DURA AUTOMOTIVE SYSTEMS INC - 10-K Annual Report

Back to GetFilings.com

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2002

COMMISSION FILE NUMBER: 0-21139
---------------------

DURA AUTOMOTIVE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE 38-3185711
(State of Incorporation) (I.R.S. Employer Identification No.)

2791 RESEARCH DRIVE 48309
ROCHESTER HILLS, MICHIGAN (Zip Code)
(Address of Principal Executive Offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(248) 299-7500
---------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
---------------------
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]

As of March 3, 2003, 16,508,198 shares of Class A Common Stock of the
Registrant were outstanding. In addition, 1,761,150 shares of Class B Common
Stock of the Registrant were outstanding at March 3, 2003. The aggregate market
value of the Class A Common Stock of the Registrant as of June 30, 2002 (based
upon the last reported sale price of the Common Stock at that date by the Nasdaq
National Market System), excluding shares owned beneficially by affiliates, was
approximately $339,335,063.

Information required by Items 10, 11, 12 and 13 of Part III of this Annual
Report on Form 10-K incorporates by reference information (to the extent
specific sections are referred to herein) from the Registrant's Proxy Statement
for its annual meeting to be held May 20, 2003 (the "2003 Proxy Statement").
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

DURA AUTOMOTIVE SYSTEMS, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

2

PART I

ITEM 1. BUSINESS

(A) GENERAL DEVELOPMENT OF BUSINESS

GENERAL

Dura Automotive Systems, Inc. (a Delaware Corporation) and its subsidiaries
(collectively referred to as "Dura") is the world's largest independent designer
and manufacturer of driver control systems for the global automotive industry.
Dura is also a leading global supplier of seating control systems, engineered
assemblies, structural door modules and integrated glass systems.

Dura sells its products to every major North American, Japanese and
European automotive original equipment manufacturer ("OEM"). Dura has 57
manufacturing and product development facilities located in the United States,
Brazil, Canada, Czech Republic, France, Germany, Mexico, Portugal, Slovakia,
Spain and the United Kingdom. Dura also has a presence in Japan, India and China
through alliances, joint ventures or technical licenses.

Over the past ten years, the automotive components supply industry has
undergone significant consolidation and globalization as OEMs reduced their
supplier base. In order to lower costs and improve quality, OEMs are awarding
sole-source contracts to full-service suppliers who are able to supply larger
portions of a vehicle on a global basis. OEMs' criteria for supplier selection
include not only cost, quality and responsiveness, but also full-service design,
engineering and program management capabilities. OEMs are seeking suppliers
capable of providing complete systems and modules rather than suppliers who only
provide separate component parts. In addition, they require suppliers to have
the capability to design and manufacture their products in multiple geographic
markets.

In response to these trends, over the past several years Dura has pursued a
disciplined acquisition strategy that has provided a wider variety of product,
manufacturing and technical capabilities. Dura has broadened its geographic
coverage and strengthened its ability to supply products on a global basis. As a
full-service supplier with strong OEM relationships, Dura expects to continue to
benefit from the supply base consolidation trends.

Approximately 67 percent of Dura's 2002 revenues were generated from sales
to OEMs manufacturing vehicles in North America, with its major customers being
Ford, GM, DaimlerChrysler, Toyota, Honda, Nissan/Renault and Fleetwood. Dura
manufactures products for many of the most popular car, light truck, sport
utility vehicles and recreation vehicles sold in North America including: the
Ford F-Series pickup, Explorer SUV and Taurus, the GM Silverado/Sierra pickup,
Trailblazer and Cavalier, the Dodge Ram pickup, the Toyota Camry, and the Honda
Accord and Civic. Approximately 32 percent of Dura's 2002 revenues were
generated from sales to OEMs manufacturing vehicles in Europe, including
Volkswagen, Mercedes, PSA (Peugeot and Citroen), BMW and Renault. Dura is
generally the sole supplier of the parts it sells to OEMs and will continue to
supply parts for the life of the model, which usually ranges from three to seven
years.

INDUSTRY TRENDS

Dura's performance and growth is directly related to certain trends within
the automotive market. The consolidation of the component supply industry
includes the growth of system sourcing and the increase in global sourcing.

OEM Supplier Consolidation. During the 1990s and continuing into 2003,
OEMs have continued to reduce their supplier base, awarding sole-source
contracts to full-service suppliers. As a result, OEMs currently work with a
smaller number of suppliers each of which supplies a greater proportion of the
total vehicle. Suppliers with sufficient size, geographic scope and financial
resources can best meet these requirements. This environment provides an
opportunity to grow by obtaining business previously provided by other non
full-service suppliers and by acquiring suppliers that further enhance product,
manufacturing and service capabilities. OEMs rigorously evaluate suppliers on
the basis of product quality, cost control and reliability of delivery, product
design capability, financial strength, new technology implementation, facilities
3

and overall management. Suppliers that obtain superior ratings are considered
for new business. These supplier policies resulted in significant consolidation
of component suppliers in certain segments, Dura believes that opportunities
exist for further consolidation within the vehicle component supply industry.
This is particularly true in Europe, which has many suppliers with relatively
small market shares.

System Sourcing. OEMs increasingly seek suppliers capable of manufacturing
complete systems of a vehicle rather than suppliers who only produce individual
parts that comprise a system. By outsourcing complete systems, OEMs are able to
reduce their costs associated with the design and integration of different
components and improve quality by enabling their suppliers to assemble and test
major portions of the vehicle prior to beginning production. Dura has
capitalized on this trend by designing its mechanisms and cable systems to
function together and by providing mechanism and cable designs that are
integrated into the design of the entire vehicle.

Module Sourcing of Interior Products. As OEMs continually seek to reduce
their costs and asset base, they are increasingly relying on suppliers to
produce integrated modules. Modules, which differ from systems, are
sub-assemblies at a specific location in the vehicle that incorporates
components from various functional systems and are supplied to the OEM already
assembled. A system refers to a specific function within the vehicle that
incorporates components, which may be dispersed throughout the vehicle. Interior
modules or complete interiors can include the cockpit, seats, doors, door trim,
overhead, electronics and other components. Often the modules are supplied to
OEM factories on a just-in-time basis, which involves the complex sequencing of
discrete modules with specific vehicle build schedules. Suppliers with
in-line-vehicle-sequencing ("ILVS") capabilities will have access to these
contract opportunities. Dura continues to invest in and expand its ILVS
capabilities for products such as complex glass modules and exterior trim
packages.

While current OEM purchasing strategies do not allow for single outsourcing
of interior mechanical assemblies, Dura believes that the trend toward module
outsourcing will change this environment. As a result, the buying power of
emerging interior suppliers will increase rapidly as sourcing responsibility is
delegated through modular outsourcing. This anticipated change in outsourcing
strategies will present Dura with significant opportunities to provide "one stop
shopping" of complete interior mechanisms.

Global Sourcing. Regions such as Asia, Latin America and Eastern Europe
are expected to experience significant growth in vehicle demand over the next
ten years. OEMs are positioning themselves to reach these emerging markets in a
cost-effective manner by seeking to design and produce "world cars" which can be
designed in one vehicle center but produced and sold in many different
geographic markets, thereby allowing OEMs to reduce design costs and take full
advantage of low-cost manufacturing locations. OEMs increasingly are requiring
their suppliers to have the capability to design and manufacture their products
in multiple geographic markets.

Dura has approximately 30 manufacturing facilities outside the United
States, including locations in Brazil, Canada, Czech Republic, France, Germany,
Mexico, Portugal, Slovakia, Spain and the United Kingdom. In addition, Dura has
formed strategic alliances, which range from investments in other manufacturers
to informal understandings, which are designed to provide Dura access to new
customers and geographic markets including Japan, India and China, and also the
capability of offering complementary products. Dura has technical design and
development capabilities in each of the regions that it has manufacturing
facilities. Dura has also relocated technical personnel resources to locations
in which OEMs will develop "world cars." By participating in the design of these
vehicles and through implementation of manufacturing processes near the point of
use, Dura believes it can continue to expand on its international presence.

Full Service Supplier Responsibilities. Suppliers are becoming more
integrally involved in the vehicle design process and have begun to assume more
system integration functions. As a result, OEMs are increasingly looking to
their suppliers for contribution when faced with product recalls, product
liability or warranty claims. In addition, with the competitive nature of the
automotive industry there is substantial and continuing pressure from the OEMs
to reduce costs, including the costs of products purchased from outside
suppliers. This forces suppliers to generate sufficient cost savings to offset
these price reductions.

4

Utilization of Light-Weight Materials. Concern over the impact of the
automotive industry on the environment has been growing resulting in European
and U.S. regulations of vehicle emissions becoming more stringent. The
automotive manufacturer's need to improve overall fuel economy in vehicles has
led to the trend toward minimizing vehicle weight. The use of light-weight
materials such as aluminum is on the rise and heavier traditional materials such
as steel and iron are being replaced whenever possible.

BUSINESS STRATEGY

Dura's primary business objective is to capitalize on the consolidation,
globalization and system sourcing trends in the automotive supply and specialty
vehicle industries in order to be the leading provider of the systems it
supplies to OEMs worldwide. The key elements of Dura's operating and growth
strategies are as follows:

OPERATING STRATEGY

Continuous Operational Improvements. Dura continuously implements
strategic initiatives designed to improve product quality and reduce
manufacturing costs through the introduction of cellular manufacturing methods,
consolidation of manufacturing facilities, improvement in inventory management
and the reduction of waste. Manufacturing flexibility enables Dura's facilities
to produce systems in a cost-effective manner and strengthens Dura's ability to
meet the just-in-time and in-line sequence delivery schedules of many of its
customers. Dura utilizes a common set of key metrics used to measure actual
performance in comparison to standards and goals.

