JL FRENCH AUTOMOTIVE CASTING INC - 10-Q Quarterly Report

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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 333-84903-1

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE 13-3983670
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(Address of principal executive offices) (Zip Code)

(612) 332-2335
(Registrant's telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

Yes X No ____
-

The number of shares outstanding of the Registrant's common stock at December
31, 2002 was 11,554 shares of Class A common stock, 7,124 shares of Class A-1
common stock, 20,660 shares of Class B common stock, 5,165 shares of Class C
common stock, 7,054 shares of Class D-1 common stock, 7,314 shares of Class D-2
common stock, 3,592 shares of Class E common stock, 14,248 shares of Class P
common stock, 65,118,328 shares of Class Q-1 common stock and 11,592,672 shares
of Class Q-2 common stock.

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

PAGE

Condensed Consolidated Statements of Operations (unaudited) for the
Three Months Ended September 30, 2002 and 2001 3

Condensed Consolidated Statements of Operations (unaudited) for the
Nine Months Ended September 30, 2002 and 2001 4

Condensed Consolidated Balance Sheets at September 30, 2002
(unaudited) and December 31, 2001 5

Condensed Consolidated Statements of Cash Flows (unaudited) for the
Nine Months Ended September 30, 2002 and 2001 6

Notes to Condensed Consolidated Financial Statements (unaudited) 7

Management's Discussion and Analysis of Financial Condition and Results
of Operations 21

2

ITEM 1 - FINANCIAL INFORMATION

J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS - UNAUDITED)

Three Months Ended
September 30,
----------------------
2002 2001
--------- ---------

Sales $ 132,604 $ 112,318

Cost of sales 116,789 90,251
--------- ---------
Gross profit 15,815 22,067

Selling, general and administrative expenses 4,930 5,943

Amortization expense 671 2,688
--------- ---------
Operating income 10,214 13,436

Interest expense, net 12,304 12,543
--------- ---------
Income (loss) before provision for income taxes (2,090) 893

Provision (benefit) for income taxes (464) 927
--------- ---------
Net loss $ (1,626) $ (34)
========= =========

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

3

J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS - UNAUDITED)

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

4

J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS - UNAUDITED)

September 30, December 31,
Assets 2002 2001
------------- ------------

Current assets:
Cash and cash equivalents $ 6,363 $ 1,055
Accounts receivable, net 55,864 43,713
Inventories 31,468 31,097
Other current assets 22,741 17,479
--------- ---------
Total current assets 116,436 93,344

Property, plant and equipment, net 267,531 275,142
Intangible and other assets, net 333,858 332,423
--------- ---------
$ 717,825 $ 700,909
========= =========

Liabilities and Stockholders' Deficit

Current liabilities:
Current maturities of long-term debt $ 9,038 $ 47,306
Accounts payable 52,948 61,678
Accrued liabilities 38,342 33,167
--------- ---------
Total current liabilities 100,328 142,151

Long-term debt, net of current maturities 386,377 328,935
Subordinated notes 175,000 175,000
Other noncurrent liabilities 22,447 21,519
--------- ---------
Total liabilities 684,152 667,605
--------- ---------

Redeemable common stock 60,000 60,000

Stockholders' deficit:
Common stock -- --
Additional paid-in capital 89,521 90,476
Accumulated deficit (108,874) (106,295)
Accumulated other comprehensive loss (6,974) (10,877)
--------- ---------
Total stockholders' deficit (26,327) (26,696)
--------- ---------
$ 717,825 $ 700,909
========= =========

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

5

J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS - UNAUDITED)

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

6

J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. The accompanying condensed consolidated financial statements have been
prepared by J.L. French Automotive Castings, Inc. ("French" or the
"Company") without audit. The information furnished in the condensed
consolidated financial statements includes normal recurring adjustments
and reflects all adjustments which are, in the opinion of management,
necessary for a fair presentation of such financial statements. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures are
adequate to make the information presented not misleading, it is suggested
that these condensed consolidated financial statements be read in
conjunction with the audited financial statements and the notes thereto
included in the Company's Form 10-K for the year ended December 31, 2001.

Sales and operating results for the three and nine months ended September
30, 2002 are not necessarily indicative of the results to be expected for
the full year.

2. The following presents comprehensive income (loss), defined as changes in
the stockholders' deficit except changes related to transactions with
stockholders of the Company, for the three and nine month periods ended
September 30, 2002 and 2001 (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------

Net income (loss) $ (1,626) $ (34) $ 1,021 $ (7,371)
Change in cumulative
translation adjustment 478 2,901 4,176 (2,165)
Cumulative effect of adoption
of SFAS No. 133 -- -- -- (1,223)
Minimum pension liability (15) -- (1,045) --
Unrealized income/(loss) on
derivative instrument 586 (1,345) 772 (2,047)
-------- --------- -------- --------
Comprehensive income (loss) $ (577) $ 1,522 $ 4,924 $(12,806)
======== ========= ======== ========

3. At September 30, 2002, the Company had an interest rate swap agreement on
$75 million of long-term debt. The swap agreement, which expires in
December 2003, has been designated as, and meets the criteria for cash
flow hedges. Initial adoption of SFAS No. 133 in 2001 resulted in the
recording of a liability for the fair value of the swap agreement of $2.0
million, with the offset recorded in equity as a component of accumulated
other comprehensive loss, net of taxes of $1.2 million. At September 30,
2002 and December 31, 2001, the fair value of the interest rate swap was a
liability of $2.1 million and $3.4 million, respectively.

