for the nine months ended October 31, 19992000 and 19981999 are as follows:
 
 
 
 
 
 
 
 
 
 
Oct. 31,
Oct. 31,
1999
1998

	Net Income
$
49.5
$
33.6

	Cumulative translation adjustments
(48.6
)
4.6

	Total comprehensive income
$
0.9
$
38.2
 
 
 
 
 
 
 
 
 
 
Oct. 31,
Oct. 31,
2000
1999
Net Income (loss)
 
$
(25.3
)
 
$
49.5
 
Cumulative translation adjustments
 
 
6.4
 
 
 
(48.6
)
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
 
$
(18.9
)
 
$
0.9
 
 
 
 
 
 
 
 
(8) (7)  Commitments and Contingencies
     
Management believes that at October 31, 1999, the Company
was in compliance with the various covenants under the agreements
 pursuant to which it has or may borrow money. Management expects
 that the

8


Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements — (Continued)
Three and Nine Months Ended October 31, 1999 and 1998
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
 
(8)  Commitments and
Contingencies — (Continued)

Company will remain in compliance with these covenants in all
material respects through the period ending October 31,
2000.

           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.
7
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(9) Notes to Consolidated Financial Statements — (Continued)
Three and Nine Months Ended October 31, 2000 and 1999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(8)  Segment Reporting
           The Company is organized based primarily on markets served and products produced. Under this organization structure, the Company’sCompany’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 nine months ended October 31:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
Net Income
Total Assets
1999
1998
1999
1998
1999
1998

	Automotive Wheels
$
1,022.4
$
934.9
$
32.1
$
21.4
$
2,183.3
$
2,103.7

	Cast Components
539.4
150.8
11.2
7.7
950.3
212.3

	Other
169.0
155.1
6.2
4.5
(301.6
)
(313.8
)

	Total
$
1,730.8
$
1,240.8
$
49.5
$
33.6
$
2,832.0
$
2,002.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
Net Income (Loss)
Total Assets
2000
1999
2000
1999
2000
1999
Automotive Wheels
 
$
1,057.5
 
 
$
1,012.6
 
 
$
9.8
 
 
$
32.9
 
 
$
1,445.2
 
 
$
1,553.9
 
Cast Components
 
 
505.1
 
 
 
539.4
 
 
 
(1.0
)
 
 
11.2
 
 
 
966.4
 
 
 
950.3
 
Other
 
 
133.3
 
 
 
178.8
 
 
 
(34.1
)
 
 
5.4
 
 
 
362.3
 
 
 
327.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
1,695.9
 
 
$
1,730.8
 
 
$
(25.3
)
 
$
49.5
 
 
$
2,773.9
 
 
$
2,832.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(10) (9)  Reclassifications
           Certain prior period amounts have been reclassified to conform to the current year presentation.
(11) (10)  Guarantor and Nonguarantor Financial Statements
          
In connection with the Company’s merger with Motor Wheel,
and as part of the financing thereof, the Company issued and sold
 $250 million in aggregate principal amount of 11%The Company’s senior subordinated notes due 2006 (the “11% Notes”) in a
 public offering.

     
In connection with the Company’s acquisition of Lemmerz
Holding GmbH on June 30, 1997 (the “Lemmerz
Acquisition”), the Company issued and sold $400 million
 in aggregate principal amount of 9 1/8% senior subordinated
 notes due 2007 (the “9 1/8% Notes”).

     
In anticipation of the acquisition of CMI and as part of the
financing thereof, the Company issued and sold the 8  1/4%
Notes. Effective June 17, 1999, the Company completed the
offer to exchange all of the 8  1/4% Notes for 8  1/4%
Series B Senior Subordinated Notes due 2008.

     
The 11% Notes, 9 1/8% Notes and 8  1/4% Notes rank 
pari passu with each other and are general unsecured
obligations of the Company, subordinated in right of payment to
all existing and future senior indebtedness of the Company, and are guaranteed by certain of the Company’sCompany’s domestic subsidiaries. 
9


Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements — (Continued)
ThreeCertain other domestic subsidiaries and Nine Months Ended October 31, 1999 and 1998
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
the foreign subsidiaries (the “Non-Guarantor Subsidiaries”) do not guarantee the senior subordinated notes.
(11)  Guarantor and Nonguarantor Financial
Statements — Continued
           The following condensed consolidating financial information presents:
 
(1) 
  Condensed consolidating financial statements as of October 31, 1999,2000, and January 31, 1999,2000, and for the nine-month periods ended October 31, 1999,2000, and 1998,1999, 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 subsidiaries are accounted for by the parent on the equity method (domestic subsidiaries are accounted for by the parent on the cost method) for purposes of the consolidating presentation. The principleprincipal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.
8
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
Three and Nine Months Ended October 31, 2000 and 1999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(10)  Guarantor and Nonguarantor Financial Statements — (Continued)
Condensed Consolidating StatementStatements of Operations
For the Nine Months Ended October 31, 2000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
Net sales
 
$
248.4
 
 
$
515.8
 
 
$
948.4
 
 
$
(16.7
)
 
$
1,695.9
 
Cost of goods sold
 
 
205.0
 
 
 
455.0
 
 
 
793.1
 
 
 
(16.7
)
 
 
1,436.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
43.4
 
 
 
60.8
 
 
 
155.3
 
 
 
—
 
 
 
259.5
 
Marketing, general and Administration
 
 
8.9
 
 
 
18.9
 
 
 
49.0
 
 
 
—
 
 
 
76.8
 
Engineering and product development
 
 
1.2
 
 
 
5.8
 
 
 
6.0
 
 
 
—
 
 
 
13.0
 
Amortization of intangibles
 
 
0.8
 
 
 
6.1
 
 
 
14.4
 
 
 
—
 
 
 
21.3
 
Equity in earnings of unconsolidated subsidiaries
 
 
(0.4
)
 
 
(0.3
)
 
 
—
 
 
 
—
 
 
 
(0.7
)
Other income (expense), net
 
 
2.0
 
 
 
57.2
 
 
 
9.5
 
 
 
—
 
 
 
68.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from operations
 
 
30.9
 
 
 
(26.9
)
 
 
76.4
 
 
 
—
 
 
 
80.4
 
Interest expense, net
 
 
21.8
 
 
 
42.6
 
 
 
56.0
 
 
 
—
 
 
 
