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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 June 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.
QUARTERLY FINANCIAL STATEMENTS

TABLE OF CONTENTS





PAGE
----


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

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

Condensed Consolidated Balance Sheets at June 30, 2002 and
December 31, 2001 5

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

Notes to Condensed Consolidated Financial Statements 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 June 30,
----------------------------
2002 2001
--------- ---------

Sales $ 146,421 $ 137,808
Cost of sales 122,592 113,998
--------- ---------
Gross profit 23,829 23,810
Selling, general and administrative expenses 7,186 8,223
Amortization expense 615 2,814
--------- ---------
Operating income 16,028 12,773
Interest expense, net 11,860 13,824
--------- ---------
Income (loss) before provision for income Taxes 4,168 (1,051)
Provision for income taxes 1,416 922
--------- ---------
Net income (loss) $ 2,752 $ (1,973)
========= =========




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)



Six Months Ended June 30,
----------------------------
2002 2001
--------- ---------

Sales $ 281,135 $ 272,364
Cost of sales 237,145 232,141
--------- ---------
Gross profit 43,990 40,223
Selling, general and administrative expenses 14,519 15,954
Amortization expense 1,231 5,676
--------- ---------
Operating income 28,240 18,593
Interest expense, net 23,814 28,004
--------- ---------
Income (loss) before provision for income Taxes 4,426 (9,411)
Provision (benefit) for income taxes 1,779 (2,074)
--------- ---------
Net income (loss) $ 2,647 $ (7,337)
========= =========



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)



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

Current assets:
Cash and cash equivalents $ 14,674 $ 1,055
Accounts receivable, net 57,352 43,713
Inventories 30,084 31,097
Other current assets 20,626 17,479
--------- ---------
Total current assets 122,736 93,344

Property, plant and equipment, net 270,507 275,142
Intangible and other assets, net 333,556 332,423
--------- ---------
$ 726,799 $ 700,909
========= =========

Liabilities and Stockholders' Deficit

Current liabilities:
Current maturities of long-term debt $ 16,885 $ 47,306
Accounts payable 57,131 61,678
Accrued liabilities 31,549 33,167
--------- ---------
Total current liabilities 105,565 142,151

Long-term debt, net of current maturities 387,256 328,935
Subordinated notes 175,000 175,000
Other noncurrent liabilities 22,721 21,519
--------- ---------
Total liabilities 690,542 667,605
--------- ---------

Redeemable common stock 60,000 60,000

Stockholders' deficit:
Common stock -- --
Additional paid-in capital 90,328 90,476
Accumulated deficit (106,048) (106,295)
Accumulated other comprehensive loss (8,023) (10,877)
--------- ---------
Total stockholders' deficit (23,743) (26,696)
--------- ---------
$ 726,799 $ 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)




Six Months Ended June 30,
---------------------------
2002 2001
-------- --------

OPERATING ACTIVITIES:
Net income (loss) $ 2,647 $ (7,337)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities -
Depreciation and amortization 23,910 26,482
Changes in other assets and liabilities (22,616) (10,342)
-------- --------
Net cash provided by operating activities 3,941 8,803
-------- --------
INVESTING ACTIVITIES:
Capital expenditures, net (12,059) (21,701)
-------- --------
Net cash used for investing activities (12,059) (21,701)
-------- --------
FINANCING ACTIVITIES:
Revolving credit facility borrowings 56,331 15,734
Repayments on revolving credit facility borrowings (20,458) (713)
Long-term borrowings 6,409 3,935
Repayment of long-term borrowings (20,451) (9,909)
Other, net (150) (168)
-------- --------
Net cash provided by financing activities 21,681 8,879
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 56 (1,291)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 13,619 (5,310)

CASH AND CASH EQUIVALENTS:
Beginning of period 1,055 6,053
-------- --------
End of period $ 14,674 $ 743
======== ========



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 six months ended June 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 six month periods ended June
30, 2002 and 2001 (in thousands):



Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2002 2001 2002 2001
-------- -------- -------- --------

Net income (loss) $ 2,752 $ (1,973) $ 2,647 $ (7,337)
Change in cumulative 4,600 (6,628) 3,698 (10,727)
translation adjustment
Cumulative effect of adoption
of SFAS No. 133 -- -- -- (1,223)
Minimum pension liability (1,030) -- (1,030) --
Unrealized income/(loss) on
derivative instrument (453) 132 186 (702)
-------- -------- -------- --------
Comprehensive income (loss) $ 5,869 $ (8,469) $ 5,501 $(19,989)
======== ======== ======== ========


The minimum pension liability relates to the excess of the unfunded
accumulated benefit obligation over the unrecognized prior service cost.