4. In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141, Business
Combinations ("SFAS No. 141") and No. 142, Goodwill and Other Intangible
Assets ("SFAS No. 142"). SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase
method. Under SFAS No. 142, goodwill and intangible assets with indefinite
lives are no longer amortized but are reviewed annually, or more
frequently if impairment indicators arise, for impairment. Separable
intangible assets that are not deemed to have indefinite lives will
continue to be amortized over their useful lives.

7

SFAS No. 142 provides for a six-month transitional period from the
effective date of adoption for the Company to perform an assessment of
whether there is an indication that goodwill is impaired. To the extent
that an indication of impairment exists, the Company must perform a second
test to measure the amount of the impairment. The Company has completed
the initial assessment as required by SFAS No. 142, and has determined
that the carrying value exceeded the fair value. The Company is currently
in the process of completing the second phase of this evaluation to
measure the amount of impairment. Management expects that upon completion
of this evaluation, the Company will record a pre tax non-cash charge of
between $150 million and $205 million as a cumulative effect of a change
in accounting principle in the statement of operations, although there can
be no assurance that the actual amount will not be outside this range. As
required by SFAS No. 142, the charge will be recorded in the first quarter
of fiscal year 2002 once the second phase of the impairment test is
completed. The impairment test is required to be completed and the final
adjustments will be made in the December 31, 2002 financial statements.
The adjustment will have no impact on the Company's cash flows.

The following table summarizes the effect of the non-amortization
provisions of goodwill of SFAS No. 142 on periods prior to January 1, 2002
(in thousands):

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No. 144
supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of ("SFAS No. 121"). SFAS
No. 144 primarily addresses significant issues relating to the
implementation of SFAS No. 121 and develops a single accounting model for
long-lived assets to be disposed of, whether previously held and used or
newly acquired. The Company adopted the provisions of SFAS No. 144 on
January 1, 2002, and it had no material impact on results of operations.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements
SFAS 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections ("SFAS No. 145"). SFAS No. 145 rescinds Statement No. 4,
Reporting Gains and Losses from Extinguishments of Debt, and an amendment
of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements. SFAS No. 145 also rescinds FASB
Statement No. 44, Accounting for Intangible Assets of Motor Carriers.
SFAS No. 145 amends FASB Statement No. 13, Accounting for Leases, ("SFAS
No. 13") to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale
leaseback transactions. SFAS No. 145 also amends other existing
authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed
conditions. The provision of SFAS No. 145 related to SFAS No. 13 must be
applied to transactions occurring after May 15, 2002. Early application
of the provisions of this Statement is encouraged. The Company does not
expect the adoption of SFAS No. 145 will have a significant impact on its
consolidated results of operations, financial position or cash flows.

In June 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This Statement requires
recording costs associated with exit or disposal activities at their fair
values when a liability has been incurred. Under previous guidance,
certain exit costs were

8

accrued upon management's commitment to an exit plan, which is generally
before an actual liability has been incurred. Adoption of this Statement
is required with the beginning of fiscal year 2003. The Company has not
yet completed its evaluation of the impact of adopting this Statement.

5. At September 30, 2002, the Company had deferred tax assets which included
$40.5 million related to its federal net operating loss carryforwards
which expire between 2018 and 2021. Management has established a valuation
allowance for a majority of the state tax credit and state operating loss
carryforwards and all of the foreign net operating loss carryforwards as
management is unable to conclude that it is more likely than not that
sufficient taxable income will be generated in the necessary jurisdictions
to realize these tax benefits. Management has concluded that a valuation
allowance is not necessary for the remaining deferred tax assets as
projections show that these assets will be realized prior to the
carryforward expiration period. The Company will continue to evaluate the
need for a valuation allowance, and at such time it is determined that it
is more likely than not that such deferred tax assets would not be
realizable, a valuation allowance will be recorded.

6. Inventories consisted of the following (in thousands):

7. In March 2002, the Company entered into an agreement to sell five machines
and lease the machines back, applying the provisions of SFAS No. 98,
Accounting for Leases. Upon the commencement of the lease term on March
27, 2002, the assets were removed from the Company's balance sheet in
accordance with accounting for the machines as an operating lease. All of
the assets sold in the transaction were purchased during the first quarter
of 2002. Net proceeds from the transaction were approximately $4.6
million. The transaction resulted in a gain of approximately $200,000,
which will be deferred and amortized over the lease term. As of September
30, 2002, the present value of the future minimum lease payments was
approximately $3.1 million.

8. Long-term senior debt consisted of the following (in thousands):

The Company and certain of its direct and indirect subsidiaries have a
senior credit facility that provides a tranche A term loan, a tranche B
term loan and a revolving credit facility which provides for total
borrowings and letters of credit of $90 million. As of September 30, 2002,
there were outstanding borrowings under the revolving credit facility of
$62.2 million and outstanding letters of credit of $28.0 million.
Subsequent to September 30, 2002, the Company repaid $200,000 of the
revolving credit facility to reduce total revolver borrowings to $90
million.

9

As of September 30, 2002, rates on borrowings under the senior credit
facility varied from 4.9% to 7.4%. Borrowings under the tranche B term
loan are due and payable on October 21, 2006. The senior credit facility
is secured by all of the assets of and guaranteed by all material present
and future subsidiaries of the Company, in each case with exceptions for
certain foreign subsidiaries and to the extent permitted by applicable law
("Guarantors").

The Company's senior credit facility includes certain restrictive
financial covenants. In July, November, and December 2002, the Company and
its lenders amended the senior credit facility to amend the financial
covenants to accommodate the new financing discussed below. The Company
was in compliance with all covenants as of September 30, 2002, as amended
in July 2002.

