AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1996AUGUST 4, 1997

REGISTRATION NO. 333-03813
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- --------------------------------------------------------------------------------333-31669

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------

AMENDMENT NO. 21

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------

HAYES WHEELS INTERNATIONAL, INC.
(Exact name of registrantRegistrant as specified in its charter)

DELAWARE 13-3384636
(State of Incorporation)------------------------------------

DELAWARE
(State or other jurisdiction of
incorporation or organization)
13-3384636
(I.R.S. Employer
Identification No.)

38481 HURON RIVER DRIVE (IRS Employer Identification No.)
ROMULUS, MICHIGAN 48174
(313) 941-2000

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------------

HAYES WHEELS INTERNATIONAL-CALIFORNIA, INC.
(Exact name of registrant as specified in its charter)
------------------------------------

DELAWARE 33-0042337
(State of Incorporation) 14500 FIRESTONE BLVD. (IRS Employer Identification No.)
LA MIRADA, CALIFORNIA
(714) 994-0150

(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------

HAYES WHEELS INTERNATIONAL-GEORGIA, INC.
(Exact name of registrant as specified in its charter)
------------------------------------

DELAWARE 58-2046122
(State of Incorporation) 1215 PALMOUR DRIVE (IRS Employer Identification No.)
GAINESVILLE, GEORGIA 30501
(770) 535-6783

(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------

HAYES WHEELS INTERNATIONAL-INDIANA, INC.
(Exact name of registrant as specified in its charter)
------------------------------------

DELAWARE 62-1240825
(State of Incorporation) 1870 RIVERFORK DRIVE (IRS Employer Identification No.)
HUNTINGTON, INDIANA 46750
(219) 356-7001

(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------

HAYES WHEELS INTERNATIONAL-MEXICO, INC.
(Exact name of registrant as specified in its charter)
------------------------------------

DELAWARE 38-3281831
(State of Incorporation) 38481 HURON RIVER DRIVE (IRS Employer Identification No.)
ROMULUS, MICHIGAN 48174
(313) 941-2000

(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------

HAYES WHEELS INTERNATIONAL-MICHIGAN, INC.
(Exact name of registrant as specified in its charter)
------------------------------------

MICHIGAN 38-1799246
(State of Incorporation) 2440 HIGHLAND ROAD (IRS Employer Identification No.)
HOWELL, MICHIGAN 48843
(517) 546-3441

(Address including zip code, and telephone number, including area code, of
registrant'sRegistrant's principal executive offices)
------------------------------------

DANIEL M. SANDBERG, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
HAYES WHEELS INTERNATIONAL, INC.
38481 HURON RIVER DRIVE
ROMULUS, MICHIGAN 48174
(313) 941-2000
(Name, addressesaddress, including zip code, and telephone numbers,number, including area codes,code,
of agentsagent for service of process)service)
------------------------------------

Copies to:

COPIES TO:

ROBERT B. PINCUS, ESQ. LOUIS B. GOLDMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
ONE RODNEY SQUARE
WILMINGTON, DELAWARE 19801
(302) 651-3000
ROGER MELTZER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM ALTHEIMER & GRAY
CAHILL GORDON & REINDEL
ONE RODNEY SQUARE, P.O. BOX 636 10 SOUTH WACKER DRIVE, SUITE 4000
80 PINE STREET
WILMINGTON, DELAWARE 19899 CHICAGO, ILLINOIS 60606
NEW YORK, NEW YORK 10005
(302) 651-3000 (312) 715-4000
(212) 701-3000

------------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after thethis Registration Statement becomes effective.
------------------------------------

If the only securities being registered on this Formform are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /[ ]

If any of the securities being registered on this Formform are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /[ ]

If this Formform is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /[ ]

If this Formform is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /[ ]
------------------------------------

THE REGISTRANTSREGISTRANT HEREBY AMENDAMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTSREGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THISTHE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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2

EXPLANATORY NOTE

This Registration Statement contains a prospectus relating to a public
offering in the United States of an aggregate of 3,000,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company (the "U.S.
Offering"), together with separate Prospectus pages relating to a concurrent
offering outside the United States of an aggregate of 779,502 shares of Common
Stock (the "International Offering"). The complete Prospectus for the U.S.
Offering follows immediately. Following such Prospectus are the alternate pages
for the Prospectus for the International Offering: a front cover page, the
sections entitled "Certain United States Federal Tax Consequences to Non-U.S.
Stockholders," "Underwriting," "Legal Matters," "Experts" and a back cover page.
The front cover page, the sections entitled "Certain United States Federal Tax
Consequences to Non-U.S. Stockholders," "Underwriting," "Legal Matters,"
"Experts" and the back cover page of the Prospectus for the International
Offering will appear in lieu of the front cover page, the sections entitled
"Underwriting," "Legal Matters," "Experts" and the back cover page of the
Prospectus for the U.S. Offering. All other pages of the Prospectus for the U.S.
Offering are to be used for both the U.S. and the International Offerings.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH JURISDICTION.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED AUGUST 4, 1997

PROSPECTUS

3,779,502 SHARES

HAYES WHEELS INTERNATIONAL LOGO
COMMON STOCK

Of the 3,779,502 shares of Common Stock, par value $.01 per share (the
"Common Stock"), offered hereby, 2,000,000 shares are being offered by Hayes
Wheels International, Inc. (the "Company") and 1,779,502 shares are being
offered by certain of the Company's stockholders (the "Selling Stockholders").
Except as provided in the Option Agreement (as defined herein), the Company will
not receive any of the proceeds from the sale of shares by the Selling
Stockholders. See "Principal and Selling Stockholders" and "Underwriting."

Of the 3,779,502 shares of Common Stock offered hereby, 3,000,000 shares
are being offered in the United States and Canada (the "U.S. Offering") and
779,502 shares are being offered outside the United States and Canada (the
"International Offering" and, together with the U.S. Offering, the "Offerings").
The initial offering price and the aggregate underwriting discount per share are
identical for both Offerings. See "Underwriting."

The Common Stock of the Company is traded on The Nasdaq National Market
System (the "NASDAQ Stock Market") under the symbol "HAYS." On August 1, 1997,
the last reported sale price on the NASDAQ Stock Market for the Common Stock was
$33 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

====================================================================================================================
PROCEEDS
PRICE TO UNDERWRITING PROCEEDS TO TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS

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Per Share............... $ $ $ $
- --------------------------------------------------------------------------------------------------------------------
Total(3)................ $ $ $ $
====================================================================================================================

(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters (as defined herein) against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). See "Underwriting."

(2) Before deducting expenses of the Offerings payable by the Company estimated
at $ .

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an aggregate of 566,925 additional shares of Common Stock on the same
terms as set forth above solely to cover over-allotments, if any. See
"Underwriting." If the Underwriters exercise such option in full, the total
"Price to Public," "Underwriting Discount" and "Proceeds to Company" will be
$ , $ , and $ , respectively. See "Underwriting."
------------------------

The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as, and if accepted by them, and subject to certain
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Common Stock will be made in New York City on or about
, 1997.
------------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.

GOLDMAN, SACHS & CO.

------------------------

The date of this Prospectus is August , 1997.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THE OFFERINGS, CERTAIN UNDERWRITERS MAY ENGAGE IN
PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ IN ACCORDANCE
WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company incorporates by reference herein the following documents filed
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"):

I. The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1997;

II. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended April 30, 1997;

III. The Company's Current Reports on Form 8-K dated July 2, 1996, June 6,
1997, June 20, 1997, June 30, 1997 and July 16, 1997; and

IV. A description of the Common Stock set forth in the Company's Form 8-A
dated June 28, 1996 and the Company's Form S-4 dated May 31, 1996, as
amended.

All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the Offerings, shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the dates of filing
of such documents or reports. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS WHICH ARE INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO THE COMPANY, 38481 HURON
RIVER DRIVE, ROMULUS, MICHIGAN 48174, ATTENTION: DIRECTOR OF INVESTOR RELATIONS,
TELEPHONE (313) 942-8716.
------------------------

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Commission. The reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and are available at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies of such materials may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a Web site at
http://www.sec.gov that contains reports, proxy statements and other
information.

The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") (of which this Prospectus is a part) under
the Securities Act for registration of the Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto, certain parts of which are omitted in
accordance with the Rules and

3
5

Regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the securities offered hereby. Statements contained in this
Prospectus, or in any document incorporated in this Prospectus by reference, as
to the contents of any contract or other document referred to herein or therein
are not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in all
respects by such reference.

THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN 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, INCLUDING STATEMENTS UNDER THE CAPTIONS
"PRO FORMA COMBINED CONDENSED FINANCIAL DATA" AND "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." 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) EXPECTED COST
SAVINGS FROM THE LEMMERZ ACQUISITION (AS DEFINED HEREIN) CANNOT BE FULLY
REALIZED; (2) COMPETITIVE PRESSURE IN THE COMPANY'S INDUSTRY INCREASES
SIGNIFICANTLY; (3) COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF THE
BUSINESSES OF THE COMPANY ARE GREATER THAN EXPECTED; AND (4) GENERAL ECONOMIC
CONDITIONS ARE LESS FAVORABLE THAN EXPECTED. FURTHER INFORMATION ON OTHER
FACTORS WHICH COULD AFFECT THE FINANCIAL RESULTS OF THE COMPANY AND SUCH FORWARD
LOOKING STATEMENTS IS INCLUDED IN THE SECTION HEREIN ENTITLED "RISK FACTORS" AND
IN THE ANNUAL REPORT ON FORM 10-K, THE QUARTERLY REPORT ON FORM 10-Q AND THE
CURRENT REPORTS ON FORM 8-K, OF THE COMPANY, INCORPORATED HEREIN BY REFERENCE.

Unless otherwise indicated, financial information in this Prospectus with
respect to Lemmerz (as defined herein) is expressed in dollars or in Deutsche
Mark ("marks" or "DM"). Amounts stated in dollars, unless otherwise indicated,
have been translated from marks in accordance with GAAP (as defined herein) and
should not be construed as representations that the mark amounts actually
represent such dollar amounts or could have been converted into dollars at the
rate indicated. Assets and liabilities denominated in marks are translated at
the rate of exchange in effect on the balance sheet date and income and expenses
are translated at the average rates of exchange prevailing during the year.

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6

PROSPECTUS SUMMARY

The following is a summary of certain information contained elsewhere in
this Prospectus or in the documents incorporated herein by reference. Reference
is made to, and this summary is qualified in its entirety by, the more detailed
information contained elsewhere in this Prospectus or in the documents
incorporated herein by reference. All references to fiscal years of the Company
in this Prospectus or in the documents incorporated herein by reference refer to
years commencing on February 1 of such year and ending January 31 of the
following year. Unless the context otherwise requires, the term the "Company"
refers to Hayes Wheels International, Inc. and its subsidiaries on a combined
basis after giving effect to the Lemmerz Acquisition (as defined herein), the
term "Lemmerz" refers to Lemmerz Holding GmbH and its subsidiaries, which was
acquired by the Company on June 30, 1997, (the "Lemmerz Acquisition"), and the
term "Hayes" refers to Hayes Wheels International, Inc. and its subsidiaries
before the Lemmerz Acquisition. The term "Motor Wheel" refers to Motor Wheel
Corporation, a wholly owned subsidiary of the Company, and the term "Motor Wheel
Transactions" refers to the series of related transactions which were
consummated on July 2, 1996, including the Recapitalization (as defined herein)
of Hayes' capital stock, pursuant to which Motor Wheel became a subsidiary of
Hayes. See "Business." Except as otherwise indicated herein, all information
presented in this Prospectus assumes no exercise of the Underwriters'
over-allotment option.

THE COMPANY

The Company is the world's largest manufacturer of automotive wheels,
supplying approximately 30% and 23% of the automotive wheels in North America
and Europe, respectively, and also is the largest global supplier of wheels to
original equipment manufacturers ("OEMs") of passenger cars, light trucks and
commercial highway vehicles. The Company's principal customers for wheel and
brake products consist of every major OEM in North America, Europe and Japan,
including General Motors, Ford, Chrysler (the three of which comprised
approximately 57% of the Company's pro forma combined 1996 net sales), BMW,
Renault, Fiat, Volkswagen, Porsche, Mercedes-Benz, Audi, Volvo, Citroen, Toyota,
Mazda, Nissan, Honda, Mitsubishi, Suzuki and Isuzu. The Company also has over
300 commercial highway vehicle customers in North America and Europe, including
Trailmobile, Dana/Mack, Mercedes-Benz, Iveco, Strick, Great Dane Trailers,
Freightliner, PACCAR, Volvo/GM, Renault and Western Star. The Company also
produces a variety of non-wheel cast aluminum products for the automotive,
heating equipment and construction industries. Sales of automotive wheel and
brake products comprised approximately 76% of the Company's pro forma combined
net sales in fiscal 1996 (69% wheels and 7% brake components), with the
remaining 24% comprised of commercial highway wheel and brake products (18%) and
non-wheel aluminum castings (6%).

The Company is the #1 or #2 independent manufacturer of its primary
products in the following markets in which it competes. The following table sets
forth the Company's estimated pro forma combined market position in North
America and Europe in 1996:

MARKET
POSITION
--------

NORTH AMERICA
Automotive Steel Wheels - Including Production by OEMs...... #1
Automotive Cast Aluminum Wheels............................. #2
Automotive Fabricated Aluminum Wheels....................... #1
Automotive Brake Rotors and Drums - Excluding Production by
OEMs...................................................... #2
Commercial Highway Wheels................................... #2
Commercial Highway Brake Hubs and Drums..................... #1
EUROPE
Automotive Steel Wheels - Including Production by OEMs...... #2
Automotive Cast Aluminum Wheels............................. #1
Commercial Highway Wheels................................... #2

5
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The Company has been active in developing strategic alliances around the
world. These include a 58% owned subsidiary in the Czech Republic and strategic
manufacturing joint ventures in Mexico, Brazil, Venezuela, Portugal, Canada,
India, Turkey, Thailand and the United States. The Company also maintains
technical relationships in Thailand and South Africa and a sales and engineering
office in Japan.

As automotive suppliers continue to consolidate worldwide, the Company
intends to strengthen and expand its leadership position in meeting the global
sourcing, quality and engineering requirements of its customers. The Lemmerz
Acquisition has created significant growth opportunities for the Company,
resulting from the following: (i) the combination of Hayes' strengths in steel
and aluminum wheel manufacturing in North America and Europe with Lemmerz's
steel and cast aluminum wheel manufacturing expertise in Europe; (ii) the
complementary nature of Hayes' and Lemmerz's respective customer bases; (iii)
the combination of Hayes' commercial highway vehicle business in North America
with Lemmerz's in Europe; and (iv) the expansion of the Company's full product
line resulting from the ability to share innovative products and processes
across passenger cars, light trucks and commercial highway vehicles worldwide.
In addition to revenue enhancement, management believes that the Lemmerz
Acquisition will result in annual cost savings of at least $21 million,
primarily as a result of capacity optimization, raw material purchasing savings
and overhead savings. These anticipated Lemmerz Acquisition-related cost savings
are in addition to the $42 million savings related to the rationalization
efforts anticipated to be realized as part of the Motor Wheel Transactions, of
which $13 million have been realized through the end of the first quarter of
fiscal 1997.

BUSINESS STRATEGY

The Company believes that it is well-positioned to realize growth in sales
and net income. The Company will continue to build upon its position as a
leading full-line supplier of wheels and brake components to the global
transportation industry, and expects to enhance this position by integrating the
European operations of Lemmerz. In addition to creating significant anticipated
cost savings and other efficiencies, the Company believes that the Lemmerz
Acquisition provides it with the opportunity to materially extend its automotive
and commercial highway wheel and brake product offerings in Europe. The Company
expects to maintain its leadership position by continuing to offer innovative
new products to increase sales and enhance operating results. The Company
expects to continue its growth and enhance its market leadership by continuing
to implement a strategy based on the following elements:

- ENHANCING STRONG RELATIONSHIPS WITH OEMS AND PURSUING NEW
CONTRACTS. The Company has developed and intends to continue to build upon
strong relationships with its OEM customers which enable it to identify
business opportunities in the early stages of vehicle design. The Company
has established a leadership position as an OEM supplier of automotive and
commercial highway wheels and brakes by maintaining an excellent reputation
for quality, service and innovation. The Company believes that its early
involvement in the design and engineering of new wheel and brake products
as a Tier I Supplier (as defined herein) has afforded it a competitive
advantage in securing new business and will continue to do so in the
future. The Company has obtained significant firm orders on a number of
high-volume vehicle platforms for periods 1997 through 2000 for incremental
new business in North America and Europe. The Company's enhanced global
presence resulting from the Lemmerz Acquisition should strengthen its
ability to offer worldwide sourcing options to its customers.

- CONTINUING FOCUS ON NEW PRODUCT INNOVATION. The Company believes
that it has an established reputation for developing product and
manufacturing process innovations. For example, the Company is the leading
producer of fabricated aluminum wheels, which are 20% lighter than cast
aluminum wheels. The Company has also recently introduced Full Face Cast
("FFC(TM)") wheels, which are lightweight, highly styled wheels that
combine a cast aluminum face with a fabricated aluminum rim. The Company is
also responsible for several steel wheel product and process innovations,
including the development and introduction of a lightweight steel wheel,
which is 10% to 15% lighter than a traditional steel wheel. The Company
intends to continue its efforts to develop innovative wheel and brake
products and manufacturing processes to better serve customers globally and
improve the Company's product mix with higher margin wheel and brake
products.
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8

- CAPITALIZING ON COMPLEMENTARY NATURE OF BUSINESSES. The Lemmerz
Acquisition provides the Company with the opportunity to expand sales and
increase market penetration due to the complementary nature of Hayes' and
Lemmerz's businesses. The Company intends to improve its future performance
by: (i) utilizing Lemmerz's complementary customer relationships to
increase the sales of Hayes' innovative products in Europe; (ii) utilizing
Lemmerz's expertise in lightweight steel wheels in North America; (iii)
drawing on Hayes' expertise in the design and manufacture of lightweight
aluminum wheels to bring greater efficiencies to Lemmerz's aluminum wheel
operations; (iv) capitalizing on Lemmerz's leadership position in the
design and manufacture of wheels for commercial highway vehicles in the
European market to increase Hayes' sales of such products in both Europe
and North America; (v) attaining additional automotive wheel and brake
component sales to OEMs worldwide by building on the Company's existing
relationships and enhanced global position; and (vi) reducing costs of
materials through further economies of scale.

- BENEFITTING FROM CONTINUED INDUSTRY CONSOLIDATION. The worldwide
wheel manufacturing industry is fragmented, particularly in Europe, where
independent producers dominate. The Company believes that as OEMs continue
to outsource and reduce the number of suppliers, there will be
opportunities for further consolidation of this industry. The Company
believes that, through its established presence in these markets,
especially as a result of the Lemmerz Acquisition, it is in a favorable
position to take advantage of future industry consolidation. The Company
intends to pursue selected acquisition opportunities compatible with its
business strategy in North America, Europe, South America and Asia that
would further expand its product offerings or geographical reach.

- ENHANCING PRESENCE IN EMERGING MARKETS. Having established a
leadership position in North America and Europe, the Company plans to
enhance its market position in emerging markets. In October 1996, Hayes
increased its ownership in Hayes Wheels Autokola NH, a.s. ("Autokola"), a
strategic low-cost manufacturing joint venture in the Czech Republic, from
45% to 58%. The Company believes that its Autokola facility will increase
the Company's flexibility and improve its economies in serving its expanded
European steel wheel customers. The Company maintains additional strategic
manufacturing joint ventures in Mexico, Brazil, Venezuela, the United
States, Thailand, India, Canada, Turkey and Portugal, as well as technical
relationships in Thailand and South Africa. The Company believes that its
expanded worldwide manufacturing and strategic joint venture presence
resulting from the Lemmerz Acquisition will enhance its ability to meet the
global sourcing needs of its customers.

- CAPITALIZING ON COST-SAVING OPPORTUNITIES. The Company has
aggressively pursued facility rationalization programs and other
cost-saving opportunities, including the closure of the Mendota, Illinois
and Ypsilanti, Michigan facilities, which were announced prior to the Motor
Wheel Transactions. Subsequent to the Motor Wheel Transactions, the Company
identified further cost rationalization programs, including the closing of
Motor Wheel's former headquarters in Okemos, Michigan and the Company's
Romulus, Michigan wheel plant. The savings related to the Motor Wheel
Transactions, including those initially targeted and subsequently
identified, total $42 million, approximately $13 million of which have been
realized through the end of the first quarter of fiscal 1997. Management
expects the remaining $29 million of such savings to be fully reflected in
the Company's fiscal 1998 financial results. In addition, management
expects actions undertaken in connection with the Lemmerz Acquisition to
result in annual cost savings of at least $21 million, which are
anticipated to be fully reflected in the Company's fiscal 1999 financial
results. The Company will continue to optimize the use of its manufacturing
capacity and seek further cost savings.

THE LEMMERZ ACQUISITION

On June 30, 1997, Hayes acquired Lemmerz, which, prior to its acquisition
by Hayes, was the leading full-line designer and manufacturer of steel and
aluminum wheels for passenger cars, light trucks and commercial highway vehicles
in Europe. Hayes acquired Lemmerz in exchange for the payment to the
shareholders of Lemmerz (the "Lemmerz Shareholders") of (i) $200 million in cash
(the "Cash Consideration") and (ii) a total of five million shares of the
Company's Series A Convertible Participating Preferred
7
9

Stock, par value $.01 per share (the "Series A Preferred Stock"), which, upon
receipt of stockholder approval currently expected to be sought at the Company's
Annual Meeting of Stockholders currently anticipated to be held in October 1997
(the "1997 Annual Meeting"), will automatically convert (the "Conversion") into
five million shares of the Company's Common Stock. See "Description of Capital
Stock -- Preferred Stock." Stockholders who hold approximately 59% of the
outstanding Common Stock after giving effect to the Offerings have delivered
irrevocable proxies to Horst Kukwa-Lemmerz who has agreed to vote such shares in
favor of the Conversion at the 1997 Annual Meeting. Immediately after the
Conversion, the shares of Common Stock received by the Lemmerz Shareholders in
the Conversion will constitute approximately 16.9% of outstanding Common Stock,
after giving effect to the Offerings. As used herein, "Lemmerz Transactions"
means (i) the Lemmerz Acquisition, (ii) the financing thereof including the
execution of the Amended Credit Agreement (as defined herein) and the issuance
of $250 million aggregate principal amount of 9 1/8% Senior Subordinated Notes
due 2007 (the "Initial Notes") in an offering under Rule 144A of the Securities
Act which closed June 30, 1997 (which was used to finance the Lemmerz
Acquisition and refinance certain indebtedness under the Amended Credit
Agreement) and (iii) $150 million aggregate principal amount of 9 1/8% Senior
Subordinated Notes due 2007 (together with the Initial Notes, the "9 1/8%
Notes") in an offering under Rule 144A of the Securities Act which closed July
22, 1997 (which was used to refinance certain indebtedness under the Amended
Credit Agreement).

In connection with the Lemmerz Acquisition, the Company has proposed to
change its name to Hayes Lemmerz International, Inc. This proposal will be
submitted to the Company's stockholders at the 1997 Annual Meeting.

RECENT DEVELOPMENTS

On July 25, 1997, the Company announced that it had agreed to purchase the
assets of Bosch Braking Systems Corporation's heavy-duty hub-and-drum and
medium- and heavy-duty steel wheel businesses. These two businesses had combined
1996 sales of approximately $44 million. The Company believes that this
acquisition, which is expected to close during the third quarter of 1997, will
complement its commercial highway vehicle wheel and brake business.

On July 24, 1997, Mrs. Inge Kruger-Pressl and Mrs. Renate Kukwa-Lemmerz
(collectively, the "Lemmerz Selling Stockholders") purchased 1,628,800 shares of
Common Stock (the "Lemmerz Shares") from LucasVarity Inc. for $30 per share.
Shortly thereafter, in order to increase the public float as originally planned,
the Company requested that the Lemmerz Selling Stockholders include the Lemmerz
Shares in the Offerings.

On July 30, 1997, the Company entered into an option agreement with the
Lemmerz Selling Stockholders (the "Option Agreement") which provides, among
other things, that during the term of the Option Agreement, the Company has the
right to require the Lemmerz Selling Stockholders to sell the Lemmerz Shares (i)
to the Company for purposes of effecting a public offering of the Common Stock
or (ii) at the Company's option, directly into a public offering. Pursuant to
the terms of the Option Agreement, the Company has directed the Lemmerz Selling
Stockholders to sell all of the Lemmerz Shares pursuant to the Offerings in
order to increase liquidity for stockholders, increase the public float for the
Common Stock and provide for a more effective public offering. See "Use of
Proceeds" and "Principal and Selling Stockholders."

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10

THE OFFERINGS

Common Stock offered hereby(1):
U.S. Offering...................................... 3,000,000 shares
International Offering............................. 779,502 shares
Total........................................... 3,779,502 shares
Common Stock offered by(1):
The Company........................................ 2,000,000 shares
Selling Stockholders............................... 1,779,502 shares
Total........................................... 3,779,502 shares
Common Stock to be outstanding after the 29,541,220 shares
Offerings(1)(2)....................................
Use of Proceeds...................................... The estimated net proceeds from the sale of
the Common Stock offered by the Company in
the Offerings will be used to repay
indebtedness under the Amended Credit
Agreement. Except as provided in the Option
Agreement, the Company will not receive any
of the proceeds from the sale of shares of
Common Stock offered by the Selling
Stockholders. See "Use of Proceeds" and
"Principal and Selling Stockholders".
Listing.............................................. The Common Stock is quoted on the NASDAQ
Stock Market under the symbol "HAYS".

- -------------------------

(1) Assumes no exercise of the Underwriters' over-allotment option.

(2) Includes five million shares of Common Stock issuable to the Lemmerz
Shareholders upon the Conversion, 150,702 shares to be issued upon the
exercise of options by a Selling Stockholder and 159,026 shares of Nonvoting
Common Stock. Does not include (i) an aggregate of 3,021,577 shares issuable
upon exercise of outstanding stock options held by (A) certain officers and
other key employees of the Company pursuant to the Company's 1992 Stock
Option Plan (the "1992 Plan") and 1996 Stock Option Plan (the "1996 Plan")
and (B) Mr. Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz, (ii)
263,193 additional shares reserved for issuance upon exercise of stock
options not yet granted under the 1992 Plan and the 1996 Plan or (iii)
Warrants (as defined herein) to purchase 2,600,000 shares of Common Stock
held by the Principal Stockholders (as defined herein) and others. See
"Principal and Selling Stockholders."

RISK FACTORS

See "Risk Factors" for a discussion of certain risks that should be
considered in connection with an investment in the Common Stock offered hereby.
9
11

SUMMARY HISTORICAL FINANCIAL INFORMATION

The following summary historical financial information is derived from the
consolidated historical financial statements of Hayes and Lemmerz and the
unaudited pro forma financial information is derived from the "Pro Forma
Combined Condensed Financial Data" of the Company included elsewhere and
incorporated by reference herein. The historical consolidated financial
statements of Hayes for each year in the three-year period ended January 31,
1997 were audited by KPMG Peat Marwick LLP. The historical consolidated
financial statements of Lemmerz for each year in the two-year period ended
December 31, 1996 were audited by KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft. The financial information of
Hayes for the three-month periods ended April 30, 1997 and 1996, and the
financial information of Lemmerz for the three-month period ended March 31,
1997, is unaudited, but in the opinion of management, reflects all adjustments
necessary for a fair presentation of such information. The information provided
below should be read in conjunction with the consolidated financial statements
and notes thereto of Hayes and Lemmerz included elsewhere in this Prospectus.

THREE MONTHS
ENDED
YEAR ENDED JANUARY 31, APRIL 30,
--------------------------------------------- ------------------
PRO FORMA
HAYES 1995 1996 1997 1997 (A) 1996 1997
- ----- ---- ---- ---- --------- ---- ----
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Net sales................................. $537.6 $611.1 $ 778.2 $ 913.1 $156.2 $ 250.2
Cost of goods sold (b).................... 441.4 513.4 675.2 795.9 133.6 212.2
Marketing, general and administration
(c)..................................... 28.6 29.7 35.9 43.6 7.8 11.2
Engineering and product development (c)... 5.1 4.7 7.2 8.1 1.8 2.3
Depreciation and amortization............. 29.6 32.7 44.4 50.9 8.8 14.8
Other income, net......................... (0.8) (1.5) (4.5) (5.3) (0.5) (0.7)
Interest expense, net (d)................. 13.4 15.0 48.5 73.6 3.6 18.4
Net income (loss)(e)...................... 29.9 28.4 (72.9)(f) (88.2)(f) 6.1 3.8
PER SHARE DATA:
Net income (loss)......................... $ 0.85 $ 0.81 $ (2.63)(f) $ (3.94)(f) $ 0.17 $ 0.17
Weighted average shares outstanding
(000's)................................. 35,148 35,148 27,703 22,390 35,148 22,390
OTHER DATA:
EBITDA (g)(h)............................. $ 92.9 $ 97.5 $ 120.7 $ 133.6 $ 22.3 $ 40.0
Capital expenditures...................... 39.9 43.4 71.4 73.3 23.4 16.7
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.............................. $589.6 $633.9 $1,183.1 $1,183.1 $648.9 $1,153.4
Total debt................................ 123.0 133.1 715.8 715.8 153.8 711.6
Stockholders' equity (deficit)............ 216.4 245.4 (41.1) (41.1) 251.1 (40.1)

YEAR ENDED THREE MONTHS YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED DECEMBER 31, ENDED
---------------- MARCH 31, ---------------------- MARCH 31,
LEMMERZ 1995 1996 1997 1995 1996 1997
- ------- ---- ---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(U.S. GAAP AND DM IN MILLIONS) (U.S. GAAP AND DOLLARS IN MILLIONS) (I)

STATEMENT OF OPERATIONS DATA:
Net sales................................ 671.2 691.4 179.5 $468.1 $459.8 $108.2
Cost of goods sold....................... 545.8 567.9 146.0 380.7 377.7 88.0
Marketing, general and administration.... 82.6 75.5 17.4 57.6 50.2 10.5
Engineering and product development...... 12.8 12.6 3.3 8.9 8.4 2.0
Depreciation and amortization............ 44.3 44.0 10.8 30.9 29.3 6.5
Interest expense, net.................... 11.2 8.0 1.8 7.8 5.3 1.1
Net income............................... 23.8 13.8 5.5 16.6 9.2 3.3
OTHER DATA:
EBITDA (g)............................... 91.9 87.7 26.0 $ 64.1 $ 58.3 $ 15.7
Capital expenditures..................... 70.4 44.2 10.6 42.8 25.0 6.4
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................. 649.8 641.8 651.5 $453.3 $412.8 $392.8
Total debt............................... 120.3 130.8 124.7 83.9 84.1 75.2
Shareholders' equity..................... 163.1 170.4 173.2 113.8 109.6 104.4

(see footnotes on the following page)
10
12

- -------------------------

(a) Represents full year results assuming the Motor Wheel Transactions
occurred on February 1, 1996.

(b) Pro forma data includes a $4.6 million adjustment as a result of the
acquisition of Motor Wheel related to the effects of purchase accounting
adjustments and adjustments to reflect adoption of Hayes' accounting
policies and pension and post-retirement benefit cost assumptions.

(c) Pro forma data includes a $0.4 million adjustment related to savings from
personnel reductions at Motor Wheel's Okemos, Michigan corporate
headquarters announced and implemented prior to the consummation of the
Motor Wheel Transactions and the effects of purchase accounting
adjustments.

(d) Pro forma data reflects the pro forma interest expense assuming the Motor
Wheel Transactions occurred on February 1, 1996.

(e) In connection with the Company's announced closure of its manufacturing
facility in Romulus, Michigan, the Company recorded a charge totaling
$109.0 million for the fiscal year ended January 31, 1997 which consists
of a writedown of assets to estimated realizable value, pension and
postretirement benefits, termination benefits and other exit costs.

(f) Excluding the effects of one-time and non-recurring charges and
extraordinary items, net income for the year ended January 31, 1997 would
have been $17.0 million, or $0.61 per share, and pro forma net income for
the year ended January 31, 1997 would have been $1.7 million, or $0.08 per
share.

(g) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization, nonrecurring charges and
certain other non-cash income and expense items. EBITDA should not be
construed as a substitute for income from operations, net income or cash
flow from operating activities, for the purpose of analyzing the Company's
operating performance, financial position and cash flows. The Company has
presented EBITDA because it is commonly used by investors to analyze and
compare companies on the basis of operating performance and to determine a
company's ability to service debt.

(h) Pro forma data includes a $3.1 million adjustment related to savings from
personnel reductions at Motor Wheel's Okemos, Michigan corporate
headquarters announced and implemented prior to the consummation of the
Motor Wheel Transactions and the effects of purchase accounting
adjustments.

(i) Statement of Operations and Other Data were translated using the average
DM/U.S. dollar exchange rate for the respective year or three-month period
(1.4338 for 1995; 1.5037 for 1996; 1.6586 for 1997). Balance Sheet Data
were translated using the ending DM/U.S. dollar exchange for the
respective year or three-month period (1.4335 for 1995; 1.5548 for 1996;
1.6779 for 1997).
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13

SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA

The following table sets forth certain unaudited pro forma financial data
for the Company for the year ended January 31, 1997 and for the three-month
period ended April 30, 1997, which are presented to reflect the pro forma effect
of (i) the Lemmerz Transactions, (ii) the Motor Wheel Transactions and (iii) the
Offerings. The unaudited pro forma statement of operations data give effect to
the Lemmerz Transactions and the Motor Wheel Transactions as if they had
occurred on February 1, 1996. The unaudited pro forma balance sheet data give
effect to the Lemmerz Transactions as if they had occurred on April 30, 1997.
The unaudited pro forma combined financial data do not purport to be indicative
of the results of operations or financial position of the Company that would
have actually been obtained had the Lemmerz Transactions and the Motor Wheel
Transactions been completed as of February 1, 1996, or which may be obtained in
the future. The unaudited pro forma combined financial data (i) have been
derived from and should be read in conjunction with the "Pro Forma Combined
Condensed Financial Data" and the notes thereto included elsewhere in this
Prospectus and (ii) should be read in conjunction with the separate historical
consolidated financial statements of Hayes and Lemmerz and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in this Prospectus. See "Index to Consolidated Financial
Statements."

COMPANY PRO FORMA COMPANY PRO FORMA
YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1997 (A) APRIL 30, 1997(A)
-------------------- ------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Net sales................................................... $1,372.9 $ 358.4
Cost of goods sold.......................................... 1,158.7 297.3
Marketing, general and administration....................... 98.5 22.9
Engineering and product development......................... 16.5 4.3
Depreciation and amortization............................... 70.0 19.6
Interest expense, net....................................... 96.6 24.1
Net income (loss)........................................... (68.3)(b) 6.3
PER SHARE DATA:
Net income (loss)........................................... $ (2.31)(b) $ 0.21
Weighted average shares outstanding (000's)................. 29,541 29,541
OTHER DATA:
EBITDA (c).................................................. $ 191.9 $ 55.7
Cash interest expense, net.................................. 90.5 22.4
Capital expenditures........................................ 98.3 23.1
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................................................................... $1,783.1
Total debt............................................................................. 975.4
Stockholders' equity................................................................... 112.6

- -------------------------

(a) The pro forma financial data do not reflect (i) any cost savings related to
or synergies that are expected to result from the Lemmerz Acquisition, (ii)
future unrealized cost savings related to, or synergies that are expected to
result from, the Motor Wheel Transactions or (iii) any cost savings related
to the closing of Hayes' Romulus facility.

(b) Excluding the effects of one-time and non-recurring charges and
extraordinary items, pro forma net income for the year ended January 31,
1997 would have been $21.6 million, or $0.73 per share.

(c) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization, nonrecurring charges and certain
other non-cash income and expense items. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from
operating activities, for the purpose of analyzing the Company's operating
performance, financial position and cash flows. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a company's
ability to service debt.
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14

RISK FACTORS

Prospective purchasers of shares of Common Stock offered hereby should
carefully consider all of the information set forth or incorporated by reference
in this Prospectus and, in particular, should evaluate the following risks in
connection with an investment in the Common Stock offered hereby.

SIGNIFICANT INDEBTEDNESS

At April 30, 1997, the Company's debt was $975.4 million and its total
stockholders' equity was $112.6 million on a pro forma basis for the Lemmerz
Transactions and the Offerings. The Company's high degree of leverage may have
important consequences for the Company, including that: (i) the ability of the
Company to obtain additional financing for acquisitions, working capital,
capital expenditures or other purposes, if necessary, may be impaired or such
financing may not be available on terms favorable to the Company; (ii) a
substantial portion of the Company's cash flow will be used to pay the Company's
interest expense and debt amortization, which will reduce the funds that would
otherwise be available to the Company for its operations and future business
opportunities; (iii) a substantial decrease in net operating cash flows or an
increase in expenses of the Company could make it difficult for the Company to
meet its debt service requirements and force it to modify its operations; (iv)
the Company may be more highly leveraged than its competitors, which may place
it at a competitive disadvantage; and (v) the Company's high degree of leverage
may make it more vulnerable to a downturn in its business or the economy
generally. Any inability of the Company to service its indebtedness or obtain
additional financing, as needed, would have a material adverse effect on the
Company.

DEPENDENCE ON MAJOR CUSTOMERS

The Company derived approximately 57% of its pro forma combined 1996 net
sales from General Motors, Ford and Chrysler. The Company has been a supplier to
these companies for many years, and continually engages in efforts to improve
and expand on its relations with each of such companies. There can be no
assurance, however, that the Company will maintain or improve these
relationships or that the Company will continue to supply these customers at
current levels. The loss of a significant portion of sales to General Motors,
Ford or Chrysler could have a material adverse effect on the Company's business.
Furthermore, General Motors and Ford manufacture a significant portion of their
own steel wheel requirements and Ford, to a limited extent, manufactures
aluminum wheels for its own use. Although General Motors and Ford have indicated
that they will continue to rely on outside suppliers, they may increase their
internal production of wheels, which could reduce the market for the Company's
products and have an adverse effect on the Company.

CYCLICAL NATURE OF INDUSTRY

The principal operations of the Company are directly related to domestic
and foreign automotive and commercial highway vehicle production. Industry sales
and production are cyclical and can be affected by the strength of the economy
generally, or in specific regions such as North America or Europe, by prevailing
interest rates and by other factors which may have an effect on the level of the
Company's sales.

CHALLENGES OF BUSINESS INTEGRATION

The full benefits of the Lemmerz Acquisition will require the integration
of each company's administrative, finance, sales and marketing organizations,
the coordination of each company's sales efforts, and the implementation of
appropriate operations, financial and management systems and controls in order
to capture the efficiencies and the cost reductions that are expected to result
therefrom. This will require substantial attention from the Company's management
team. The diversion of management attention, as well as any other difficulties
which may be encountered in the transition and integration process, could have
an adverse impact on the revenue and operating results of the Company. There can
be no assurance that the Company will be able to integrate the operations of
Hayes and Lemmerz successfully.

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15

In addition, the German Federal Cartel Office has notified the Company that
it intends to conduct a more detailed examination of the Lemmerz Acquisition. In
connection therewith, the Federal Cartel Office has requested from the Company
and certain of its competitors and customers additional information regarding
the Company's markets and sales. In the event the Federal Cartel Office elects
to proceed further with this matter, there can be no assurances that any actions
taken or required to be taken by the Federal Cartel Office will not have a
material adverse effect on the Company. See "Business -- Legal Proceedings."

CONTROLLING STOCKHOLDERS

Joseph Littlejohn & Levy Fund II, L.P. ("JLL"), each of the Lemmerz
Shareholders, TSG Capital Fund II, L.P. ("TSG") and certain other stockholders
of the Company (collectively, the "Principal Stockholders"), which collectively
own 22,184,182 shares, or 75.1% of the outstanding Common Stock after giving
effect to the Conversion and the Offerings, have entered into an Amended and
Restated Stockholders' Agreement with the Company, dated June 30, 1997 (the
"Stockholders' Agreement"), which provides, among other things, that certain of
the Principal Stockholders, including JLL, each of the Lemmerz Shareholders and
TSG, will vote their shares of Common Stock so that the Board of Directors of
the Company will be comprised of eleven directors, consisting of the Chief
Executive Officer of the Company (currently, Mr. Cucuz), four designees of JLL
(currently, Messrs. Clark, Joseph, Levy and Ying), one designee of TSG
(currently, Mr. Christophe), two designees of the Lemmerz Shareholders
(currently, Messrs. Kukwa-Lemmerz and Meilicke), and three other individuals
determined by the Board (currently, Messrs. Heyer and Rodewig and one vacancy)
at least two of whom are not affiliated with the Company or any of the parties
to the Stockholders' Agreement (except that one of such directors may be
affiliated with CIBC WG Argosy Merchant Fund 2, L.L.C. ("Argosy")).
Consequently, the Principal Stockholders will be entitled to elect the entire
Board of Directors without the vote of any other stockholder. See "Management --
Stockholders' Agreement."

In addition, JLL, which owns 9,634,176 shares of Common Stock, representing
approximately 32.6% of the outstanding Common Stock after giving effect to the
Conversion and the Offerings, and is entitled to designate four directors, will
have significant influence over the management and policies of the Company.
Moreover, the level of ownership of the outstanding Common Stock by the
Principal Stockholders also may have the effect of precluding, absent the
support of such stockholders, a proxy contest, a merger involving the Company, a
tender offer, an open market purchase program or purchases of the Common Stock
that could give stockholders the opportunity to realize a premium over the
then-prevailing market price for their shares of Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

The Principal Stockholders, which collectively own 22,184,182 shares, or
75.1%, of the Common Stock after giving effect to the Conversion and the
Offerings, have entered into the Stockholders' Agreement which, among other
things, prohibits the sale, transfer or other disposition of their shares,
except to certain Permitted Transferees (as defined therein), until the later of
(i) July 2, 1998 or (ii) the Conversion. After such time, the Principal
Stockholders will be able to require the Company to register the sale of such
shares under the Securities Act. No prediction can be made as to the effect, if
any, that future sales of Common Stock, or the availability of Common Stock for
future sales, will have on the market price of the Common Stock prevailing from
time to time. Nevertheless, sales in the public market of substantial amounts of
Common Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock. See "Management --
Stockholders' Agreement" and "Shares Eligible for Future Sale."

LABOR RELATIONS

At April 30, 1997, approximately 28% of the Company's employees in the
United States were represented by the United Auto Workers ("UAW") or United
Steel Workers ("USW"). Collective bargaining agreements with the UAW or USW
affecting these employees expire at various times through 1997 and 1998. As is
common in many European jurisdictions, substantially all of the Company's
employees in Europe are covered by country-wide collective bargaining
agreements, expiring at various times through 1998. Certain

14
16

employees of the Company's major customers are unionized. While the Company
believes that its relations with its employees are satisfactory, a dispute
between the Company and its employees, or between any of its major customers and
such customer's employees, could have a material adverse effect on the Company.

RESTRICTIVE DEBT COVENANTS

The Company's Amended Credit Agreement and the indentures governing the
Company's 11% Senior Subordinated Notes due 2006 (the "11% Notes") and the
9 1/8% Notes (collectively, the "Debt Instruments") contain a number of
significant covenants that, among other things, restrict the ability of the
Company to (i) declare dividends or redeem or repurchase capital stock, (ii)
prepay, redeem or purchase debt, (iii) incur liens and engage in sale-leaseback
transactions, (iv) make loans and investments, (v) incur additional
indebtedness, (vi) amend or otherwise alter debt and other material agreements,
(vii) make capital expenditures, (viii) engage in mergers, acquisitions and
asset sales, (ix) enter into transactions with affiliates and (x) alter the
business it conducts. The indebtedness outstanding under the Amended Credit
Agreement is guaranteed by all of the Company's material domestic subsidiaries
and is secured by a first priority lien on substantially all of the properties
and assets of the Company and its material domestic subsidiaries, now owned or
acquired later, including a pledge of all of the shares of the Company's
material existing and future domestic subsidiaries and up to 65% of the shares
of the Company's existing and future foreign subsidiaries which are owned by the
Company or one of its domestic subsidiaries. In addition, under the Amended
Credit Agreement, the Company is also required to comply with financial
covenants with respect to (i) a maximum leverage ratio, (ii) a minimum interest
coverage ratio and (iii) a minimum fixed charge coverage ratio. If the Company
were unable to borrow under its Amended Credit Agreement due to a default or
failure to meet certain specified borrowing base prerequisites for borrowing, it
could be left without sufficient liquidity.

LIMITED RECOURSE TO SELLERS

The Company's recourse to the Lemmerz Shareholders under the
indemnification provisions of the Lemmerz Acquisition agreement is extremely
limited. Accordingly, unanticipated events or liabilities related to the Lemmerz
business could materially and adversely affect the Company.

POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES

The Company's operations are subject to various foreign, federal, state and
local environmental laws, ordinances, and regulations, including those governing
discharges into the air and water, the storage, handling and disposal of solid
and hazardous wastes, the remediation of soil and groundwater contaminated by
petroleum products or hazardous substances or wastes, and the health and safety
of employees ("Environmental Laws"). Under certain Environmental Laws, a current
or previous owner or operator of property may be liable for the costs of removal
or remediation of certain hazardous substances or petroleum products on, under
or in such property, without regard to whether the owner or operator knew of, or
caused, the presence of the contaminants, and regardless of whether the
practices that resulted in the contamination were legal at the time they
occurred. The presence of, or failure to remediate properly such substances may
adversely affect the ability to sell or rent such property or to borrow using
such property as collateral. Persons who generate, arrange for the disposal or
treatment of, or dispose of hazardous substances may be liable for the costs of
investigation, remediation or removal of such hazardous substances at or from
the disposal or treatment facility, regardless of whether the such facility is
owned or operated by such person. Additionally, the owner of a site may be
subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from a site. See "Business
- -- Environmental Compliance" and "Business -- Legal Proceedings." Compliance
with Environmental Laws, stricter interpretations of or amendments to such laws,
or more vigorous enforcement policies by regulatory agencies with respect to
them may require material expenditures by the Company. The nature of the
Company's current and former operations and the history of industrial uses at
some of its facilities expose the Company to the risk of liabilities or claims
with respect to environmental and worker health and safety matters which could
have a material adverse effect on the Company's financial condition or results
of operations.