Capitalize on Opportunities for Operating Synergies. Dura's acquisitions
typically provide it with a number of opportunities to reduce costs and improve
operational efficiency. For example, the similarity of the manufacturing
processes and technical capabilities of Dura, and companies that Dura has
acquired, has resulted in significant cost savings and operating synergies.
Immediately following the execution of acquisition agreements, Dura establishes
cross-functional teams, which identify synergies expected to be realized from
consolidation of the design, engineering and administrative functions, plant
restructuring and realignment and coordination of raw material purchases. The
cross-functional teams formulate an overall integration plan.

Foster a Decentralized, Participatory Culture. Dura's decentralized
approach to managing its manufacturing facilities encourages decision making and
employee participation in areas such as manufacturing processes and customer
service. This "team" approach fosters a unified culture and enhances
communication of strategic direction and goals, while facilitating a greater
success rate in reaching and exceeding its objectives. Dura provides
ownership-related incentives to not only its managers, but also to its salaried
and hourly employees, through grants under Dura's stock option plan and
participation in the employee stock discount purchase plan.

GROWTH STRATEGY

Historically, Dura's growth strategy has been substantially by way of
acquisition. Dura has completed several strategic acquisitions since inception
that have increased Dura's product and customer base, as well as, increased its
global presence. Presently, Dura is focused on organic growth. Dura is
strategically reviewing its businesses, looking to invest in areas with the
opportunity for greatest return. This will include smart investments in high
technology products and processes. For those businesses that are more
commodity-like, Dura intends to take a low cost producer strategy.

Focus on Systems. OEMs are increasingly seeking suppliers capable of
providing complete systems rather than suppliers who only provide separate
component parts. A key element of Dura's growth strategy has been to add to its
ability to provide complete systems to its OEM customers.

Increase Platform and Customer Penetration. A key element of Dura's
strategy is to increase volume by adding new customers and to strengthen its
existing customer relationships by broadening its range of products through
internal development efforts and fill-in acquisitions. Dura has also obtained
firm orders on a number of new platforms for the years 2003 through 2005 for
incremental new business in North America and Europe.

5

Dura believes that its geographic diversity and product depth strengthen its
ability to pursue new vehicle platform contracts in the future.

Extend Global Manufacturing Reach. In 2002, over 70 percent of total
worldwide passenger vehicle production occurred outside North America. To meet
OEMs' increasing preference for suppliers with global capabilities, Dura has
expanded its manufacturing presence into new geographic markets through
strategic acquisitions, alliances and opening new manufacturing facilities in
Slovakia and the Czech Republic. In addition, this strategy has provided Dura
the capability to design, develop and produce components and systems for the
growing market of global platforms or world cars. Increased international sales
will also allow Dura to mitigate the effects of cyclical downturns in a given
geographic region and further diversify its OEM customer base.

COMPANY HISTORY

Dura Automotive Systems, Inc. is a holding company whose predecessor was
formed by Hidden Creek Industries ("HCI"), Onex DHC LLC (together with its
affiliates, "Onex"), J2R Corporation ("J2R") and certain others for the purpose
of acquiring the Dura Automotive Hardware and Mechanical Components divisions of
Wickes Manufacturing Company ("Wickes") in November 1990. In August 1994, Dura
entered into a transaction that combined the operations of Dura's operating
subsidiary, Dura Operating Corp. ("Dura"), with the automotive parking brake and
cable business and light duty cable business (the "Brake and Cable Business") of
Alkin Co. ("Alkin").

Since the completion of the acquisition of the Brake and Cable Business,
Dura has successfully completed the following strategic acquisitions, joint
ventures and divestitures:

- In August 1996, Dura formed a joint venture with Excel Industries, Inc.
("Excel") to participate equally in the acquisition of a 25.5 percent
interest in Pollone S.A. ("Pollone"), a manufacturer of automotive
components and mechanical assemblies headquartered in Sao Paulo, Brazil,
for $5 million in total. The joint venture also loaned Pollone an
additional $10.5 million pursuant to notes which were convertible into
equity of Pollone at the joint venture's option. In January 1998, the
joint venture increased its interest in Pollone to 51.0 percent through
the conversion of certain of these notes. As a result of Dura's March
1999 acquisition of Excel, Dura began consolidating Pollone's financial
results. In January 2000, Dura acquired the remaining ownership interest
in Pollone. This investment provided Dura with a manufacturing presence
in South America.

- In October 1996, Dura acquired the parking brake business of Rockwell
Light Vehicle Systems France S.A. for approximately $3.8 million. The
parking brake business, which was operated from a facility in Cluses,
France, added a manufacturing presence in Europe and PSA (Peugeot and
Citroen) and Renault as customers.

- In December 1996, Dura acquired KPI Automotive Group ("KPI") from Sparton
Corporation for approximately $78.8 million. KPI manufactures shifter
systems, parking brake mechanisms, brake pedals and underbody tire
carriers for the North American automotive industry from facilities in
Indiana and Michigan. The acquisition added significant market
penetration in console-based shifter systems, increased platform content
and added a significant new product line in underbody tire carriers.

- In January 1997, Dura acquired the VOFA Group ("VOFA") for approximately
$38.0 million in cash and assumed indebtedness, plus contingent payments.
VOFA designs and manufactures shifter cables, brake cables and other
light duty cables for the European automotive and industrial markets from
facilities in Dusseldorf, Gehren and Daun, Germany and Barcelona, Spain.
The acquisition added new customers such as Mercedes, Volkswagen and BMW,
providing a strong European position. This established Dura's cable
manufacturing capabilities globally.

- In May 1997, Dura acquired the automotive parking brake business from
Excel for approximately $2.9 million. The acquisition increased Dura's
penetration of the parking brake market and expanded Dura's relationship
with DaimlerChrysler.

6

- In August 1997, Dura acquired GT Automotive Systems, Inc. ("GT
Automotive") for approximately $45.0 million in cash and assumed
indebtedness, plus contingent payments. GT Automotive designs and
manufactures column-mounted shifter systems and turn signal and tilt
lever assemblies for North American OEMs. At the time of the acquisition,
GT Automotive had a substantial share of the North American column-based
shifter market. The acquisition of GT Automotive, combined with Dura's
existing position in console-based shifter systems, increased Dura's
share of the North American shifter market to the leading position. In
addition, the acquisition added Nissan as a customer.

- In December 1997, Dura purchased approximately 19 percent of the
outstanding common stock of Thixotech Inc. ("Thixotech") for
approximately $0.5 million. Dura subsequently invested a total of $8.5
million in Thixotech. In October 2001, after management identified the
business as non-core to Dura's strategy for the future, Dura successfully
completed the sale of Thixotech for total proceeds of approximately $4.1
million. Dura recorded a non-cash charge related to this transaction of
approximately $5.2 million in the fourth quarter of 2001.

- In December 1997, Dura acquired REOM Industries ("REOM") for
approximately $3.7 million. REOM, located in Australia, generated
approximately $10.0 million of revenue on an annualized basis and
produced parking brakes, jacks, pedal assemblies, hinges and latches for
the automotive industry. Their largest customers included Ford Motor
Company, Holden Limited, and Delphi Automotive Systems. In August 2001,
after management identified the business as non-core to Dura's strategy
for the future, Dura divested this operation resulting in a charge of
approximately $7.5 million in the third quarter of 2001. Approximately
$2.0 million of this charge was cash related.

- In March 1998, Dura acquired Universal Tool and Stamping Co., Inc., a
manufacturer of jacks for the North American automotive industry, for
approximately $19.5 million. Universal had 1997 revenues of approximately
$37.0 million. Universal's customers include General Motors, Ford and
Honda. The acquisition provided Dura with a market presence for jacks in
North America and added Honda as a significant new customer.

- In April 1998, Dura acquired all of the outstanding equity interests of
Trident Automotive plc ("Trident"). Trident had revenues of approximately
$300 million in 1997, of which 69 percent was derived from sales of cable
assemblies, principally to the automotive OEM market, and the balance
from door handle assemblies, lighting and other products. Approximately
68 percent of Trident's revenues were generated in North America, 27
percent in Europe and the remainder in Latin America. Trident had
manufacturing and technical facilities in Michigan, Tennessee, Arkansas,
Canada, the United Kingdom, Germany, France and Brazil. Pursuant to the
terms of the agreement, Dura acquired all of the outstanding equity
interests of Trident for total consideration of $93.2 million in cash. In
addition, Dura assumed $75.0 million of Trident's outstanding 10 percent
Senior Subordinated Notes due 2005. Dura also repaid Trident's
outstanding senior indebtedness of approximately $53.0 million.

- In August 1998, Dura acquired the hinge business from Tower Automotive,
Inc. ("Hinge Business") for approximately $37.3 million. The Hinge
Business had annual revenues of approximately $50.0 million and
manufactures automotive hood and deck lid hinges.

- In March 1999, Dura acquired Excel for approximately $155.5 million in
cash, 4.9 million shares of Dura Class A Common Stock and the assumption
of $164.3 million in indebtedness. Excel designs and manufactures window,
door and seating systems for the automotive, recreation vehicle, heavy
truck and mass transit markets and appliances and hardware for the
recreation vehicle market. Excel also manufactures decorative trim for
the automotive market and complex injection molded parts for the consumer
and industrial markets. Revenues for 1998 were approximately $1.1
billion. The acquisition of Excel provided Dura with new, value-added
product lines and strengthened Dura's relationship with important
customers such as Ford, DaimlerChrysler, Volkswagen and BMW.

- In March 1999, Dura acquired Adwest Automotive plc ("Adwest"), for $213.9
million in cash and the assumption of $106.1 million in indebtedness.
Adwest designs and manufactures driver control mechanisms, engine control
products and automotive cable primarily for the European automotive

7

market and had annual revenues of $400 million. The acquisition of Adwest
provided Dura with substantial driver control mechanism design and
production capability in Europe and broadened Dura's dealings with
customers such as Volkswagen, BMW, Ford, GM, Peugeot and Renault.