On December 27, 2002, the Company incurred the following indebtedness:

(i) $95.0 million of a Tranche C term loan, which resulted in net
proceeds of $90.3 million. The Tranche C term loan is part of the
Company's senior credit facility and matures in October 2006. The
loan bears interest at the greater of 11% or prime plus 6%, payable
quarterly. There are no scheduled principal payments until maturity.
All principal payments are subject to an exit fee of 5% of such
principal payment.

(ii) $96.4 million of secured second lien term loan, which resulted in net
proceeds of $94.0 million. The second lien term loan bears 12% cash
interest, payable quarterly, and 7% deferred interest. The principal
and deferred interest are due on December 31, 2007. The term loan is
secured by a second lien on substantially all domestic assets of the
Company. The Company also issued warrants to acquire 5% of the fully
diluted stockholders equity of the Company to the lenders of the
second lien term loan (See Note 10).

Concurrently with the debt issuances, the Company issued 65.1 million
shares of Class Q-1 and 11.6 million shares of Class Q-2 common stock (see
Note 10) to a partnership owned by certain stockholders of the Company for
total proceeds of $1 million.

The net proceeds from the debt and stock issuances described above, were
used to retire all tranche A term loan balances ($125.4 million), repay
$16.6 million of the tranche B term loan, reduce borrowings under the
revolving credit facility by $33.8 million and pay transaction related
costs of $9.5 million.

In connection with the financing described above, the Company also amended
its senior credit facility to extend the revolving credit facility
availability until June 30, 2006. The Company's senior credit facility, as
amended, and the secured second lien notes include certain restrictive
financial covenants including minimum interest coverage and maximum
leverage ratios. Under the terms of the amended senior credit facility,
the revolving credit is available until June 2006. Interest on the
revolving credit is at prime plus 3.0% or LIBOR plus 4.0% and on the
tranche B term loan is prime plus 3.50% or LIBOR plus 4.50%. Further the
principal payments on the tranche B term loan are subject to an exit fee
of 1% in 2003, 2% in 2004 and 3% in 2005.

In addition to the senior debt included in the table above, the Company
also has outstanding $175 million of senior subordinated notes. These
notes mature in May 2009 and bear interest at 11 1/2%. The Company did not
make an interest payment on the notes of approximately $10.1 million on
December 2, 2002, the scheduled payment date. Such payment was made by the
Company on December 27, 2002, within the thirty day grace period allowed
by the indenture governing the notes.

Other long-term debt consists principally of obligations under capital
leases and term loans of the Company's foreign subsidiaries.

10

9. Supplemental cash flow information (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2002 2001 2002 2001
-------- -------- -------- --------

Cash paid for -
Interest $ 7,666 $ 8,697 $ 29,908 $ 38,263
Income taxes, net of
refunds received (2,439) 118 (2,270) 530

10. In December 2002, the Company amended its certificate of incorporation to
authorize the issuance of 97,845,000 shares of Class Q-1 common stock and
12,000,000 shares of Class Q-2. On December 27, 2002, the Company issued
65,118,328 shares of Class Q-1 common stock and 11,592,672 shares of Class
Q-2 common stock for $1.0 million. Pursuant to the amended certificate of
incorporation the Class Q common stock is entitled to 99.9% of any equity
distributions. Class Q-1 shares are voting shares and Class Q-2 shares are
non-voting.

In connection with the issuance of the secured second lien notes described
in Note 8, the Company issued warrants to acquire 4,041,458 shares of Class
Q common stock at an exercise price of $.01 per share. The warrants are
exercisable anytime through December 2009.

Following is a summary of activity in the accumulated deficit account for
the nine months ended September 30, 2002 and 2001 (in thousands):

Nine Months Ended
September 30,
----------------------------
2002 2001
--------- ---------

Beginning balance $(106,295) $ (92,886)
Net income (loss) 1,021 (7,371)
Dividends (3,600) (5,292)
--------- ---------
Ending balance $(108,874) $(105,549)
========= =========

The Company accrued dividends of $3.6 million on the outstanding Class P
common stock for the nine months ended September 30, 2002 and September 30,
2001 and these dividends are included in other non-current liabilities. In
addition, as of September 30, 2002, the Company had accrued $1.9 million in
Class A-1 common stock dividends, which are payable in stock and are
included in additional paid-in capital.

11. As a result of the acquisition of Nelson Metal Products Corporation in
1999, the Company identified certain customer contract commitments that
existed at the acquisition date that will result in future losses. At
December 31, 2001, the liability for those losses was $8.9 million. For the
nine months ended September 30, 2002, the liability was reduced by $5.1
million due to sales of products and also included a reduction of
approximately $800,000 due to cost reductions and reductions in estimated
future shipments. The reserve for loss contracts at September 30, 2002
consisted of a $1.9 million current liability and $1.9 million of long-term
liability.

11

12. In October 2002, certain of the Company's stockholders purchased trade
accounts receivable from the Company to provide additional liquidity. The
total discount for all trade receivables purchased by the stockholders was
approximately $15,000. The maximum amount purchased by the stockholders was
approximately $4.2 million. All trade receivables purchased by the
stockholders were collected by October 25, 2002.

In December 2002, the Company issued approximately $9.9 million of the
secured second lien term loan to a partnership owned by certain
stockholders of the Company (See Note 8).

13. On December 31, 2002, the Company's board of directors approved the closure
of the Company's Grandville, Michigan facility. The Company has not yet
determined the amount of the restructuring charge it will record related to
the closure of this facility, but expects to record the charge in the
fourth quarter of 2002.