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17

INCREASE IN VARIABLE INTEREST RATES; CURRENCY FLUCTUATIONS

A significant portion of the indebtedness of the Company bears interest at
variable rates. Although the Company has entered into interest rate protection
agreements to limit its exposure to increases in such interest rates, such
agreements do not eliminate such exposure to variable rates. Any increase in the
interest rates on the Company's indebtedness will reduce funds available to the
Company for its operations and future business opportunities and will exacerbate
the consequences of the Company's leveraged capital structure.

As a result of the Lemmerz Acquisition, the Company is likely to experience
increased foreign currency exchange gains and losses in the ordinary course of
its business due to the increase in its operations outside the United States. As
a result, fluctuations in the exchange rate between the U.S. dollar, the DM and
the currencies of other countries in which the Company conducts its business,
may have a material impact on the Company's financial condition or results of
operations. While the Company engages in foreign currency hedging transactions
which moderate the overall effect of such currency exchange rate fluctuations,
the Company expects that such fluctuations will continue, and there can be no
assurance that the Company will be successful in its hedging activities or that
such exchange rate fluctuations will not otherwise have a material adverse
effect on the Company's financial condition or results of operations, or cause
significant fluctuations in quarterly results of operations.

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation
and Amended and Restated By-Laws may discourage potential acquisition proposals,
delay or prevent a change in control of the Company and limit the price that
certain investors might be willing to pay in the future for shares of the Common
Stock. These provisions include a classified board of directors, advance notice
procedures for stockholders to nominate candidates for election as directors of
the Company and to submit proposals for consideration at stockholders' meetings
and a prohibition against stockholder action by written consent. See
"Description of Capital Stock -- Certain Charter and By-Laws Provisions."

DIVIDEND POLICY

The Company does not intend to declare any cash dividends on its Common
Stock in the foreseeable future. See "Dividend Policy."

16
18

THE COMPANY

The Company is the world's largest manufacturer of automotive wheels,
supplying approximately 30% and 23% of the automotive wheels in North America
and Europe, respectively, and also is the largest global supplier of wheels to
OEMs of passenger cars, light trucks and commercial highway vehicles. The
Company's principal customers for wheel and brake products consist of every
major OEM in North America, Europe and Japan, including General Motors, Ford,
Chrysler (the three of which comprised approximately 57% of the Company's pro
forma combined 1996 net sales), BMW, Renault, Fiat, Volkswagen, Porsche,
Mercedes-Benz, Audi, Volvo, Citroen, Toyota, Mazda, Nissan, Honda, Mitsubishi,
Suzuki and Isuzu. The Company also has over 300 commercial highway vehicle
customers in North America and Europe, including Trailmobile, Dana/Mack,
Mercedes-Benz, Iveco, Strick, Great Dane Trailers, Freightliner, PACCAR,
Volvo/GM, Renault and Western Star. The Company also produces a variety of
non-wheel cast aluminum products for the automotive, heating equipment and
construction industries. Sales of automotive wheel and brake products comprised
approximately 76% of the Company's pro forma combined net sales in fiscal 1996
(69% wheels and 7% brake components), with the remaining 24% comprised of
commercial highway wheel and brake products (18%) and non-wheel aluminum
castings (6%).

MARKET
POSITION
--------

The Company's principal executive offices are located at 38481 Huron River
Drive, Romulus, Michigan 48174, and its telephone number is (313) 941-2000.

USE OF PROCEEDS

The net proceeds to the Company from the Offerings will be approximately
$ million (or approximately $ million if the Underwriters' over-allotment
option is exercised in full) after deducting estimated underwriting discounts
and expenses of the Offerings payable by the Company. See "Underwriting." The
Company will use the net proceeds from the shares of Common Stock sold by the
Company in the Offerings to repay indebtedness incurred under the Amended Credit
Agreement. After giving effect to the Lemmerz Transactions, such indebtedness
bore interest at a weighted average rate of 8.4% and was scheduled to mature on
various dates between 2003 and 2005. In addition, in the event that the net
proceeds in the Offerings are less than $30 per share, the Company will use a
portion of the net proceeds to pay the Lemmerz Selling Stockholders an amount
equal to the difference between $30 and such per share net proceeds multiplied
by 1,628,800, the number of shares to be sold by the Lemmerz Selling
Stockholders in the

17
19

Offerings. In the event that the net proceeds in the Offerings are in excess of
$30 per share, the Company will receive as additional net proceeds from the
Offerings, an amount equal to the difference between such per share net proceeds
and $30, multiplied by 1,628,800. Except as provided in the immediately
preceding sentence, the Company will not receive any of the proceeds from the
sale of Common Stock by the Selling Stockholders in the Offerings. See
"Principal and Selling Stockholders."

PRICE RANGE OF COMMON STOCK

The Common Stock has been traded on the NASDAQ Stock Market since July 2,
1996, the date of the Motor Wheel Transactions, under the symbol "HAYS." The
following table sets forth, for the periods indicated, the high and low sales
prices per share of the Common Stock as reported on the NASDAQ Stock Market. All
amounts were restated to reflect Hayes' 2-for-1 stock split effected in the form
of a 100% stock dividend paid on January 6, 1997.

HIGH LOW
---- ---

Quarter ending October 31, 1997 (through August 1, 1997).... $33.000 $30.500
Quarter ended July 31, 1997................................. 32.000 20.750
Quarter ended April 30, 1997................................ 24.500 18.750
Quarter ended January 31, 1997.............................. 22.750 16.625
Quarter ended October 31, 1996.............................. 16.875 13.875
July 2, 1996 through July 31, 1996.......................... 16.000 14.750

The last reported sale price for the Common Stock as reported on the NASDAQ
Stock Market on August 1, 1997 was $33.

DIVIDEND POLICY

The Company has not declared any cash dividends on the Common Stock since
the Motor Wheel Transactions and does not currently anticipate paying cash
dividends in the foreseeable future. The payment of dividends will be a business
decision to be made by the Company's Board of Directors (the "Board of
Directors") from time to time based on such considerations as the Board of
Directors deems relevant. In addition, dividends are subject to certain
restrictions contained in the Debt Instruments.

18
20

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
April 30, 1997 and as adjusted to reflect the Lemmerz Transactions and the
Offerings and the application of the Company's net proceeds therefrom. The
information set forth in this table should be read in conjunction with "Selected
Historical Consolidated Financial Information of Hayes" and Pro Forma Combined
Condensed Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus.

APRIL 30, 1997
---------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)

Revolving Credit Facility................................... $ -- $ --
Term Loan Facilities........................................ 420.5 264.1
11% Notes................................................... 250.0 250.0
9 1/8% Notes................................................ -- 400.0
Other debt.................................................. 41.1 61.3
------ --------
Total debt............................................. $711.6 $ 975.4
Common stockholders' equity:
Preferred Stock, par value $.01 per share; 25,000,000 shares
authorized; 5,000,000 Series A Convertible Participating
Preferred shares issued and outstanding................... -- --
Common stock, par value $0.01 per share:
Voting -- authorized 99,000,000; 22,231,492 shares issued
and outstanding; 24,382,194 shares as adjusted for the
Offerings................................................. 0.2 0.2
Nonvoting -- authorized 1,000,000; 159,026 shares issued and
outstanding............................................... -- --
Additional paid-in capital.................................. 43.6 196.3
Retained earnings (accumulated deficit)..................... (78.3) (78.3)
Cumulative translation adjustment........................... (3.4) (3.4)
Pension liability adjustment................................ (2.2) (2.2)
------ --------
Total stockholders' equity (deficit)................... (40.1) 112.6
------ --------
Total capitalization........................................ $671.5 $1,088.0
====== ========

19
21

PRO FORMA COMBINED CONDENSED FINANCIAL DATA

The Unaudited Pro Forma Combined Statement of Operations of the Company for
the fiscal year ended January 31, 1997 and the three-month period ended April
30, 1997 (the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma
Combined Balance Sheet of the Company as of April 30, 1997 (the "Pro Forma
Balance Sheet" and, together with the Pro Forma Statements of Operations, the
"Pro Forma Financial Statements"), have been prepared to illustrate the
estimated effect of the Lemmerz Transactions, the Motor Wheel Transactions and
the Offerings. The Pro Forma Financial Statements do not reflect any anticipated
cost savings from the Lemmerz Acquisition, or any synergies that are anticipated
to result from the Lemmerz Acquisition, and there can be no assurance that any
such cost savings or synergies will occur. The Pro Forma Statements of
Operations give pro forma effect to the Motor Wheel Transactions, the Lemmerz
Transactions and the Offerings as if they had occurred on February 1, 1996. The
Pro Forma Balance Sheet gives pro forma effect to the Lemmerz Transactions and
the Offerings as if they had occurred on April 30, 1997. The Pro Forma Financial
Statements do not purport to be indicative of the results of operations or
financial position of the Company that would have actually been obtained had
such transactions been completed as of the assumed dates and for the period
presented, or which may be obtained in the future. The pro forma adjustments are
described in the accompanying notes and are based upon available information and
certain assumptions that the Company believes are reasonable. The Pro Forma
Financial Statements should be read in conjunction with the separate historical
consolidated financial statements of Hayes and Lemmerz and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere or incorporated by reference in this Prospectus.

A preliminary allocation of the purchase price has been made to major
categories of assets and liabilities in the accompanying Pro Forma Financial
Statements based on available information. The actual allocation of purchase
price and the resulting effect on income from operations may differ
significantly from the pro forma amounts included herein. These pro forma
adjustments represent the Company's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that the Company believes to be reasonable. Consequently, the
amounts reflected in the Pro Forma Financial Statements are subject to change,
and the final amounts may differ substantially.

20
22

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(THREE-MONTH PERIOD ENDED APRIL 30, 1997)

HAYES LEMMERZ PRO FORMA
THREE-MONTH PERIOD THREE-MONTH PERIOD PRO FORMA COMBINED
ENDED APRIL 30, 1997 ENDED MARCH 31, 1997 ADJUSTMENTS COMPANY(A)
-------------------- -------------------- ----------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Net sales.................................. $250.2 $108.2 $ -- $358.4
Cost of goods sold......................... 212.2 88.0 (2.9)(c) 297.3
------- ------- ----- ------
Gross profit............................. 38.0 20.2 2.9 61.1
Marketing, general and administration...... 11.2 10.5 1.2(c) 22.9
Engineering and product development
costs.................................... 2.3 2.0 -- 4.3
Equity in losses of subsidiaries........... -- 0.5 -- 0.5
Other income, net.......................... (0.7) (1.5) -- (2.2)
------- ------- ----- ------
Earnings from operations................. 25.2 8.7 1.7 35.6
Interest expense, net...................... 18.4 1.1 4.6(f) 24.1
------- ------- ----- ------
Earnings (loss) before taxes on income
and minority interest................. 6.8 7.6 (2.9) 11.5
Income tax provision (benefit)............. 2.9 4.1 (2.1)(g) 4.9
------- ------- ----- ------
Earnings (loss) before minority
interest.............................. 3.9 3.5 (0.8) 6.6
Minority interest.......................... 0.1 0.2 -- 0.3
------- ------- ----- ------
Net income (loss)........................ $ 3.8 $ 3.3 $(0.8) $ 6.3
======= ======= ===== ======
PER SHARE DATA:
Net income................................. $ 0.21
======
Weighted average shares outstanding
(000's).................................. 29,541
======
OPERATING AND OTHER DATA:
EBITDA*.................................... $ 40.0 $ 15.7 $ -- $ 55.7
Depreciation and amortization.............. 14.8 6.5 (1.7) 19.6
Capital expenditures....................... 16.7 6.4 -- 23.1
Cash interest expense, net................. 17.1 1.1 4.2 22.4
CASH FLOW PROVIDED BY (USED FOR):
Operating activities....................... $ (4.5) $ 14.1 $(2.1) $ 7.5
Investing activities....................... (16.9) (11.7) -- (28.6)
Financing activities....................... (1.7) (2.5) -- (4.2)

- -------------------------
* "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization, nonrecurring charges and certain
other non-cash income and expense items. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from operating
activities, for the purpose of analyzing Hayes' operating performance,
financial position and cash flows. The Company has presented EBITDA because it
is commonly used by investors to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service debt.

21
23

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(YEAR ENDED JANUARY 31, 1997)

MOTOR WHEEL
HAYES FIVE MONTHS
YEAR ENDED ENDED PRO FORMA
JANUARY 31, JUNE 30, MOTOR WHEEL COMBINED
1997 1996 ADJUSTMENTS HAYES
----------- ----------- ----------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Net sales................................ $ 778.2 $134.9 $ -- $ 913.1
Cost of goods sold....................... 675.2 125.3 (4.6)(b) 795.9
------- ------ ------ -------
Gross profit............................ 103.0 9.6 4.6 117.2
Marketing, general and administration.... 35.9 6.4 1.3 (b)(d) 43.6
Engineering and product development
costs................................... 7.2 1.8 (0.9)(d) 8.1
Equity in (earnings) loss of
subsidiaries............................ 2.5 1.9 -- 4.4
Other income, net........................ (4.5) (0.8) -- (5.3)
Nonrecurring charges..................... 115.4 -- -- 115.4
------- ------ ------ -------
Earnings (loss) from operations......... (53.5) 0.3 4.2 (49.0)
Interest expense, net.................... 48.5 7.3 17.8 (e) 73.6
------- ------ ------ -------
Earnings (loss) before taxes on income,
minority interest and extraordinary
items................................. (102.0) (7.0) (13.6) (122.6)
Income tax provision (benefit)........... (36.7) 0.1 (5.3)(g) (41.9)
------- ------ ------ -------
Earnings (loss) before minority interest
and extraordinary items............... (65.3) (7.1) (8.3) (80.7)
Minority interest........................ 0.2 (0.1) -- 0.1
------- ------ ------ -------
Earnings (loss) before extraordinary
items................................. (65.5) (7.0) (8.3) (80.8)
Extraordinary items, net of tax.......... 7.4 -- -- 7.4
------- ------ ------ -------
Net income (loss)....................... $ (72.9) $ (7.0) $ (8.3) $ (88.2)
======= ====== ====== =======
PER SHARE DATA:
Net loss.................................
Weighted average shares outstanding
(000's).................................
OPERATING AND OTHER DATA:
EBITDA*.................................. $ 120.7 $ 9.8 $ 3.1 $ 133.6
Depreciation and amortization............ 44.4 7.6 (1.1) 50.9
Capital expenditures..................... 71.4 1.9 -- 73.3
Cash interest expense, net............... 45.3 7.0 16.7 69.0
CASH FLOW PROVIDED BY (USED FOR):
Operating activities..................... $ 71.2 $ 6.9 $ (8.6) $ 69.5
Investing activities..................... (65.1) 1.5 -- (63.6)
Financing activities..................... 39.6 (2.4) -- 37.2

LEMMERZ LEMMERZ
YEAR ENDED AND PRO FORMA
DECEMBER 31, OFFERING COMBINED
1996 ADJUSTMENTS COMPANY (A)
------------ ----------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Net sales................................ $459.8 $ -- $1,372.9
Cost of goods sold....................... 377.7 (14.9)(c) 1,158.7
------ ------ --------
Gross profit............................ 82.1 14.9 214.2
Marketing, general and administration.... 50.2 4.7 (c) 98.5
Engineering and product development
costs................................... 8.4 -- 16.5
Equity in (earnings) loss of
subsidiaries............................ (1.0) -- 3.4
Other income, net........................ (5.5) -- (10.8)
Nonrecurring charges..................... -- -- 115.4
------ ------ --------
Earnings (loss) from operations......... 30.0 10.2 (8.8)
Interest expense, net.................... 5.3 17.7 (f) 96.6
------ ------ --------
Earnings (loss) before taxes on income,
minority interest and extraordinary
items................................. 24.7 (7.5) (105.4)
Income tax provision (benefit)........... 14.8 (18.2)(g) (45.3)
------ ------ --------
Earnings (loss) before minority interest
and extraordinary items............... 9.9 10.7 (60.1)
Minority interest........................ 0.7 -- 0.8
------ ------ --------
Earnings (loss) before extraordinary
items................................. 9.2 10.7 (60.9)
Extraordinary items, net of tax.......... -- -- 7.4
------ ------ --------
Net income (loss)....................... $ 9.2 $ 10.7 $ (68.3)(h)
====== ====== ========
PER SHARE DATA:
Net loss................................. $ (2.31)(h)
========
Weighted average shares outstanding
(000's)................................. 29,541
========
OPERATING AND OTHER DATA:
EBITDA*.................................. $ 58.3 $ -- $ 191.9
Depreciation and amortization............ 29.3 (10.2) 70.0
Capital expenditures..................... 25.0 -- 98.3
Cash interest expense, net............... 5.3 16.2 90.5
CASH FLOW PROVIDED BY (USED FOR):
Operating activities..................... $ 34.7 $ 2.0 $ 106.2
Investing activities..................... (35.7) -- (99.3)
Financing activities..................... (13.2) -- 24.0

22
24

NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

(a) The Pro Forma Statement of Operations assumes that the Lemmerz Transactions,
the Motor Wheel Transactions and the Offerings occurred on February 1, 1996.
For purposes of the Pro Forma Statement of Operations for the year ended
January 31, 1997, Motor Wheel's historical statement of operations for the
five months ended June 30, 1996 and Lemmerz's historical statement of
operations for the year ended December 31, 1996 were combined with Hayes'
historical statement of operations for the year ended January 31, 1997. For
purposes of the Pro Forma Statement of Operations for the three-month period
ended April 30, 1997, Lemmerz's historical statement of operations for the
three-month period ended March 31, 1997 was combined with Hayes' historical
statement of operations for the three-month period ended April 30, 1997.

(b) The acquisition of Motor Wheel was accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price was
allocated to the tangible and intangible assets and liabilities of Motor
Wheel based upon their respective fair values as of the closing date based
upon valuations and other studies. The following presents the effect of the
purchase adjustments and adjustments to reflect adoption of the Company's
accounting policies and pension and post-retirement benefit cost assumptions
on the Motor Wheel Statement of Operations for the five months ended June
30, 1996:

YEAR ENDED
JANUARY 31, 1997
----------------
COST OF SALES MG&A
------------- ----

Depreciation.............................................. $(3.4) $ --
Reduction in post retirement benefit costs................ (1.2) --
Amortization of intangibles and goodwill.................. -- 2.3
----- ----
Total increase (decrease)............................ $(4.6) $2.3
===== ====

The adjustments for estimated pro forma depreciation and amortization of
intangible assets and goodwill are based on their estimated fair values.
Property, plant and equipment are being depreciated over estimated useful
lives. Motor Wheel historically depreciated the $215.4 million of historical
cost of its assets appearing on the December 31, 1995 balance sheet over a
composite life of 14 years resulting in $15.4 million of annual
depreciation, accumulated depreciation of $136.4 million and a net book
value of $79.0 million. Upon consummation of the Motor Wheel Transactions,
the fair value of assets acquired was estimated to be approximately $92.0
million. This amount is being depreciated over 25 years for buildings and 12
years for equipment, consistent with Hayes' depreciation policy for used
equipment and Hayes' estimate of the remaining economic life of the assets
($7.2 million of annual depreciation expense). Other intangible assets and
goodwill are being amortized over their estimated useful lives, not to
exceed 40 years. For pro forma purposes, a 35-year composite amortization
life has been used.

(c) The Lemmerz Acquisition was accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price was
allocated to the tangible and intangible assets and liabilities of Lemmerz
based upon their respective estimated fair values as of June 30, 1997, the
effective date of the Lemmerz Acquisition, based upon preliminary valuations
and other studies which are not yet finalized. The actual allocation of
purchase price and the resulting effect on income from operations may differ
significantly from the pro forma amounts included herein. The following
presents the effect of the

23
25

purchase adjustments and adjustments to reflect adoption of the Company's
accounting policies on the Pro Forma Statement of Operations:

YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1997 APRIL 30, 1997
---------------- ------------------
COST OF SALES MG&A COST OF SALES MG&A
------------- ---- ------------- ----

Depreciation........................... $(14.9) $-- $(2.9) $ --
Amortization of intangibles and
goodwill............................. -- 4.7 -- 1.2
------ ---- ----- ----
Total increase (decrease)......... $(14.9) $4.7 $(2.9) $1.2
====== ==== ===== ====

The adjustments for estimated pro forma depreciation and amortization of
intangible assets and goodwill are based on their estimated fair values.
Property, plant and equipment is being depreciated over estimated useful
lives. Lemmerz historically depreciated the $519.5 million of historical
cost of its assets appearing on the December 31, 1996 balance sheet over a
composite life of 18 years resulting in $28.7 million of annual depreciation
in the year ended December 31, 1996, accumulated depreciation of $364.8
million and a net book value of $154.7 million. Upon consummation of the
Lemmerz Acquisition, the fair value of assets acquired was estimated to be
$194.7 million. This amount is being depreciated over 25 years for buildings
and 12 years for equipment, consistent with Hayes' depreciation policy for
used equipment and Hayes' estimate of the remaining economic life of the
assets ($13.8 million of annual depreciation expense). Other intangible
assets and goodwill are being amortized over their estimated useful lives,
not to exceed 40 years. For pro forma purposes, a 35-year composite
amortization life has been used.

(d) As part of its restructuring, Motor Wheel permanently terminated
approximately 50 corporate positions and eliminated certain salaries and
related costs associated with its Okemos, Michigan corporate headquarters.
The savings related to the elimination of these salaries and related costs
are as follows:

YEAR ENDED
JANUARY 31, 1997
----------------

Marketing, general and administrative....................... $(1.0)
Engineering and product development......................... (0.9)
------
Total savings.......................................... $(1.9)
======

(e) Reflects adjustments for additional interest expense assuming the Motor
Wheel Transactions occurred on February 1, 1996. The change in interest
expense, in addition to amortization of deferred financing costs, reflect
changes in long term borrowings and their rates based on a three-month LIBOR
of 6.0% (dollars in millions):

24
26

Year Ended
January 31,
1997
----------------
Pro Forma
Interest
Rate Amount Expense
---- ------ ---------

Revolving Credit Facility................... 8.500% $ 27.0 $ 1.0
Term Loan A-1............................... 8.500 198.5 7.0
Term Loan B................................. 9.000 125.0 4.7
Term Loan C................................. 9.500 100.0 4.0
11% Notes................................... 11.000 250.0 11.4
Unused revolver commitment.................. 1.0
Letter of credit fees....................... 0.5
Administrative fee.......................... 0.4
-------
30.0
Amortization of capitalized financing
fees...................................... 1.1
-------
Total pro forma interest expense....... 31.1
Historical Motor Wheel interest expense..... (7.3)
Historical Hayes interest expense........... (6.0)
-------
Total historical interest expense
(including amortization of financing
fees)................................ (13.3)
-------
Total pro forma interest expense
adjustment........................... $ 17.8
=======

The Company estimates that an increase or decrease in interest rates on
floating debt of 1/8% would increase or decrease annual interest expense by
approximately $563,000. The Company anticipates entering into interest rate
caps and swaps with respect to a portion of the floating rate debt to
mitigate the effect of interest rate fluctuations.

(f) Reflects adjustments for the additional interest expense assuming the
Lemmerz Transactions and the Offerings occurred on February 1, 1996. The
change in interest expense, in addition to amortization of deferred
financing costs, reflects changes in long term borrowings and their rates
based on a three-month LIBOR of 6% (dollars in millions):

Year Ended Three Months
January 31, Ended
1997 April 30, 1997
---------------- ----------------
Pro Forma Pro Forma
Interest Interest
Rate Amount Expense Expense
---- ------ --------- ---------

Term Loan A-2............................. 6.250% $100.0 $ 6.3 $ 1.6
9 1/8% Notes.............................. 9.125 400.0 36.5 9.1
Paydown on Hayes outstanding obligations:
Term Loan A-1............................. 8.250 (119.3) (9.8) (2.5)
Term Loan B............................... 8.750 (76.4) (6.7) (1.7)
Term Loan C............................... 9.000 (60.7) (5.5) (1.4)
------ ------
20.8 5.1
Amortization of capitalized financing
fees.................................... 1.5 0.4
Less Adjustment to new financing rates:
Term Loan A-1............................. (0.250) 198.5 (0.5) (0.1)
Term Loan B............................... (0.250) 125.0 (0.3) (0.1)
Term Loan C............................... (0.500) 100.0 (0.5) (0.1)
------ ------
Total pro forma interest expenses.... 21.0 5.2
Less: Historical Lemmerz interest
expense................................. (3.3) (0.6)
------ ------
Total pro forma interest expense
adjustment......................... $17.7 $ 4.6
====== ======

The Company estimates that an increase or decrease in interest rates on
floating debt of 1/8% would increase or decrease annual interest expense by
approximately $334,000. The Company anticipates

25
27

entering into interest rate caps and swaps with respect to a portion of the
floating rate debt to mitigate the effect of interest rate fluctuations.

(g) Reflects income tax effects of the pro forma adjustments assuming a combined
effective statutory income tax rate of 43%.

(h) Excluding the effects of one-time and non-recurring charges and
extraordinary items, pro forma net income for the year ended January 31,
1997 would have been $21.6 million, or $0.73 per share.

26
28

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(APRIL 30, 1997)

HAYES LEMMERZ
APRIL 30, MARCH 31, PRO FORMA PRO FORMA
1997 1997 ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
(DOLLARS IN MILLIONS)

ASSETS
- -------
Cash and cash equivalents.................. $ 24.8 $ 4.2 $ 20.0 (b) $ 49.0
Certificates of deposit.................... -- 11.6 -- 11.6
Trade accounts and notes receivable........ 152.6 78.4 -- 231.0
Inventories................................ 87.3 54.2 -- 141.5
Other current assets....................... 8.1 7.9 -- 16.0
-------- ------ ------ --------
Current assets........................ 272.8 156.3 20.0 449.1
Property, plant and equipment, net......... 486.6 143.3 40.0 (a) 669.9
Other noncurrent assets.................... 22.8 49.4 -- 72.2
Deferred tax asset......................... 17.6 43.8 -- 61.4
Deferred financing costs................... 29.0 -- 12.5 (b) 41.5
Goodwill................................... 324.6 -- 164.4 (a) 489.0
-------- ------ ------ --------
Total assets.......................... $1,153.4 $392.8 $236.9 $1,783.1
======== ====== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------
Bank borrowings............................ $ 6.4 $ 45.7 $(45.7)(c) $ 6.4
Current portion of bank term loans and
other long term debt..................... 23.6 -- -- 23.6
Trade accounts payable..................... 149.1 76.5 -- 225.6
Accrued liabilities........................ 72.2 20.2 -- 92.4
-------- ------ ------ --------
Current liabilities................... 251.3 142.4 (45.7) 348.0
Pension and other long-term liabilities.... 252.2 106.1 -- 358.3
Minority interest.......................... 8.4 5.3 -- 13.7
Deferred tax liability, net................ -- 5.1 -- 5.1
Bank term loans and other long term debt
less current portion..................... 430.1 29.5 (265.7)(b)(c)(d) 193.9
Term loans................................. -- -- 100.0 (b) 100.0
Senior subordinated debt................... 251.5 -- -- 251.5
9 1/8% Notes............................... -- -- 400.0 (b) 400.0
-------- ------ ------ --------
Total liabilities..................... 1,193.5 288.4 188.6 1,670.5
Capital stock.............................. 0.2 -- -- 0.2
Paid in capital............................ 43.6 57.9 94.8 (e) 196.3
Retained earnings (deficit)................ (78.3) 46.8 (46.8)(e) (78.3)
Cumulative translation and pension
liability adjustment..................... (5.6) (0.3) 0.3 (e) (5.6)
-------- ------ ------ --------
Total stockholders' equity
(deficit)........................... (40.1) 104.4 (48.3) 112.6
-------- ------ ------ --------
Total liabilities and stockholders'
equity (deficit).................... $1,153.4 $392.8 $236.9 $1,783.1
======== ====== ====== ========

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29

NOTES TO THE PRO FORMA BALANCE SHEET AT APRIL 30, 1997

(a) The estimated purchase price and preliminary adjustments to historical book
value of Lemmerz as a result of the Lemmerz Transactions are as follows
(dollars in millions):

Purchase price:
Estimated value of cash and preferred stock issued........ $ 308.8
Book value of net assets acquired......................... (104.4)
-------
Purchase price in excess of net assets acquired........... $ 204.4
=======
Preliminary allocation of purchase price in excess of net
assets required:
Increase in property, plant and equipment to estimated
fair value............................................. $ 40.0
Estimated goodwill........................................ 164.4
-------
Total..................................................... $ 204.4
=======

(b) Reflects the sources and uses of funds for the Lemmerz Transactions and the
Offerings as follows, assuming the Lemmerz Transactions occurred and the
Common Stock issued as of April 30, 1997 (dollars in millions):

Sources of Funds:
Term Loan A-2............................................. $ 100.0
9 1/8% Notes.............................................. 400.0
Proceeds from the Offerings............................... 60.0
Issuance of Hayes convertible preferred stock............. 108.8
-------
Total Sources of Funds.................................... $ 668.8
=======
Uses of Funds:
Cash consideration for Lemmerz Acquisition................ $ 200.0
Equity consideration for Lemmerz Acquisition.............. 108.8
Repayment of existing Hayes term debt..................... 256.4
Working capital purposes.................................. 20.0
Repayment of existing Lemmerz obligations................. 55.0
Fees and expenses (including deferred financing costs).... 28.6
-------
Total Uses of Funds....................................... $ 668.8
=======

(c) Proceeds from the Lemmerz Transactions and the Offerings will be used to
repay the following obligations of Lemmerz (dollars in millions):

Current portion debt and notes.............................. $ 45.7
Long-term portion debt...................................... 9.3
-------
Total..................................................... $ 55.0
=======

(d) Approximately $256.4 million of the proceeds from the Lemmerz Transactions
and the Offerings will be used to repay certain outstanding obligations of
the Company.

(e) The adjustments to paid-in capital, retained earnings and cumulative
translation and pension liability adjustments as a result of the Lemmerz
Acquisition and the Offerings are as follows (dollars in million):

Paid-in capital:
Elimination of Lemmerz paid-in capital.................... $ (57.9)
Value of Hayes convertible preferred stock issued......... 108.8
Proceeds from the Offerings............................... 60.0
Estimated professional fees and expenses.................. (16.1)
-------
Total..................................................... $ 94.8
=======
Retained earnings:
Elimination of Lemmerz pre-business combination retained
earnings............................................... $ (46.8)
Cumulative translation and pension liability adjustments:
Elimination of Lemmerz pre-business combination amount.... $ 0.3

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30

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF HAYES

The following selected historical consolidated financial information of
Hayes with respect to each year in the five-year period ended January 31, 1997
is derived from the consolidated financial statements of Hayes. Such
consolidated financial statements have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The consolidated financial statements
of Hayes for each of the years in the three-year period ended January 31, 1997
are included elsewhere or incorporated by reference in this Prospectus. The
financial information of Hayes for the three-month periods ended April 30, 1997
and 1996 is unaudited, but in the opinion of management, reflects all
adjustments necessary for a fair presentation of such information. The selected
consolidated financial information provided below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of Hayes and the notes
thereto included elsewhere or incorporated by reference in this Prospectus.

THREE MONTHS
FISCAL YEAR ENDED JANUARY 31, ENDED APRIL 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1996 1997
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Net sales........................................ $408.7 $428.2 $537.6 $611.1 $ 778.2 $156.2 $ 250.2
Costs of goods sold.............................. 336.4 344.4 441.4 513.4 675.2 133.6 212.2
------ ------ ------ ------ -------- ------ --------
Gross profit................................... 72.3 83.8 96.2 97.7 103.0 22.6 38.0
Marketing, general and administration............ 26.1 26.3 28.6 29.7 35.9 7.8 11.2
Engineering and product development.............. 5.8 4.0 5.1 4.7 7.2 1.8 2.3
Equity in loss of unconsolidated subsidiaries.... -- -- -- -- 2.5 -- --
Other income, net................................ (1.2) (2.3) (0.8) (1.5) (4.5) (0.5) (0.7)
Nonrecurring charges............................. -- -- -- 3.6 115.4 -- --
------ ------ ------ ------ -------- ------ --------
Earnings (loss) from operations.................. 41.6 55.8 63.3 61.2 (53.5) 13.5 25.2
Interest expense, net............................ 33.8 13.6 13.4 15.0 48.5 3.6 18.4
------ ------ ------ ------ -------- ------ --------
Earnings (loss) before taxes on income, minority
interest, extraordinary items and cumulative
effect of changes in accounting principles..... 7.8 42.2 49.9 46.2 (102.0) 9.9 6.8
Income tax provision (benefit)................... 4.2 17.6 20.0 17.8 (36.7) 3.8 2.9
------ ------ ------ ------ -------- ------ --------
Earnings (loss) before minority interest,
extraordinary items and cumulative effect of
changes in accounting principles............... 3.6 24.6 29.9 28.4 (65.3) 6.1 3.9
Minority interest................................ -- -- -- -- 0.2 -- 0.1
------ ------ ------ ------ -------- ------ --------
Earnings (loss) before extraordinary items and
cumulative effect of changes in accounting
principles..................................... 3.6 24.6 29.9 28.4 (65.5) 6.1 3.8
Extraordinary items.............................. -- -- -- -- 7.4 -- --
------ ------ ------ ------ -------- ------ --------
Earnings (loss) before cumulative effect of
changes in accounting principles............... 3.6 24.6 29.9 28.4 (72.9) 6.1 3.8
Cumulative effect of changes in accounting
principles..................................... -- 24.6 -- -- -- -- --
------ ------ ------ ------ -------- ------ --------
Net income (loss).............................. $ 3.6 $ -- $ 29.9 $ 28.4 $ (72.9)(a) $ 6.1 $ 3.8
====== ====== ====== ====== ======== ====== ========
PER SHARE DATA:
Income (loss) before extraordinary items and
cumulative effect of changes in accounting
principles..................................... $ 0.20 $ 0.70 $ 0.85 $ 0.81 $ (2.36) $ 0.17 $ 0.17
Extraordinary items, net of tax.................. -- -- -- -- (0.27) -- --
Cumulative effect of changes in accounting
principles..................................... -- (0.70) -- -- -- -- --
------ ------ ------ ------ -------- ------ --------
Net income (loss)................................ $ 0.20 $ -- $ 0.85 $ 0.81 $ (2.63)(a) $ 0.17 $ 0.17
====== ====== ====== ====== ======== ====== ========
Dividends per common share....................... -- 0.030 0.030 0.030 0.015 -- --
====== ====== ====== ====== ======== ====== ========
Weighted average shares outstanding (000's)...... 18,202 35,148 35,148 35,148 27,703 35,148 22,390
====== ====== ====== ====== ======== ====== ========
OTHER DATA:
EBITDA (b)....................................... $ 63.8 $ 80.6 $ 92.9 $ 97.5 $ 120.7 $ 22.3 $ 40.0
Depreciation and amortization.................... 22.2 24.8 29.6 32.7 44.4 8.8 14.8
Capital expenditures............................. 28.7 34.8 39.9 43.4 71.4 23.4 16.7
CASH FLOW PROVIDED BY (USED FOR):
Operating activities............................. $ 18.5 $ 52.6 $ 22.4 $ 44.9 $ 71.2 $ 5.5 $ (4.5)
Investing activities............................. (38.2) (48.6) (40.9) (52.4) (65.1) (26.9) (16.9)
Financing activities............................. 34.8 (15.7) 13.5 8.8 39.6 20.4 (1.7)
BALANCE SHEET DATA (AT PERIOD END):
Total assets..................................... $499.9 $527.6 $589.6 $633.9 $1,183.1 $648.9 $1,153.4
Total debt....................................... 122.0 107.7 123.0 133.1 715.8 153.8 711.6
Stockholders' equity (deficit)................... 191.9 184.8 216.4 245.4 (41.1) 251.1 (40.1)

- -------------------------
(a) Excluding the effects of one-time and non-recurring charges and
extraordinary items, net income for the year ended January 31, 1997 would
have been $17.0 million, or $0.61 per share.

(b) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization, nonrecurring charges and certain
other non-cash income and expense items. EBITDA should not be construed as
a substitute for income from operations, net income or cash flow from
operating activities, for the purpose of analyzing Hayes' operating
performance, financial position and cash flows. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a
company's ability to service debt.

29
31

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF LEMMERZ

The following selected historical consolidated financial information of
Lemmerz with respect to each year in the three-year period ended December 31,
1996 is derived from the consolidated financial statements of Lemmerz. The
consolidated financial statements of Lemmerz for each of the years in the
two-year period ended December 31, 1996 are included elsewhere and incorporated
by reference in this Prospectus. Such consolidated financial statements have
been audited by KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft. The financial information of Lemmerz for the
year ended December 31, 1994 and for the three-month period ended March 31,
1997, is unaudited. In the opinion of management, such financial information for
the three-month period ended March 31, 1997 reflects all adjustments necessary
for a fair presentation of such information. The selected consolidated financial
information provided below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements of Lemmerz and the notes thereto included
elsewhere or incorporated by reference in this Prospectus.

YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
----------------------------------------- MARCH 31,
1994 1995 1996 1997
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(DOLLARS IN MILLIONS)

STATEMENT OF OPERATIONS DATA:
Net sales................................. $394.0 $468.1 $459.8 $108.2
Cost of goods sold........................ 319.7 380.7 377.7 88.0
------ ------ ------ -------
Gross profit............................ 74.3 87.4 82.1 20.2
Marketing, general and administrative..... 55.2 57.6 50.2 10.5
Engineering and product development....... 7.0 8.9 8.4 2.0
Other income, net......................... (14.0) (11.7) (6.5) (1.0)
------ ------ ------ -------
Earnings from operations................ 26.1 32.6 30.0 8.7
Interest expense, net..................... 10.8 7.8 5.3 1.1
------ ------ ------ -------
Earnings before taxes on income......... 15.3 24.8 24.7 7.6
Income tax provision...................... 1.4 7.8 14.8 4.1
------ ------ ------ -------
Earnings before minority interests...... 13.9 17.0 9.9 3.5
Minority interest......................... (0.1) 0.4 0.7 0.2
------ ------ ------ -------
Net income................................ $ 14.0 $ 16.6 $ 9.2 $ 3.3
====== ====== ====== =======
OTHER DATA:
EBITDA (a)................................ $ 47.9 $ 64.1 $ 58.3 $ 15.7
Depreciation and amortization............. 28.1 30.9 29.3 6.5
Capital expenditures...................... 42.7 42.8 25.0 6.4
CASH FLOW PROVIDED BY (USED FOR);
Operating activities...................... $ 37.2 $ 48.9 $ 34.7 $ 14.1
Investing activities...................... (32.8) (35.1) (35.7) (11.7)
Financing activities...................... (8.0) (1.0) (13.2) (2.5)
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.............................. $412.2 $453.3 $412.8 $392.8
Total debt................................ 111.2 83.9 84.1 75.2
Stockholders' equity...................... 89.2 113.8 109.6 104.4

- -------------------------
(a) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization, nonrecurring charges and certain
other non-cash income and expense items. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from
operating activities, for the purpose of analyzing the Company's operating
performance, financial position and cash flows. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a company's
ability to service debt.

30
32

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion of each of Hayes' and Lemmerz's consolidated
historical results of operations and financial condition should be read in
conjunction with the consolidated financial statements of Hayes and Lemmerz and
the notes thereto included elsewhere in this Prospectus. The following
discussion and analysis covers periods before completion of the Motor Wheel
Transactions and the Lemmerz Transactions. See "Risk Factors" and "Pro Forma
Combined Condensed Financial Data" for a further discussion relating to the
effect that the Motor Wheel Transactions, the Lemmerz Transactions and the
Offerings may have on Hayes and Lemmerz.

GENERAL

Sales of the Company's wheels and brake components produced in North
America are directly affected by the overall level of passenger car, light truck
and commercial highway vehicle production of North American OEMs, while sales of
its wheels in Europe are directly affected by the overall vehicle production in
Europe. The North American and European automotive industries are sensitive to
the overall strength of their respective economies.

OEMs typically specify the type and basic styling of a wheel which will be
used for a particular model. A particular wheel may be designated either as
standard equipment or as an option. An OEM will ordinarily designate one
supplier for each specific wheel platform for a vehicle model, although a
particular vehicle model may offer a number of different wheels. The process of
being designated as a supplier of a particular wheel often occurs several years
before initial vehicle production. A potential supplier must first develop a
wheel design based on styling and engineering specifications provided by an OEM.
Suppliers that design, engineer, manufacture and conduct quality control testing
are generally referred to as Tier I Suppliers. After a comprehensive engineering
and feasibility review, the OEM will designate a specific supplier for a
particular wheel that meets the OEM's cost, quality and engineering
specifications for a particular vehicle model. The duration of a wheel
platform's life depends on the life cycle of the vehicle model, although wheel
designs may be changed every two to four years to update the appearance of the
vehicle.

The Company has been awarded new automotive wheel contracts that management
expects will significantly increase its fabricated wheel volumes. An important
factor enabling the Company to obtain automotive wheel contracts is its ability
to offer new, innovative products at competitive prices. As a result of these
new contracts, the Company anticipates that it will experience significant
upfront costs. Management believes such costs will include capital expenditures
for tooling and facility expansion and additional launch costs as the OEMs reach
normal operating levels for new vehicle production. In addition to capital
expenditures associated with new business, the Company anticipates further
capital expenditures related to productivity improvements and cost reductions.
For the past three years, more than half of the Company's capital expenditures
have been related to new contract awards.

Hayes completed the Lemmerz Acquisition on June 30, 1997. In addition to
revenue enhancement, management believes that this acquisition will result in
annual cost savings of at least $21 million, primarily as result of capacity
optimization, raw material purchasing savings and overhead savings. These
anticipated Lemmerz Acquisition-related cost savings are in addition to savings
related to the rationalization efforts identified as part of the Motor Wheel
Transactions. The savings anticipated to be realized from the Motor Wheel
Transactions, including those initially targeted and subsequently identified,
total $42 million and comprise the following: (i) $11 million related to a
reduction in selling, general and engineering costs; (ii) $10 million related to
rationalization efforts at Hayes' brake facilities; and (iii) $21 million
related to rationalization efforts at Hayes' steel wheel facilities, which
includes $12 million of savings related to the closure of Hayes' Romulus,
Michigan facility. Hayes announced the closure of the Romulus facility in
January 1997 and expects that the production from the facility will be shifted
to Hayes' other existing facilities by the end of 1997. Approximately $13
million of the aggregate $42 million of savings related to the Motor Wheel
Transactions have been realized through the end of the first quarter of fiscal
1997. Management expects the remaining $29 million of savings related to the
Motor Wheel Transactions to be fully reflected in

31
33

the Company's fiscal 1998 financial results, with the additional $21 million of
cost savings related to the Lemmerz Acquisition to be fully reflected in the
Company's fiscal 1999 financial results.

The Company's largest component of cost is the raw material cost of steel
and aluminum. In accordance with industry practice in the United States, the
costs or benefits of fluctuations in steel and aluminum prices are passed on to
the customer. Opportunities to recover increased material costs from customers
in Europe are more limited than in the United States.

RESULTS OF OPERATIONS OF HAYES

Three Months Ended April 30, 1997 Compared to Three Months Ended April 30, 1996

Hayes' net sales for the first quarter of fiscal 1997 increased by $94.0
million or 60.2% compared to the first quarter of fiscal 1996. This increase was
attributable to the additional sales contributed by Motor Wheel which was
acquired effective July 2, 1996, and increased volume in both the North American
and European Aluminum Wheel groups.

Hayes' gross profit for the first quarter of fiscal 1997 increased to $38.0
million or 15.2% of net sales compared to $22.6 million or 14.5% of net sales
for the first quarter of fiscal 1996. The increase in margin percentage is
attributable to increased volume and strong productivity at the Company's North
American and European aluminum wheel facilities.

Marketing, general and administrative expenses were $2.2 million higher for
the first quarter of fiscal 1997 as compared with the first quarter of fiscal
1996. However, these costs have decreased from 4.3% of net sales for the first
quarter of fiscal 1996 to 3.6% of net sales for the current period due to
synergies being recognized as a result of the consolidation of the Hayes and
Motor Wheel headquarters.

Amortization of intangibles increased by $1.2 million as compared with the
first quarter of fiscal 1996. This increase is due to increased goodwill
recognized as a result of the Motor Wheel Transactions.

Interest expense was $18.4 million for the first quarter of fiscal 1997, an
increase of $14.8 million over the same period for fiscal 1996. This increase
was caused by increased debt as a result of the Motor Wheel Transactions.

Fiscal 1996 Compared to Fiscal 1995

Hayes' net sales for fiscal 1996 increased by $167.1 million or 27.0% as
compared to fiscal 1995. This increase was attributable to the additional sales
contributed by Motor Wheel which was acquired effective July 2, 1996 and
increased volume in North America. These results were partially offset by the
General Motors strikes during the first, third and fourth quarters and lower
selling prices due to the pass-through of lower aluminum prices.

Hayes' gross profit for fiscal 1996 increased to $103.0 million or 13.2% of
net sales, compared with $97.7 million or 16.0% of net sales for fiscal 1995.
The decrease in margin percentage was attributable to: (i) the write-down of
certain assets during the second quarter; (ii) inefficiencies in former Motor
Wheel plants that are either being prepared for or are undergoing major
restructuring; and (iii) production losses resulting from the General Motors
strikes.

Marketing, general and administrative expenses were $6.2 million higher for
fiscal 1996 as compared with fiscal 1995. However, these costs decreased from
4.9% of net sales for fiscal 1995 to 4.6% of net sales for the current year due
to synergies being recognized as a result of the consolidation of the Hayes and
Motor Wheel headquarters.

Engineering and product development expenses increased $2.5 million for
fiscal 1996 versus fiscal 1995. This increase is due to additional engineering
and product development costs related to new product lines acquired as a result
of the Motor Wheel Transactions and a decrease in recovery on engineering
expenses related to the timing of new programs.

32
34

Equity in loss of subsidiaries for fiscal 1996 includes the recognition of
losses of Hayes' Czech joint venture during its early production stage and a
writedown of Hayes' investment in Hayes Wheels de Mexico, S.A. de C.V., offset
by earnings related to Hayes investment in Hayes Wheels de Venezuela, C.A. Due
to the ongoing condition of the Mexican economy, management determined that
Hayes' investment in Mexico had become impaired resulting in a writedown of the
investment amount.

Other income increased by $3.0 million for fiscal 1996 versus fiscal 1995.
This increase is due to the recognition of a gain on the sale of Hayes' 7.0%
equity investment in Central Manufacturing Company located in Kentucky, sale of
molds and low pressure machines in Hayes' European operations and effects of
currency exchange on transactions.

