Overall Corporate Results The following table sets out certain highlights of the company s performance in 2009 and 2008:

LINAMAR CORPORATION MANAGEMENT S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2009 This Management s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") of Linamar Corporation ( Linamar or the company ) should be read in conjunction with its consolidated financial statements for the quarter ended December 31, 2009 and related notes thereto. This MD&A has been prepared as at March 4, 2010. Additional information regarding Linamar, including copies of its continuous disclosure materials such as its annual information form, is available on its website at www.linamar.com or through the SEDAR website at www.sedar.com. OVERALL CORPORATE PERFORMANCE Overview of the Business Linamar Corporation (TSX:LNR) is a diversified global manufacturing company of highly engineered products powering vehicles, motion, work and lives. The company s Powertrain and Driveline focused divisions are world leaders in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle and power generation markets. The company s Industrial division is a world leader in the design and production of innovative mobile industrial equipment, notably its class-leading aerial work platforms and telehandlers. With more than 9,400 employees in 37 manufacturing locations, 5 R&D centers and 11 sales offices in Canada, the US, Mexico, Germany, Hungary, the UK, China, Korea and Japan, Linamar generated sales of close to $1.7 Billion in 2009. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com. Overall Corporate Results The following table sets out certain highlights of the company s performance in 2009 and 2008: Three Months Ended Year Ended December 31 December 31 (in millions of dollars, except content per vehicle numbers) 2009 2008 +/- % 2009 2008 +/- % Sales $ 451.9 $ 476.7 $ (24.8) (5.2%) $ 1,675.9 $ 2,257.0 $ (581.1) (25.7%) Gross Margin 31.5 22.6 8.9 39.4% 47.7 229.6 (181.9) (79.2%) Operating Earnings (Loss) 7.8 (5.9) 13.7 232.2% (50.5) 103.6 (154.1) (148.7%) Earnings (Loss) from Continuing Operations 14.6 (13.9) 28.5 205.0% (46.9) 51.0 (97.9) (192.0%) Net Earnings (Loss) $ 14.6 $ (2.6) $ 17.2 661.5% $ (46.9) $ 70.4 $ (117.3) (166.6%) Unusual Items (3.9) 19.4 (23.3) 48.0 20.3 27.7 Net Earnings (Loss) - Adjusted $ 10.7 $ 16.8 $ (6.1) (36.3%) $ 1.1 $ 90.7 $ (89.6) (98.8%) Content per Vehicle North America (1) $ 128.68 $104.08 $ 24.60 23.6% $ 130.26 $ 101.13 $ 29.13 28.8% Content per Vehicle Europe (1) $ 6.37 $8.10 $ (1.73) (21.4%) $ 6.81 $ 7.03 $ (0.22) (3.1%) Content per Vehicle Asia Pacific (1) $ 2.37 $2.09 $ 0.28 13.4% $ 2.07 $ 1.62 $ 0.45 27.8% Note: (1) Content per Vehicle calculations reflect updated allocations of automotive sales in certain quarters of 2007, 2008, 2009. These allocations have no effect on the company s financial statements for those periods. See the Automotive Sales and Content per Vehicle section of this analysis for more information. The changes in these financial highlights are discussed in detail in the following sections of this analysis. 1

Certain unusual items affected earnings in both 2009 and 2008 as noted in the table below: Three Months Ended Year Ended December 31 December 31 (in millions of dollars, except per share figures) 2009 2008 2009 2008 Net Earnings (Loss) $ 14.6 $ (2.6) $ (46.9) $ 70.4 Adjustments due to unusual items Taxable Items before Tax 1) Capital asset impairments due to market conditions 2.8 6.7 49.1 6.7 2) Severance related to the global economic slow down - 9.2 12.1 13.1 3) Closure announcement of Invar 6.4-6.4-4) Inventory provision related to the global economic slow down 6.0-6.0-5) Access equipment contract converted from previous period sale to a rental contract 2.5-2.5-6) Change in key accounting estimates (12.3) - (12.3) - 7) Program specific asset write down - - - 4.7 8) Ontario Capital Tax - eliminated retroactively to Jan 1, 2007 - - - (4.4) 5.4 15.9 63.8 20.1 Tax Impact (1.6) (1.6) (21.3) (2.9) 3.8 14.3 42.5 17.2 Non-Taxable Items 9) Goodwill impairments - 5.1 11.7 5.1 10) Intangible asset impairments - - 1.5-11) Rate changes on future income taxes in Canada (3.7) - (3.7) - 12) Utilization of previously unrecognized tax losses (4.0) - (4.0) - 13) Foreign exchange loss (gain) on Hungarian Forints held in escrow - - - (2.0) Adjusted Net Earnings (Loss) $ 10.7 $ 16.8 $ 1.1 $ 90.7 As a percentage of Sales 2.4% 3.5% 0.1% 4.0% Change over Prior Year (36.3%) (98.8%) Adjusted Earnings (Loss) per Share $ 0.17 $ 0.26 $ 0.02 $ 1.36 1) In the second quarter of 2009 ( Q2 2009 ), the company assessed the recoverability of the carrying cost of its property, plant and equipment based largely on the bankruptcy filings of General Motors and Chrysler, the reduced production volumes that existed in the quarter and the expectation that volumes will remain suppressed in 2009. As a result, the company identified asset groups, on specific programs, where the carrying value was impaired and the appropriate write down was taken in the quarter. This assessment was reviewed again in the fourth quarter of 2009 ( Q4 2009 ) which resulted in an additional impairment charge of $2.8 million being recorded. In the fourth quarter of 2008 ( Q4 2008 ), the company assessed the recoverability of the carrying cost of its property, plant and equipment based the the product volumes and the expectation that volumes would remain suppressed in 2009 and as a result, an impairment charge was recognized. 2) During both 2009 and 2008, the company incurred certain expenses related to the release of employees as the company adjusted to new sales volumes. 3) On December 3, 2009, Linamar announced the closure of Invar Manufacturing Corporation ( Invar ), located in Batawa Ontario. Invar will work through an orderly wind down of operations in 2010 and accordingly, has recognized charges in Q4 2009 mainly related to severance and termination benefits. 4) During Q4 2009, the company re-assessed the level of the inventory in the Industrial segment as a result of the continued low activity in the industrial markets served by Linamar. This resulted in an increased inventory provision being recorded in the quarter for slow moving inventory and for products where the cost was in excess of the net realizable value of the product. 5) In Q4 2009, the company reassessed a previous sale at Skyjack Inc., and changed the accounting to reflect a rental contract. This has the effect of reducing sales by $9.5 million and operating earnings by $2.5 million in the period. 6) Upon reviewing Linamar s key accounting estimates in Q4 2009, it was determined that two key estimates needed modification: the estimation of general stores inventory was understated by $18.5 million; and the estimated useful life of certain capital assets was no longer appropriate based on the expected future usage of the assets in question and as a result, additional amortization of $6.2 million was charged in the quarter. 2

