DURA AUTOMOTIVE SYSTEMS INC - 10-Q Quarterly Report

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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

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

For the quarterly period ended September 30, 2002

OR

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

For the transition period from ___ to ___

Commission file number 0-21139

DURA AUTOMOTIVE SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE 38-3185711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4508 IDS CENTER 55402
MINNEAPOLIS, MINNESOTA (Zip Code)
(Address of principal executive offices)

(612) 342-2311
(Registrant's telephone number, including area code)

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

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

Yes X No
----- -----

The number of shares outstanding of the Registrant's Class A common stock, par
value $.01 per share, at November 1, 2002 was 16,483,280 shares. The number of
shares outstanding of the Registrant's Class B common stock, par value $.01 per
share, at November 1, 2002 was 1,761,150 shares.

DURA AUTOMOTIVE SYSTEMS, INC.
FORM 10-Q

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements:

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

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

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

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

Notes to Condensed Consolidated Financial Statements
(unaudited)

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Item 6. Exhibits and Reports on Form 8-K

SIGNATURE

CERTIFICATIONS

-2-

ITEM 1 - FINANCIAL INFORMATION

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS - UNAUDITED)

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

Revenues $ 586,797 $ 568,890
Cost of sales 517,075 500,723
--------- ---------
Gross profit 69,722 68,167
Selling, general and administrative expenses 36,352 33,494
Facility consolidation and other charges 4,225 7,685
Amortization expense 283 6,833
--------- ---------
Operating income 28,862 20,155
Interest expense, net 21,110 24,603
--------- ---------
Income (loss) before provision for income taxes 7,752 (4,448)
and minority interests
Provision (benefit) for income taxes 3,177 (1,704)
Minority interest - dividends on trust preferred
securities, net 622 642
--------- ---------
Net income (loss) $ 3,953 $ (3,386)
========= =========

Basic earnings (loss) per share: $ 0.22 $ (0.19)
Basic shares outstanding 18,257 17,768

Diluted earnings (loss) per share: $ 0.21 $ (0.19)
Diluted shares outstanding 18,660 17,768

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

-3-

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS - UNAUDITED)

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

Revenues $ 1,870,261 $ 1,897,064
Cost of sales 1,634,220 1,647,979
----------- -----------
Gross profit 236,041 249,085
Selling, general and administrative expenses 106,256 107,226
Facility consolidation and other charges 25,313 10,314
Amortization expense 968 20,527
----------- -----------
Operating income 103,504 111,018
Interest expense, net 64,628 77,752
----------- -----------
Income before provision for income taxes
and minority interests 38,876 33,266
Provision for income taxes 26,402 12,641
Minority interest - dividends on trust preferred
securities, net 1,865 1,927
----------- -----------
Income before extraordinary item 10,609 18,698
Extraordinary item (3,422) --
----------- -----------
Net income $ 7,187 $ 18,698
=========== ===========

Basic earnings per share:
Income before extraordinary item $ 0.59 $ 1.05
Extraordinary item (0.19) --
----------- -----------
Net income $ 0.40 $ 1.05
=========== ===========

Basic shares outstanding 18,002 17,747
=========== ===========

Diluted earnings per share:
Income before extraordinary item $ 0.57 $ 1.04
Extraordinary item (0.18) --
----------- -----------
Net income $ 0.39 $ 1.04
=========== ===========

Diluted shares outstanding 18,498 18,022
=========== ===========

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

-4-

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS)

September 30, December 31,
Assets 2002 2001
------ ------------- ------------
(unaudited)

Current assets:
Cash and cash equivalents $ 123,284 $ 32,289
Accounts receivable, net 331,809 293,476
Inventories 120,179 116,508
Other current assets 127,872 126,367
----------- -----------
Total current assets 703,144 568,640
----------- -----------

Property, plant and equipment, net 479,747 516,517
Goodwill, net 970,798 962,467
Fair value of derivative instruments 32,598 --
Deferred income taxes and other assets, net 79,636 73,980
----------- -----------
$ 2,265,923 $ 2,121,604
=========== ===========

Liabilities and Stockholders' Investment
----------------------------------------

Current liabilities:
Accounts payable $ 271,358 $ 249,824
Accrued liabilities 235,812 177,327
Current maturities of long-term debt 4,646 60,847
----------- -----------
Total current liabilities 511,816 487,998
----------- -----------

Long-term debt, net of current maturities 1,094,577 1,015,579
Other noncurrent liabilities 125,329 120,380

Mandatorily redeemable convertible trust preferred securities 55,250 55,250
----------- -----------

Stockholders' investment:
Common stock - Class A 165 147
Common stock - Class B 17 31
Additional paid-in capital 346,913 342,694
Treasury stock (1,974) (1,891)
Retained earnings 168,455 161,268
Accumulated other comprehensive loss (34,625) (59,852)
----------- -----------
Total stockholders' investment 478,951 442,397
----------- -----------
$ 2,265,923 $ 2,121,604
=========== ===========

The accompanying notes are an integral part of these condensed consolidated
balance sheets.

-5-

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS - UNAUDITED)

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

OPERATING ACTIVITIES:
Net income $ 7,187 $ 18,698
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization 56,648 72,036
Deferred income taxes 9,372 706
Extraordinary loss on extinguishment of debt 3,422 --
Changes in other operating items 53,386 65,041
--------- ---------
Net cash provided by operating activities 130,015 156,481
--------- ---------
INVESTING ACTIVITIES:
Net proceeds from disposition of businesses 31,122 --
Capital expenditures, net (40,422) (46,486)
--------- ---------
Net cash used in investing activities (9,300) (46,486)
--------- ---------
FINANCING ACTIVITIES:
Short-term debt repayments, net (58,632) 755
Long-term debt repayments, net (309,888) (108,994)
Proceeds from issuance of senior notes 350,000 --
Debt issue costs (10,964) --
Proceeds from issuance of common stock and
exercise of stock options 4,223 --
Other, net (83) 286
--------- ---------
Net cash used in financing activities (25,344) (107,953)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (4,376) (12,278)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 90,995 (10,236)
CASH AND CASH EQUIVALENTS:
Beginning of period 32,289 30,438
--------- ---------
End of period $ 123,284 $ 20,202
========= =========
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $ 43,541 $ 63,366
Cash paid for income taxes $ 10,393 $ 3,241

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

-6-

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

General - Dura Automotive Systems, Inc. (a Delaware Corporation) and
subsidiaries (Dura) designs and manufactures components and systems primarily
for the global automotive industry. Dura has over 70 manufacturing and product
development facilities located in the United States, Brazil, Canada, Czech
Republic, France, Germany, Mexico, Portugal, Slovakia, Spain and the United
Kingdom.

We have prepared the condensed consolidated financial statements of
Dura, without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments and reflects all
adjustments which are, in our opinion, necessary for a fair presentation of the
results of operations and statements of financial position for the interim
periods presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such rules and regulations. We believe that the disclosures
are adequate to make the information presented not misleading when read in
conjunction with the financial statements and the notes thereto included in our
Annual Report on Form 10-K, as filed with the Securities and Exchange Commission
for the period ended December 31, 2001.