14. The following consolidating financial information presents statement of
operations, balance sheet and cash flow information related to the
Company's businesses. Each Guarantor is a direct wholly owned domestic
subsidiary of the Company and has fully and unconditionally guaranteed the
11 1/2% senior subordinated notes issued by J.L. French Automotive
Castings, Inc., on a joint and several basis. The Non-Guarantor Companies
are the Company's foreign subsidiaries in the UK, Spain and Mexico.
Separate financial statements and other disclosures concerning the
Guarantors have not been presented because management believes that such
information is not material.

12

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND RETAINED EARNINGS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2002

(AMOUNTS IN THOUSANDS)

13

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND RETAINED EARNINGS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS)

14

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS)

15

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS)

16

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS)

17

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS)

18

14. Condensed consolidating guarantor and non-guarantor financial
information (continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2001
(AMOUNTS IN THOUSANDS)

19

14. Condensed consolidating guarantor and non-guarantor financial information
(continued):

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS)

J.L. FRENCH
AUTOMOTIVE NON-
CASTINGS, GUARANTOR GUARANTOR
INC. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
-------- -------- -------- -------- --------

OPERATING ACTIVITIES:
Net income (loss) $ (7,371) $ 11,750 $ (4,642) $ (7,108) $ (7,371)
Adjustments to reconcile net
income (loss to net cash
provided by (used for)
operating activities-
Depreciation and amortization 76 31,797 7,883 -- 39,756
Income from invest-
ment in subsidiaries (7,108) -- -- 7,108 --
Changes in other operating
activities 9,560 (24,958) 2,176 -- (13,222)
-------- -------- -------- -------- --------
Net cash provided by (used
for) operating items (4,843) 18,589 5,417 -- 19,163
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Capital expenditures, net -- (18,229) (12,156) -- (30,385)
-------- -------- -------- -------- --------
Net cash used for
investing activities -- (18,229) (12,156) -- (30,385)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Revolving credit facility
borrowings 22,000 -- 4,265 -- 26,265
Repayments of revolving
credit facility borrowings (7,800) -- (1,426) -- (9,226)
Long-term borrowings -- -- 6,597 -- 6,597
Repayment of other borrowings (7,919) (1,087) (5,423) -- (14,429)
Other (1,449) -- -- -- (1,449)
-------- -------- -------- -------- --------
Net cash provided by
(used for) financing
activities 4,832 (1,087) 4,013 -- 7,758
-------- -------- -------- -------- --------
EFFECT OF EXCHANGE
RATES ON CASH AND
CASH EQUIVALENTS -- -- (1,010) -- (1,010)
-------- -------- -------- -------- --------
NET CHANGES IN CASH
AND CASH EQUIVALENTS (11) (727) (3,736) -- (4,474)
CASH AND CASH EQUIVALENTS

Beginning of period 22 803 5,228 -- 6,053
-------- -------- -------- -------- --------
End of period $ 10 $ 76 $ 1,493 $ -- $ 1,579
======== ======== ======== ======== ========

20

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

GENERAL

The Company ordinarily begins working on products awarded for new or redesigned
platforms two to five years prior to initial vehicle production. During such
period, French incurs (1) costs related to the design and engineering of such
products, (2) costs related to production of the tools and dies used to
manufacture the products and (3) start-up costs associated with the initial
production of such product. In general, design and engineering costs are
expensed in the period in which they are incurred. Costs incurred in the
production of the tools and dies are generally capitalized and reimbursed by the
customer prior to production. Start-up costs, which are generally incurred 30 to
60 days immediately prior to and immediately after production, are expensed as
incurred.

The contracts the Company enters into typically: (1) range from one year to the
life of the platform, (2) are on a sole-source basis, (3) do not require the
purchase by the customer of any minimum number of units, (4) are at fixed prices
subject to annual price reductions or renegotiations and (5) provide for price
adjustments related to changes in the cost of aluminum. The Company's sales are
dependent on its customers' production schedules which, in turn, are dependent
on retail sales of new automobiles and light trucks.

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2002 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 2001

Sales -- Sales for the third quarter of 2002 increased by approximately $20.3
million to $132.6 million from $112.3 million in the third quarter of 2001.
North American light vehicle production was 10.7% higher in the third quarter of
2002 compared with the third quarter of 2001. Volume growth, driven primarily by
this increase in the North American production, increased the Company's sales by
approximately $8.6 million. In addition, sales from the Company's European
subsidiaries increased approximately $5.3 million in the third quarter as a
result of new business and by approximately $1.7 million as a result of changes
in foreign currency exchange rates. Higher aluminum prices represented
approximately $4.7 million of the sales increase in 2002.

Cost of Sales -- Cost of sales for the third quarter of 2002 was $116.8 million
or 88.1% of sales compared to $90.3 million or 80.4% of sales in the third
quarter of 2001. Reduced utilization of loss contract reserves adversely
impacted cost of sales by $4.2 million in the quarter, or approximately 3.8% of
sales. In addition, higher aluminum prices, while not impacting gross profit
dollars, impacted costs by approximately 1.7% of sales. Higher depreciation
expense, incentive accruals, lower prices to the Company's customers and ramp up
costs associated with new business adversely impacted costs by approximately
2.6% of sales. Cost reductions on manufacturing supplies, utilities, freight and
maintenance offset the increases described above by 0.4% of sales.

S, G & A Expenses -- Selling, general and administrative expenses decreased by
$1.0 million to $4.9 million or 3.7% of sales in the third quarter of 2002 from
$5.9 million or 5.3% of sales in the third quarter of 2001. Despite the increase
in sales, the Company has reduced selling, general and administrative costs,
primarily through reductions in headcount.

Amortization Expense -- The adoption of SFAS No. 142, which resulted in the
discontinuation of goodwill amortization effective January 1, 2002, decreased
amortization expense by approximately $2.0 million to $0.7 million in the third
quarter of 2002 from $2.7 million in the third quarter of 2001.