7) In the first quarter of 2008 ( Q1 2008 ), the company re-assessed the fair value of a specific asset that was not meeting performance requirements as committed to by the vendor. The company s attempts to correct the performance issues have had limited success. The company was required to invest in additional equipment to ensure that customer delivery and quality was not compromised. Accordingly, the original equipment was written down to its fair value. 8) In the 2007 Economic Outlook and Fiscal Review, the Government of Ontario proposed to eliminate the Capital Tax effective January 1, 2008 for Ontario companies primarily engaged in manufacturing and resource activities. In the March 2008 Budget, the Government committed to retroactively eliminate the Capital Tax one year earlier, effective January 1, 2007, for Ontario companies primarily engaged in manufacturing and resource activities. 9) The Company completed Q4 2008 impairment test of the McLaren reporting unit during the first quarter of 2009 ( Q1 2009 ). It was determined that the goodwill attributable to this reporting unit was fully impaired. As a result, an impairment charge of $11.7 million was recorded in Q1 2009. In Q4 2008, an impairment test was completed on the Hungary reporting unit and it was determined that the reporting unit was fully impaired and an impairment charge of $5.1 million was recorded in Q4 2008. Refer to the Goodwill section of this analysis for more details. 10) As part of the impairment tests of the McLaren reporting unit, the company determined in Q2 2009 that the intangible assets of the McLaren reporting unit were fully impaired. 11) The one-time income tax reduction recognized in Q4 2009 as a result of the Ontario corporate income tax rate reduction announced in the March 2009 Ontario budget and substantively enacted into law on December 15, 2009. 12) The utilization of previously unrecognized tax losses in Q4 2009, relative to 2008, specifically in the UK and Asia. The utilization of these previously unrecognized tax losses are not unusual in practice but they are unusual in magnitude and their impact on the results of the quarter. 13) On February 26, 2007, the company announced its public purchase offer for the balance of the outstanding shares of its consolidated subsidiary Linamar Hungary Nyrt. The offer expired in May of 2007. During the offer period, the company purchased 981,727 of the shares that it did not already own for $16.7 million to bring its ownership total to 70.1%. On January 22, 2008, the company announced the repatriation of the remaining funds that were held in escrow in Hungary that were intended for the purchase. The money was repatriated at the same exchange rate at which it was placed in escrow which resulted in a foreign exchange gain in Q1 2008. Currently, the company owns 70.3% of Linamar Hungary Nyrt. 3

BUSINESS SEGMENT REVIEW The company reports its results of operations in two business segments: Powertrain/Driveline and Industrial. The segments are differentiated by the products that each produces and reflects how the chief decision makers of the company manage the business. The following should be read in conjunction with Note 22 to Linamar s consolidated financial statements for the year ended December 31, 2009. Three Months Ended December 31 2009 2008 (in millions of dollars) Powertrain /Driveline Industrial Linamar Powertrain /Driveline Industrial Linamar Sales $ 437.6 $ 14.3 $ 451.9 $ 422.1 $ 54.6 $ 476.7 Operating Earnings (Loss) 28.8 (21.0) 7.8 (6.9) 1.0 (5.9) Unusual Items (3.4) 8.8 5.4 14.8 1.1 15.9 Operating Earnings (Loss) - Adjusted 25.4 (12.2) 13.2 7.9 2.1 10.0 Year Ended December 31 2009 2008 (in millions of dollars) Powertrain /Driveline Industrial Linamar Powertrain /Driveline Industrial Linamar Sales $ 1,514.6 $ 161.3 $ 1,675.9 $ 1,813.4 $ 443.6 $ 2,257.0 Operating Earnings (Loss) (10.1) (40.4) (50.5) 67.3 36.3 103.6 Unusual Items 53.8 11.5 65.3 18.9 (0.8) 18.1 Operating Earnings (Loss) - Adjusted 43.7 (28.9) 14.8 86.2 35.5 121.7 Powertrain/Driveline Highlights Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 +/- % 2009 2008 +/- % Sales $ 437.6 $ 422.1 $ 15.5 3.7% $ 1,514.6 $ 1,813.4 $ (298.8) (16.5%) Operating Earnings (Loss) 28.8 (6.9) 35.7 517.4% (10.1) 67.3 (77.4) (115.0%) Unusual Items Capital asset impairments due to market conditions 2.8 6.7 (3.9) 49.1 6.7 42.4 Severance related to the global economic slow down - 8.1 (8.1) 9.4 12.0 (2.6) Closure announcement of Invar 6.4-6.4 6.4-6.4 Change in key accounting estimates (12.6) - (12.6) (12.6) - (12.6) Program specific asset write down - - - - 4.7 (4.7) Ontario Capital Tax - eliminated retroactively to Jan 1, 2007 - - - - (3.2) 3.2 Intangible asset impairments - - - 1.5-1.5 Foreign exchange loss (gain) on Hungarian Forints held in Escrow - - - - (1.3) 1.3 (3.4) 14.8 (18.2) 53.8 18.9 34.9 Operating Earnings (Loss) - Adjusted 25.4 7.9 17.5 221.5% 43.7 86.2 (42.5) (49.3%) Sales for the Powertrain/Driveline segment ( Powertrain/Driveline ) increased by $15.5 million, or 3.7% in Q4 2009 compared with Q4 2008. The sales increase in the fourth quarter was impacted by the vehicle volumes starting to recover in the global vehicle markets and specifically by: higher sales driven by increased consumer demand in the USA since Q2 2009; higher sales from the Asian operations in Q4 2009; the acquisition of the company s joint venture partner s 40% interest in Eagle Manufacturing LLC in January 2009; and the ramping up of key programs that were in the start-up phase in 2008 including 6 speed transmissions. 4