3. At June 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 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 June 30, 2002, the fair value of the
interest rate swap was a liability of $3.1 million and $3.4 million at
December 31, 2001.

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 planning 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 the 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 by December 31, 2002. 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:



Three Months Ended June 30, Six Months Ended June 30,
------------------------ ------------------------
2002 2001 2002 2001
------- ------- ------- -------

Net income (loss) $ 2,752 $(1,973) $ 2,647 $(7,337)
Goodwill amortization,
net of income taxes -- 1,370 -- 2,726
------- ------- ------- -------
Adjusted net income (loss) $ 2,752 $ (603) $ 2,647 $(4,611)
======= ======= ======= =======


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 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



8


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 June 30, 2002, the Company had deferred tax assets which included $40.5
million related to its federal net operating loss carryforward that expires
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):



June 30, Dec. 31,
2002 2001
------- -------

Raw materials $15,860 $15,530
Work-in-process 6,851 7,314
Finished goods 7,373 8,253
------- -------
$30,084 $31,097
======= =======


7. In March 2002, the Company entered into an agreement to sell five machines
and lease the machines back, applying the provisions of Statement of
Financial Accounting Standards 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 June 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):



June 30, December 31,
2002 2001
--------- ---------

Senior Credit Facility:
Revolving credit facility $ 62,356 $ 25,213
Tranche A term loan 133,372 149,881
Tranche B term loan 149,503 149,904
--------- ---------
Total senior credit facility 345,231 324,998
Other, net 58,910 51,243
--------- ---------
404,141 376,241
Less-current maturities (16,885) (47,306)
--------- ---------
Total long-term debt $ 387,256 $ 328,935
========= =========



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 revolving credit facility which provides for total borrowings
and letters of credit of $90 million. As of June 30, 2002, there were
outstanding borrowings under the revolving credit facility of $62.3 million
and outstanding letters of credit of $27.5 million.



9


As of June 30, 2002, rates on borrowings under the senior credit facility
varied from 4.9% to 7.2%. 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.

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 June 30, Six Months Ended June 30,
--------------------------- --------------------------
2002 2001 2002 2001
-------- -------- -------- --------

Cash paid for -
Interest $ 15,356 $ 17,128 $ 22,242 $ 29,566
Income taxes (186) 100 169 412



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 six months ended June 30, 2002 and 2001 (in thousands):



Six Months Ended June 30,
-----------------------------
2002 2001
--------- ---------

Beginning balance $(106,295) $ (92,886)
Net income (loss) 2,647 (7,337)
Dividends (2,400) (3,529)
--------- ---------
Ending balance $(106,048) $(103,752)
========= =========


The Company accrued dividends of $2.4 million on the outstanding Class P
common stock for the six months ended June 30, 2002 and June 30, 2001 and
these dividends are included in other non-current liabilities. In addition,
as of June 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
six months ended June 30, 2002, the liability was reduced by $4.4 million
due to sales of products subject to those contracts. In addition to the
utilization during the six months ended June 30, 2002, the reserve was
reduced by approximately $800,000 due to cost reductions and reductions in
estimated future shipments of certain loss contract parts. The reserve for
loss contracts at June 30, 2002 consisted of a $2.0 million current
liability and $2.5 million of long-term liability.

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).