Nonrecurring charges of $115.4 million consist of a one-time charge for the
closing of Hayes' Romulus, Michigan facility of $109.0 million, elimination of
$2.9 million of deferred costs resulting from a previous patent infringement
suit with Motor Wheel and $3.5 million of stock compensation recorded in
conjunction with the payout of the management stock option plan. The Romulus
plant closing consists of three main areas: (i) $63 million related to the
writedown of assets to their estimated realizable value based on the decline in
the steel wheel market since 1989 and the Motor Wheel Transactions. This reserve
reflects the writedown of excess land, buildings and equipment to fair value, as
well as the writedown of certain tooling and goodwill; (ii) $25 million for
estimated employee costs associated with pension and postretirement benefits. As
a result of the current contract related to the closing, additional employees
qualify for retirement benefits necessitating additional pension and retiree
medical liabilities; and (iii) $21 million for estimated termination benefits,
costs to shutdown the facility and other miscellaneous costs.

Interest expense increased to $48.5 million for fiscal 1996, an increase of
$33.5 million from fiscal 1995. This change was primarily caused by increased
debt as a result of the Motor Wheel Transactions and higher bank fees and
interest rates associated with this new debt.

The extraordinary loss for bond defeasance represents the redemption
premium and unamortized debt issue costs related to the 9 1/4% Senior Notes due
2002, of which $98.5 million principal amount was retired as part of Hayes'
recapitalization.

Fiscal 1995 Compared to Fiscal 1994

Hayes' net sales for fiscal 1995 increased by $73.5 million or 13.7% as
compared with fiscal 1994. This increase was due to significant increased unit
volume in Europe, higher selling prices resulting from the pass through of
increased aluminum and steel costs and a shift in Hayes' steel wheel sales mix
toward more highly styled full-face wheels.

Hayes' gross profit for fiscal 1995 increased to $97.7 million or 16.0% of
net sales, compared with $96.2 million or 17.9% of net sales for the same period
in 1994. The decrease in margin percentage was attributable to: (i) higher
selling prices, while maintaining the same profit level, resulting from the pass
through of increased aluminum and steel costs; (ii) plant capacity additions
resulting in higher support costs that were not fully absorbed due to softer
customer demand; (iii) customer delays of new product launches; and (iv) the
impact of the strike at Hayes' Howell, Michigan facility.

Marketing, general and administrative expenses increased $1.1 million for
fiscal 1995 as compared to fiscal 1994. However these costs decreased from 5.3%
of net sales for fiscal 1994 to 4.9% of net sales for the fiscal 1995 period.

During the fourth quarter of fiscal 1995, Hayes recognized non-recurring
charges of $3.6 million. These charges include a $1.4 million provision
associated with the restructuring of the North American Aluminum Wheel group and
$2.2 million of charges associated with the withdrawn Varity Corporation
("Varity") proposal to purchase Hayes' outstanding publicly held shares.

Interest expense increased to $15.0 million for fiscal 1995, an increase of
$1.6 million over the same period of 1994. This change was due primarily to: (i)
higher short term borrowing rates in the U.S.; (ii) an

33
35

increase in borrowing levels to support working capital needs; and (iii) higher
bank fees associated with Hayes' U.S. bank facility which was increased in March
1995.

CAPITAL RESOURCES AND LIQUIDITY

The Company is party to an amended credit agreement dated June 30, 1997
(the "Amended Credit Agreement") with Canadian Imperial Bank of Commerce
("CIBC") and Merrill Lynch Capital Corporation ("Merrill Capital"), as managing
agents. Pursuant to the Amended Credit Agreement, after giving effect to the
Lemmerz Transactions, among other things, a syndicate of lenders have agreed to
lend to the Company up to $320.5 million in the form of a senior secured term
loan facility, such aggregate amount being allocated among (i) a Tranche A-1
Term Loan facility in an aggregate principal amount of up to $103.0 million,
(ii) a Tranche A-2 term Loan Facility in an aggregate principal amount of up to
$100 million, (iii) a Tranche B Term Loan facility in an aggregate principal
amount of up to $64.9 million and (iv) a Tranche C Term Loan facility in an
aggregate principal amount of up to $52.6 million, and up to $270 million in the
form of a senior secured revolving credit facility. Such term loan facilities
and revolving facility are guaranteed by the Company and all of its existing and
future material domestic subsidiaries. Such term loan facilities and revolving
facility are secured by a first priority lien in substantially all of the
properties and assets of the Company and its material domestic subsidiaries, now
owned or acquired later, including a pledge of all of the shares of certain of
the Company's existing and future material domestic subsidiaries and 65% of the
shares of certain of the Company's existing and future foreign subsidiaries. As
of June 30, 1997, there was $419.3 million outstanding under the term loan
facilities and $227.8 million available under the revolving facility.

Hayes' operations provided $71.2 million in cash during fiscal 1996, an
increase of $26.3 million over the same period of fiscal 1995. This increase is
due to improved results of operations, excluding the effect of non-cash items,
and improved management of working capital. Hayes used $4.5 million in cash for
operating activities during the first quarter of fiscal 1997, an increase of
$10.0 million from the same period in fiscal 1996. This increased use of cash
was caused by lower net income attributable to increased interest expense and an
increased use of working capital due to additional facilities obtained with the
acquisition of Motor Wheel.

Capital expenditures for fiscal 1996 amounted to $71.4 million and $16.7
million for the quarter ended April 30, 1997. These expenditures were primarily
for the acquisition of additional machinery and equipment to increase production
capacity at Hayes' North American and European facilities to meet future
customer requirements for fabricated aluminum and FFC(TM) wheels.

The Company estimates that for fiscal 1997, capital expenditures will be
approximately $114.0 million, relating principally to new vehicle platforms,
cost reduction programs and maintenance.

In connection with the Motor Wheel Transactions, Hayes issued and sold the
11% Notes in a public offering. The 11% Notes are general unsecured obligations
of Hayes, subordinated in right of payment to all existing and future senior
indebtedness of Hayes, and are guaranteed by certain of Hayes' domestic
subsidiaries. Hayes also retired $98.5 million principal amount of its 9 1/4%
Senior Notes due 2002 and Motor Wheel redeemed all of its 11 1/2% Senior Notes
due 2000 ($125 million principal amount) and repaid and terminated its revolving
credit facility.

In connection with the Lemmerz Transactions, Hayes issued and sold the
9 1/8% Notes in two offerings under Rule 144A of the Securities Act which closed
June 30, 1997 ($250 million aggregate principal amount which was used to finance
the Lemmerz Acquisition and refinance certain indebtedness under the Amended
Credit Agreement) and July 22, 1997 ($150 million aggregate principal amount
which was used to refinance certain indebtedness under the Amended Credit
Agreement). The 9 1/8% Notes are general unsecured obligations of the Company
ranking pari passu with the 11% Notes and are guaranteed by certain of the same
domestic subsidiaries of the Company as guaranteed the 11% Notes. In connection
with the Lemmerz Transactions, the Company also retired $200.0 million principal
amount of existing term debt under the Amended Credit Agreement and retired
$55.0 million of outstanding obligations of Lemmerz.

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36

At April 30, 1997, 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 material compliance with these covenants
at least through the period ending January 31, 1998.

The Company does not believe that sales of its products are materially
affected by inflation, although there can be no assurance that such an effect
will not occur in the future. In accordance with industry practice, the costs or
benefits of fluctuations in aluminum prices are passed through to customers. In
the United States, the Company adjusts the sales prices of its aluminum wheels
every three months, if necessary, to reflect fully any increase or decrease in
the price of aluminum. A general decline in aluminum prices in fiscal 1996 and
higher prices in fiscal 1994 (approximately 70% increase) have been passed
through to the Company's customers. As a result, the Company's net sales of
aluminum wheels were adjusted, although gross profit per wheel was not
materially affected. Prices remained relatively stable during fiscal 1995. From
time to time, the Company enters into futures contracts or purchase commitments
solely to hedge against possible aluminum price changes that may occur between
the dates of aluminum wheel price adjustments. Pricing and purchasing practices
are similar in Europe, but opportunities to recover increased material costs
from customers are more limited than in the United States. These arrangements
typically relate on average up to 50% of the Company's production needs for the
next three to six months.

The value of the Company's consolidated assets and liabilities located
outside the United States (which are translated at period end exchange rates)
and income and expenses (which are translated using average rates prevailing
during the period) have been affected by the translation values, particularly
those of the Italian lira, Spanish peseta, German mark and Belgian franc. Such
translation adjustments are reported as a separate component of stockholders'
equity. While foreign exchange rate fluctuations have historically not had a
significant impact on the Company's reported results of operations, the recent
devaluations of the Italian lira, Spanish peseta and German mark may result in
lower translated values. However, due to the self-sustaining nature of these
businesses (which maintain their own credit facilities, enter into borrowings
and swap agreements and incur costs in their respective local currencies), the
financial effect of these devaluations is expected to be minimal.

The Company's net sales are continually affected by pressure from its major
customers to reduce prices. The Company's emphasis on reduction of production
costs, increased productivity and improvement of production facilities may
enable the Company to respond to this pressure.

The Company's liquidity needs will arise primarily from principal and
interest payments under the outstanding indebtedness, and from the funding of
its capital expenditures. Principal and interest payments under the Amended
Credit Agreement and interest payments on the 11% Notes and the 9 1/8% Notes
will represent significant liquidity requirements for the Company. It is
expected that with respect to the $320.5 million of indebtedness outstanding
under Term Loan Facilities following the Lemmerz Transactions, the Company will
be required to make scheduled principal payments of approximately $9.1 million
in 1998, $18.0 million in 1999, $21.6 million in 2000, $22.8 million in 2001 and
an aggregate of $249.0 million thereafter. The Revolving Credit Facility will
mature in July 2003. The loans under the Amended Credit Agreement bear interest
at floating rates based upon the interest rate option elected by the Company. In
addition, the Company will have scheduled principal payments under other term
loans of approximately $11 million per year for the year 1997 through 2000 and
approximately $12 million in the aggregate thereafter.

The Company believes that cash generated from operations, together with
amounts available under the Revolving Credit Facility and any other available
financing sources, will be adequate to permit the Company to meet its debt
service obligations, capital expenditure program requirements, ongoing operating
costs and working capital needs, although no assurance can be given in this
regard. The Company's future operating performance and ability to service or
refinance the 11% Notes and the 9 1/8% Notes and to repay, extend or refinance
the Amended Credit Agreement will be subject to future economic conditions and
to financial, business and other factors, many of which are beyond the Company's
control. See "Risk Factors."

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BUSINESS

GENERAL

The Company is the world's largest manufacturer of automotive wheels,
supplying approximately 30% and 23% of the automotive wheels in North America
and Europe, respectively, and also is the largest global supplier of wheels to
OEMs of passenger cars, light trucks and commercial highway vehicles. The
Company's principal customers for wheel and brake products consist of every
major OEM in North America, Europe and Japan, including General Motors, Ford,
Chrysler (the three of which comprised approximately 57% of the Company's pro
forma combined 1996 net sales), BMW, Renault, Fiat, Volkswagen, Porsche,
Mercedes-Benz, Audi, Volvo, Citroen, Toyota, Mazda, Nissan, Honda, Mitsubishi,
Suzuki and Isuzu. The Company also has over 300 commercial highway vehicle
customers in North America and Europe, including Trailmobile, Dana/Mack,
Mercedes-Benz, Iveco, Strick, Great Dane Trailers, Freightliner, PACCAR,
Volvo/GM, Renault and Western Star. The Company also produces a variety of
non-wheel cast aluminum products for the automotive, heating equipment and
construction industries. Sales of automotive wheel and brake products comprised
approximately 76% of the Company's pro forma combined net sales in fiscal 1996
(69% wheels and 7% brake components), with the remaining 24% comprised of
commercial highway wheel and brake products (18%) and non-wheel aluminum
castings (6%).

The Company is the #1 or #2 independent manufacturer of its primary
products in the markets in which it competes. The following table sets forth the
Company's estimated pro forma combined market position in North America and
Europe in 1996:

MARKET
POSITION
--------

The Company considers its operations to be operating in two geographic
areas (North America and Europe). The financial information required by
geographic area for the three years ended January 31, 1997, 1996 and 1995 is
included in note 14 of the Hayes Consolidated Financial Statements and for the
years ended December 31, 1996 and 1995 is included in note 14 of the Lemmerz
Consolidated Financial Statements, included elsewhere in this Prospectus.

A significant trend toward the use of lighter, more highly-styled wheels
for passenger cars and light trucks has increased the demand for and the use of
aluminum wheels. Aluminum wheel growth is primarily attributable to: (i) the
weight advantage of aluminum wheels, which helps OEMs meet government-imposed
fuel economy standards and (ii) the aesthetics of styled cast aluminum wheels.
Aluminum wheel penetration (new vehicle installations) in North America has
increased from approximately 3% in 1980 to approximately 44% in 1996. The
Company estimates that such penetration will reach approximately 55% by 2000 due
primarily to new aluminum wheel product innovations, including fabricated
aluminum wheels and FFC(TM)

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aluminum wheels. Aluminum wheel penetration in Europe in 1996 was approximately
21% and continues to display a similar growth pattern as that experienced in
North America. The Company is well-positioned to continue to increase sales of
its aluminum wheels given the new, but rapidly growing, fabricated aluminum
wheel and FFC(TM) wheel designs where the Company is the only significant
manufacturer.

Raw materials and component parts used in the Company's manufacturing
operations are those commonly used in such operations and adequate supplies are
available. The Company is generally not dependent on long-term supply contracts
and has available to it alternate sources for its raw materials and component
parts.

The Company is dedicated to the continued development of new and improved
wheels and brake components and related products either through its own
engineering efforts or joint ventures with other parties. These new designs
include full-faced styled steel wheels, light-weight steel wheels, light-weight
fabricated aluminum wheels, FFC(TM) wheels, clad-covered wheels and
Centrifuse(R) brake drums. The Company's North American Wheel and Brake
Engineering, Design, and Advanced Research and Development Groups are located in
Romulus, Michigan. The Company also has significant design, engineering,
research and development capabilities in Europe at its Konigswinter, Germany;
Hoboken, Belgium; and Dello, Italy facilities. The Company believes that it is
the world leader in advanced research for wheel and brake technology. The
Company has also developed a number of innovative non-wheel cast aluminum
products for passenger cars, heavy trucks, heating equipment and the machinery
and construction industries.

Supported by computer-aided design and manufacturing, as well as
finite-element analysis tools, the Company investigates specific wheel designs
for lighter-weight wheels that help reduce overall vehicle weight and provide
more attractive styling variations. To ensure that new, lighter-weight products
are sufficiently durable to meet vehicle requirements, the Company performs
fatigue tests that put prototype wheels through the equivalent of thousands of
miles of road use before they reach the manufacturing stage. To ensure longevity
of the wheels, salt-spray and other environmental tests are conducted on coated
wheels. During fiscal 1994, fiscal 1995 and fiscal 1996, the Company spent
approximately $12.1 million, $13.6 million and $15.6 million on a pro forma
basis, respectively, on engineering and product development.

The Company owns numerous patents and trademarks and has patent licenses
from others relating to its products and manufacturing methods. The Company also
grants patent and trademark licenses to others throughout the world and receives
royalties under most of these licenses. While the Company does not consider any
particular patent or group of patents to be essential to its business as a
whole, it considers its patents to be significant to the conduct of its business
in certain product areas. In addition, the Company relies on proprietary data
and processes, including trade secrets and know-how, and depends, to some
extent, on such information remaining confidential. The Company also grants
patent and trademark licenses to others throughout the world and receives
royalties under most of these licenses. The "Hayes" and "Lemmerz" names are
registered in countries in North and South America, Europe, Asia and Africa.

Hayes' business originated with Hayes Wheel, founded in 1908 by Clarence
Hayes, and K.H. Wheel Company, founded in 1909 by John Kelsey and John Herbert,
which produced wooden-spoked wheels for automobiles such as Henry Ford's Model
T. These companies merged in 1927 to form Kelsey-Hayes Wheel Corporation, which
was reorganized in 1933 into Kelsey-Hayes Wheel Company. In 1992, the non-wheel
businesses and assets of Hayes, particularly its automotive brake systems
business and assets, were transferred to, and certain liabilities related
thereto were assumed by a wholly owned subsidiary of Hayes, Kelsey-Hayes Company
("Kelsey-Hayes"), the capital stock of which was then transferred by Hayes to
its sole stockholder as an extraordinary dividend and Hayes consummated an
initial public offering of its common stock. On July 2, 1996, Hayes consummated
the Motor Wheel Transactions pursuant to which: (i) Motor Wheel became a wholly
owned subsidiary of Hayes; (ii) Hayes' common stock was recapitalized with each
share of common stock then outstanding being exchanged for 1/10th share of
Common Stock and $28.80 in cash (the "Recapitalization"); and (iii) JLL, TSG and
certain other stockholders of the Company acquired ownership of approximately
76.6% of the Common Stock. Lemmerz was founded in 1919 at its current site in
Konigswinter, Germany and was the leading full-time wheel supplier in Europe. On
June 30, 1997, Hayes

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acquired Lemmerz for $200 million in cash and five million shares of Series A
Preferred Stock, which, upon receipt of stockholder approval, will automatically
convert into five million shares of Common Stock.

THE INDUSTRY

Wheels for passenger cars and light trucks are generally made of steel or
aluminum, which offer OEMs a range of design options for the vehicles. Steel
wheels, which are heavier than aluminum wheels, are generally low-cost, high
volume production items that consist of two separate pieces (a rim and a center)
welded together. The Company also manufactures more expensive stylized
full-faced steel wheels, with a clear, color or chrome finish. "Full-faced"
refers to a design approach in which the styling effect is obtained by forming
the entire face of the wheel into a one-piece styled design that is then welded
onto a partial rim assembly to form a complete wheel. Aluminum wheels are
generally lighter in weight, more readily stylized and more expensive than steel
wheels, and can be single-piece cast aluminum wheels, fabricated aluminum wheels
or FFC(TM) wheels, which are made from two separate pieces (a fabricated
aluminum rim and a cast aluminum center) welded together. The Company's
fabricated aluminum wheels are similar in design to fabricated steel wheels.
Though not as highly styled as cast aluminum wheels, they are lighter in weight
than both fabricated steel and one-piece cast aluminum wheels.

Based on published vehicle production statistics, the Company estimates
that in 1996 approximately 24.5 million one-piece cast aluminum automotive
wheels where manufactured in North America. The Company estimates that it sold
approximately 22% of the aluminum wheels manufactured in North America in 1996.
In Western Europe, the Company estimates that approximately 10.2 million cast
aluminum wheels were manufactured in 1996, of which approximately 25% were sold
by the Company.

The Company estimates that in 1996 approximately 45 million steel passenger
car and light truck wheels, including 14 million steel wheels manufactured by
the OEMs for their own use, were manufactured in North America. During 1996, the
Company believes that it sold approximately 51% of the independently
manufactured steel wheels and approximately 35% of all steel wheels manufactured
in North America. In Western Europe, the Company estimates that it sold
approximately 22% of the automative steel wheels manufactured in 1996.

General Motors, Ford and Chrysler, as well as Japanese OEMs and European
OEMs, continue to outsource component manufacturing. Wheel manufacturing is not
strategic to these companies and outsourcing has increased in response to
competitive pressures on OEMs to improve quality and reduce capital outlays,
production costs, overhead and inventory levels. The Company believes that it is
well positioned to benefit from any future outsourcing opportunities.

OEMs typically specify the features of the wheel, whether steel or
aluminum, which will be used for a particular model either as standard or
optional equipment. Among the features specified by OEMs are weight, styling and
pricing requirements. The OEM will ordinarily designate one supplier of a
particular wheel for a vehicle model, although a particular vehicle model may
utilize a number of different wheels produced by one or more suppliers. The
process of being designated as a supplier of a particular wheel can take more
than two years from the time of initial design to first delivery. A potential
supplier must first develop a wheel design based on styling and engineering
specifications provided by the OEM. After a comprehensive engineering and
feasibility review, the OEM then designates a specific supplier for a particular
wheel that meets the OEMs' cost, quality, styling and engineering specifications
for particular vehicle models. The duration of the designation is dependent upon
the life cycle of the vehicle model. Suppliers that design, engineer,
manufacture and conduct quality control testing are generally referred to as
Tier I suppliers ("Tier I Suppliers"). The Company believes that early
involvement in the design and engineering of new wheel and brake products as a
Tier I Supplier affords it a competitive advantage in securing new business and
provides customers a significant cost reduction through coordination of design,
development and manufacturing processes. As a result of the lengthy approval
process, combined with the continued designation of a particular supplier for
the life of the vehicle model, increases or decreases in sales to a particular
OEM and corresponding changes in market share normally occur over an extended
period of time.

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In fitting with its status as a full-line global wheel supplier, the
Company continues to offer its customers a wide range of products including,
among others, a base steel wheel for low cost, a stylized and chromed steel
wheel for a bright appearance, a light-weight steel wheel, which is 10-15%
lighter than traditional steel wheels, a cast aluminum wheel for high styling, a
fabricated aluminum wheel for low weight, a clad-covered wheel for a bright
appearance at a significantly lower cost than a fully-chromed wheel, a truck
wheel with an outside valve hole for use on trucks with disc brakes and finally,
an FFC(TM) two-piece aluminum wheel, which provides both high styling and
lighter weight. The Company believes this breadth of product offering and
manufacturing capability enhances its ability to support a full vehicle platform
with any wheel designed by its customers.

North American OEMs generally manufacture passenger cars and light trucks
with drum-brakes on the rear axle and disc brakes on the front axle, although
disc brakes are increasingly being used on rear axles for high performance
vehicles and vehicles incorporating anti-lock brake systems. OEMs offer
anti-lock brake systems as optional equipment on certain vehicle models and as
standard equipment on higher priced vehicle models. The Company manufactures
automotive brake components consisting primarily of composite metal drums, full
cast drums and cast iron hubs for drum-type brakes and cast iron rotors for disc
brakes. The Company's brake components have been incorporated into anti-lock
brake systems offered by its OEM customers. In addition to the OEM market for
automotive brake components, a growing service market exists for brake rotors
due to the high wear-out rate which is experienced with this product. As a
result, the automotive industry is facing a demand for brake rotors in excess of
manufacturing capacity.

In the commercial highway vehicle market, the Company sells wheels, rims
and brake products to OEMs (including replacement parts sold through original
equipment servicers) and aftermarket distributors. Commercial highway wheels,
rims, brake components, and wheel hub and brake drum assemblies are installed
principally on trucks, trailers, buses and forklift trucks. In the commercial
highway market, sales to OEMs are attributable to either having the product
designated as standard equipment by the OEM or obtaining fleet specifications
where purchasers of commercial highway vehicles specify the component parts to
be utilized on vehicles manufactured for their fleets.

In an effort to increase the quality of the vehicles they produce, OEMs
continue to increase the quality demands on their component suppliers. Each OEM
has a structured program and rating system for quality and grants awards to
suppliers. Examples include Ford's Q-l, General Motors' Targets for Excellence
and Chrysler's QE and Pentastar. Once a supplier receives a quality award, the
supplier retains the award level, subject to continuing favorable review by the
OEM. The Company endeavors to meet and exceed the quality demands of the OEMs.
Most of the Company's manufacturing facilities have received such quality
awards.

The North American automotive industry has recently adopted new standards
for quality ratings commonly known as QS 9000 as to which each of the "Big
Three" OEMs will require compliance. The Company's Gainesville, Georgia location
was the first wheel plant in North America to qualify for this rating. Most of
the Company's worldwide facilities have now received QS 9000 and/or ISO 9001
registration in compliance with all of its customers' requirements.

While the Company's business is not seasonal in the traditional sense, July
and December are usually lower volume months because OEMs typically perform
model changeovers during July and assembly plants are closed for a period
shortly before Christmas to after New Year's Day.

The Company competes for sales of its cast aluminum wheels, fabricated
steel wheels, fabricated aluminum wheels and brake components on the basis of
cost, delivery, quality and service. As a large portion of the Company's
business consists of sales to GM, Ford and Chrysler (in the aggregate, 65% of
cast aluminum wheel, 76% of fabricated wheel and substantially all of the brake
component production in North America), the loss of a significant portion of the
Company's sales to any of these OEMs could have a material adverse impact on the
Company. The Company has been doing business with each of these OEMs for many
years, and sales are composed of a number of different products and of different
models or types of the same products and are made to individual divisions of
such OEMs.

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CAST ALUMINUM WHEELS

The Company's cast aluminum wheels are produced in North America and Europe
and are sold in North America, Europe and Japan.

NORTH AMERICA

At four manufacturing facilities in the United States, the Company designs,
manufactures and distributes a full-line of cast aluminum wheels to OEMs in the
passenger car and light truck segments of the automotive industry. In fiscal
1996, the Company supplied approximately 22% of the cast aluminum wheels
purchased in North America. With the exception of a limited number of cast
aluminum wheels manufactured by Ford in New Zealand and aluminum wheels
manufactured by Toyota and Volkswagen, there is no significant OEM manufacturing
of cast aluminum wheels. In 1996, the Company believes approximately 44% of
passenger cars and light trucks in North America used cast aluminum wheels, up
from approximately 42% in 1995.

Customers. In fiscal 1996, approximately 89% of the Company's total cast
aluminum wheel production was sold to General Motors, Ford and Chrysler for use
on vehicles produced in North America. The Company exported approximately 4% of
its cast aluminum wheels to Nissan and Isuzu in Japan and sold approximately 7%
to Japanese transplants in the United States. The Company owns 100% of Hayes
Wheels Japan Limited, a Japanese corporation that provides sales, engineering
and service support for the Company in the Japanese wheel market.

Supplier relationships with the OEMs are critical. The Company believes
that it has excellent relationships with its customers and is continually
working to strengthen these relationships.

Manufacturing. In manufacturing cast aluminum wheels, the Company uses both
gravity casting and low pressure casting. The Company has emphasized cost
control and product quality in its manufacturing processes and facilities.

The Company manufactures one-piece and two-piece wheels. One-piece wheels
comprise the bulk of the Company's current sales. The Company introduced its
innovative Street Smart Modular(R) two-piece wheel in 1987, and more recently,
the FFC(TM) two-piece wheel. These two-piece designs offer OEMs even greater
weight savings without sacrificing styling.

To enhance wheel design and reduce development lead-time, the Company
utilizes computer-aided design, has direct computer links to customers and
provides OEMs with engineering and manufacturing support. The Company utilizes a
computer-aided manufacturing system with which it gathers key data to control
cast aluminum wheel manufacturing to continually improve product quality and
cost.

The Company also utilizes other manufacturing techniques to reduce
manufacturing process time and improve product quality. An example is
Lok-Alloy(R), the Company's patented infra-red heat treating process that
changes the manufacturing of cast aluminum wheels from a traditional batch
process to a modern synchronous process. Lok-Alloy(R) reduces work-in-process
inventory and material handling, minimizes labor costs and improves quality.
Lok-Alloy(R) also reduces the total time to produce a wheel from three to five
days to three to five hours. The Company has implemented this process at its
Gainesville, Georgia facility.

Competition. The Company believes that its capabilities as a cost-effective
supplier of cast aluminum wheels meeting OEM requirements enable it to compete
effectively with other aluminum wheel manufacturers. The Company's primary
competitor in the North American cast aluminum wheel market is Superior
Industries International, Inc., which the Company estimates had approximately a
38% share of the North American market in 1996, as compared with the Company's
share of approximately 22%. Other aluminum wheel manufacturers that account for
the remaining market share include Wheeltek, Inc., a subsidiary of Amcast
Industrial Corp., American Racing Equipment, Inc., Alcoa, Reynolds Metals Co.,
Aluminum Wheel Technology, Inc. ("Alumitech"), a 50% owned joint venture of the
Company, and several foreign suppliers operating in the United States.

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EUROPE

At its four manufacturing facilities in Europe, the Company designs,
manufactures and distributes a full-line of cast aluminum wheels to OEMs in the
passenger car and light truck segments of the European automotive industry.

Customers. The Company estimates that its share of the European market for
cast aluminum wheels was approximately 25% for fiscal 1996. Substantially all of
its European cast aluminum wheels were sold to Mercedes-Benz, BMW, Opel, Fiat,
Renault, Nissan, Volvo and Ford of Europe in that year.

Manufacturing. Engineering, research and development for the Company's
European cast aluminum wheel operations is currently performed at the Company's
Dello, Italy and Hoboken, Belgium facilities.

The Company maintains substantial capability in Europe to style and design
cast aluminum wheels for sale to particular OEMs. The Company offers its OEM
customers various Company-generated styles and sizes each year. The Company has
also established direct computer links with several customer locations in Europe
to streamline the design and approval process and reduce product development
lead-time. In Europe, the Company believes that its interaction with its
customers through computer-aided design offers a competitive advantage. In
addition, the Company is actively introducing its new weight and cost saving
technologies to the European car makers. Pressure for better fuel consumption
and lower vehicle weight are driving European car producers to seek new products
such as fabricated aluminum wheels and FFC(TM) wheels.

In 1988, the Company acquired its Campiglione, Italy aluminum wheel
operation from Fiat. The Company continues to lease the plant (excluding
equipment) from Fiat on a year-to-year basis.

Competition. The cast aluminum wheel market in Europe remains more
fragmented than in North America, with numerous producers possessing varying
levels of financial resources and market positions. The current installation
rate of cast aluminum wheels in Europe is significantly lower than in North
America. As a result of anticipated consolidations of small local manufacturers
across the European community and the expected increasing demand for cast
aluminum wheels among consumers and OEMs in Europe, the Company believes that,
over the next several years, the number of cast aluminum wheel manufacturers in
Europe is likely to decline and the remaining producers will increase their
market shares. As a result of its position in Europe and its advanced
engineering and technology, the Company believes that it is well positioned to
meet these changes in the European market.

The Company's primary competitors in the European cast aluminum wheel
market for passenger cars are Ronal AG, Speedline S.p.A., Alloy Wheel
International Ltd. and Mannesmann Kronprinz. These competitors have market
shares ranging from 6% to 13% each. Management estimates that the Company had a
market share of 25% in 1996.

FABRICATED WHEELS

The Company's fabricated steel and fabricated aluminum wheels are produced
and sold in North America and Europe.

NORTH AMERICA

At its manufacturing facilities in Sedalia, Missouri; Bowling Green,
Kentucky; and Romulus, Michigan, the Company designs, manufactures and
distributes a full-line of fabricated steel and fabricated aluminum wheels for
sale to OEMs in the passenger car and light truck segments of the automotive
industry. Having commenced production in the early 1900s, the Company has
manufactured more steel wheels in North America than any other manufacturer.

Revenues and unit sales in the Fabricated Wheel Group in North America
increased in fiscal 1996 from prior year levels primarily due to the
introduction of new products, increased market share and additional sales
contributed by Motor Wheel. The Company's new products, including fabricated
aluminum wheels, chromed, full-face steel wheels, and clad-covered wheels, have
been well received by its customers. The Company believes that new contracts
obtained in 1995 and 1996 relating to these new products have positioned this

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group for significant future growth. The Company has signed contracts for the
sale of fabricated aluminum wheels that in total are in excess of $150 million
by 1998. Currently the Company produces fabricated aluminum wheels for both Ford
and General Motors, including a full-faced, styled version for the Ford F150
truck.

The Company believes that the North American steel wheel market will remain
significant because OEMs will continue to specify less costly steel wheels for
more moderately priced passenger cars and light trucks and for most spare
wheels. The rate of installation of steel or aluminum wheels for any model year
may be affected by OEM promotion programs. The Company continues to explore
other avenues of growth for steel wheels, including further penetration into
that portion of the market currently served by OEM wheel manufacturers.

Customers. The Company estimates that its share of the North American
market for steel wheels for fiscal 1996 was approximately 35% (including wheels
manufactured by OEMs). Approximately 96% of the Company's steel wheels were sold
to General Motors, Ford and Chrysler in fiscal 1996.

In 1995, the Company and General Motors entered into a contract for the
supply of steel wheels which will initially extend through the 2000 model year.
Under certain circumstances, this contract may be extended or terminated. The
Company also has a long term supply contract with Ford.

Manufacturing. The Company's fabricated steel and fabricated aluminum
wheels are manufactured by a continuous in-line process, thus enhancing quality
standardization and reducing work-in-process inventory. Although tooling is
relatively expensive for steel wheels, a particular style is likely to be run
for a customer in high volume over a long period, lowering the unit production
cost.

As a result of the Motor Wheel Transactions, the Company had four
fabricated steel wheel manufacturing facilities. In 1996, the Company decided to
consolidate its fabricated steel wheel production into two facilities due to the
reduction in demand for steel wheels resulting from the growing demand for
aluminum wheels in North America. Production will continue in the Bowling Green,
Kentucky and Sedalia, Missouri facilities. The former Motor Wheel facility in
Mendota, Illinois was closed in the fourth quarter of fiscal 1996 and on January
9, 1997, the Company announced the closing of its Romulus, Michigan facility.
The Company expects that the fabricated steel and fabricated aluminum wheel
capacity associated with its Romulus facility will be shifted to the Sedalia,
Missouri and Bowling Green, Kentucky facilities by the end of 1997. The Company
believes that consolidating production from four facilities into two will allow
the Company to optimize capacity utilization and thereby reduce costs.

Competition. The Company's primary non-OEM competitors in the North
American steel wheel market for passenger cars and light trucks are
Rockwell-Fumagalli (a Brazilian subsidiary of Rockwell International), Accuride,
Topy and Central Manufacturing Company. The Company estimates that the
competitors held a combined share of approximately 34% of the steel wheel market
in 1996 while the OEMs together accounted for 31% of the market in 1996. The
Company believes that it is well-positioned to maintain its market share of
steel wheels at General Motors, Ford and Chrysler against non-OEM competition.

The Company remains vulnerable to increased sourcing of steel wheels by
General Motors and Ford to their respective wheel operations, which may win
contracts based on factors other than quality, price and efficiency. General
Motors and Ford supplied approximately 45% and 65%, respectively, of their steel
wheel needs in 1995 and 1996. The Company believes, however, that, with OEMs
becoming increasingly sensitive to the cost of their products, and with new
products such as styled steel and fabricated aluminum wheels, it will be able to
capture market share from the OEMs. Neither General Motors nor Ford has
production capability for stylized steel wheels or fabricated aluminum wheels.
The Company continues to work with both General Motors and Ford on proposals to
outsource their current in-house production of steel wheels.

EUROPE

As a result of the Lemmerz Acquisition, the Company has three manufacturing
facilities in Konigswinter, Germany; Manresa, Spain; and Manisa, Turkey, where
it designs, manufactures and distributes a full-line of fabricated steel wheels
for sale to both OEMs and the aftermarket of the automotive industry throughout

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Europe. The Company's operations in Turkey are operated as a joint venture, with
the Company owning 68% and Inci Holding A.S. owning the remaining 32%. This
joint venture was established to provide the growing Turkish automobile industry
with quality steel wheels.

In addition to the operations described above, the Company currently owns
58% of Autokola, a joint venture in Eastern Europe which was established in
October 1993 by the Company and Nova Hut a.s. ("Nova Hut"). Autokola
manufactures fabricated steel and fabricated aluminum wheels in Ostrava, Czech
Republic. The Company and Nova Hut have granted Autokola the exclusive right to
sell its products in the Czech Republic, the Slovak Republic, Poland, Romania,
Croatia, Serbia and the other republics of territories formerly comprising
Yugoslavia, Albania, Bulgaria, the Soviet Union and Hungary. The Company has
entered into a marketing assistance agreement for sales outside the exclusive
territories and a technical assistance agreement with Autokola, under which it
has licensed its wheel patents and other technical information to Autokola and
has agreed to furnish Autokola with technical assistance. The Company will
receive fees and commissions under the former agreement and license fees and
royalties under the latter. Autokola currently has capacity to produce 4.5
million fabricated steel and fabricated aluminum wheels annually, and since
fiscal 1996, Autokola has been shipping wheels to GM-Opel in Germany.

Customers. On a pro forma basis, the Company supplied approximately 22% of
the automotive steel wheels manufactured in Western Europe in 1996. The
Company's principal customers include BMW, Opel, Mercedes-Benz, Ford, Nissan,
Volkswagen, PSA and Volvo. In Eastern Europe, Autokola's principal customer is
Skoda, the national automobile manufacturer of the Czech Republic, for which it
is the sole supplier of wheels.

Manufacturing. The Company's steel wheel manufacturing facilities in
Germany, Spain, Turkey and the Czech Republic have a combined production
capacity of 22 million steel wheels for passenger cars and light trucks. The
Konigswinter, Germany facility has state-of-the-art, automated production
equipment and extensive research and development facilities. The Company's
lightweight steel wheel, which is 10%-15% lighter than a traditional steel
wheel, was developed and is manufactured at the Konigswinter facility. The
Company's Manresa, Spain facility has developed a specialty niche in wheels for
light trucks, recreational vehicles and vans. The Manisa, Turkey facility
produces wheels for the Turkish market and exports both OEM and aftermarket
wheels to Western Europe. It benefits from lower labor rates and has enough
available manufacturing space to double the plant's manufacturing capacity from
1.5 million to 3.0 million wheels. In addition to these manufacturing
facilities, Autokola completed a new paint facility and installed a new
fabricated aluminum wheel rim and assembly line and a steel wheel rim and
assembly line subsequent to the establishment of the joint venture in 1993. This
equipment is state-of-the-art and was required to meet the volume and quality
demands of Skoda and Autokola's new Western European customers.

Competition. The Company's principal non-OEM competitors for the sale of
passenger car and light truck steel wheels include Michelin (which recently
announced the acquisition of Mannesmann Kronprinz), Dunlop-Topy and Fergat. Ford
and VW together produced approximately 16% of all passenger car and light truck
steel wheels in Europe during 1996. Historically, Autokola has had no
competition as sole supplier to Skoda for steel wheels. However, as Autokola
continues to expand into the Western European market, Autokola is experiencing
increased competition from other Western European companies as well as other
Eastern European companies.

AUTOMOTIVE BRAKE COMPONENTS

The Company manufactures automotive brake components consisting primarily
of composite metal drums and full cast drums for drum-type brakes and cast iron
rotors for disc brakes. Sales of automotive brake products accounted for
approximately 7% of the Company's pro forma net sales for fiscal 1996.

Customers. The Company sells substantially all of its automotive brake
components to Chrysler and Ford.

Manufacturing. The Company currently has two manufacturing facilities in
North America which produce brake components. These facilities include Homer,
Michigan and a 75% owned subsidiary in

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Monterey, Mexico. Prior to the Motor Wheel Transactions, Motor Wheel had
announced that as a result of maximizing manufacturing capacity and minimizing
non-competitive costs, the Ypsilanti, Michigan plant would be closed. The plant
was closed during the second quarter of fiscal 1997. Existing production was
transferred to the remaining two facilities.

Competition. The principal non-OEM competitors of the Company for the sale
of automotive brake components include Kelsey-Hayes, Bosch, American Axle and
Racini. The Company believes that Kelsey-Hayes and Bosch supply brake drums and
rotors as well as anti-lock brake systems, while American Axle and Racini are
suppliers of brake rotors and drums. General Motors is also a significant
manufacturer of automotive brake components, installed primarily on General
Motors' vehicles.

COMMERCIAL HIGHWAY PRODUCTS

The Company's commercial highway vehicle wheels and brakes are produced and
sold in North America and Europe.

NORTH AMERICA

The Company manufactures disc wheels and demountable rims for commercial
highway vehicles. The Company also manufactures two-piece take-apart wheels for
certain special applications, the most significant of which is for the High
Mobility Multiple Purpose Wheeled Vehicle (the "Hummer") produced by AM General
Corporation. The Company manufactures brake components for commercial highway
vehicles consisting of Centrifuse(R) drums which can be assembled together with
iron or aluminum hubs and sold as a unit. Unlike conventional cast iron brake
drums, Centrifuse(R) drums are manufactured using a proprietary process to fuse
iron to a steel jacket to combine the advantages of iron and steel to produce a
lighter and stronger brake drum. The Company has achieved a significant market
share for this product which is supplied to OEMs almost exclusively as a result
of fleet specification. Sales of commercial highway products accounted for
approximately 11% of the Company's pro forma net sales for fiscal 1996.

Customers. The Company's largest customers for commercial highway wheels
and rims include Trailmobile, Strick and Great Dane Trailers, while its largest
customers for commercial highway brake components include Freightliner
Corporation, PACCAR and Dana Corporation. Sales to OEM/OES, and warehouse
distributors and others constituted approximately 67% and 33%, respectively, of
the Company's commercial highway net sales for 1996.

Manufacturing. The Company has two manufacturing facilities which produce
components for the commercial highway market. The Akron, Ohio facility produces
wheels and rims and the Berea, Kentucky facility produces brake components.

Competition. The Company competes for sales of commercial highway wheels,
rims and brake components on the basis of cost, delivery, quality and service.
The Company spends a considerable amount of effort obtaining fleet
specifications where purchasers of commercial highway vehicles specify to the
OEMs the components to be used. The principal competitors of the Company for the
sale of commercial highway wheels and rims include Accuride Corporation, Alcoa
and Bosch. The Company believes that Accuride Corporation predominantly supplies
steel wheels, but also supplies aluminum wheels, while Alcoa supplies aluminum
wheels and Bosch supplies steel wheels and brake components. The Company is the
only producer of the Centrifuse(R) drum which does not compete with full cast
iron drums.

EUROPE

As a result of the Lemmerz Acquisition, the Company manufactures steel
truck and trailer wheels for sale to OEMs of commercial highway vehicles in
Europe at its Konigswinter, Germany facility. In addition, the Company produces
wheels for the forklift truck market. Sales of steel wheels for the commercial
highway market in the year ended December 31, 1996 were approximately $85
million. Recently, the Company underlined its leadership in both product and
process technology by launching the first truck wheel with an

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outside valve hole. Management believes there is a growing need for this product
due to the increase in penetration of disc brakes on trucks.

Customers. The Company supplied approximately 25% of the heavy truck steel
wheels sold in Western Europe in 1996. The Company's principal customers for
steel wheels for commercial highway vehicles include Mercedes-Benz, Renault,
Volvo, Leyland/DAF and Western Star.

Manufacturing. At its Konigswinter, Germany facility, the Company produces
a variety of tubeless and tubetype wheels for commercial highway vehicles, as
well as a variety of steel wheels for forklift trucks. The facility's total
annual capacity for all of these products is 1.7 million wheels. Management
believes that the Konigswinter facility has the most technologically advanced
truck wheel manufacturing line in the world.

Competition. The Company's principal competitors for the sale of commercial
highway wheels in Europe include Michelin, Mannesmann Kronprinz and Gianetti.
With the recently announced acquisition of Mannesmann Kronprinz by Michelin,
Michelin will have approximately a 50% share of this market.

OTHER PRODUCTS

The Company also has two non-wheel aluminum casting operations,
collectively called Metaalgieterij Giesen B.V. ("MGG"). MGG is comprised of two
facilities which utilize sand-cast, low pressure and high-pressure aluminum
casting processes. The sand casting process uses specially designed pattern to
create a sand mold into which molten aluminum is poured. Sand casting allows MGG
to produce complicated pieces in small quantities. The complexity and low volume
makes it too costly to manufacture these items using permanent mold casting,
such as is used to produce cast aluminum wheels. MGG manufactures a variety of
products, including heat exchangers used in gas-fired boilers, intake manifolds
and aluminum housings for automotive and heavy truck applications, and a variety
of aluminum products for the machinery and construction industries. This
business had sales of approximately $73 million in 1996. From these facilities
the Company supplies approximately 50% of the cast aluminum heat exchangers for
use in gas-fired boilers for the commercial and residential markets in Europe.
The Company expects this market to nearly double over the next five years.

In addition to non-wheel cast products, the Company manufactures a variety
of precision and specialty tools for use in stamping and other manufacturing
processes at its La Chaux-de-Fonds, Switzerland facility. This business had
sales of approximately $2 million in 1996.

INVESTMENTS

The Company has additional interests, to the extent described below, in the
following businesses located throughout the world:

(i) a 49% interest in Hayes Wheels de Venezuela, C.A., a steel wheel
manufacturer in Venezuela;

(ii) a 40% interest in Hayes Wheels de Mexico, S.A. de C.V., an aluminum
and steel wheel manufacturer in Mexico;

(iii) a 50% interest in Alumitech, a cast aluminum wheel manufacturer in
Somerset, Kentucky;

(iv) a 29.6% interest in Riviera Tool Company, a manufacturer of stamping
dies sold to domestic automobile manufacturers and their suppliers;

(v) a 49% interest in Hayes Wheels do Brasil, Ltda., a manufacturer of
aluminum wheels in Brazil;

(vi) a 100% interest in Hayes Wheels Japan Limited, a sales, engineering
and service support company in the Japanese wheel market;

(vii) a 49% interest in Continental Lemmerz (Portugal) -- Componente para
Automoveis, Lda., a value-added assembler of passenger car and light
truck wheels and tires in Portugal;

(viii) a 44% interest in Borlem S.A. Empreendimentos Industriais, a steel
and aluminum wheel manufacturer in Brazil;

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(ix) a 25% interest in Reynolds-Lemmerz Industries, a cast aluminum wheel
manufacturer in Canada;

(x) a 25% interest in Kalyani-Lemmerz Ltd., a commercial highway truck
steel wheel manufacturer in India;

(xi) a 25% interest in Jantas Jant Sanayi ve Ticaret A.S., a truck wheel
manufacturer in Turkey; and

(xii) a 25% interest in Siam Lemmerz Co., Ltd., a steel wheel manufacturer
in Thailand.

In addition, the Company has a technical assistance agreement with ATP, a
wheel manufacturer in Thailand, as well as a South African technical assistance
agreement.

ENVIRONMENTAL COMPLIANCE

The Company, like most other manufacturing companies, is subject to and is
required from time to time to take action at its facilities to comply with
federal, state, local and foreign laws and regulations relating to pollution
control and protection of the environment. In this regard, the Company maintains
an ongoing compliance program to anticipate and, if necessary, correct
environmental problems.

As part of its due diligence for the Lemmerz Acquisition, Hayes identified
soil and groundwater contamination at several facilities. Contamination of the
soil and groundwater by solvents, heavy metals, BTEX and TPH had been identified
at the Company's two adjacent Hoboken, Belgium facilities and contamination of
the groundwater by chlorinated hydrocarbons and potential contamination of the
soil and groundwater by other substances has been identified at the
Konigswinter, Germany site. The Company had also identified areas of potential
contamination at its Tegelen, Netherlands and Manresa, Spain facilities. Based
on current regulations and practices in the locations where these facilities are
located, the Company does not expect the cost of remediation to be material if
and when remediation is required. However, if law or requirements in the
locations where these facilities are located are changed to require clean-up of
the contamination of these facilities, the costs could be material to the
Company. A history of odor complaints from residents near the Tegelen,
Netherlands facility has also been identified. The Company intends to implement
measures to remove the cause of the odors at an estimated cost of less than $1.5
million.