Sales for Powertrain/Driveline decreased by $298.8 million, or 16.5% in 2009 compared with 2008. The key factor impacting the fourth quarter was the significant reduction in global vehicle markets in 2009 compared to 2008. Q4 2009 operating earnings for Powertrain/Driveline were higher by $35.7 million or 517.4% over Q4 2008. The Powertrain/Driveline segment experienced the following in Q4 2009: improved margins as production volumes increased while operating under a leaner cost structure; increase due to changes in key accounting estimates as previously described in the analysis relating to general stores inventory and the useful life of certain capital assets; improved results in Asia from the sales growth; and with the following Q4 2008 impact: expenses relating to the release of employees as the segment adjusted to new sales volumes that did not recur in Q4 2009. These improvements were partially offset by: the charges recorded in the quarter related to the announcement of the orderly wind down of Invar; and the additional capital asset impairments recorded in the quarter. Annual operating earnings for Powertrain/Driveline were lower by $77.4 million or 115% over 2008. The 2009 operating earnings were impacted by the same factors as Q4. In addition, the Powertrain/Driveline segment experienced the following in 2009: under absorption of fixed costs due to the significant volume reductions in the global vehicle markets; partially offset by cost savings from the company s overhead and fixed cost reduction program that was executed throughout the year; expenses relating to the release of employees as the segment adjusted to new sales volumes; increased raw material costs as a result of a shift to higher material content products and, to a lesser extent, issues with certain financially distressed suppliers; the capital asset impairments from Q2 2009 related to the bankruptcy filings of General Motors and Chrysler; the intangible asset impairment from Q2 2009 related to the McLaren reporting unit; and with the following 2008 impacts: a program specific asset write down in Q1 2008; elimination of the Ontario Capital Tax in Q1 2008 retroactive to January 1, 2007; and in Q1 2008, the segment s portion of the foreign exchange gain on the Hungarian Forints held in Escrow. 5

Industrial Highlights Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 +/- % 2009 2008 +/- % Sales $ 14.3 $ 54.6 $ (40.3) (73.8%) $ 161.3 $ 443.6 $ (282.3) (63.6%) Operating Earnings (Loss) (21.0) 1.0 (22.0) (2200.0%) (40.4) 36.3 (76.7) (211.3%) Unusual Items Severance related to the global economic slow down - 1.1 (1.1) 2.7 1.1 1.6 Inventory provision related to the global economic slow down 6.0-6.0 6.0-6.0 Access equipment contract converted from previous period sale to a rental contract 2.5-2.5 2.5-2.5 Change in key accounting estimates 0.3-0.3 0.3-0.3 Ontario Capital Tax - eliminated retroactively to Jan 1, 2007 - - - - (1.2) 1.2 Foreign exchange loss (gain) on Hungarian Forints held in escrow - - - - (0.7) 0.7 8.8 1.1 7.7 11.5 (0.8) 12.3 Operating Earnings (Loss) - Adjusted (12.2) 2.1 (14.3) (681.0%) (28.9) 35.5 (64.4) (181.4%) The Industrial segment ( Industrial ) product sales decreased 73.8% or $40.3 million to $14.3 million in Q4 2009 from Q4 2008. The sales decrease was due to: significant volume reductions due to global economic uncertainty and restricted customer credit availability leading to lower levels of non-residential construction projects and to significant declines in agricultural equipment sales at the European Fabrication Division; and the reassessment of a previous sale at Skyjack Inc., to reflect a rental contract. For the year, the Industrial product sales decreased 63.6% or $282.3 million to $161.3 million in 2009. The same factors that impacted Q4 also drove the changes in the annual results with following additional item: increased competition which created pricing pressures due to limited demand in the access equipment market which Skyjack services. Operating earnings in Q4 2009 decreased $22.0 million over Q4 2008 to a loss of $21.0 million. The decrease in Industrial operating earnings was predominantly driven by: under absorption of fixed costs due to the volume reductions; partially offset by cost savings from the company s overhead and fixed cost reduction program that was executed throughout the year; inventory provisions taken as a result of continued low activity primarily in the access equipment market; the reassessment of a previous sale at Skyjack Inc., to reflect a rental contract.; absorbed some increased raw material costs launch costs related to the continued start up of the energy market business; and with the following Q4 2008 impact: expenses relating to the release of employees as the segment adjusted to new sales volumes that did not recur in Q4 2009. 2009 Operating earnings decreased $76.7 million or 211.3% over 2008 to a loss of $40.4 million. The decrease in Industrial operating earnings was predominantly driven by the same issues as Q4 2009 with the following additional issues: expenses relating to the release of employees as the segment adjusted to new sales volumes; lower margins due to the pricing pressures; and with the following 2008 impacts: elimination of the Ontario Capital Tax in Q1 2008 retroactive to January 1, 2007; and in Q1 2008, the segment s portion of the foreign exchange gain on the Hungarian Forints held in Escrow. 6