11


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, which include JLF UK, Ansola and
JLF 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 JUNE 30, 2002
(AMOUNTS IN THOUSANDS)



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

Sales $ -- $ 120,016 $ 26,405 $ -- $ 146,421
Cost of sales -- 100,554 22,038 -- 122,592
--------- --------- --------- --------- ---------
Gross profit -- 19,462 4,367 -- 23,829
Selling, general and
administrative expenses 1,382 3,305 2,499 -- 7,186
Amortization expense 603 -- 12 -- 615
--------- --------- --------- --------- ---------
Operating income (loss) (1,985) 16,157 1,856 -- 16,028
Interest expense 5,136 5,251 1,473 -- 11,860
--------- --------- --------- --------- ---------
Income (loss) before
income taxes, equity in
earnings (losses) of
subsidiaries (7,121) 10,906 383 -- 4,168
Provision (benefit) for income
taxes (2,361) 3,777 -- -- 1,416
Equity in earnings of
subsidiaries 7,512 -- -- (7,512) --
--------- --------- --------- --------- ---------
Net income (loss) $ 2,752 $ 7,129 $ 383 $ (7,512) $ 2,752
========= ========= ========= ========= =========

RETAINED EARNINGS:

Beginning balance $(107,600) $ 14,034 $ (19,951) $ 5,917 $(107,600)
Net income (loss) 2,752 7,129 383 (7,512) 2,752
Dividends (1,200) -- -- -- (1,200)
Ending balance -- -- -- -- --
--------- --------- --------- --------- ---------
$(106,048) $ 21,163 $ (19,568) $ (1,595) $(106,048)
========= ========= ========= ========= =========




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
SIX MONTHS ENDED JUNE 30, 2002
(AMOUNTS IN THOUSANDS)



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


Sales $ -- $ 230,302 $ 50,833 $ -- $ 281,135
Cost of sales -- 193,145 44,000 -- 237,145
--------- --------- --------- --------- ---------
Gross profit -- 37,157 6,833 -- 43,990
Selling, general and
administrative expenses 2,219 8,171 4,129 -- 14,519
Amortization expense 1,206 -- 25 -- 1,231
--------- --------- --------- --------- ---------
Operating income (loss) (3,425) 28,986 2,679 -- 28,240
Interest expense 10,224 10,741 2,849 -- 23,814
--------- --------- --------- --------- ---------
Income (loss) before
income taxes, equity in
earnings (losses) of
subsidiaries (13,649) 18,245 (170) -- 4,426
Provision (benefit) for income
taxes (4,711) 6,490 -- -- 1,779
Equity in earnings of
subsidiaries 11,585 -- -- (11,585) --
--------- --------- --------- --------- ---------
Net income (loss) $ 2,647 $ 11,755 $ (170) $ (11,585) $ 2,647
========= ========= ========= ========= =========

RETAINED EARNINGS:

Beginning balance $(106,295) $ 9,408 $ (19,398) $ 9,990 $(106,295)
Net income (loss) 2,647 11,755 (170) (11,585) 2,647
Dividends (2,400) -- -- -- (2,400)
--------- --------- --------- --------- ---------
Ending balance $(106,048) $ 21,163 $ (19,568) $ (1,595) $(106,048)
========= ========= ========= ========= =========




14


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


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




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

Assets

Current assets:
Cash and cash equivalents $ 4,419 $ 8,311 $ 1,944 $ -- $ 14,674
Accounts receivable, net 207,583 140,502 25,365 (316,098) 57,352
Inventories -- 21,406 8,678 -- 30,084
Other current assets (2,520) 16,906 6,240 -- 20,626
--------- --------- --------- --------- ---------
Total current assets 209,482 187,125 42,227 (316,098) 122,736
Property, plant and equipment,
net -- 164,195 106,312 -- 270,507
Investment in subsidiaries 332,849 -- -- (332,849) --
Intangible and other assets, net 55,061 225,461 53,034 -- 333,556
--------- --------- --------- --------- ---------
$ 597,392 $ 576,781 $ 201,573 $(648,947) $ 726,799
========= ========= ========= ========= =========

Liabilities and Stockholders'
Investment (Deficit)