Hayes spent approximately $0.6 million for environmental compliance and
cleanup in fiscal 1996. The Company's management believes that its fiscal years
1997 and 1998 expenditures for environmental compliance, including potential
expenditures for compliance with the permitting and other requirements of the
federal Clean Air Act, will not exceed a total of $3 million. Hayes' cleanup
program, commenced in 1990, is scheduled to be completed in fiscal 1999, with
average annual amounts approximating $1.5 million. The Company believes it is in
material compliance with applicable federal, state, local and foreign laws and
regulations relating to pollution control and protection of the environment. See
"-- Legal Proceedings."

EMPLOYEES

At April 30, 1997, approximately 28% of the Company's employees in the
United States were represented by UAW or USW. Collective bargaining agreements
with the UAW or USW affecting these employees expire at various times through
1997 and 1998. As is common in many European jurisdictions, substantially all of
the Company's employees in Europe are covered by country-wide collective
bargaining agreements. In Europe, bargaining agreements are often made on a
local basis. These agreements expire at various times through 1998. Additional
agreements are often made with the facility Works Council on an individual basis
covering miscellaneous topics of local concern. There are no company-wide or
industry-wide bargaining units in the United States. The Company considers its
employee relations to be satisfactory. See "-- Properties" for a listing of
employees by location.

PROPERTIES

The Company operates twelve major manufacturing facilities in North
America, and has its headquarters in Romulus, Michigan. Total North American
manufacturing space exceeds 3.5 million square feet. Within Europe, the Company
operates ten manufacturing facilities with approximately 3.2 million square feet
in the

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aggregate. The Company believes that its plants are adequate and suitable for
the manufacturing of products for the markets in which it sells. Moreover, the
Company believes that it maintains adequate production capacity at its
manufacturing facilities in both North America and Europe to meet current demand
for all of its products. To meet projected demand for fabricated aluminum wheels
and FFC(TM) wheels in North America and Europe, the Company expects to continue
upgrading and expanding its current manufacturing facilities. Most of the
Company's worldwide facilities are either QS 9000 or ISO 9001 registered.

The Company's manufacturing and research facilities are as follows:

OWNED OR
LOCATION EMPLOYEES USE LEASED
- -------- --------- --- --------

Romulus, MI(a)......................... 670 Fabricated Wheels, Headquarters and R&D Owned
Howell, MI............................. 370 Cast Aluminum Wheels Owned
Gainesville, GA........................ 245 Cast Aluminum Wheels Owned
Huntington, IN......................... 425 Cast Aluminum Wheels Owned
La Mirada, CA.......................... 580 Cast Aluminum Wheels Leased
Sedalia, MO............................ 555 Fabricated Wheels Owned
Bowling Green, KY...................... 185 Fabricated Wheels Leased
Ypsilanti, MI(a)....................... 135 Automotive Brake Components Owned
Homer, MI.............................. 190 Automotive Brake Components Owned
Monterey, Mexico....................... 90 Automotive Brake Components Leased
Akron, OH.............................. 155 Commercial Highway Wheels Owned
Berea, KY.............................. 140 Commercial Highway Brake Components Owned
Barcelona, Spain....................... 95 Cast Aluminum Wheels Owned
Dello, Italy........................... 290 Cast Aluminum Wheels and R&D Owned
Campiglione Fenile, Italy.............. 85 Cast Aluminum Wheels Leased
Ostrava, Czech Republic................ 620 Fabricated Wheels Owned
Konigswinter, Germany.................. 1,250 Fabricated Wheels (Automotive and Owned
Commercial Highway) and R&D
Manresa, Spain......................... 450 Fabricated Wheels Owned
Manisa, Turkey......................... 120 Fabricated Wheels Owned
Hoboken, Belgium....................... 800 Cast Aluminum Wheels, Non-Wheel Owned
Castings and R&D
Tegelen, Netherlands................... 400 Non-Wheel Castings and R&D Owned
La Chaux-de-Fonds, Switzerland......... 20 Tooling Owned

- -------------------------
(a) Plants scheduled to close during fiscal 1997.

The Company leases the former Motor Wheel headquarters in Okemos, Michigan
pursuant to a ten-year lease expiring in July 2004. The Company has subleased
these premises for the entire remaining term of its lease pursuant to a sublease
which commenced in May 1997.

LEGAL PROCEEDINGS

In the ordinary course of its business, the Company is a party to
litigation involving its operations and products, which may include allegations
as to safety and design. Except as described below, management believes that the
outcome of this litigation will not have a material adverse effect on the
consolidated operations or financial condition of the Company.

On June 10, 1997, the Company filed a notification with the German Federal
Cartel Office regarding the Lemmerz Acquisition. On July 11, 1997, the Federal
Cartel Office notified the Company that it intended to conduct a more detailed
examination of the Lemmerz Acquisition. In connection therewith, the Federal
Cartel Office has requested from the Company additional information regarding
the Company's markets and sales, and has also requested related information from
certain of the Company's competitors and customers, all of which information is
to be submitted on or before August 15, 1997. Thereafter, the Federal Cartel
Office

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may elect to conduct additional inquiries regarding this matter. In the event
the Federal Cartel Office elects at that time to proceed with this matter, there
can be no assurances that any actions taken or required to be taken by the
Federal Cartel Office will not have a material adverse effect on the Company.

The Company is a party to two lawsuits, Joseph Golden et al. v.
Kelsey-Hayes Company et al. and Richard Helwig et al. v. Kelsey-Hayes Company,
each of which was brought in 1995 in the U.S. District Court for the Eastern
District of Michigan, pursuant to which salaried and union pensioners and their
surviving spouses have alleged that the Company breached its welfare benefit
plans when the Company amended such plans in 1992 and 1994. Although the Company
denies all substantive allegations of the plaintiffs in these lawsuits and is
vigorously defending these cases, in the event that these lawsuits are
determined adversely to the Company, the Company could be required to incur
material costs to maintain the pre-amendment terms of the Company's welfare
benefit plans and to reimburse the plaintiffs in these lawsuits for costs
incurred by them since the date of such amendments.

The Company is a party to a patent infringement action, Lacks Incorporated
v. Hayes Wheels International, Inc., et al. brought in March 1997 in the U.S.
District Court for the Eastern District of Michigan, regarding certain
proprietary processes which it uses and upon which it has patents. The Company
intends to vigorously defend this matter. The Company was served with the
complaint in this lawsuit on April 14, 1997 and has answered the complaint.
However, at this time it is not yet in a position to evaluate the impact, if
any, which this lawsuit may have on the Company's financial condition or
operations.

The Company has received notice of potential environmental liability
arising out of both its wheel and non-wheel businesses at fifteen (15) Superfund
sites (the "Sites") under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"). Of the Sites,
ten (10) Sites were acquired from The Goodyear Tire & Rubber Co. ("Goodyear") in
1986 by MWC Holdings, Inc. ("Holdings"), parent of Motor Wheel prior to the
Motor Wheel Transactions. In connection with such transaction, Goodyear agreed
to retain all liabilities relating to these Sites and to indemnify and hold the
Company, as successor to Holdings, harmless with respect thereto. Goodyear has
acknowledged this responsibility and is presently representing the interests of
the Company, as successor to Holdings, with respect to all matters relating to
these Sites.

As a result of activities which took place at the Company's Howell,
Michigan facility prior to its acquisition by the Company, the State of Michigan
is performing a remedial investigation/feasibility study of PCB contamination at
such facility, and in the adjacent South Branch of the Shiawasee River. Under
the terms of a consent judgment entered into in 1981 by Cast Forge, Inc. ("Cast
Forge") (the previous owner of this Site) and the State of Michigan, any
additional PCB cleanup which may be required is the responsibility of the State
of Michigan, and not of Cast Forge or its successors or assigns (including the
Company). The federal Environmental Protection Agency (the "EPA") has concurred
in the consent judgment. Since the time of the consent judgment, the State of
Michigan has not asserted that Cast Forge or the Company is liable for
remediation at the Site. The Company and other parties have, however, received
information requests from the EPA and the State of Michigan. In addition, at the
time the Company acquired the corporation that owns the Howell facility, the
Company received an indemnity against liability arising from the prior use of
PCBs at the Site from Multifastener Corp. ("Multifastener"), one of the
stockholders of Cast Forge. Although Multifastener has to date honored its
indemnity obligations, no assurance can be given that it will continue to do so.
If the State of Michigan takes the position that it has not retained liability
for the cleanup at this site, and if Multifastener should fail to honor all or
part of its indemnity obligations, the Company could be required to participate
in cleanup efforts mandated by the EPA or the State of Michigan. In such
instance, the Company's expenses with respect to cleanup of this Site
potentially could have a material adverse effect on the consolidated operations
or financial condition of the Company.

The Company has entered into settlements with various government agencies
and the other parties identified by the applicable agency as "potentially
responsible parties" to resolve its liability with respect to the remaining four
Sites.

The Company has also received notice of potential environmental liability
at three state-listed sites (two of which are company-owned properties). Of
these, one was closed through delisting in early 1997. The

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Company is presently working with the appropriate government agencies to resolve
its liability with respect to the remaining two sites.

While the Company remains potentially liable under CERCLA to the federal
and certain state governments with respect to the Sites, it believes that its
maximum financial exposure will be less than $3.8 million.

In addition to the Sites, the Company has received notice of potential
environmental liability at twelve (12) Superfund sites arising out of businesses
presently operated by Kelsey-Hayes. Kelsey-Hayes assumed and agreed to indemnify
the Company with respect to any liabilities associated with these sites.
Kelsey-Hayes has acknowledged this responsibility and is presently representing
the interests of the Company with respect to these sites.

Kelsey-Hayes, and in certain cases the Company, may remain liable with
respect to environmental cleanup costs in connection with certain divested
businesses, relating to aerospace, heavy-duty truck components and farm
implements, under Federal and state laws and under agreements with purchasers of
these divested businesses. The Company believes, however, that such costs in the
aggregate will not have a material adverse effect on the consolidated operations
or financial condition of the Company and, in any event, Kelsey-Hayes has
assumed and agreed to indemnify the Company with respect to any liabilities
arising out of or associated with these divested businesses.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets out the names and ages of each of the directors
and executive officers of the Company.

NAME AGE POSITION
---- --- --------

Ranko ("Ron") Cucuz.................... 53 Chairman of the Board of Directors; President and
Chief Executive Officer
Horst Kukwa-Lemmerz.................... 54 Vice Chairman of the Board of Directors
Giancarlo Dallera...................... 51 Vice President; President -- European Aluminum Wheels
Klaus Junger........................... 41 Vice President; President -- European Fabricated
Wheels
Ronald L. Kolakowski................... 50 Vice President; President -- North American Aluminum
Wheels
William S. Linski...................... 50 Vice President; President -- Fabricated Wheels
Michael C. McGrath..................... 52 Vice President; President -- Commercial Highway and
Aftermarket Services
William D. Shovers..................... 43 Vice President; Chief Financial Officer and Principal
Accounting Officer
John A. Salvette....................... 41 Treasurer
Daniel M. Sandberg..................... 38 Vice President -- International Operations, General
Counsel and Secretary
Larry Karenko.......................... 47 Vice President -- Human Resources
Cleveland A. Christophe................ 51 Director
Timothy J. Clark....................... 32 Director
Andrew R. Heyer........................ 39 Director
Peter A. Joseph........................ 45 Director
Paul S. Levy........................... 49 Director
Wienand Meilicke....................... 51 Director
John R. Rodewig........................ 63 Director
David Y. Ying.......................... 42 Director

Ranko ("Ron") Cucuz was elected Chairman of the Board of Directors of Hayes
in July 1996, and has been President, Chief Executive Officer and a Director of
Hayes since October 1992. He also serves as Chairman of the Management Board of
Autokola, the Company's joint venture located in the Czech Republic, as a
director of Hayes Wheels, S.p.A. (Italy) and Hayes Wheels de Espana, S.A.
(Spain), the Company's wholly owned subsidiaries, and serves as Chairman of each
of the Company's Aluminum Wheel subsidiaries. From August 1992 to October 1992,
Mr. Cucuz served as Group President of the Wheels Division of the Company as it
existed prior to the Reorganization. Previously, Mr. Cucuz was President of the
Steel Wheels (renamed Fabricated Wheels) Business Unit from June 1991 to October
1992. Mr. Cucuz is also a director of National-Standard Company.

Horst Kukwa-Lemmerz was appointed to his present position Vice Chairman of
the Board of Directors in June 1997. Prior to that time and since June 1993, he
served as CEO and President of Lemmerz. He has also acted as Chairman of Lemmerz
Espanola from 1978 through the closing of the Lemmerz Acquisition (the
"Closing") and as Vice President of Borlem-Brazil from 1982 through the Closing.
From April 1977 until June 1993 he served as Personal Liable Partner, President
and CEO of Lemmerz Werke KGaA. Previously, Mr. Kukwa-Lemmerz had been President
of Lemmerz Werke GmbH since 1974 and Director Marketing and Sales since 1972.

Giancarlo Dallera was appointed to his present position as Vice President;
President -- European Aluminum Wheels in October 1992. He has served as Managing
Director, Hayes Wheels, S.p.A., since April 1990 and has been Director and
General Manager since 1985 and 1981, respectively. He also has acted as Managing
Director of Hayes Wheels de Espana, S.A. since October 1992.

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Klaus Junger was appointed to his present position as Vice President;
President -- European Fabricated Wheels in June 1997. Prior to that time and
since June 1993, he served as Executive Vice President Finance of Lemmerz. He
also acted as Managing Director of Lemmerz Werke KGaA from May 1995 through the
Closing. From July 1990 until June 1993 he served as Group Director Finance of
Lemmerz Werke GmbH. Before joining Lemmerz, Mr. Junger was Director & Financial
Controller of BBA Group Plc's Friction Materials Division from April 1986 until
June 1990. Prior to that, he served with Unilever Plc as Internal Audit Manager.

Ronald Kolakowski was appointed to his present position as Vice President;
President of North American Aluminum Wheels in October 1995. Previously, he
served as Plant Manager of the Fabricated Wheel manufacturing facility in
Sedalia, Missouri from June 1993 to September 1995. Prior to joining Hayes, Mr.
Kolakowski was Vice President, U.S. Operations for ACCO Controls Group --
Babcock Industries.

William S. Linski has served in his present position as Vice President;
President of Fabricated Wheels since November 1993. Mr. Linski has also served
as Chairman of the Supervisory Board of Autokola since October 1993 and served
as Vice President -- Operations of Fabricated Wheels from 1992 to 1993.
Previously, from 1988 to 1992, Mr. Linski acted as the Plant Manger for the
Sedalia Fabricated Wheel Plant.

Michael C. McGrath was appointed the Vice President; President --
Commercial Highway and Aftermarket Services in February 1994. He joined Hayes in
1968, worked in customer relations and sales and has served as General Manager
of the aftermarket business since 1981.

William D. Shovers joined Hayes in his present position as Vice President
of Finance and Chief Financial Officer in February 1993. He has served as
Director of Autokola since October 1993 and Director of Hayes Wheels, S.p.A.
since February 1993. Prior to joining Hayes, Mr. Shovers was Vice President of
Finance for Monroe Auto Equipment Company, a subsidiary of Tenneco, Inc., from
November 1989 to January 1993.

John A. Salvette has served as Treasurer of Hayes since February 1995. He
has served as Director of Investor Relations and Business Planning from May 1993
to January 1995 and as Group Controller for the North American Aluminum Wheel
Business from March 1990 to April 1993.

Daniel M. Sandberg has served in his present position as Vice President;
International Operations, General Counsel and Secretary since March 1994. Prior
to that time, Mr. Sandberg was Executive Vice President and General Counsel,
Kelter-Thorner, Inc. from October 1990 to March 1994. From September 1988 to
September 1990, Mr. Sandberg was General Counsel and Secretary of Meadowdale
Foods, Inc.

Larry Karenko was appointed to his present position as Vice President of
Human Resources in October 1994. Mr. Karenko previously worked for Federal-Mogul
Corporation as Group Manager, Human Resources of its Chassis Products
Operations, August 1993 to October 1994; as Group Manager, Human Resources,
Power Train Products Operations, August 1992 to August 1993; and Employee
Relations Manager, Precisions Forged Products Division, June 1986 to August
1992.

Cleveland A. Christophe has been a Director of Hayes since July 1996. Mr.
Christophe has been a Managing Partner and major shareholder of TSG Capital
Group, L.L.C. since January 1995, and a director and President of TSG Associates
II, Inc. since January 1995. He has served as a principal, a director and the
Executive Vice President of TSG Ventures Inc. (formerly known as Equico Capital
Corporation ("Equico")), a private equity investment firm, since May 1992. From
February 1990 to May 1992, Mr. Christophe was a Vice President of Equico. Mr.
Christophe is also a director of Envirotest Systems Corporation, Midwest
Stamping, Inc., The Ashley Stewart Group Ltd. and PAR Radio Holdings L.L.C.

Timothy J. Clark has been a Director of Hayes since July 1996. Mr. Clark is
a principal of Joseph Littlejohn and Levy, an affiliate of JLL, which he joined
in 1993. Prior to that time, Mr. Clark was corporate planning manager of Edgcomb
Metals Company and a financial analyst at the Blackstone Group. Mr. Clark is
also a director of Freedom Chemical Company ("Freedom").

Andrew R. Heyer has been a Director of Hayes since April 1997. Mr. Heyer
has been a Managing Director and co-head of the High Yield Group of CIBC Wood
Gundy Securities Corp. since August 1995. Mr. Heyer was a founder and, from
February 1990 until July 1995, a Managing Director of The Argosy

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Group, an investment banking firm. Mr. Heyer is Chairman of the Board of The
Hain Food Group and a director of Niagara Corporation.

Peter A. Joseph has been a Director of Hayes since July 1996. Mr. Joseph
has been a partner of JLL from its inception in 1988. Mr. Joseph is also a
director of Fairfield Manufacturing Company, Inc. ("Fairfield"), Freedom, Lancer
Industries, Inc. ("Lancer") and Peregrine Incorporated ("Peregrine"). Mr. Joseph
is also President and Secretary of Lancer and Vice President and Secretary of
Fairfield.

Paul S. Levy has been a Director of Hayes since July 1996. Mr. Levy has
been a partner of JLL from its inception in 1988. Mr. Levy has served as
Chairman of the Board of Directors and Chief Executive Officer of Lancer since
July 1989. Mr. Levy is also a director of Fairfield, Freedom and Peregrine. Mr.
Levy is also Vice President and Assistant Secretary of Fairfield.

Wienand Meilicke has been a Director of the Company since June 1997. Mr.
Meilicke is an attorney admitted to practice in Bonn, Germany and has, during at
least the last five years, been a partner of Meilicke & Partner, a law firm
located in Bonn, Germany. Mr. Meilicke is also a member of the supervisory board
of WABCO Standard GmbH and Breuniger Beteiligungs GmbH.

John S. Rodewig has been a Director of Hayes since December 1992. He served
as President of Eaton Corporation ("Eaton") and as its Chief Operating Officer
- -- Vehicle Components from 1992 until his retirement on January 1, 1996. He
served as President of the Truck Components Group of Eaton from 1991 to 1992.
Mr. Rodewig also serves as Chairman of the Board of Directors of Eaton Limited
(United Kingdom) and as a director of FKI plc and AP Parts International.

David Y. Ying has been a Director of the Company since June 1997. Mr. Ying
has been a partner of Joseph Littlejohn & Levy since June 1997. From January
1993 until May 1997, Mr. Ying was a Managing Director of Donaldson, Lufkin &
Jenrette, an investment banking firm, and from January 1990 until December 1992,
Mr. Ying was a Managing Director of Smith Barney, an investment banking firm.

Upon consummation of the Lemmerz Acquisition, the Company's Board of
Directors was increased to 11 members and Horst Kukwa-Lemmerz, a former
shareholder and managing director of Lemmerz, and Wienand Meilicke were elected
to the Company's Board, as designees of the Lemmerz Shareholders, for terms
expiring at the Company's Annual Meeting of Stockholders in 1997 and 1999,
respectively. Mr. Kukwa-Lemmerz was also elected (i) Vice Chairman of the
Company's Board of Directors, (ii) a member of its Executive Committee and a
nonvoting member of its Compensation Committee and (iii) Chairman of the Board
of the Company's subsidiary, HWI (Europe) Ltd. The Company also entered into
consulting agreements (the "Consulting Agreements") with Mr. Kukwa-Lemmerz and
an affiliate of Mr. Kukwa-Lemmerz pursuant to which, among other things, (i) Mr.
Kukwa-Lemmerz retired from all positions held with Lemmerz and its subsidiaries,
(ii) the Company will pay to Mr. Kukwa-Lemmerz and his affiliate an aggregate of
$500,000 annually during the five-year period for which consulting services are
provided and (iii) the Company granted Mr. Kukwa-Lemmerz and his affiliate
options to purchase an aggregate of 250,000 shares of the Common Stock at an
exercise price of $16 per share, which options will become exercisable at the
rate of 20% annually on June 30, 1998 and each June 30th thereafter during the
term of the Consulting Agreements.

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SECURITY OWNERSHIP OF MANAGEMENT AND THE BOARD OF DIRECTORS

The following table sets forth, as of July 28, 1997, after giving effect to
the Conversion and as adjusted to reflect the sale in the Offerings of an
aggregate of 3,779,502 shares of Common Stock, the beneficial ownership (as
defined by the Commission) of the Company's Common Stock by each of the
Directors and the named executive officers of the Company and by the Directors
and executive officers of the Company as a group:

NUMBER OF
NAME OF BENEFICIAL OWNER SHARES (A)(B)
------------------------ -------------

Cucuz, Ranko................................................ 260,535
Dallera, Giancarlo.......................................... 92,447
Linski, William S. ......................................... 70,241
Sandberg, Daniel M. ........................................ 36,720
Shovers, William D. ........................................ 89,137
Christophe, Cleveland A. (c)................................ --
Clark, Timothy J. (d)....................................... --
Heyer, Andrew R. (e)........................................ --
Joseph, Peter A. (d)........................................ 9,634,176
Kukwa-Lemmerz, Horst (f).................................... 1,775,000
Levy, Paul S. (d)........................................... 9,634,176
Meilicke, Wienand........................................... 200
Rodewig, John S. ........................................... 60
Ying, David Y. (d).......................................... 9,644,936
All directors and officers as a group (19 persons) (d)(f)... 12,065,882

- -------------------------
(a) Includes the following shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of June 30, 1997, and shares of
Common Stock purchased under the Company's Retirement Savings Plan (the
"Savings Plan"):

ISSUABLE UPON ISSUABLE UPON
EXERCISE OF OPTIONS EXERCISE OF OPTIONS
GRANTED UNDER GRANTED UNDER PURCHASED UNDER
NAME 1992 PLAN 1996 PLAN SAVINGS PLAN
---- ------------------- ------------------- ---------------

Cucuz, Ranko................................. 180,300 30,417 548
Dallera, Giancarlo........................... 65,300 6,083 --
Linski, William S. .......................... 52,400 6,083 1,000
Sandberg, Daniel M. ......................... 26,000 5,070 162
Shovers, William D. ......................... 62,000 6,083 --
All directors and executive officers as a
group...................................... 452,100 73,001 4,283

Shares issuable upon the exercise of options under the 1996 Plan are subject
to stockholder approval.

(b) In each case, except as to Messrs. Joseph, Kukwa-Lemmerz, Levy and Ying and
"All directors and executive officers as a group," less than 1% of the
outstanding shares of Common Stock. Messrs. Joseph, Levy and Ying may be
deemed to beneficially own 32.6% of the Common Stock of the Company (see
footnote (d) below).

(c) Mr. Christophe is associated with TSG, which owns 9.5% of the Common Stock
of the Company; he disclaims any beneficial ownership of such Common Stock.
See "Principal and Selling Stockholders."

(d) Messrs. Clark, Joseph, Levy and Ying are all associated with JLL, which owns
32.6% of the Common Stock of the Company. Mr. Clark disclaims any beneficial
ownership of such Common Stock. Messrs. Joseph, Levy and Ying are general
partners of JLL Associates II, L.P., the general partner of JLL, and, as a
result, each of them may be deemed to beneficially own all of the shares of
Common Stock held directly or indirectly by JLL. See "Principal and Selling
Stockholders." In addition, Mr. Ying directly owns an additional 10,760
shares of Common Stock.

(e) Mr. Heyer is associated with Argosy, which owns 8.5% of the Common Stock of
the Company, and CIBC Wood Gundy, which owns 2.2% of the Common Stock of the
Company; he disclaims any beneficial ownership of all such Common Stock. See
"Principal and Selling Stockholders."

(f) Consists of 1,750,000 shares of Series A Preferred Stock owned by Mr.
Kukwa-Lemmerz and 25,000 shares of Series A Preferred Stock owned by Renate
Kukwa-Lemmerz, his wife, which, in each case, following stockholder approval
will automatically convert into an equal number of shares of Common Stock.
Such shares represent 6.0% of the outstanding Common Stock. Mr. Kukwa-
Lemmerz disclaims any beneficial ownership of the shares owned by Mrs.
Kukwa-Lemmerz.

As of July 28, 1997, all Directors and executive officers as a group may be
deemed beneficially to own approximately 40.1% of the outstanding Common Stock.

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STOCKHOLDERS' AGREEMENT

In connection with the Lemmerz Acquisition, the Company, JLL, TSG, Argosy,
Nomura Holding America, Inc. and Chase Equity Associates, L.P., which
collectively owned in excess of 70% of the outstanding shares of the Common
Stock prior to the Lemmerz Acquisition, and each of the Lemmerz Shareholders
entered into an Amended and Restated Stockholders' Agreement, dated June 30,
1997 (the "Stockholders' Agreement") which provides, among other things, that
certain of the Principal Stockholders, including JLL, each of the Lemmerz
Shareholders and TSG, will vote their shares of Common Stock so that the Board
of Directors of the Company will be comprised of eleven directors, consisting of
the Chief Executive Officer of the Company (currently, Mr. Cucuz), four
designees of JLL (currently, Messrs. Clark, Joseph, Levy and Ying), one designee
of TSG (currently, Mr. Christophe), two designees of the Lemmerz Shareholders
(currently, Messrs. Kukwa-Lemmerz and Meilicke), and three other individuals
determined by the Board (currently, Messrs. Heyer and Rodewig and one vacancy)
who are not affiliated with the Company or any of the parties to the
Stockholders' Agreement (except that one of such directors may be affiliated
with Argosy).

Pursuant to the Stockholders' Agreement, the Principal Stockholders agreed
not to transfer any shares of the Common Stock, except to certain Permitted
Transferees (as defined therein), until the later of (i) July 2, 1998 or (ii)
the Conversion of the Series A Preferred Stock; provided, however, that the
Principal Stockholders have consented to the sale of an aggregate of 1,628,800
shares of Common Stock in the Offerings by the Lemmerz Selling Stockholders. The
Stockholders' Agreement grants each of the Principal Stockholders holding shares
of Common Stock with an aggregate value of at least $15 million, the right
(exercisable after the Registration Date (as defined therein)) to require the
Company to register under the Securities Act the disposition of all or part of
such shares at the Company's expense on two occasions. The Principal
Stockholders are entitled to an unlimited number of "piggyback registrations,"
which will allow the Principal Stockholders to include shares of the Common
Stock (including shares of the Common Stock to be issued upon the exercise of
Warrants (as defined therein) and the Conversion) held by them in certain
registrations of shares of the Common Stock effected by the Company (subject to
customary cutback provisions). In addition to these registration rights, the
Stockholders' Agreement allows the Principal Stockholders to participate
proportionately in any sales by JLL of shares of the Common Stock, subject to
certain exceptions.

The Stockholders' Agreement also provides that the Company will not
repurchase any shares of Common Stock, other than to fund employee benefit
plans, without the approval of holders of at least 82.5% of the shares of Common
Stock subject to the Stockholders' Agreement. In addition, the Company has
agreed to file all necessary reports with the Commission, if applicable, and
take whatever action any Principal Stockholder may reasonably request to enable
such stockholder to sell shares of the Common Stock without registration
limitations provided by Rule 144 thereunder. Each of the Principal Stockholders
has agreed not to acquire beneficial ownership of more than 3,000,000 additional
shares of Common Stock, other than pursuant to a stock dividend or the exercise
of Warrants to purchase Common Stock. The Stockholders' Agreement will terminate
on July 2, 2004, unless terminated earlier pursuant to its terms. See "Shares
Eligible for Future Sale."

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56

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information concerning the
beneficial ownership of Common Stock held by (i) stockholders known by the
Company (based on filings with the Commission) to beneficially own in excess of
5% of the outstanding Common Stock as of July 28, 1997, and (ii) the Selling
Stockholders, as of July 28, 1997, in each case, after giving effect to the
Conversion and as adjusted to reflect the sale in the Offerings of an aggregate
of 3,779,502 shares of Common Stock.

SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
THE OFFERING THE OFFERING
---------------------------- NUMBER OF ----------------------------
NUMBER OF SHARES BEING NUMBER OF
NAME SHARES PERCENT(1) OFFERED SHARES PERCENT(1)
---- --------- ---------- ------------ --------- ----------

Joseph Littlejohn & Levy Fund
II, L.P. ..................... 9,634,176(2) 35.0 -- 9,634,176(2) 32.6
Marianne Lemmerz................ 3,200,000(3) 11.7 -- 3,200,000(3) 10.8
Horst Kukwa-Lemmerz............. 1,750,000(4) 6.4 -- 1,750,000(4) 5.9
Inge Kruger-Pressl.............. 839,400(5) 3.1 814,400 25,000(5) *
Renate Kukwa-Lemmerz............ 839,400(5) 3.1 814,400 25,000(5) *
TSG Capital Fund II, L.P. ...... 2,812,500(6) 10.2 -- 2,812,500(6) 9.5
CIBC WG Argosy Merchant Fund 2,
L.L.C. ....................... 2,500,000(7) 9.1 -- 2,500,000(7) 8.5
Richard W. Tuley(8)............. 256,250(9)(10) * 150,702 105,548(10) *

- -------------------------

* Less than one percent.

(1) Excludes options to purchase Common Stock held by certain officers and
directors of the Company and Mr. Kukwa-Lemmerz and also excludes Warrants
to purchase 2,600,000 shares of Common Stock.

(2) Excludes Warrants to purchase 1,823,376 shares of Common Stock at a
purchase price of $24, which are exercisable from July 2, 2000 through July
2, 2003.

(3) Consists of 3,200,000 shares of Series A Preferred Stock which will
automatically convert into an equal number of shares of Common Stock
following stockholder approval.

(4) Consists of 1,750,000 shares of Series A Preferred Stock which will
automatically convert into an equal number of shares of Common Stock
following stockholder approval. Excludes 25,000 shares of Series A
Preferred Stock and 814,400 shares of Common Stock owned by Mrs.
Kukwa-Lemmerz as to which Mr. Kukwa-Lemmerz disclaims beneficial ownership
and options to purchase 250,000 shares of Common Stock held by Mr.
Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz. See "Prospectus
Summary -- The Lemmerz Acquisition" and "Management -- Stockholders'
Agreement."

(5) Includes 25,000 shares of Series A Preferred Stock which will automatically
convert into an equal number of shares of Common Stock following
stockholder approval.

(6) Excludes Warrants to purchase 67,500 shares of Common Stock for a purchase
price of $24, which are exercisable from July 2, 2000 through July 2, 2003.

(7) Excludes Warrants to purchase 60,000 shares of Common Stock for a purchase
price of $24, which are exercisable from July 2, 2000 through July 2, 2003.
Does not include 650,000 shares of Common Stock owned by CIBC Wood Gundy of
which CIBC WG Argosy Merchant Fund 2, L.L.C. disclaims beneficial
ownership.

(8) Mr. Tuley served as Chief Operating Officer of Motor Wheel from November
1994 to May 1995, President of Motor Wheel from May 1995 to July 1996 and
Executive Vice President of the Company from July 1996 to November 1996.

(9) Includes options to purchase 150,702 shares of Common Stock which Mr. Tuley
intends to exercise immediately prior to the consummation of the Offerings.

(10) Excludes Warrants to purchase 46,754 shares of Common Stock at a purchase
price of $24, which are exercisable from July 2, 2000 through July 2, 2003.

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57

On July 30, 1997, the Company entered into the Option Agreement with the
Lemmerz Selling Stockholders which provides, among other things, that during the
term of the Option Agreement, the Company has the right to require the Lemmerz
Selling Stockholders to sell the Lemmerz Shares (i) to the Company for purposes
of effecting a public offering of the Common Stock or (ii) at the Company's
option, directly into a public offering. The Option Agreement provides that the
Company will pay the Lemmerz Selling Stockholders $30 per share for shares it
purchases directly from the Lemmerz Selling Stockholders and, in the event that
the Company directs such Lemmerz Selling Stockholders to sell shares directly
into a public offering (a) if the net proceeds in any such offering are less
than $30 per share, the Company will pay the Lemmerz Selling Stockholders an
amount equal to the product of (I) the difference between $30 and the per share
net proceeds of such offering multiplied by (II) the number of shares sold by
the Lemmerz Selling Stockholders in such offering and (b) in the event that the
net proceeds in any such offering are more than $30 per share, the Company will
receive, as a portion of the net proceeds of such offering, an amount equal to
the product of (I) the difference between the per share net proceeds of such
offering and $30 multiplied by (II) the number of shares sold by the Lemmerz
Selling Stockholders in such offering. The Option Agreement will terminate on
November 30, 1997.

Pursuant to the terms of the Option Agreement, the Company has directed the
Lemmerz Selling Stockholders to sell all of the 1,628,800 Lemmerz Shares
pursuant to the Offerings in order to increase liquidity for stockholders,
increase the public float for the Common Stock and provide for a more effective
public offering.

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58

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.01 per share, 1,000,000 of which is Nonvoting
Common Stock, and 25,000,000 shares of preferred stock par value $.01 per share
(the "Preferred Stock"). As of the date hereof, there are 22,231,492 shares of
voting Common Stock and 159,026 Shares of Nonvoting Common Stock issued and
outstanding and 5,000,000 shares of Series A Preferred Stock issued and
outstanding. The Board of Directors has proposed that the number of Nonvoting
Common Stock be increased to five million shares. Such proposal will be
considered by stockholders at the 1997 Annual Meeting. The following description
of the capital stock of the Company and of certain provisions of the Company's
Restated Certificate of Incorporation (the "Charter") and the Company's Amended
and Restated By-Laws (the "By-Laws") is a summary of the principal terms
thereof. Reference is hereby made to the full text of the Charter and By-Laws,
copies of which are filed as exhibits to the Company's Current Report on Form
8-K dated July 2, 1996, incorporated herein by reference.

COMMON STOCK

The holders of the Common Stock, other than the Nonvoting Common Stock, are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Subject to preferences that may be applicable to any
outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends as may from time to time be declared by the Board of
Directors out of funds legally available therefor. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock would be entitled to share ratably in all assets of the Company
available for distribution to holders of Common Stock remaining after payment of
all liabilities and the liquidation preference of any outstanding Preferred
Stock. Holders of Common Stock have no preemptive rights and have no rights to
convert their Common Stock into any other securities, and there are no
redemption provisions with respect to such shares. All of the outstanding shares
of Common Stock are fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors has the authority to issue the Preferred Stock in
one or more classes or series and to fix the designations, powers, preferences
and rights of the shares of each such class or series, including dividend rates,
conversion rights, voting rights, terms of redemption and liquidation
preferences and the number of shares constituting each such class or series,
without, any further vote or action by the stockholders.

The Company has issued 5,000,000 shares of Series A Preferred Stock. The
designations, amount, voting powers, preferences and rights of the Series A
Preferred Stock are set forth in the Certificate of Designations of the Series A
Preferred Stock (the "Certificate of Designations") filed with the Secretary of
State of the State of Delaware on June 24, 1997. The Certificate of Designations
provides for five million shares of Series A Preferred Stock which rank senior
to the Common Stock and all other classes of capital stock of the Company upon
liquidation. Holders of shares of Series A Preferred Stock are entitled to a
liquidation preference of $.05 per share and to share ratably in any further
distribution to stockholders upon dissolution. The Series A Preferred Stock has
no voting rights except where specifically required by law. Holders of Series A
Preferred Stock are entitled to receive dividends only when, as and if declared
by the Board of Directors, upon the Common Stock in an amount equal to the
dividend that would be received by such holder had the shares of Series A
Preferred Stock held by such Holder been converted into Common Stock on the
record date for such dividend. The Certificate of Designations provides that
each share of the Series A Preferred Stock will be automatically converted into
one share of Common Stock immediately upon stockholder approval of the
Conversion. The Certificate of Designations provides for adjustments to the
conversion ratio upon any stock dividend, stock split, recapitalization or
reorganization of the Company.

Upon stockholder approval, the shares of Series A Preferred Stock will
automatically convert into five million shares of Common Stock. Following the
Conversion, the Series A Preferred Stock will be retired and will no longer be
outstanding. Accordingly, the $.05 liquidation preference associated with each
share of

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59

Series A Preferred Stock will no longer be applicable. Upon the Conversion, the
holders of Series A Preferred Stock will automatically own one share of Common
Stock for each share of Series A Preferred Stock previously held by such holder,
and will have all rights and privileges of a holder of Common Stock. The rights
and privileges of current holders of Common Stock will not be affected by the
Conversion except that there will be an additional five million shares of Common
Stock outstanding and, accordingly, the voting power of current holders of
Common Stock will be proportionately diluted. The Conversion will not result in
any changes to the Company's results of operations, financial condition or
method of calculating earnings per share.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Chase Mellon
Shareholder Services, L.L.C.

CERTAIN CHARTER AND BY-LAWS PROVISIONS

The Charter and the By-Laws contain provisions that could make more
difficult the acquisition of the Company by means of a tender offer, a proxy
contest or otherwise.

CLASSIFIED BOARD OF DIRECTORS AND RELATED PROVISIONS. The Charter provides
that the Board of Directors shall be divided into three classes, designated
Class 1, Class 2 and Class 3, which shall be as nearly equal in number as
possible. Class 1 directors, who will serve for a term ending with the 1997
Annual Meeting, currently consist of two directors and one vacancy, Class 2
directors who will serve for a term ending with the annual meeting of
stockholders to be held in 1998, consist of four directors and Class 3
directors, who will serve for a term ending with the annual meeting of
stockholders to be held in 1999, consist of four directors. A director may be
removed by the stockholders, but only for cause, and only by the affirmative
vote of the holders of a majority of the shares then entitled to vote at an
election of directors.

The purpose of a classified board is to promote conditions of continuity
and stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors, by guaranteeing that in the ordinary
course at least two-thirds of the directors will at all times have had at least
one year's experience as directors of the Company. However, for similar reasons,
a classified board may deter certain mergers, tender offers or other takeover
attempts which some or a majority of the holders of the Company's stock may deem
to be in their best interest, since it would take two annual meetings of
stockholders to elect a majority of the Board of Directors. Similarly, a
classified board structure would delay stockholders who do not like the policies
of the Board of Directors from removing a majority of the Board of Directors at
a single annual meeting.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS. The By-Laws establish an advance notice procedure for stockholders to
make nominations of candidates for election as directors, or bring other
business before an annual meeting of stockholders of the Company (the
"Stockholder Notice Procedure").

The Stockholder Notice Procedure provides that only persons who are
nominated by, or at the direction of the Company's Board of Directors, or by a
stockholder who has given timely written notice to the Secretary of the Company
prior to the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Stockholder Notice Procedure provides
that at an annual meeting, only such business may be conducted as has been
specified in the notice of the meeting given by, or at the direction of, the
Board of Directors or brought before the meeting by, or at the direction of, the
Board of Directors, or by a stockholder who has given timely written notice to
be Secretary of the Company of such stockholder's intention to bring such
business before such meeting.

Under the Stockholder Notice Procedure, for notice of stockholder
nominations to be made or business to be conducted at an annual meeting to be
timely, such notice must be received by the Company not less than 50 days nor
more than 75 days prior to the annual meeting. In the event less than 65 days'
notice or prior public disclosure as of the date of the meeting is given, notice
must be delivered by the stockholder to the Company not later than the fifteenth
day following the day on which such notice of the date of the meeting was mailed
or public disclosure was made, whichever occurs first.

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60

In addition, under the Stockholder Notice Procedure, a stockholder's notice
to the Company proposing to nominate a person for election as a director or
conduct certain business at an annual meeting must contain certain specified
information. If the Board of Directors determines that a person was not
nominated, or other business was not brought before the meeting, in accordance
with the Stockholder Notice Procedure, such person will not be eligible for
election as a director, or such business will not be conducted at such meeting,
as the case may be.

NO STOCKHOLDER ACTION BY WRITTEN CONSENT

The Charter and the By-laws provide that no stockholder action required to
be taken at any annual or special meeting of stockholders of the Company may be
taken without a meeting, and the power of stockholders to consent in writing
without a meeting to the taking of any action is specifically denied.

STATUTORY PROVISIONS

Section 203 of the Delaware General Corporation Law (the "DGCL") prohibits
certain transactions between a Delaware corporation and an "interested
stockholder," which is defined as a person who, together with any affiliates
and/or associates of such person, beneficially owns, directly or indirectly, 15%
or more of the outstanding voting shares of a Delaware corporation. This
provision prohibits certain business combinations (defined broadly to include
mergers, consolidations, sales or other dispositions of assets having an
aggregate value in excess of 10% of the consolidated assets of the corporation,
and certain transactions that would increase the interested stockholder's
proportionate share ownership in the corporation) between an interested
stockholder and a corporation for a period of three years after the date the
interested stockholder acquired its stock, unless (i) the business combination
is approved by the corporation's board of directors prior to the date the
interested stockholder acquired shares, (ii) the interested stockholder acquired
at least 85% of the voting stock of the corporation in the transaction in which
it became an interested stockholder or (iii) the business combination is
approved by a majority of the board of directors and by the affirmative vote of
two-thirds of the votes entitled to be cast by disinterested stockholders at an
annual or special meeting. A Delaware corporation, pursuant to a provision in
its certificate of incorporation or by-laws, may elect not to be governed by
Section 203 of the DGCL, in which case such election becomes effective one year
after its adoption. The Company has not made such an election. Acquisitions of
Common Stock by the Principal Stockholders and the Lemmerz Shareholders were
approved by the Board of Directors prior to the date such shares were acquired.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings and after giving effect to the Conversion,
the Company will have 29,541,220 shares of Common Stock outstanding, of which
7,357,038 will be freely tradeable without restriction or further registration
under the Securities Act, except for any shares held or purchased by an
"affiliate" of the Company as that term is defined in Rule 144 ("Rule 144")
under the Securities Act (an "Affiliate"). In addition, 22,184,182 shares of
Common Stock are subject to the restrictions on transfer contained in the
Stockholders' Agreement. Any shares purchased in the Offerings or otherwise held
by an Affiliate of the Company may not be resold except pursuant to an effective
registration statement filed by the Company or an applicable exemption from
registration, including an exemption under Rule 144.

In general, under Rule 144 as currently in effect, an Affiliate of the
Company is entitled to sell, within any three-month period, a number of shares
of Common Stock that does not exceed the greater of 1% of the then outstanding
shares of the Common Stock (approximately 295,412 shares immediately after the
Offerings after giving effect to the Conversion) or the average weekly trading
volume in the Common Stock during the four calendar weeks preceding such sale.
Sales under Rule 144 are also subject to certain restrictions on the manner of
sale, notice requirements, and the availability of current public information
about the Company.

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Transferees (as defined therein), until the later of (i) July 2, 1998 and (ii)
the Conversion of the Series A Preferred Stock; provided, however, that the
Principal Stockholders have consented to the sale of the Lemmerz Shares by the
Lemmerz Selling Stockholders in the Offerings. After such time, the Principal
Stockholders will be able to require the Company to register the sale of such
shares under the Securities Act. See "Management -- Stockholders' Agreement."

The Company has issued to the Principal Stockholders and others warrants to
purchase an aggregate of 2,600,000 shares of Common Stock for a purchase price
of $24 per share (the "Warrants"). The Warrants are exercisable from July 2,
2000 through July 2, 2003. The Company has also issued to the former Lemmerz
Shareholders shares of the Series A Preferred Stock, which will, upon
stockholder approval, automatically convert into an aggregate of five million
shares of Common Stock. Stockholders who hold approximately 59% of the
outstanding Common Stock after giving effect to the Offerings have delivered
irrevocable proxies to Mr. Kukwa-Lemmerz who has agreed to vote such shares in
favor of the Conversion at the 1997 Annual Meeting. In addition, the Company has
issued options to purchase (i) an aggregate of 2,771,577 shares of Common Stock
to certain of its officers and other key employees pursuant to the Company's
1992 Plan and the 1996 Plan and (ii) an aggregate of 250,000 shares of Common
Stock to Mr. Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz pursuant to the
Consulting Agreements (the "Options"). See "Management."

No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock or the availability of shares of Common Stock for future
sales, will have on the market price of the Common Stock prevailing from time to
time. Nevertheless, sales in the public market of substantial amounts of the
Common Stock (including shares of Common Stock acquired upon the exercise of the
Options, the Warrants or the Series A Preferred Stock), or the perception that
such sales could occur, could adversely affect prevailing market prices of the
Common Stock.

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UNDERWRITING

Subject to the terms and conditions set forth in the United States Purchase
Agreement (the "U.S. Purchase Agreement") among the Company, the Selling
Stockholders and each of the Underwriters named below (the "U.S. Underwriters"),
and concurrently with the sale of 779,502 shares of Common Stock to the
International Managers (as defined below), the Company and the Selling
Stockholders severally have agreed to sell to each of the U.S. Underwriters, and
each of the U.S. Underwriters severally has agreed to purchase, the aggregate
number of shares of Common Stock set forth opposite its name below:

NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Bear, Stearns & Co. Inc.....................................
Goldman, Sachs & Co. .......................................
---------
Total.......................................... 3,000,000
=========

The Company and the Selling Stockholders have also entered into an
International Purchase Agreement (the "International Purchase Agreement" and,
together with the U.S. Purchase Agreement, the "Purchase Agreements") with
certain underwriters outside the United States and Canada (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters"). Subject
to the terms and conditions set forth in the International Purchase Agreement,
and concurrently with the sale of 3,000,000 shares of Common Stock to the U.S.
Underwriters pursuant to the U.S. Purchase Agreement, the Company and the
Selling Stockholders severally have agreed to sell to the International
Managers, and the International Managers severally have agreed to purchase, an
aggregate of 779,502 shares of Common Stock. The offering price per share and
the total underwriting discount per share are identical under the U.S. Purchase
Agreement and the International Purchase Agreement.