Interest Expense -- Interest expense for the third quarter of 2002 was $12.3
million, a decrease of $0.2 million from the third quarter of 2001. The decrease
was due principally to lower weighted average interest rates during the third
quarter of 2002.

21

Income Taxes -- In the third quarter of 2002, the Company recorded a tax benefit
of $0.5 million or 22% of the pre tax loss. The effective tax rate is less than
the statutory rates primarily due to nondeductible expenses and a valuation
allowance for certain foreign losses. In the third quarter of 2001, the Company
recorded a tax provision of $0.9 million, despite pre tax income of $0.9
million. The provision was the result of non-income based state taxes.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2002 TO THE NINE MONTHS
ENDED SEPTEMBER 30, 2001

Sales -- Sales for the nine months ended September 30, 2002 were $413.7 million,
compared to $384.7 million for the nine months ended September 30, 2001, an
increase of $29.0 million or 7.5%. Approximately $21.4 million of the increase
was the result of the increase in North American light vehicle production. Total
light vehicle production increased approximately 7.1% in the first nine months
of 2002 as compared to the prior year. Sales from the Company's European
subsidiaries increased approximately $11.0 million in the first nine months of
2002 as compared to the same period in 2001. Higher aluminum prices increased
revenues by $7.4 million. These increases were partially offset by $10.2 million
resulting from resourcing of certain low margin components by a customer.

Cost of Sales -- Cost of sales for the first nine months of 2002 was $353.9
million or 85.5% of sales compared to $322.4 million or 83.8% of sales in the
first nine months of 2001. Reduced utilization of loss contract reserves
adversely impacted cost of sales by $11.2 million for nine months, or
approximately 2.6% of sales. In addition, higher aluminum prices, while not
impacting gross profit dollars, impacted costs by approximately 1.3% of sales.
Higher depreciation expense, incentive accruals, lower prices to the Company's
customers and ramp up costs associated with new business adversely impacted
costs by approximately 1.7% of sales. Cost reductions on manufacturing supplies,
utilities, freight and maintenance offset the increases described above by 3.9%
of sales.

S, G & A Expenses -- Selling, general and administrative expenses were $19.4
million or 4.7% of sales for the first nine months of 2002 compared to $21.9
million or 5.7% of sales for the first nine months of 2001, a decrease of $2.5
million. Despite the increase in sales, the Company has reduced selling, general
and administrative costs, primarily through reductions in headcount.

Amortization Expense -- The adoption of SFAS No. 142, which resulted in the
discontinuation of goodwill amortization effective January 1, 2002 decreased
amortization expense by approximately $6.5 million to $1.9 million in the first
nine months of 2002 from $8.4 million in the first nine months of 2001.

Interest Expense -- Interest expense for the first nine months of 2002 was $36.1
million compared to $40.5 million in the prior year, a decrease of $4.4 million.
The decrease was due to lower weighted average interest rates during the 2002
period.

Income Taxes -- The provision for income taxes for the first nine months of 2002
was $1.3 million, or 56% of pre tax income. The effective rate differed from the
federal statutory rate of 35% as a result of state income taxes, nondeductible
expenses and a valuation allowance for certain foreign losses. In the 2001
period, the Company recorded a tax benefit of $1.1 million or 13.5% of the pre
tax loss. The benefit is less than the statutory rate as a result of
non-deductible goodwill amortization.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

The Company's principal sources of cash are cash flow from operations and
commercial borrowings. See also "Liquidity." For the nine months ended September
30, 2002 and 2001, the Company generated cash from operations of $13.9 million
and $19.2 million, respectively. Cash generated from operations before changes
in working capital items was $37.4 million for the 2002 period compared to $32.4
million in 2001.

22

Increases in working capital used cash of $23.5 million during the first nine
months of 2002 compared to $13.2 million in the comparable 2001 period.

In connection with the April 1999 recapitalization, the Company entered into a
senior credit facility that provided for aggregate borrowings of approximately
$370.0 million. On October 15, 1999, the Company amended and restated the senior
credit facility in connection with the acquisitions of Nelson to provide for an
additional $100.0 million of available borrowings. On November 30, 2000, the
senior credit facility was amended to defer certain principal repayments
scheduled for 2001 to future years and to amend certain restrictive covenants
included in the senior credit facility.

As of September 30, 2002, interest rates on borrowings under the senior credit
facility varied from 4.9% to 7.4%. Borrowings under the tranche A term loan are
due and payable April 21, 2005 and borrowings under the tranche B term loan are
due and payable on October 21, 2006. The revolving credit facility is available
until April 21, 2005. The senior credit facility is secured by all of the assets
of and guaranteed by all of the material present and future subsidiaries of the
Company, in each case with exceptions for certain foreign subsidiaries and to
the extent permitted by applicable law.

The Company's senior credit facility includes certain restrictive financial
covenants. In July, November and December 2002, the Company and its lenders
amended the senior credit facility to amend the financial covenants. The Company
was in compliance with all covenants as of September 30, 2002.

In May, 1999, the Company completed an offering of $175.0 million of 11 1/2%
senior subordinated notes due 2009. The net proceeds of the offering of
approximately $169.6 million and $0.4 million of cash on hand were used to
retire all of the borrowings under the subordinated bridge financing facility,
$2.5 million of borrowings under the tranche A term loan and $37.5 million of
borrowings under the tranche B term loan of the senior credit facility. The
Company did not make an interest payment on the notes of approximately $10.1
million on December 2, 2002, the scheduled payment date. Such payment was made
by the Company on December 27, 2002, within the thirty day grace period allowed
by the indenture governing the notes.

