Higher Sales, Positive Operating Earnings, Stronger Free Cash Flow and Improved Liquidity for Quarter Ended July 31, 2006

Hayes Lemmerz International, Inc. today reported that sales for the fiscal second quarter ended July 31, 2006 were $583.4 million, up 4.9% from $556.0 million a year earlier. Earnings from operations for the fiscal second quarter were $10.8 million, significantly improved from a loss from operations of $48.6 million in the year earlier quarter. For the second fiscal quarter, the Company's net loss was $26.9 million, improved from a loss of $70.3 million in the prior year quarter.

Hayes Lemmerz reported free cash flow, excluding the impact of the Company's securitization program, of negative $10.3 million in the second quarter, improved from a negative $41.8 million in the year earlier quarter. Liquidity as of July 31, 2006 was $152 million, compared with $129 million a year earlier. In the recent quarter, the Company obtained approximately $30 million of additional liquidity by restructuring its North American securitization program.

"We continue to execute our strategy of growth in the right places, improved cash flow and stronger liquidity," said Curtis Clawson, President, CEO and Chairman of the Board.

The Company reported adjusted EBITDA for the second quarter of 2006 of $49.1 million, an improvement of $10.9 million over the year earlier quarter and YTD adjusted EBITDA was $97.9 million, a $1.9 million improvement from a year earlier.

During the second quarter 2006, the Company put in place North American employee compensation restructuring programs that are expected to save $25 million in 2006 and $10 million per year ongoing and business unit restructuring initiatives that are expected to save $25 million per year ongoing. "These restructuring initiatives enhance our position as a low-cost producer in the industry and improve our competitive position for the future," Mr. Clawson said.

The Company also entered the Russian marketplace during the quarter with a licensing arrangement that will combine advanced Hayes Lemmerz steel wheel technology with a local business partner's market knowledge and experience. "This agreement allows us to participate in this rapidly growing market without the need for any significant upfront investment," Mr. Clawson said.

"I am pleased with our performance for the second quarter. We saw significant improvement in key financial and operational parameters," said Mr. Clawson. "Our sales are up, our productivity continues to improve and we continue to win new business in growing markets," he said. "Some 75% of our $385 million of new business wins in the first half are in international markets, including major wins with Japanese and Korean automakers including Toyota, Hyundai, Nissan and Honda, as well as European manufacturers including Volkswagen, Audi, BMW, Renault and Fiat; in the North American market we are increasingly diversifying our product mix with more cross-over SUVs and more passenger cars," he said. "Given the changing buying patterns of American consumers, this is very important for us."

A core component of Hayes Lemmerz' strategy is to grow by maximizing customer satisfaction. "We are extremely proud that Volkswagen has named our steel wheel plant in Brazil as a 'Supplier of the Year,'" Mr. Clawson said.

For the full year, Hayes Lemmerz expects to achieve sales of $2.2 billion to $2.3 billion, improved EBITDA compared with 2005, and capital expenditures of $80 million to $90 million, and to continue to concentrate on improving free cash flow and cash generation. Capital expenditures in the first half totaled approximately $30 million. For the remainder of the year, the Company will focus its capital expenditures on expanding capacity in low-cost strategic markets, including capacity expansions at Czech, Thai and Turkish aluminum wheel plants and its India truck steel wheel plant.

Use of Non-GAAP Financial Information

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 asset impairment losses and other restructuring charges, reorganization items and 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. 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. In addition, incentive compensation for management is based on Adjusted EBITDA. Free cash flow is defined as cash from operating activities minus capital expenditures plus cash from discontinued operations and the sale of assets. Management uses free cash flow to identify the amount of cash available to meet debt amortization requirements, pay dividends to stockholders or make corporate investments.

Hayes Lemmerz International, Inc. is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 34 facilities and approximately 10,000 employees worldwide.

This press release includes forward looking statements, 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 Annual Report on Form 10-K and other 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