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

2. INVENTORIES

Inventories consisted of the following (in thousands):

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

Raw materials $ 65,433 $ 65,228
Work-in-process 26,535 25,369
Finished goods 28,211 25,911
-------- --------
$120,179 $116,508
======== ========

3. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share were computed by dividing net income by
the weighted average number of Class A and Class B common shares outstanding
during the period. Diluted earnings (loss) per share is computed under the
treasury stock method and calculates the dilutive effect of potential common
shares, as follows (in thousands, except share and per share amounts):

-7-

Three months Nine months
ended September 30, ended September 30,
---------------------- ----------------------
2002 2001 2002 2001
-------- -------- -------- --------

Net income (loss) $ 3,953 $ (3,386) $ 7,187 $ 18,698
-------- -------- -------- --------

Weighted average number of Class A
common shares outstanding 16,425 14,602 15,637 14,498
Weighted average number of Class B
common shares outstanding 1,832 3,166 2,365 3,249
-------- -------- -------- --------
18,257 17,768 18,002 17,747
Dilutive effect of outstanding stock options
after application of the treasury stock method 403 -- 496 275
-------- -------- -------- --------
Diluted shares outstanding 18,660 17,768 18,498 18,022
======== ======== ======== ========

Basic earnings (loss) per share $ 0.22 $ (0.19) $ 0.40 $ 1.05
======== ======== ======== ========

Diluted earnings (loss) per share $ 0.21 $ (0.19) $ 0.39 $ 1.04
======== ======== ======== ========

Potential common shares of approximately 1,289,000 relating to Dura's
outstanding Preferred Securities were excluded from the computation of diluted
earnings per share for the three months and nine months ended September 30, 2002
and 2001, as inclusion of these shares would have been anti-dilutive. In
addition, outstanding stock options of approximately 445,000 were excluded from
the computation of diluted earnings per share for the three months ended
September 30, 2001, as inclusion of these options would have been anti-dilutive.

4. FACILITY CONSOLIDATION AND OTHER CHARGES

Divestitures

In May 2002, Dura divested its Steering Gear Business. The Steering Gear
Business is a machining operation that utilized a technology that was determined
to be non-essential to Dura's capabilities. This business employs approximately
200 people in England and generated annual revenue of approximately $20.0
million. The transaction resulted in a one-time charge of approximately $19.2
million consisting of asset write-downs and remaining contractual commitments.
No tax benefit was recorded related to this charge. In addition, Dura also
wrote-off approximately $2.1 million related to certain deferred tax assets and
this is included in the provision for income taxes in the accompanying condensed
consolidated statements of income for the nine months ended September 30, 2002.
The effects of this divestiture on future operating results will not be
significant.

In November 2001, Dura entered into a definitive agreement to divest its
Plastic Products Business for gross proceeds of approximately $41.0 million. The
transaction closed in January 2002. The net cash proceeds of approximately $31.1
million were used to repay outstanding indebtedness. The Plastic Products
Business designs, engineers, and manufactures plastic

-8-

components for a wide variety of automotive vehicle applications, focusing on
the metal to plastic conversion and dual plastic applications markets. This
business employs 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. The effect of this divestiture on future operating
results will not be significant.

Restructuring

During the third quarter of 2002, Dura continued its plan to exit
certain of its non-core products and exited its pedals product line in Europe.
Further, in order to improve capacity utilization, Dura announced a plan to
combine its Benton Harbor and Butler facilities in North America. These actions,
together with certain costs expensed as incurred and an adjustment made to a
previously recorded reserve, resulted in a third quarter 2002 restructuring
charge of $4.2 million. The charge related to the exit of the pedals product
line in Europe included severance related costs of $1.3 million, asset
impairment of $1.5 million and other facility closure costs of $0.5 million. No
tax benefit was recorded related to this charge. The charge related to the
closure of the Benton Harbor facility included 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 and made an adjustment to
reverse a previously recorded reserve of $0.3 million.

Costs incurred and charged to the reserve related to the exit of the
European pedals product line in Europe as of September 30, 2002 amounted to $0.1
million in severance related costs.

The decision to exit the European pedals product line resulted in a
reduction in the work force of approximately 25 salaried and 72 hourly
employees, of which 1 salaried and 18 hourly employees have been severed as of
September 30, 2002. These restructuring actions are anticipated to be complete
by September 30, 2003.

The decision to close the Benton Harbor facility will result in a
reduction in the work force of approximately 12 salaried and 44 hourly
employees. No employees have been severed as of September 30, 2002. These
restructuring actions are anticipated to be complete by September 30, 2003.

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 recreational 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

-9-

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 consolidated statements of operations.

Costs incurred and charged to the reserves as of September 30, 2002
amounted to $10.1 million in severance related costs and $0.9 million in
facility closure costs. During 2001 and 2002, additional adjustments were made
of $0.2 million 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 severed as of September 30, 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 of which 216 have been severed as of
September 30, 2002. These restructuring actions are anticipated to be complete
in 2002.

5. ACQUISITION INTEGRATIONS

Dura has developed and implemented the majority of the facility
consolidation plans designed to integrate the operations of past acquisitions.
As of September 30, 2002, purchase liabilities recorded in conjunction with the
acquisitions included approximately $17.0 million for costs associated with the
shutdown and consolidation of certain acquired facilities and $3.2 million for
severance and other related costs. Adjustments to the reserve recorded during
the three months ended September 30, 2002 included a net decrease of $0.5
million for costs related to acquired facilities and a net decrease of $0.7
million in severance and other related costs. All adjustments were reflected as
an adjustment to goodwill. Costs incurred and charged to these reserves amounted
to $0.9 million related to acquired facilities and $0.2 million in severance and
other related costs during the quarter ended September 30, 2002. The remaining
employee terminations and facility closures are expected to be completed by the
end of 2002 except for certain contractual obligations, principally facility
lease obligations that extend beyond that date.

-10-

6. LONG-TERM DEBT

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

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

Credit Agreement:
Tranche A and B term loans $ -- $ 454,306
Tranche C term loan 150,000 --
Revolving credit facility -- 62,584
Senior notes 350,000 --
Subordinated notes 549,029 539,700
Senior notes - derivative
instrument adjustment 32,598 --
Other 17,596 19,836
----------- -----------
1,099,223 1,076,426
Less - Current maturities (4,646) (60,847)
----------- -----------
Total long-term debt $ 1,094,577 $ 1,015,579
=========== ===========

In connection with the acquisitions of Adwest and Excel, Dura entered
into an amended and restated $1.15 billion credit agreement (Credit Agreement).
The Credit Agreement provides for revolving credit facilities of $400.0 million,
a $275.0 million tranche A term loan, a $275.0 million tranche B term loan and a
$200.0 million interim term loan facility.

In April 2002, Dura completed the offering of $350.0 million 8 5/8
percent senior unsecured notes (Senior Notes), due April 2012. The interest on
the Senior Notes is payable semi-annually beginning October 15, 2002. Net
proceeds from this offering of approximately $341.0 million were used to repay
the outstanding balance of the $275.0 million tranche A term loan, and a portion
of the $275.0 million tranche B term loan. Dura then replaced the remaining
tranche B term loan with a $150.0 million tranche C term loan. Borrowings under
the tranche C term loan are based on LIBOR and are due and payable in December
2008 with no early payment penalties. In conjunction with these transactions,
Dura obtained an amendment to the Credit Agreement to allow for the offering and
to further relax certain financial covenants. Dura also entered into a fixed to
floating interest rate swap (notional amount of $325.0 million) with various
financial institutions that more closely mirrors the cost of its bank debt (see
Note 8). In connection with the repayment of borrowings outstanding under the
Credit Agreement, Dura wrote-off debt issuance costs of approximately $3.4
million, net of income taxes, during the second quarter of 2002. This write-off
is reflected as an extraordinary item in the accompanying condensed consolidated
statement of operations for the nine months ended September 30, 2002.

As of September 30, 2002, rates on borrowings under the Credit Agreement
are based on LIBOR and were 4.3 percent. The revolving credit facility is
available until March 2005. Borrowings under the interim loan were due and
payable in September 2000, and, as further discussed below, were repaid in April
1999. The Credit Agreement contains various restrictive covenants which limit
indebtedness, investments, rental obligations and cash dividends. The Credit
Agreement also requires Dura to maintain certain financial ratios including
minimum

-11-

liquidity and interest coverage. Dura was in compliance with the covenants as of
September 30, 2002. Borrowings under the Credit Agreement are collateralized by
certain assets of Dura.

