8th December 2005 - Hayes Lemmerz Reports Third Quarter of 2005

11% Higher Sales, Improved Operating Income, Positive Free Cash Flow, and Increased Liquidity

Hayes Lemmerz International, Inc.today reported that sales for the fiscal third quarter ended October 31, 2005, rose 11 percent to $604.0 million from $545.9 million for the same period last year, helped by higher international volume, significant recovery from customers of increased steel prices, and favorable foreign exchange rates, while North American sales were lower than a year earlier.

The Company reported earnings from operations of $16.8 million, up 29% from $13.0 million in the year earlier quarter. Net loss for the quarter was $13.3 million, compared with a net loss of $5.3 million in the year earlier third quarter, primarily due to higher interest costs.

Adjusted EBITDA(1) was $60.8 million for the third quarter of 2005, down slightly from $62.4 million a year earlier. During the quarter, the Company generated positive free cash flow(2) of $25.1 million (excluding the change in receivables securitization), and its total liquidity improved to $179 million at October 31, 2005 from $129 million at July 31, 2005.

"In the face of lower sales of domestic auto and light truck sales, we are pleased with our third quarter results," said Curtis Clawson, President, CEO and Chairman of the Board of Hayes Lemmerz. "Our long-term strategy again demonstrated its value by making it possible for us to realize increased sales and higher operating income despite the difficult business environment in North America.

"We will continue to pursue our strategic plans to expand in low-cost countries, to serve our customers as they continue to expand in markets outside of the U.S. and Western Europe," Mr. Clawson said. In that regard, he noted that in November, the Company bought a controlling interest in its aluminum wheel joint venture in Turkey. "Increasing our stake in this joint venture further improves our ability to meet customer needs in very important Turkish and European markets," he said. He also cited the Company's recent decision to invest in low pressure aluminum wheel casting technology to serve the European truck and trailer market, where aluminum wheels are becoming widely accepted for their ability to provide improved fuel economy and increased payload.

"Consistent with our efforts to concentrate on our core business, subsequent to the quarter, we completed the sale of our Hubs and Drums business and sold our operations in Cadillac, Michigan," he said. "We will continue to cut costs, rationalize our manufacturing capacity in the U.S., and improve efficiency worldwide. Continued cash flow generation and lowering our debt level is of the highest priority."

Mr. Clawson noted that Hayes Lemmerz has secured over $300 million in new and carry-over business during the first nine months of 2005, and is winning new business internationally not only with Japanese manufacturers, but also with Korean auto makers. "We are winning new business with the OEMs who are winning the global automotive competition," Mr. Clawson said.

For the nine months ended October 31, the Company reported sales of $1.75 billion, up 9 percent from $1.61 billion a year earlier. Earnings from operations for the nine months, excluding asset impairment losses and other restructuring charges, were $18.9 million compared with $54.2 million in the prior year period. The Company recorded asset impairment and restructuring charges in the first nine months of fiscal 2005 totaling $37.6 million, compared with $6.2 million of charges in the year earlier period. Adjusted EBITDA for the nine months was $163.5 million, versus $197.2 million in the prior nine months.

The Company provided revised guidance for 2005, to reflect the continued softening in the North American market, the impact to revenue, profits, and cash flow from companies sold, and less favorable exchange rates. Adjusted EBITDA is now expected to be approximately $180 million to $190 million (revised from prior guidance of $190 million to $205 million). Revenue is now expected to be $2.2 billion to $2.3 billion for the full year, and with a free cash flow between neutral and negative $15 million for the full fiscal year. Capital expenditures for the year are still expected to be under $130 million, the Company said.

Due to uncertainties in the North American market, the Company is not providing financial guidance for fiscal year 2006 at this time, but announced that it is targeting positive free cash flow with capital expenditures of under $100 million.

Hayes Lemmerz International, Inc. is a leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 36 facilities and over 10,000 employees worldwide.

(1) Adjusted EBITDA, a measure used by management to measure operating performance, is defined as earnings from operations plus depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude: (i) asset impairment losses and other restructuring charges; (ii) reorganization items; and (iii) other items. Management references these non- GAAP financial measures frequently in its decision making because they provide supplemental information that facilitates internal comparisons to historical operating performance of prior periods and external comparisons to competitors' historical operating performance. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to earnings from operations as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, these presentations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Institutional investors generally look to Adjusted EBITDA in measuring performance, among other things. The company uses Adjusted EBITDA to facilitate quantification of planned business activities and enhance subsequent follow-up with comparisons of actual to planned Adjusted EBITDA. The company is disclosing these non-GAAP financial measures in order to provide transparency to investors.

(2) Free Cash Flow is defined as cash flows from operating activities adjusted to include cash used for investing activities and discontinued operations. Management uses this non-GAAP financial measure because it identifies the amount of cash available to meet principal debt amortization requirements, pay dividends to stockholders, or make corporate investments.

This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the company's expectations and beliefs concerning future events that involve risks and uncertainties which could cause actual results to differ materially from those currently anticipated. All statements other than statements of historical facts included in this release are forward looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward looking statements include the factors set forth in our periodic reports filed with the SEC. Consequently, all of the forward looking statements made in this press release are qualified by these and other factors, risks, and uncertainties.

Source: Hayes Lemmerz Press Release