In connection with the October 1999 acquisition of Nelson, the Company borrowed
$30.0 million from Tower Automotive, Inc. ("Tower") through the issuance of a 7
1/2% convertible subordinated promissory note due October 14, 2009. In November
2000, Tower exchanged its 7 1/2% convertible subordinated promissory note for a
total of 7,124 shares of Class A-1 common stock. The Class A-1 common stock
accrues pay-in-kind dividends at an annual rate of 7 1/2%. The dividends are
payable, at the sole election of the holder, in either (i) shares of Class A-2
common stock equal to the amount of the dividend to be paid divided by $4,211 or
(ii) shares of Class A common stock equal to the amount of the dividend to be
paid divided by $5,897. As of September 30, 2002, the Company has accrued $1.9
million in Class A-1 dividends which are included in additional paid-in capital.

On May 24, 2000, the Company sold an aggregate of 4,191 shares of the Company's
common stock to certain existing stockholders for approximately $17.9 million,
the proceeds of which were used to repay indebtedness incurred in connection
with the Nelson acquisition.

On November 30, 2000, the Company sold 14,248 shares of nonvoting Class P common
stock to certain existing stockholders for an aggregate of $60 million. The
Class P common stock accrued dividends at an annual rate of 8% and the dividends
are payable in cash at the time of redemption of the Class P common stock.

23

On December 27, 2002, the Company incurred the following indebtedness:

(i) $95.0 million of a Tranche C term loan, which resulted in net proceeds of
$90.3 million. The Tranche C term loan is part of the Company's senior
credit facility and matures in October 2006. The loan bears interest at the
greater of 11% or prime plus 6%, payable quarterly. There are no scheduled
principal payments until maturity. All principal payments are subject to an
exit fee of 5% of such principal payment.

(ii) $96.4 million secured second lien term loan, which resulted in net proceeds
of $94.0 million. The second lien term loan bears 12% cash interest,
payable quarterly, and 7% deferred interest. The principal and deferred
interest are due on December 31, 2007. The term loan is secured by a second
lien on substantially all domestic assets of the Company. The Company also
issued warrants to acquire 5% of the fully diluted stockholders equity of
the Company to the lenders of the second lien term loans.

Concurrently with the debt issuances, the Company issued 65.1 million shares of
Class Q-1 and 11.6 million shares of Class Q-2 common stock to a partnership
owned by certain stockholders of the Company for total proceeds of $1 million.

The net proceeds from the debt and stock issuances described above, were used to
retire all tranche A term loan balances ($125.4 million), repay $16.6 million of
the tranche B term loan, reduce borrowings under the revolving credit facility
by $33.8 million and pay transaction related costs of $9.5 million.

In connection with the financing described above, the Company also amended its
senior credit facility to extend the revolving credit facility availability
until June 30, 2006. The Company's senior credit facility, as amended, and the
secured second lien notes include certain restrictive financial covenants
including minimum interest coverage and maximum leverage ratios.

After giving effect to the indebtedness incurred as described above, the
Company's senior credit facility consists of: (A) a $132.7 million tranche B
term loan that matures in October 2006, bears interest at prime plus 3.5% or
LIBOR plus 4.5% and has no scheduled principal repayments until maturity; (B) a
$95.0 million tranche C term that matures in October 2006, bears interest at 11%
and has no scheduled principal repayments until maturity; and (C) a $90.0
million revolving credit facility. After giving effect to the financing
transactions described above, borrowings under the revolving credit facility
totaled $55.0 million as of December 27, 2002.

Net cash provided by financing activities totaled $10.5 million for the first
nine months of 2002 compared with net cash provided by financing activities of
$7.8 million in the comparable 2001 period.

Uses of Cash

Net cash used in investing activities was $19.1 million during the first nine
months of 2002 compared to $30.4 million during the comparable 2001 period.
Capital expenditures totaled $19.1 million in the first nine months of 2002 and
$30.4 million in the comparable 2001 period and were primarily for equipment
purchases related to new or replacement programs. In the first quarter of 2002,
the Company entered into a sale leaseback on certain equipment in the amount of
$4.6 million at the Glasgow facility. The purchase of this equipment also took
place in the first quarter, resulting in essentially no net cash flows. The
Company expects that capital expenditures will be approximately $35.0 million in
2002.

24

Liquidity

The Company has a substantial amount of leverage. After giving effect to the
financing transactions on December 27, 2002 as described above, the Company has
outstanding indebtedness of approximately $578.9 million. In addition, cash
interest expense will approximate $57.8 million annually. However, the December
27, 2002 financing transactions eliminated all scheduled senior debt principal
repayments until 2006. After giving effect to the financing, the Company had
borrowing availability under its revolving credit facility and cash on hand of
approximately $35.0 million.

The Company believes that cash generated from operations together with available
borrowings under its senior credit facility will provide sufficient liquidity
and capital resources to fund working capital, debt service obligations and
capital expenditures for the foreseeable future. The assumptions underlying this
belief include, among other things, that there will be no material adverse
developments in either the Company's business or the automotive market in
general. There can be no assurances, however, that these assumed events will
occur. For example, the general slowdown in the U.S. economy that resulted in
lower automotive and light truck production during 2001 had a negative impact on
the Company's operations.

SEASONALITY

The Company typically experiences decreased sales and operating income during
the third calendar quarter of each year due to production shutdowns at OEMs for
model changeovers and vacations.