The Credit Agreement provides Dura with the ability to denominate a
portion of its revolving credit borrowings in foreign currencies up to an amount
equal to $150.0 million. As of September 30, 2002, Dura had no borrowings
outstanding under the revolver.

Dura also utilizes uncommitted overdraft facilities to satisfy the
short-term working capital requirements of its foreign subsidiaries. At
September 30, 2002, Dura had no borrowings outstanding under its overdraft
facilities. At September 30, 2002, Dura had overdraft facilities available from
banks of approximately $40.4 million.

In April 1999, Dura completed the offering of $300.0 million and Euro
100.0 million of 9 percent senior subordinated notes (Subordinated Notes), due
May 2009. The interest on the Subordinated Notes is payable semi-annually. Net
proceeds from this offering of approximately $394.7 million were used to repay
the $200.0 million interim term loan, approximately $78.1 million to retire
other indebtedness and approximately $118.9 million was used for general
corporate purposes. In June 2001, Dura completed a similar offering of 9 percent
senior subordinated notes due May 2009 with a face amount of $158.5 million. The
interest on these notes is also payable semi-annually. Unamortized discount and
debt issuance costs were approximately $8.5 million, yielding an imputed
interest rate of 10 percent. Net proceeds of approximately $147.1 million were
used to reduce the borrowings outstanding under the revolving credit facility.
These notes are collateralized by guarantees of certain of Dura's subsidiaries.

7. BUSINESS COMBINATIONS, GOODWILL AND INTANGIBLE ASSETS

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets". 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 is required to adopt SFAS No. 142 effective
January 1, 2002. As of September 30, 2002, Dura has completed step one of the
transitional goodwill impairment test. The results of this step have identified
that Dura may have to record an impairment loss related to its Controls Systems
and Other Operating Companies reportable units, as defined under SFAS No. 142.
Based on current estimates, Dura believes the range of the transitional goodwill
impairment to be from $200.0 million to $240.0 million. Dura will complete step
two of the transitional goodwill impairment test prior to the end of the year.
Had the non-amortization provision of SFAS No. 141 and 142 been adopted January
1, 2001, net income and earnings per share would have been reported as the
following amounts (in thousands, except per share data):

-12-

Three months ended Nine months ended
September 30, September 30,
------------------------------ ------------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------

Net income (loss), as reported $ 3,953 $ (3,386) $ 7,187 $ 18,698
Add back goodwill amortization,
net of tax -- 5,946 -- 17,868
---------- ---------- ---------- ----------
Adjusted net income $ 3,953 $ 2,560 $ 7,187 $ 36,566
========== ========== ========== ==========

Basic earnings per share:
Net income (loss), as reported $ 0.22 $ (0.19) $ 0.40 $ 1.05
Goodwill amortization -- 0.33 -- 1.01
---------- ---------- ---------- ----------
Adjusted net income $ 0.22 $ 0.14 $ 0.40 $ 2.06
========== ========== ========== ==========

Basic shares outstanding 18,257 17,768 18,002 17,747
========== ========== ========== ==========

Diluted earnings per share:
Net income (loss), as reported $ 0.21 $ (0.19) $ 0.39 $ 1.04
Goodwill amortization -- 0.33 -- 0.99
---------- ---------- ---------- ----------
Adjusted net income $ 0.21 $ 0.14 $ 0.39 $ 2.03
========== ========== ========== ==========

Diluted shares outstanding 18,660 18,213 18,498 18,022
========== ========== ========== ==========

8. DERIVATIVES AND HEDGING ACTIVITIES

Dura is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. Dura does not enter into derivatives or
other financial instruments for trading or speculative purposes. Dura enters
into financial instruments to manage and reduce the impact of changes in foreign
currency exchange rates and interest rates. The counter parties to these
financial instruments are major financial institutions.

Dura uses forward exchange contracts to hedge its foreign currency
exposure related to the interest payments under its outstanding Euro 100.0
million denominated Senior Subordinated Notes. Dura designated these contracts
at their inception as a cash flow hedge. At September 30, 2002, Dura had
outstanding contracts to purchase Euro 4.5 million (approximately $3.9 million),
representing the interest payments due during 2002. The estimated fair value of
these foreign exchange contracts based upon market quotes was approximately $4.4
million. The net unrealized gain of approximately $0.5 million is included in
accumulated other comprehensive income in the accompanying September 30, 2002
condensed consolidated balance sheet.

Dura also uses forward exchange contracts to hedge its foreign currency
exposure related to certain intercompany transactions. Dura designated these
contracts at their inception as a cash flow hedge. At September 30, 2002, Dura
had outstanding contracts to purchase Euro 16.0 million (approximately $15.6
million) and Pounds 2.0 million (approximately $3.1 million).

-13-

The estimated fair value of these foreign exchange contracts based upon market
quotes was approximately $15.7 million and $3.1 million, respectively. The net
unrealized loss of approximately $0.1 million on the contracts to purchase Euro
16.0 million is included in accumulated other comprehensive income in the
accompanying September 30, 2002 condensed consolidated balance sheet. There was
no change in the fair market value of the contract to purchase 2.0 million
Pounds.

In April 2002, in connection with the Senior Notes offering, Dura
entered into a fixed to floating interest rate swap (notional amount of $325.0
million) with various financial institutions. Dura designated these contracts at
their inception as a fair value hedge. At September 30, 2002, Dura's swap
contract outstanding had a fair value based upon market quotes of approximately
$32.6 million and this amount is included in long term debt in the accompanying
September 30, 2002 condensed consolidated balance sheet.

9. COMPREHENSIVE INCOME (LOSS)

Comprehensive income reflects the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. For Dura, comprehensive income (loss) represents net
income adjusted for foreign currency translation adjustments and the deferred
gain/ loss on derivative instruments utilized to hedge Dura's interest and
foreign exchange exposures. Comprehensive income (loss) for the periods is as
follows (in thousands):

Three months ended Nine months ended
September 30, September 30,
----------------------- ----------------------
2002 2001 2002 2001
-------- -------- -------- --------

Net income (loss) $ 3,953 $ (3,386) $ 7,187 $ 18,698
Other comprehensive income:
Foreign currency
translation adjustment (14,548) 1,998 24,531 (27,173)
Derivative instruments 1,395 560 696 (57)
-------- -------- -------- --------
Comprehensive income (loss) $ (9,200) $ (828) $ 32,414 $ (8,532)
======== ======== ======== ========

10. NEW ACCOUNTING PRONOUNCEMENTS

In August 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 for the year ending
December 31, 2003. The adoption of this statement is not anticipated to have a
material effect on our results of operations or financial position.

In July 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of
Long-Lived Assets," which was effective for fiscal years beginning after
December 15, 2001. The provisions of this Statement provide a single accounting
model for impairment and disposal of long-lived

-14-

assets. Dura adopted SFAS No. 144 on January 1, 2002. The adoption of this
pronouncement did not have a material impact on our results of operations or
financial position.

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 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 for the year
ending December 31, 2003. The adoption of this statement will result in a
reclassification, within our 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 6).

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS No. 146"). 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 is effective 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. SFAS No. 146 is applied prospectively. While Dura does not currently
anticipate the adoption will have a material impact on the Company'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.