AUTOMOTIVE SALES AND CONTENT PER VEHICLE 1 Automotive sales by region in the following discussion are determined by the final vehicle production location and, as such, there are differences between these figures and those reported under the geographic segment disclosure, which are based primarily on the company s location of manufacturing and includes both automotive and non-automotive sales. These differences are the result of products being sold directly to one continent, and the final vehicle being assembled on another continent. It is necessary to show the sales based on the vehicle build location to provide accurate comparisons to the production vehicle units for each continent. As vehicle production continues to expand in Eastern Europe, the company decided to state European content per vehicle based on all European production effective March 2008. In prior years, content per vehicle was expressed in terms of Western European production only. The 2007 comparative figures have been adjusted accordingly. As vehicle production continues to expand in Asia Pacific, the company decided to state Asia Pacific content per vehicle based on all China, India, Japan, South Korea and Thailand production effective September 2009. In prior years, content per vehicle was expressed in terms of China, Japan and South Korea production only. The 2007 and 2008 comparative figures have been adjusted accordingly. In addition to automotive OEMs, Linamar sells powertrain parts to a mix of automotive and non-automotive manufacturers that service various industries such as power generation, construction equipment, marine and automotive. The final application of some parts sold to these manufacturers is not always clear, however the company estimates the automotive portion of the sales for inclusion in its content per vehicle calculations. In reviewing its calculation of content per vehicle in Q4 2009, the company identified certain sales estimates that required updating to better reflect the automotive sales in certain quarters of 2007, 2008 and 2009. These allocations have no effect on the company s financial statements for those periods. For informational purposes, the tables below present content per vehicle calculations with the automotive sales allocations for 2007, 2008 and 2009, updated where applicable. Refer to the Summary of Content per Vehicle by Quarter section of this analysis for a complete update for each quarter for 2007, 2008 and 2009. 2 Three Months Ended Year Ended December 31 December 31 North America 2009 2008 % Change 2009 2008 % Change Vehicle Production Units 2 2.62 2.85 (8.1%) 8.65 12.93 (33.1%) Automotive Sales 3 $ 337.6 $ 296.2 14.0% $ 1,126.8 $ 1,307.5 (13.8%) Content Per Vehicle $ 128.68 $ 104.08 23.6% $ 130.26 $ 101.13 28.8% Europe Vehicle Production Units 2 4.91 4.25 15.5% 17.18 21.30 (19.3%) Automotive Sales 3 $ 31.3 $ 34.5 (9.3%) $ 117.0 $ 149.8 (21.9%) Content Per Vehicle $ 6.37 $ 8.10 (21.4%) $ 6.81 $ 7.03 (3.1%) Asia Pacific Vehicle Production Units 2 8.24 6.09 35.3% 26.70 26.42 1.1% Automotive Sales 3 $ 19.5 $ 12.8 52.3% $ 55.1 $ 42.7 29.0% Content Per Vehicle $ 2.37 $ 2.09 13.4% $ 2.07 $ 1.62 27.8% 1 Measured as the amount of Linamar automotive sales dollars per vehicle, not including tooling sales. 2 2 Vehicle production units are shown in millions of units. North American vehicle production units used by Linamar for the determination of the company s content per vehicle include medium and heavy truck volumes. European and Asia Pacific vehicle production units exclude medium and heavy trucks and the off-road (heavy equipment) market. All volume information is as regularly reported by industry sources. 3 Automotive sales are shown in millions of dollars. 7

Three Months Ended Year Ended December 31 December 31 North America 2008 2007 % Change 2008 2007 % Change Vehicle Production Units 2 2.85 3.67 (22.3%) 12.93 15.47 (16.4%) Automotive Sales 3 $ 296.2 $ 334.0 (11.3%) $ 1,307.5 $ 1,445.4 (9.5%) Content Per Vehicle $ 104.08 $ 91.11 14.2% $ 101.13 $ 93.44 8.2% Europe Vehicle Production Units 2 4.25 5.56 (23.5%) 21.30 21.60 (1.4%) Automotive Sales 3 $ 34.5 $ 29.4 17.5% $ 149.8 $ 121.9 22.9% Content Per Vehicle $ 8.10 $ 5.28 53.3% $ 7.03 $ 5.64 24.6% Asia Pacific Vehicle Production Units 2 6.09 6.44 (5.4%) 26.42 24.45 8.1% Automotive Sales 3 $ 12.8 $ 3.9 227.5% $ 42.7 $ 10.2 319.0% Content Per Vehicle $ 2.09 $ 0.61 244.3% $ 1.62 $ 0.42 288.7% North American automotive sales increased $41.4 million or 14.0% to $337.6 million in a market which saw an overall decrease in vehicle production of 8.1%. As a result, content per vehicle in Q4 2009 increased by 23.6% to $128.68 from $104.08. European automotive sales decreased by $3.2 million or 9.3% to $31.3 million as compared to Q4 2008. Vehicle production volumes increased 15.5% and content per vehicle decreased 21.4% to $6.37 from $8.10 in Q4 2008. Content per vehicle for Asia Pacific continues at its anticipated low level as programs in the region ramp up. The content per vehicle increased by 13.4% to $2.37 from $2.09 in a market that increased 35.3% in terms of vehicle production for Q4 2009. SELECTED ANNUAL INFORMATION * The following table sets out selected financial data relating to the company s year ended December 31, 2009, 2008 and 2007 prepared in accordance with Canadian Generally Accepted Accounting Principles ( GAAP ) and reported in Canadian dollars. This financial data should be read in conjunction with the company s audited consolidated financial statements for these years: (in millions of dollars, except per share amounts) 2009 2008 2007 Sales $ 1,675.9 $ 2,257.0 $ 2,313.6 Earnings from Continuing Operations (46.9) 51.0 109.0 Discontinued Operations, net of Income Tax Effect - 0.4 0.3 Net Earnings (46.9) 70.4 109.3 Unusual Items * 48.0 20.3 (8.1) Net Earnings (Loss) - Adjusted * 1.1 90.7 101.2 Total Assets 1,572.4 1,841.6 1,813.8 Total Long-term Liabilities 309.3 352.8 420.4 Cash Dividends declared per share 0.12 0.24 0.24 Earnings Per Share From Continuing Operations: Basic $ (0.73) $ 0.76 $ 1.56 Diluted (0.73) 0.76 1.56 Earnings Per Share From Net Earnings: Basic $ (0.73) $ 1.05 $ 1.57 Diluted (0.73) 1.05 1.57 The unusual items in the above table were previously discussed in this Analysis for 2009 and 2008. The unusual items for 2007 consisted of the following items: * Unusual Items and Net Earnings (Loss) Adjusted are Non-GAAP measures and do not appear in the company s consolidated financial statements. These measure have been previously defined in the Overall Corporate Results section of this analysis. 8