120.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before taxes on income, and minority interest
 
 
9.1
 
 
 
(69.5
)
 
 
20.4
 
 
 
—
 
 
 
(40.0
)
Income tax (benefit) provision
 
 
(0.1
)
 
 
(25.1
)
 
 
8.4
 
 
 
—
 
 
 
(16.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before minority interest
 
 
9.2
 
 
 
(44.4
)
 
 
12.0
 
 
 
—
 
 
 
(23.2
)
Minority interest
 
 
—
 
 
 
—
 
 
 
2.1
 
 
 
—
 
 
 
2.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
9.2
 
 
$
(44.4
)
 
$
9.9
 
 
$
—
 
 
$
(25.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Statements of Operations
For the Nine Months Ended October 31, 1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total

	Net sales
$
261.6
$
555.1
$
916.5
$
(2.4
)
$
1,730.8

	Cost of goods sold
220.4
465.5
741.7
(2.4
)
1,425.2

	Gross profit
41.2
89.6
174.8
—
305.6

	Marketing, general and administration
4.0
17.5
49.2
—
70.7

	Engineering and product development
3.3
5.0
7.3
—
15.6

	Amortization of intangibles
1.1
6.1
14.8
—
22.0

	Equity in earnings of unconsolidated subsidiaries
(1.8
)
—
(0.3
)
—
(2.1
)

	Other income, net
(2.1
)
(1.6
)
(1.6
)
—
(5.3
)

	Earnings from operations
36.7
62.6
105.4
—
204.7

	Interest expense, net
20.8
41.9
52.8
—
115.5

	Earnings before taxes on income, And minority interest
15.9
20.7
52.6
—
89.2

	Income tax provision
8.3
9.7
20.4
—
38.4

	Earnings before minority interest
7.6
11.0
32.2
—
50.8

	Minority interest
—
0.2
1.1
—
1.3

	Net income
$
7.6
$
10.8
$
31.1
$
—
$
49.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
Net sales
 
$
261.6
 
 
$
555.1
 
 
$
916.5
 
 
$
(2.4
)
 
$
1,730.8
 
Cost of goods sold
 
 
220.4
 
 
 
465.5
 
 
 
741.7
 
 
 
(2.4
)
 
 
1,425.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
41.2
 
 
 
89.6
 
 
 
174.8
 
 
 
—
 
 
 
305.6
 
Marketing, general and Administration
 
 
4.0
 
 
 
17.5
 
 
 
49.2
 
 
 
—
 
 
 
70.7
 
Engineering and product development
 
 
3.3
 
 
 
5.0
 
 
 
7.3
 
 
 
—
 
 
 
15.6
 
Amortization of intangibles
 
 
1.1
 
 
 
6.1
 
 
 
14.8
 
 
 
—
 
 
 
22.0
 
Equity in earnings of unconsolidated subsidiaries
 
 
(0.3
)
 
 
—
 
 
 
(0.3
)
 
 
—
 
 
 
(0.6
)
Other income, net
 
 
(3.6
)
 
 
(1.6
)
 
 
(1.6
)
 
 
—
 
 
 
(6.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
 
36.7
 
 
 
62.6
 
 
 
105.4
 
 
 
—
 
 
 
204.7
 
Interest expense, net
 
 
20.8
 
 
 
41.9
 
 
 
52.8
 
 
 
—
 
 
 
115.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes on income, and minority interest
 
 
15.9
 
 
 
20.7
 
 
 
52.6
 
 
 
—
 
 
 
89.2
 
Income tax provision
 
 
8.3
 
 
 
9.7
 
 
 
20.4
 
 
 
—
 
 
 
38.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before minority interest
 
 
7.6
 
 
 
11.0
 
 
 
32.2
 
 
 
—
 
 
 
50.8
 
Minority interest
 
 
—
 
 
 
0.2
 
 
 
1.1
 
 
 
—
 
 
 
1.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
7.6
 
 
$
10.8
 
 
$
31.1
 
 
$
—
 
 
$
49.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10

9
Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements —— (Continued)
Three and Nine Months Ended October 31, 19992000 and 19981999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(11) (10)  Guarantor and Nonguarantor Financial Statements — Continued— (Continued)
Condensed Consolidating Statement of OperationsBalance Sheet
For the Nine months ended October 31, 19982000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total

	Net sales
$
215.1
$
514.0
$
519.3
$
(7.6
)
$
1,240.8

	Cost of goods sold
185.2
428.1
418.4
(7.6
)
1,024.1

	Gross profit
29.9
85.9
100.9
—
216.7

	Marketing, general and administration
6.9
13.8
28.0
—
48.7

	Engineering and product development
2.1
4.2
9.4
—
15.7

	Amortization of intangibles
1.0
6.2
5.5
—
12.7

	Equity in earnings of unconsolidated subsidiaries
(0.6
)
—
—
—
(0.6
)

	Other income, net
(0.5
)
(0.1
)
(3.3
)
—
(3.9
)

	Earnings from operations
21.0
61.8
61.3
—
144.1

	Interest expense, net
28.7
35.4
5.3
—
69.4

	Earnings (loss) before taxes on income, minority interest and
	extraordinary loss
(7.7
)
26.4
56.0
—
74.7

	Income tax provision
11.5
9.4
10.5
—
31.4

	Earnings (loss) before minority interest and extraordinary loss
(19.2
)
17.0
45.5
—
43.3

	Minority interest
—
0.2
1.2
—
1.4

	Earnings (loss) before extraordinary loss
(19.2
)
16.8
44.3
41.9

	Extraordinary loss, net of tax
8.3
—
—
8.3

	Net income (loss)
$
(27.5
)
$
16.8
$
44.3
$
—
$
33.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
Cash and cash equivalents
 
$
7.0
 
 
$
0.2
 
 
$
16.4
 
 
$
—
 
 
$
23.6
 
Receivables
 
 
49.8
 
 
 
7.8
 
 
 
182.9
 
 
 
—
 
 
 
240.5
 
Inventories
 
 
33.9
 
 
 
51.9
 
 
 
115.4
 
 
 
—
 
 
 
201.2
 
Prepaid expenses and other
 
 
2.9
 
 
 
7.4
 
 
 
17.3
 
 
 
(10.7
)
 
 
16.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total current assets
 
 
93.6
 
 
 
67.3
 
 
 
332.0
 
 
 