11. RELATED PARTY TRANSACTION

During 2001, Dura loaned approximately $1.2 million to Automotive
Aviation Partners, LLC, (AAP LLC), an entity in which Dura's former Chairman,
who is a member of the board of directors, is a 75% owner. Dura owns the other
25% of AAP LLC. A promissory note in favor of Dura, which evidences the loan,
bears interest at the commercial prime lending rate and matured in October 2002.
Dura is currently taking steps to obtain payment of the note. As security for
the repayment of the loan, Dura's former Chairman has guaranteed repayment of
75% of the promissory note. The Board of Directors of Dura has authorized Dura
to enter into a forbearance agreement with AAP LLC and the former Chairman
pursuant to which Dura will agree to temporarily forbear from enforcing its
rights under the guaranty, until March 30, 2003, in exchange for the efforts of
AAP LLC and the former Chairman to grant a secondary subordinate security
interest in the sole asset of AAP LLC in favor of Dura. This promissory note is
included in

-15-

accounts receivable in the accompanying consolidated balance sheet of Dura as of
September 30, 2002.

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

The following condensed consolidating financial information presents
balance sheets, statements of income and cash flow information related to Dura's
business. Each Guarantor, as defined, is a direct or indirect wholly owned
subsidiary of Dura and has fully and unconditionally guaranteed the 9% senior
subordinated notes issued by Dura Operating Corp., on a joint and several basis.
Separate financial statements and other disclosures concerning the Guarantors
have not been presented because management believes that such information is not
material to investors.

-16-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS AS OF SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS - UNAUDITED)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------

Assets
- -------------------------
Current assets:
Cash and cash equivalents $ 87,012 $ 1,092 $ 35,180 $ -- $ 123,284
Accounts receivable, net 81,944 34,000 215,865 -- 331,809
Inventories 28,425 20,569 71,185 -- 120,179
Other current assets 42,025 1,913 83,934 -- 127,872
Due from affiliates 87,031 72,862 -- (159,893) --
----------- ----------- ----------- ----------- -----------
Total current assets 326,437 130,436 406,164 (159,893) 703,144
----------- ----------- ----------- ----------- -----------
Property, plant and equipment,
net 140,664 52,822 286,261 -- 479,747
Investment in subsidiaries 953,790 20,949 71,733 (1,046,472) --
Notes receivable from
affiliates 147,864 186,851 70,713 (405,428) --
Goodwill, net 422,535 82,770 465,493 -- 970,798
Fair value of derivative
instruments 32,598 -- -- -- 32,598
Other assets, net 53,306 654 25,676 -- 79,636
----------- ----------- ----------- ----------- -----------
Total Assets $ 2,077,194 $ 474,482 $ 1,326,040 $(1,611,793) $ 2,265,923
=========== =========== =========== =========== ===========

Liabilities and Stockholders'
Investment
- -----------------------------
Current liabilities:
Accounts payable $ 102,142 $ 26,161 $ 143,055 $ -- $ 271,358
Accrued liabilities 101,569 16,932 117,311 -- 235,812
Current maturities of long-
term debt 1,531 50 3,065 -- 4,646
Due to affiliates 75,461 49,698 34,734 (159,893) --
----------- ----------- ----------- ----------- -----------
Total current liabilities 280,703 92,841 298,165 (159,893) 511,816
----------- ----------- ----------- ----------- -----------
Long-term debt, net of
current maturities 148,554 19 14,377 -- 162,950
Subordinated notes 931,627 -- -- -- 931,627
Other noncurrent liabilities 59,246 14,182 51,901 -- 125,329
Notes payable to affiliates 92,663 -- 312,765 (405,428) --
----------- ----------- ----------- ----------- -----------
Total liabilities 1,512,793 107,042 677,208 (565,321) 1,731,722
----------- ----------- ----------- ----------- -----------
Mandatorily redeemable
convertible trust preferred
securities 55,250 -- -- -- 55,250
Stockholders' investment: 513,576 367,440 679,032 (1,046,472) 513,576
Accumulated other
comprehensive loss (4,425) -- (30,200) -- (34,625)
----------- ----------- ----------- ----------- -----------
Total Liabilities and
Stockholders' Investment $ 2,077,194 $ 474,482 $ 1,326,040 $(1,611,793) $ 2,265,923
=========== =========== =========== =========== ===========

-17-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS - UNAUDITED)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------

Revenues $ 236,473 $ 88,460 $ 272,621 $ (10,757) $ 586,797
Cost of sales 202,369 71,264 254,199 (10,757) 517,075
--------- --------- --------- --------- ---------
Gross profit 34,104 17,196 18,422 -- 69,722
Selling, general and
administrative expenses 16,820 4,077 15,455 -- 36,352
Facility consolidation and
other charges (116) 1,185 3,156 -- 4,225
Amortization expense 179 2 102 -- 283
--------- --------- --------- --------- ---------
Operating income 17,221 11,932 (291) -- 28,862
Interest expense, net 24,960 (28) (3,822) -- 21,110
--------- --------- --------- --------- ---------
Income (loss) before provision
for income taxes, equity in
(earnings) of affiliates and
minority interest (7,739) 11,960 3,531 -- 7,752
--------- --------- --------- --------- ---------
Provision (benefit) for income
taxes (3,831) 4,105 2,903 -- 3,177
Minority interests and equity in
(earnings) losses of affiliates,
net (7,548) -- (1,960) 9,508 --
Minority interest-dividends on
trust preferred securities, net 622 -- -- -- 622
Dividends (to)/ from affiliates (935) -- -- 935 --
--------- --------- --------- --------- ---------
Income (loss) before
extraordinary item 3,953 7,855 2,588 (10,443) 3,953
Extraordinary item -- -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) $ 3,953 $ 7,855 $ 2,588 $ (10,443) $ 3,953
========= ========= ========= ========= =========

-18-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------

Revenues $ 798,156 $ 286,276 $ 821,836 $ (36,007) $ 1,870,261
Cost of sales 695,127 224,428 750,672 (36,007) 1,634,220
----------- ----------- ----------- ----------- -----------
Gross profit 103,029 61,848 71,164 -- 236,041
Selling, general and
administrative expenses 48,173 11,962 46,121 -- 106,256
Facility consolidation and
other charges 1,747 1,185 22,381 -- 25,313
Amortization expense 653 5 310 -- 968
----------- ----------- ----------- ----------- -----------
Operating income 52,456 48,696 2,352 -- 103,504
Interest expense, net 52,114 (78) 12,592 -- 64,628
----------- ----------- ----------- ----------- -----------
Income (loss) before provision
for income taxes, equity in
(earnings) of affiliates and
minority interest 342 48,774 (10,240) -- 38,876
----------- ----------- ----------- ----------- -----------
Provision for income taxes 2,641 16,218 7,543 -- 26,402
Minority interests and equity in
(earnings) losses of affiliates,
net (12,003) -- (4,541) 16,544 --
Minority interest-dividends on
trust preferred securities, net 1,865 -- -- -- 1,865
Dividends (to)/ from affiliates (2,770) -- -- 2,770 --
----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary item 10,609 32,556 (13,242) (19,314) 10,609
Extraordinary item (3,422) -- -- -- (3,422)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 7,187 $ 32,556 $ (13,242) $ (19,314) $ 7,187
=========== =========== =========== =========== ===========

-19-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2002
(AMOUNTS IN THOUSANDS - UNAUDITED)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------