Current liabilities:
Current maturities of long-
term debt $ 8,270 $ 230 $ 8,385 $ -- $ 16,885
Accounts payable -- 39,578 17,553 -- 57,131
Accrued liabilities 7,688 16,300 7,561 -- 31,549
--------- --------- --------- --------- ---------
Total current liabilities 15,958 56,108 33,499 -- 105,565
Long-term debt 435,827 41,709 84,720 -- 562,256
Other noncurrent liabilities 10,665 10,685 1,371 -- 22,721
Intercompany 95,823 188,377 31,898 (316,098) --
--------- --------- --------- --------- ---------
Total liabilities 558,273 296,879 151,488 (316,098) 690,542
Redeemable common stock 60,000 -- -- -- 60,000
Stockholders' investment
(deficit):
Additional paid-in capital 90,328 259,808 71,446 (331,254) 90,328
Retained earnings (deficit) (106,048) 21,163 (19,568) (1,595) (106,048)
Accumulated other
comprehensive loss (5,161) (1,069) (1,793) -- (8,023)
--------- --------- --------- --------- ---------
Total stockholders' investment
(deficit) (20,881) 279,902 50,085 (332,849) (23,743)
--------- --------- --------- --------- ---------
$ 597,392 $ 576,781 $ 201,573 $(648,947) $ 726,799
========= ========= ========= ========= =========




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 SIX MONTHS ENDED JUNE 30, 2002
(AMOUNTS IN THOUSANDS)



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

OPERATING ACTIVITIES:
Net income (loss) $ 2,647 $ 11,755 $ (170) $(11,585) $ 2,647
Adjustments to reconcile
income (loss) to net
cash provided by (used for)
operating activities:
Depreciation and amortization 1,205 17,482 5,223 -- 23,910
Income from investment in
subsidiaries (11,585) -- -- 11,585 --
Changes in other operating
activities (3,818) (15,316) (3,482) -- (22,616)
-------- -------- -------- -------- --------
Net cash provided by (used
for) operating activities (11,551) 13,921 1,571 -- 3,941
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Capital expenditures, net -- (5,532) (6,527) -- (12,059)
-------- -------- -------- -------- --------
Net cash provided by (used
for) investing activities -- (5,532) (6,527) -- (12,059)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Borrowings on revolving
credit facilities 51,300 -- 5,031 -- 56,331
Repayment of borrowings on
revolving credit facilities (18,700) -- (1,758) -- (20,458)
Long-term borrowings -- -- 6,409 -- 6,409
Repayment of long-term
borrowings (16,488) (110) (3,853) -- (20,451)
Capital investment (150) -- -- -- (150)
-------- -------- -------- -------- --------
Net cash provided by
(used for) financing
activities 15,962 (110) 5,829 -- 21,681
-------- -------- -------- -------- --------
EFFECT OF EXCHANGE
RATES ON CASH AND
CASH EQUIVALENTS -- -- 56 -- 56
-------- -------- -------- -------- --------
NET CHANGE IN CASH
AND CASH EQUIVALENTS 4,411 8,279 929 -- 13,619
CASH AND CASH
EQUIVALENTS:
Beginning of period 8 32 1,015 -- 1,055
-------- -------- -------- -------- --------
End of period $ 4,419 $ 8,311 $ 1,944 $ -- $ 14,674
======== ======== ======== ======== ========




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 JUNE 30, 2001
(AMOUNTS IN THOUSANDS)



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


OPERATIONS:

Sales $ -- $ 116,585 $ 21,223 $ -- $ 137,808
Cost of sales 1,000 93,976 19,022 -- 113,998
--------- --------- --------- --------- ---------
Gross profit (1,000) 22,609 2,201 -- 23,810
Selling, general and
administrative expenses 1,518 3,523 3,182 -- 8,223
Amortization expense 3 2,407 404 -- 2,814
--------- --------- --------- --------- ---------
Operating income (loss) (2,521) 16,679 (1,385) -- 12,773
Interest expense 6,458 5,894 1,472 -- 13,824
--------- --------- --------- --------- ---------
Income (loss) before
income taxes, equity in
earnings of
subsidiaries (8,979) 10,785 (2,857) -- (1,051)
Provision (benefit) for income
taxes (2,564) 4,293 (807) -- 922
Equity in earnings
of subsidiaries 4,442 -- -- (4,442) --
--------- --------- --------- --------- ---------
Net income (loss) $ (1,973) $ 6,492 $ (2,050) $ (4,442) $ (1,973)
========= ========= ========= ========= =========

RETAINED EARNINGS:

Beginning balance $(100,016) $ 40,409 $ (7,390) $ (33,019) $(100,016)
Net income (loss) (1,973) 6,492 (2,050) (4,442) (1,973)
Dividends (1,763) -- -- -- (1,763)
--------- --------- --------- --------- ---------
Ending balance $(103,752) $ 46,901 $ (9,440) $ (37,461) $(103,752)
========= ========= ========= ========= =========