In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any of such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting U.S.
Underwriters or International Managers (as the case may be) may be increased.
The sale of Common Stock to the U.S. Underwriters is conditioned upon the sale
of shares of Common Stock to the International Managers, and vice versa.

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
Underwriters are permitted to sell shares of Common Stock to each other for
purposes of resale at the public offering price set forth on the cover page of
this Prospectus, less an amount not greater than the selling concession. Under
the terms of the Intersyndicate Agreement, the U.S. Underwriters and any dealer
to whom they sell shares of Common Stock will not offer to sell or sell shares
of Common Stock to persons who are non-U.S. or non-Canadian persons or to
persons they believe intend to resell to persons who are non-U.S. or
non-Canadian persons, and the International Managers and any dealer to whom they
sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to U.S. persons or Canadian persons or to persons they believe intend to
resell to U.S. persons or Canadian persons, except, in each case, for
transactions pursuant to the Intersyndicate Agreement.

The U.S. Underwriters have advised the Company and the Selling Stockholders
that the U.S. Underwriters propose initially to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share of Common Stock. The U.S. Underwriters may allow, and such
dealers may reallow, a discount not in excess of $ per share of Common Stock
on sales to certain other dealers. After the public offering, the public
offering price, concession and discount may be changed.

61
63

The Company has granted an option to the U.S. Underwriters, exercisable
during the 30-day period after the date of this Prospectus, to purchase up to an
additional 450,000 shares of Common Stock at the public offering price set forth
on the cover page hereof, less the underwriting discount. The U.S. Underwriters
may exercise this option only to cover over-allotments, if any, made on the sale
of shares of Common Stock offered hereby. To the extent that the U.S.
Underwriters exercise this option, each U.S. Underwriter will be obligated,
subject to certain conditions, to purchase approximately the number of
additional shares of Common Stock proportionate to such U.S. Underwriters'
initial amount reflected in the foregoing table. The Company has also granted an
option to the International Managers, exercisable during the 30-day period after
the date of this Prospectus, to purchase up to an additional 116,925 shares of
Common Stock to cover over-allotments, if any, on terms similar to those granted
to the U.S. Underwriters.

The Company, the Principal Stockholders and Messrs. Cucuz and Shovers have
agreed that they will not, directly or indirectly, for a period of 120 days
following the date of the Prospectus, except with the prior consent of Merrill
Lynch & Co., on behalf of the Underwriters, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Common Stock, except, in
the case of the Company, for the purchase of Common Stock pursuant to the Option
Agreement, the issuance of Common Stock under the 1992 Plan and the 1996 Plan
and the issuance of Common Stock upon conversion of shares of the Company's
Series A Preferred Stock and, in the case of the Lemmerz Selling Stockholders,
for the sale of Common Stock pursuant to the Option Agreement. The Principal
Stockholders' securities are also restricted under the Stockholders' Agreement.
See "Management -- Stockholders' Agreement" and "Shares Eligible for Future
Sale."

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the U.S. Underwriters and certain selling
group members to bid for and purchase the Common Stock. As an exception to these
rules, the U.S. Underwriters are permitted to engage in certain transactions
that stabilize the price of the Common Stock. Such transactions consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.

In connection with the Offerings, certain Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers on
the NASDAQ National Market may engage in "passive market making" in the Common
Stock on the NASDAQ National Market in accordance with Rule 103 under Regulation
M. Rule 103 permits, upon the satisfaction of certain conditions, underwriters
and selling group members participating in a distribution that are also NASDAQ
National Market market makers in the security being distributed to engage in
limited market making transactions during the period when Rule 103 under
Regulation M would otherwise prohibit such activity. Rule 103 prohibits
underwriters and selling group members engaged in passive market making
generally from entering a bid or effecting a purchase at a price that exceeds
the highest bid for those securities displayed on the NASDAQ National Market by
a market maker that is not participating in the distribution. Under Rule 103,
each underwriter or selling group member engaged in passive market making is
subject to a daily net purchase limitation equal to 30% of such entity's average
daily trading volume during the two full consecutive calendar months immediately
preceding the date of the filing of the registration statement under the
Securities Act pertaining to the security to be distributed.

If the U.S. Underwriters create a short position in the Common Stock in
connection with the Offerings (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus), the U.S. Underwriters
may reduce that short position by purchasing Common Stock in the open market.
The U.S. Underwriters may also elect to reduce any short position through the
exercise of all or part of the over-allotment option described above. In
general, purchases of a security for the purpose of stabilization or to reduce a
short position could cause the price of the security to be higher than it might
be in the absence of such purchases.

Neither the Company nor the U.S. Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor the Underwriters make any representation that the

62
64

Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") acted
as financial advisor to Hayes in connection with the Lemmerz Acquisition.
Merrill Lynch is an affiliate of Merrill Capital who is the documentation agent
and a lender under the Amended Credit Agreement. In connection with acting as
documentation agent and lender under the Amended Credit Agreement, Merrill
Capital received customary fees. Merrill Lynch acted as an underwriter in
connection with the offering of the 11% Notes and as an initial purchaser in
connection with the offering of the 9 1/8% Notes for which it received customary
fees. In addition, Bear, Stearns & Co. Inc. acted as an initial purchaser in
connection with the offering of the Initial Notes.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act.

LEGAL MATTERS

Certain legal matters with respect to the Common Stock have been passed
upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP, and for the
Underwriters by Cahill Gordon & Reindel. Skadden, Arps, Slate, Meagher & Flom
LLP has from time to time represented certain of the Underwriters in connection
with unrelated legal matters.

EXPERTS

The consolidated financial statements of Hayes Wheels International, Inc.
and subsidiaries as of January 31, 1997 and 1996 and for each of the years in
the three-year period ended January 31, 1997 have been included in, and
incorporated by reference into, this Prospectus in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein and incorporated by reference herein, and upon the authority of
such firm as experts in accounting and auditing.

The consolidated financial statements of Lemmerz Holding GmbH and
subsidiaries as of December 31, 1996 and 1995 and for each of the years in the
two-year period ended December 31, 1996 have been included in, and incorporated
by reference into, this Prospectus in reliance upon the report of KPMG Deutsche
Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprufungsgesellschaft,
independent certified public accountants, appearing elsewhere herein and
incorporated by reference herein, and upon the authority of such firm as experts
in accounting and auditing.

The consolidated financial statements of MWC Holdings, Inc. at December 31,
1995 and 1994, and for each of the three years in the period ended December 31,
1995, included in, and incorporated by reference into, this Prospectus have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

63
65

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES:

AUDITED FINANCIAL STATEMENTS

PAGE
----

Report of KPMG Peat Marwick LLP, Independent Auditors....... F-3
Consolidated Statements of Operations for the Fiscal Years
Ended
January 31, 1997, 1996 and 1995........................... F-4
Consolidated Balance Sheets at January 31, 1997 and 1996.... F-5
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for
the Fiscal Years Ended January 31, 1997, 1996 and 1995.... F-6
Consolidated Statements of Cash Flows for the Fiscal Years
Ended
January 31, 1997, 1996 and 1995........................... F-7
Notes to Consolidated Financial Statements for the Fiscal
Years Ended
January 31, 1997, 1996 and 1995........................... F-8
UNAUDITED FINANCIAL STATEMENTS
Consolidated Statements of Operations for the Three Months
Ended April 30, 1997 and 1996............................. F-32
Consolidated Balance Sheets at April 30, 1997 and January
31, 1997.................................................. F-33
Consolidated Statements of Cash Flows for the Three Months
Ended April 30, 1997 and 1996............................. F-34
Notes to Consolidated Financial Statements for the Three
Months Ended April 30, 1997
and 1996.................................................. F-35
LEMMERZ HOLDING GMBH AND SUBSIDIARIES:
AUDITED FINANCIAL STATEMENTS
Report of KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft........ F-41
Consolidated Balance Sheets at December 31, 1996 and 1995... F-42
Consolidated Statements of Earnings for the Years Ended
December 31, 1996 and 1995................................ F-43
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended
December 31, 1996 and 1995................................ F-44
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995................................ F-45
Notes to Consolidated Financial Statements for the Years
Ended
December 31, 1996 and 1995................................ F-46
UNAUDITED FINANCIAL STATEMENTS
Consolidated Balance Sheets at March 31, 1997............... F-55
Consolidated Statement of Earnings for the Three Months
Ended March 31, 1997...................................... F-56
Consolidated Statement of Cash Flows for the Three Months
Ended March 31, 1997...................................... F-57
Notes to Unaudited Interim Consolidated Financial Statements
for the Three Months Ended March 31, 1997................. F-58

F-1
66

MWC HOLDINGS, INC.:

AUDITED FINANCIAL STATEMENTS

PAGE
----

Report of Ernst & Young LLP, Independent Auditors........... F-59
Consolidated Balance Sheets at December 31, 1995 and 1994... F-60
Consolidated Income Statements for the Years Ended December
31, 1995, 1994 and 1993................................... F-61
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1995, 1994 and 1993.............. F-62
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993.......................... F-63
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1995, 1994 and 1993.................... F-64

F-2
67

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Hayes Wheels International, Inc.

We have audited the accompanying consolidated balance sheets of Hayes Wheels
International, Inc. and subsidiaries as of January 31, 1997 and 1996, and the
related consolidated statements of operations, changes in stockholders' equity
(deficit), and cash flows for each of the years in the three year period ended
January 31, 1997. 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 audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Hayes Wheels
International, Inc. and subsidiaries as of January 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three year-period ended January 31, 1997, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Detroit, Michigan
February 25, 1997

F-3
68

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS)

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Net sales................................................... $778.2 $611.1 $537.6
Cost of goods sold.......................................... 675.2 513.4 441.4
------ ------ ------
Gross profit........................................... 103.0 97.7 96.2
Marketing, general and administration....................... 35.9 29.7 28.6
Engineering and product development......................... 7.2 4.7 5.1
Equity in loss of unconsolidated subsidiaries............... 2.5 -- --
Other income, net........................................... (4.5) (1.5) (0.8)
Nonrecurring charges (Note 10).............................. 115.4 3.6 --
------ ------ ------
Earnings (loss) from operations........................ (53.5) 61.2 63.3
Interest expense, net....................................... 48.5 15.0 13.4
------ ------ ------
Earnings (loss) before taxes on income, minority
interest and extraordinary items..................... (102.0) 46.2 49.9
Income tax (benefit) provision (Note 6)..................... (36.7) 17.8 20.0
------ ------ ------
Earnings (loss) before minority interest and
extraordinary items.................................. (65.3) 28.4 29.9
Minority interest........................................... 0.2 -- --
------ ------ ------
Earnings (loss) before extraordinary items............. (65.5) 28.4 29.9
Extraordinary items, net of tax of $4.9 (Note 7)............ 7.4 -- --
------ ------ ------
Net income (loss)...................................... $(72.9) $ 28.4 $ 29.9
====== ====== ======
Per share income (loss) (Note 1):
Income (loss) before extraordinary items............... $(2.36) $ 0.81 $ 0.85
Extraordinary items, net of tax........................ (0.27) -- --
------ ------ ------
Net income (loss)...................................... $(2.63) $ 0.81 $ 0.85
====== ====== ======
Weighted average shares outstanding (in thousands).......... 27,703 35,148 35,148
====== ====== ======

See accompanying notes to consolidated financial statements.

F-4
69

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS)

JANUARY 31, JANUARY 31,
ASSETS 1997 1996
------ ----------- -----------

Current assets:
Cash and cash equivalents................................. $ 47.5 $ 1.8
Receivables (less allowance of $2.2 at January 31, 1997
and $0.1 at January 31, 1996).......................... 145.2 109.6
Inventories (Note 3)...................................... 82.9 58.9
Prepaid expenses and other................................ 13.9 9.9
-------- -------
Total current assets................................... 289.5 180.2
Property, plant and equipment:
Land...................................................... 20.1 18.3
Buildings................................................. 98.0 76.8
Machinery and equipment................................... 515.2 319.7
-------- -------
633.3 414.8
Accumulated depreciation.................................. (146.9) (110.4)
-------- -------
Net property, plant and equipment...................... 486.4 304.4
Goodwill and other assets (Note 4).......................... 407.2 149.3
-------- -------
Total assets.............................................. $1,183.1 $ 633.9
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- ------------------------------------------------------------
Current liabilities:
Bank borrowings (Note 7).................................. $ 5.6 $ 4.1
Current portion of long-term debt (Note 7)................ 23.9 0.1
Accounts payable and accrued liabilities (Notes 5 and
11).................................................... 244.8 125.5
-------- -------
Total current liabilities.............................. 274.3 129.7
Noncurrent liabilities:
Long-term debt, net of current portion (Note 7)........... 686.3 128.9
Deferred income taxes (Note 6)............................ -- 48.1
Minority interest......................................... 8.3 --
Pension and other long-term liabilities (Notes 9 and
10).................................................... 255.3 81.8
-------- -------
Total noncurrent liabilities........................... 949.9 258.8
Commitments and contingencies (Notes 7, 9, 10 and 12)
Stockholders' equity (deficit): (Notes 1 and 13)
Preferred Stock, 25,000,000 shares authorized, none
issued or outstanding................................. -- --
Common stock, par value $0.01 per share:
Voting -- authorized 99,000,000; issued and
outstanding, 22,231,492 at January 31, 1997 and
35,148,000 at January 31, 1996...................... 0.2 0.4
Nonvoting -- authorized 1,000,000; issued and
outstanding, 159,026 at January 31, 1997 and zero at
January 31, 1996....................................
Additional paid-in capital............................. 43.6 198.3
Retained earnings (accumulated deficit)................ (82.2) 49.6
Cumulative translation adjustment...................... (0.5) (0.3)
Pension liability adjustment........................... (2.2) (2.6)
-------- -------
Total stockholders' equity (deficit)................. (41.1) 245.4
-------- -------
Total liabilities and stockholders' equity
(deficit)........................................... $1,183.1 $ 633.9
======== =======

See accompanying notes to consolidated financial statements.

F-5
70

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED JANUARY 31, 1997, 1996, 1995

(MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS)

COMMON STOCK
(NOTE 1) RETAINED
------------------- ADDITIONAL EARNINGS CUMULATIVE PENSION
PAR PAID-IN (ACCUMULATED TRANSLATION LIABILITY
SHARES VALUE CAPITAL DEFICIT) ADJUSTMENT ADJUSTMENT
------ ----- ---------- ------------ ----------- ----------

Balance, January 31, 1994.......... 35,148,000 $ 0.4 $ 198.3 $ (6.5) $(3.5) $(3.9)
Cash dividends ($0.03 per share)... -- -- -- (1.1) -- --
Net income......................... -- -- -- 29.9 -- --
Translation adjustment............. -- -- -- -- 1.3 --
Pension adjustment................. -- -- -- -- -- 1.5
----------- ----- ------- ------ ----- -----
Balance, January 31, 1995.......... 35,148,000 0.4 198.3 22.3 (2.2) (2.4)
Cash dividends ($0.03 per share)... -- -- -- (1.1) -- --
Net income......................... -- -- -- 28.4 -- --
Translation adjustment............. -- -- -- -- 1.9 --
Pension adjustment................. -- -- -- -- -- (0.2)
----------- ----- ------- ------ ----- -----
Balance, January 31, 1996.......... 35,148,000 0.4 198.3 49.6 (0.3) (2.6)
Cash dividends ($0.015 per
share)........................... -- -- -- (0.5) -- --
Net loss........................... -- -- -- (72.9) -- --
Translation adjustment............. -- -- -- -- (0.2) --
Pension adjustment................. -- -- -- -- -- 0.4
Exercise of options................ 125,718 -- 2.0 -- -- --
Recapitalization................... (12,883,200) (0.2) (156.7) (58.4) -- --
----------- ----- ------- ------ ----- -----
Balance, January 31, 1997.......... 22,390,518 $ 0.2 $ 43.6 $(82.2) $(0.5) $(2.2)
=========== ===== ======= ====== ===== =====

See accompanying notes to consolidated financial statements.

F-6
71

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS)

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Cash flows from operating activities
Net income (loss)....................................... $ (72.9) $ 28.4 $ 29.9
Adjustments to reconcile net income (loss) to net cash
provided by operations:
Depreciation and tooling amortization................ 36.6 26.6 24.0
Amortization of intangibles.......................... 11.0 6.1 5.6
Increase (decrease) in deferred taxes................ (31.5) 7.7 1.3
Nonrecurring charges................................. 115.4 3.6 --
Equity in losses of unconsolidated subsidiaries...... 2.5 -- --
Extraordinary loss................................... 12.3 -- --
Changes in operating assets and liabilities:
(Increase) decrease in receivables................... 3.3 (14.5) (30.9)
(Increase) decrease in inventories................... 4.4 (1.9) (13.1)
(Increase) decrease in prepaid expenses and other.... 1.9 (2.4) (2.2)
Increase in accounts payable and accrued
liabilities........................................ 15.9 2.9 12.4
Decrease in other long-term liabilities.............. (27.7) (11.6) (4.6)
------- ------ ------
Cash provided by operating activities........... 71.2 44.9 22.4
Cash flows from investment activities:
Acquisition of property, plant and equipment......... (71.4) (43.4) (39.9)
Net cash acquired with joint venture investment...... 5.0 -- --
Investment in joint venture.......................... -- (3.2) --
Other, net........................................... 1.3 (5.8) (1.0)
------- ------ ------
Cash used for investment activities............. (65.1) (52.4) (40.9)
Cash flows from financing activities:
Increase (decrease) in foreign bank borrowings and
loans.............................................. (4.1) (6.4) 6.0
Retirement of long term debt......................... (106.4) -- --
Retirement of acquired long term debt................ (137.7) -- --
Proceeds from issuance of long term debt............. 673.5 -- --
Common stock repurchase.............................. (506.1) -- --
Proceeds from equity infusion, net of costs.......... 185.4 -- --
Dividends paid to stockholders....................... (0.5) (1.1) (1.1)
Fees paid to issue long term debt.................... (35.0) -- --
Increase (decrease) in bank revolving loan and other
domestic loans..................................... (29.5) 16.3 8.6
------- ------ ------
Cash provided by financing activities........... 39.6 8.8 13.5
Effect of exchange rate changes on cash and cash
equivalents............................................. -- -- 0.2
------- ------ ------
Increase (decrease) in cash and cash
equivalents................................... 45.7 1.3 (4.8)
Cash and cash equivalents at beginning of year............ 1.8 0.5 5.3
------- ------ ------
Cash and cash equivalents at end of year.................. $ 47.5 $ 1.8 $ 0.5
======= ====== ======

See accompanying notes to consolidated financial statements.

F-7
72

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(1) ORGANIZATION

Organization

Unless otherwise indicated, references to "Company" mean Hayes Wheels
International, Inc. and its subsidiaries and reference to fiscal year means the
Company's year ended January 31 of the following year (e.g., "fiscal 1996"
refers to the period beginning February 1, 1996 and ending January 31, 1997,
"fiscal 1995" refers to the period beginning February 1, 1995 and ending January
31, 1996 and "fiscal 1994" refers to the period beginning February 1, 1994 and
ending January 31, 1995).

The Company designs, engineers and manufactures steel and aluminum wheels
and brake components, principally to original equipment manufacturers ("OEMs")
of passenger cars, light trucks and commercial highway vehicles worldwide. The
Company's products include one-piece cast aluminum wheels, fabricated aluminum
wheels, fabricated steel wheels, full-faced cast aluminum wheels, clad covered
wheels and brake drums, hubs and rotors.

On December 6, 1996, the Company's Board of Directors declared a stock
split to be effected in the form of a stock dividend which resulted in the
issuance of one additional share of the Company's common stock for every
outstanding share of common stock. All share information included in the
accompanying financial statements and footnote information has been adjusted to
reflect the effect of the stock split.

In October, 1996, the Company exercised its right to increase its ownership
in Hayes Wheels Autokola N.H. a.s. ("Autokola") from 45% to 58% in consideration
for a cash contribution of $6.0 million. As a result of the increased ownership,
financial results for Autokola have been included in the consolidated financial
statements of the Company since November, 1996.

On July 2, 1996, the Company consummated a merger between MWC Holdings,
Inc. ("Holdings") and the Company, (the "Merger") pursuant to which, among other
things, Holdings was merged with and into the Company, with the Company as the
surviving corporation. As a result of the Merger, Motor Wheel Corporation, a
wholly owned subsidiary of Holdings ("Motor Wheel"), became a wholly owned
subsidiary of the Company.

Immediately prior to the Merger and as part of the financing thereof (the
"Recapitalization"), the Company issued and sold to certain new investors (i) an
aggregate of 200,000 shares of Company Preferred Stock, which upon consummation
of the Merger were converted into an aggregate of 12,500,000 shares of new
common stock, and (ii) 300,000 warrants, in exchange for aggregate cash
consideration, net of related costs, of $185.4 million. The Company also issued
new long-term debt totaling $673.5 million which was utilized along with the
equity infusion to (i) retire $106.4 million principal amount plus redemption
premium of the Company's 9 1/4% Senior Notes due 2002; (ii) retire all existing
senior debt of Motor Wheel at the time of the acquisition; and (iii) repurchase
31,633,200 shares of the Company's common stock.

The Company acquired Holdings for a total purchase price of approximately
$105.4 million which included (i) the issuance of 6,250,000 shares of new common
stock, and (ii) 2,300,000 warrants. The merger was accounted for under the
purchase method of accounting with the results of operations of Motor Wheel
included in the accompanying financial statements from the date of the Merger.
The fair value of the assets acquired, including goodwill, was $420.8 million
and liabilities assumed totaling $315.4 million. Goodwill and other intangibles
of $224.5 million are being amortized over a 40-year life on a straight-line
basis.

F-8
73

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(1) ORGANIZATION -- (CONTINUED)
Unaudited pro forma results of operations, assuming the Merger and
Recapitalization had been completed on February 1, 1995, are as follows (dollars
in millions, except per share amounts):

UNAUDITED
--------------------------
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Net sales............................................... $913.1 $968.3
Earnings (loss) from operations......................... (50.9) 43.9
Net loss................................................ (85.4) (17.4)
Net loss per common share............................... $(3.81) $(0.78)

The pro forma results are not necessarily indicative of the actual results
if the transactions had been in effect for the entire period 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.

(2) SUMMARY OF ACCOUNTING PRINCIPLES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. The Company's investments in
joint ventures are accounted for under the equity method. Financial position and
results of operations for these entities as of, and for the twelve months ended
January 31, 1997, 1996 and 1995, respectively, were not material to the
consolidated financial statements of the Company.

Revenue Recognition

Sales are recorded when products are shipped to customers.

Inventories

Inventories are stated at the lower of cost or market, with cost determined
by the last in, first out (LIFO) method for a portion of domestic inventories.
Cost for other inventories, including foreign, which were approximately 48
percent and 62 percent of inventories at January 31, 1997 and 1996,
respectively, are stated using the first in, first out (FIFO) or average cost
method. Cost includes the cost of materials, direct labor and the applicable
share of manufacturing overhead.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is
generally provided on a straight-line basis at rates which are designed to write
off the assets over their estimated useful lives, principally as follows:

Buildings................................................... 25 years
Machinery and equipment..................................... 12 to 14 years

Expenditures for maintenance, repairs and minor replacements of $28.1
million, $22.8 million and $18.5 million for the years ended January 31, 1997,
1996 and 1995, respectively, were charged to expense as incurred.

F-9
74

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(2) SUMMARY OF ACCOUNTING PRINCIPLES -- (CONTINUED)
Special Tooling

Expenditures made to meet special tooling requirements are capitalized.
Special tooling which is reimbursable by the customer is classified as either a
current asset or noncurrent asset, depending upon the expected time of
reimbursement. Special tooling which is not reimbursable by the customer is
classified as a noncurrent asset and is charged to expense on a pro rata basis
over its estimated useful life.

Goodwill

Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over 40 years.
Recoverability is reviewed annually or sooner if events or changes in
circumstances indicate that the carrying amount may exceed fair value.
Recoverability is then determined by comparing the undiscounted net cash flows
of the assets to which the goodwill applies to the net book value including
goodwill of those assets.

Research and Development Costs

Research and development costs are expensed as incurred. Amounts expensed
during the years ended January 31, 1997, 1996 and 1995, were approximately $3.1
million, $2.3 million and $2.2 million, respectively.

Financial Instruments

The carrying amounts of cash and cash equivalents, receivables, and
accounts payable and accrued liabilities approximate fair value because of the
short maturity of these instruments. The carrying amount of bank borrowings,
variable rate long-term debt, and other liabilities approximate market value, as
interest rates vary with market rates. The fair value of fixed rate debt is
discussed in Note 7.

In accordance with industry practice, the costs or benefits of fluctuations
in aluminum prices are passed through to customers. Futures contracts and
purchase commitments are entered into by the Company, from time to time, to
hedge its exposure to future increases in aluminum prices that may occur between
the dates of aluminum wheel price adjustments. Outstanding contracts represent
future commitments and are not included in the consolidated balance sheet.
Substantially all of such contracts mature within a period of three months.
Gains or losses resulting from the liquidation of futures contracts are
recognized in the income statement currently as part of costs of goods sold.

The Company has entered into interest rate cap agreements to minimize the
impact of increases in short-term interest rates on its debt. The costs of
interest rate cap agreements are included in interest expense ratably over the
lives of the agreements. The unamortized costs of the cap agreements are
included in other assets and approximate fair value.

Foreign Currency Translation

Translation of assets and liabilities of subsidiaries denominated in
foreign currencies, other than those located in highly inflationary countries,
are translated at the rate of exchange in effect on the balance sheet date;
income and expenses are translated at the average rates of exchange prevailing
during the year. The related translation adjustments are reflected in the
cumulative translation adjustment section of Stockholders' Equity (Deficit).
Foreign currency gains and losses resulting from transactions and the
translation of financial statements of subsidiaries in highly inflationary
countries are included in results of operations.

F-10
75

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(2) SUMMARY OF ACCOUNTING PRINCIPLES -- (CONTINUED)
Pensions

The Company has trusteed noncontributory pension plans covering
substantially all domestic employees and funds at least the minimum required by
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

Taxes on Income

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

No provision is necessary for future United States taxes on the
undistributed portion of the Company's equity in earnings of foreign affiliates,
since it is anticipated that the unremitted earnings will be permanently
invested for growth and expansion.

Environmental Compliance and Remediation

Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations and that do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable and the costs can be reasonably
estimated. Estimated costs are based upon enacted laws and regulations, existing
technology and the most probable method of remediation. The costs determined are
not discounted and exclude the effects of inflation and other societal and
economic factors. Where the cost estimates result in a range of equally probable
amounts, the lower end of the range is accrued. Amounts accrued for
environmental compliance and remediation are not material to the consolidated
financial statements as of January 31, 1997 and 1996.

Statement of Cash Flows

For purposes of reporting cash flows, the Company considers all investments
with an original maturity of three months or less to be cash equivalents. The
following is additional information to the Consolidated Statements of Cash Flows
(millions of dollars):

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Cash paid for interest........................ $40.0 $13.8 $12.8
Cash paid for income taxes.................... 7.7 12.0 21.4
Non-cash financing activity:
Acquisition of Motor Wheel.................. 105.4 -- --

F-11
76

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(2) SUMMARY OF ACCOUNTING PRINCIPLES -- (CONTINUED)
Postretirement and Postemployment Benefits

The Company accounts for postretirement benefits other than pensions using
an accrual basis method of accounting recognizing the cost of these benefits
over an employee's active working career. The Company will continue its policy
of paying postretirement benefits as they become due.

Impairment of Assets

The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of" on February 1, 1996. This Statement
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The adoption of SFAS No. 121
did not have a material effect on the Company's consolidated financial
statements.

Stock-Based Compensation

Prior to February 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
February 1, 1996, the Company adopted SFAS No. 123 Accounting for Stock-Based
Compensation, which allows entities to continue to apply the provisions of APB
Opinion No. 25, and provide pro forma net income and pro forma earnings per
share disclosures for employee stock option grants made in fiscal 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
See Note 13.

Earnings Per Share

Per share income is calculated based on the number of weighted average
shares outstanding at the end of the year. The dilutive effect of common stock
equivalents has not been reflected as the effect is immaterial or anti-dilutive
to the calculation of per share income.

Use of Estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent liabilities to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ from those
estimates.

F-12
77

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(3) INVENTORIES

The major classes of inventory are as follows (millions of dollars):

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Raw materials............................................ $32.0 $19.7
Work-in-process.......................................... 21.1 13.5
Finished goods........................................... 29.8 25.7
----- -----
Total.................................................. $82.9 $58.9
===== =====

The replacement value of LIFO inventories approximates carrying value.

(4) GOODWILL AND OTHER ASSETS

Goodwill and other assets consist of the following (millions of dollars):

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Goodwill and other intangibles........................... $328.4 $110.3
Unamortized debt issuance costs.......................... 29.5 3.6
Deferred tax assets...................................... 18.0 --
Other.................................................... 31.3 35.4
------ ------
Total............................................... $407.2 $149.3
====== ======

Goodwill and other intangibles are presented net of accumulated
amortization of $35.8 million and $27.3 million at January 31, 1997 and 1996,
respectively.

(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following (millions
of dollars):

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Accounts payable......................................... $160.8 $ 86.8
Employee costs........................................... 24.1 19.7
Accrued interest......................................... 7.4 2.1
Other accrued liabilities................................ 52.5 16.9
------ ------
Total............................................... $244.8 $125.5
====== ======

F-13
78

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(6) TAXES ON INCOME

The components of pre-tax income (loss) are as follows (millions of
dollars):

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

United States................................. $(127.6) $34.6 $42.8
Foreign....................................... 13.3 11.6 7.1
------- ----- -----
$(114.3) $46.2 $49.9
======= ===== =====

The provision for taxes on income is summarized as follows (millions of
dollars):

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Current:
Federal and state........................... $(15.8) $ 4.5 $15.0
Foreign..................................... 4.1 4.0 2.2
------ ----- -----
$(11.7) $ 8.5 $17.2
Deferred:
Federal and state........................... $(29.3) $ 9.4 $ 2.6
Foreign..................................... (0.6) (0.1) 0.2
------ ----- -----
(29.9) 9.3 2.8
------ ----- -----
Less: Extraordinary items (Note 8).......... 4.9 -- --
------ ----- -----
Taxes on income excluding extraordinary
items............................... $(36.7) $17.8 $20.0
====== ===== =====

A reconciliation of federal income tax computed at the statutory 35% rate
to the actual provision for taxes on income follows (millions of dollars):

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Federal taxes computed at statutory rate....... $(40.0) $16.2 $17.5
Increase (decrease) resulting from:
Unrecognized tax benefit from net operating
loss carryforwards........................ 0.8 1.2 --
Tax benefit from foreign sales corporation... -- (0.5) (0.5)
Expiring foreign net operating loss.......... -- 0.7 2.4
Effective tax rate differential on earnings
of consolidated foreign affiliates........ (0.8) (0.4) 1.4
Permanent differences resulting from purchase
accounting................................ 2.3 0.9 0.9
Change in valuation allowance for foreign NOL
carryforward/deferred tax asset........... (0.8) (1.9) (2.4)
All other items.............................. (3.1) 1.6 0.7
------ ----- -----
Income tax expense (benefit)............ $(41.6) $17.8 $20.0
====== ===== =====

F-14
79

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(6) TAXES ON INCOME -- (CONTINUED)
Deferred tax assets (liabilities) result from differences in the basis of
assets and liabilities for tax and financial statement purposes. The cumulative
tax effect of the major items follows (millions of dollars):

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Deferred tax assets:
Nondeductible accrued liabilities...................... $103.1 $ 24.7
Net operating loss and tax credit carryforwards........ 24.3 2.8
Pension................................................ 9.0 7.6
------ ------
Total gross deferred tax assets..................... 136.4 35.1
Less valuation allowance............................... (19.7) (2.5)
------ ------
Net deferred tax assets............................. $116.7 $ 32.6
Deferred tax liabilities:
Fixed assets, principally due to differences in
depreciation........................................ (90.9) (66.3)
Intangibles............................................ (7.8) (8.0)
Inventory.............................................. -- (2.8)
All other items........................................ -- (3.6)
------ ------
Total gross deferred tax liabilities................ (98.7) (80.7)
------ ------
Net deferred tax asset (liabilities)................ $ 18.0 $(48.1)
====== ======

The Company has recorded a valuation allowance to reflect the estimated
amount of deferred tax assets which may not be realized principally due to the
inability of subsidiaries to fully utilize available net operating loss
carryforwards which expire through the year 2011. The subsequent recognition of
tax benefits relating to the valuation allowance will be reported in the
consolidated statement of operations $(9.7) million or as a reduction of
goodwill $(10.0) million as opportunities to utilize these carryforwards become
more certain.

(7) LONG-TERM DEBT AND BANK BORROWINGS

Long-term debt and bank borrowings of the Company consists of the following
(millions of dollars):

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

11% Senior Subordinated Notes due 2006................... $250.0 $ --
9 1/4% Senior Notes due November 15, 2002................ 1.5 100.0
Bank Term Notes.......................................... 423.5 28.6
Other domestic loans maturing through 2001 with a fixed
annual rate of 6.5%.................................... 0.7 --
Various foreign bank and government loans maturing
through 2003, weighted average interest rate of 8.8%
and 11.9% at January 31, 1997 and 1996................. 34.5 0.4
------ ------
710.2 129.0
Less current portion..................................... 23.9 0.1
------ ------
$686.3 $128.9
====== ======

F-15
80

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(7) LONG-TERM DEBT AND BANK BORROWINGS -- (CONTINUED)
The Company entered into a Credit Agreement, dated June 27, 1996, which
replaced the previous $180 million revolving credit agreement. The Credit
Agreement provides senior bank financing consisting of the following (millions
of dollars):

Revolving credit facility, including up to $75 million of
letters of credit, expiring on July 31, 2002.............. $220.0
Tranche A Term Notes, maturing through July 31, 2002........ 198.5
Tranche B Term Notes, maturing through July 31, 2003........ 125.0
Tranche C Term Notes, maturing through July 31, 2004........ 100.0
------
$643.5
======

Borrowings on these facilities bear interest at one of the following rates
as selected by the Company: (i) the rate per annum equal to the London Interbank
Offered Rate ("LIBOR") plus the applicable margin or (ii) the bank's Alternate
Base Rate, as defined in the Credit Agreement ("ABR"), plus the applicable
margin. The ABR is defined as the highest of (i) the bank's prime rate or (ii)
the Federal Funds rate plus 1/2% or (iii) a certificate of deposit-based rate
plus 1%. The applicable margins under each of the loans as of January 31, 1997,
are as follows:

ABR LIBOR
----- -----

Revolving Credit............................................ 1.50% 2.50%
Tranche A................................................... 1.50% 2.50%
Tranche B................................................... 2.00% 3.00%
Tranche C................................................... 2.50% 3.50%

At January 31, 1997, the Company was paying interest on the Term Notes at
an average LIBOR-based interest rate of 8.39%.

The Company pays a commitment fee on the unused portion of the revolving
credit facility which was at a rate of 0.5% at January 31, 1997. The Company had
available revolver borrowing capacity under the Credit Agreement of $182.5
million, including unused letters of credit totaling $37.5 million as of January
31, 1997.

The Credit Agreement and certain foreign bank borrowings contain financial
covenants. The Company was in compliance with such covenants at January 31,
1997. The Credit Agreement is secured by a first priority lien on substantially
all of the properties and assets of the Company and its domestic subsidiaries,
now owned or acquired later, including a pledge of all of the shares of certain
of the Company's existing and future domestic subsidiaries and 65% of the shares
of certain of the Company's existing and future foreign subsidiaries.

In connection with the Merger and Recapitalization, the Company commenced
an offer to repurchase its 9 1/4% Senior Notes, of which substantially all were
tendered. Accordingly, the Company recorded an extraordinary loss of $12.3
million ($7.4 million, net of tax) related to the early retirement of debt. The
extraordinary loss was comprised of a prepayment penalty and deferred debt
issuance costs. The 11% Senior Subordinated Notes were issued on July 2, 1996.
The Notes are redeemable at the Company's option at specified prices, in whole
or in part, at any time on or after July 15, 2001. The Senior Subordinated Notes
are guaranteed by the Company's domestic subsidiaries, but are subordinated to
the Credit Agreement. The Company believes that as of January 31, 1997, the
market value of the Senior Notes exceeds their recorded value by approximately
10%.

F-16
81

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(7) LONG-TERM DEBT AND BANK BORROWINGS -- (CONTINUED)
Principal repayments on long-term debt and bank borrowings during the next
five years ending January 31 are as follows (millions of dollars): 1998-$23.9;
1999-$38.9; 2000-$48.7; 2001-$48.7; 2002-$54.0 and thereafter-$496.0. Bank
borrowings consist of short-term notes of the Company's foreign subsidiaries.

During the year, the Company entered into interest rate hedge agreements
with the objective of managing interest costs and exposure to changing interest
rates. The Credit Agreement requires the Company to provide interest rate
protection on a portion of the related outstanding indebtedness. Strategies for
achieving the Company's objectives have resulted in the Company maintaining
interest rate cap agreements covering an aggregate principal amount of $300
million in floating rate indebtedness at January 31, 1997. Various agreements
have been entered into with several banks and, on average, provide protection
against LIBOR rates higher than 6.67%, for an average of 2.3 years. Premiums
paid for these cap agreements are amortized to interest expense over the term of
the agreement. The unamortized costs of the cap agreements are included in other
assets and approximate fair value. The notional amount of interest rate cap
agreements do not represent amounts exchanged by the parties and are not a
measure of the Company's exposure to credit or market risks. The amounts
exchanged are calculated on the basis of the notional amounts and the other
terms of the cap agreements. Notional amounts are not included in the
consolidated balance sheet.

(8) LEASES

The Company leases certain production facilities and equipment under
agreements expiring from 1998 to 2002. The following is a schedule of future
minimum rental payments required under operating leases that have initial or
remaining noncancelable lease terms in excess of one year as of January 31, 1997
(millions of dollars):

YEAR ENDING JANUARY 31:
-----------------------

1998........................................................ $13.6
1999........................................................ 10.8
2000........................................................ 8.6
2001........................................................ 7.6
2002 and later years........................................ 25.9
-----
Total minimum payments required............................. $66.5
=====

Rent expense was $13.9 million, $7.8 million and $6.0 million for the years
ended January 31, 1997, 1996 and 1995, respectively.

F-17
82

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(9) PENSION PLANS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The components of net pension cost included in operating results for the
years ended January 31, 1997, 1996 and 1995 are as follows (millions of
dollars):

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Service cost.................................. $ 1.5 $ 0.8 $ 1.1
Interest on projected benefit obligation...... 8.9 5.1 4.7
Actual return on plan assets.................. (10.4) (5.0) (1.6)
Net amortization and deferral................. 3.8 3.1 (0.3)
------ ----- -----
Net pension cost............................ $ 3.8 $ 4.0 $ 3.9
====== ===== =====
Discount rate................................. 7.50% 7.50% 8.25%
Assumed rate of return........................ 9.00% 9.00% 8.50%

The following table sets forth the plans' funded status (millions of
dollars):

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Actuarial present value of benefit obligations:
Vested employees......................................... $ 151.2 $ 56.5
Nonvested employees...................................... 9.4 9.2
------- ------
Accumulated benefit obligation........................... 160.6 65.7
Projected benefit obligation............................. 163.9 67.6
Plan assets at fair value (principally listed stocks and
bonds)................................................. (125.8) (38.0)
------- ------
Projected benefit obligation in excess of plan assets.... 38.1 29.6
Unrecognized net losses.................................. (5.5) (4.8)
Unrecognized prior service cost.......................... (3.9) (4.3)
Adjustment required to recognize minimum liability....... 6.7 7.1
------- ------
Accrued pension cost................................ $ 35.4 $ 27.6
======= ======

The Company's defined benefit pension plans generally provide benefits
based on years of service. The projected unit credit funding method was used.
Prior service costs and actuarial gains and losses are generally amortized over
the average remaining service period of active employees.

Effective January 1, 1995, the Company modified the defined benefit
Salaried Pension Plan to freeze credited service and remove salary caps that had
been instituted in 1991. Assumed rates of increase in future compensation levels
for the Salaried Pension Plan range from 5 percent to 6 percent. In conjunction
with this change, the Company increased the basic contribution of the existing
salary defined contribution plan.

In connection with the Merger in July 1996, the Company was required to
contribute $10 million and $4 million to the Hayes Wheels and Motor Wheel
pension plans, respectively, as part of an agreement with the Pension Benefit
Guaranty Corporation ("PBGC"). Under this agreement, the Company is required to
provide contributions to the plans of $16 million, $13 million and $11 million
as of June 30, 1997, 1998 and 1999, respectively. To secure these contributions,
the Company provided the PBGC with an irrevocable letter of credit for the
benefit of the PBGC in the amount of $14 million. The letter of credit will be
reduced to $5 million after the Company contributes $13 million and $10 million
as of June 30, 1997 and 1998, respectively,

F-18
83

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(9) PENSION PLANS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- (CONTINUED)
to the Hayes Wheels plans. Once all of the required contributions are made, the
letter of credit will be canceled.

The Company also has contributory employee retirement savings plans
covering substantially all of its employees. The employer contribution is
determined at the discretion of the Company and totaled approximately $2.7
million, $2.7 million and $0.9 million for the years ended January 31, 1997,
1996 and 1995, respectively.

The Company provides comprehensive medical and group life benefits to
certain of its United States retirees who elect to participate in the Company's
medical and group life plans. The medical plan contributions are adjusted
periodically; the life insurance plan is non-contributory.

For the year ended January 31, 1997, 1996 and 1995, the components of
postretirement benefits expense (income) were as follows:

YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995
----------- ----------- -----------

Service cost (benefits earned during the
period)..................................... $ 0.4 $ 0.3 $ 0.6
Interest cost on accumulated postretirement
benefit obligations......................... 5.0 2.6 2.6
Net amortization.............................. (3.7) (4.1) (3.8)
----- ----- -----
Total....................................... $ 1.7 $(1.2) $(0.6)
===== ===== =====
Discount rate................................. 7.50% 7.50% 8.25%

At January 31, 1997 and 1996, the recorded actuarial liabilities for these
postretirement benefits are as follows:

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

Retirees................................................. $ 96.1 $22.6
Fully eligible active participants....................... 21.7 4.6
Other active participants................................ 10.5 10.2
------ -----
Subtotal............................................... $128.3 $37.4
Unamortized gains........................................ 9.9 9.8
------ -----
Total.................................................. $138.2 $47.2
====== =====

The assumed health care cost trend was 7.0% (8.0% at January 31, 1996) and
was assumed to decrease by 1% per annum to an ultimate rate of 5%. This
assumption was modified in the case of the plan that was capped. The Company
estimates an increase in the assumed health care cost trend rate of 1% per year
would increase the accumulated postretirement benefit obligation as of January
31, 1997 and 1996 by $0.9 million but would have no effect on the aggregate of
the service and interest components of postretirement benefit expense for the
year ended January 31, 1997 and 1996.

The anticipated workforce reductions resulting from closure of the Romulus
Plant resulted in the recognition of $18.0 million of net curtailment loss in
fiscal 1996 related to both pension and postretirement benefits.

F-19
84

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(9) PENSION PLANS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- (CONTINUED)
One of the Company's European subsidiaries provides benefits to its
employees through unfunded retirement arrangements. At January 31, 1997 and
1996, $4.7 million and $4.4 million, respectively, were accrued for such
obligations.

(10) NONRECURRING CHARGES

On January 9, 1997, the Company announced that it was ceasing manufacturing
operations at its fabricated wheel facility in Romulus, Michigan and
consolidating such manufacturing operations into other fabricated wheel
facilities of the Company. This action is based on the continued decline in the
market for fabricated steel wheels and the merger with Motor Wheel which added
fabricated steel wheel manufacturing capacity to the Company's operations. In
connection with the closure, certain property, plant and equipment will be idled
and disposed of, other excess assets disposed of and the service of
approximately 450 active employees will be terminated. Management expects these
actions to be fully implemented by the end of calendar year 1997. The Company
has recorded a charge totaling $109.0 million for the fiscal year ended January
31, 1997, which consists of $63.0 million to writedown assets to estimated
realizable values; $25.0 million for pension and postretirement benefits; and
$21.0 million for termination benefits and other exit costs. At January 31,
1997, $31.0 million of the plant closure reserve was reflected as a current
accrued liability and $75.7 million was included in other long-term liabilities
on the accompanying consolidated balance sheet.

In connection with the Merger, the Company recorded nonrecurring charges of
$6.4 million. These charges consist of the elimination of $2.9 million of
deferred costs resulting from a previous patent infringement suit with Motor
Wheel and $3.5 million of stock compensation recorded in conjunction with the
payout of the management stock option plan. In addition, the Company assumed
plant closure liabilities of Holdings of $27.4 million relating to actions
undertaken by Holdings in fiscal 1995 and 1994 to close manufacturing operations
in its automotive wheel and brake businesses. As of January 31, 1997, $22.7
million of these liabilities remain on the balance sheet of the Company.

During the fourth quarter of fiscal 1995, the Company recognized
nonrecurring charges of $3.6 million. These charges include a $1.4 million
provision associated with the restructuring of the North American Aluminum Wheel
Group and $2.2 million of charges associated with Varity Corporation's proposal
to purchase the Company's outstanding shares not owned by Varity (at the time
the owner of 46.3% of the Company's outstanding common stock), which proposal
was made on September 27, 1995, and withdrawn on February 5, 1996.

(11) 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.

(12) OTHER EQUITY INVESTMENTS

The Company holds the following investments which are accounted for under
the equity method.

As a result of the Merger, the Company acquired a 50% interest in Aluminum
Wheel Technology, Inc. ("Alumitech"), a manufacturer of cast aluminum wheels,
and a 50% interest in Riviera Tool Company, a manufacturer of stamping dies that
are sold to domestic automobile manufacturers and their suppliers. Subsequent to
year end, as a result of a public offering of stock by Riviera Tool Company, the
Company's interest in Riviera Tool Company was reduced to 29.6%

F-20
85

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(12) OTHER EQUITY INVESTMENTS -- (CONTINUED)
In fiscal 1995, the Company increased its ownership in Hayes Wheels de
Venezuela, C.A. to 49% in consideration for a contribution to the joint venture
of $1.4 million, which included capital equipment, tooling and a cash payment.