OPERATING ACTIVITIES:
Net income (loss) $ 7,187 $ 32,556 $ (13,242) $ (19,314) $ 7,187
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 19,630 7,070 29,948 -- 56,648
Deferred income taxes 5,013 -- 4,359 -- 9,372
Equity in earnings of affiliates and
minority interest (12,003) -- (4,541) 16,544 --
Extraordinary item 3,422 -- -- -- 3,422
Changes in other operating items 81,625 (5,719) (22,520) -- 53,386
--------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities 104,874 33,907 (5,996) (2,770) 130,015
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES:
Net proceeds from disposition of
businesses 31,122 -- -- -- 31,122
Capital expenditures, net (7,390) (5,135) (27,897) -- (40,422)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
investing activities 23,732 (5,135) (27,897) -- (9,300)
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES:
Short-term repayments, net (41,500) -- (17,132) -- (58,632)
Long-term repayments, net (270,143) (37) (39,708) -- (309,888)
Proceeds from issuance of senior notes 350,000 -- -- -- 350,000
Debt issue costs (10,964) -- -- -- (10,964)
Debt financing (to)/from affiliates (90,105) (26,730) 116,835 -- --
Proceeds from issuance of common
stock and exercise of stock options 4,223 -- -- -- 4,223
Other, net (83) -- -- -- (83)
Dividends paid -- (2,770) -- 2,770 --
--------- --------- --------- --------- ---------
Net cash (used in) provided by
financing activities (58,572) (29,537) 59,995 2,770 (25,344)
EFFECT OF EXCHANGE RATE
CHANGES ON CASH 6,285 -- (10,661) -- (4,376)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 76,319 (765) 15,441 -- 90,995
CASH AND CASH EQUIVALENTS:
Beginning of period 10,693 1,857 19,739 -- 32,289
--------- --------- --------- --------- ---------
End of period $ 87,012 $ 1,092 $ 35,180 $ -- $ 123,284
========= ========= ========= ========= =========

-20-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2001
(AMOUNTS IN THOUSANDS)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------

Assets
- -------------------------
Current assets:
Cash and cash equivalents $ 10,693 $ 1,857 $ 19,739 $ -- $ 32,289
Accounts receivable, net 113,655 25,205 154,616 -- 293,476
Inventories 34,425 17,591 64,492 -- 116,508
Other current assets 47,909 1,249 77,209 -- 126,367
Due from affiliates 149,969 63,358 2,241 (215,568) --
----------- ----------- ----------- ----------- -----------
Total current assets 356,651 109,260 318,297 (215,568) 568,640
----------- ----------- ----------- ----------- -----------
Property, plant and equipment,
net 184,461 48,554 283,502 -- 516,517
Investment in subsidiaries 648,053 3,489 66,926 (718,468) --
Notes receivable from
affiliates 278,213 146,409 70,711 (495,333) --
Goodwill, net 429,663 82,769 450,035 -- 962,467
Other assets, net 47,989 510 25,481 -- 73,980
----------- ----------- ----------- ----------- -----------
Total Assets $ 1,945,030 $ 390,991 $ 1,214,952 $(1,429,369) $ 2,121,604
=========== =========== =========== =========== ===========

Liabilities and Stockholders'
Investment
- -----------------------------
Current liabilities:
Accounts payable $ 105,430 $ 17,655 $ 126,739 $ -- $ 249,824
Accrued liabilities 71,248 12,522 93,557 -- 177,327
Current maturities of long-
term debt 42,122 50 18,675 -- 60,847
Due to affiliates 65,760 33,999 115,809 (215,568) --
----------- ----------- ----------- ----------- -----------
Total current liabilities 284,560 64,226 354,780 (215,568) 487,998
----------- ----------- ----------- ----------- -----------
Long-term debt, net of
current maturities 962,350 56 53,173 -- 1,015,579
Other noncurrent liabilities 61,117 12,606 46,657 -- 120,380
Notes payable to affiliates 84,625 23,851 386,857 (495,333) --
----------- ----------- ----------- ----------- -----------
Total liabilities 1,392,652 100,739 841,467 (710,901) 1,623,957
----------- ----------- ----------- ----------- -----------
Mandatorily redeemable
convertible trust preferred
securities 55,250 -- -- -- 55,250
Stockholders' investment: 497,128 290,252 373,485 (718,468) 442,397
----------- ----------- ----------- ----------- -----------
Total Liabilities and
Stockholders' Investment $ 1,945,030 $ 390,991 $ 1,214,952 $(1,429,369) $ 2,121,604
=========== =========== =========== =========== ===========

-21-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------

Revenues $ 258,843 $ 73,323 $ 247,355 $ (10,631) $ 568,890
Cost of sales 218,994 62,877 229,483 (10,631) 500,723
--------- --------- --------- --------- ---------
Gross profit 39,849 10,446 17,872 -- 68,167
Selling, general and
administrative expenses 17,892 3,533 12,069 -- 33,494
Facility consolidation and other
charges 7,685 -- -- -- 7,685
Amortization expense 3,405 577 2,851 -- 6,833
--------- --------- --------- --------- ---------
Operating income 10,867 6,336 2,952 -- 20,155
Interest expense, net 15,727 25 8,851 -- 24,603
--------- --------- --------- --------- ---------
Income (loss) before provision
for income taxes, equity in
(earnings) losses of affiliates
and minority interest (4,860) 6,311 (5,899) -- (4,448)
Provision (benefit) for income
taxes (705) 344 (1,343) -- (1,704)
Minority interests and equity in
(earnings) losses of affiliates,
net 670 -- (1,096) 426 --
Minority interest-dividends on
trust preferred securities, net 642 -- -- -- 642
Dividends (to)/ from affiliates (2,081) -- -- 2,081 --
--------- --------- --------- --------- ---------
Net income (loss) $ (3,386) $ 5,967 $ (3,460) $ (2,507) $ (3,386)
========= ========= ========= ========= =========

-22-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ------------ ------------

Revenues $ 874,774 $ 230,061 $ 831,899 $ (39,670) $1,897,064
Cost of sales 750,655 188,759 748,235 (39,670) 1,647,979
---------- ---------- ---------- ---------- ----------
Gross profit 124,119 41,302 83,664 -- 249,085
Selling, general and
administrative expenses 58,250 10,926 38,050 -- 107,226
Facility consolidation and
other charges 9,301 708 305 -- 10,314
Amortization expense 9,570 2,093 8,864 -- 20,527
---------- ---------- ---------- ---------- ----------
Operating income 46,998 27,575 36,445 -- 111,018
Interest expense, net 45,930 621 31,201 -- 77,752
---------- ---------- ---------- ---------- ----------
Income before provision for
income taxes, equity in
(earnings) losses of affiliates
and minority interest 1,068 26,954 5,244 -- 33,266
Provision for income taxes 3,476 6,031 3,134 -- 12,641
Minority interests and equity in
(earnings) losses of affiliates,
net (15,751) -- (2,935) 18,686 --
Minority interest-dividends on
trust preferred securities, net 1,927 -- -- -- 1,927
Dividends (to)/ from affiliates (7,282) -- -- 7,282 --
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 18,698 $ 20,923 $ 5,045 $ (25,968) $ 18,698
========== ========== ========== ========== ==========

-23-

12. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)

DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS)

DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------

OPERATING ACTIVITIES:
Net income $ 18,698 $ 20,923 $ 5,045 $ (25,968) $ 18,698
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 30,682 7,973 33,381 -- 72,036
Deferred income taxes (14,707) 14,573 840 -- 706
Equity in earnings of affiliates and
minority interest (15,751) -- (2,935) 18,686 --
Changes in other operating items 76,838 14,621 (26,418) -- 65,041
--------- --------- --------- --------- ---------
Net cash provided by operating
activities 95,760 58,090 9,913 (7,282) 156,481
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES:
Capital expenditures, net (7,512) (3,361) (35,613) -- (46,486)
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES:
Short-term borrowings (repayments), net 5,018 53 (4,316) -- 755
Long-term borrowings (repayments), net 71,061 65 (180,120) -- (108,994)
Debt financing (to)/from affiliates (155,381) (47,239) 202,620 -- --
Proceeds from issuance of common
stock and exercise of stock options 286 -- -- -- 286
Dividends paid -- (7,282) -- 7,282 --
--------- --------- --------- --------- ---------
Net cash (used in) provided by
financing activities (79,016) (54,403) 18,184 7,282 (107,953)
EFFECT OF EXCHANGE RATE
CHANGES ON CASH (10,695) -- (1,583) -- (12,278)
--------- --------- --------- --------- ---------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (1,463) 326 (9,099) -- (10,236)
CASH AND CASH EQUIVALENTS:
Beginning of period 18,154 1,060 11,224 -- 30,438
--------- --------- --------- --------- ---------
End of period $ 16,691 $ 1,386 $ 2,125 $ -- $ 20,202
========= ========= ========= ========= =========

-24-

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

OVERVIEW

North American automotive and recreation vehicle production volumes continued to
be strong through the first nine months of 2002, however we are still cautious
about the outlook for the remainder of the year. European automotive production
volumes are down versus prior year and the outlook is less certain.

RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition and
results of operations (MD&A) should be read in conjunction with the MD&A
included in our Annual Report on Form 10-K for the year ended December 31, 2001.

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

Revenues - Revenues for the three months ended September 30, 2002 were $586.8
million, an increase of $17.9 million, or 3.1%, from $568.9 million for the
three months ended September 30, 2001. Factors that favorably impacted sales
included increased volumes in the North American automotive and recreation
vehicle markets, the strengthening of the European currencies in relation to the
US dollar, and an increase in new business in Dura's core products. Offsetting
these favorable items were a decrease in sales related to the divestiture of our
Steering Gear, Plastic Products, Australia and Thixotech businesses along with
weakness in the European automotive industry and the exiting of certain non-core
businesses in Europe.

Cost of Sales - Cost of sales for the three months ended September 30, 2002 were
$517.1 million, an increase of $16.4 million, or 3.3% , from $500.7 million for
the three months ended September 30, 2001. Cost of sales as a percentage of
revenues for the third quarter of 2002 was 88.1%, which is basically flat
compared to 88.0% in the third quarter of 2001.

Facility Consolidation and Other Charges - During the third quarter of 2002,
Dura continued its plan to exit certain of its non-core products and exited its
pedals product line in Europe. Further, in order to improve capacity
utilization, Dura announced a plan to combine its Benton Harbor and Butler
facilities in North America. These actions, together with certain costs expensed
as incurred and an adjustment made to a previously recorded reserve, resulted in
a third quarter 2002 restructuring charge of $4.2 million. The charge related to
the exit of the pedals product line in Europe included severance related costs
of $1.3 million, asset impairment of $1.5 million and other facility closure
costs of $0.5 million. The charge related to the closure of the Benton Harbor
facility included 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 and made an adjustment to reverse a previously recorded
reserve of $0.3 million.

Selling, General, and Administrative - Selling, general, and administrative
expenses for the three months ended September 30, 2002 were $36.4 million, an
increase of $2.9 million, or 8.7%, from $33.5 million for the three months ended
September 30, 2001. As a percentage of revenue, selling, general and
administrative expenses increased to 6.2% for 2002 compared to 5.9% in the third
quarter of 2001. The increase in cost is primarily the result of Dura's ongoing
investment in new technology.

-25-

Amortization Expense - Amortization expense for the three months ended September
30, 2002, was $0.3 million, a decrease of $6.5 million, or 95.9%, from $6.8
million for the three months ended September 30, 2001. The decrease is the
result of Dura adopting SFAS No. 142 "Goodwill and Other Intangible Assets".
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 Adoption of SFAS No. 142 below).

Interest Expense - Interest expense for the three months ended September 30,
2002 was $21.1 million, a decrease of $3.5 million, or 14.2%, from $24.6 million
for the three months ended September 30, 2001. The decrease in interest expense
is due to debt pay-down during 2001 and the first nine months of 2002 and lower
interest rates on LIBOR contracts. This decrease was slightly offset by the
higher interest cost related to the additional issuance of $158.5 million of
Senior Subordinated Notes (see below).

Income Taxes - The effective income tax rate was 41.0% for the three months
ended September 30, 2002 and a benefit of 38.3% for the three months ended
September 30, 2001. The effective tax rate for 2002 reflects the impact of not
benefiting losses related to the exiting of the European pedals product line.
The benefit in 2001 resulted from losses incurred in the third quarter of 2001.
The overall effective rates differed from the statutory rates as a result of
lower combined foreign tax rates, the effects of state taxes, the provision of a
valuation allowance on certain losses in foreign jurisdictions, as well as the
items discussed above.

Minority Interest - Minority interest for the three months ended September 30,
2002 and September 30, 2001 represents dividends, net of income tax benefits, on
the 7 1/2 percent Convertible Trust Preferred Securities ("Preferred
Securities") which were issued on March 20, 1998.

Adoption of SFAS No. 141 and 142 - In July 2001, the FASB issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets". 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 is required to adopt SFAS No. 142
effective January 1, 2002. As of September 30, 2002, Dura has completed step one
of the transitional goodwill impairment test. The results of this step have
identified that Dura may have to record an impairment loss related to its
Controls Systems and Other Operating Companies reportable units, as defined
under SFAS No. 142. Based on current estimates, Dura believes the range of the
transitional goodwill impairment to be from $200.0 million to $240.0 million.
Dura will complete step two of the transitional goodwill impairment test prior
to the end of the year. Had the non-amortization provisions of SFAS No. 141 and
142 been adopted January 1, 2001, net income and earnings per share would have
been reported as the following amounts (in thousands, except per share data):

-26-

Three months ended
September 30,
-----------------------
2002 2001
---------- ----------

Net income (loss), as reported $ 3,953 $ (3,386)
Add back goodwill amortization,
net of tax -- 5,946
---------- ----------
Adjusted net income $ 3,953 $ 2,560
========== ==========

Basic earnings per share:
Net income (loss), as reported $ 0.22 $ (0.19)
Goodwill amortization -- 0.33
---------- ----------
Adjusted net income $ 0.22 $ 0.14
========== ==========

Basic shares outstanding 18,257 17,768
========== ==========

Diluted earnings per share:
Net income (loss), as reported $ 0.21 $ (0.19)
Goodwill amortization -- 0.33
---------- ----------
Adjusted net income $ 0.21 $ 0.14
========== ==========

Diluted shares outstanding 18,660 18,213
========== ==========

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

Revenues - Revenues for the nine months ended September 30, 2002 were $1,871.3
million, a decrease of $25.8 million, or 1.4%, from $1,897.1 million for the
nine months ended September 30, 2001. Factors that unfavorably impacted sales
included the divestiture of our Steering Gear, Plastic Products, Australia and
Thixotech businesses along with weakness in the European automotive industry.
Slightly offsetting these unfavorable items was an increase in the North
American automotive and recreational vehicle production volumes, the
strengthening of the European currencies in relation to the US dollar, and an
increase in new business in Dura's core products.

Cost of Sales - Cost of sales for the nine months ended September 30, 2002 were
$1,634.2 million, a decrease of $13.8 million, or 0.8%, from $1,648.0 million
for the nine months ended September 30, 2001. Cost of sales as a percentage of
revenues for the first nine months of 2002 increased to 87.4% compared to 86.9%
in the first nine months of 2001. The corresponding reduction in gross margin is
primarily the result of some difficult program launches that took place in
Europe during the later part of 2001. Cost associated with these launches
extended into the first quarter of 2002 and negatively impacted gross margin. By
the second quarter of 2002 these costs were mostly behind us and operational
efficiency continued to improve in Europe. In addition, North American
automotive and recreational vehicle production volumes increased helping to
positively impact gross margin.