(10.7
)
 
 
482.2
 
Net property, plant and equipment
 
 
155.9
 
 
 
279.9
 
 
 
672.8
 
 
 
—
 
 
 
1,108.6
 
Goodwill and other assets
 
 
1,498.0
 
 
 
301.9
 
 
 
652.7
 
 
 
(1,269.5
)
 
 
1,183.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,747.5
 
 
$
649.1
 
 
$
1,657.5
 
 
$
(1,280.2
)
 
$
2,773.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bank borrowings
 
$
0.0
 
 
$
—
 
 
$
85.4
 
 
$
—
 
 
$
85.4
 
Current portion of long-term debt
 
 
59.3
 
 
 
—
 
 
 
13.2
 
 
 
—
 
 
 
72.5
 
Accounts payable and accrued liabilities
 
 
97.6
 
 
 
73.1
 
 
 
280.5
 
 
 
(4.6
)
 
 
446.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total current liabilities
 
 
156.9
 
 
 
73.1
 
 
 
379.1
 
 
 
(4.6
)
 
 
604.5
 
Long-term debt, net of current portion
 
 
1,504.5
 
 
 
—
 
 
 
96.4
 
 
 
—
 
 
 
1,600.9
 
Deferred income taxes
 
 
18.4
 
 
 
8.2
 
 
 
67.8
 
 
 
—
 
 
 
94.4
 
Pension and other long-term liabilities
 
 
76.8
 
 
 
51.8
 
 
 
161.7
 
 
 
—
 
 
 
290.3
 
Minority interest
 
 
—
 
 
 
—
 
 
 
10.1
 
 
 
—
 
 
 
10.1
 
Parent loans
 
 
(241.9
)
 
 
327.0
 
 
 
(75.6
)
 
 
(9.5
)
 
 
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
 
1,514.7
 
 
 
460.1
 
 
 
639.5
 
 
 
(14.1
)
 
 
2,600.2
 
Common stock
 
 
0.3
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0.3
 
Additional paid-in capital
 
 
251.9
 
 
 
108.7
 
 
 
1,012.6
 
 
 
(1,136.1
)
 
 
237.1
 
Retained earnings (accumulated deficit)
 
 
(51.8
)
 
 
80.3
 
 
 
134.2
 
 
 
(130.0
)
 
 
32.7
 
Common stock in treasury
 
 
(26.3
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(26.3
)
Accumulated other comprehensive income (loss)
 
 
58.7
 
 
 
—
 
 
 
(128.8
)
 
 
—
 
 
 
(70.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders’ equity
 
 
232.8
 
 
 
189.0
 
 
 
1,018.0
 
 
 
(1,266.1
)
 
 
173.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholder’s equity
 
$
1,747.5
 
 
$
649.1
 
 
$
1,657.5
 
 
$
(1,280.2
)
 
$
2,773.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11

10
Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements —— (Continued)
Three and Nine Months Ended October 31, 19992000 and 19981999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(11) (10)  Guarantor and Nonguarantor Financial Statements — Continued— (Continued)
Condensed Consolidating Balance Sheet
As of OctoberJanuary 31, 19992000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total

	Cash and cash equivalents
$
26.7
$
0.1
$
23.8
$
—
$
50.6

	Receivables
88.7
35.9
122.1
—
246.7

	Inventories
36.4
46.8
101.5
—
184.7

	Prepaid expenses and other
4.6
5.0
10.0
(1.7
)
17.9

	Total current assets
156.4
87.8
257.4
(1.7
)
499.9

	Net property, plant and equipment
162.3
333.0
659.9
—
1,155.2

	Goodwill and other assets
1,423.8
308.9
708.5
(1,264.3
)
1,176.9

	Total assets
$
1,742.5
$
729.7
$
1,625.8
$
(1,266.0
)
$
2,832.0

	Bank borrowings
$
2.7
—
$
86.5
—
$
89.2

	Current portion of long-term debt
0.2
—
18.3
—
18.5

	Accounts payable and accrued liabilities
125.2
104.0
276.8
(3.7
)
502.3

	Total current liabilities
128.1
104.0
381.6
(3.7
)
610.0

	Long-term debt, net of current portion
1,470.7
—
100.6
—
1,571.3

	Deferred income taxes
(5.1
)
28.5
53.2
—
76.6

	Pension and other long-term liabilities
91.3
62.3
187.9
(2.5
)
339.0

	Minority interest
—
—
13.0
—
13.0

	Parent loans
(135.4
)
302.2
(166.4
)
(0.4
)
(0.0
)

	Total liabilities
1,549.6
497.0
569.9
(6.6
)
2,609.9

	Common stock
0.3
—
—
—
0.3

	Additional paid-in capital
252.0
110.5
1,004.0
(1,129.4
)
237.1

	Retained earnings (accumulated deficit)
(51.8
)
123.4
100.8
(130.0
)
42.4

	Accumulated other comprehensive income
(7.6
)
(1.2
)
(48.9
)
—
(57.7
)

	Total stockholders’ equity
192.9
232.7
1,055.9
(1,259.4
)
222.1

	Total liabilities and stockholder’s equity
$
1,742.5
$
729.7
$
1,625.8
$
(1,266.0
)
$
2,832.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
Cash and cash equivalents
 
$
6.8
 
 
$
0.1
 
 
$
19.0
 
 
$
—
 
 
$
25.9
 
Receivables
 
 
34.1
 
 
 
4.2
 
 
 
150.4
 
 
 
—
 
 
 
188.7
 
Inventories
 
 
38.0
 
 
 
46.1
 
 
 
91.5
 
 
 
—
 
 
 
175.6
 
Prepaid expenses and other
 
 
0.9
 
 
 
4.0
 
 
 
21.9
 
 
 
(17.4
)
 
 
9.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total current assets
 
 
79.8
 
 
 
54.4
 
 
 
282.8
 
 
 
(17.4
)
 
 
399.6
 
Net property, plant and equipment
 
 
158.3
 
 
 
339.1
 
 
 
681.0
 
 
 
—
 
 
 
1,178.4
 
Goodwill and other assets
 
 
1,464.0
 
 
 
304.8
 
 
 
694.3
 
 
 
(1,264.3
)
 
 
1,198.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,702.1
 
 
$
698.3
 
 
$
1,658.1
 
 
$
(1,281.7
)
 