In fiscal 1995, the Company purchased a 40% interest in the wheel business
of Kelsey-Hayes de Mexico, S.A. de C.V. ("KHDM") for $0.2 million and made a
capital contribution of $2.0 million. KHDM was then renamed Hayes Wheels de
Mexico, S.A. de C.V.

The Company holds a 49% interest in Metalurgica FPS do Brasil, Ltda.

The aggregate financial position and results of operations for these
entities as of, and for the twelve months ended January 31, 1997, 1996 and 1995,
respectively, were not material to the consolidated financial statements of the
Company.

(13) STOCK OPTIONS AND WARRANTS

In 1992, the Company adopted the Hayes Wheels International, Inc. 1992
Stock Incentive Plan (the "1992 Plan"), under which 500,000 shares of Common
Stock are available for issuance with respect to awards granted to officers,
management and other key employees of the Company. In connection with the Merger
and Recapitalization, certain of the stock options were exercised with the
remainder becoming vested. At January 31, 1997, 301,100 options were exercisable
at a price of $10.00, 161,900 options were exercisable at a price of $19.94, and
7,500 options were exercisable at a price of $19.69.

At the time of the Recapitalization, the Company established the Hayes
Wheels International, Inc. 1996 Stock Option Plan (the "1996 Plan"), which plan
remains subject to certain approvals required by applicable law, under which
2,534,770 shares of Common Stock are available for issuance with respect to
awards granted to officers, management and other key employees of the Company.
Each such option grant is divided into five tranches (each, a "Tranche") of an
equal number of options. The options in each such Tranche vest when both of the
following conditions have been met: (a) 20% of each Tranche vests on the last
day of each fiscal year commencing on January 31, 1997, and continuing until
January 31, 2001, if the employee to whom they were granted is then still an
employee of the Company; and (b) the average share price for any twenty
consecutive day period on the principal exchange upon which the Common Stock is
traded equals or exceeds certain specified prices (the "Target Prices") ranging
from $16.00 per share for the first Tranche and increasing ratably to $80.00 per
share for the fifth Tranche. A particular Target Price need only be reached on
one occasion for all options within the Tranche to which such Target Price
relates to become vested, subject to the satisfaction of the condition to such
vesting set forth in clause (a) above. In addition, notwithstanding the
foregoing conditions to vesting, the options granted under the 1996 Plan become
exercisable nine years after their grant date if the employee to whom they were
granted is then still an employee of the Company. At January 31, 1997, awards
for 76,043 stock options under the first tranche of the 1996 Plan were
exercisable, subject to the approvals described above.

Also, in connection with the Merger, 150,702 options with an exercise price
of $2.05 were granted to a former shareholder of Holdings. Of these stock
options, 90,470 are exercisable, with the remainder becoming exercisable on July
2, 1997.

F-21
86

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(13) STOCK OPTIONS AND WARRANTS -- (CONTINUED)
Information with respect to all stock options is summarized below:

1992 PLAN 1996 PLAN OTHER TOTAL
--------- --------- ------- ---------

Outstanding at January 31, 1995....... 464,100 -- -- 464,100
Granted............................... 266,000 -- -- 266,000
Exercised............................. -- -- -- --
Expired............................... (80,000) -- -- (80,000)
-------- --------- ------- ---------
Outstanding at January 31, 1996....... 650,100 -- -- 650,100
Granted............................... 301,100 1,901,077 150,702 2,352,879
Exercised............................. (480,700) -- -- (480,700)
-------- --------- ------- ---------
Outstanding at January 31, 1997....... 470,500 1,901,077 150,702 2,522,279
======== ========= ======= =========

The Company applies APB Opinion 25 and related Interpretations in
accounting for stock options. Compensation cost charged against operations for
1996 was $3.5 million which reflects amounts paid in connection with the
exercise of certain of the stock options granted under the 1992 Plan.

In compliance with SFAS No. 123, the Company has elected to provide the pro
forma disclosure. As such, the Company's net income (loss) and earnings (loss)
per share for 1996 and 1995 adjusted to reflect pro forma amounts are indicated
below:

1996 1995
------ -----

Net income (loss)
As reported............................................... $(72.9) $28.4
Pro forma................................................. (75.1) 28.2
Earnings (loss) per share
As reported............................................... $(2.63) $0.81
Pro forma................................................. (2.73) 0.80

The fair value of stock options granted in 1996 and 1995 was estimated on
the date of grant using the Black-Scholes option-pricing model. The weighted
average fair values and related assumptions were:

1996 1995
--------- ---------

Weighted average fair value............................... $9.32 $4.74
Expected volatility....................................... 41.2% 40.3%
Risk free interest rate................................... 6.8% 6.2%
Expected lives............................................ 8.7 years 6.7 years

Dividend yield for all grants was assumed to be insignificant.

At January 31, 1997, warrants, issued in conjunction with the Merger and
Recapitalization, to purchase 2.6 million common shares were outstanding. Each
warrant allows the holder thereof to acquire one share of Common Stock for a
purchase price of $24.00. The warrants are exercisable from July 2, 2000 through
July 2, 2003.

F-22
87

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(14) INFORMATION BY GEOGRAPHIC AREA

The Company operates principally in one segment -- the design, manufacture
and supply of wheels and brake components to OEMs of automobiles, light trucks
and commercial highway vehicles. Operating data and identifiable assets by
geographic area follow (millions of dollars):

EARNINGS (LOSS) BEFORE TAXES ON INCOME,
REVENUE(1) MINORITY INTEREST AND EXTRAORDINARY ITEMS
--------------------------------------- ------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ------------ ------------ ------------

North America............. $689.5 $527.3 $474.9 $ (67.8) $ 48.4 $ 54.6
Europe(2)................. 88.7 83.8 62.7 14.3 12.8 8.7
------ ------ ------ ------- ------ ------
Totals.................. 778.2 611.1 537.6 (53.5) 61.2 63.3
General corporate(3)...... -- -- -- -- -- --
Interest expense.......... -- -- -- (48.5) (15.0) (13.4)
------ ------ ------ ------- ------ ------
Consolidated totals....... $778.2 $611.1 $537.6 $(102.0) $ 46.2 $ 49.9
====== ====== ====== ======= ====== ======

YEAR-END
IDENTIFIABLE ASSETS
-------------------------

JANUARY 31, JANUARY 31,
1997 1996
----------- -----------

North America............. $ 988.9 $552.8
Europe(2)................. 164.7 77.5
-------- ------
Totals.................. 1,153.6 630.3
General corporate(3)...... 29.5 3.6
Interest expense.......... -- --
-------- ------
Consolidated totals....... $1,183.1 $633.9
======== ======

- ---------------
(1) Sales were made to three major automotive customers each in amounts
exceeding 10 percent of total sales. Sales to one of these customers totaled
$185.3 million in fiscal 1996, $197.6 million in fiscal 1995 and $180.3
million in fiscal 1994. Sales to another customer totaled $182.5 million in
fiscal 1996, $161.0 million for fiscal 1995 and $130.5 million for fiscal
1994. Sales to a third major customer totaled $205.4 million in fiscal 1996,
$129.1 million for fiscal 1995 and $122.5 million for fiscal 1994.

(2) Europe includes subsidiaries in Italy, Spain and the Czech Republic.

(3) General corporate assets are unamortized debt issuance costs.

(15) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following represents the Company's quarterly results (millions of
dollars, except share amounts):

QUARTERS ENDED
---------------------------------------------------------------------------------------------------
JANUARY 31, OCTOBER 31, JULY 31, APRIL 30, JANUARY 31, OCTOBER 31, JULY 31, APRIL 30,
1997 1996 1996 1996 1996 1995 1995 1995
----------- ----------- -------- --------- ----------- ----------- -------- ---------

Net Sales............... $222.3 $234.4 $165.3 $156.2 $142.1 $157.9 $151.4 $159.7
Gross profit............ 33.5 35.9 11.0 22.6 22.9 25.2 23.0 26.6
Net income (loss)....... (66.8) 4.7 (16.9) 6.1 4.9 8.0 7.2 8.3
Net income (loss) per
share................. $(2.98) $ 0.21 $(0.54) $ 0.17 $ 0.14 $ 0.23 $ 0.20 $ 0.24

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS

In connection with the Merger and as part of the financing thereof, the
Company issued and sold $250 million aggregate principal amount of its 11%
Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes") in a public
offering. The Senior Subordinated Notes 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's
domestic subsidiaries.

The following condensed consolidating financial information presents:

(1) Condensed consolidating financial statements as of January 31,
1997 and 1996 and for the twelve month periods ended January 31, 1997, 1996
and 1995, of (a) Hayes Wheels International, Inc.,

F-23
88

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
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 Wheels
International, Inc., the parent, with 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 principle
elimination entries eliminate investments in subsidiaries and intercompany
balances and transactions.

F-24
89

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 31, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------

Cash and cash equivalents.............. $ 41.2 $ (0.6) $ 6.9 $ -- $ 47.5
Receivables............................ 51.0 62.9 31.3 -- 145.2
Inventories............................ 36.4 34.5 12.0 -- 82.9
Prepaid expenses and other............. 3.3 3.5 7.4 (0.3) 13.9
------- ------ ------ ------- --------
Total current assets................. 131.9 100.3 57.6 (0.3) 289.5
Property, plant and equipment.......... 249.2 267.9 116.2 -- 633.3
Accumulated depreciation............... (49.1) (67.1) (30.7) -- (146.9)
------- ------ ------ ------- --------
Net property, plant and equipment.... 200.1 200.8 85.5 -- 486.4
Goodwill and other assets.............. 345.8 323.9 12.6 (275.1) 407.2
------- ------ ------ ------- --------
Total assets......................... $ 677.8 $625.0 $155.7 $(275.4) $1,183.1
======= ====== ====== ======= ========
Bank borrowings........................ $ -- $ -- $ 5.6 $ -- $ 5.6
Current portion of long-term debt...... 17.4 -- 6.5 -- 23.9
Accounts payable and accrued
liabilities.......................... 105.2 97.7 42.2 (0.3) 244.8
------- ------ ------ ------- --------
Total current liabilities............ 122.6 97.7 54.3 (0.3) 274.3
Long-term debt, net of current
portion.............................. 658.3 -- 28.0 -- 686.3
Deferred income taxes.................. (31.1) 18.0 13.1 -- --
Minority interest...................... -- 0.2 -- 8.1 8.3
Pension and other long-term
liabilities.......................... 143.2 103.3 12.1 (3.3) 255.3
Parent loans........................... (211.2) 208.0 3.2 -- --
------- ------ ------ ------- --------
Total noncurrent liabilities......... 559.2 329.5 56.4 4.8 949.9
Common stock........................... 0.2 -- -- -- 0.2
Additional paid-in capital............. 43.5 104.5 33.5 (137.9) 43.6
Retained earnings (accumulated
deficit)............................. (44.5) 93.4 9.5 (140.6) (82.2)
Cumulative translation adjustment...... (1.0) (0.1) 2.0 (1.4) (0.5)
Pension liability adjustment........... (2.2) -- -- -- (2.2)
------- ------ ------ ------- --------
Total stockholders' equity
(deficit)......................... (4.0) 197.8 45.0 (279.9) (41.1)
------- ------ ------ ------- --------
Total liabilities and stockholders'
equity (deficit).................. $ 677.8 $625.0 $155.7 $(275.4) $1,183.1
======= ====== ====== ======= ========

F-25
90

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 31, 1996

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------

Cash and cash equivalents.............. $ 1.0 $ 0.1 $ 0.7 $ -- $ 1.8
Receivables............................ 50.4 35.6 23.6 -- 109.6
Inventories............................ 36.4 18.7 3.8 -- 58.9
Prepaid expenses and other............. 3.4 3.9 2.8 (0.2) 9.9
------- ------ ------ ------- --------
Total current assets................. 91.2 58.3 30.9 (0.2) 180.2
Property, plant and equipment.......... 178.5 173.2 63.1 -- 414.8
Accumulated depreciation............... (37.2) (53.1) (20.1) -- (110.4)
------- ------ ------ ------- --------
Net property, plant and equipment.... 141.3 120.1 43.0 -- 304.4
Goodwill and other assets.............. 169.6 76.3 5.0 (101.6) 149.3
------- ------ ------ ------- --------
Total assets......................... $ 402.1 $254.7 $ 78.9 $(101.8) $ 633.9
======= ====== ====== ======= ========
Bank borrowings........................ $ -- $ -- $ 4.1 $ -- $ 4.1
Current portion of long-term debt...... -- -- 0.1 -- 0.1
Accounts payable and accrued
liabilities.......................... 78.8 26.2 20.8 (0.3) 125.5
------- ------ ------ ------- --------
Total current liabilities............ 78.8 26.2 25.0 (0.3) 129.7
Long-term debt, net of current
portion.............................. 128.6 -- 0.3 -- 128.9
Deferred income taxes.................. 18.4 18.0 11.7 -- 48.1
Pension and other long-term
liabilities.......................... 76.7 0.1 9.2 (4.2) 81.8
Parent loans........................... (115.4) 117.3 15.9 (17.8) --
------- ------ ------ ------- --------
Total noncurrent liabilities......... 108.3 135.4 37.1 (22.0) 258.8
Common stock........................... 0.4 -- -- -- 0.4
Additional paid-in capital............. 198.3 6.5 1.9 (8.4) 198.3
Retained earnings (accumulated
deficit)............................. 20.7 86.6 12.5 (70.2) 49.6
Cumulative translation adjustment...... (1.8) -- 2.4 (0.9) (0.3)
Pension liability adjustment........... (2.6) -- -- -- (2.6)
------- ------ ------ ------- --------
Total stockholders' equity
(deficit)......................... 215.0 93.1 16.8 (79.5) 245.4
Total liabilities and stockholders'
equity (deficit).................. $ 402.1 $254.7 $ 78.9 $(101.8) $ 633.9
======= ====== ====== ======= ========

F-26
91

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------

Net sales............................. $264.9.. $424.9 $91.5 $(3.1) $ 778.2
Cost of goods sold.................... 239.8 363.5 75.0 (3.1) 675.2
------- ------ ----- ----- -------
Gross profit........................ 25.1 61.4 16.5 -- 103.0
Marketing, general and
administration...................... 7.8 23.0 5.1 -- 35.9
Engineering and product development... 2.7 3.3 1.2 -- 7.2
Equity in loss of unconsolidated
subsidiaries........................ 2.5 -- -- -- 2.5
Other income, net..................... (0.7) (0.4) (3.4) -- (4.5)
Nonrecurring charges.................. 115.4 -- -- -- 115.4
------- ------ ----- ----- -------
Earnings (loss) from operations..... (102.6) 35.5 13.6 -- (53.5)
Interest expense, net................. 21.7 25.7 1.1 -- 48.5
Equity in earnings of consolidated
subsidiaries........................ (7.2) -- -- 7.2 --
------- ------ ----- ----- -------
Earnings (loss) before taxes on
income, minority interest and
extraordinary items.............. (117.1) 9.8 12.5 (7.2) (102.0)
Income tax (benefit) provision........ (46.8) 4.5 5.6 -- (36.7)
------- ------ ----- ----- -------
Earnings (loss) before minority
interest and extraordinary
items............................ (70.3) 5.3 6.9 (7.2) (65.3)
Minority interest..................... -- -- -- 0.2 0.2
------- ------ ----- ----- -------
Earnings (loss) before extraordinary
items............................ (70.3) 5.3 6.9 (7.4) (65.5)
Extraordinary items, net of tax....... 7.4 -- -- -- 7.4
------- ------ ----- ----- -------
Net income(loss).................... $ (77.7) $ 5.3 $ 6.9 $(7.4) $ (72.9)
======= ====== ===== ===== =======

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1996

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Net sales.............................. $249.9 $280.5 $83.8 $(3.1) $611.1
Cost of goods sold..................... 206.5 242.3 67.7 (3.1) 513.4
------ ------ ----- ----- ------
Gross profit......................... 43.4 38.2 16.1 -- 97.7
Marketing, general and
administration....................... 8.7 15.2 5.8 -- 29.7
Engineering and product development.... 2.3 1.6 0.8 -- 4.7
Other (income) expense, net............ 6.8 -- (9.9) 1.6 (1.5)
Nonrecurring charges................... 3.6 -- -- -- 3.6
------ ------ ----- ----- ------
Earnings (loss) from operations...... 22.0 21.4 19.4 (1.6) 61.2
Interest expense, net.................. 1.3 7.7 6.0 -- 15.0
Equity in earnings of consolidated
subsidiaries......................... (5.7) -- -- 5.7 --
------ ------ ----- ----- ------
Earnings (loss) before taxes on
income............................ 26.4 13.7 13.4 (7.3) 46.2
Income tax provision................... 6.8 5.2 5.8 -- 17.8
------ ------ ----- ----- ------
Net income(loss)..................... $ 19.6 $ 8.5 $ 7.6 $(7.3) $ 28.4
====== ====== ===== ===== ======

F-27
92

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1995

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Net sales.............................. $201.9 $276.9 $62.7 $(3.9) $537.6
Cost of goods sold..................... 171.6 225.0 48.7 (3.9) 441.4
------ ------ ----- ----- ------
Gross profit......................... 30.3 51.9 14.0 -- 96.2
Marketing, general and
administration....................... 9.2 12.3 7.1 -- 28.6
Engineering and product development.... 1.9 1.4 1.8 -- 5.1
Other (income) expense, net............ 5.1 (0.1) (5.8) -- (0.8)
------ ------ ----- ----- ------
Earnings (loss) from operations...... 14.1 38.3 10.9 -- 63.3
Interest expense, net.................. 4.4 7.0 2.0 -- 13.4
Equity in earnings of consolidated
subsidiaries......................... (2.7) -- -- 2.7 --
------ ------ ----- ----- ------
Earnings (loss) before taxes on
income............................ 12.4 31.3 8.9 (2.7) 49.9
Income tax provision................... 2.6 11.8 5.6 -- 20.0
------ ------ ----- ----- ------
Net income (loss).................... $ 9.8 $ 19.5 $ 3.3 $(2.7) $ 29.9
====== ====== ===== ===== ======

F-28
93

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 31, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------

Cash flows provided from (used by)
operating activities................. $ 31.4 $ 31.2 $ 16.0 $(7.4) $ 71.2
Cash flows from investing activities:
Acquisition of property, plant and
equipment......................... (28.9) (25.6) (16.9) -- (71.4)
Other, net........................... (4.3) 12.1 (1.5) -- 6.3
------- ------- ------ ----- -------
Cash used by investing
activities...................... (33.2) (13.5) (18.4) -- (65.1)
Cash flows from financing activities:
Increase (decrease) in foreign bank
borrowings and loans.............. -- -- (4.1) -- (4.1)
Retirement of long term debt......... (106.4) -- -- -- (106.4)
Retirement of acquired long term
debt.............................. -- (137.7) -- -- (137.7)
Proceeds from issuance of
long term debt.................... 673.5 -- -- -- 673.5
Common stock repurchase.............. (506.1) -- -- -- (506.1)
Proceeds from equity infusion, net of
costs............................. 185.4 -- -- -- 185.4
Dividends paid to stockholders....... (0.5) -- -- -- (0.5)
Fees paid to issue long term debt.... (35.0) -- -- -- (35.0)
Increase (decrease) in bank revolving
loan and other domestic loans..... (29.5) -- -- -- (29.5)
------- ------- ------ ----- -------
Cash provided by financing
activities...................... 181.4 (137.7) (4.1) 0.0 39.6
Increase (decrease) in parent loans and
advances............................. (139.4) 119.3 12.7 7.4 --
Effect of exchange rates of cash and
cash equivalents..................... -- -- -- -- --
Net increase (decrease) in cash
and cash equivalents............ 40.2 (0.7) 6.2 -- 45.7
Cash and cash equivalents at beginning
of period............................ 1.0 0.1 0.7 -- 1.8
------- ------- ------ ----- -------
Cash and cash equivalents at end of
period............................... $ 41.2 $ (0.6) $ 6.9 $ -- $ 47.5
======= ======= ====== ===== =======

F-29
94

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 31, 1996

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Cash flows provided from (used by)
operating activities................. $ 24.0 $ 8.7 $22.0 $(9.8) $ 44.9
Cash flows from investing activities:
Acquisition of property, plant and
equipment......................... (23.5) (15.1) (4.8) -- (43.4)
Other, net........................... (10.0) 2.1 (1.1) -- (9.0)
------ ------ ----- ----- ------
Cash used by investing
activities...................... (33.5) (13.0) (5.9) -- (52.4)
Cash flows from financing activities:
Increase (decrease) in foreign bank
borrowings and loans.............. -- -- (6.4) -- (6.4)
Dividends paid to stockholders....... (1.1) -- -- -- (1.1)
Increase (decrease) in bank revolving
loan and other domestic loans..... 17.7 (1.3) (0.1) -- 16.3
------ ------ ----- ----- ------
Cash provided by financing
activities...................... 16.6 (1.3) (6.5) -- 8.8
Increase (decrease) in parent loans and
advances............................. (6.2) 5.6 (9.2) 9.8 --
Effect of exchange rates of cash and
cash equivalents..................... -- -- -- -- --
Net increase (decrease) in cash and
cash equivalents.................. 0.9 -- 0.4 -- 1.3
Cash and cash equivalents at beginning
of period............................ 0.1 0.1 0.3 -- 0.5
------ ------ ----- ----- ------
Cash and cash equivalents at end of
period............................... $ 1.0 $ 0.1 $ 0.7 $ -- $ 1.8
====== ====== ===== ===== ======

F-30
95

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
------------------------------------

(16) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 31, 1995

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Cash flows provided from (used by)
operating activities................. $ 5.4 $ 21.0 $(1.3) $(2.7) $ 22.4
Cash flows from investing activities:
Acquisition of property, plant and
equipment......................... (10.4) (26.5) (3.0) -- (39.9)
Other, net........................ (0.2) (0.5) (0.3) -- (1.0)
------ ------ ----- ----- ------
Cash used by investing activities.... (10.6) (27.0) (3.3) -- (40.9)
Cash flows from financing activities:
Increase (decrease) in foreign bank
borrowings and loans.............. -- -- 6.0 -- 6.0
Dividends paid to stockholders....... (1.1) -- -- -- (1.1)
Increase (decrease) in bank revolving
loan and other domestic loans..... 10.0 (1.3) (0.1) -- 8.6
------ ------ ----- ----- ------
Cash provided by financing
activities...................... 8.9 (1.3) 5.9 -- 13.5
Increase (decrease) in parent loans and
advances............................. (4.0) 3.7 (2.4) 2.7 --
Effect of exchange rates of cash and
cash equivalents..................... -- -- 0.2 -- 0.2
Net increase (decrease) in cash
and cash equivalents............ (0.3) (3.6) (0.9) -- (4.8)
Cash and cash equivalents at beginning
of period............................ 0.4 3.7 1.2 -- 5.3
------ ------ ----- ----- ------
Cash and cash equivalents at end of
period............................... $ 0.1 $ 0.1 $ 0.3 $ -- $ 0.5
====== ====== ===== ===== ======

(17) PENDING ACQUISITION

On December 9, 1996, the Company announced that it had signed a Letter of
Intent (the "Letter") with Lemmerz Holding GmbH ("Lemmerz") and each of the
shareholders of Lemmerz, wherein the Company indicated its intent to acquire
76.63% of the total equity capital interest in Lemmerz (the "Acquisition"), with
the right to acquire the remaining interest at a later date.

Lemmerz is the leading full-line wheel supplier in Europe and manufactures
steel and aluminum wheels for automobiles and light trucks, and steel wheels for
heavy-duty trucks. If the Acquisition is completed, Lemmerz, or an entity formed
for the purpose of receiving the Lemmerz shares in the Acquisition, would become
a subsidiary of the Company.

Consummation of the Acquisition is subject to various conditions, including
(i) the negotiation and execution of a definitive agreement and agreements with
key management employees; (ii) receipt by Lemmerz, the Lemmerz shareholders and
the Company of all required governmental and third-party approvals to the
Acquisition, including, but not limited to, the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and any applicable German or other antitrust legislation;
and (iii) the satisfactory completion of due diligence reviews of Lemmerz and
the Company, by the Company and the Lemmerz shareholders, respectively.

F-31
96

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

THREE MONTHS
ENDED
APRIL 30,
----------------
1997 1996
---- ----

Net sales................................................... $250.2 $156.2
Cost of goods sold.......................................... 212.2 133.6
------ ------
Gross profit.............................................. 38.0 22.6
Marketing, general and administration....................... 8.9 6.7
Engineering and product development......................... 2.3 1.8
Amortization of intangibles................................. 2.3 1.1
Other income, net........................................... (0.7) (0.5)
------ ------
Earnings from operations.................................. 25.2 13.5
Interest expense, net....................................... 18.4 3.6
------ ------
Earnings before taxes on income and minority interest..... 6.8 9.9
Income tax provision........................................ 2.9 3.8
------ ------
Earnings before minority interest......................... 3.9 6.1
Minority interest........................................... 0.1 --
------ ------
Net income................................................ $ 3.8 $ 6.1
====== ======
Per share income:
Net income.................................................. $ 0.17 $ 0.17
====== ======
Weighted average shares outstanding (in thousands).......... 22,390 35,148
====== ======
Dividends declared per share................................ $ -- $0.008
====== ======

See accompanying notes to consolidated financial statements.

F-32
97

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(MILLIONS OF DOLLARS)
(UNAUDITED)

APRIL 30, JANUARY 31,
1997 1997
--------- -----------

ASSETS
------
Current assets:
Cash and cash equivalents................................. $ 24.8 $ 47.5
Receivables (less allowance of $2.2 million at April 30,
1997 and January 31, 1997)............................. 152.6 145.2
Inventories............................................... 87.3 82.9
Prepaid expenses and other................................ 8.1 13.9
-------- --------
Total current assets................................... 272.8 289.5
Property, plant and equipment:
Land...................................................... 20.7 20.1
Buildings................................................. 103.2 98.0
Machinery and equipment................................... 518.0 515.2
-------- --------
641.9 633.3
Accumulated depreciation.................................. (155.3) (146.9)
-------- --------
Net property, plant and equipment...................... 486.6 486.4
Goodwill and other assets................................... 394.0 407.2
-------- --------
Total assets........................................... $1,153.4 $1,183.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank borrowings........................................... $ 6.4 $ 5.6
Current portion of long-term debt......................... 23.6 23.9
Accounts payable and accrued liabilities.................. 221.3 244.8
-------- --------
Total current liabilities.............................. 251.3 274.3
Noncurrent liabilities:
Long-term debt............................................ 681.6 686.3
Deferred income taxes..................................... -- --
Pension and other long-term liabilities................... 252.2 255.3
Minority interest......................................... 8.4 8.3
-------- --------
Total noncurrent liabilities........................... 942.2 949.9
Commitments and contingencies (Note 4)
Stockholders' equity (deficit):
Preferred stock, 25,000,000 shares authorized, none
issued................................................. -- --
Common stock, par value $0.01 per share:
Voting -- authorized 99,000,000; and outstanding,
22,231,492............................................ 0.2 0.2
Nonvoting -- authorized 1,000,000; and outstanding,
159,026............................................... -- --
Additional paid in capital................................ 43.6 43.6
Accumulated deficit....................................... (78.3) (82.2)
Foreign currency translation adjustment................... (3.4) (0.5)
Pension liability adjustment.............................. (2.2) (2.2)
-------- --------
Total stockholders' equity (deficit)................... (40.1) (41.1)
-------- --------
Total liabilities and stockholders' equity (deficit)...... $1,153.4 $1,183.1
======== ========

See accompanying notes to consolidated financial statements.

F-33
98

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(MILLIONS OF DOLLARS)
(UNAUDITED)

FOR THE THREE
MONTHS ENDED
APRIL 30,
----------------
1997 1996
---- ----

Cash flows from operating activities:
Net income................................................ $ 3.8 $ 6.1
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and tooling amortization.................. 12.3 7.3
Amortization of intangibles............................ 3.8 1.5
Increase in deferred taxes............................. -- 0.9
Changes in operating assets and liabilities:
Increase in receivables.............................. (14.2) (3.8)
(Increase) decrease in inventories................... (8.3) 5.4
Decrease in prepaid expenses and other............... 5.2 1.1
Decrease in accounts payable and accrued
liabilities......................................... (5.0) (11.1)
Decrease in other long-term liabilities.............. (2.1) (1.9)
------ ------
Cash provided by (used for) operating
activities....................................... (4.5) 5.5
Cash flows from investing activities:
Acquisition of property, plant and equipment.............. (16.7) (23.4)
Other, net................................................ (0.2) (3.5)
------ ------
Cash used for investing activities................ (16.9) (26.9)
Cash flows from financing activities:
Increase (decrease) in short-term bank borrowings and
loans.................................................. 1.3 (2.9)
Dividend paid to stockholders............................. -- (0.3)
Increase (decrease) in bank revolving loan & other
domestic loans......................................... (3.0) 23.6
------ ------
Cash provided by (used for) financing
activities....................................... (1.7) 20.4
Effect of exchange rate changes on cash and cash
equivalents............................................... 0.4 --
------ ------
Decrease in cash and cash equivalents............. (22.7) (1.0)
Cash and cash equivalents at beginning of year.............. 47.5 1.8
------ ------
Cash and cash equivalents at end of period.................. $ 24.8 $ 0.8
====== ======
Supplemental data:
Cash paid for interest.................................... $ 11.8 $ 1.2
Cash paid for income taxes................................ $ 0.1 $ 0.1

See accompanying notes to consolidated financial statements.

F-34
99

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(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 April 30, 1997, and January 31, 1997, and the
results of its operations and cash flows for the three months ended April 30,
1997 and 1996. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere herein. Results for interim periods are not necessarily
indicative of those to be expected for the entire year.

(2) INVENTORIES

The major classes of inventory are as follows:

APRIL 30, JANUARY 31,
1997 1997
--------- -----------

Raw materials.............................................. $28.6 $32.0
Work-in-process............................................ 25.3 21.1
Finished goods............................................. 33.4 29.8
----- -----
Total...................................................... $87.3 $82.9
===== =====

(3) COMMITMENTS AND CONTINGENCIES

At April 30, 1997, management believes that the Company was in compliance
with its various financial covenants. Management expects that the Company will
remain in compliance with its financial covenants in all material respects
through the period ending April 30, 1998.

(4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS

The following condensed consolidating financial information presents:

(1) Condensed consolidating financial statements as of April 30, 1997
and January 31, 1997 and for the three month periods ended April
30, 1997 and 1996, of (a) Hayes Wheels 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 Wheels
International, Inc., the parent, with guarantor and nonguarantor
subsidiaries.

F-35
100

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
(MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED)

(4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED APRIL 30, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Net sales............................... $76.8 $140.5 $33.4 $(0.5) $250.2
Cost of goods sold...................... 67.0 118.1 27.6 (0.5) 212.2
----- ------ ----- ----- ------
Gross profit....................... 9.8 22.4 5.8 -- 38.0
Marketing, general and administration... 2.0 5.1 1.8 -- 8.9
Engineering and product development..... 0.6 1.4 0.3 -- 2.3
Amortization of intangibles............. 0.3 2.0 -- -- 2.3
Other income, net....................... -- -- (0.7) -- (0.7)
----- ------ ----- ----- ------
Earnings (loss) from operations.... 6.9 13.9 4.4 -- 25.2
Interest expense, net................... 7.5 10.0 0.9 -- 18.4
Equity in earnings of consolidated
subsidiaries.......................... (2.6) -- -- 2.6 --
----- ------ ----- ----- ------
Earnings (loss) before taxes on
income, and minority interest.... 2.0 3.9 3.5 (2.6) 6.8
Income tax (benefit) provision.......... (0.6) 2.0 1.5 -- 2.9
----- ------ ----- ----- ------
Earnings (loss) before minority
interest......................... 2.6 1.9 2.0 (2.6) 3.9
Minority interest....................... -- -- -- 0.1 0.1
----- ------ ----- ----- ------
Net income(loss)................... $ 2.6 $ 1.9 $ 2.0 $(2.7) $ 3.8
===== ====== ===== ===== ======

FOR THE QUARTER ENDED APRIL 30, 1996

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Net sales............................... $66.5 $ 70.2 $20.5 $(1.0) $156.2
Cost of goods sold...................... 59.2 58.9 16.5 (1.0) 133.6
----- ------ ----- ----- ------
Gross profit....................... 7.3 11.3 4.0 -- 22.6
Marketing, general and administration... 2.3 3.3 1.1 -- 6.7
Engineering and product development..... 1.1 0.4 0.3 -- 1.8
Amortization of intangibles............. 0.5 0.6 -- -- 1.1
Other income, net....................... 0.1 -- (0.6) -- (0.5)
----- ------ ----- ----- ------
Earnings (loss) from operations.... 3.3 7.0 3.2 -- 13.5
Interest expense, net................... 1.5 2.0 0.1 -- 3.6
Equity in earnings of consolidated
subsidiaries.......................... (1.7) -- -- 1.7 --
----- ------ ----- ----- ------
Earnings (loss) before taxes on
income........................... 3.5 5.0 3.1 (1.7) 9.9
Income tax provision.................... 0.6 1.8 1.4 -- 3.8
----- ------ ----- ----- ------
Net income (loss).................. $ 2.9 $ 3.2 $ 1.7 $(1.7) $ 6.1
===== ====== ===== ===== ======

F-36
101

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
(MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED)

(4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF APRIL 30, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Cash and cash equivalents............. $ 27.8 $ (8.2) $ 5.2 $ -- $ 24.8
Receivables........................... 57.1 62.5 33.0 -- 152.6
Inventories........................... 36.8 39.4 11.1 -- 87.3
Prepaid expenses and other............ 2.1 4.0 2.2 (0.2) 8.1
------- ------ ------ ------- --------
Total current assets.................. 123.8 97.7 51.5 (0.2) 272.8
Property, plant and equipment......... 230.4 294.4 117.1 -- 641.9
Accumulated depreciation.............. (51.8) (71.5) (32.0) -- (155.3)
------- ------ ------ ------- --------
Net property, plant and equipment..... 178.6 222.9 85.1 486.6
Goodwill and other assets............. 336.9 319.0 11.3 (273.2) 394.0
------- ------ ------ ------- --------
Total assets.......................... $ 639.3 $639.6 $147.9 $(273.4) $1,153.4
======= ====== ====== ======= ========
Bank borrowings....................... $ -- $ -- $ 6.4 $ -- $ 6.4
Current portion of long-term debt..... 17.5 -- 6.1 -- 23.6
Accounts payable and accrued
liabilities......................... 89.0 94.4 38.1 (0.2) 221.3
------- ------ ------ ------- --------
Total current liabilities............. 106.5 94.4 50.6 (0.2) 251.3
Long-term debt........................ 655.2 -- 26.4 -- 681.6
Deferred income taxes................. (30.2) 17.9 12.3 -- (0.0)
Minority interest..................... -- 0.2 -- 8.2 8.4
Pension and other long-term
liabilities......................... 143.7 100.8 12.8 (5.1) 252.2
Parent loans.......................... (230.5) 226.5 4.0 -- --
------- ------ ------ ------- --------
Total noncurrent liabilities.......... 538.2 345.4 55.5 3.1 942.2
Common stock.......................... 0.2 -- -- -- 0.2
Additional paid-in capital............ 43.5 104.5 33.5 (137.9) 43.6
Retained earnings (accumulated
deficit)............................ (42.0) 95.4 9.7 (141.4) (78.3)
Cumulative translation adjustment..... (4.9) (0.1) (1.4) 3.0 (3.4)
Pension liability adjustment.......... (2.2) -- -- -- (2.2)
------- ------ ------ ------- --------
Total stockholders' equity
(deficit)........................... (5.4) 199.8 41.8 (276.3) (40.1)
Total liabilities and stockholders'
equity (deficit).................... $ 639.3 $639.6 $147.9 $(273.4) $1,153.4
======= ====== ====== ======= ========

F-37
102

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
(MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED)

(4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 31, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Cash and cash equivalents............. $ 41.2 $ (0.6) $ 6.9 $ -- $ 47.5
Receivables........................... 51.0 62.9 31.3 -- 145.2
Inventories........................... 36.4 34.5 12.0 -- 82.9
Prepaid expenses and other............ 3.3 3.5 7.4 (0.3) 13.9
------- ------ ------ ------- --------
Total current assets.................. 131.9 100.3 57.6 (0.3) 289.5
Property, plant and equipment......... 249.2 267.9 116.2 -- 633.3
Accumulated depreciation.............. (49.1) (67.1) (30.7) -- (146.9)
------- ------ ------ ------- --------
Net property, plant and equipment..... 200.1 200.8 85.5 -- 486.4
Goodwill and other assets............. 345.8 323.9 12.6 (275.1) 407.2
------- ------ ------ ------- --------
Total assets.......................... $ 677.8 $625.0 $155.7 $(275.4) $1,183.1
======= ====== ====== ======= ========
Bank borrowings....................... $ -- $ -- $ 5.6 $ -- $ 5.6
Current portion of long-term debt..... 17.4 -- 6.5 -- 23.9
Accounts payable and accrued
liabilities......................... 105.2 97.7 42.2 (0.3) 244.8
------- ------ ------ ------- --------
Total current liabilities............. 122.6 97.7 54.3 (0.3) 274.3
Long-term debt........................ 658.3 -- 28.0 -- 686.3
Deferred income taxes................. (31.1) 18.0 13.1 -- --
Minority interest..................... -- 0.2 -- 8.1 8.3
Pension and other long-term
liabilities......................... 143.2 103.3 12.1 (3.3) 255.3
Parent loans.......................... (211.2) 208.0 3.2 -- 0.0
------- ------ ------ ------- --------
Total noncurrent liabilities.......... 559.2 329.5 56.4 4.8 949.9
Common stock.......................... 0.2 -- -- -- 0.2
Additional paid-in capital............ 43.5 104.5 33.5 (137.9) 43.6
Retained earnings (accumulated
deficit)............................ (44.5) 93.4 9.5 (140.6) (82.2)
Cumulative translation adjustment..... (1.0) (0.1) 2.0 (1.4) (0.5)
Pension liability adjustment.......... (2.2) -- -- (2.2)
------- ------ ------ ------- --------
Total stockholders' equity
(deficit)........................... (4.0) 197.8 45.0 (279.9) (41.1)
Total liabilities and stockholders'
equity (deficit).................... $ 677.8 $625.0 $155.7 $(275.4) $1,183.1
======= ====== ====== ======= ========

F-38
103

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
(MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED)

(4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE QUARTER ENDED APRIL 30, 1997

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Cash flows provided from (used by):
operating activities...................... $ 0.2 $(1.6) $(0.7) $(2.4) $ (4.5)
Cash flows from investing activities:
Acquisition of property, plant and
equipment............................... (3.0) (4.7) (9.0) -- (16.7)
Other, net................................ (7.6) 5.0 2.4 -- (0.2)
------ ----- ----- ----- ------
Cash used by investing activities..... (10.6) 0.3 (6.6) -- (16.9)
Cash flows from financing activities:
Increase (decrease) in foreign bank
borrowings and loan..................... -- -- 1.3 -- 1.3
Increase (decrease) in bank revolving loan
and other domestic loans................ (3.0) -- -- -- --
------ ----- ----- ----- ------
Cash provided by financing
activities......................... (3.0) -- 1.3 -- 1.3
Increase (decrease) in parent loans and
advances.................................. (20.0) 18.5 (0.9) 2.4 --
Effect of exchange rates of cash and cash
equivalents............................... 0.4 0.4
Net increase (decrease) in cash and
cash equivalents................... (33.4) 17.2 (6.5) -- (22.7)
Cash and cash equivalents at beginning of
period.................................... 41.2 (0.6) 6.9 -- 47.5
------ ----- ----- ----- ------
Cash and cash equivalents at end of
period.................................... $ 7.8 $16.6 $ 0.4 $ -- $ 24.8
====== ===== ===== ===== ======

FOR THE QUARTER ENDED APRIL 30, 1996

GUARANTOR NONGUARANTOR CONSOLIDATED
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------ ------------ ------------

Cash flows provided from (used by) operating
activities................................ $ 0.2 $ 3.5 $ 3.5 $(1.7) $ 5.5
Cash flows from investing activities:
Acquisition of property, plant and
equipment............................... (20.4) (1.7) (1.3) -- (23.4)
Other, net................................ (3.7) 0.2 -- -- (3.5)
------ ----- ----- ----- ------
Cash used by investing activities..... (24.1) (1.5) (1.3) -- (26.9)
Cash flows from financing activities:
Increase (decrease) in foreign bank
borrowings and loans.................... -- -- (2.9) -- (2.9)
Dividends paid to stockholders............ (0.3) -- -- -- (0.3)
Increase (decrease) in bank revolving loan
and other domestic loans................ 23.6 -- -- -- 23.6
------ ----- ----- ----- ------
Cash provided by financing
activities......................... 23.3 -- (2.9) -- 20.4
Increase (decrease) in parent loans and
advances.................................. (0.1) (2.0) 0.4 1.7 0.0
Effect of exchange rates of cash and cash
equivalents
Net increase (decrease) in cash and
cash equivalents................... (0.7) -- (0.3) -- (1.0)
Cash and cash equivalents at beginning of
period.................................... 1.0 0.1 0.7 -- 1.8
------ ----- ----- ----- ------
Cash and cash equivalents at end of
period.................................... $ 0.3 $ 0.1 $ 0.4 $ -- $ 0.8
====== ===== ===== ===== ======

F-39
104

HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED)
(MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED)

(5) SUBSEQUENT EVENTS

On June 6, 1997, the Company, Cromodora, Wheels S.p.A., Lemmerz Holding
GmbH ("Lemmerz") and the shareholders of Lemmerz entered into a definitive
acquisition agreement, pursuant to which the Company will purchase the capital
stock of Lemmerz for (i) $200 million in cash and (ii) convertible preferred
stock of the Company, which following shareholder approval, will automatically
convert into 5 million shares of the Company's common stock.

F-40
105

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Lemmerz Holding GmbH

We have audited the accompanying consolidated balance sheets of Lemmerz
Holding GmbH and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of earnings, changes in shareholders' equity, and cash
flows for each of the years 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
audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Lemmerz
Holding GmbH and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the years then ended in
conformity with United States generally accepted accounting principles.

KPMG Deutsche Treuhand - Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft

Cologne, Germany
May 21, 1997

F-41
106

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(THOUSANDS OF UNITED STATES DOLLARS)

DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------

ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,647 $ 19,581
Certificates of deposit................................... 7,721 5,146
Receivables (less allowances of $886 at December 31, 1996
and $1,554 at December 31, 1995)....................... 78,954 77,969
Inventories............................................... 54,659 61,214
Prepaid expenses and other................................ 8,579 9,667
-------- --------
Total current assets.............................. 154,560 173,577
Property, plant, and equipment, net......................... 154,704 170,175
Investments in affiliates................................... 45,486 35,953
Deferred income taxes....................................... 50,110 63,540
Other assets................................................ 7,960 10,012
-------- --------
Total assets...................................... $412,820 $453,257
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings..................................... $ 41,115 $ 40,478
Current portion of long-term debt......................... 17,975 9,858
Current portion of capital lease obligations.............. 1,333 1,312
Accounts payable and accrued liabilities.................. 95,992 126,195
-------- --------
Total current liabilities......................... 156,415 177,843
Long-term debt, less current portion........................ 25,000 33,588
Capital lease obligations, less current portion............. 3,982 5,510
Deferred income taxes....................................... 5,443 5,391
Pension and other long-term liabilities..................... 106,893 111,447
-------- --------
Total liabilities................................. 297,733 333,779
Minority interests.......................................... 5,496 5,673
Shareholders' equity:
Share capital............................................. 57,927 57,927
Retained earnings......................................... 43,576 38,234
Cumulative translation adjustment......................... 8,088 17,644
-------- --------
Total shareholders' equity........................ 109,591 113,805
-------- --------
Total liabilities and shareholders' equity........ $412,820 $453,257
======== ========

See accompanying notes to consolidated financial statements.

F-42
107

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(THOUSANDS OF UNITED STATES DOLLARS)

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------

Net sales................................................... $459,841 $468,122
Cost of goods sold.......................................... 377,728 380,694
-------- --------
Gross profit........................................... 82,113 87,428
Marketing, general, and administrative...................... 50,205 57,605
Engineering and product development......................... 8,466 8,852
Other income, net........................................... (5,528) (12,358)
-------- --------
Earnings from operations............................... 28,970 33,329
Interest expense, net....................................... 5,269 7,810
-------- --------
Earnings before income taxes, minority interests, and
equity in income (loss) of affiliates................. 23,701 25,519
Income tax provision........................................ 14,838 7,833
-------- --------
Earnings before minority interests and equity in income
(loss) of affiliates.................................. 8,863 17,686
Equity in income (loss) of affiliates....................... 1,040 (635)
Minority interests.......................................... (702) (402)
-------- --------
Net income............................................. $ 9,201 $ 16,649
======== ========

See accompanying notes to consolidated financial statements.

F-43
108

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1996 AND 1995

(THOUSANDS OF UNITED STATES DOLLARS)

CUMULATIVE
SHARE RETAINED TRANSLATION
CAPITAL EARNINGS ADJUSTMENT TOTAL
------- -------- ----------- -----

Balance, January 1, 1995.............................. $57,927 $21,585 $ 9,718 $ 89,230
Net income............................................ -- 16,649 -- 16,649
Foreign currency translation adjustment............... -- -- 7,926 7,926
------- ------- ------- --------
Balance, December 31, 1995............................ 57,927 38,234 17,644 113,805
Dividend distribution................................. -- (3,859) -- (3,859)
Net income............................................ -- 9,201 -- 9,201
Foreign currency translation adjustment............... -- -- (9,556) (9,556)
------- ------- ------- --------
Balance, December 31, 1996............................ $57,927 $43,576 $ 8,088 $109,591
======= ======= ======= ========

See accompanying notes to consolidated financial statements.