-27-

Facility Consolidation and Other Charges - In May 2002, Dura divested its
Steering Gear Business. The Steering Gear Business is a machining operation that
utilized a technology that was determined to be non-essential to Dura's
capabilities. This business employs approximately 200 people in England and
generated annual revenue of approximately $20.0 million. The transaction
resulted in a one-time charge of approximately $19.2 million consisting of asset
write-downs and remaining contractual commitments. No tax benefit was recorded
related to this charge. Dura also recorded an additional $1.9 million charge
related to final negotiation of purchase price adjustments associated with the
sale of the Plastics Products Business.

During the third quarter of 2002, Dura continued its plan to exit
certain of its non-core products and exited its pedals product line in Europe.
Further, in order to improve capacity utilization, Dura announced a plan to
combine its Benton Harbor and Butler facilities in North America. These actions,
together with certain costs expensed as incurred and an adjustment made to a
previously recorded reserve, resulted in a third quarter 2002 restructuring
charge of $4.2 million. The charge related to the exit of the pedals product
line in Europe included severance related costs of $1.3 million, asset
impairment of $1.5 million and other facility closure costs of $0.5 million. The
charge related to the closure of the Benton Harbor facility included 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 and made
an adjustment to reverse a previously recorded reserve of $0.3 million.

Selling, General, and Administrative - Selling, general, and administrative
expenses for the nine months ended September 30, 2002 were $106.3 million, a
decrease of $0.9 million, or 0.8%, from $107.2 million for the nine months ended
September 30, 2001. As a percentage of revenue, selling, general and
administrative expenses was 5.7% for the first nine months of 2002 and 2001.

Amortization Expense - Amortization expense for the nine months ended September
30, 2002 was $1.0 million, a decrease of $19.5 million from $20.5 million for
the nine months ended September 30, 2001. The decrease is the result of Dura
adopting the non-amortization provisions of SFAS No. 142 "Goodwill and Other
Intangible Assets". 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 Adoption of SFAS No. 142 below).

Interest Expense - Interest expense for the nine months ended September 30, 2002
was $64.6 million, a decrease of $13.2 million, or 17.0%, from $77.8 million for
the nine months ended September 30, 2001. The decrease in interest expense is
due to significant debt pay-down during 2001 and the first three quarters of
2002 and a lower average borrowing rate. This decrease was slightly offset by
the higher interest cost related to the additional issuance of $158.5 million of
Senior Subordinated Notes (see below).

Income Taxes - The effective income tax rate was 67.9% for the nine months ended
September 30, 2002 and 38.0% for the nine months ended September 30, 2001. The
significant increase in the effective tax rate relates to the impact of exiting
the European pedals product line and the divestiture of the Steering Gear
Business. Due to Dura's current tax position in the U.K. we provided no benefit
on the $19.2 million loss recorded on the Steering Gear Business. In addition,
$2.1 million was charged to the provision relating to certain deferred tax
assets associated with the Steering Gear Business. The overall effective rates
differed from the statutory rates as a result of lower combined foreign tax
rates, the effects of state taxes, the provision of a valuation allowance on
certain losses in foreign jurisdictions, as well as the items discussed above.

-28-

Minority Interest - Minority interest for the nine months ended September 30,
2002 and September 30, 2001 represents dividends, net of income tax benefits, on
the 7 1/2 percent Preferred Securities which were issued on March 20, 1998.

Adoption of SFAS No. 141 and 142 - In July 2001, the FASB issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets". 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 is required to adopt SFAS No. 142
effective January 1, 2002. As of September 30, 2002, Dura has completed step one
of the transitional goodwill impairment test. The results of this step have
identified that Dura may have to record an impairment loss related to its
Controls Systems and Other Operating Companies reportable units, as defined
under SFAS No. 142. Based on current estimates, Dura believes the range of the
transitional goodwill impairment to be from $200.0 million to $240.0 million.
Dura will complete step two of the transitional goodwill impairment test prior
to the end of the year. Had the non-amortization provision of SFAS No. 141 and
142 been adopted January 1, 2001, net income and earnings per share would have
been reported as the following amounts (in thousands, except per share data):

Nine months ended
September 30,
-----------------------
2002 2001
---------- ----------

Net income, as reported $ 7,187 $ 18,698
Add back goodwill amortization,
net of tax -- 17,868
---------- ----------
Adjusted net income $ 7,187 $ 36,566
========== ==========

Basic earnings per share:
Net income, as reported $ 0.40 $ 1.05
Goodwill amortization -- 1.01
---------- ----------
Adjusted net income $ 0.40 $ 2.06
========== ==========

Basic shares outstanding 18,002 17,747
========== ==========

Diluted earnings per share:
Net income, as reported $ 0.39 $ 1.04
Goodwill amortization -- 0.99
---------- ----------
Adjusted net income $ 0.39 $ 2.03
========== ==========

Diluted shares outstanding 18,498 18,022
========== ==========

-29-

LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of 2002, Dura provided cash from operations of
$130.0 million, compared to $156.5 million in 2001. Cash generated from
operations before changes in working capital items was $76.6 million for the
first nine months of 2002 compared to $91.4 million for 2001. Working capital
generated cash of $53.4 million in the first nine months of 2002 compared to
$65.0 million in 2001. This reduction in cash generated from working capital is
primarily the result of the strengthening of the European currencies in relation
to the US dollar.

Net cash used in investing activities was $9.3 million for the first nine months
of 2002 compared to $46.5 million in 2001. Net proceeds from disposition of the
Plastic Products business provided $31.1 million and net capital expenditures
totaled $40.4 million for the first nine months of 2002. The capital
expenditures were primarily for equipment and dedicated tooling purchases
related to new or replacement programs. This compares with net capital
expenditures of $46.5 million in 2001.

Net cash used in financing activities totaled $25.3 million for the first nine
months of 2002 compared to $108.0 million in 2001, principally for the repayment
of outstanding indebtedness.

In connection with the acquisitions of Adwest and Excel, Dura entered into a
$1.15 billion credit agreement. The Credit Agreement provides for revolving
credit facilities of $400.0 million, a $275.0 million tranche A term loan, a
$275.0 million tranche B term loan and a $200.0 million interim term loan
facility.

In April 2002, Dura completed the offering of $350.0 million 8 5/8 percent
senior unsecured notes, due April 2012. The interest on the Senior Notes is
payable semi-annually beginning October 15, 2002. Net proceeds from this
offering of approximately $341.0 million were used to repay the outstanding
balance of the $275.0 million tranche A term loan, and a portion of the $275.0
million tranche B term loan. Dura then replaced the remaining tranche B term
loan with a $150.0 million tranche C term loan. Borrowings under the tranche C
term loan are based on LIBOR and are due and payable in December 2008. In
conjunction with these transactions, Dura obtained an amendment to the Credit
Agreement to allow for the offering and to further relax certain financial
covenants. Dura also entered into a fixed to floating interest rate swap
(notional amount of $325.0 million) with various financial institutions that
more closely mirrors the cost of its bank debt. In connection with the repayment
of borrowings outstanding under the Credit Agreement, Dura wrote-off debt
financing costs of approximately $3.4 million, net of income taxes, during the
second quarter of 2002. This write-off is reflected as an extraordinary item in
the accompanying condensed consolidated statement of income for the nine months
ended September 30, 2002.

As of September 30, 2002, rates on borrowings under the Credit Agreement are
based on LIBOR and were 4.3 percent. The revolving credit facility is available
until March 2005. Borrowings under the interim loan were due and payable in
September 2000, and, as further discussed below, were repaid in April 1999. The
Credit Agreement contains various restrictive covenants which limit
indebtedness, investments, rental obligations and cash dividends. The Credit
Agreement also requires Dura to maintain certain financial ratios including
minimum liquidity and interest coverage. Dura was in compliance with the
covenants as of September 30, 2002. Borrowings under the Credit Agreement are
collateralized by certain assets of Dura.