$
2,776.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bank borrowings
 
$
—
 
 
$
—
 
 
$
73.6
 
 
$
—
 
 
$
73.6
 
Current portion of long-term debt
 
 
57.9
 
 
 
—
 
 
 
11.7
 
 
 
—
 
 
 
69.6
 
Accounts payable and accrued liabilities
 
 
126.9
 
 
 
154.1
 
 
 
326.1
 
 
 
(23.2
)
 
 
583.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total current liabilities
 
 
184.8
 
 
 
154.1
 
 
 
411.4
 
 
 
(23.2
)
 
 
727.1
 
Long-term debt, net of current portion
 
 
1,289.2
 
 
 
—
 
 
 
95.4
 
 
 
—
 
 
 
1,384.6
 
Deferred income taxes
 
 
18.5
 
 
 
28.5
 
 
 
68.6
 
 
 
—
 
 
 
115.6
 
Pension and other long-term liabilities
 
 
80.3
 
 
 
57.1
 
 
 
181.4
 
 
 
(2.5
)
 
 
316.3
 
Minority interest
 
 
—
 
 
 
—
 
 
 
14.3
 
 
 
—
 
 
 
14.3
 
Parent loans
 
 
(61.9
)
 
 
225.2
 
 
 
(166.7
)
 
 
3.4
 
 
 
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
 
1,510.9
 
 
 
464.9
 
 
 
604.4
 
 
 
(22.3
)
 
 
2,557.9
 
Common stock
 
 
0.3
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0.3
 
Additional paid-in capital
 
 
251.9
 
 
 
108.7
 
 
 
1,005.9
 
 
 
(1,129.4
)
 
 
237.1
 
Retained earnings (accumulated deficit)
 
 
(61.1
)
 
 
124.7
 
 
 
124.4
 
 
 
(130.0
)
 
 
58.0
 
Accumulated other comprehensive Income (loss)
 
 
0.1
 
 
 
—
 
 
 
(76.6
)
 
 
—
 
 
 
(76.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders’ equity
 
 
191.2
 
 
 
233.4
 
 
 
1,053.7
 
 
 
(1,259.4
)
 
 
218.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholder’s equity
 
$
1,702.1
 
 
$
698.3
 
 
$
1,658.1
 
 
$
(1,281.7
)
 
$
2,776.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12

11
Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements —— (Continued)
Three and Nine Months Ended October 31, 19992000 and 19981999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(11) (10)  Guarantor and Nonguarantor Financial Statements — Continued— (Continued)
Condensed Consolidating Balance SheetStatement of Cash Flows
JanuaryFor the Nine Months Ended October 31, 19992000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total

	Cash and cash equivalents
$
23.3
$
0.1
$
27.9
$
—
$
51.3

	Receivables
42.9
26.0
112.7
—
181.6

	Inventories
33.1
49.8
83.7
—
166.6

	Prepaid expenses and other
1.6
2.9
19.9
(1.6
)
22.8

	Total current assets
100.9
78.8
244.2
(1.6
)
422.3

	Net property, plant and equipment
148.1
313.9
416.0
—
878.0

	Goodwill and other assets
799.1
309.2
363.4
(661.1
)
810.6

	Total assets
$
1,048.1
$
701.9
$
1,023.6
$
(662.7
)
$
2,110.9

	Bank borrowings
$
2.6
$
—
$
42.2
$
—
$
44.8

	Current portion of long-term debt
0.2
—
12.1
—
12.3

	Accounts payable and accrued liabilities
87.5
159.1
211.2
(1.1
)
456.7

	Total current liabilities
90.3
159.1
265.5
(1.1
)
513.8

	Long-term debt, net of current portion
900.8
—
75.3
—
976.1

	Deferred income taxes
(5.1
)
13.0
50.5
—
58.4

	Pension and other long-term liabilities
83.1
79.4
169.1
(2.5
)
329.1

	Minority interest
—
0.4
12.2
—
12.6

	Parent loans
(191.5
)
228.7
(33.9
)
(3.3
)
—

	Total liabilities
877.6
480.6
538.7
(6.9
)
1,890.0

	Common stock
0.3
—
—
—
0.3

	Additional paid-in capital
251.7
108.7
293.4
(417.0
)
236.8

	Retained earnings (accumulated deficit)
(59.4
)
112.6
178.5
(238.8
)
(7.1
)

	Accumulated other comprehensive income.
(22.1
)
—
13.0
—
(9.1
)

	Total stockholders’ equity
170.5
221.3
484.9
(655.8
)
220.9

	Total liabilities and stockholder’s equity
$
1,048.1
$
701.9
$
1,023.6
$
(662.7
)
$
2,110.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
Cash flows provided by (used in) operating activities
 
$
(0.9
)
 
$
(75.0
)
 
$
17.4
 
 
$
—
 
 
$
(58.5
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition of property, plant and equipment
 
 
(8.5
)
 
 
(18.3
)
 
 
(97.0
)
 
 
—
 
 
 
(123.8
)
 
Acquisition of tooling
 
 
—
 
 
 
—
 
 
 
(1.9
)
 
 
—
 
 
 
(1.9
)
 
Purchase of businesses, net of cash
 
 
—
 
 
 
—
 
 
 
(6.4
)
 
 
—
 
 
 
(6.4
)
 
Increased investment in majority-owned subsidiary
 
 
—
 
 
 
—
 
 
 
(7.3
)
 
 
—
 
 
 
(7.3
)
 
Other, net
 
 
29.5
 
 
 
(8.5
)
 
 
(36.6
)
 
 
—
 
 
 
(15.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by (used in) investing activities
 
 
21.0
 
 
 
(26.8
)
 
 
(149.2
)
 
 
—
 
 
 
(155.0
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net change in bank borrowings and revolver
 
 
216.7
 
 
 
—
 
 
 
34.0
 
 
 
—
 
 
 
250.7
 
 
Proceeds (payments) from accounts receivable securitization
 
 
(17.2
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(17.2
)
 
Purchase of treasury stock
 
 
(26.3
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(26.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by financing activities
 
 
173.2
 
 
 
—
 
 
 
34.0
 
 
 
—
 
 
 
207.2
 
Increase (decrease) in parent loans and advances
 
 
(193.1
)
 
 
101.9
 
 
 
91.2
 
 
 
—
 
 
 