On February 26, 2007, the company announced its public purchase offer for the balance of the outstanding shares of its consolidated subsidiary Linamar Hungary Nyrt. In 2007, the company recognized $3.0 million of exchange losses as a result of the funds that were held in Escrow. In May 2006, Linamar and the Ontario government announced an investment partnership in people and technology development, specifically in support of the development, adaptation and commercialization of cutting edge machining, manufacturing and environmental technologies in the production of powertrain and driveline components and systems (Ontario Automotive Investment Strategy OAIS ). On February 9, 2007 the company and the Ontario government formalized this investment agreement. During the third quarter of 2007, the company recognized government assistance from the OAIS program in the financial statements, of which $4.3 million after tax it related to 2005 and 2006. The one-time decrease recognized in the fourth quarter of 2007 from the reduction of Canadian tax rates ($6.8 million). Gross Margin Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 2009 2008 Sales $451.9 $476.7 $1,675.9 $2,257.0 Cost of sales 372.2 409.8 1,449.9 1,850.5 Amortization 48.2 44.3 178.3 176.9 Gross Margin $31.5 $22.6 $47.7 $229.6 Gross Margin Percentage 7.0% 4.7% 2.8% 10.2% Gross margin percentage increased to 7.0% in Q4 2009 from 4.7% for the same quarter in 2008. Cost of sales as a percentage of sales decreased to 82.4% for Q4 2009 compared to 86.0% for the same quarter of 2008. Cost of sales decreased as a percentage of sales during Q4 2009 as a result of the issues discussed earlier in this analysis such as: improved margins as production volumes increase while operating under a leaner cost structure and primarily in Powertrain/Driveline; net changes in key accounting estimates relating to general stores inventory and the useful life of certain capital assets; improved results in Asia from the sales growth; and with the following Q4 2008 impact: expenses relating to the release of employees as the segment adjusted to new sales volumes that did not recur in Q4 2009. These positive impacts were minimized by the issues as discussed earlier in this analysis such as: the under absorption of fixed costs due to the significant volume reductions in the global vehicle markets, the access equipment market and the agricultural equipment market; and inventory provisions taken as a result of continued low activity primarily in the access equipment market. Q4 2009 amortization increased to 10.7% of sales as compared to 9.3% in Q4 2008. Amortization for Q4 2009 adjusted for the change in estimate of the useful life of certain assets, as previously discussed in this analysis, would have been $42.0 million or 9.3% of sales. 2009 gross margin decreased to 2.8% from 10.2% in 2008. The annual gross margin was impacted by the same factors that impacted Q4 2009 but more significantly by: under absorption of fixed costs due to the significant volume reductions in global vehicle markets as well as declines in the access equipment market supplied by Skyjack; expenses relating to the release of employees as the company adjusted to new sales volumes; and the capital asset impairments taken in Q2 2009 relating to the impact of the General Motors and Chrysler bankruptcies. 9

Selling, General and Administration Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 2009 2008 Selling, general and administrative $23.7 $28.5 $98.2 $126.0 SG&A Percentage 5.2% 6.0% 5.9% 5.6% Selling, general and administrative ( SG&A ) costs decreased $4.8 million in Q4 2009 to $23.7 million when compared to Q4 2008. As a percentage of sales, SG&A costs were 5.2% in Q4 2009 and 6.0% in Q4 2008. The decrease in SG&A cost is primarily due to cost reductions related to wages, benefits and other fixed costs to adjust SG&A costs to new sales volumes in both the Powertrain/Driveline and Industrial segments. For 2009, SG&A decreased to $98.2 million from $126.0 million in 2008. The annual SG&A costs were impacted by the same factors that impacted Q4 2009. Expenses and Other Income Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 2009 2008 Operating Earnings (Loss) $7.8 ($5.9) ($50.5) $103.6 Other Income (Expense) Net Interest Expense (3.1) (5.4) (17.3) (19.5) Other Income 1.6 0.6 3.1 2.2 Provision for (Recovery of) Income Taxes (7.9) (1.0) (30.2) 28.4 Non-Controlling Interests 0.4 0.9 (0.7) (1.8) Goodwill Impairments - (5.1) (11.7) (5.1) Earnings (Loss) from Continuing Operations $14.6 ($13.9) ($46.9) $51.0 Discontinued Operations - 0.4-0.4 Extraordinary Items - 10.9-19.0 Net Earnings (Loss) $14.6 ($2.6) ($46.9) $70.4 Interest Interest on long-term debt during Q4 2009 decreased $0.6 million over Q4 2008, to $3.7 million. Interest on longterm debt in the quarter was: decreased due to the June 2009 repayment of the $80 million USD Series A Private Placement Notes; decreased due to the maturity of the $60 million interest rate swap in Q4 2009; increased due to the conversion of short-term debt through interest rate swaps to long-term debt in Q4 2008; and increased due to the ineffective portion of interest rate swap entered into during Q4 2008. These factors resulted in the consolidated effective interest rate for Q4 2009 increasing to 6.3% as compared to 5.2% in Q4 2008. The ineffective portion of the interest rate swap was the largest contributor to the increase in the effective rate. For 2009, interest on long-term debt increased by $0.9 million over 2008. 2009 was impacted by the same factors that impacted the quarter but the conversion of short-term debt through interest rate swap to long-term debt in Q4 2008 had more of an impact than the other factors. The consolidated effective interest rate for 2009 increased to 5.4% as compared to 5.0% in 2008. The ineffective portion of the interest rate swap was a large contributor to the annual increase in the effective rate. 10