- In June 1999, Dura acquired Metallifacture Limited ("Metallifacture")
from Bullough plc. Metallifacture, located in Nottingham, England, is a
manufacturer of jacks and tire carriers for the European automotive
industry. It had revenues of approximately $25 million and its major
customers include Ford, General Motors, Rover, Nissan and Volkswagen.

- In November 1999, Dura acquired the seat adjusting business of Meritor
Automotive, Inc. ("Meritor Seats") for total cash consideration of $130
million. Meritor Seats manufactures seat track adjusting mechanisms for
the North American automotive industry. Meritor Seats, with operations in
Bracebridge, Ontario and Gordonsville, Tennessee, had revenues of
approximately $130 million and is a Tier II supplier to Lear Corporation
and other automotive interior suppliers.

- In January 2000, Dura purchased the Jack Division of Ausco Products, Inc.
("Ausco") for total cash consideration of $9 million. Ausco, with
operations in Benton Harbor, Michigan, produces automotive jacks
primarily for North American OEMs and has revenues of approximately $13
million.

- In June 2000, Dura increased its ownership interest in a previously
majority owned subsidiary by acquiring the remaining outstanding
interests in Bowden TSK ("Bowden"). Bowden, located in the U.K., produces
automotive cables for European OEMs.

- In November 2000, Dura acquired Reiche GmbH & Co.KG Automotive Components
("Reiche"), a manufacturer of steering columns for total consideration of
$20 million. Reiche, located in Germany, manufactures steering columns
and steering column components for European and North American OEMs.

- In January 2002, Dura divested its Plastic Products Business for total
proceeds of approximately $41.0 million. The Plastic Products Business
designs, engineers, and manufactures plastic components for a wide
variety of automotive vehicle applications, focusing on the metal to
plastic conversion and dual plastic applications markets. Dura recorded a
non-cash charge of approximately $7.4 million in the fourth quarter of
2001 for the estimated loss upon divestment and in the second quarter of
2002, Dura recorded an additional $1.9 million charge related to the
final negotiation of purchase price adjustments.

- During the fourth quarter of 2002, Dura adopted a plan to divest its
Mechanical Assemblies Europe business, as it believes this business will
not assist Dura in reaching its strategic growth and profitability
targets for the future. The Mechanical Assemblies Europe business
generated annualized revenues of approximately $111.9 million from
facilities in Grenoble and Boynes, France; and Woodley, Nottingham and
Stourport, UK. The planned Mechanical Assemblies Europe divestiture has
been treated as a discontinued operation under SFAS No. 144 (See Note 3
to the consolidated financial statements). In conjunction with that
decision, Dura recorded a loss from the Mechanical Assemblies Europe
business of approximately $107.4 million in the fourth quarter of 2002,
of which approximately $15.0 million is cash related. Including the
previously disclosed and reported divestiture of the Steering Gear
product line in the second quarter of 2002 and exit of the European pedal
product line in the third quarter of 2002, the total loss from
discontinued operations for the year ended December 31, 2002 was $126.6
million, on which no tax benefit was recorded. These losses relate
primarily to asset write-downs of $53.3 million, contractual commitments
and transaction related costs of $15.0 million, and year-to-date
operating losses of $58.3 million. The operating losses include a pension
settlement charge of $18.1 million and facility consolidation costs
related to the Steering and Pedal product line disposals completed in
second and third quarter of 2002 of $19.2 million and $2.4 million,
respectively.

8

PRODUCTS

Dura is the world's largest independent designer and manufacturer of driver
control systems for the global automotive industry. Dura is also a leading
global supplier of seating control systems, engineered assemblies, structural
door modules and integrated glass systems.

Although a portion of Dura's products are sold directly to OEMs as finished
components, Dura uses most of its products to produce "systems" or "subsystems,"
which are groups of component parts located throughout the vehicle which operate
together to provide a specific vehicle function. Systems currently produced by
Dura include glass, door, pedal, parking brake, transmission shift, seat
adjusting and latch.

A brief summary of each of Dura's principal product categories is set forth
below:

9

The following table sets forth the approximate composition of Dura's
revenues from continuing operations by product category for the last three
fiscal years:

See Note 11 to the consolidated financial statements for more information
regarding Dura's revenues by product category.

CUSTOMERS AND MARKETING

The North American vehicle component supply industry is led by GM, Ford and
DaimlerChrysler. New domestic manufacturers as a whole accounted for
approximately 23 percent of the market in 2002. In North America, Dura supplies
its products primarily to Ford, GM, DaimlerChrysler and Lear Corporation. Dura
has also expanded its global presence through acquisitions and internal growth.
Dura has added new customers and increased penetration into certain existing
customers such as BMW, Volkswagen, Toyota, Nissan/Renault and PSA.

In 2002, over 70 percent of total worldwide light vehicle production
occurred outside of North America. Dura derives a significant amount of its
revenues from sales to OEMs located outside of North America. In Europe, Dura
supplies its products primarily to Volkswagen, GM/Opel, Ford, BMW, PSA (Peugeot
and Citroen), Nissan/Renault, and DaimlerChrysler. Set forth below is a summary
of Dura's sales from continuing operations by geographic region for 2002, 2001
and 2000:

See Note 11 to the consolidated financial statements for more information
relating to revenues and long-lived assets for each geographic area referenced
above.

10

The following is a summary of Dura's significant customers based on results
of continuing operations for 2002, 2001 and 2000:

Dura's automotive customers award contracts for a particular car platform,
which may include more than one car model. Such contracts range from one year to
the life of the models, which is generally three to seven years, and do not
require the customer to purchase by the customer of any minimum number of parts.
Dura also competes for new business to supply parts for successor models.
Because Dura supplies parts for a broad cross-section of both new and mature
models, its reliance on any particular model is minimized. Dura manufactures
products for many of the most popular car, light truck, sport utility and
mini-van models in North America and Europe.

Major customers for Dura's specialty vehicle products include Fleetwood
Enterprises, Winnebago Industries, Thor Industries, Damon Corporation, Jayco,
Coachmen Industries, Monaco Coach Corporation, Motor Coach Industries and
Navistar International Corporation. Sales and engineering groups are located in
Rockford, Illinois and Elkhart, Indiana to service these customers. Customers in
the specialty vehicle products market generally negotiate annual pricing
contracts without firm order commitments and long purchase order lead times.
Therefore, the specialty vehicle group does not have a significant backlog of
orders at any particular time.

Dura's sales and marketing efforts are designed to create overall awareness
of its engineering, design and manufacturing capabilities and to have Dura
considered and selected to supply its products for new and redesigned models of
its OEM customers. Dura's sales and marketing staff works closely with Dura's
design and engineering personnel to prepare the materials used for bidding on
new business as well as to provide a consistent interface between Dura and its
key customers. Most of Dura's sales and marketing personnel have engineering
backgrounds which enable them to understand and participate in the design and
engineering aspects of acquiring new business as well as ongoing customer
service. Dura currently has sales and marketing personnel located in every major
region in which it operates. From time to time, Dura also participates in
industry trade shows and advertises in industry publications.

DESIGN AND ENGINEERING SUPPORT

Dura believes that engineering service and support are key factors in
successfully obtaining new business. Dura utilizes program management with
customer-dedicated program teams, which have full design, development, test and
commercial issues under the operational control of a single manager. In
addition, Dura

11

has established cross-functional teams for each new program to ensure efficient
product development from program conception through product launch.

Dura has a co-located design and development philosophy, which allows
individual plant locations to optimize product designs to coincide with Dura
manufacturing processes. In support of this philosophy, Dura has sites that
contain technical design & development capabilities in each of the major regions
that support customers around the world. A separate advanced technology group
has been established to maintain Dura's position as a technology leader. The
advanced technology group has developed many innovative features in Dura's
products, including many features that were developed in conjunction with Dura's
customers. Dura utilizes computer aided designs ("CAD") in the design process,
which enables Dura to share data files with its customers via compatible systems
during the design stage, thereby improving function, fit and performance within
the total vehicle. Dura also utilizes CAD links with its manufacturing engineers
to enhance manufacturability and quality of the designs early in the development
process.

Dura has approximately 500 patents granted or in the application process.
The patents granted expire over several years beginning in 2003. Although Dura
believes that, taken together, the patents are significant, the loss or
expiration of any particular patent would not be material to Dura.

MANUFACTURING

Dura employs a number of different manufacturing processes. Dura primarily
utilizes flexible manufacturing cells in both the mechanism and cable assembly
processes. Manufacturing cells are clusters of individual manufacturing
operations and work stations grouped in a circular configuration, with the
operators placed centrally within the configuration. This provides flexibility
by allowing efficient changes to the number of operations each operator
performs. When compared to the more traditional, less flexible assembly line
process, cell manufacturing allows Dura to maintain its product output
consistent with its customers' requirements and reduce the level of inventory.

Assemblies such as seat systems, jacks, parking brake levers, gear shifters
and latches consist of between five and 50 individual components, which are
attached to form an integrated mechanism. Although these assembly operations are
generally performed in manufacturing cells, high-volume, automated assembly
machines are employed where appropriate. The assembly operations construct the
final product through hot or cold forging machines, staking and riveting the
component parts. A large portion of the component parts are purchased from
Dura's outside suppliers. However, Dura manufactures its own stampings, a
process that consists of passing sheet metal through dies in a stamping press to
form the metal into three-dimensional parts. Dura produces stamped parts using
single-stage and progressive dies in presses, which range in size from 150 to
600 tons. Through continuous improvement teams, which stress employee
involvement, manufacturing processes are regularly upgraded to increase
flexibility, improve operating safety and minimize changeover times of the dies
and fixtures.