—
 
Effect of exchange rates of cash and cash equivalents
 
 
—
 
 
 
—
 
 
 
4.0
 
 
 
—
 
 
 
4.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
 
0.2
 
 
 
0.1
 
 
 
(2.6
)
 
 
—
 
 
 
(2.3
)
Cash and cash equivalents at beginning of period
 
 
6.8
 
 
 
0.1
 
 
 
19.0
 
 
 
—
 
 
 
25.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end
of period
 
$
7.0
 
 
$
0.2
 
 
$
16.4
 
 
$
—
 
 
$
23.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13


12
Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements —— (Continued)
Three and Nine Months Ended October 31, 19992000 and 19981999
(Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(11) (10)  Guarantor and Nonguarantor Financial Statements — Continued— (Continued)
Condensed Consolidating StatementStatements of Cash Flows
For the nine months ended October 31, 1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total

	Cash flows provided by (used in) operating activities
$
(80.2
)
$
(29.1
)
$
144.4
$
—
$
35.1

	Cash flows from investing activities:

	Acquisition of property, plant and equipment
(24.1
)
(36.8
)
(75.2
)
—
(136.1
)

	Acquisition of tooling
(9.2
)
—
—
—
(9.2
)

	Purchase of businesses, net of cash
(615.0
)
(0.5
)
(14.6
)
—
(630.1
)

	Proceeds from disposal of assets/business
—
2.6
37.4
—
40.0

	Other, net
21.3
(9.8
)
(23.6
)
—
(12.1
)

	Cash used in investing activities
(627.0
)
(44.5
)
(76.0
)
—
(747.5
)

	Cash flows from financing activities:

	Net change in bank borrowings and revolver
570.1
—
60.2
—
630.3

	Fees paid to issue long term debt
(15.2
)
—
—
—
(15.2
)

	Stock options exercised
0.2
—
—
—
0.2

	Net proceeds from accounts receivable securitization
99.4
—
—
—
99.4

	Cash provided by financing activities
654.5
—
60.2
—
714.7

	Increase (decrease) in parent loans and advances
56.1
73.6
(129.7
)
—
—

	Effect of exchange rates of cash and cash equivalents
—
—
(3.0
)
—
(3.0
)

	Net increase (decrease) in cash and cash equivalents
3.4
—
(4.1
)
—
(0.7
)

	Cash and cash equivalents at beginning of period
23.3
0.1
27.9
—
51.3

	Cash and cash equivalents at end of period
$
26.7
$
0.1
$
23.8
$
—
$
50.6
14

Table of Contents
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements — (Continued)
Three and Nine Months Ended October 31, 1999 and 1998
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
Cash flows provided by (used in) operating activities
 
$
(80.2
)
 
$
(29.1
)
 
$
145.9
 
 
$
—
 
 
$
36.6
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition of property, plant and equipment
 
 
(24.1
)
 
 
(36.8
)
 
 
(75.2
)
 
 
—
 
 
 
(136.1
)
 
Acquisition of tooling
 
 
(9.2
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(9.2
)
 
Purchase of businesses, net of cash
 
 
(615.0
)
 
 
(0.5
)
 
 
(14.6
)
 
 
—
 
 
 
(630.1
)
 
Proceeds from disposal
of assets/business
 
 
—
 
 
 
2.6
 
 
 
37.4
 
 
 
—
 
 
 
40.0
 
 
Other, net
 
 
21.3
 
 
 
(9.8
)
 
 
(25.1
)
 
 
—
 
 
 
(13.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash used in investing activities
 
 
(627.0
)
 
 
(44.5
)
 
 
(77.5
)
 
 
—
 
 
 
(749.0
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net change in bank borrowings and revolver
 
 
570.1
 
 
 
—
 
 
 
60.2
 
 
 
—
 
 
 
630.3
 
 
Fees paid to issue long term debt
 
 
(15.2
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(15.2
)
 
Stock options exercised
 
 
0.2
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0.2
 
 
Net proceeds from accounts receivable securitization
 
 
99.4
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
99.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by financing activities
 
 
654.5
 
 
 
—
 
 
 
60.2
 
 
 
—
 
 
 
714.7
 
Increase (decrease) in parent loans and advances
 
 
56.1
 
 
 
73.6
 
 
 
(129.7
)
 
 
—
 
 
 
—
 
Effect of exchange rates of cash and cash equivalents
 
 
—
 
 
 
—
 
 
 
(3.0
)
 
 
—
 
 
 
(3.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
 
3.4
 
 
 
—
 
 
 
(4.1
)
 
 
—
 
 
 
(0.7
)
Cash and cash equivalents at beginning of period
 
 
23.3
 
 
 
0.1
 
 
 
27.9
 
 
 
—
 
 
 
51.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end
of period
 
$
26.7
 
 
$
0.1
 
 
$
23.8
 
 
$
—
 
 
$
50.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
 (Unaudited)
(Millions of Dollars Unless Otherwise Stated)
(11)  Guarantor and Nonguarantor Financial
Statements — Continued
Condensed Consolidating Statement of Cash Flows
For the nine months ended October 31, 1998
Item 2. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantor
Nonguarantor
Consolidated
Parent
Subsidiaries
Subsidiaries
Eliminations
Total

	Cash flows provided by (used in) operating activities
$
(54.5
)
$
44.3
$
76.3
$
—
$
66.1

	Cash flows from investing activities:

	AcquisitionManagement’s Discussion and Analysis of property, plantFinancial Condition and equipment
(12.3
)
(31.9
)
(44.7
)
—
(88.9
)

	AcquisitionResults of toolingOperations
(6.6
)
—
—
—
(6.6
)

	Purchase of businesses, net of cash received
(8.8
)
—
(70.5
)
—
(79.3
)

	Other, net
(35.5
)
8.7
0.1
—
(26.7
)

	Cash provided by (used in) investing activities
(63.2
)
(23.2
)
(115.1
)
—
(201.5
)

	Cash flows from financing activities:

	Net change in bank borrowings and revolver
4.7
(34.5
)
40.5
—
10.7

	Stock options exercised
1.7
—
—
—
1.7

	Fees paid to issue debt
(1.4
)
—
—
—
(1.4
)