Interest expense from short-term borrowings for Q4 2009 is lower by $0.8 million compared to the same period in 2008, and is lower for the year by $3.3 million compared to 2008. Interest on short-term borrowings in Q4 and 2009 were: decreased due to the conversion of short-term debt through interest rate swaps to long term debt in Q4 2008; and decreased due to lower interest rates. Provision for Income Taxes The effective tax rate for Q4 2009 was negative 124.7%, an increase from the negative 9.7% rate in the same quarter of 2008. This reduction is related primarily to the Ontario corporate income tax rate reduction announced in the March 2009 Ontario budget and substantively enacted into law on December 15, 2009. Also of significance was the utilization of previously unrecognized losses in Q4 2009, relative to 2008, specifically in the UK and Asia. For 2009, the effective tax rate was 46.7%, an increase from 32.9% in 2008. In addition to the two items discussed above, this year over year increase is also attributable to the mix of profits recognized at lower foreign tax rates coupled with losses recognized at the higher Canadian and U.S. income tax rate. Non-Controlling Interests Non-Controlling Interests decreased by $0.5 million from a $0.9 million gain in Q4 2008 to a $0.4 million gain in the same quarter of 2009. Goodwill Impairments In the prior year, the company determined that goodwill could potentially be impaired with respect to its Hungary and McLaren reporting units. With respect to Hungary, the Company made a reasonable estimate of the goodwill impairment by determining the implied fair value of goodwill in the same manner as if the Company had acquired the reporting unit at year end. Based on this it was determined that the goodwill attributable to this reporting unit was fully impaired and as a result a change of $5.1 million was recorded against the goodwill in Q4 2008. While it was determined that the carrying amount of the McLaren reporting unit exceeded its fair value, the impairment test was not completed and a reasonable estimate of the impairment, if any, could not be determined in Q4 2008. The Company completed the impairment test of the McLaren reporting unit during Q1 2009 and it was determined that the goodwill attributable to this reporting unit was fully impaired. As a result, an impairment charge of $11.7 million was recorded in Q1 2009. Extraordinary Gain During the third quarter of 2008 ( Q3 2008 ), Linamar purchased a new automotive manufacturing facility, a former Visteon plant, in Swansea, Wales, United Kingdom (UK), which resulted in the company recognizing an extraordinary gain. The purchase price allocation method used for accounting, determined fair value of assets in excess of the purchase price. This difference, to the extent it can not be eliminated by allocating it as a reduction of the amounts that otherwise would be assigned to the acquired assets, is required to be reported as an extraordinary gain under Canadian GAAP. The purchase price accounting for this acquisition was finalized in the fourth quarter of 2008. 11

Shareholders Equity Book value per share 1 decreased to $12.48 per share at December 31, 2009, as compared to $13.57 per share at December 31, 2008. During the year no options expired unexercised, and no options were exercised. On August 26, 2009, 999,999 options were granted with an average exercise price of $12.89 per option. 333,333 of the options vested 50% on date of grant with the remaining vesting on the next anniversary date of grant. The remaining 666,666 options vested 10% on the date of grant with additional 10% vesting on each of the next 9 consecutive anniversary dates of grant. All 999,999 options were outstanding at the end of the quarter. OUTSTANDING SHARE DATA Linamar is authorized to issue an unlimited number of common shares, of which 64,701,876 common shares were outstanding as of March 4, 2010. As of March 4, 2010, there were 999,999 options outstanding under Linamar s share option plan. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS The following table sets forth unaudited information for each of the eight quarters ended March 31, 2008 through December 31, 2009. This information has been derived from our unaudited consolidated financial statements which, in the opinion of management, have been prepared on a basis consistent with the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation of our financial position and results of operations for those periods. (in millions of dollars, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, except per share figures) 2008 2008 2008 2008 2009 2009 2009 2009 Sales $614.5 $625.4 $540.4 $476.7 $424.9 $378.0 $421.1 $451.9 Earnings (Loss) from Continuing Operations 29.5 32.0 3.4 (13.9) (12.6) (48.4) (0.5) 14.6 Net Earnings (Loss) 29.5 32.0 11.5 (2.6) (12.6) (48.4) (0.5) 14.6 Earnings (Loss) per Share from Continuing Operations: Basic 0.43 0.48 0.05 (0.21) (0.19) (0.75) (0.01) 0.22 Diluted 0.43 0.48 0.05 (0.21) (0.19) (0.75) (0.01) 0.22 Net Earnings (Loss) per Share: Basic 0.43 0.48 0.17 (0.04) (0.19) (0.75) (0.01) 0.22 Diluted 0.43 0.48 0.17 (0.04) (0.19) (0.75) (0.01) 0.22 The quarterly results of the company are impacted by the seasonality of certain operational units. Earnings in the second quarter are generally positively impacted by the high selling season for both the aerial work platform, other industrial and agricultural businesses. The third and fourth quarters are generally negatively impacted by the scheduled shutdowns at automotive customers. The company takes advantage of shutdowns for maintenance activities that would otherwise disrupt normal production schedules. The purchase during Q3 2008 of the new automotive manufacturing facility, a former Visteon plant, in Swansea, Wales, United Kingdom (UK) resulted in the company recognizing an extraordinary gain in both the third and fourth quarters of 2008. The purchase price allocation method used for accounting, determined fair value of assets in excess of the purchase price. This difference, to the extent it can not be eliminated by allocating it as a reduction of the amounts that otherwise would be assigned to the acquired assets, is required to be reported as an extraordinary gain under Canadian GAAP. The purchase price accounting for this acquisition was finalized in the fourth quarter of 2008. 1 Book Value Per Share, as used by the chief operating decision makers and management, indicates the value of the company based on the carrying value of the company s net assets. For more information refer to the Non-GAAP Measures section of this MD&A. 12