Dura's door systems and body components use similar processes coupled with
roll forming and stretch bending. Roll forming is a continuous process in which
coiled steel is passed through a series of rollers which progressively form the
metal into a consistently shaped section. When viewed from one end, the profile
may be u-shaped for glass channels and roof rails. More complex shapes are
processed for upper door profiles. Stretch bending involves clamping a length of
the rolled profile at numerous points and then twisting or bending the metal to
form contoured surfaces, such as door frames. Door and body components also
require welding, grinding and polishing operations to provide a smooth finish.

Cables are manufactured using a variety of processes, including plastic
injection molding, extrusion, wire flattening, spring making and zinc
diecasting. Wire is purchased from outside suppliers and then woven into
contra-twisted layers on tubular stranders and bunching machines to produce up
to 19-wire stranded cable. Corrosion resistance is provided by a proprietary,
ceramic coating applied during the stranding process. The cable then is
plastic-coated by an extrusion process to provide a smooth, low coefficient
surface that results in high efficiency and durability. Conduit is then produced
by flattening and coiling wire, which is then extruded with a protective
coating. Proprietary strand and conduit cutting machines enable efficient
processing. Assembly operations are arranged in cells to minimize inventory,
improve quality, reduce scrap, improve
12

productivity and enhance employee involvement. The cables are assembled with
various attachments and end fittings that allow the customer to install the
cables to the appropriate mating mechanisms.

Dura's window systems broadly include two categories of products:
mechanically framed glass and molded framed glass. Mechanically framed glass
products are produced by putting glass panes through a series of processes,
which include adding handles, hinges, aluminum and steel based edge frame
assemblies, electrical connectors and fasteners. The production of molded framed
glass products involves two primary molding media: RIM and HPIM. Both media
provide a "surround" to the glass panes that incorporates the styling, sealing
and mechanical attachment features of the product. Dura's ability to utilize
either media provides OEMs with the maximum advantage in terms of cost, styling
imperatives and robustness. The glass panes used in the production of Dura's
window systems are purchased from outside suppliers.

Dura utilizes frequent communication meetings at all levels of
manufacturing to provide training and instruction as well as to assure a
cohesive, focused effort toward common goals. Dura encourages employee
involvement in all aspects of its' business and views such involvement as a key
element in its success. Dura also aggressively pursues involvement from its
suppliers, which is necessary to assure a consistent high quality and on time
delivery of raw materials and components. Where practical, Dura utilizes
component suppliers in the design and prototype stages of the new product
development to facilitate the most comprehensive, state-of-the-art designs
available. Dura has made substantial investments in manufacturing technology and
product design capability to support its products. This includes modern
manufacturing equipment, fineblanking, sophisticated CAD systems and
highly-trained engineering personnel. These advanced capabilities enable Dura to
deliver superior product quality at globally competitive prices.

The automotive industry has adopted a rigorous quality management system
known as QS-9000. Suppliers must be registered as QS-9000 compliant by
independent auditors as a condition of doing business with automotive customers.
Dura has received QS-9000 registration at all of its facilities and maintains
this status by demonstrating continuous improvement in manufacturing capability
and support processes. In addition, Dura has received ISO 9000 registration for
all facilities that serve the specialty vehicle markets. Dura has begun the
process to transition to TS 16949. TS 16949 is more rigorous than QS-9000 and is
more widely accepted throughout the automotive industry.

Dura's plants have been recognized by its customers with various awards,
such as the DaimlerChrysler Gold Pentastar Award, GM Target for Excellence,
Nummi Delivery Performance Award, Lear Hall of Fame Award, Nissan Quality Master
Award and Isuzu Quality Achievement Award. Dura has also received an "A" rating
at Peugeot and Renault. Dura has received Ford Q-1 certification at facilities
shipping current model Ford product. Moreover, Dura's specialty vehicle group
has been the recipient of Fleetwood Industries Circle of Excellence: Quality
Supplier Award for many years as well as WDA Supplier of the Year.

Dura is implementing an environmental management system at its
manufacturing locations. The system meets the ISO 14001 standard and is
certified by independent auditors. The system assists Dura in being a clean
corporate citizen and provides a framework for managing environmental inputs.
Approximately 90 percent of Dura's manufacturing locations have achieved
independent certification to ISO-14001.

COMPETITION

Dura operates in a highly competitive environment. Dura principally
competes for new business at the beginning of the development of new models and
upon the redesign of existing models. New model development generally begins two
to five years before marketing of such models to the public. Once a producer has
been designated to supply parts for a new program, an OEM usually will continue
to purchase those parts from the designated producer for the life of the
program, although not necessarily for a redesign. Competitive factors in the
market for Dura's products include product quality and reliability, cost, timely
delivery, technical expertise and development capability, new product innovation
and customer service. The number of Dura's competitors has decreased due to the
supplier consolidation resulting from changing OEM policies. Some of our
competitors have substantial size, scale and financial resources.

13

In addition, there is substantial and continuing pressure at the OEMs to
reduce costs, including the cost of products purchased from outside suppliers
such as Dura. Historically, Dura has been able to generate sufficient production
cost savings to offset these price reductions.

Dura is the world's largest independent designer and manufacturer of driver
control systems for the global automotive industry. Dura is also a leading
global supplier of seating control systems, glass systems, engineered
assemblies, structural door modules and exterior trim systems. Set forth below
is a brief summary of Dura's most significant competitors in several major
product categories:

(1) Driver Control Systems:

Automotive Cables. Dura is the leading producer of automotive cables
in both North American and Europe. Major competitors include Teleflex
Incorporated ("Teleflex") and Hi-Lex Corporation ("Hi-Lex") in North
America and Kuester & Co. GmbH ("Kuester"), Ficosa International, S.A.
("Ficosa") and Sila Holding Industriale ("Sila") in Europe.

Parking Brakes. Dura is the leading producer of traditional and
electronic parking brakes in North America. Traditional parking brake
competitors include Ventra Group, Inc. ("Ventra"), Magna International Inc.
("Magna"), Ficosa and Aisin Seiki. Dura's competitors in Europe include
Scharwaechter GmbH & Co. ("Edscha") and Ficosa. Competitors in the
electronic parking brake market include Kuester, Ficosa, TRW and Bosch.

Transmission Shifters. Dura is a leading producer of transmission
shifters in North America, with its only significant competitor being Grand
Haven Stamped Products. Dura has three competitors in Europe, Teleflex,
Ficosa, and Sila.

Pedal Systems. Dura's primary competitors in pedal systems are
Teleflex, KSR and Williams in North America.

(2) Seating Control Systems: Dura's primary competitors in seat adjusters
are the in-house operations of Lear Corporation, Magna, Johnson Controls, Inc.,
and Faurecia. Independent competition exists in Europe, which includes Brose
Fahrzeagteile Glaswerke GmbH & Co. ("Brose"), C. Rob Hammerstein GmbH & Co. KG
and Keiper Recaro GmbH & Co.

(3) Glass Systems: Dura's primary competitors in window systems are Magna,
Libbey-Owens Ford Co., PPG Inc. and Guardian Industries, Inc. in North America
and Sekurit and Pilkington in Europe.

(4) Engineered Assemblies:

Hood Latches. Dura is the number one producer of hood latches in
North America with only one other major competitor, Magna.

Jacks. There are only two major jack suppliers in North America, Dura
and Ventra. Dura and Ventra are the two largest competitors in Europe with
Batz, Bilstein and Storz sharing the remaining market.

Tire Carriers. Leading the North American market for tire carriers,
Dura's primary competitors include Edscha, Deuer, and Fabco (Krupp). Dura
enjoys the largest share of the market in Europe which has three other
players Jackson, Deuer and Fabco (Krupp).

(5) Structural Door Modules: In this product group, Dura competes in door
modules and window lift systems as well as other product areas. The primary
competitors for door modules in North America and Europe include Brose, Delphi,
ArvinMeritor, Magna, Matra and Wagon and for window lift systems in North
America, Dura competes with ArvinMeritor, Brose, Hi-Lex and Magna.

(6) Exterior Trim Systems: Dura's primary competitors in Europe for roof
trim moldings, side frame trim, A, B, & C-pillar cappings, body color trim
include WKW and Aries.

14

(7) Mobile Products: Dura's primary competitors for mobile products include
Suburban Manufacturing (division of Airxcel), Maytag Appliances/Magic Chef RV
Products, TriMas Corporation and Hehr International, Inc.

SUPPLIERS AND RAW MATERIALS

Dura's principal raw materials include (1) coil steel and resin in
mechanism production, (2) metal wire and resin in cable production and (3) glass
in window systems. Dura does not manufacture or sell primary glass. The types of
steel Dura purchases include hot and cold rolled, galvanized, organically coated
and aluminized steel. In general, the wire used by Dura is produced from steel
with many of the same characteristics with the exception that it has a higher
carbon content. Dura utilizes plastic resin to produce the protective coating
for cables and transmission shifter components. Dura employs just-in-time
manufacturing and sourcing systems enabling it to meet customer requirements for
faster deliveries while minimizing its need to carry significant inventory
levels. Dura has not experienced any significant shortages of raw materials and
normally does not carry inventories of raw materials or finished products in
excess of those reasonably required to meet production and shipping schedules.

Dura typically negotiates blanket purchase orders or 12-month supply
agreements with service centers that have demonstrated timely delivery, quality
steel and competitive prices. These arrangements do not contain minimum purchase
requirements. These relationships allow Dura to order precise quantities and
types of steel for delivery on short notice, thereby permitting Dura to maintain
low inventories. In addition, Dura occasionally "spot buys" steel from service
centers to meet customer demand, engineering changes or new part tool trials.

Other raw materials purchased by Dura include dies, motors, fasteners,
springs, rivets and rubber products, all of which are available from numerous
sources.