	Net proceeds from accounts receivable securitization
120.8
—
—
—
120.8

	Cash provided by (used in) financing activities
125.8
(34.5
)
40.5
—
131.8

	Increase (decrease) in parent loans and advances
(12.7
)
13.1
(0.4
)
—
—

	Effect of exchange rates of cash and cash equivalents
—
—
(1.7
)
—
(1.7
)

	Net increase (decrease) in cash and cash equivalents
(4.6
)
(0.3
)
(0.4
)
—
(5.3
)

	Cash and cash equivalents at beginning of period
4.6
0.1
18.4
—
23.1

	Cash and cash equivalents at end of period
$
—
$
(0.2
)
$
18.0
$
—
$
17.8
15

Table of Contents
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended October 31, 19992000 Compared to Three Months Ended October 31, 19981999
Net Sales
          
The Company’sCompany’s net sales for the third quarter of fiscal 19992000 were $598.5$558.3 million, an increasea decrease of 34.8%6.7% as compared to net sales of $443.9$598.5 million for the third quarter of fiscal 1998. This increase was due to1999. Significant reductions in heavy truck production and softening in OEM light vehicle volumes in the additional sales contributed
as a result of the CMI acquisition, which was effective
February 3, 1999, and higherUnited States have resulted in lower sales in the North American AutomotiveCommercial Highway, North American Cast Components and North American Wheel group. TheseGroups. Increased sales increasesin the European Wheel Groups were partially offset by lower selling prices duethe Euro weakening against the Dollar in the third quarter of fiscal 2000 as compared to the pass throughthird quarter of lower
aluminum costs and the maxi-devaluation of the Brazilian economy.

fiscal 1999.
Gross Profit
          
The Company’sCompany’s gross profit for the third quarter of fiscal 1999 increased2000 decreased to $105.4$73.2 million or 17.6%13.1% of net sales as compared to $82.7$105.4 million or 18.6%17.6% of net sales for the third quarter of fiscal 1998.1999. The Company’sCompany’s third quarter gross profit margin was negatively impacted primarily by the reduction in the North American heavy truck and OEM sales and production inefficiencies related to the volatile heavy truck and premium costs associated withOEM production environment. In addition, gross margin was negatively impacted by the unexpectedly strong demand
for lightweight aluminum wheelswrite off of $5.0 million in both North Americaexcess and Europe,
 slower demand for steel wheels in Europe as a result of the
higher aluminum wheel penetrationobsolete inventories pursuant to capacity reductions and the continuation of the
economic devaluation in developing markets.

softening market conditions.
     Marketing, General and Administrative
      Marketing, general and administrative expenses were $28.3 million or 5.1% of net sales for the third quarter of fiscal 2000 as compared to $21.8 million or 3.6% of net sales for the third quarter of fiscal 1999 as compared1999. Marketing, general and administrative expenses for the third quarter of fiscal 2000 were negatively impacted by the write off of $7.2 million principally associated with cancelled transactions, and an increase in the allowance for doubtful accounts and severance costs due to $16.7market conditions.
Engineering and Product Development
      Engineering and product development costs were $3.6 million or 3.8%0.6% of net sales for the same periodthird quarter of fiscal 1998. The increase in
expenses was attributable2000 as compared to additional costs incurred as a
result of the CMI acquisition. As a percent of sales, however,
marketing, general and administrative costs have improved as
synergies from this acquisition have been realized.

     
Engineering and product development costs were $4.4 million or 0.7% of net sales for the third quarter of fiscal 1999 as
compared to $5.7 million or 1.3% of net sales for1999. This improvement principally reflects the third
quarter of fiscal 1998. Engineering and product development costs
 were lower, despite the CMI acquisition, due to synergies
realized and timing associated with recovery of engineering and development costs from our customers.
Other (Income) Expense
          
AmortizationPursuant to its acquisition strategy in prior periods, the Company has been in the process of intangibles increasedintegrating operations as well as evaluating capacity, technology and personnel needs. In response to continued softening in the heavy truck and light vehicle markets, the Company accelerated this process and approved restructuring plans in the third quarter of fiscal 2000. In addition to the items discussed in Gross Profit and Marketing, General and Administrative categories above, impairment and restructuring charges totaling $75.6 million were recorded in the third quarter of fiscal 2000.
      Of the $75.6 million, $63.8 million was attributable to impairment of long-lived assets, principally excess and obsolete machinery and equipment which the Company intends to dispose of in the near future. Impairment was measured based on the estimated net proceeds from the disposal of such equipment.
      Restructuring charges consist of $6.7 million for severance benefits and $0.9 million for future lease costs of closed office facilities. These costs are all related primarily to 387 administrative and operations employees impacted by $3.6restructuring programs in Europe. There were no payments made in the third quarter of fiscal 2000.
14
      In addition, Other (Income) Expense includes $4.2 million to
$8.2for the write down of the Company’s investment in a joint venture in Venezuela and certain contractual agreements that have no future value.
Interest Expense
      Interest expense was $41.6 million for the third quarter of fiscal 1999. This
increase is attributable2000 compared to the increased goodwill recognized as
a result of the CMI acquisition.

     
Interest expense was $37.5 million for the third quarter of
fiscal 1999, an increase of $15.1 million over the same period of fiscal 1998 of $22.4 million.1999. This increase was due primarily to the increase in debt as a result of the CMI acquisition.

interest rates and borrowings.
Nine Months Ended October 31, 19992000 Compared to Nine Months Ended October 31, 19981999
Net Sales
          
The Company’sCompany’s net sales for the first nine months of fiscal 19992000 were $1,730.8$1,695.9 million, an increasea decrease of 39.5%2.0%, as compared to net sales of $1,240.8$1,730.8 million for the first nine months of fiscal 1998.1999. This increasedecrease was due to the additional sales
contributed as a result of the CMI acquisition, which was
effective February 3, 1999, the additional sales contributed
 by the acquisitions of Alumitech, Borlem, MIN-CER, N.F. Die and
Kalyani (the “1998 acquisitions”), and higher sales in the North American Automotiveand European Wheel group. These sales increases
were partiallyGroups offset by lower selling pricessales in the North American Commercial Highway and North American Components Groups due to the pass
through of lower aluminum costssoftening marketing conditions and the maxi-devaluationweakening of the Brazilian economy.