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash Flows Three Months Ended Year Ended December 31 December 31 ( in millions of dollars) 2009 2008 2009 2008 Cash provided by (used in): Operating Activities $ 72.5 $ 107.0 $ 298.2 $ 258.9 Financing Activities (61.9) (21.5) (166.0) (90.4) Investing Activities (30.2) (44.5) (130.6) (190.7) Effect of Translation Adjustment (0.8) - (3.8) 2.0 Net Increase/(Decrease) in Cash Position (20.4) 41.0 (2.2) (20.2) Cash Position Beginning of Period 101.7 42.5 83.5 103.7 Cash Position End of Period $ 81.3 $ 83.5 $ 81.3 $ 83.5 Comprised of: Cash $ 98.0 $ 89.5 $ 98.0 $ 89.5 Unpresented Cheques (16.7) (6.0) (16.7) (6.0) $ 81.3 $ 83.5 $ 81.3 $ 83.5 Linamar s cash position (net of unpresented cheques) at December 31, 2009 was $81.3 million, a decrease of $2.2 million from the same quarter of 2008. Cash provided by operating activities was $72.5 million, $34.5 million less than was provided in Q4 2008. In Q4 2008, Linamar started its non-cash working capital reduction plans. Q4 2008 had a larger reduction in non-cash working capital than Q4 2009 as it was the beginning of the initiative. For 2009, cash provided by operating activities was $298.2 million, $39.3 million more than was provided in 2008. This is the result of a full year s impact of the non-cash working capital reduction initiatives. During the quarter, financing activities used $61.9 million and for 2009 financing activities used $166.0 million. In Q2 2009, the company prepaid the Series A Private Placement Notes in the principal amount of $80 million USD ($104.4 million CAD) that were to mature in October 2009. In Q4 2009, the $60 million interest rate swap that was entered into in November 2007 matured which resulted in the moving of the debt from long term debt to short term debt. 2009 investing activities used $30.2 million in Q4 2009 and $130.6 million in 2009 mainly for the purchase of property, plant and equipment. The company significantly reduced capital expenditures by 33.6% in Q4 and by 28.1% for the year. This reduction was achieved by delaying capital expenditures based on the automotive volume reductions and by reutilizing existing equipment from programs that had excess capacity. Operating Activities Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 2009 2008 Earnings (Loss) from continuing operations $ 14.6 $ (13.9) $ (46.9) $ 51.0 Non-cash charges to earnings 45.4 65.9 217.5 216.2 $ 60.0 $ 52.0 $ 170.6 $ 267.2 Changes in non-cash working capital 12.5 53.3 127.6 (9.5) Cash flow continuing operations $ 72.5 $ 105.3 $ 298.2 $ 257.7 Cash flow discontinued operations - 1.7-1.2 Cash provided (used) from operating activities $ 72.5 $ 107.0 $ 298.2 $ 258.9 Cash provided by continuing operations before the effect of changes in non-cash working capital was a 15.4% increase to $60.0 million in Q4 2009 compared to $52.0 million in Q4 2008. On an annual basis, cash provided by continuing operations before the effect of changes in non-cash working capital decreased 36.2% over the same period of 2008. Non-cash working capital for Q4 decreased $12.5 million, compared to a $53.3 million decrease in Q4 2008. Annual non-cash working capital decreased $127.6 million, compared to a $9.5 million increase in 2008. 13

Financing Activities Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 2009 2008 Proceeds from (repayments of) short-term bank borrowings $ 4.2 $ (69.9) $ 15.3 $ (63.9) Proceeds from long-term debt - 59.6-62.1 Repayment of long-term debt (61.0) (1.2) (170.7) (5.4) Repurchase of shares - (3.9) - (66.2) Decrease/(Increase) in long-term receivables (3.2) (2.2) (2.8) (1.0) Dividends to shareholders (1.9) (3.9) (7.8) (16.0) Cash provided (used) from financing activities $ (61.9) $ (21.5) $ (166.0) $ (90.4) Financing activities for Q4 2009 used $61.9 million of cash compared to $21.5 million used in Q4 2008. Net Debt 1 at December 31, 2009 was $222.3 million, an improvement of $161.7 million over levels at December 31, 2008 of $384.0 million. Effective November 9, 2006, the company renewed its five-year revolving credit facility in the amount of $520 million. This facility will mature on November 9, 2011. At the end of Q4 2009, $263.1 million in credit was available under the facility. In Q2 2009, the company prepaid the Series A Private Placement Notes in the principal amount of $80 million USD ($104.4 million CAD) that were to mature in October 2009. Given the condition of financial markets at the time, the Private Placement Notes were refinanced using the syndicated revolving credit facility. In Q4 2009, the company repaid the $60 million interest rate swap that was entered into in November 2007 and that matured in October 2009. In 2008, the company continued its dividend policy with payments made quarterly at a rate of $0.06 per share. In the fourth quarter of 2008, the company amended the dividend policy with payments to be made quarterly at a rate of $0.03 per share with respect to dividends payable on or after April 15, 2009. Long-term receivables regularly arise in the industrial products marketplace. In order to manage the associated cash flow, the company periodically securitizes portions of the receivable balance. During Q4 2009, the company s long-term receivables increased $3.2 million and increased $2.8 million for the year. Investing Activities Three Months Ended Year Ended December 31 December 31 (in millions of dollars) 2009 2008 2009 2008 Payments for purchase of property, plant and equipment $ (30.4) $ (45.8) $ (130.7) $ (181.8) Proceeds from disposal of property, plant and equipment 0.2 1.4 1.3 4.7 Business acquisitions - - (1.2) (11.8) Extraordinary Item - (0.1) - (1.8) Cash used for investing activities $ (30.2) $ (44.5) $ (130.6) $ (190.7) Cash spent on investing activities for Q4 was $30.2 million while during Q4 2008 the total spent was $44.5 million. For 2009, $130.6 million was spent on investing activities compared to $190.7 million in 2008. At December 31, 2009, outstanding commitments for capital expenditures under purchase orders and contracts amounted to $102.7 million which relates to the purchase of manufacturing equipment and buildings. All of these commitments are due within the next twelve months. 1 Net Debt is defined as short-term bank borrowings, current portion of long-term debt and long-term debt net of cash. 14