EFFECTS OF INFLATION

Inflation affects the Company in two principal ways. First, a portion of the
Company's debt is tied to prevailing short-term interest rates which may change
as a result of inflation rates, translating into changes in interest expense.
Second, general inflation can impact material purchases, labor and other costs.
While the contracts with customers provides for pass through increases in the
price of aluminum, the Company does not have the ability to pass through
inflation-related cost increases for labor and other costs. In the past few
years, however, inflation has not significantly affected the operating results.

MARKET RISK

The Company is exposed to various market risks arising from adverse changes in
market rates and prices, such as foreign currency exchange and interest rates.
The Company does not enter into derivatives or other financial instruments for
trading or speculative purposes. The strategy for management of currency risk
relies primarily upon conducting operations in such countries' respective
currencies and the Company may, from time to time, engage in hedging programs
intended to reduce its exposure to currency fluctuations. The counterparties are
major financial institutions.

Interest rate risk is managed by balancing the amount of fixed and variable
debt. For fixed rate debt, interest rate changes affect the fair market value of
such debt but do not impact earnings or cash flows. Conversely for variable rate
debt, interest rate changes generally do not affect the fair market value of
such debt, but do impact future earnings and cash flows, assuming other factors
are held constant. At September 30, 2002, all of the Company's debt other than
the outstanding senior subordinated notes was variable rate debt. Holding other
variables constant (such as foreign exchange rates and debt levels), a one
percentage point change in interest rates would be expected to have an estimated
impact on pre-tax earnings and cash flows for the next year of approximately
$2.7 million.

The Company has entered into an interest rate swap agreement with a bank having
a notional amount of $75 million to reduce the impact of changes in interest
rates on the floating rate long-term debt. This agreement effectively changes
the interest rate exposure on $75 million of floating rate debt from a LIBOR
base rate to a fixed base rate of 4.8%. The interest rate swap agreement matures
December 31, 2003. The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap

25

agreement. However, the Company does not anticipate nonperformance by the
counterparties. The fair value of the interest rate swap as of September 30,
2002 was a liability of $2.1 million, which is reflected as a non-current
liability in the September 30, 2002 balance sheet.

A portion of the Company's sales is derived from manufacturing operations in the
UK, Spain and Mexico. The results of operations and the financial position of
the operations in these countries are principally measured in their respective
currency and translated into U.S. dollars. The effects of foreign currency
fluctuations in such countries are somewhat mitigated by the fact that expenses
are generally incurred in the same currencies in which sales are generated. The
reported income of these operations will be higher or lower depending on a
weakening or strengthening of the U.S. dollar against the respective foreign
currency.

Certain of the Company's assets are located in foreign countries and are
translated into U.S. dollars at currency exchange rates in effect as of the end
of each period, with the effect of such translation reflected as a separate
component of stockholders' investment. Accordingly, the consolidated
stockholders' investment will fluctuate depending upon the weakening or
strengthening of the U.S. dollar against the respective foreign currency.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141, Business Combinations
("SFAS No. 141") and No. 142, Goodwill and Other Intangible Assets ("SFAS
No. 142"). SFAS No. 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. Under SFAS No.
142, goodwill and intangible assets with indefinite lives are no longer
amortized but are reviewed annually, or more frequently if impairment
indicators arise, for impairment. Separable intangible assets that are not
deemed to have indefinite lives will continue to be amortized over their
useful lives. The Company applied the provisions of SFAS No. 142 beginning
January 1, 2002.

SFAS No. 142 provides for a six-month transitional period from the effective
date of adoption for the Company to perform an assessment of whether there is an
indication that goodwill is impaired. To the extent that an indication of
impairment exists, the Company must perform a second test to measure the amount
of the impairment. The Company has completed the initial assessment as required
by SFAS No. 142, and has determined that the carrying value exceeded the fair
value. The Company is currently in the process of completing the second phase of
this evaluation to measure the amount of impairment. Management expects that
upon completion of this evaluation, the Company will record a pre-tax non-cash
charge of between $150 million and $205 million as a cumulative effect of a
change in accounting principle in the statement of operations, although there
can be no assurance that the actual amount will not be outside this range. As
required by SFAS No. 142, the charge will be recorded in the first quarter of
fiscal year 2002 once the second phase of the impairment test is completed. The
impairment test is required to be completed and the final adjustments made by
December 31, 2002.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No. 144 supercedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of ("SFAS No. 121"). SFAS No. 144
primarily addresses significant issues relating to the implementation of
SFAS No. 121 and develops a single accounting model for long-lived assets
to be disposed of, whether previously held and used or newly acquired. The
Company adopted the provisions of SFAS No. 144 on January 1, 2002, and it
had no material impact on results of operations.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements SFAS 4,
44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections ("SFAS
No. 145"). SFAS No. 145 rescinds Statement No. 4, Reporting Gains and Losses
from Extinguishments of Debt, and an amendment of that Statement, FASB Statement
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. SFAS
No. 145 also rescinds FASB Statement No. 44, Accounting for Intangible Assets of
Motor Carriers. SFAS No. 145 amends FASB Statement No. 13, Accounting for
Leases, ("SFAS No. 13")

26

to eliminate an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale leaseback transactions. SFAS No.
145 also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The provision of SFAS No. 145 related to SFAS No. 13 should
be applied to transactions occurring after May 15, 2002. Early application of
the provisions of this Statement is encouraged. The Company does not expect the
adoption of SFAS No. 145 will have a significant impact on its consolidated
results of operations, financial position or cash flows.

In June 2002, the FASB issued Statement No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan, which is generally before
an actual liability has been incurred. Adoption of this Statement is required
with the beginning of fiscal year 2003. The Company has not yet completed its
evaluation of the impact of adopting this Statement.