Euro against the Dollar by approximately 12%.
Gross Profit
          
The Company’sCompany’s gross profit for the first nine months of fiscal 1999 increased2000 decreased to $305.6$259.5 million or 17.7%15.3% of net sales as compared to $216.7$305.6 million or 17.5%17.7% of net sales for the first nine months of fiscal 1998.1999. This increasedecrease reflects the reduction in the North American heavy truck and OEM sales and production inefficiencies related to the volatile heavy truck and OEM production environment. In addition, gross margin was attributable tonegatively impacted by the increased revenueswrite off of $5.0 million in excess and improved
productivityobsolete inventories in the majoritythird quarter of the Company’s businesses.

fiscal 2000 pursuant to capacity reductions and softening market conditions.
     Marketing, General and Administrative
      Marketing, general and administrative expenses were $70.7$76.8 million or 4.1%4.5% of net sales for the first nine months of fiscal 1999 as2000 compared to $48.7$70.7 million or 3.9%4.1% of net sales for the same period of fiscal 1998. This

16

Table of Contents
1999. The increase was attributable to additional costs incurred as a
result of the CMI and 1998 acquisitions. The Company believes
thatin marketing, general and administrative expenses was attributable to $7.2 million in write offs in the third quarter of fiscal 2000 principally related to cancelled transactions, and an increase in the allowance for doubtful accounts and severance costs as a percent of
net sales will improve as the synergies are realized as a result
of these acquisitions.
due to market conditions.
     Engineering and Product Development
      Engineering and product development costs were $13.0 million or 0.8% of net sales for the first nine months of fiscal 2000 as compared to $15.6 million or 0.9% of net sales for the first nine months of fiscal 19991999.
Other (Income) Expense
      Pursuant to its acquisition strategy in prior periods, the Company has been in the process of integrating operations as comparedwell as evaluating capacity, technology and personnel needs. In response to $15.7continued softening in the heavy truck and light vehicle markets, the Company accelerated this process and approved restructuring plans in the third quarter of fiscal 2000. In addition to the items discussed in Gross Profit and Marketing, General and Administrative categories above, impairment and restructuring charges totaling $75.6 million or 1.3%were recorded in the third quarter of fiscal 2000.
      Of the $75.6 million, $63.8 million was attributable to impairment of long-lived assets, principally excess and obsolete machinery and equipment which the Company intends to dispose of in the near future. Impairment was measured based on the estimated net salesproceeds from the disposal of such equipment.
      Restructuring charges consist of $6.7 million for severance benefits and $0.9 million for future lease costs of closed office facilities. These costs are all related primarily to 387 administrative and operations employees impacted by restructuring programs in Europe. There were no payments made in the third quarter of fiscal 2000.
15
      In addition, Other (Income) Expense includes $4.2 million for the first nine monthswrite down of fiscal 1998. Despite the increaseCompany’s investment in costs
attributable to the CMIa joint venture in Venezuela and 1998 acquisitions, engineering and
product development costs as a percent of sales improved over the
 prior fiscal year.

certain contractual agreements that have no future value.
Interest Expense
          
Amortization of intangibles increased by $9.3 million to
$22.0Interest expense was $120.4 million for the first nine months of fiscal 1999. This
 increase is attributable2000 compared to the increased goodwill recognized as
 a result of the CMI and 1998 acquisitions.

     
Other income was $5.3$115.5 million for the first nine months of
fiscal 1999, an increase of $1.4 million over the same period of fiscal 1998.1999. This increase was due primarily to gains
on the sales of a joint venture interest and other assets,
partially offset by currency losses and other redundancy costs
associated with productivity improvement programs in the Company.

     
Interest expense was $115.5 million for the first nine
months of fiscal 1999, an increase of $46.1 million over the
 same period of fiscal 1998 of $69.4 million. This increase was
due to the increase in debt as a result of the CMIinterest rates and 1998
acquisitions.

borrowings.
     
The extraordinary loss for early extinguishment of debt in fiscal
 1998 represented the write-off of the remaining deferred
financing costs associated with the term debt incurred in
connection with both the Lemmerz Acquisition and the merger with
Motor Wheel. As a result of strong cash flow and significantly
improved credit position, the Company was able to restructure its
 senior credit facility and fully repay certain of the
outstanding term debt.

Financial Condition, Liquidity and Capital Resources
          
The Company’sCompany’s operations provided $35.1used $58.5 million in cash in the first nine months of fiscal 1999, a decrease2000, an increase of $31.0$95.1 million over the same period of fiscal 1998.1999. This decreaseincrease was due primarily to increased working capital
requirements as a resultthe timing of the acquisition of CMI.

payments to suppliers and higher inventories.
           Capital expenditures for the first nine months of fiscal 19992000 were $136.1$123.8 million. These expenditures were primarily for additional machinery and equipment to improve productivity increase production capacityand reduce costs, to meet demand for new vehicle platforms and to meet expected requirements for ourthe Company’s products. The Company anticipates capital expenditures for fiscal 19992000 will be approximately $190 million relating
primarily to new vehicle platforms, capacity increases worldwide
to meet the growing demand for our products, cost reduction
programs and the funding of new programs associated with the
acquisition of CMI.

less than $170.0 million.
           On February 3, 1999, the Company entered into a third amended and restated credit agreement (the “Third“Third Amended and Restated Credit Agreement”Agreement”) with Canadian Imperial Bank of Commerce (“CIBC”(“CIBC”) and Merrill Lynch Capital Corporation (“(“Merrill Lynch”Lynch”), as managing agents. Pursuant to the Third Amended and Restated Credit Agreement, a syndicate of lenders agreed to lend to the Company up to $450 million in the form of a senior secured term loan facility and up to $650 million in the form of a senior secured revolving credit facility. Such term loan and revolving facilities are guaranteed by the Company and all of its existing and future material domestic subsidiaries. Such term loan and revolving facilities are secured by a first priority lien inon substantially all of the properties and assets of the Company and its material domestic subsidiaries, now owned or later acquired, later, including a pledge of all of the shares of certain of the Company’sCompany’s existing and future domestic subsidiaries and 65% of the shares of certain of ourthe Company’s existing and future foreign subsidiaries. As of October 31, 19992000 there was $450$399 million outstanding under the term loan facilitiesfacility and $489$386 million available under the revolving facility.
          On December 8, 2000, the Company reached agreement with its senior lenders to amend the Third Amended and Restated Credit Agreement. Pursuant to such agreement, financial covenants regarding the leverage ratio, the interest coverage ratio and the fixed charge coverage ratio were modified and a ratio of senior indebtedness to earnings before interest, taxes, depreciation and amortization was added. In addition, an annual limit on capital expenditures was added, the stock repurchase authority was deleted and a cumulative limit on acquisitions was deleted. The text of the amendment agreement is filed as an exhibit to this Form 10-Q and is incorporated herein by reference.
      In April 1998, the Company entered into a three-yearthree year agreement pursuant to which the Company and certain of its subsidiaries sold, and will continue 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,
17