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 SIX MONTHS ENDED JUNE 30, 2001
(AMOUNTS IN THOUSANDS)



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

OPERATIONS:

Sales $ -- $ 226,638 $ 45,726 $ -- $ 272,364
Cost of sales 1,000 191,570 39,571 -- 232,141
--------- --------- --------- --------- ---------
Gross profit (1,000) 35,068 6,155 -- 40,223
Selling, general and
administrative expenses 2,223 7,251 6,480 -- 15,954
Amortization expense 28 4,828 820 -- 5,676
--------- --------- --------- --------- ---------
Operating income (loss) (3,251) 22,989 (1,145) -- 18,593
Interest expense 13,327 11,716 2,961 -- 28,004
--------- --------- --------- --------- ---------
Income (loss) before
income taxes, equity in
earnings of
subsidiaries (16,578) 11,273 (4,106) -- (9,411)
Provision (benefit) for income
taxes (5,452) 4,307 (929) -- (2,074)
Equity in earnings
of subsidiaries 3,789 -- -- (3,789) --
--------- --------- --------- --------- ---------
Net income (loss) $ (7,337) $ 6,966 $ (3,177) $ (3,789) $ (7,337)
========= ========= ========= ========= =========

RETAINED EARNINGS:

Beginning balance $ (92,886) $ 39,935 $ (6,263) $ (33,672) $ (92,886)
Net income (loss) (7,337) 6,966 (3,177) (3,789) (7,337)
Dividends (3,529) -- -- -- (3,529)
--------- --------- --------- --------- ---------
Ending balance $(103,752) $ 46,901 $ (9,440) $ (37,461) $(103,752)
========= ========= ========= ========= =========




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)




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

Assets

Current assets:
Cash and cash equivalents $ 8 $ 32 $ 1,015 $ -- $ 1,055
Accounts receivable, net -- 27,571 19,460 (3,318) 43,713
Inventories -- 22,747 8,350 -- 31,097
Other current assets (2,282) 14,081 5,680 -- 17,479
--------- --------- --------- --------- ---------
Total current assets (2,274) 64,431 34,505 (3,318) 93,344
Property, plant and equipment,
net -- 175,533 99,609 -- 275,142
Investment in subsidiaries 321,264 -- -- (321,264) --
Intangible and other assets, net 51,665 231,604 49,154 -- 332,423
--------- --------- --------- --------- ---------
$ 370,655 $ 471,568 $ 183,268 $(324,582) $ 700,909
========= ========= ========= ========= =========

Liabilities and Stockholders'
Investment (Deficit)

Current liabilities:
Accounts payable $ -- $ 46,046 $ 15,632 $ -- $ 61,678
Accrued liabilities 6,207 19,802 7,158 -- 33,167
Current maturities of long-
term debt 38,987 222 8,097 -- 47,306
--------- --------- --------- --------- ---------
Total current liabilities 45,194 66,070 30,887 -- 142,151
Long-term debt 388,445 41,828 73,662 -- 503,935
Other noncurrent liabilities 8,564 12,310 645 -- 21,519
Intercompany (109,611) 82,919 30,010 (3,318) --
--------- --------- --------- --------- ---------
Total liabilities 332,592 203,127 135,204 (3,318) 667,605
Redeemable common stock 60,000 -- -- -- 60,000

Stockholders' investment
(deficit):
Additional paid-in capital 90,476 259,808 71,446 (331,254) 90,476
Retained earnings (deficit) (106,295) 9,408 (19,398) 9,990 (106,295)
Accumulated other
comprehensive loss (6,118) (775) (3,984) -- (10,877)
--------- --------- --------- --------- ---------
Total stockholders' investment
(deficit) (21,937) 268,441 48,064 (321,264) (26,696)
--------- --------- --------- --------- ---------
$ 370,655 $ 471,568 $ 183,268 $(324,582) $ 700,909
========= ========= ========= ========= =========




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 SIX MONTHS ENDED JUNE 30, 2001
(AMOUNTS IN THOUSANDS)