CRITICAL ACCOUNTING POLICIES

In December 2001, the SEC requested that all registrants list their most
"critical accounting policies" in their periodic reports under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The SEC indicated that a "critical accounting policy" is one which
is both important to the portrayal of their financial condition and results and
requires management's most difficult, subjective or complex judgments, often as
a result of the need to make estimates about the effect of matters that are
inherently uncertain. Management believes that the following accounting policies
fit this definition:

Revenue Recognition. The Company typically enters into contracts to provide
products for the life of a platform for automotive original equipment
manufacturers. Revenue is recognized when the product is shipped from the
Company's facility as that is the time that title passes to the customer and the
selling price is fixed. The Company establishes reserves as appropriate for any
pricing related disputes.

Reserve for Doubtful Accounts. Senior management reviews the accounts receivable
aging on a monthly basis to determine if any receivables will potentially be
uncollectable. Detailed reviews are conducted on any accounts significantly in
arrears or of material amounts. After all attempts to collect the receivable
have failed, the receivable is written off against the reserve. Based on the
information available, management believes the reserve for doubtful accounts as
of September 30, 2002 was adequate. However, no assurances can be given that
actual write-offs will not exceed the recorded reserve.

Loss Contracts. The Company is committed under certain existing agreements to
supply products to its customers at selling prices which are not sufficient to
cover the costs to produce such product. These agreements were part of an
acquisition made by the Company. In such situations, the Company records a
liability for the estimated future amount of losses. Such losses are recognized
at the time that the loss is probable and reasonably estimatable and are
recorded at the minimum amount necessary to fulfill the obligation to the
customer. Losses are estimated based upon information available at the time of
the estimate, including future production volume estimates, length of the
program and selling price and product information, and adjusted as new facts are
determined. Any change in the estimate will result in a change in period income.

Valuation of Long-Lived Assets and Investments. The Company periodically reviews
the carrying value of its long-lived assets and investments for continued
appropriateness. This review is based upon its projections of anticipated future
cash flows. While management believes that its estimates of future cash flows
are reasonable, different assumptions regarding such cash flows could materially
affect the valuations. If the sum of the expected future cash flows
(undiscounted and without interest charges) were less than the carrying amount
of goodwill and other long-lived assets, the Company would recognize an
impairment loss. The Company uses a probability weighted cash flow estimation
approach to deal with situations in which alternative courses of action to
recover the carrying amount of a long-lived asset are under consideration or

27

a range is estimated for the amount of possible future cash flows. In 2001, the
current and historical operating and cash flow losses of certain operating
segments combined with forecasts that demonstrate continuing losses prompted us
to assess the recoverability of the goodwill and other long-lived assets of
these operating segments. Based on the assessment, the carrying value of
goodwill of Inyecta Alum, S.A. de C.V., or "JLF Mexico," exceeded its fair
value. Accordingly, the Company recorded an impairment charge of approximately
$4.0 million to write down the goodwill during the fourth quarter of 2001.

FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this Form
10-Q, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are, or may be
deemed to be, forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. When used in this Form 10-Q, the words "anticipate," "believe,"
"estimate," "expect," "intends," and similar expressions, as they relate to the
Company, are intended to identify forward-looking statements. Such
forward-looking statements are based on the beliefs of the Company's management
as well as on assumptions made by and information currently available to the
Company at the time such statements were made. Various economic and competitive
factors could cause actual results to differ materially from those discussed in
such forward-looking statements, including factors which are outside the control
of the Company, such as risks relating to: (i) the ability of the Company to
complete an alternative financing transaction on a timely basis; (ii) the
Company's current liquidity situation; (iii) the Company's ability to develop or
successfully introduce new products; (iv) general economic or business
conditions affecting the automotive industry; (v) increased competition in the
automotive components supply market; and (vi) the Company's failure to complete
or successfully integrate additional strategic acquisitions. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on behalf of the Company are expressly qualified in their
entirety by such cautionary statements.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Market Risk" section of Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations.

ITEM 4: CONTROLS AND PROCEDURES

The Company's management, including its Chief Executive Officer and Chief
Financial Officer, have concluded based on their evaluation performed October
31, 2002, that the Company's disclosure controls and procedures are effective
for gathering, analyzing and disclosing the information the Company is required
to disclose in its reports filed under the Securities Exchange Act of 1934.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the previously mentioned evaluation.

28

PART II. OTHER INFORMATION

J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES

Item 1. Legal Proceedings:

None.

Item 2. Change in Securities:

None.

Item 3. Defaults Upon Senior Securities:

None.

Item 4. Submission of Matters to a Vote of Security Holders:

None.

Item 5. Other Information:

None.

Item 6. Exhibits and Reports on Form 8-K:

(a) Exhibits:

None.

(b) Reports on Form 8-K:

During the quarter for which this report is filed, the
Company filed the following Form 8-K Current Reports with
the Securities and Exchange Commission:

None.

29

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

J.L. FRENCH AUTOMOTIVE CASTINGS, INC.

Date: January 16, 2003 By /s/ Mark S. Burgess
------------------------------------------
Mark S. Burgess
Vice President, Chief Financial Officer

30

I, David S. Hoyte, certify that:

1. I have reviewed this quarterly report on Form 10-Q of J.L. French
Automotive Castings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing of this quarterly
report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and audit committee
of the registrant's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weakness in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

January 16, 2003

/s/ David S. Hoyte
-----------------------------------
David S. Hoyte
Chief Executive Officer

31

I, Mark S. Burgess, certify that:

1. I have reviewed this quarterly report on Form 10-Q of J.L. French
Automotive Castings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing of this quarterly
report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and audit committee of
the registrant's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weakness in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

January 16, 2003

/s/ Mark S. Burgess
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Mark S. Burgess
Chief Financial Officer

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