F-44
109

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(THOUSANDS OF UNITED STATES DOLLARS)

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------

Cash flows from operating activities:
Net income................................................ $ 9,201 $ 16,649
Adjustments to reconcile net income to net cash provided
by operations:
Gain on sale of subsidiaries and assembly line......... (415) (10,792)
Depreciation of property, plant, and equipment......... 28,733 29,933
Depreciation of intangible assets...................... 528 926
Equity in (income) loss of affiliates.................. (1,040) 635
Change in deferred taxes............................... 9,411 5,789
Decrease in inventories................................ 7,340 4,761
Decrease (increase) in receivables and other assets.... 2,425 (1,489)
Increase (decrease) in accounts payable and accrued
liabilities........................................... (21,459) 2,502
--------- --------
Net cash provided by operating activities......... 34,724 48,914
--------- --------
Cash flows from investing activities:
Proceeds from sale of subsidiaries and assembly line...... 415 18,097
Proceeds from sale of property, plant, and equipment...... 2,270 4,710
Repayment of long-term loans and receivables.............. 1,013 882
Acquisition of property, plant, and equipment............. (24,967) (42,828)
Investment in affiliated enterprises...................... (12,186) (5,154)
Investment in certificates of deposit..................... (2,218) (5,145)
Other changes............................................. -- (5,686)
--------- --------
Cash used for investment activities............... (35,673) (35,124)
--------- --------
Cash flows from financing activities:
Payment of dividends...................................... (3,859) --
Repayment of long-term debt and capital lease
obligations............................................ (11,312) (13,836)
Proceeds from borrowings.................................. 10,971 12,882
Repayment of shareholder loan............................. (9,028) --
--------- --------
Cash used for financing activities................ (13,228) (954)
--------- --------
Translation adjustment for cash............................. (757) 505
--------- --------
Net increase (decrease) in cash and cash equivalents........ (14,934) 13,341
Cash and cash equivalents at beginning of year.............. 19,581 6,240
--------- --------
Cash and cash equivalents at end of year.................... $ 4,647 $ 19,581
========= ========
Supplemental cash flow disclosures:
Cash paid for interest.................................... $ 7,616 $ 7,315
========= ========
Cash paid for income taxes................................ $ 216 $ 1,228
========= ========

In 1995, the Company acquired $6,235 of property and equipment under capital leases.

See accompanying notes to consolidated financial statements.

F-45
110

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Lemmerz Holding GmbH and subsidiaries ("Lemmerz" or the "Company") is a
manufacturer and distributor of steel and aluminum wheels principally to
European automotive manufacturers for use on passenger cars, light trucks and
commercial highway vehicles.

Basis of Presentation

The Company's consolidated financial statements have been prepared in
accordance with United States generally accepted accounting principles ("U.S.
GAAP"). All amounts herein are shown in thousands of United States dollars
("$").

Consolidation Methods

All material companies in which Lemmerz has legal or effective control are
fully consolidated. Minority interest represents minority shareholders'
proportionate share of the equity in certain of the Company's consolidated
subsidiaries. Significant investments in which Lemmerz has an ownership interest
in the range of 20 percent to 50 percent are accounted for using the equity
method of accounting. The effects of intercompany transactions have been
eliminated.

Foreign Currency Translation

For purposes of the accompanying consolidated financial statements, the
reporting currency of the Company is the United States dollar. In general, the
functional currency of each of the Company's subsidiaries is the local currency
of the country in which the subsidiary is located. The balance sheets of non-
U.S. dollar functional currency subsidiaries have been translated into U.S.
dollars using exchange rates as of the balance sheet dates while the statements
of income and cash flows have been translated using average exchange rates
during each period.

Financial Instruments

Unrealized gains and losses on interest rate swap and currency exchange
contracts purchased to hedge existing assets, liabilities or firm commitments
are deferred and recognized along with the effects of the underlying hedged
transaction. Unrealized gains and losses on other derivative financial
instruments are recognized in income at each balance sheet date.

Revenue Recognition

Revenue is recognized when title passes or services are rendered net of
discounts, customer bonuses, and rebates granted.

Research and Development

Research and development costs are expensed as incurred. Research and
development costs amount to $3,495 and $3,775 in 1996 and 1995, respectively.

Cash and cash equivalents

Cash and cash equivalents represents cash and highly liquid investments
with original maturities of three months or less.

F-46
111

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Inventory Valuation

Inventory is valued at the lower of cost or market, cost being determined
on the basis of an average or first-in, first-out method. Manufacturing costs
comprise direct material and labor and applicable manufacturing overheads,
including depreciation charges.

Property, Plant, and Equipment

Property, plant, and equipment is valued at cost and depreciated using the
straight-line depreciation method over the assets' useful lives as follows:
buildings -- 20 to 33.5 years; leasehold improvements -- 15 to 25 years; factory
machinery and equipment -- 2.5 to 25 years. Expenditures for renewals or
betterments are capitalized. Expenditures for repairs and maintenance are
charged to operations as incurred.

Income Taxes

Deferred tax assets and liabilities are provided for the expected future
tax consequences of temporary differences between the carrying amount and tax
basis of the Company's assets and liabilities.

Major Customers and Concentration of Credit Risk

The Company's financial condition and results of operations depend on a
number of European automotive manufacturers. Mercedes-Benz and General Motors,
each representing individually more than 10 percent of the Company's
consolidated revenues, aggregated approximately 24.6 percent and 23.6 percent of
the Company's consolidated revenues during the years ended December 31, 1996 and
1995, respectively. At December 31, 1996 and 1995, 18.5 percent and 16.9
percent, respectively, of the Company's accounts receivable were outstanding
from such automotive manufacturers.

Use of estimates

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent amounts at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

(2) INVENTORIES

DECEMBER 31,
------------------
1996 1995
---- ----

Raw materials and manufacturing supplies................... $17,558 18,102
Work in progress........................................... 18,084 19,662
Finished goods, parts, and goods purchased for resale...... 21,079 25,213
------- -------
56,721 62,977
Reserves................................................... (2,062) (1,763)
------- -------
$54,659 61,214
======= =======

F-47
112

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(3) PROPERTY, PLANT, AND EQUIPMENT

DECEMBER 31,
----------------------
1996 1995
---- ----

Costs:
Land................................................. $ 14,038 $ 18,160
Buildings............................................ 88,609 91,957
Machinery and equipment.............................. 401,334 425,471
Leasehold improvements............................... 7,797 7,937
Construction in progress............................. 7,696 8,163
--------- ---------
519,474 551,688
Accumulated depreciation............................. (364,770) (381,513)
--------- ---------
$ 154,704 $ 170,175
========= =========

The foregoing amounts include machinery and equipment capitalized under
capital lease agreements, as follows:

DECEMBER 31,
----------------------
1996 1995
---- ----

Machinery and equipment................................ $ 7,797 $ 7,937
Accumulated depreciation............................... (1,063) (603)
--------- ---------
$ 6,734 $ 7,334
========= =========

Depreciation expense, including depreciation on assets under capital lease
arrangements, charged in the statements of earnings was $28,733 in 1996 and
$29,333 in 1995.

(4) INVESTMENTS IN AFFILIATES

The Company's investments in affiliates for the year ended December 31,
1995, mainly consist of approximately a 49 percent interest in Continental
Lemmerz (Portugal), a 44 percent interest in Borlem S.A. (Brazil), a 25 percent
interest in Reynolds-Lemmerz (Canada) and a 25 percent interest in the Jantas
(Turkey). The investments in 1996 consist of each of the above companies and, in
addition, a 25 percent interest each in Kalyani Lemmerz Ltd. (India), and Siam
Lemmerz Co. Ltd. (Thailand).

Summarized financial information of the unconsolidated affiliates follows:

Balance sheet information:

DECEMBER 31,
------------------------
1996 1995
---- ----

Current assets......................................... $ 74,782 $ 53,572
Non-current assets..................................... 117,169 101,354
Current liabilities.................................... 77,634 40,999
Non-current liabilities................................ 18,858 27,461
Equity................................................. 95,448 86,466

F-48
113

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(4) INVESTMENTS IN AFFILIATES -- (CONTINUED)
Statement of income information:

YEAR ENDED DECEMBER 31,
------------------------
1996 1995
---- ----

Revenues................................................. $229,067 $209,462
Net income............................................... 7,492 3,590

(5) INCOME TAXES

For the years ended December 31, 1996 and 1995, pre-tax income of $13,071
and $8,992, respectively, relate to the Company's operations in Germany while
the remainder was earned by operations outside Germany.

The provisions for income taxes are as follows:

YEAR ENDED DECEMBER 31,
------------------------
1996 1995
---- ----

Currently payable:
Germany................................................ $ 3,326 $ 48
Non-German............................................. 2,101 1,996
------- ------
5,427 2,044
------- ------
Deferred taxes:
Germany................................................ 9,159 5,283
Non-German............................................. 252 506
------- ------
9,411 5,789
------- ------
$14,838 $7,833
======= ======

German corporate tax law applies a split-rate imputation system with regard
to the taxation of the income of a corporation and its stockholders. In general,
retained corporate income is initially subject to a federal corporation tax of
45 percent plus a surcharge of 7.5 percent on the federal corporate tax rate.
After giving effect to the surcharge, the federal corporate tax rate increases
to 48.375 percent. Upon distribution of retained earnings to stockholders, the
corporate income tax rate on the distributed earnings is adjusted to 30 percent
by receiving a refund for taxes previously paid on income in excess of 30
percent. After giving effect to the surcharge, the distributed earnings
corporate tax rate increases to 32.25 percent. This refund is passed on to the
stockholders through a gross up of the dividend from the corporation.

F-49
114

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(5) INCOME TAXES -- (CONTINUED)
A reconciliation of income taxes determined using the German federal
statutory rate of 48.375 percent is as follows:

YEAR ENDED
DECEMBER 31,
-----------------
1996 1995
---- ----

Expected provisions for income taxes....................... $11,465 $12,347
Trade taxes, net of corporate benefit...................... 749 533
Foreign tax rate differential.............................. (354) (834)
Non-deductible expenses/(non-taxable income)............... 640 (573)
Write-down of investment for tax purposes.................. (4,607) (3,070)
Increase (decrease) in valuation allowance................. 9,011 (440)
Benefit from corporate tax audit........................... (1,226) --
Other...................................................... (840) (130)
------- -------
Actual provision for income taxes..................... $14,838 $ 7,833
======= =======
Effective rate........................................ 62.6% 30.7%
======= =======

Deferred income tax assets and liabilities are summarized as follows:

DECEMBER 31,
-------------------
1996 1995
---- ----

Deferred tax assets relating to:
Fixed assets........................................... $ 19,073 $ 24,928
Inventory.............................................. 287 319
Pension liability...................................... 11,035 10,439
Tax loss carryforwards................................. 43,544 46,533
-------- --------
73,939 82,219
Valuation allowance.................................... (22,109) (17,635)
-------- --------
51,830 64,584
-------- --------
Deferred tax liabilities relating to:
Fixed assets........................................... 4,943 3,944
Pension liability...................................... 202 663
Other accruals......................................... 1,720 1,044
Inventory.............................................. 298 784
-------- --------
7,163 6,435
-------- --------
Deferred tax (liability) asset per balance
sheet.......................................... $ 44,667 $ 58,149
======== ========

At December 31, 1996, the Company had net operating losses ("NOLs") and tax
credit carryforwards mainly in Germany and Belgium amounting to approximately
$97,391. The majority of the NOLs have an unlimited carryforward period.

At December 31, 1996, the Company had established deferred tax valuation
allowances, including allowances of $7,097 and $11,410 in Germany and Belgium,
respectively. The valuation allowances were established principally against the
Belgian and German companies' NOLs. The Belgian deferred tax valuation allowance
was deemed to be necessary by Company management since realization of the
Belgian NOL

F-50
115

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(5) INCOME TAXES -- (CONTINUED)
depends primarily on the generation of taxable income in the entity which
generated the loss. Such entity has had a history of losses. The valuation
allowance of the German company was established in 1996 as a result of the
Company's determination that a risk as to the acceptability of a portion of the
loss existed.

(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

DECEMBER 31,
------------------
1996 1995
---- ----

Accounts payable trade...................................... $36,985 $ 40,530
------- --------
Other current liabilities................................... 38,679 66,690
------- --------
Accrued liabilities:
Employee benefits and social costs........................ 9,709 9,963
Provisions for taxes...................................... 5,313 2,551
Estimated future losses on open contracts................. 1,492 1,168
Severance programs........................................ 547 3,365
Other accruals............................................ 3,267 1,928
------- --------
20,328 18,975
------- --------
$95,992 $126,195
======= ========

Other current liabilities include at December 31, 1995, an amount of $9,028
advanced from one of the Company's shareholders. The amount bore interest at
6.25 percent. During 1996, such amount was repaid.

(7) SHORT-TERM BORROWINGS

At December 31, 1996 and 1995, the Company had outstanding $41,115 and
$40,478, respectively, under short-term lines of credit. Under the terms of the
lines of credit, the Company may borrow up to $119,217. The lines of credit bear
interest at varying interest rates based upon published indices plus varying
margins.

At December 31, 1996 and 1995, certain of such borrowings were secured by a
mortgage conveyance and liens of approximately $4,563 and $4,482, respectively.

(8) LONG-TERM DEBT

At December 31, 1996 and 1995, the Company's long-term debt of $42,975 and
of $43,446 consisted principally of amounts borrowed from financial
institutions. Such borrowings mature between 1997 and 2013 and carry varying
fixed and variable interest rates. At December 31, 1996 and 1995, the average
interest rate on long-term debt was 6.6 percent, respectively. At December 31,
1996 and 1995, $17,975 and $9,858, respectively, of such long-term debt was due
within one year.

The Company's debt is secured by mortgage conveyance and liens of
approximately $41,239 in 1996 and $38,524 in 1995.

Aggregate maturities of the Company's debt during the next five years and
thereafter are as follows: 1997 -- $17,975; 1998 -- $4,613; 1999 -- $4,857;
2000 -- $3,862; 2001 -- $3,394 and thereafter -- $8,274.

At December 31, 1996, the Company had available to it noncancelable
long-term credit lines of $43,656 of which $21,934 was unused.

F-51
116

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(8) LONG-TERM DEBT -- (CONTINUED)
At December 31, 1996 and 1995, the book value of the Company's debt
approximated fair value.

(9) RETIREMENT PLANS

The Company provides defined benefit pension benefits to certain of its
employees based upon years of service and final monthly salary. Consistent with
normal practice in the Federal Republic of Germany, the Company's pension
benefits are unfunded.

The funded status of the Company's principal retirement plans, in which
accumulated benefits exceed assets, is as follows:

DECEMBER 31,
--------------------
1996 1995
---- ----

Actuarial present value of benefits:
Vested.................................................... $ 74,488 $ 78,852
Nonvested................................................. 23,284 24,273
-------- --------
Accumulated benefit obligation............................ 97,772 103,125
Effect of projected future salary increase.................. 1,506 1,775
-------- --------
Projected benefit obligations.......................... 99,278 104,900
Unrecognized transition obligation.......................... (10,983) (13,614)
Unrecognized net gains...................................... 10,578 11,775
-------- --------
Pension liability...................................... $ 99,873 $103,061
======== ========

The projected benefit obligation was calculated each period using assumed
discount rates and rates of increase in remuneration in 1996 and 1995 of 6.5
percent and 7.0 percent, respectively, and 3.0 percent and 3.0 percent,
respectively.

The net periodic pension cost for the major retirement plans comprised:

YEAR ENDED DECEMBER 31,
------------------------
1996 1995
---- ----

Service cost: present value of benefits earning during the
year...................................................... $ 876 $ 819
Interest cost on projected benefit obligation............... 7,150 6,818
Net amortization............................................ 1,228 1,534
-------- --------
Net periodic pension cost.............................. $ 9,254 $ 9,171
======== ========

In addition to the foregoing principal retirement plans, certain of the
Company's subsidiaries provide retirement benefits to employees. The recorded
pension liability for such plans at December 31, 1996 and 1995, was $6,104 and
$6,080, respectively. Pension expense for such plans was not material.

F-52
117

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(10) OTHER INCOME, NET

YEARS ENDED
DECEMBER 31,
----------------
1996 1995
---- ----

License fees, royalties, other fees......................... $2,116 $ 2,420
Foreign currency gains...................................... 381 356
Gain from disposal Lemmerz United Kingdom................... -- 8,064
Gain from disposal of assembly line......................... 415 2,728
Government export subsidies................................. 64 158
Sales of fixed assets....................................... (118) 237
Early retirement and other social costs..................... (291) (178)
Severance payment/provision................................. 155 (3,290)
Commissions, earned......................................... 513 436
Other....................................................... 2,293 1,427
------ -------
$5,528 $12,358
====== =======

During the year ended December 31, 1995, the Company sold to third parties
its subsidiary in the United Kingdom for cash proceeds of $15,369 and its
assembly line for the production of certain off-road wheels for cash proceeds of
$2,728.

(11) COMMITMENTS AND CONTINGENCIES

The Company leases certain facilities and machinery and equipment under
operating lease contracts. Total rentals under operating leases, charged as an
expense in the statements of earnings amounted to $838 and $2,056 in the years
ended December 31, 1996 and 1995, respectively. Future minimum lease payments
under operating leases that have initial or remaining terms in excess of one
year at December 31, 1996, are as follows: 1997: $641; 1998: $318.

Various legal actions, governmental investigations, proceedings and claims
are pending or may be instituted or asserted in the future against the Company,
including those arising out of alleged defects in the Company's products,
governmental regulations relating to safety, emissions and fuel economy,
intellectual property rights, product warranties, and environmental matters.

Litigation is subject to many uncertainties; the outcome of individual
litigated matters is not predictable with assurance; and it is reasonably
possibly that some of the foregoing matters could be decided unfavorably to the
Company. Although the amount of liability at December 31, 1996, with respect to
these matters cannot be ascertained, the Company believes that the resulting
liability, if any, should not materially affect the consolidated financial
position or results of operations of the Company.

(12) RELATED PARTY TRANSACTIONS

During the years ended December 31, 1996 and 1995, the Company recorded
$3,164 and $4,370, respectively, of sales of scrap materials to a company for
which the chairman of the Company's supervisory board was the managing director.

(13) FINANCIAL INSTRUMENTS

The Company has only limited involvements with derivative financial
instruments and uses them only for hedging purposes. They are used to manage
interest rate and currency exchange risks.

F-53
118

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF UNITED STATES DOLLARS, UNLESS OTHERWISE INDICATED)

(13) FINANCIAL INSTRUMENTS -- (CONTINUED)
The Company was a party to $14,230 and $6,767 nominal value of interest
rate swaps with terms of up to four years at December 31, 1996 and 1995,
respectively. The agreements entitle the Company to receive from the
counterparties fixed interest payments and to make payments equal to three
months LIBOR plus varying basis points. Such agreements have been purchased as a
hedge of certain of the Company's long-term loans.

At December 31, 1996 and 1995, the Company had outstanding $22,431 and
$22,746 nominal value of forward currency exchange contracts. The contracts were
principally for the exchange of Deutsche Marks for Japanese Yen, British Pounds,
and Swiss Francs.

At December 31, 1996 and 1995, $10,944 and $12,876, respectively, of such
contracts were not accounted for as hedges of underlying transactions and
accordingly $655 and $(120), respectively, of unrealized gains or losses were
recognized. The balance of such contracts were purchased to hedge purchases,
assets and liabilities denominated in currencies other than Deutsche Marks. The
fair value of the derivative financial instruments accounted for using hedge
accounting was not material.

The Company is exposed to credit losses in the event of nonperformance by
the counterparties (only major European banks) to its interest rate swap and
currency forward agreements. The Company anticipates, however, that each of the
counterparties will be able to fully satisfy their obligations under the
contracts.

(14) INFORMATION BY GEOGRAPHIC AREA

Geographic information with respect to the Group's sales, net income and
identifiable assets follows:

1996 GERMANY SPAIN NETHERLANDS BELGIUM TURKEY OTHER ELIMINATIONS CONSOLIDATED
---- ------- ----- ----------- ------- ------ ----- ------------ ------------

Sales (by operations):
To unaffiliated customers....... $197,094 $82,735 $74,478 $ 96,947 $ 6,541 $ 2,046 $ -- $459,841
Transfers between geographic
areas......................... 5,036 4,710 47 5,186 1,878 99 (16,956) --
-------- ------- ------- -------- ------- ------- --------- --------
Total sales............... $202,130 $87,445 $74,525 $102,133 $ 8,419 $ 2,145 $ (16,956) $459,841
======== ======= ======= ======== ======= ======= ========= ========
Net income (loss)................. $ (126) $ 4,142 $ 2,786 $ (8,166) $ 1,379 $ 659 $ 8,527 $ 9,201
======== ======= ======= ======== ======= ======= ========= ========
Identifiable assets............... $305,785 $60,729 $59,860 $ 63,171 $15,066 $22,082 $(113,873) $412,820
======== ======= ======= ======== ======= ======= ========= ========
1995
Sales (by operations):
To unaffiliated customers....... $229,614 $74,989 $72,041 $ 81,981 $ 3,447 $ 6,050 $ -- $468,122
Transfers between geographic
areas......................... 1,197 4,769 -- 5,313 2,916 970 (15,165) --
-------- ------- ------- -------- ------- ------- --------- --------
Total sales............... $230,811 $79,758 $72,041 $ 87,294 $ 6,363 $ 7,020 $ (15,165) $468,122
======== ======= ======= ======== ======= ======= ========= ========
Net income (loss)................. $ (1,251) $ 5,234 $ 2,168 $ (3,061) $ 597 $ 609 $ 12,353 $ 16,649
======== ======= ======= ======== ======= ======= ========= ========
Identifiable assets............... $364,554 $58,477 $62,198 $ 74,286 $16,430 $53,096 $(175,784) $453,257
======== ======= ======= ======== ======= ======= ========= ========

Sales of products and services between geographic regions are generally
based upon third-party sales prices. For the years ended December 31, 1996 and
1995, $109,226 and $102,713, respectively, of the Company's sales were derived
from the export of products manufactured in Germany.

F-54
119

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)

MARCH 31,
1997
---------

ASSETS
------
Current assets:
Cash and cash equivalents................................. $ 4,177
Certificates of deposit................................... 11,640
Receivables (less allowances of $873 at March 31, 1997
)...................................................... 78,340
Inventories............................................... 54,203
Prepaid expenses and other................................ 7,892
--------
Total current assets................................... 156,252
Property, plant, and equipment, net......................... 143,322
Investments in affiliates................................... 42,394
Deferred income taxes....................................... 43,837
Other assets................................................ 6,993
--------
Total assets........................................... $392,798
========
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------
Current liabilities:
Short-term borrowings..................................... $ 35,031
Current portion of long-term debt......................... 10,674
Current portion of capital lease obligations.............. 929
Accounts payable and accrued liabilities.................. 95,719
--------
Total current liabilities.............................. 142,353
Long-term debt, less current portion........................ 29,457
Capital lease obligations, less current portion............. 4,306
Deferred income taxes....................................... 5,128
Pension and other long-term liabilities..................... 101,803
--------
Total liabilities...................................... 283,047
Minority interests.......................................... 5,304
Shareholders' equity:
Share capital............................................. 57,927
Retained earnings......................................... 46,823
Cumulative translation adjustment......................... (303)
--------
Total shareholders' equity............................. 104,447
--------
Total liabilities and shareholders' equity............. $392,798
========

See accompanying notes to consolidated financial statements

F-55
120

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EARNINGS
(THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)

THREE MONTHS
ENDED
MARCH 31,
1997
------------

Net sales................................................... $108,225
Cost of goods sold.......................................... 88,051
--------
Gross profit........................................... 20,174
Marketing, general, and administrative...................... 10,463
Engineering and product development......................... 2,034
Other income, net........................................... (1,529)
--------
Earnings from operations............................... 9,206
Interest expense, net....................................... 1,111
--------
Earnings before income taxes, minority interests, and
equity in income (loss) of affiliates................. 8,095
Income tax provision........................................ 4,087
--------
Earnings before minority interests and equity in income
(loss) of affiliates.................................. 4,008
Equity in losses of affiliates.............................. (543)
Minority interests.......................................... (218)
--------
Net income............................................. $ 3,247
========

See accompanying notes to consolidated financial statements

F-56
121

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)

THREE MONTHS
ENDED
MARCH 31,
1997
------------

Cash flows from operating activities:
Net income................................................ $ 3,247
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation of property, plant and equipment.......... 6,323
Depreciation of intangible assets...................... 132
Equity in loss of affiliates........................... 543
Change in deferred taxes............................... 2,714
Increase in inventories................................ (3,593)
Increase in receivables and other current assets....... (5,002)
Decrease in accounts payable and accrued liabilities... 9,713
--------
Net cash provided by operating activities............ 14,077
--------
Cash flows from investing activities:
Repayment of long-term loans and receivables.............. 55
Acquisition of property, plant, and equipment............. (6,400)
Investment in certificates of deposit..................... (4,537)
Other changes............................................. (842)
--------
Cash used for investment activities.................. (11,724)
--------
Cash flows from financing activities:
Repayment of long term borrowings and capital lease
obligations............................................ (7,905)
Long term borrowings...................................... 6,730
Repayment of short-term borrowings........................ (1,308)
--------
Cash used for financing activities................... (2,483)
--------
Translation adjustment for cash............................. (340)
--------
Net decrease in cash and cash equivalents................... (470)
Cash and cash equivalents at beginning of year.............. 4,647
--------
Cash and cash equivalents at end of year.................... $ 4,177
========
Supplemental disclosure of cash flow information:
Cash paid for interest.................................... $ 1,433
========
Cash paid for income taxes................................ $ 506
========

See accompanying notes to consolidated financial statements.

F-57
122

LEMMERZ HOLDING GMBH AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
(U.S. DOLLAR IN THOUSANDS, UNLESS OTHERWISE INDICATED)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business -- Lemmerz Holding GmbH and subsidiaries ("Lemmerz"
or the "Company") is a manufacturer and distributor of steel and aluminum wheels
to European automotive manufacturers for use on passenger cars, light trucks,
and commercial highway vehicles.

Basis of Presentation -- The Company's consolidated financial statements
have been prepared in accordance with United States generally accepted
accounting principles ("U.S. GAAP"). All amounts herein are shown in thousands
of United States dollars ("$").

The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with U.S. GAAP for interim financial information.
Accordingly, they do not include all of the information and footnotes required
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Adjustments
consisted of only normal recurring accruals. Operating results for the three
month period March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997. The consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto as of and for the years ended December
31, 1996 and 1995.

(2) INVENTORIES

AT MARCH 31,
1997
------------

Raw materials and manufacturing supplies.................... $21,578
Work in progress............................................ 17,908
Finished goods, parts and goods purchased for resale........ 16,537
-------
56,023
Reserves.................................................... (1,820)
-------
$54,203
=======

(3) CONTINGENCIES

Litigation is subject to many uncertainties; the outcome of individual
litigated matters is not predictable with assurance; and it is reasonably
possible that some of the foregoing matters could be decided unfavorably to the
Company. Although the amount of liability at March 31, 1997 with respect to
these matters cannot be ascertained, the Company believes that the resulting
liability, if any, should not materially affect the consolidated financial
position or results of operations of the Company.

F-58
123

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and Shareholders
MWC Holdings, Inc.

We have audited the accompanying consolidated balance sheets of MWC
Holdings, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1995. The financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
MWC Holdings, Inc. and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.

As discussed in Notes G and L to the financial statements, in 1993 the
Company changed its method of accounting for postretirement benefits other than
pensions and its method of accounting for income taxes.

ERNST & YOUNG LLP

February 23, 1996,
except for Note O, as to which the date is
March 28, 1996
Detroit, Michigan

F-59
124

MWC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
----------------------
1995 1994
---------- ---------
(DOLLARS IN THOUSANDS)

ASSETS -- Note E
Current assets:
Cash...................................................... $ 1,351 $ 1,018
Accounts receivable, net of allowance of $250 in 1995 and
1994................................................... 32,294 44,766
Inventories -- Note B..................................... 31,943 33,187
Prepaid expenses and other current assets................. 5,581 5,817
--------- --------
Total current assets................................. 71,169 84,788
Property, plant and equipment -- Note J:
Land and improvements..................................... 4,445 4,445
Buildings................................................. 26,111 25,569
Machinery and equipment................................... 178,186 171,791
Construction in progress.................................. 6,620 7,670
--------- --------
215,362 209,475
Less accumulated depreciation, amortization and valuation
allowance.............................................. 136,385 110,519
--------- --------
78,977 98,956
Investments in equity affiliates -- Note C.................. 7,374 8,061
Other assets................................................ 12,087 17,131
--------- --------
Total assets......................................... $ 169,607 $208,936
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.......................................... $ 30,123 $ 43,374
Accrued liabilities -- Note D............................. 26,087 21,247
Short-term borrowings -- Note E........................... 5,000 6,811
--------- --------
Total current liabilities............................ 61,210 71,432
Long-term debt -- Note E.................................... 125,000 125,000
Preferred stock of subsidiary -- Note H..................... -- 15,000
Other long-term liabilities................................. 60,953 49,655
Shareholders' equity (deficit) -- Notes E and I:
Common stock, $0.01 par value, authorized 500,000 shares,
issued 442.5 shares and 162,994 shares at December 31,
1995 and 1994, respectively............................ -- 2
Additional paid-in capital................................ 38,922 4,164
Retained-earnings deficit................................. (107,737) (55,541)
Additional minimum pension liability...................... -- (763)
--------- --------
(68,815) (52,138)
Less treasury stock, 65.1 shares and 428 shares at
December 31, 1995 and 1994, respectively............... (8,741) (13)
--------- --------
Total shareholders' equity (deficit)................. (77,556) (52,151)
--------- --------
Total liabilities and shareholders' equity
(deficit)........................................... $ 169,607 $208,936
========= ========

The accompanying notes are an integral part of the consolidated financial
statements.

F-60
125

MWC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
--------- --------- --------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)

Net sales................................................... $ 357,179 $ 405,183 $367,970
Cost of goods sold.......................................... 324,012 361,510 325,702
--------- --------- --------
Gross profit........................................... 33,167 43,673 42,268
Selling, administrative and general......................... 18,218 18,471 16,985
Research and development.................................... 6,882 6,941 6,647
Plant closure costs -- Note J............................... 32,986 31,589 --
Interest expense............................................ 17,854 17,174 16,466
Preferred dividends of subsidiary -- Note H................. 1,629 1,890 1,908
Other expense (income) -- Note K............................ 3,646 2,808 1,608
Patent defense costs........................................ -- 1,700 --
--------- --------- --------
Loss before taxes...................................... (48,048) (36,900) (1,346)
Provision for income taxes -- Note L........................ 4,168 503 713
--------- --------- --------
Loss before extraordinary item......................... (52,216) (37,403) (2,059)
Loss on debt extinguishment, net of income tax tax benefit
-- Note E................................................. -- -- (3,229)
--------- --------- --------
Net loss............................................... $ (52,216) $ (37,403) $ (5,288)
========= ========= ========
Loss per common share -- Note I:
Before extraordinary item................................. $(267,912) $(230,314) $(12,741)
Extraordinary item........................................ -- -- (19,982)
--------- --------- --------
Net loss............................................... $(267,912) $(230,314) $(32,723)
========= ========= ========
Weighted average common shares outstanding -- Note I........ 194.9 162.4 161.6
========= ========= ========

The accompanying notes are an integral part of the consolidated financial
statements.

F-61
126

MWC HOLDINGS, INC. SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

ADDITIONAL
ADDITIONAL RETAINED- MINIMUM
COMMON PAID-IN EARNINGS PENSION TREASURY
STOCK CAPITAL DEFICIT LIABILITY STOCK TOTAL
------ ---------- --------- ---------- -------- --------
(DOLLARS IN THOUSANDS)

Balance, December 31, 1992........... $ 2 $ 4,145 $ (13,085) $ -- $ (39) $ (8,977)
Net loss for 1993.................... -- -- (5,288) -- -- (5,288)
Accretion on preferred stock of
subsidiary......................... -- -- 164 -- -- 164
--- ------- --------- ----- ------- --------
Balance, December 31, 1993........... 2 4,145 (18,209) -- (39) (14,101)
Sale of treasury stock............... -- 19 -- -- 26 45
Net loss for 1994.................... -- -- (37,403) -- -- (37,403)
Accretion on preferred stock of
subsidiary......................... -- -- 71 -- -- 71
Adjustment to additional minimum
pension liability.................. -- -- -- (763) -- (763)
--- ------- --------- ----- ------- --------
Balance, December 31, 1994........... 2 4,164 (55,541) (763) (13) (52,151)
Issuance of common stock............. 3 37,022 -- -- -- 37,025
Purchase of treasury stock and common
shares retired..................... -- (2,269) -- -- (8,728) (10,997)
Common stock reverse split........... (5) 5 -- -- -- --
Net loss for 1995.................... -- -- (52,216) -- -- (52,216)
Accretion on preferred stock of
subsidiary......................... -- -- 20 -- -- 20
Adjustment to additional minimum
pension liability.................. -- -- -- 763 -- 763
--- ------- --------- ----- ------- --------
Balance, December 31, 1995........... $-- $38,922 $(107,737) $ -- $(8,741) $(77,556)
=== ======= ========= ===== ======= ========

The accompanying notes are an integral part of the consolidated financial
statements.

F-62
127

MWC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- ---------
(DOLLARS IN THOUSANDS)

Cash Flows from Operating Activities
Net loss.................................................. $(52,216) $(37,403) $ (5,288)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Plant closure costs.................................... 32,986 31,589 --
Depreciation and amortization.......................... 19,047 19,346 17,454
Postretirement benefits other than pensions -- Note
G.................................................... 1,764 2,934 4,985
Deferred income taxes (credit)......................... 5,189 (2,004) (2,573)
Write-down of assets to realizable value............... 2,263 1,909 --
Preferred dividends of subsidiary...................... 1,629 1,890 1,908
Extraordinary item -- loss on debt extinguishment...... -- -- 4,893
Other.................................................. 1,974 2,127 3,848
Net change in operating assets and liabilities -- Note
M...................................................... (5,398) (2,392) 122
-------- -------- ---------
Net cash provided by operating activities................... 7,238 17,996 25,349
Cash Flows from Investing Activities
Additions to property, plant and equipment:
Capital expenditures................................... (9,284) (13,069) (12,433)
Tooling and dunnage.................................... (4,959) (5,293) (3,380)
Other.................................................. 190 14 (140)
-------- -------- ---------
Net cash used for investing activities...................... (14,053) (18,348) (15,953)
Cash Flows from Financing Activities
Issuance of common stock.................................. 37,025 -- --
Purchase of treasury stock and common stock retired....... (10,977) -- --
Purchase of preferred stock of subsidiary................. (17,069) -- --
Proceeds from (repayment of) revolving credit loans with
financial institutions................................. (1,811) 3,085 3,726
Payment of preferred stock dividends by subsidiary........ -- (1,800) (4,256)
Sale of treasury stock.................................... -- 45 --
Proceeds from issuance of Motor Wheel Senior Notes........ -- -- 125,000
Retirement of Subordinated Notes.......................... -- -- (107,665)
Repayment of term and revolving credit loans with
financial institutions................................. -- -- (21,063)
Debt issuance costs....................................... -- -- (5,117)
-------- -------- ---------
Net cash provided by (used for) financing activities........ 7,168 1,330 (9,375)
-------- -------- ---------
Increase in cash............................................ 333 978 21
Cash at beginning of year................................... 1,018 40 19
-------- -------- ---------
Cash at end of year......................................... $ 1,351 $ 1,018 $ 40
======== ======== =========

The accompanying notes are an integral part of the consolidated financial
statements.

F-63
128

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1995

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

Description of Business: MWC Holdings, Inc. (the Company) and its
wholly-owned subsidiary, Motor Wheel, operate primarily in one business segment.
Holdings designs, manufactures and markets wheels, rims and brake components for
passenger cars, light trucks and commercial highway vehicles. Each of Holdings'
plants produces and ships products principally to original equipment
manufacturers in North America and Japan. Substantially all of Holdings'
accounts receivable are from these manufacturers. Holdings has two major
customers. Sales to its largest customer represented 40%, 44% and 37% of net
sales in 1995, 1994 and 1993, respectively. Sales to its second largest customer
represented 13%, 15% and 24% of net sales in 1995, 1994 and 1993, respectively.
Total export sales were $70,580,000, $82,700,000 and $73,470,000 in 1995, 1994
and 1993, respectively, which include sales to unaffiliated customers in Canada
of $45,895,000, $56,065,000 and $59,810,000 in 1995, 1994 and 1993,
respectively, and the remainder predominantly representing sales to unaffiliated
customers in Mexico and Japan.

Principles of Consolidation: The consolidated financial statements include
the accounts of Holdings and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Companies in which
Holdings has stock ownership from 20 to 50 percent are accounted for by the
equity method.

Revenue Recognition: Sales and related costs of goods sold are recognized
when the products are shipped.

Inventories: Inventories are stated at the lower of cost or market. Cost
was determined by the last-in, first-out (LIFO) method for substantially all
inventories at December 31, 1995 and 1994.

Property, Plant and Equipment: Property, plant and equipment are stated on
the basis of cost. Expenditures for major improvements are capitalized while
repairs and maintenance are charged to expense. Depreciation is computed by the
straight-line method based upon the estimated useful lives of the assets, which
range from 20 to 40 years for buildings and land improvements and from 3 to 15
years for machinery and equipment. Expenditures for tooling and dunnage are
included in machinery and equipment and are amortized on a straight-line basis
over the estimated useful lives of the assets which range from 2 to 5 years.
When a tooling or dunnage expenditure is fully amortized, the cost and
accumulated amortization are eliminated from the accounts.

Holdings capitalizes interest costs incurred in constructing major
improvements. Interest costs of $76,000, $66,000 and $461,000 were capitalized
in 1995, 1994, and 1993, respectively. Construction in progress at December 31,
1995 primarily relates to normal ongoing improvements and replacements of
machinery and equipment.

Debt Issuance Costs: Debt issuance costs at December 31, 1995 represent
expenditures associated with the issuance and sale of the 11 1/2% senior notes
(the "Motor Wheel Senior Notes") and the borrowings under Motor Wheel s credit
agreement with financial institutions. These costs are being amortized using the
interest yield method over the terms of the agreements, and the unamortized
balance of $3,134,000 at December 31, 1995 is included in other assets.

Management Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported net income
during the reporting period. Actual results could differ from those estimates.

Long-Lived Assets: In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for

F-64
129

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Long-Lived Assets to Be Disposed of. Companies are required to adopt this
standard no later than 1996. Holdings has not completed the analysis of the
impact of this standard, but management does not believe the impact will be
significant.

NOTE B -- INVENTORIES

Inventories are comprised of:

1995 1994
-------- --------
(DOLLARS IN THOUSANDS)

Raw materials and supplies.................................. $15,315 $16,860
Work in process............................................. 6,536 6,578
Finished product............................................ 14,863 12,770
------- -------
36,714 36,208
Less excess of FIFO cost over LIFO.......................... (1,971) (1,507)
Less valuation allowance -- Note J.......................... (2,800) (1,514)
------- -------
$31,943 $33,187
======= =======

NOTE C -- EQUITY INVESTMENTS

Holdings has a 50% common stock ownership in Aluminum Wheel Technology,
Inc. ("Alumitech"), a manufacturer of cast aluminum wheels. Alumitech has
$39,881,000 of bank loans which are 50% guaranteed by Holdings.

Holdings has a 50% common stock ownership in Riviera Tool Company, a
manufacturer of stamping dies that are sold to domestic automobile manufacturers
and their suppliers.

F-65
130

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE C -- EQUITY INVESTMENTS -- (CONTINUED)
Alumitech's fiscal year end is December 31, 1995, and Riviera Tool
Company's fiscal year end is August 31, 1995. Summarized combined financial
information at December 31, 1995 and 1994, and for the three years ended
December 31, 1995 for these equity investments, is as follows:

AT DECEMBER 31,
-----------------------
1995 1994
-------- --------
(DOLLARS IN THOUSANDS)

Current assets.............................................. $23,582 $25,637
Noncurrent assets........................................... 51,080 55,249
------- -------
Total assets......................................... $74,662 $80,886
======= =======
Current liabilities......................................... $24,494 $30,022
Noncurrent liabilities...................................... 36,508 35,850
------- -------
Total liabilities.................................... 61,002 65,872
Shareholders' equity........................................ 13,660 15,014
------- -------
Total liabilities and shareholders' equity........... $74,662 $80,886
======= =======

FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
------- ------- -------
(DOLLARS IN THOUSANDS)

Net sales................................................... $74,785 $78,495 $67,552
Gross profit................................................ 6,513 6,186 6,994
Operating profit............................................ 2,973 2,184 3,694
Net loss.................................................... (1,115) (1,803) (2,417)

In 1993, Riviera Tool Company recorded a loss of $2,517,000 to write off an
investment in and receivable from an affiliated company which ceased business
operations during 1994 and sold substantially all of its assets.

For a substantial portion of 1993, Holdings carried a note receivable
balance due from Dotson Wheel Corporation, Inc. ("Dotson"), a manufacturer of
off-highway wheel and rim products in which Holdings also held a 30% common
stock ownership. Dotson ceased business operations during 1993 and sold
substantially all of its assets. Correspondingly, Holdings recorded a $1,289,000
loss in 1993 to write off the note receivable.

NOTE D -- ACCRUED LIABILITIES

Accrued liabilities are comprised of:

1995 1994
-------- --------
(DOLLARS IN THOUSANDS)

Payroll and compensated absences............................ $ 5,233 $ 6,093
Interest.................................................... 4,884 4,958
Workers' compensation....................................... 3,363 3,414
Plant closure costs......................................... 3,340 1,000
Other....................................................... 9,267 5,782
------- -------
$26,087 $21,247
======= =======

F-66
131

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE E -- LONG-TERM DEBT

Long-term debt at December 31, 1995 and 1994 consists of $125,000,000 of
Motor Wheel Senior Notes due March 1, 2000 which are unsecured with interest
payable semiannually on March 1 and September 1 of each year.

Motor Wheel has a revolving credit agreement which provides borrowing
capacity up to $50,000,000 through March 1998, subject to limitations based on
the value of Motor Wheel's inventory and receivables. During 1995, Motor Wheel
negotiated an amendment to its existing revolving credit agreement which
extended the maturity date of the agreement from March 1996 to March 1998,
decreased the interest rates on borrowings under the agreement, eliminated
certain financial covenants and provided an option, at the mutual consent of
Motor Wheel and its lender, for an extension of one year on the maturity date.
The credit agreement also provides up to $25,000,000 in letters of credit with
the amount of any outstanding letters of credit applied to reduce Motor Wheel s
borrowing capacity.

Short-term borrowings outstanding at December 31, 1995 represent borrowings
under this agreement based upon Eurodollar interest rates (8.44% at December 31,
1995). The agreement also provides for borrowings based upon prime interest
rates plus 1%, none of which were outstanding at December 31, 1995. The interest
rate on the short term borrowings outstanding at December 31, 1994 was 10 1/4%.
Interest is payable monthly. Outstanding letters of credit totaled $12,532,000
at December 31, 1995 and included $6,667,000 in standby letters of credit
partially to support Holdings guarantee of 50% of Alumitech's bank loans (see
Note C). At December 31, 1995, the unused and available portion of commitment
under the credit agreement was approximately $22,300,000.

The liquidity position of Holdings, primarily the level of unused and
available portion of commitment under the credit agreement, is improved over
prior years despite the incurrence of net losses over the past three years and
the resulting shareholders deficit. The significant items contributing to these
net losses include the plant closure costs and other noncash expenses recorded
over the past three years.

In 1993, Holdings completed a refinancing which included the issuance of
the Motor Wheel Senior Notes, the retirement of $105 million face value of
Senior Subordinated Notes, the repayment of outstanding term loans, the payment
of $3,375,000 of accrued preferred stock dividends and the payment of other
costs related to the refinancing. Holdings recognized an extraordinary charge of
$3,229,000, net of the related income tax effect of $1,664,000, which consisted
primarily of the write-off of unamortized debt issuance costs and the redemption
premium for the 11 3/8% Senior Subordinated Notes.

The indenture relating to the 11 1/2% Motor Wheel Senior Notes include
covenants that, among other things, limit Motor Wheel's ability to create or
incur additional indebtedness, create or incur additional liens, sell assets and
engage in certain transactions. The revolving credit agreement includes a limit
on Motor Wheel's annual capital expenditures in the amount of $15,000,000, which
can be exceeded provided that certain minimum levels of borrowing availability
have been maintained. Substantially all accounts receivable and inventory are
collateralized under the credit agreement for short-term borrowings. Although
the remaining assets are not collateralized, under the indenture relating to the
Motor Wheel Senior Notes Holdings has agreed not to pledge these assets as
collateral for other borrowings.

Interest paid was $16,340,000, $16,300,000 and $14,920,000 in 1995, 1994
and 1993, respectively.

The fair value of the Motor Wheel Senior Notes outstanding at December 31,
1995 was approximately 88% of the carrying amount. Based on borrowing rates
currently available to Holdings for bank loans with similar terms, the fair
value of the amounts outstanding under Motor Wheel's credit agreement
approximate the carrying amounts at December 31, 1995.

F-67
132

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE F -- PENSIONS

Holdings has defined benefit pension plans covering substantially all
employees. Benefits for plans covered by collective bargaining agreements are
based upon a fixed amount per year of credited service while benefits for other
plans are based upon years of service, compensation and social security
benefits.

Holdings' funding policy is to contribute annually an actuarially
determined amount which includes current and prior service cost. Plan assets
include corporate and government debt securities, marketable equity securities
and cash equivalents.

The following table sets forth the plans' funded status and amounts
recognized in Holdings' consolidated balance sheets at December 31, 1995 and
1994.

1995 1994
-------- --------
(DOLLARS IN THOUSANDS)

Accumulated benefits obligation including vested benefits of
$80,312 and $71,213 at December 31, 1995 and 1994,
respectively.............................................. $83,504 $79,782
======= =======
Projected benefit obligation for service rendered to date... $85,789 $82,697
Plan assets at fair value................................... 68,835 61,117
------- -------
Projected benefit obligation in excess of plan assets....... 16,954 21,580
Unrecognized net gain from past experience different from
that assumed.............................................. 3,051 504
Unrecognized prior service costs resulting from plan
amendments................................................ (3,492) (4,581)
Adjustment required to recognize minimum liability.......... 2,886 4,595
------- -------
Accrued pension liability................................... $19,399 $22,098
======= =======

Accrued pension liability is included under the captions "Accrued
liabilities" and "Other long-term liabilities."

Intangible assets in the amounts of $2,886,000 and $3,832,000 as of
December 31, 1995 and 1994, respectively, related to the minimum liability
recognized have been included in other assets.

Pension expense consists of:

1995 1994 1993
-------- ------- -------
(DOLLARS IN THOUSANDS)

Service cost-benefits earned during the period.............. $ 1,868 $ 2,341 $ 2,074
Interest cost on projected benefit obligation............... 6,111 5,796 5,377
Actual (return) loss on assets.............................. (14,115) 1,333 (6,176)
Net amortization and deferral............................... 9,909 (5,783) 2,121
-------- ------- -------
$ 3,773 $ 3,687 $ 3,396
======== ======= =======

In 1995, there were certain curtailment and termination events primarily
relating to work-force reductions which resulted in the recognition of a net
gain of $969,000. In 1994, as part of a provision for plant closure costs (see
Note J), Holdings recognized a loss of $4,527,000.