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

OPERATING ACTIVITIES:
Net income (loss) $ (7,337) $ 6,966 $ (3,177) $ (3,789) $ (7,337)
Adjustments to reconcile net
income (loss) to net cash
provided by (used for)
operating activities -
Depreciation and amortization 28 21,256 5,198 -- 26,482
Income from invest-
ment in subsidiaries (3,789) -- -- 3,789 --
Changes in other operating
activities 4,438 (14,713) (67) -- (10,342)
-------- -------- -------- -------- --------
Net cash provided by (used
for) operating items (6,660) 13,509 1,954 -- 8,803
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Capital expenditures, net -- (13,252) (8,449) -- (21,701)
-------- -------- -------- -------- --------
Net cash used for
investing activities -- (13,252) (8,449) -- (21,701)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Revolving credit facility
borrowings 12,900 -- 2,834 -- 15,734
Repayments of revolving
credit facility borrowings -- -- (713) -- (713)
Long-term borrowings -- -- 3,935 -- 3,935
Repayment of other borrowings (5,947) (1,011) (2,951) -- (9,909)
Other (168) -- -- -- (168)
-------- -------- -------- -------- --------
Net cash provided by
(used for) financing
activities 6,785 (1,011) 3,105 -- 8,879
-------- -------- -------- -------- --------

EFFECT OF EXCHANGE
RATES ON CASH AND
CASH EQUIVALENTS -- -- (1,291) -- (1,291)
-------- -------- -------- -------- --------
NET CHANGES IN CASH
AND CASH EQUIVALENTS 125 (754) (4,681) -- (5,310)
CASH AND CASH
EQUIVALENTS:
Beginning of period 22 803 5,228 -- 6,053
-------- -------- -------- -------- --------
End of period $ 147 $ 49 $ 547 $ -- $ 743
======== ======== ======== ======== ========




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 JUNE 30, 2002 TO THE THREE MONTHS ENDED
JUNE 30, 2001

Sales -- Sales for the second quarter of 2002 increased by approximately $8.6
million to $146.4 million from $137.8 million in the second quarter of 2001.
North American light vehicle production was 7.2% higher in the second quarter of
2002 compared with the second quarter of 2001. The increase in the North
American production increased the Company's sales by approximately $8.2 million.
In addition, sales from the Company's European subsidiaries increased
approximately $4.5 million in the second quarter as a result of new business and
by approximately $0.5 million as a result of changes in foreign currency
exchange rates. These increases were offset by $4.4 million resulting from
resourcing of certain low margin components by a customer.

Cost of Sales -- Cost of sales for the second quarter of 2002 was $122.6 million
or 83.7% of sales compared to $114.0 million or 82.7% of sales in the second
quarter of 2001. Reduced utilization of loss contract reserves adversely
impacted cost of sales by $4.5 million in the quarter, or approximately 3.7% of
sales. In addition, higher aluminum prices, while not impacting gross profit
dollars, impacted costs by approximately 2.0% 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
1.2% of sales. Cost reductions on manufacturing supplies, utilities, freight and
maintenance offset the increases described above by 5.9% of sales.

S, G & A Expenses -- Selling, general and administrative expenses decreased by
$1.0 million to $7.2 million in the second quarter of 2002 from $8.2 million in
the second quarter of 2001. The decrease was the result of continued cost
reductions including labor cost reductions.

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 $2.2 million to $0.6 million in the second
quarter of 2002 from $2.8 million in the second quarter of 2001.

Interest Expense -- Interest expense for the second quarter of 2002 was $11.9
million, a decrease of $1.9 million from the second quarter of 2001. The
decrease was due principally to lower weighted average interest rates during the
second quarter of 2002.



21


Income Taxes -- The provision for income taxes for the second quarter of 2002
was $1.4 million or 34% of pre tax income. In the second quarter of 2001, the
Company recorded a tax provision of $0.9 million, despite a pre tax loss of $1.1
million. The provision was the result of non-income based state taxes.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2002 TO THE SIX MONTHS ENDED JUNE
30, 2001

Sales -- Sales for the six months ended June 30, 2002 were $281.1 million,
compared to $272.4 million for the six months ended June 30, 2001, an increase
of $8.7 million or 3.2%. Approximately $14.7 million of the increase was the
result of the increase in North American light vehicle production. Total light
vehicle production increased approximately 5.6% in the first half of 2002 as
compared to the prior year. Sales from the Company's European subsidiaries
increased approximately $5.5 million in the first six months of 2002 as compared
to the same period in 2001. The increases were partially offset by $9.4 million
resulting from resourcing of certain low margin components by a customer.