-30-

The Credit Agreement provides Dura with the ability to denominate a portion of
its revolving credit borrowings in foreign currencies up to an amount equal to
$150.0 million. As of September 30, 2002, Dura had no borrowings outstanding
under the revolver.

At September 30, 2002, Dura had unused borrowing capacity of approximately
$370.5 million of which $101.3 million was available under its most restrictive
debt covenant. Dura also utilizes uncommitted overdraft facilities to satisfy
the short-term working capital requirements of its foreign subsidiaries. At
September 30, 2002, Dura had no borrowings outstanding under its overdraft
facilities. At September 30, 2002, Dura had overdraft facilities available from
banks of approximately $40.4 million. Dura believes the borrowing availability
under its credit agreement, uncommitted overdraft facilities and funds generated
by operations, should provide liquidity and capital resources to pursue its
business strategy for the foreseeable future, with respect to working capital,
capital expenditures, and other operating needs. Dura estimates its 2002 capital
expenditures will be approximately $65.0 million.

In April 1999, Dura completed the offering of $300 million and Euro 100.0
million of senior subordinated notes. The Subordinated Notes mature in May 2009
and bear interest at 9% per year, which is payable semi-annually. Net proceeds
from this offering of approximately $394.7 million were used to repay the $200.0
million interim term loan, approximately $78.1 million to retire other
indebtedness and approximately $118.9 million was used for general corporate
purposes. In June 2001, Dura completed a similar offering of 9% senior
subordinated notes due May 2009 with a face amount of $158.5 million. The
interest on these notes is also payable semi-annually. Unamortized discount and
debt issuance costs were $8.5 million, yielding an imputed interest rate of 10%.
Net proceeds of approximately $147.1 million were used to reduce the borrowings
outstanding under the revolving credit facility. These notes are collateralized
by guarantees of certain of Dura's subsidiaries.

Dura is limited as to its ability to declare or make certain dividend payments
or other distributions of assets under its Credit Agreement and Subordinated
Notes. Certain distributions are permitted including a company stock purchase
program, tax sharing arrangements and distributions as required under Dura's
Preferred Securities.

QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY

Dura typically experiences decreased revenues and operating income during the
third calendar quarter of each year due to production shutdowns at OEMs for
model changeovers and vacations. The recreational vehicle market is seasonal in
that sales in the fourth quarter are normally at reduced levels.

EFFECTS OF INFLATION

Inflation potentially affects Dura in two principal ways. First, a significant
portion of Dura's debt is tied to prevailing short-term interest rates which may
change as a result of inflation rates, translating into changes in interest
expense. Second, general inflation can impact material purchases, labor and
other costs. In many cases, Dura has limited ability to pass through
inflation-related cost increases due to the competitive nature of the markets
that Dura serves. In the past few years, however, inflation has not been a
significant factor.

-31-

FOREIGN CURRENCY TRANSACTIONS

A significant portion of Dura's revenues during the three and nine months ended
September 30, 2002 were derived from manufacturing operations in Europe, Canada
and Latin America. The results of operations and the financial position of
Dura's operations in these countries are principally measured in their
respective currency and translated into U.S. dollars. The effects of foreign
currency fluctuations in such countries are somewhat mitigated by the fact that
expenses are generally incurred in the same currencies in which revenues are
generated. The reported income of these subsidiaries will be higher or lower
depending on a weakening or strengthening of the U.S. dollar against the
respective foreign currency.

A significant portion of Dura's assets at September 30, 2002 are based in its
foreign operations and are translated into U.S. dollars at foreign currency
exchange rates in effect as of the end of each period, with the effect of such
translation reflected as a separate component of stockholders' investment.
Accordingly, Dura's consolidated stockholders' investment will fluctuate
depending upon the weakening or strengthening of the U.S. dollar against the
respective foreign currency.

Dura's strategy for management of currency risk relies primarily upon conducting
its operations in such countries' respective currency and Dura may, from time to
time, engage in hedging programs intended to reduce Dura's exposure to currency
fluctuations.

NEW ACCOUNTING PRONOUNCEMENTS

In August 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 for the year ending December 31, 2003.
The adoption of this statement is not anticipated to have a material effect on
our results of operations or financial position.

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

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 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. The adoption of this statement will result in a
reclassification, within our results of operations, related to the write-off of
debt issuance costs during the second quarter of 2002 in connection with certain
financing transactions.

-32-

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities" ("SFAS No. 146"). 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 is effective for exit or disposal
activities that are initiated after December 31, 2002, with early adoption
encouraged. SFAS No. 146 also increases the disclosure requirements associated
with exit or disposal activities. SFAS No. 146 is applied prospectively. While
Dura does not currently anticipate the adoption will have a material impact on
its 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.

FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this Form
10-Q, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are, or may be
deemed to be, forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. When used in this Form 10-Q, the words "anticipate," "believe,"
"estimate," "expect," "intends," and similar expressions, as they relate to
Dura, are intended to identify forward-looking statements. Such forward-looking
statements are based on the beliefs of Dura's management as well as on
assumptions made by and information currently available to Dura at the time such
statements were made. Various economic and competitive factors could cause
actual results to differ materially from those discussed in such forward-looking
statements, including factors which are outside the control of Dura, such as
risks relating to: (i) the degree to which Dura is leveraged; (ii) Dura's
reliance on major customers and selected models; (iii) the cyclicality and
seasonality of the automotive market; (iv) the failure to realize the benefits
of recent acquisitions and joint ventures; (v) obtaining new business on new and
redesigned models; (vi) Dura's ability to continue to implement its acquisition
strategy; and (vii) the highly competitive nature of the automotive supply
industry. All subsequent written and oral forward-looking statements
attributable to Dura or persons acting on behalf of Dura are expressly qualified
in their entirety by such cautionary statements.

-33-

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In April 2002, in connection with the Senior Note offering, Dura entered into a
fixed to floating interest rate swap (notional amount of $325.0 million) with
various financial institutions. Dura designated these contracts at their
inception as a fair value hedge. At September 30, 2002, Dura's swap contract
outstanding had a fair value based upon market quotes of approximately $32.6
million and this amount is included in long term debt in the accompanying
September 30, 2002 condensed consolidated balance sheet.

There have been no other material changes to our exposures to market risk since
December 31, 2001.

ITEM 4: CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of Dura management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of these disclosure
controls and procedures were effective. No significant changes were made in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.

-34-

PART II. OTHER INFORMATION

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

Item 1. Legal Proceedings:

Other than as reported in Dura's 2001 Annual Report on Form 10-K under
the caption "Legal Proceedings," Dura is not currently a party to any
material pending legal proceedings, other than routine matters
incidental to the business of Dura.

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

(a) Exhibits

99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

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

1. Dura's current report on Form 8-K dated August
13, 2002, under Item 9 (Commission File No.
0-21139).

-35-

SIGNATURE

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

DURA AUTOMOTIVE SYSTEMS, INC.

Date: November 14, 2002 By /s/ David R. Bovee
------------------
David R. Bovee
Vice President, Chief Financial Officer
(principal accounting and financial
officer)

-36-

CERTIFICATION

I, Karl F. Storrie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Dura Automotive
Systems, Inc.;

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

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

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

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

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

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

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

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

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

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

/s/ Karl F. Storrie
- --------------------
Karl F. Storrie
President, Chief Executive Officer and Director
November 14, 2002

CERTIFICATION

I, David R. Bovee, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Dura Automotive
Systems, Inc.;

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

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

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

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

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

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

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

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

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

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

/s/ David R. Bovee
- -------------------
David R. Bovee
Vice President and Chief Financial Officer
November 14, 2002

EXHIBIT INDEX

99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002