The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7 3/4% at December 31, 1995, 8 1/2% at December
31, 1994 and 7 3/4% at December 31, 1993. The assumed long-term rate of return
on plan assets was 9 1/2%. The rate of increase in future compensation, where
applicable, was 4 1/2%.

F-68
133

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE F -- PENSIONS -- (CONTINUED)
Holdings has 401(K) plans covering substantially all domestic employees.
Under these various plans, Holdings provides differing levels of matching
contributions which totaled $497,000, $423,000 and $307,000 in 1995, 1994 and
1993, respectively.

NOTE G -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Holdings provides substantially all employees with health care and life
insurance benefits following retirement with the primary exception being that
these benefits are not extended to the majority of employees hired after
December 31, 1992. Health care benefit levels for all current retirees are based
upon company contributions which are substantially limited to 1992 levels of
health care costs requiring certain levels of contributions by the retirees. The
cost of life insurance benefits is fully paid by Holdings. Postretirement
benefit levels for active plan participants (future retirees) are similar to the
benefit levels for current retirees; however, differences exist for certain
active plan participants who are covered by existing collective bargaining
agreements.

The following table displays the components of Holdings' accumulated
postretirement benefit obligation as of December 31, 1995 and 1994 reconciled to
amounts recognized in the accompanying consolidated balance sheet.

1995 1994
-------- --------
(DOLLARS IN THOUSANDS)

Accumulated postretirement benefit obligation:
Retirees.................................................. $ 33,970 $ 30,801
Fully eligible active plan participants................... 9,070 12,123
Other active plan participants............................ 12,273 8,681
-------- --------
55,313 51,605
Unrecognized prior service cost............................. (1,179) --
Unrecognized net gain (loss)................................ 2,157 5,005
Unrecognized transition obligation.......................... (41,201) (44,341)
-------- --------
Accrued postretirement benefit cost......................... $ 15,090 $ 12,269
======== ========

Effective January 1, 1993, Holdings adopted SFAS No. 106, Employer's
Accounting for Postretirement Benefits Other Than Pensions. The estimated
transition obligation as of January 1, 1993 was $78,928,000, measured based upon
the substantive plans in effect as of that date. The transition obligation
represented that portion of future retiree benefit costs related to services
already rendered by both active plan participants and retirees as of January 1,
1993. This obligation is being recognized over an amortization period of 20
years. Since January 1, 1993, Holdings has negotiated reductions in benefit
levels with certain active plan participants who are covered under collective
bargaining agreements. The impact of these lower benefit levels has been
accounted for as reductions to the unamortized transition obligation and a
corresponding reduction in ongoing net periodic postretirement benefit costs.

F-69
134

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE G -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- (CONTINUED)
Net periodic postretirement benefit cost is comprised of:

1995 1994 1993
------ ------ -------
(DOLLARS IN THOUSANDS)

Service cost................................................ $ 433 $ 674 $ 1,377
Interest cost............................................... 4,280 4,378 6,051
Amortization of transition obligation....................... 2,686 2,818 3,435
Amortization of prior service cost.......................... 43 -- --
------ ------ -------
Net periodic postretirement benefit cost.................... $7,442 $7,870 $10,863
====== ====== =======

The net periodic postretirement benefit cost has exceeded Holdings' cash
disbursements for such benefits by $1,764,000, $2,934,000 and $4,985,000 in
1995, 1994 and 1993, respectively. Holdings expects to continue its policy of
paying postretirement benefits as incurred, so there is no anticipated effect on
the timing of cash disbursements relating to postretirement benefits.

In 1995, there were certain curtailment and termination events primarily
relating to work-force reductions which resulted in the recognition of a net
loss of $215,000. In 1994, as part of a provision for plant closure costs (see
Note J), Holdings recognized a loss of $4,350,000.

The assumed weighted-average health care cost trend rate is 8.0% for 1996
and is assumed to decrease linearly to 4 3/4% for 2001 and remain at that level
thereafter. The health care cost trend rate assumption can have a significant
effect on the amounts reported. Increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1995 by $850,000, and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year ended December 31, 1995 by $130,000.
The assumed weighted average discount rate used in determining the actuarial
present value of the accumulated postretirement benefit obligation was 7 3/4% at
December 31, 1995, 8 1/2% at December 31, 1994 and 7 3/4% at December 31, 1993.

NOTE H -- PREFERRED STOCK

Prior to November 7, 1995 (see Note I), Motor Wheel had 150,000 outstanding
shares of no-par-value Cumulative Exchangeable Preferred Stock ("Motor Wheel
Preferred Stock"). The initial dividend rate was $11.25 per share per annum
through April 1, 1993 and increased thereafter by $0.50 per share each year on
April 1. The accretion of the discount at the time of issuance of the increasing
rate Motor Wheel Preferred Stock of $20,000, $71,000 and $164,000 in 1995, 1994
and 1993, respectively, has been reflected in net loss.

NOTE I -- ISSUANCE OF COMMON STOCK

On November 7, 1995, Holdings completed certain transactions in which an
equity investment was made in Holdings in exchange for a controlling interest in
Holdings. A portion of the proceeds of this investment was used by Holdings to
(i) purchase certain shares of its common stock; (ii) purchase the outstanding
shares of Motor Wheel Preferred Stock; and (iii) pay transaction costs. In
conjunction, a reverse split of the common shares of Holdings was completed
whereby holders received one share for every thousand shares held. The loss per
common share amounts is based on the weighted average number of common shares
outstanding, which are presented on a pro forma basis for all years giving
effect to the reverse split in 1995.

An officer of Holdings has options to purchase 16.371 shares of Holdings'
common stock at an exercise price of $135,000 per share. Such options vest and
become exercisable ratably over a five-year period

F-70
135

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE I -- ISSUANCE OF COMMON STOCK -- (CONTINUED)
beginning on December 31, 1996. Vesting of the options is subject to Holdings
achieving certain performance targets but shall vest in full no later than 2003,
provided the officer remains an employee of Holdings.

NOTE J -- PLANT CLOSURE COSTS

In 1995, Holdings recorded provisions related to two plant closure matters.
Holdings commenced efforts to address manufacturing capacity and noncompetitive
costs in both its automotive steel wheel and automotive brake operations. As a
result of these efforts, manufacturing operations at both the Mendota, Illinois,
and Ypsilanti, Michigan, facilities will be terminated. Closure of these
facilities will commence in 1996. Holdings is currently evaluating various
options with respect to satisfying its expected production requirements within
automotive wheel and brake operations.

Holdings has recorded provisions totaling $32,986,000, which consist of the
following estimates:

(DOLLARS IN THOUSANDS)

Asset write-down to estimated realizable values............. $16,396
Curtailment costs associated with postretirement benefits... 3,525
Facility maintenance costs during estimated holding
period.................................................... 5,940
Postemployment benefits..................................... 7,125
-------
$32,986
=======

In 1994, Holdings recorded provisions related to plant-closure matters
associated with reducing its manufacturing capacity within its automotive wheel
operations. Holdings recorded provisions totaling $31,589,000, which consisted
of the following estimates:

(DOLLARS IN THOUSANDS)

Asset write-downs to estimated realizable values............ $12,541
Curtailment costs associated with postretirement benefits... 8,877
Facility maintenance costs during estimated holding
period.................................................... 6,596
Postemployment benefits..................................... 3,575
-------
$31,589
=======

During 1995, Holdings transferred production of automotive steel wheels
from Lansing to another steel wheel facility, reduced employment levels and
commenced efforts to dispose of excess property, plant and equipment. Also in
1995, Holdings completed the sale of certain equipment and inventory associated
with its Luckey manufacturing operations.

As of December 31, 1995, Holdings' recorded liability for the Lansing and
Luckey plant-closure costs was $9,675,000, which consists of facility
maintenance costs and postemployment benefits. Liabilities related to these
plant closures for pensions and postretirement benefits other than pensions are
included in the amounts disclosed in Notes F and G. In addition, remaining
valuation allowances for inventory and property, plant and equipment total
$708,000 and $7,968,000, respectively. There were no significant adjustments
made in 1995 to the plant-closure cost estimates recorded in 1994.

F-71
136

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE K -- OTHER EXPENSE (INCOME)

Other expense (income) is comprised of:

1995 1994 1993
------ ------ ------
(DOLLARS IN THOUSANDS)

Write-down of assets to realizable value.................... $2,263 $1,909 $ --
Restructuring costs......................................... 846 -- --
Equity in net loss of affiliates Note C..................... 687 1,024 2,666
License and royalty agreements.............................. (124) (341) (411)
Other....................................................... (26) 216 (647)
------ ------ ------
$3,646 $2,808 $1,608
====== ====== ======

NOTE L -- INCOME TAXES

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Holdings' deferred tax assets and liabilities as of December 31, 1995 and 1994
are as follows:

DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- ----------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX TAX TAX TAX
ASSETS LIABILITIES ASSETS LIABILITIES
-------- ----------- -------- -----------
(DOLLARS IN THOUSANDS)

Tax over book depreciation........................... $ -- $12,603 $ -- $14,680
Plant-closure costs.................................. 17,460 -- 10,740 --
Employee benefit accruals............................ 13,545 -- 10,692 --
Other................................................ 1,430 709 443 604
Net operating loss carryforwards..................... 4,451 -- 2,965 --
-------- ------- -------- -------
36,886 13,312 24,840 15,284
Tax credit carryforwards............................. 5,345 -- 6,373 --
Valuation allowance for deferred tax assets.......... (28,919) -- (10,740) --
-------- ------- -------- -------
Total deferred taxes................................. $ 13,312 $13,312 $ 20,473 $15,284
======== ======= ======== =======

As disclosed in Note I, certain transactions were completed in 1995 which
resulted in a change in control in the ownership of Holdings. Under certain
provisions of the Internal Revenue Code, a change in control can significantly
impact a taxpayer's ability to utilize net operating loss and tax credit
carryforwards. The change of control has a significant impact on Holdings'
ability to utilize net operating loss and tax credit carryforwards. Holdings
also incurred additional operating losses and provided additional costs for
plant closures in 1995. As a result, Holdings provided a total of $18,179,000 to
increase the valuation allowance against deferred tax assets. Net deferred tax
assets of $5,189,000 at December 31, 1994 include $1,250,000 under the caption
"Prepaid expenses and other current assets" and $3,939,000 under the caption
"Other assets."

F-72
137

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE L -- INCOME TAXES (CONTINUED)
The provision (credit) for income taxes is comprised of:

1995 1994 1993
-------- -------- -------
(DOLLARS IN THOUSANDS)

Deferred expense (credit):
Plant-closure costs....................................... $ (6,720) $(10,740) $ --
Employee benefits......................................... (2,853) (962) (1,901)
Depreciation.............................................. (2,077) (1,126) (706)
Other items, net.......................................... (882) (381) (19)
-------- -------- -------
(12,532) (13,209) (2,626)
Net operating loss carryforwards.......................... (1,486) -- --
Tax credit carryforwards.................................. 1,028 (1,936) (1,479)
Reinstatement due to utilization of net operating loss
carryforwards.......................................... -- 2,401 1,532
-------- -------- -------
(12,990) (12,744) (2,573)
Adjustment to valuation allowance for deferred tax assets... 18,179 10,740 --
-------- -------- -------
Total deferred expense (credit)........................... 5,189 (2,004) (2,573)
Currently payable (refundable).............................. (1,021) 2,507 1,622
-------- -------- -------
4,168 503 (951)
Tax benefit allocated to extraordinary item Note E.......... -- -- 1,664
-------- -------- -------
$ 4,168 $ 503 $ 713
======== ======== =======

Net income taxes paid were $300,000, $2,078,000 and $1,204,000 in 1995,
1994 and 1993, respectively.

A reconciliation of income taxes calculated at the statutory rate of 34% to
the provision for income taxes follows:

1995 1994 1993
-------- -------- -----
(DOLLARS IN THOUSANDS)

Credit at Federal statutory rate............................ $(16,336) $(12,546) $(458)
Adjustments to taxes at statutory rate:
Adjustment to valuation allowance for deferred tax
assets................................................. 18,179 10,740 --
Nondeductible losses from foreign subsidiaries............ 1,248 854 259
Nondeductible preferred dividends of subsidiary........... 554 643 649
Nondeductible losses from equity investments.............. 320 391 48
Other items............................................... 203 421 215
-------- -------- -----
Income taxes.............................................. $ 4,168 $ 503 $ 713
======== ======== =====

For United States tax-reporting purposes, at December 31, 1995, Holdings
has net operating loss carryforwards of approximately $13,091,000, utilization
of which is limited to approximately $250,000 per year through the final year of
expiration in 2010, and tax credit carryforwards of approximately $5,345,000
principally related to alternative minimum tax.

Effective January 1, 1993, Holdings adopted SFAS No. 109, Accounting for
Income Taxes. This adoption did not have a significant impact on the financial
position, results of operations or cash flows of Holdings.

F-73
138

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE M -- NET CHANGE IN OPERATING ASSETS AND LIABILITIES

The net change in operating assets and liabilities is comprised of (dollars
in thousands):

1995 1994 1993
-------- ------- -------

Accounts receivable......................................... $ 12,472 $(6,294) $(5,186)
Inventories................................................. (1,277) 693 (3,496)
Other operating assets...................................... (2,732) (2,306) (411)
Operating liabilities....................................... (13,861) 5,515 9,215
-------- ------- -------
$ (5,398) $(2,392) $ 122
======== ======= =======

NOTE N -- COMMITMENTS AND CONTINGENCIES

Holdings leases certain property, plant and equipment under various
noncancelable operating leases. Original lease terms generally expire within
fifteen years but may be renewed by Holdings. Many of the leases provide that
Holdings will pay taxes assessed against leased property and the cost of
insurance and maintenance.

Future minimum lease payments under noncancelable operating leases are as
follows (dollars in thousands):

1996........................................................ $ 3,263
1997........................................................ 2,446
1998........................................................ 1,713
1999........................................................ 1,555
2000........................................................ 1,539
-------
10,516
Thereafter.................................................. 6,884
-------
Total future minimum lease payments......................... $17,400
=======

Total rental expense charged to income was $4,000,000, $4,800,000 and
$4,900,000 in 1995, 1994 and 1993, respectively.

Holdings, in the normal course of business, is involved in various legal
actions. Management, after taking into consideration legal counsel's
evaluations, is of the opinion that the outcome thereof will not have a material
impact on the financial position, operating results or cash flows of Holdings.

In addition, Holdings is party to various environmental cleanup and product
liability matters. Holdings was formed to acquire Motor Wheel from The Goodyear
Tire & Rubber Company (Goodyear). At the time of the acquisition of Motor Wheel
from Goodyear in December 1986 (the "Acquisition"), Goodyear agreed to be
responsible for, and to indemnify Holdings with respect to, all liabilities,
claims and obligations for environmental pollutants, or other substances
generated prior to December 30, 1986, for the plants then owned by Motor Wheel,
and April 1, 1987, for the plants previously owned by Goodyear. Also at the time
of the Acquisition, Goodyear agreed to indemnify Holdings for all costs and
liabilities arising from any product warranty, product liability, other claims
or obligations for products manufactured by Motor Wheel prior to December 30,
1986 and for products manufactured by Goodyear at the Akron, Ohio, plant prior
to April 1, 1987. After taking into consideration both the Goodyear
indemnification and actions taken by Holdings since the Acquisition to limit
Holdings' exposure in these matters, management is of the opinion that the
outcome thereof will not have a material impact on the financial position,
operating results or cash flows of Holdings.

F-74
139

MWC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE O -- SUBSEQUENT EVENT

On March 28, 1996, Holdings signed a definitive Agreement and Plan of
Merger (the "Merger Agreement"), which provides for the merger of Holdings with
and into Hayes Wheels International, Inc. (the "Company"). At the effective time
of the merger, the separate corporate existence of Holdings shall thereupon
cease and the Company shall continue as the surviving corporation. The Board of
Directors of both Holdings and the Company approved the Merger Agreement and the
transactions contemplated thereby at their respective meetings held on March 28,
1996. In connection with the merger and the related financings, it is
anticipated that all of the outstanding Motor Wheel Senior Notes due 2000 of
Holdings will be retired in accordance with their terms.

Consummation of the merger is subject to various conditions, including: (i)
receipt of approval by the stockholders of Holdings and the Company of the
Merger Agreement and the merger; (ii) expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended; (iii) filing and effectiveness of a Proxy and Registration
Statement; (iv) receipt of financing necessary to consummate the transactions;
and (v) satisfaction of certain other conditions. The merger is expected to be
consummated in midsummer 1996.

F-75
140

===============================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------

TABLE OF CONTENTS

PAGE
----

Incorporation of Certain Documents by
Reference.................................. 3
Available Information........................ 3
Prospectus Summary........................... 5
Risk Factors................................. 13
The Company.................................. 17
Use of Proceeds.............................. 17
Price Range of Common Stock.................. 18
Dividend Policy.............................. 18
Capitalization............................... 19
Pro Forma Combined Condensed Financial
Data....................................... 20
Selected Historical Consolidated Financial
Information of Hayes....................... 29
Selected Historical Consolidated Financial
Information of Lemmerz..................... 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 31
Business..................................... 36
Management................................... 50
Principal and Selling Stockholders........... 55
Description of Capital Stock................. 57
Shares Eligible for Future Sale.............. 59
Underwriting................................. 61
Legal Matters................................ 63
Experts...................................... 63
Index to Consolidated Financial Statements... F-1

===============================================================
===============================================================

3,779,502 SHARES

[HAYES WHEELS LOGO]

COMMON STOCK

----------------
PROSPECTUS
----------------

MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.

AUGUST , 1997

===============================================================
141

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED AUGUST 4, 1997

PROSPECTUS

3,779,502 SHARES

HAYES WHEELS LOGO
COMMON STOCK

Of the 3,779,502 shares of Common Stock offered hereby, 779,502 shares are
being offered outside the United States and Canada (the "International
Offering") and 3,000,000 shares are being offered in the United States and
Canada (the "U.S. Offering" and, together with the International Offering, the
"Offerings"). The initial offering price and the aggregate underwriting discount
per share are identical for both Offerings. See "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

(2) Before deducting expenses of the Offerings payable by the Company estimated
at $ .

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an aggregate of 566,925 additional shares of Common Stock on the same
terms as set forth above solely to cover over-allotments, if any. See
"Underwriting." If the Underwriters exercise such option in full, the total
"Price to Public", "Underwriting Discount," and "Proceeds to Company" will
be $ , $ , and $ , respectively. See
"Underwriting."
------------------------

GOLDMAN SACHS INTERNATIONAL

------------------------

The date of this Prospectus is August , 1997.

142

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-U.S. STOCKHOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of shares of
Common Stock by "Non-U.S. Holders." In general, a "Non-U.S. Holder" is an
individual or entity other than (i) a citizen or resident of the United States;
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any state thereof,
(iii) an estate the income of which is includable in gross income for United
States federal income tax purposes regardless of its source; or (iv) a trust if
a court within the United States is able to exercise primary supervision over
the administration of the trust, and one or more United States fiduciaries have
the authority to control all substantial decisions of the trust. This discussion
does not address all United States federal income and estate tax consequences
that may be relevant to a non-U.S. Holder in light of its particular
circumstances or to certain Non-U.S. Holders that may be subject to special
treatment under United States federal income tax laws. Furthermore, the
following discussion does not discuss any aspects of foreign, state or local
taxation. The following discussion is based on current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and administrative and
judicial interpretations as of the date hereof, all of which are subject to
change, possibly with retroactive effect. EACH PROSPECTIVE NON-U.S. HOLDER IS
URGED TO CONSULT ITS TAX ADVISER WITH RESPECT TO THE UNITED STATES FEDERAL
INCOME AND ESTATE TAX CONSEQUENCES OF OWNING AND DISPOSING OF SHARES OF COMMON
STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL OR OTHER TAXING JURISDICTION.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States, or (ii) if certain income tax treaties apply, attributable to a United
States permanent establishment maintained by the Non-U.S. Holder. Dividends
effectively connected with such a trade or business or attributable to such a
permanent establishment generally will not be subject to U.S. withholding tax
and generally will be subject to United States federal income tax on a net
income basis, in the same manner as if the Non-U.S. Holder were a resident of
the United States. A Non-U.S. Holder that is a corporation may be subject to an
additional branch profits tax at a rate of 30% (or such lower rate as may be
specified by an applicable treaty). A Non-U.S. Holder of Common Stock may be
required to comply with certain certification and disclosure requirements in
order to claim an exemption from or a reduction of withholding under the rules
described in this paragraph.

GAIN ON DISPOSITION

A Non-U.S. Holder generally will not be subject to United States federal
income tax (and no tax will generally be withheld) on any gain recognized upon
the disposition of Common Stock unless (i) the gain is effectively connected
with the conduct of a trade or business within the United States of the Non-U.S.
Holder or, if certain tax treaties apply, attributable to a permanent
establishment maintained within the United States by the Non-U.S. Holder; (ii)
in the case of a Non-U.S. Holder who is a nonresident alien individual and who
holds shares as a capital asset, such individual is present in the United States
for 183 days or more in the taxable year of the disposition; (iii) the Non-U.S.
Holder is subject to tax pursuant to provisions of the Code applicable to
certain United States expatriates; or (iv) the Company is or has been a "U.S.
real property holding corporation" for United States federal income tax purposes
(which the Company does not believe that it has been, is or is likely to become)
and the Non-U.S. Holder disposing of the Common Stock owned, directly or
constructively, at any time during the five-year period preceding the
disposition, more than five percent of the outstanding Common Stock.

61
143

BACKUP WITHHOLDING, INFORMATION RETURN AND INFORMATION REPORTING REQUIREMENTS

The Company must make an information return annually to the Internal
Revenue Service and to each Non-U.S. Holder of the amount of dividends paid to,
and the tax withheld with respect to, each Non-U.S. Holder. These information
return requirements apply regardless of whether withholding was reduced or
eliminated by an applicable tax treaty. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement to
the tax authorities in the country in which the Non-U.S. Holder resides or is
established.

United States backup withholding (which generally is imposed at the rate of
31% on certain payments to persons who fail to furnish the information required
under the United States information reporting requirements) and information
reporting generally will not apply to dividends that are subject to the 30%
withholding discussed above or are not so subject because a tax treaty applies,
and are paid on Common Stock to a Non-U.S. Holder at an address outside the
United States.

The payment of proceeds from the disposition of Common Stock by a Non-U.S.
Holder to or through the United States office of a broker will be subject to
information reporting and backup withholding at a rate of 31% unless the owner
certifies, among other things, its status as a Non-U.S. Holder under penalties
of perjury or otherwise establishes an exemption. The payment of proceeds from
the disposition by a Non-U.S. Holder of Common Stock to or through a non-U.S.
office of a non-U.S. broker will generally not be subject to backup withholding
and information reporting. However, in the case of proceeds from a disposition
of Common Stock paid to or through a non-U.S. office of a broker that is (i) a
United States person, (ii) a "controlled foreign corporation" for U.S. federal
income tax purposes or (iii) a foreign person 50% or more of whose gross income
from all sources for a certain three-year period was effectively connected with
a United States trade or business, (a) backup withholding will not apply unless
such broker has actual knowledge that the owner is not a Non-U.S. Holder, and
(b) information reporting will apply unless the broker has documentary evidence
in its files of the owner's status as a Non-U.S. Holder (and the broker has no
actual knowledge to the contrary) or the owner otherwise establishes an
exemption.

Any amounts withheld under the backup withholding rules from payments to a
Non-U.S. Holder will be refunded or credited against the Non-U.S. Holder's
United States federal income tax liability, if any, provided that the required
information is furnished to the Internal Revenue Service.

The backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to the Common Stock is
subject to change.

FEDERAL ESTATE TAX

Shares of Common Stock owned or treated as owned by an individual who is
not a citizen or resident (as defined for United States federal estate tax
purposes) of the United States at the time of death will be includable in the
individual's gross estate for United States federal estate tax purposes unless
an applicable estate tax treaty provides otherwise, and, therefore, may be
subject to United States federal estate tax.

62
144

UNDERWRITING

Subject to the terms and conditions set forth in the International Purchase
Agreement (the "International Purchase Agreement") among the Company, the
Selling Stockholders and each of the Underwriters named below (the
"International Managers"), and concurrently with the sale of 3,000,000 shares of
Common Stock to the U.S. Underwriters (as defined below), the Company and the
Selling Stockholders severally have agreed to sell to each of the International
Managers, and each of the International Managers severally has agreed to
purchase, the aggregate number of shares of Common Stock set forth opposite its
name below:

NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------

Merrill Lynch International.................................
Bear, Stearns International Limited.........................
Goldman Sachs International.................................
-------
Total....................................... 779,502
=======

The Company and the Selling Stockholders have also entered into the United
States Purchase Agreement (the "U.S. Purchase Agreement" and, together with the
International Purchase Agreement, the "Purchase Agreements") with certain
underwriters inside the United States and Canada (the "U.S. Underwriters" and,
together with the International Managers, the "Underwriters"). Subject to the
terms and conditions set forth in the U.S. Purchase Agreement, and concurrently
with the sale of 779,502 shares of Common Stock to the International Managers
pursuant to the International Purchase Agreement, the Company and the Selling
Stockholders severally have agreed to sell to the U.S. Underwriters and the U.S.
Underwriters severally have agreed to purchase, an aggregate of 3,000,000 shares
of Common Stock. The offering price per share and the total underwriting
discount per share are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.

The International Managers have advised the Company and the Selling
Stockholders that the International Managers propose initially to offer the
shares of Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $ per share of Common Stock. The U.S.
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per share of Common Stock on sales to certain other dealers. After the
public offering, the public offering price, concession and discount may be
changed.

The Company has granted an option to the International Managers,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to an additional 116,925 shares of Common Stock at the

63
145

public offering price set forth on the cover page hereof, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of shares of Common Stock offered
hereby. To the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase approximately the number of additional shares of Common Stock
proportionate to such International Manager's initial amount reflected in the
foregoing table. The Company has also granted an option to the U.S.
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an additional 450,000 shares of Common Stock to
cover over-allotments, if any, on terms similar to those granted to the
International Managers.

The Company, the Principal Stockholders and Messrs. Cucuz and Shovers have
agreed that they will not, directly or indirectly, for a period of 120 days
following the date of the Prospectus, except, in the case of the Company, with
the prior consent of Merrill Lynch International, on behalf of the International
Managers, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any Common Stock, except, in the case of the Company, for the
purchase of Common Stock pursuant to the Option Agreement, the issuance of
Common Stock under the 1992 Plan and the 1996 Plan and the issuance of Common
Stock upon conversion of shares of the Company's Series A Preferred Stock and,
in the case of the Lemmerz Selling Stockholders, for the sale of Common Stock
pursuant to the Option Agreement. The Principal Stockholders' securities are
also restricted under the Stockholders' Agreement. See "Management --
Stockholders' Agreement" and "Shares Eligible for Future Sale."

If the U.S. Underwriters create a short position in the Common Stock in
connection with the Offerings (i.e., if they sell more than 3,000,000 shares of
Common Stock), the U.S. Underwriters may reduce that short position by
purchasing Common Stock in the open market. The U.S. Underwriters may also elect
to reduce any short position through the exercise of all or part of the
over-allotment option described above. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of such purchases.

Neither the Company nor the International Managers make any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor the Underwriters make any representation that
the Underwriters will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.

64
146

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), an
affiliate of Merrill Lynch International, acted as financial advisor to Hayes in
connection with the Lemmerz Acquisition. Merrill Lynch International is an
affiliate of Merrill Capital who is the documentation agent and a lender under
the Amended Credit Agreement. In connection with acting as documentation agent
and lender under the Amended Credit Agreement, Merrill Capital received
customary fees. Merrill Lynch acted as an underwriter in connection with the
offering of the 11% Notes and as an initial purchaser in connection with the
offering of the 9 1/8% Notes for which it received customary fees. In addition,
Bear, Stearns & Co. Inc. acted as an initial purchaser in connection with the
offering of the Initial Notes.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act.

LEGAL MATTERS

EXPERTS

65
147

===============================================================

------------------

TABLE OF CONTENTS

PAGE
----

Incorporation of Certain Documents by
Reference.................................. 3
Available Information........................ 3
Prospectus Summary........................... 5
Risk Factors................................. 13
The Company.................................. 17
Use of Proceeds.............................. 17
Price Range of Common Stock.................. 18
Dividend Policy.............................. 18
Capitalization............................... 19
Pro Forma Combined Condensed Financial
Data....................................... 20
Selected Historical Consolidated Financial
Information of Hayes....................... 29
Selected Historical Consolidated Financial
Information of Lemmerz..................... 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 31
Business..................................... 36
Management................................... 50
Principal and Selling Stockholders........... 55
Description of Capital Stock................. 57
Shares Eligible for Future Sale.............. 59
Certain United States Federal Tax
Consequences to Non-U.S. Stockholders...... 61
Underwriting................................. 63
Legal Matters................................ 65
Experts...................................... 65
Index to Consolidated Financial Statements... F-1

===============================================================
===============================================================

3,779,502 SHARES

[HAYES WHEELS INTERNATIONAL LOGO]

COMMON STOCK

----------------
PROSPECTUS
----------------

MERRILL LYNCH INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL

AUGUST , 1997

===============================================================
148

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimatedfollowing table shows all expenses in connection with this offeringof the issuance and distribution of
securities offered hereby, other than underwriting discounts and commissions are as follows:commission:

Securities and Exchange Commission registration fee................................ $86,207
NASD("SEC") registration..... $39,184
National Association of Securities Dealers, Inc. ("NASD")
filing fee.................................................................... 25,500
Blue Skyfee................................................ 17,500
Transfer agent's and registrar's fees.......................
Printing expenses...........................................
Legal fees and expenses......................................................... *expenses.....................................
Accounting fees and expenses....................................................... *
Legalexpenses................................
Blue sky filing fees and expenses............................................................ *
Trustee's fees and expenses........................................................ *
Printing........................................................................... *
Miscellaneous...................................................................... *expenses (including counsel
fees).....................................................
Miscellaneous expenses......................................
-------
Total............................................................................Total.................................................. $ *
=======

- ---------------
* ToAll amounts listed above, except for the SEC registration fee and NASD filing
fee, are estimates. All expenses will be filedpaid by amendment.the Company.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Set forth below is a description of certain provisions of the By-lawsAmended and
Restated By-Laws (the "By-laws") of the Company and the General Corporation Law
of the State of Delaware (the "DGCL"), as such provisions relate to the
indemnification of the directors and officers of the Company. This description
is intended only as a summary and is qualified in its entirety by reference to
the Restated
Certificate of Incorporation, the By-laws and the DGCL.

Section 145 of the General Corporation Law of DelawareDGCL empowers a corporation to indemnify any person who
was or is a party or witness or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reasons of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise. Depending on the character of the proceeding,
a corporation may indemnify against expenses, costs and fees (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit or proceeding if the
person indemnified acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. If the person indemnified is not wholly
successful in such action, suit or proceeding, but is successful, on the merits
or otherwise, in one or more but less than all claims, issues or matters in such
proceeding, he or she may be indemnified against expenses actually and
reasonably incurred in connection with each successfully resolved claim, issue
or matter. In the case of an action or suit by or in the right of the
corporation, no indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery, or the
court in which such action or suit was brought, shall determine that, despite
the adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
provides that, to the extent a director, officer, employee or agent of a
corporation has been successful in the defense of any action, suit or proceeding
referred to above or in the defense of any claim, issue or manner therein, he or
she shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.

The Company's By-lawsBy-Laws provide for indemnification by the Company of its
directors and officers to the fullfullest extent permitted by the DGCL. Pursuant to
Section 145 of the DGCL, the Company will purchasehas purchased insurance on behalf of its
present and former directors and officers against liabilities asserted against
or incurred by them in such capacity or arising out of their status as such.

II-1
3149

The Company has entered into indemnification agreements with each of its
directors pursuant to which the Company has agreed to indemnify such individuals
to the fullest extent permitted under Delaware law.

The form of U.S. and International Purchase Agreements contained in
Exhibits 1.1 and 1.2 provide for indemnification of the directors and officers
signing the Registration Statement and certain controlling persons of the
Company against certain liabilities, including certain liabilities under the
Securities Act, in certain instances by the Underwriters.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The following exhibits arewere filed as part of this Registration
Statement.Statement:

EXHIBIT NO. DESCRIPTION
- ----------- -----------

1.1*1.1 Form of UnderwritingU.S. Purchase Agreement.+

*1.2 Form of International Purchase Agreement.

**2.1 Agreement and Plan of Merger, dated as of March 28, 1996, by
and between Hayes Wheels International, Inc. and MWC
Holdings, Inc. (incorporated by reference to Exhibit 2 of
the Current Report on Form 8-K, dated March 28, 1996, of
Hayes Wheels International, Inc.).

4.1 Indenture, dated as of November 15, 1992, between**2.2 Purchase Agreement among Hayes Wheels International, Inc.
Cromodora Wheels S.p.A., Lemmerz Holding GmbH and Manufacturers and Traders Trust Company,the
Shareholders of Lemmerz Holding GmbH dated as Trustee, relating to 9 1/4% Senior
Notes due 2002, including the form of Note thereinJune 6,
1997 (incorporated by reference to Exhibit 4.2 of the Form 10-K for the year ended January 31, 1993 of Hayes Wheels
International, Inc. (File No. 1-11592)).
4.2 Indenture, between Hayes Wheels International, Inc. and Comerica Bank, as Trustee,
relating to % Senior Subordinated Notes due 2006, including the form of Note
therein.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom.*
10.1 Credit Agreement, dated as of December 15, 1992, and amended and restated as of
November 30, 1993, June 10, 1994 and March 24, 1995, between Hayes Wheels
International, Inc., the Subsidiary Guarantors (as defined therein), the Banks named
on the signature pages thereof, The Chase Manhattan Bank (National Association) as
Agent, and the Bank of Nova Scotia, as Co-Agent (incorporated by reference to Exhibit
4.4 of the Form 10-K for the year ended January 31, 1995 of Hayes Wheels
International, Inc. (File No. 1-11592)).
10.2 Form of Subscription Agreement, between Hayes Wheels International, Inc. and the New
Investors (incorporated by reference to Exhibit 10.12 of the Current
Report on Form 8-K, dated March 28, 1996,June 6, 1997, of Hayes Wheels
International, Inc.).

12.1 Calculation4.1 Option Agreement among Hayes Wheels International, Inc.,
Renate Kukwa-Lemmerz and Inge Kruger-Pressl, dated as of
RatiosJuly 30, 1997.

*5.1 Opinion of Earnings to Fixed Charges.+
23.1 Consent of KMPG Peat MarwickSkadden, Arps, Slate, Meagher & Flom LLP.+
23.2 Consent of Ernst Young LLP.+
23.3

*23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in its opinion filed as
Exhibit 5.1 hereto)5.1).*

23.2 Consent of KPMG Peat Marwick LLP.

23.3 Consent of KPMG Deutsche Treuhand -- Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft.

23.4 Consent of Houlihan Lokey HowardErnst & Zukin, Inc.+
24.1 PowersYoung LLP.

**24 Power of Attorney.+
25.1 Statement of Eligibility of Trustee on Form T-1.+

- ----------------------------------------
* To be filed by amendment.

+** Previously filed.

(b) No Financial Statement Schedules are required to be filed as part of
this Registration Statement.

II-2
4Statement: ITEM 17. UNDERTAKINGS.

(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-2
150

(b) The undersigned Registrantregistrant hereby undertakes that, forthat:

(1) For purposes of determining any liability under the Securities Act
of 1933:

(1)1933, each filing of the Registrantregistrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;thereof.

(2) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective;
andeffective.

(3) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at thatthe time
shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnificationThe
undersigned registrant hereby undertakes to file an application for liabilities arising under the
Securities
Actpurpose of 1933 may be permitted to directors, officers and controlling personsdetermining the eligibility of the Registrant pursuanttrustee to act under
subsection (a) of Section 310 of the foregoing provisions, or otherwise,Trust Indenture Act in accordance with
the Registrant has been advised that inrules and regulations prescribed by the opinionCommission under Section
305(b)(2) of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for identification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.Act.

II-3
5151

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statementregistration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Romulus, State of Michigan, on this 19th4th day of
June 1996.August, 1997.

HAYES WHEELS INTERNATIONAL, INC.

By: /s/ WILLIAM D. SHOVERS*

--------------------------------------DANIEL M. SANDBERG

------------------------------------

Name: William D. ShoversDaniel M. Sandberg

Title: Vice President -- Financeand General
Counsel

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated below.

SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- ---------------------- ----- ----

/s/ JOHN E. UTLEY** Chairman of the Board of June 19, 1996Directors; August 4, 1997
- ------------------------------------- Directors; Director
John E. Utley
/s/ RANKO CUCUZ*--------------------------------------------- President and Chief Executive June 19, 1996
- ------------------------------------- Officer (Principal ExecutiveOfficer;
Ranko Cucuz Officer); Director

/s/ WILLIAM D. SHOVERS** Vice President; Chief Financial Officer (Principal June 19, 1996August 4, 1997
- ------------------------------------- Accounting--------------------------------------------- Officer and Principal Accounting
William D. Shovers Financial Officer)
/s/Officer

* Director August 4, 1997
- ---------------------------------------------
Cleveland A. Christophe

* Director August 4, 1997
- ---------------------------------------------
Timothy J. ANTHONY GILROY*Clark

* Director June 19, 1996August 4, 1997
- -------------------------------------
J. Anthony Gilroy
/s/ JOHN---------------------------------------------
Andrew R. Heyer

* Director August 4, 1997
- ---------------------------------------------
Peter A. Joseph

* Director August 4, 1997
- ---------------------------------------------
Horst Kukwa-Lemmerz

* Director August 4, 1997
- ---------------------------------------------
Paul S. RODEWIG*Levy

* Director June 19, 1996August 4, 1997
- -------------------------------------
John S. Rodewig
/s/ KENNETH L. WAY* Director June 19, 1996
- -------------------------------------
Kenneth L. Way---------------------------------------------
Wienand Meilicke

*By: /s/ BARRY MILLER
- --------------------------------
Barry Miller
Pursuant to power of attorney
filed as Exhibit 24.1 to the
Registration Statement.

II-4
6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Romulus, State of Michigan, on this
19th day of June 1996.

HAYES WHEELS INTERNATIONAL --
CALIFORNIA, INC.

By: /s/ WILLIAM D. SHOVERS*

--------------------------------------
Name: William D. Shovers
Title: Vice President -- Finance

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated below.152

SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- ---------------------- ----- ----

/s/ RANKO CUCUZ* Chairman of the Board of June 19, 1996* Director August 4, 1997
- ------------------------------------- Directors;---------------------------------------------
John S. Rodewig

* Director Ranko Cucuz
/s/ RONALD KOLAKOWSKI* President (Principal Executive June 19, 1996August 4, 1997
- ------------------------------------- Officer); Director
Ronald Kolakowski
/s/ WILLIAM D. SHOVERS* Vice President -- Finance June 19, 1996
- ------------------------------------- (Principal Accounting Officer and
William D. Shovers Principal Financial Officer);
Director
---------------------------------------------
David Y. Ying

*By: /s/ BARRY MILLER
- --------------------------------
Barry Miller
Pursuant to power of attorney
filed as Exhibit 24.1 to the
Registration Statement.

II-5
7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Romulus, State of Michigan, on this
19th day of June 1996.

HAYES WHEELS INTERNATIONAL--
GEORGIA, INC.

By: /s/ WILLIAM D. SHOVERS*
----------------------------------
Name: William D. Shovers
Title: Vice President -- Finance

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated below.

SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------

/s/ RANKO CUCUZ* Chairman of the Board of June 19, 1996
- ------------------------------------- Directors; Director
Ranko Cucuz

/s/ RONALD KOLAKOWSKI* President (Principal Executive June 19, 1996
- ------------------------------------- Officer); Director
Ronald Kolakowski

/s/ WILLIAM D. SHOVERS* Vice President -- Finance June 19, 1996
- ------------------------------------- (Principal Accounting Officer and
William D. Shovers Principal Financial Officer);
Director

*By: /s/ BARRY MILLER
---------------------------------
Barry Miller
Pursuant to power of attorney
filed as Exhibit 24.1 to the
Registration Statement.

II-6
8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Romulus, State of Michigan, on this
19th day of June 1996.

HAYES WHEELS INTERNATIONAL--
INDIANA, INC.

By: /s/ WILLIAM D. SHOVERS*
------------------------------
Name: William D. Shovers
Title: Vice President -- Finance

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated below.

SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------

/s/ RANKO CUCUZ* Chairman of the Board of June 19, 1996
- ------------------------------------- Directors; Director
Ranko Cucuz

/s/ RONALD KOLAKOWSKI* President (Principal Executive June 19, 1996
- ------------------------------------- Officer); Director
Ronald Kolakowski

/s/ WILLIAM D. SHOVERS* Vice President -- Finance June 19, 1996
- ------------------------------------- (Principal Accounting Officer and
William D. Shovers Principal Financial Officer);
Director

*By: /s/ BARRY MILLER
---------------------------------
Barry Miller
Pursuant to power of attorney
filed as Exhibit 24.1 to the
Registration Statement.

II-7
9

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Romulus, State of Michigan, on this
19th day of June 1996.

HAYES WHEELS INTERNATIONAL --
MEXICO, INC.

By: /s/ WILLIAM D. SHOVERS*
---------------------------------
Name: William D. Shovers
Title: Vice President -- Finance

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated below.

SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------

/s/ RANKO CUCUZ* Chairman of the Board of June 19, 1996
- ------------------------------------- Directors; President and Chief
Ranko Cucuz Executive Officer (Principal
Executive Officer); Director

/s/ WILLIAM LINSKI* Chief Operating Officer June 19, 1996
- -------------------------------------
William Linski

/s/ WILLIAM D. SHOVERS* Vice President -- Finance June 19, 1996
- ------------------------------------- (Principal Accounting Officer and
William D. Shovers Principal Financial Officer);
Director /s/ DANIEL M. SANDBERG* Director June 19, 1996
- -------------------------------------SANDBERG
----------------------------------------
Daniel M. Sandberg
Attorney-in-fact

*By: /s/ BARRY MILLER
---------------------------------
Barry Miller
Pursuant to power of attorney
filed as Exhibit 24.1 to the
Registration Statement.

II-8II-5
10

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Romulus, State of Michigan, on this
19th day of June 1996.

HAYES WHEELS INTERNATIONAL--
MICHIGAN, INC.

By: /s/ WILLIAM D. SHOVERS*
----------------------------------
Name: William D. Shovers
Title: Vice President -- Finance

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated below.

SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------

/s/ RANKO CUCUZ* Chairman of the Board of June 19, 1996
- ------------------------------------- Directors; Director
Ranko Cucuz

/s/ RONALD KOLAKOWSKI* President (Principal Executive June 19, 1996
- ------------------------------------- Officer); Director
Ronald Kolakowski

/s/ WILLIAM D. SHOVERS* Vice President -- Finance June 19, 1996
- ------------------------------------- (Principal Accounting Officer and
William D. Shovers Principal Financial Officer);
Director

*By: /s/ BARRY MILLER
---------------------------------
Barry Miller
Pursuant to power of attorney
filed as Exhibit 24.1 to the
Registration Statement.

II-9
11153

EXHIBIT INDEX

EXHIBIT SEQUENTIAL
NO. DESCRIPTION
PAGE NO.
- ------- ----------- ---------------------

1.1*1.1 Form of UnderwritingU.S. Purchase Agreement.+............................................

*1.2 Form of International Purchase Agreement.
**2.1 Agreement and Plan of Merger, dated as of March 28, 1996, by
and between Hayes Wheels International, Inc. and MWC
Holdings, Inc. (incorporated by reference to Exhibit 2 of
the Current Report on Form 8-K, dated March 28, 1996, of
Hayes Wheels International, Inc.)..................................

4.1 Indenture, dated as of November 15, 1992, between.
**2.2 Purchase Agreement among Hayes Wheels International, Inc.
Cromodora Wheels S.p.A., Lemmerz Holding GmbH and Manufacturers and Traders Trust Company,the
Shareholders of Lemmerz Holding GmbH dated as Trustee
($100,000,000 principal amount of 9 1/4% Senior Notes due 2002), including
all exhibits theretoJune 6,
1997 (incorporated by reference to Exhibit 4.2 of the Form
10-K for the year ended January 31, 1993 of Hayes Wheels International, Inc.
(File No. 1-11592)).........................................................

4.2 Indenture between Hayes Wheels International, Inc. and Comerica Bank, as
Trustee relating to % Senior Subordinated Notes due 2006, including the
form of Note therein........................................................

5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom.*...........................

10.1 Credit Agreement, dated as of 15, 1992, and amended and restated as of
November 30, 1993, June 10, 1994 and March 24, 1995, between Hayes Wheels
International, Inc., the Subsidiary Guarantors (as defined therein), the
Banks named on the signature pages thereof, The Chase Manhattan Bank
(National Association) as Agent, and the Bank of Nova Scotia, as Co-Agent
(incorporated by reference to Exhibit 4.4 of the Form 10-K for the year
ended January 31, 1995 of Hayes Wheels International, Inc. (File No.
1-11592))...................................................................

10.2 Form of Subscription Agreement, between Hayes Wheels International, Inc. and
the New Investors (incorporated by reference to Exhibit 10.12 of the Current
Report on Form 8-K, dated March 28, 1996,June 6, 1997, of Hayes Wheels
International, Inc.).......................................................................

12.1 Calculation.
4.1 Option Agreement among Hayes Wheels International, Inc.,
Renate Kukwa-Lemmerz and Inge Kruger-Pressl, dated as of
RatiosJuly 30, 1997.
*5.1 Opinion of Earnings to Fixed Charges.+........................

23.1 Consent of KMPG Peat Marwick LLP+...........................................

23.2 Consent of Ernst Young LLP+.................................................

23.3Skadden, Arps, Slate, Meagher & Flom LLP.
*23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in its opinion
filed as Exhibit 5.1 hereto)5.1).*..............................................
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Deutsche Treuhand -- Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft.
23.4 Consent of Houlihan Lokey HowardErnst & Zukin, Inc.+.............................

24.1 PowersYoung LLP.
**24 Power of Attorney.+........................................................

25.1 Statement of Eligibility of Trustee on Form T-1.+...........................

- ----------------------------------------
* To be filed by amendment.

+** Previously filed.