Cost of Sales -- Cost of sales for the first six months of 2002 was $237.1
million or 84.4% of sales compared to $232.1 million or 85.2% of sales in the
first six months of 2001. Reduced utilization of loss contract reserves
adversely impacted cost of sales by $7.0 million for six months, or
approximately 1.8% of sales. In addition, higher aluminum prices, while not
impacting gross profit dollars, impacted costs by approximately 0.5% 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 0.8% 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 $14.5
million for the first half of 2002 compared to $16.0 million for the first half
of 2001, a decrease of $1.5 million. The decrease was the result of the
Company's continuing cost reduction program as well as labor reductions.

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 $4.5 million to $1.2 million in the first
half of 2002 from $5.7 million in the first half of 2001.

Interest Expense --Interest expense for the first half of 2002 was $23.8 million
compared to $28.0 million in the prior year, a decrease of $4.2 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 half of 2002 was
$1.8 million, or 40% of pre tax income. The effective rate differed from the
federal statutory rate of 35% as a result of state and foreign income taxes. In
the 2001 period, the Company recorded a tax benefit of $2.1 million or 22.0% 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,
commercial borrowings and sale of equity securities. For the six months ended
June 30, 2002 and 2001, the Company generated cash from operations of $3.9
million and $8.8 million, respectively. Cash generated from operations before
changes in working capital items was $26.6 million for 2002 period compared to
$19.1 million in 2001. Increases in working capital used cash of $22.6 million
during the first half of 2002 compared to $10.3 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



22


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. On July 19, 2002, the senior credit
facility was amended to adjust certain restrictive covenants.

As of June 30, 2002, interest rates on borrowings under the senior credit
facility varied from 4.9% to 7.2%. 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.

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.

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.



23


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 $21.7 million for the first
half of 2002 compared with net cash provided by financing activities of $8.9
million in the comparable 2001 period.

Uses of Cash

Net cash used in investing activities was $12.1 million during the first half of
2002 compared to $21.7 million during the comparable 2001 period. Capital
expenditures totaled $12.1 million in the first half of 2002 and $21.7 million
in the comparable 2001 period and were primarily for equipment purchases related
to new or replacement programs. In the first half 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.

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.



24


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 June 30, 2002, all of the Company's debt other than the
outstanding 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 $2.9 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 agreement.
However, the Company does not anticipate nonperformance by the counterparties.
The fair value of the interest rate swap as of June 30, 2002 was a liability of
$3.1 million, which is recorded in the June 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.



25


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 planning 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 the 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") 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.



26


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 June 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 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




27


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 Company's ability to develop or successfully introduce new
products; (ii) general economic or business conditions affecting the automotive
industry; (iii) increased competition in the automotive components supply
market; and (iv) 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.



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:

10.1 Amended Certificate of Incorporation of J.L. French
Automotive Castings, Inc.

10.2 Second Amendment, dated as of July 15, 2002, to the Amended
and Restated Credit Agreement dated as of October 15, 1999.

10.3 Third Amendment, dated as of November 19, 2002, to the
Amended and Restated Credit Agreement dated as of October
15, 1999.

10.4 Fourth Amendment, dated as of November 22, 2002, to the
Amended and Restated Credit Agreement dated as of October
15, 1999.

10.5 Fifth Amendment, dated as of December 26, 2002, to the
Amended and Restated Credit Agreement dated as of October
15, 1999.

10.6 Securities Purchase Agreement, dated December 27, 2002,
$96,410,256.41 19% Senior Secured Notes due December 31,
2007.

10.7 Amendment No. 3, dated December 27, 2002, to the Investor
Stockholders Agreement dated April 21, 1999.

10.8 Amendment No. 2, dated December 27, 2002, to Registration
Agreement and Joinder and Rights Agreement dated April 21,
1999.


(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;



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;



January 16, 2003


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