Financing Resources At December 31, 2009 cash on hand was $98.0 million, with unpresented cheques and short-term bank borrowings of $112.7 million. At December 31, 2009, the company s syndicated revolving facility had available credit of $263.1 million. On April 16, 2009 the company withdrew $100 million CAD from the syndicated revolving credit facility and was held in short-term investments until June 5, 2009, at which time, the company used these funds to repay the Series A Private Placement Notes that were due in October 2009. Contractual Obligations 1 The following table summarizes contractual obligations by category and the associated payments for the next five years. Payment Due by Period (in millions of dollars) Total 2010 2011 2012 2013 2014 Thereafter Long-Term Debt Principal, Excluding Capital Leases $214.0 $ - $99.5 $ - $62.3 $52.2 $ - Capital Lease Obligations 1 10.8 5.4 2.4 1.4 1.6 - - Operating Leases 26.6 7.4 5.2 4.2 3.4 2.6 3.8 Purchase Obligations 2 102.7 102.7 - - - - - Total Contractual Obligations $354.1 $115.5 $107.1 $5.6 $67.3 $54.8 $3.8 Foreign Currency Activities Linamar pursues a strategy of balancing its foreign currency cash flows, to the largest extent possible, in each region in which it operates. The company s foreign currency outflows for the purchases of materials and capital equipment denominated in foreign currencies are naturally hedged when contracts to sell products are denominated in those same foreign currencies. To manage the residual exposure, Linamar employs hedging programs, where rate-appropriate, through the use of forward exchange contracts. The contracts are purchased based on the projected net foreign cash flows from operations. The amount and timing of forward contracts is dependent upon a number of factors, including anticipated production delivery schedules, anticipated customer payment dates, anticipated foreign currency costs, and expectations with respect to future foreign exchange rates. Linamar is exposed to credit risk from potential default by counterparties on its foreign exchange contracts and attempts to mitigate this risk by dealing only with relationship banks in our credit facility. Despite these measures, significant long-term movements in relative currency values could affect the company s results of operations. Linamar does not hedge the business activities of its self-sustaining foreign subsidiaries and, accordingly, results of operations could be further affected by a significant change in the relative values of the Canadian dollar, U.S. dollar, Euro, British pound, Hungarian forint and Mexican peso. At December 31, 2009, the company was committed to a series of forward contracts to sell U.S. dollars. These forward contracts qualify for accounting as a cash flow hedge and the fair value of unrealized gains and losses are included in other comprehensive earnings, net of taxes. The gains and losses will be recognized in net earnings in the same period as the transaction which generates the cash flows. The company was also committed to a long-dated forward contract to buy U.S. dollars. This forward exchange contract qualifies for accounting as a fair value hedge and any fair value unrealized gains and losses are included in net earnings. Please see Note 7 of the consolidated financial statements for the year ended December 31, 2009 which are hereby incorporated by reference herein. 1 Capital Lease Obligations includes the interest component in accordance with the definition of minimum lease payments under GAAP. 2 Purchase Obligations means an agreement to purchase goods or services that is enforceable and legally binding that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. 15

Off Balance Sheet Arrangements The company leases transport trucks and trailers through its subsidiaries Linamar Transportation Inc. and Linamar Transportation USA, Inc. The company currently leases approximately 88 trucks and 193 trailers. The amounts due under these operating leases are reflected under the heading Operating Leases in the table set out in the Contractual Obligations section of this document. Should the entire arrangement be terminated, the company would be responsible for the balance of the amount owing under the leases. The company also has various operating leases for office equipment, computers, fork trucks, and other such items. Please see Note 18 of the consolidated financial statements for the year ended December 31, 2009, which are hereby incorporated by reference herein. Under a portfolio purchase agreement signed in 2004, the company regularly sells certain long-term receivables. Although title is transferred and no entitlement or obligated repurchase agreement is in place before maturity, the company remains exposed to certain risks of default on the amount of proceeds from the receivables under securitization, less recourse in the form of the underlying physical asset. Under the agreement, receivables are sold on a fully serviced basis so that the company continues to administer the collection of such receivables. The company receives no fee for administration of the collection of such receivables. Guarantees Linamar is a party to certain financial guarantees and contingent liabilities as discussed in Notes 3, 18, 19, and 21 of the consolidated financial statements for the year ended December 31, 2009 which are hereby incorporated by reference herein. Transactions with Related Parties Included in the costs of property, plant and equipment is the construction of buildings, building additions and building improvements in the aggregate amount of $0.9 million (2008 - $12.6 million) paid to a company owned by the spouse of an officer and director. Included in sales is $0.05 million (2008 - $0.03 million) related to equipment and services sold to the same company. Included in cost of sales is maintenance costs of $0.3 million (2008 - $0.8 million) paid to the same company. The maintenance and construction costs represent general contracting and construction activities related to plant construction, improvements, additions and maintenance for a number of facilities. The company has designed an independent process to ensure building construction and improvements are transacted at fair value. Other transactions have been recorded at the exchange amount. CURRENT AND PROPOSED TRANSACTIONS On January 30, 2009, Linamar Corporation completed the acquisition of its joint venture partner s interest in Eagle Manufacturing LLC, a machining facility in Florence, Kentucky. Prior to this, Linamar held a 60% interest in the joint venture. The purchase price allocation was finalized in the third quarter of 2009. RISK MANAGEMENT Operational Risk DEPENDENCE ON CERTAIN CUSTOMERS The company s Powertrain/Driveline segment is a world leader in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle markets. As a result, the company typically has a limited number of customers that individually account for more than 10% of its consolidated revenues or receivables at any given time. The sales cycle is extended longer than one year for 16