SEASONALITY

A significant portion of Dura's business is directly related to automotive
and recreation vehicle sales and production by its customers, which is highly
cyclical and depends on general economic conditions, consumer spending and
preferences. Any significant reduction in vehicle production and sales by Dura's
customers would have a material adverse effect on its business. The North
American automotive and recreation vehicle market, Dura's largest market,
experienced a downturn that began in 2000 and continued into 2001. As such,
Dura's sales declined in line with the reduced volumes. To offset the reduction
in production volumes, Dura accelerated its structural cost reduction efforts.
North American sales recovered in 2002 with the help of incentive programs
offered by the OEMs. This had a positive effect on Dura's sales for 2002.

Dura has operations in several major regions of the world and economic
conditions in these regions often differ, which may have varying effects on its
business. The recent strengthening of the Euro relative to the U.S. dollar
resulted in a positive impact to Dura's results of operations during 2002.

Dura's business is moderately seasonal as its primary North American
customers historically halt operations for approximately two weeks in July for
vacations and model changeovers and its European customers generally reduce
production during the month of August. In addition, third quarter automotive
production is traditionally lower as new models enter production. Accordingly,
third quarter results may reflect this cyclicality.

EMPLOYEES

As of December 31, 2002, Dura employed approximately 9,100 people in North
America, 9,200 in Europe and 500 in other regions of the world. A substantial
number of Dura's employees are members of unions. Dura has collective bargaining
agreements with several unions including: the UAW; the CAW; the International
Brotherhood of Teamsters; and the International Association of Machinists and
Aerospace Workers. Virtually all of Dura's unionized facilities in the United
States and Canada have a separate contract with the union which represents the
workers employed there, with each such contract having an expiration

15

date independent of its other labor contracts. The majority of Dura's European
and Mexican employees are members of industrial trade union organizations and
confederations within their respective countries. Many of these organizations
and confederations operate under national contracts, which are not specific to
any one employer. Although Dura believes that its relationship with its union
employees is generally good, there can be no assurance that Dura will be able to
negotiate new agreements on favorable terms. In the event Dura is unsuccessful
in negotiating new agreements, these facilities could be subject to work
stoppages, which could have a material adverse effect on the operations of Dura.

(B) SAFE HARBOR PROVISIONS AND SELECTED VEHICLE PROGRAMS

Forward-looking statements included in this Form 10-K are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by use of the words
such as "may," "will," "should," "expect," "anticipate," "believe," "estimate"
and similar words, although some forward-looking statements may be expressed
differently. There are certain important factors that could cause future results
to differ materially from those that might be anticipated based on some of the
statements made in this report. Investors are cautioned that all forward-looking
statements involve risks and uncertainty. Actual results may differ materially
from those in forward-looking statements as a result of various factors
including, but not limited to:

- RELIANCE ON MAJOR CUSTOMERS AND SELECTED VEHICLE PROGRAMS. Dura's
largest customers, Ford, GM, Lear and DaimlerChrysler, represented
approximately 26 percent, 14 percent, 12 percent and 10 percent,
respectively, of Dura's 2002 revenues. Any significant reduction in the
demand for vehicles manufactured by Ford, GM or DaimlerChrysler or
products manufactured by Lear for which we produce components and
assemblies or for certain other key vehicle models or group of related
vehicle model sold by any of Dura's other major customers could have a
material adverse effect on Dura's existing and future revenues and net
income.

- INDUSTRY CYCLICALITY AND SEASONALITY. The automotive and recreation
vehicle end customer markets are highly cyclical and both markets are
dependent on consumer spending. Economic factors adversely affecting
automotive and recreation vehicle production and consumer spending could
adversely impact Dura. We typically experience decreased volumes during
the third quarter of each year due to the impact of scheduled OEM plant
shutdowns in July and August for vacations and new model changeovers.

- FAILURE TO OBTAIN BUSINESS RELATED TO NEW AND REDESIGNED MODEL
INTRODUCTIONS. The failure of Dura to obtain new business on new models
or to retain or increase business on redesigned existing models could
adversely affect Dura.

- HIGHLY COMPETITIVE VEHICLE SUPPLY INDUSTRY. The vehicle component supply
industry is highly competitive. There is substantial and continuing
pressure from the OEMs to reduce costs, including the cost of products
purchased from outside suppliers such as Dura. If we are unable to
generate sufficient cost savings in the future to offset price
reductions, our gross margin could be adversely affected.

- PRODUCT LIABILITY EXPOSURE. Dura faces an inherent business risk of
exposure to product liability claims from its customers and consumers in
the event that its products fail to perform to specifications or result
in personal injury or death, and there can be no assurance that Dura will
not experience material product liability losses in the future or that we
will not incur significant costs to defend these claims. In addition, if
any Dura-designed products are or are alleged to be defective, we may be
required to participate in a product recall involving those products.
Each OEM has its own policy regarding product recalls and other product
liability actions relating to its suppliers. However, as suppliers become
more integrally involved in the vehicle design process and assume more
system integration functions, OEMs are increasingly looking to their
suppliers for contribution when faced with product recalls, product
liability or warranty claims. Dura cannot assure you that the future
costs associated with providing product warranties will not be material.

16

- WORK STOPPAGES AND OTHER LABOR MATTERS. A significant number of our
employees are unionized. Dura cannot assure you that we will not
encounter strikes, further unionization efforts or other types of
conflicts with labor unions or our employees. Any of these factors may
have an adverse effect on us or may limit our flexibility in dealing with
our workforce. In addition, many OEMs and their suppliers have unionized
workforces. Work stoppages or slow-downs experienced by OEMs or their
suppliers could result in slow-downs or closures of assembly plants where
our products are included in assembled vehicles. In the event that one or
more of our customers experience a material work stoppage, such work
stoppage could have a material adverse effect on our business.

- SUBSTANTIAL LEVERAGE. We have a significant amount of indebtedness. Our
ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these
factors are beyond our control. In addition, since a portion of our
indebtedness is at variable rates of interest, we will be vulnerable to
increases in interest rates, which could have a material adverse effect
on our results of operations, liquidity and financial condition.

- SIGNIFICANT FOREIGN OPERATIONS. Dura has significant operations in
Europe, Canada and Latin America. Certain risks are inherent in
international operations, including:

- The difficulty of enforcing agreements and collecting receivables
through certain foreign legal systems;

- Foreign customers may have longer payment cycles than customers in the
United States;

- Tax rates in certain foreign countries may exceed those in the United
States and foreign earnings may be subject to withholding requirements
or the imposition of tariffs, exchange controls or other restrictions;

- General economic and political conditions in countries where we operate
may have an adverse effect on our operations in those countries;

- The difficulties associated with managing a large organization spread
throughout various countries; and

- Required compliance with a variety of foreign laws and regulations.

In addition, Dura generates a significant portion of its revenues
and incurs a significant portion of its expenses in currencies other
than U.S. dollars. To the extent that it is unable to match revenues
received in foreign currencies with costs paid in the same currency,
exchange rate fluctuations in any such currency could have an adverse
effect on Dura's financial results. The strengthening of the European
currencies in relation to the U.S. dollar had a positive impact on
Dura's revenues in 2002.

(C) AVAILABLE INFORMATION

Dura maintains a website on the Internet at www.duraauto.com. Dura makes
available free of charge through its website, by way of a hyperlink to a
third-party SEC filing website, its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act. Such information is available as soon as such reports are filed with the
SEC.

ITEM 2. PROPERTIES

Dura's world headquarters is located in Rochester Hills, Michigan. Dura
leases this facility, which is approximately 100,000 square feet, a portion of
which is used for product development activities.

Dura believes that the productive capacity and utilization of its
facilities is sufficient to allow Dura to conduct its operations in accordance
with its business strategy. All of Dura's owned facilities are subject to

17

liens under its amended and restated $1.15 billion credit agreement ("Credit
Agreement"). The following table shows the principal facilities of Dura as of
December 31, 2002:

Dura's manufacturing facilities have a combined square footage in excess of
7,050,000, approximately 85 percent of which is owned and approximately 15
percent is leased. To increase efficiency, Dura expects to consolidate the
operations of certain of its manufacturing facilities and technical centers over
the next twelve months.

In some cases, several of Dura's manufacturing sites, technical centers
and/or product development centers and sales activity offices are located at a
single multi-purpose site. As of December 31, 2002, Dura had sites that contain
technical design and development capabilities in each of the major regions that
support customers around the world.

Management believes that substantially all of its property and equipment is
in good condition and that it has sufficient capacity to meet its current
manufacturing needs. Utilization of Dura's facilities varies with North American
and European light and recreation vehicle production and general economic
conditions in such regions.

ITEM 3. LEGAL PROCEEDINGS

Dura is involved in routine litigation incidental to the conduct of its
business. Dura does not believe that any litigation to which it is currently a
party will have a material adverse effect on its business or financial
condition.

In late 1994, Ford issued a recall of a series of manual transmission Ford
F-Series pickups to repair the self-adjust parking brakes originally
manufactured by the Brake and Cable Business. The type of alleged failures that
prompted the F-Series recalls have led to a number of claims and lawsuits filed
against Ford, one of which culminated in a July 1998 award of punitive damages
against Ford of more than $151 million (which has subsequently been reduced on
appeal to $69 million) and Ford appealed the decision. In December 2002, the
Ninth Circuit Court of Appeals issued an opinion remanding the case for a new
trial on punitive damages because the trial court failed to limit the punitive
damages award to a reasonable amount. Dura may be subject to claims brought
directly against Dura by injured occupants of Ford vehicles and to claims for
contribution or indemnification asserted by Ford. The agreement relating to the
acquisition of the Brake and Cable Business provided that Dura is liable for
claims arising out of accidents that take place on or after August 31, 1994 and
that Dura will be liable for other claims only to the extent any losses by Alkin
relating to such claims are not paid by Alkin's insurance policies (either
because they are not over the deductible amount, because Alkin's policy limits
have been exceeded or because they are not covered by Alkin's insurance policies
for other reasons). Dura is not presently aware of any other open self-adjusting
parking

18

brake claims against Ford with respect to which Ford may elect to seek
contribution from Dura. Dura has attempted to work with Ford to address the
claims arising from the self-adjusting parking brakes and does not believe that
these claims have adversely affected its business relationship with Ford.