Table of Contents
 the Company and such subsidiaries, irrevocably and without recourse, transferred and will transfer substantially all of their U.S. dollar denominated trade accounts receivable to Funding Co. Funding Co. then sold and will 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 October 31, 2000 total $145.8 million.
          During the second quarter, the Board of Directors approved the repurchase of up to an aggregate of $30 million of the Company’s outstanding common stock. Through October 31, 2000, the Company repurchased approximately 1.9 million shares of its common stock for an aggregate purchase price of approximately $26.3 million.
      At October 31, 1999,2000, management believes that the Company was in compliance with the various covenants under the agreements pursuant to which it has or may borrow money. Management expects that the Company will remain in compliance with these covenants, as modified by the December 8, 2000 amendment
16
to the Third Amended and Restated Credit Agreement, in all material respects through the period ending October 31, 2000.

2001.
Other Matters
Year 2000
     
The Company has developed plans to address its exposure in all
critical information technology (“IT”) and non-IT
systems to computer programs which identify years with two digits
 instead of four. Such programs may recognize the year 2000 as
the year 1900. The Company is also assessing the year 2000
capabilities of its critical suppliers, customers and key service
 providers to determine, to the extent possible, whether its
operations will be adversely impacted by these companies.

     
The Company primarily relies on packaged software applications
which are year 2000 compliant. The Company has substantially
completed the testing of these applications and has confirmed
their year 2000 compliance. The Company is also testing all
internally developed IT software for the year 2000 compliance.
This process was completed by the end of the second quarter of
fiscal 1999.

     
The Company continues to assess all critical non-IT systems for
year 2000 compliance. Non-IT systems include, among other things,
 manufacturing equipment, telephone systems and heating and
cooling systems. An inventory of all critical non-IT systems and
manufacturers to determine year 2000 compliance has been
prepared. This process was completed during the first quarter of
fiscal 1999.

     
As of October 31, 1999, the costs incurred directly related
to becoming year 2000 compliant were approximately
$5.4 million with minimal additional costs expected to be
incurred subsequent to October 31, 1999. The year 2000
remediation effort has not postponed any IT projects, the delay
of which would have a material adverse effect on the business,
financial condition or results of operations.

     
The Company is year 2000 compliant at this time with all critical
 business and production processes ready. Although the Company is
 striving to be completely year 2000 compliant, year 2000 issues
may still negatively affect the Company. Based on progress to
date, management believes that such impact, if any, will not have
 a material adverse impact on the business, financial condition
or results of operations. The Company cannot guarantee that this
will be so.

     
Although the Company has contacted critical suppliers, customers
and key service providers to determine their level of year 2000
compliance, a lack of year 2000 readiness at these companies
could adversely impact the Company’s operations. The Company
 has developed a program for monitoring year 2000 risk in its
supply chain and have mailed “Supplier Year 2000
Self-Assessment” questionnaires to all critical suppliers
and key service providers. The full extent of any such adverse
impact (if any) is impossible to determine. The Company is
attempting to mitigate any possible adverse impact by identifying
 alternate suppliers where possible. The Company may also
increase inventory of crucial materials in anticipation of
possible disruptions.

     
The Company has developed contingency plans for all critical
business and production processes which the Company believes will
 help to minimize its year 2000 risk.

18


Table of Contents
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
           For the period ended October 31, 1999,2000, the Company did not experience any material change in market risk exposures affecting the quantitative and qualitative disclosures as presented in the Company’sCompany’s Annual Report on Form 10-K for the year ended January 31, 1999.

2000.
19


17
Table of Contents



PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings
      None
Item 2.   Changes in Securities and Use of Proceeds
      None
Item 3.  Defaults uponUpon Senior Securities
      None
Item 4.   Submission of Matters to a Vote of Security-HoldersSecurity Holders
      The Company held its Annual Meeting of Stockholders on August 3, 2000. The results of the matters submitted to a vote of the Company’s stockholders at the Annual Meeting were reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2000 and are incorporated herein by reference.
Item 5.  Other Information
      None
Item 6.  Exhibits and Reports on Form 8-K
          
(a)  Exhibits
 
 
 
 
 
Exhibit Number
Description
10.30
Amendment No. 2 to the Third Amended and Restated Credit Agreement dated as of December 8, 2000, among the Company, as Borrower, the several banks and other financial institutions from time to time parties thereto, as Lenders, Canadian Imperial Bank of Commerce, as Administrative Agent and Co-Lead Arranger, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, Merrill Lynch Capital Corporation, as Co-Documentation Agent, and Dresdner Bank AG, as Co-Documentation Agent and European Swing Line Administrator.
10.31
Severance Agreements, each dated June 15, 2000, between the Company and certain of its officers.
27
Financial Data Schedule
          
(b)   Reports on Form 8-K
20


      None
18
Table of Contents



SIGNATURES
           Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
HAYES LEMMERZ INTERNATIONAL, INC.
 
By: 

	/s//s/ WILLIAM D. N. VERMILYASHOVERS
 
 
William D. N. VermilyaShovers
 

	Corporate Controller andVice President — Finance; Chief AccountingFinancial Officer
December 15, 1999

2000
21


19
Table of Contents



EXHIBIT INDEX
 
 
 
 
 
 
 
 
 
Sequentially
Exhibit
Numbered
Number
Description
Page
10.30
Amendment No. 2 to the Third Amended and Restated Credit Agreement dated as of December 8, 2000, among the Company, as Borrower, the several banks and other financial institutions from time to time parties thereto, as Lenders, Canadian Imperial Bank of Commerce, as Administrative Agent and Co-Lead Arranger, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, Merrill Lynch Capital Corporation, as Co-Documentation Agent, and Dresdner Bank AG, as Co-Documentation Agent and European Swing Line Administrator.
10.31
Severance Agreements, each dated June 15, 2000, between the Company and certain of its officers.
27
Financial Data Schedule
22