In early November 1996, Dura was served with a lawsuit brought by
affiliates of AIG, its excess insurance carrier, in Toronto, Canada seeking a
declaratory judgment that the umbrella and excess liability policies that it had
issued to Onex do not provide coverage in connection with allegedly defective
self-adjust parking brakes manufactured by Alkin prior to August 31, 1994. The
AIG policies at issue provided (a) the first layer of excess coverage (beyond
Dura's $3 million primary policy per year) for claims arising from August 31,
1994 to April 1, 1996 in the amount of $20 million coverage per year, and (b) an
additional layer of excess coverage at $33 to $53 million per year. In principal
part, the AIG affiliates claim that the policies do not provide coverage with
respect to products manufactured prior to August 31, 1994 or liabilities assumed
by Dura pursuant to purchase agreements. The AIG affiliates also claim that the
policies should be voided with respect to self-adjust parking brake claims for
inadequate disclosure at the time the policies were applied for. Dura and Onex
dispute the allegations of the Ontario lawsuit and have filed a counterclaim
against the AIG affiliates for breach of contract.

In March 1999, Dura was notified by Ford of its decision to institute a
recall of certain of its vehicles, including Mustangs (approximately 987,839),
relating to the speed control cable. In October 1999, Ford announced that it was
voluntarily recalling all 1998-1999 Ford Explorers and Mountaineers
(approximately 932,000 vehicles) to replace the auxiliary hood latches. Although
Dura denies full liability related to the speed control and secondary hood latch
recalls, in June 2000, it settled the two product recall matters through a cost
sharing agreement with Ford. Dura agreed to pay $40 million ($20 million in July
2000, followed by three equal payments totaling $20 million in July 2001, July
2002 and July 2003) to resolve Ford's claims relating to these recalls.

In September 2001, Dura was notified by Landrover of its decision to
institute a recall of its Freelander vehicles due to alleged malfunctions of the
parking brake mechanism. This recall included approximately 220,000 vehicles
manufactured world-wide between September 1997 and March 2001. In September
2002, Dura and Landrover reached a settlement and Dura agreed to pay Pounds 2.8
million (approximately $4.5 million). In return, Dura received a release from
further liability as a result of this recall.

In December 2002, Nissan/Renault issued a claim to Dura requesting payment
for a recall of its Almera and Tino vehicles due to alleged malfunctions of the
parking brake mechanism. This recall included approximately 125,000 vehicles
manufactured world-wide. Dura is currently working with the customer to resolve
this matter.

Dura faces an inherent business risk of exposure to product liability and
warranty claims in the event that its products fail to perform as expected and
such failure of the products results, or is alleged to result, in bodily injury
and/or property damage. Dura cannot assure that it will not experience any
material warranty or product liability losses in the future or that it will not
incur significant costs to defend such claims. In addition, if any of the
products are or are alleged to be defective, Dura may be required to participate
in a recall involving such products. Each OEM has its own policy regarding
product recalls and other product liability actions relating to its suppliers.
However, as suppliers become more integrally involved in the vehicle design
process and assume more of the vehicle assembly functions, OEMs are increasingly
looking to their suppliers for contribution when faced with product liability
claims. A successful claim brought against Dura or a requirement to participate
in a product recall may have a material adverse effect on Dura's business. OEMs
are also increasingly requiring their outside suppliers to guarantee or warrant
their products and bear the costs of repair and replacement of such products
under new vehicle warranties. Depending on the terms under which Dura supplies
products to an OEM, an OEM may hold Dura responsible for some or all of the
repair or replacement costs of defective products under new vehicle warranties,
when the product supplied did not perform as represented. Dura carries insurance
for certain legal matters including product liability; however, Dura no longer
carries insurance for warranty matters, as the cost and availability for such
insurance, in the opinion of management, is cost prohibitive or not available.
Dura has established reserves for matters that are probable and estimable in
amounts management believes are adequate to cover reasonable adverse judgments

19

not covered by insurance. Based upon the information available to management and
discussions with legal counsel, it is the opinion of management that the
ultimate outcome of the various legal actions and claims that are incidental to
Dura's business will not have a material adverse impact on the consolidated
financial position, results of operations, or cash flows of Dura; however, such
matters are subject to many uncertainties, and the outcomes of individual
matters are not predictable with assurance.

Environmental Matters

Dura is subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. While
Dura devotes resources designed to maintaining compliance with these
requirements, there can be no assurance that Dura operates at all times in
complete compliance with all such requirements. Dura could be subject to
potentially significant fines and penalties for any noncompliance that may
occur. Although Dura has made and will continue to make capital and other
expenditures to comply with environmental requirements, Dura does not expect to
incur material capital expenditures for environmental controls in 2003.

Some of Dura's operations generate hazardous substances. Like all
manufacturers, if a release of hazardous substances occurs or has occurred at or
from any of Dura's current or former properties or at a landfill or another
location where Dura has disposed of wastes, Dura may be held liable for the
contamination, and the amount of such liability could be material.

In 1995, the Michigan Department of Environmental Quality requested that
Dura and Wickes conduct an environmental investigation at and around Dura's
Mancelona, Michigan facility, which Dura acquired from Wickes in 1990. The
investigation detected trichloroethylene ("TCE") in groundwater at the facility
and offsite locations. Dura has not used TCE since it acquired the Mancelona
facility, although TCE may have been used by prior operators. Dura has arranged
and paid for the sampling of several residential drinking water wells in the
area and for the replacement of drinking water wells found to contain TCE above
drinking water standards. Dura may incur additional costs to further
investigate, monitor or remediate the contamination, and possibly to provide
additional alternative drinking water supplies. In April 1999, Dura settled
certain potential claims asserted by a ski resort with respect to possible
future impact on the resort's water supply wells.

The Mancelona groundwater contamination matter is subject to an indemnity
from Wickes. In connection with Dura's acquisition of certain assets from Wickes
in 1990, Wickes agreed to indemnify Dura with respect to certain environmental
liabilities associated with Wickes' operation of the subject facilities subject
to a $750,000 basket (which has been reached), up to a $2.5 million cap. Dura
will be obligated to indemnify Wickes with respect to any liabilities above such
cap. Wickes has acknowledged that Dura made a timely and adequate claim for
indemnification with respect to the Mancelona matter, and has been paying
indemnification claims relating to the Mancelona matter, subject to a
reservation of rights.

In 1998, Dura acquired Universal. The seller in the Universal transaction
agreed to indemnify Dura for environmental liabilities arising from the
operation of the acquired facilities prior to the acquisition. Following the
acquisition, pursuant to the indemnity, the seller continued to address certain
environmental matters, including the cleanup of TCE-contaminated soil at Dura's
Butler, Indiana facility. In 1998, the seller filed for reorganization under the
federal bankruptcy laws and ceased performing its obligations under the
indemnity. In March 1999, the seller requested bankruptcy court approval to
reject their contractual indemnity obligations to Dura. Subject to Dura's right
to seek repayment in the bankruptcy proceeding, it is likely that Dura will be
responsible for completing the cleanup at its Butler facility. Although Dura
cannot provide complete assurance, based on estimates provided by the
environmental consultant that has been performing the cleanup, Dura does not
expect the cost to complete the cleanup to be material.

In 1998, Dura entered into a partial consent decree to settle its liability
for past costs at the former Excel Main Street Well Field Site in Elkhart,
Indiana, where TCE was found in a municipal well field near the Elkhart
facility. Dura is one of several potentially responsible parties involved at the
site. Under the settlement, Dura has a continuing payment obligation for
operation and maintenance of a groundwater treatment system and for a soil vapor
extraction system. These obligations will likely continue for several

20

years. The annual cost to operate these systems is not material. In addition,
Dura expects to receive certain payments from other parties involved at the
site.

Dura is involved as a potentially responsible party at several waste
disposal sites. Although the environmental laws provide for joint and several
liability at such sites, liability is typically allocated among the viable
parties involved. Dura believes that it has no liability at some of these sites,
and that adequate reserves are in place for current estimates of Dura's share of
liability at the other sites. Dura cannot provide complete assurance, however,
that its liability at these sites will not materially exceed the current amount
of Dura's reserves.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of stockholders during the fourth
quarter of 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "DRRA." The following table sets forth, for the periods indicated, the
low and high closing sale prices for the Class A common stock as regularly
quoted on Nasdaq.

As of March 3, 2003, there were approximately 719 holders of record of the
outstanding Class A common stock and 11 holders of record of the outstanding
Class B common stock.

Dura has not declared or paid any dividends on its Common Stock in the past
and does not anticipate paying dividends in the foreseeable future. Any future
payment of dividends is within the discretion of the Board of Directors and will
depend upon, among other factors, the capital requirements, operating results
and financial condition of Dura. In addition, Dura's ability to pay dividends is
limited under the terms of the $350.0 million 8 5/8 percent senior unsecured
notes ("Senior Notes") indenture and $458.5 million and Euro 100.0 million 9
percent senior subordinated notes ("Subordinated Notes") indenture and by the
terms of its Credit Agreement. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition-Liquidity and Capital Resources."

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data for Dura presented below for, and
as of the end of each of the years in the five-year period ended December 31,
2002, is derived from Dura Automotive Systems, Inc.'s Consolidated Financial
Statements. The three year period ended December 31, 2002 has been audited by
Deloitte & Touche LLP, independent public accountants. The consolidated
financial statements at December 31, 2002 and 2001 and for each of the three
years in the period ended December 31, 2002 and the independent auditor's report
thereon are included elsewhere in this report. The consolidated financial

21

statements at December 31, 2000, 1999 and 1998 and for the years ended December
31, 1999 and 1998 are not included herein. This selected consolidated financial
data should be read in conjunction with "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and Dura's Consolidated Financial
Statements and Notes to Consolidated Financial Statements, included elsewhere in
this report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

This discussion should be read in conjunction with Dura's Consolidated
Financial Statements and the Notes to Consolidated Financial Statements included
elsewhere in this report.

During the fourth quarter of 2002, Dura adopted a plan to divest its
Mechanical Assemblies Europe business, as it believes this business will not
assist Dura in reaching its strategic growth and profitability targets for the
future. The planned Mechanical Assemblies Europe divestiture has been treated as
a discontinued operation under SFAS No. 144 (see Note 3 to the consolidated
financial statements). The applicable assets, liabilities and results of
operations related to the Mechanical Assemblies Europe business, including the

22

related charges, have been classified as discontinued operations in the
consolidated financial statements, and prior periods have been recast to present
Mechanical Assemblies Europe as a discontinued operation in all periods
presented.

OVERVIEW

The economic climate throughout 2002 remained challenging as the benefits
from higher production volumes in the North American automotive and recreation
vehicle industries were partially offset by weakness in Europe. The OEMs
continued to offer various incentive plans including zero percent financing
throughout the year. We anticipate that 2003 will continue to be a challenging
environment and we believe that our ability to reduce costs and deliver quality
products has prepared us for the conditions this uncertain market may present to
us.

COMPARISON OF YEAR ENDED DECEMBER 31, 2002 TO YEAR ENDED DECEMBER 31, 2001

Revenues. Revenues for the year ended December 31, 2002 increased by $26.6
million, or 1.1 percent, to $2,360.3 million from $2,333.7 million for 2001.
Factors that favorably impacted revenue in 2002 included an increase in the
North American automotive and recreation vehicle production volumes, the
strengthening of the European currencies in relation to the U.S. dollar and an
increase in new business in Dura's core products. Slightly offsetting these
favorable items was the impact of Dura's divestiture actions, continued weakness
in European volumes and the impact of strategically exiting certain of Dura's
low margin non-core businesses in Europe.

Cost of Sales. Cost of sales for the year ended December 31, 2002
increased by $21.4 million, or 1.1 percent, to $2,035.0 million from $2,013.6
million for 2001. Cost of sales as a percentage of revenues for the year ended
December 31, 2002 was 86.2 percent, which is basically flat compared to 86.3
percent for 2001.

Selling, General, and Administrative. Selling, general, and administrative
expenses for the year ended December 31, 2002 increased by $1.2 million, or 0.9
percent, to $135.6 million from $134.4 million in 2001. As a percentage of
revenue, selling, general and administrative expenses remained basically flat at
5.7 percent for 2002, compared to 5.8 percent for 2001.

Facility Consolidation and Other Charges. In December 2002, Dura announced
a plan to close its Livonia, Michigan facility and its Cauvigny, France
facility. These actions resulted in a fourth quarter 2002 restructuring charge
of $12.9 million, approximately $8.5 million of which was cash related. The
charge related to the closure of the Livonia facility included severance related
costs of $0.7 million, asset impairment of $3.2 million and other facility
closure costs of $0.1 million. The charge related to the closure of the Cauvigny
facility included severance related costs of $7.7 million and asset impairment
of $1.2 million. Dura expects to fund these expenditures through cash flow from
operations. Costs incurred and charged to the reserve related to the closure of
these two facilities as of December 31, 2002 amounted to $0.2 million in
severance related costs. The decision to close the Livonia facility resulted in
a reduction in the work force of approximately 20 salaried and 127 hourly
employees, none of which have been let go as of December 31, 2002. The decision
to close the Cauvigny facility will result in a reduction in the work force of
approximately 208 salaried employees, none of which have been let go as of
December 31, 2002. These restructuring actions are anticipated to be complete by
December 31, 2003.

In July 2002, Dura announced a plan to combine its Benton Harbor, Michigan
and Butler, Indiana facilities in North America. This action resulted in a third
quarter 2002 restructuring charge of $1.1 million, including severance of $0.6
million and facility closure costs of $0.5 million. Additionally, Dura expensed
as incurred certain equipment relocation costs of $0.1 million. Costs incurred
and charged to the reserve as of December 31, 2002 amounted to $0.2 million in
severance related costs. The decision to close the Benton Harbor facility
resulted in a reduction in the work force of approximately 12 salaried and 44
hourly employees, all of which have been let go as of December 31, 2002. These
restructuring actions are anticipated to be complete by September 30, 2003.
During the fourth quarter of 2002, Dura expensed as incurred certain equipment
relocation costs of $0.3 million and other costs of $0.4 million related to the
closure of the Benton

23

Harbor facility. Approximately $1.7 million of these charges were cash related.
Dura expects to fund these expenditures through cash flow from operations.

Amortization Expense. Amortization expense for the year ended December 31,
2002 decreased by $25.7 million, or 96.3 percent, to $1.0 million from $26.7
million in 2001. The decrease is the result of Dura adopting SFAS No. 142
"Goodwill and Other Intangible Assets", effective January 1, 2002. Under SFAS
No. 142, goodwill and intangible assets with indefinite lives are no longer
amortized, but reviewed annually, or more frequently if impairment indicators
arise (see Significant Accounting Policies below).

Interest Expense. Interest expense for the year ended December 31, 2002
decreased by $16.6 million, or 16.5 percent, to $83.9 million from $100.5
million in 2001. The decrease in interest expense is due to lower interest rates
on LIBOR contracts, offset by the higher effective interest cost related to the
issuance of $350.0 million of Senior Notes (see below).

Income Taxes. The effective tax rate for the year ended December 31, 2002
was 44.8 percent compared to the 2001 effective tax rate of 30.8 percent. The
increase in the effective tax rate relates to the mix of income and loss among
Dura's tax jurisdictions, not benefiting losses in certain locations, increases
in valuation allowances in certain tax jurisdictions and not benefiting the
facility consolidation charge related to Cauvigny.

Minority Interest. Minority interest for the years ended December 31, 2002
and 2001 represents dividends, net of income tax benefits, on the $55.3 million
7 1/2 percent Convertible Trust Preferred Securities ("Preferred Securities")
which were issued on March 20, 1998.

Income from Continuing Operations. Income from continuing operations for
the year ended December 31, 2002 increased by $25.3 million, or 119.3 percent,
to $46.5 million from $21.2 million in 2001. The increase is primarily due to an
increase in revenues and decreases in both amortization expense and interest
expense, as described above. These increases to income from continuing
operations were offset by an increase in the provision for income taxes, also
described above.

Discontinued Operations. During the fourth quarter of 2002, Dura adopted a
plan to divest its Mechanical Assemblies Europe business, as it believes this
business will not assist Dura in reaching its strategic growth and profitability
targets for the future. The Mechanical Assemblies Europe business generated
annualized revenues of approximately $111.9 million from facilities in Grenoble
and Boynes, France; and Woodley, Nottingham and Stourport, UK. The Mechanical
Assemblies Europe divestiture was treated as a discontinued operation under SFAS
No. 144 (See Note 3 to the consolidated financial statements).

In conjunction with that decision, Dura recorded a loss from the Mechanical
Assemblies Europe business of approximately $107.4 million in the fourth quarter
of 2002, of which approximately $15.0 million is cash related. Including the
previously disclosed and reported divestiture of the Steering Gear product line
in the second quarter of 2002 and exit of the European pedal product line in the
third quarter of 2002, the total loss from discontinued operations for the year
ended December 31, 2002 was $126.6 million, on which no tax benefit was
recorded. These losses relate primarily to asset write-downs of $53.3 million,
contractual commitments and transaction related costs of $15.0 million, and
year-to-date operating losses of $58.3 million. The operating losses include a
pension settlement charge of $18.1 million and facility consolidation costs
related to the Steering and Pedal product line disposals completed in second and
third quarter of 2002 of $19.2 million and $2.4 million, respectively.

Extraordinary Item. The extraordinary loss for the year ended December 31,
2002 represents the write-off, net of income taxes, of debt financing costs in
connection with the repayment of borrowings outstanding under the Credit
Agreement (see Liquidity and Capital Resources below).

Cumulative Effect of Change in Accounting. The cumulative effect of change
in accounting for the year ended December 31, 2002 represents the write-off of
goodwill as a result of Dura adopting SFAS No. 142, effective January 1, 2002
(see Significant Accounting Policies below).

Net Income (Loss). Net income (loss) for the year ended December 31, 2002
decreased by $299.9 million to a loss of $288.7 million, from income of $11.2
million in 2001. The decrease primarily relates
24

to the loss from discontinued operations and the write-off of goodwill, as
described above. Further contributing to the decrease was the write-off, net of
income taxes, of debt financing costs, as well as the additional fluctuations in
income from continuing operations described above.

New Accounting Pronouncements. In December 2002, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure," which amends SFAS No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirement of SFAS No. 123 to require more prominent and
more frequent disclosures in financial statements of the effects of stock-based
compensation. The transition guidance and annual disclosure provisions of SFAS
No. 148 are effective for fiscal years ending after December 15, 2002. The
interim disclosure provisions are effective for financial reports containing
condensed financial statements for interim periods beginning after December 15,
2002. The adoption of the new disclosure provisions of SFAS No. 148 did not have
a material impact on Dura's consolidated balance sheet or results of operations,
with the annual required disclosures included herein (see Note 6 to the
consolidated financial statements).

In November 2002, the FASB issued FASB Interpretation No. ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN 45 clarifies the
requirements for a guarantor's accounting for and disclosure of certain
guarantees issued and outstanding. The initial recognition and initial
measurement provisions of FIN 45 are applicable to guarantees issued or modified
after December 31, 2002. The disclosure requirements of FIN 45 are effective for
financial statements of interim or annual periods ending after December 15,
2002. The adoption of FIN 45 is not expected to have a significant impact on
Dura's consolidated balance sheet or results of operations; however, Dura
adopted the disclosure requirement provisions of this pronouncement during 2002,
with required disclosures included herein (see Note 2 to the consolidated
financial statements).

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between SFAS No.
146 and EITF 94-3 relates to SFAS No. 146's requirements for the timing of
recognizing a liability for a cost associated with an exit or disposal activity.
SFAS No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under EITF 94-3
a liability for an exit cost was recognized at the date of an entity's
commitment to an exit plan. SFAS No. 146 must be applied prospectively for exit
or disposal activities that are initiated after December 31, 2002. SFAS No. 146
also increases the disclosure requirements associated with exit or disposal
activities. While the adoption will not impact Dura's current financial position
or results of operations, should Dura initiate further exit or disposal
activities in the future, Dura would be required to follow this new
pronouncement.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This statement eliminates the automatic classification of gain or
loss on extinguishment of debt as an extraordinary item of income and requires
that such gain or loss be evaluated for extraordinary classification under the
criteria of Accounting Principles Board ("APB") Opinion No. 30 "Reporting
Results of Operations." This statement also requires sales-leaseback accounting
for certain lease modifications that have economic effects that are similar to
sales-leaseback transactions, and makes various other technical corrections to
existing pronouncements. This statement will be effective for Dura beginning
January 1, 2003. The adoption of this statement will result in a
reclassification within results of operations related to the write-off of debt
issuance costs during the second quarter of 2002 in connection with certain
financing transactions (see Note 8 to the consolidated financial statements).

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which was effective for fiscal
years beginning after December 15, 2001. The provisions of this

25

statement provide a single accounting model for impairment and disposal of
long-lived assets. Dura adopted SFAS No. 144 on January 1, 2002, the adoption of
this pronouncement did not have a material impact on results of continuing
operations or financial position (see Note 3 to the consolidated financial
statements).

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement requires recognition of a liability for
any legal obligations associated with the retirement of a tangible long-lived
asset. Any such liability will be recorded at fair value when incurred and
generally results in an increase to the carrying amount of the related
long-lived asset. This statement will be effective for Dura beginning January 1,
2003. The adoption of this statement is not anticipated to have a material
effect on results of operations or financial position.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142. SFAS No. 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method of accounting. Under
SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer
amortized, but reviewed annually, or more frequently if impairment indicators
arise. Separable intangible assets that are not deemed to have indefinite lives
will continue to be amortized over their useful lives, but with no maximum life.
The amortization provisions of SFAS No. 142 apply to goodwill and intangible
assets acquired after June 30, 2001. With respect to goodwill and intangible
assets acquired prior to July 1, 2001, Dura was required to adopt SFAS No. 142
effective January 1, 2002 (see Significant Accounting Policies below).

COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000

Revenues. Revenues for the year ended December 31, 2001 decreased by
$131.7 million, or 5.3 percent, to $2,333.7 million from $2,465.4 million for
2000. Factors that unfavorably impacted revenue in 2001 included the weakness in
both the North American automotive and recreation vehicle markets as well as the
weakening of the European currencies in relation to the US dollar. Approximately
29 percent of Dura's total revenues are generated from European operations and 8
percent of total revenues are generated from the recreation vehicle market.

Cost of Sales. Cost of sales for the year ended December 31, 2001
decreased by $70.8 million, or 3.4 percent, to $2,013.6 million from $2,084.4
million for 2000. Cost of sales as a percentage of revenues for the year ended
December 31, 2001 was 86.3 percent compared to 84.5 percent for 2000. The
corresponding reduction in gross margin is primarily the result of the decreased
volumes in the North American automotive and recreation vehicle markets as well
as inefficiencies resulting from difficult product launches in Europe. These
items were partially offset by the benefit from the implementation of Dura's
restructuring plan and continued focus on cost reduction.

Selling, General, and Administrative. Selling, general, and administrative
expenses for the year ended December 31, 2001 decreased by $19.5 million, or
12.7 percent, to $134.4 million from $153.9 million in 2000. As a percentage of
revenue, selling, general and administrative expenses decreased to 5.8 percent
for 2001 compared to 6.2 percent for 2000. The decrease in cost is primarily the
result of the salaried headcount reduction actions taken in late 2000 and early
2001.

Facility Consolidation, Product Recall and Other Charges. In November
2001, Dura entered into a definitive agreement to divest its Plastic Products
business for total proceeds of approximately $41.0 million. The transaction
closed on January 28, 2002. The Plastic Products business designed, engineered,
and manufactured plastic components for a wide variety of automotive vehicle
applications, focusing on the metal to plastic conversion and dual plastic
applications markets. This business employed approximately 750 people in three
facilities located in Mishawaka, Indiana; Bowling Green, Kentucky; and
Jonesville, Michigan and generated approximately $80.0 million in annual
revenue. Two members of Dura's Board of Directors are members of management of
an investor group which is general partner of the controlling shareholder of the
acquiring company. Dura recorded a noncash charge of approximately $7.4 million
in the fourth quarter of 2001 for the estimated loss upon divestment. In the
second quarter of 2002, Dura recorded an additional $1.9 million charge related
to final negotiation of purchase price adjustments.

26

In October 2001, Dura successfully completed the sale of its Thixotech
business located in Canada for total proceeds of approximately $4.1 million.
Thixotech generated approximately $10.0 million of revenue on an annualized
basis, and is a manufacturer of magnesium injection molded products for the
electronics, communications, power tools and automotive industries. Dura
recorded a noncash charge related to this transaction of approximately $5.2
million in the fourth quarter of 2001.

In August 2001, Dura divested its Australian operations resulting in a
charge of approximately $7.5 million in the third quarter of 2001. Approximately
$2.0 million of this charge was cash related. The Australian operations
generated approximately $10.0 million of revenue on an annualized basis and
produced parking brakes, jacks, pedal assemblies, hinges and latches for the
automotive industry.

Throughout 2000 and 2001 Dura has evaluated manufacturing capacity issues
and opportunities for cost reduction given the reduced demand in the North
America automotive and recreation vehicle markets and the available capacity
within Dura's operations. As a result, beginning in the fourth quarter of 2000,
Dura began to implement several actions including discontinuing operations in
two North American facilities, combining the Driver Control and Engineered
Products divisions into one (Control Systems), and reducing and consolidating
certain support activities to achieve an appropriate level of support personnel
relative to remaining operations and future business requirements. These actions
resulted in a fourth quarter 2000 restructuring charge of $6.8 million,
including severance related payments of $6.2 million and facility closure costs
of approximately $0.6 million. Additionally in 2000, Dura expensed as incurred
equipment relocation costs of $0.8 million. In continuation of the actions taken
in 2000, Dura recorded $2.4 million of additional restructuring charges in the
first quarter and $2.0 million in the fourth quarter of 2001 relating to
employee severance. Dura also expensed as incurred approximately $0.2 million of
equipment relocation costs incurred during the first quarter of 2001. The effect
of the costs expensed as incurred are reflected as facility consolidation and
other charges in the 2001 consolidated statements of operations. Costs incurred
and charged to the reserves as of December 31, 2002 amounted to $11.0 million in
severance related costs and $1.0 million in facility closure costs. During 2001
and 2002, additional adjustments were made of $0.1 million and $0.3 million,
respectively, to decrease the reserve for employee severance as the actual costs
incurred were less than originally estimated. The decision to exit the two
facilities resulted in a reduction in the work force of approximately 52
salaried and 408 hourly employees, all of which have been let go as of December
31, 2002. Additionally, the decision to consolidate two divisions into one and
to reduce support personnel to a level consistent with future business
requirements resulted in a reduction of approximately 217 salaried employees,
all of which have been let go as of December 31, 2002.

Amortization Expense. Amortization expense for the year ended December 31,
2001 decreased by $0.4 million, or 1.5 percent, to $26.7 million from $27.1
million in 2000. The slight decrease is due to the impact of foreign exchange on
European goodwill during 2001.

Interest Expense. Interest expense for the year ended December 31, 2001
decreased by $11.4 million, or 10.2 percent, to $100.5 million from $111.9
million in 2000. The decrease in interest expense is due to lower interest rates
on LIBOR contracts and debt pay-down of approximately $131.2 million during
2001, offset by the higher interest cost related to the additional issuance of
$158.5 million of Subordinated Notes and the unfavorable impact of existing
interest rate swap agreements.

Income Taxes. The effective tax rate for the year ended December 31, 2001
was 30.8 percent compared to the 2000 effective tax rate of 40.9 percent. The
effective income tax rate decreased as a result of the implementation of tax
planning strategies during 2001, a reduction in the statutory tax rates in
Germany that became effective in 2001 and a tax holiday in the Czech Republic
for 2001. The effective rate differs from statutory rates due primarily to the
mix of income/loss among the countries in which Dura operates, the effect of
non-deductible goodwill amortization and the effects of various tax planning
strategies.

Minority Interest. Minority interest for the years ended December 31, 2001
and December 31, 2000 represents dividends, net of income tax benefits, on the
Preferred Securities which were issued on March 20, 1998.

27

Income from Continuing Operations. Income from continuing operations for
the year ended December 31, 2001 decreased by $19.5 million, or 47.9 percent, to
$21.2 million from $40.7 million in 2000. The decrease is primarily due to
decreases in revenues and gross margin, as described above. These decreases to
income from continuing operations were offset by decreases in selling, general
and administrative expenses, interest expense and the provision for income
taxes, also described above.

Discontinued Operations. Income (loss) from discontinued operations for
the year ended December 31, 2001 decreased by $11.0 million to a loss of $10.0
million, from income of $1.0 million in 2000. The decrease is due to lower
volumes in these businesses and certain product warranty costs.

Net Income (Loss