DURA AUTOMOTIVE SYSTEMS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

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

FOR THE FISCAL YEAR ENDED: COMMISSION FILE NUMBER:
DECEMBER 31, 2003 0-21139

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

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

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(248) 299-7500

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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE

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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

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

As of March 8, 2004, 16,967,970 shares of Class A Common Stock of the
Registrant were outstanding. In addition, 1,486,208 shares of Class B Common
Stock of the Registrant were outstanding at March 8, 2004. The aggregate market
value of the Class A Common Stock of the Registrant as of June 30, 2003 (based
upon the last reported sale price of the Common Stock at that date by the Nasdaq
National Market System), excluding shares owned beneficially by affiliates, was
approximately $167,023,503.

Information required by Items 10, 11, 12, 13 and 14 of Part III of this
Annual Report on Form 10-K incorporates by reference information (to the extent
specific sections are referred to herein) from the Registrant's Proxy Statement
for its annual meeting to be held May 19, 2004 (the "2004 Proxy Statement").

DURA AUTOMOTIVE SYSTEMS, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

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PART I

ITEM 1. BUSINESS

(A) GENERAL DEVELOPMENT OF BUSINESS

GENERAL

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

Dura sells its products to every major North American and Japanese
automotive original equipment manufacturer ("OEM"), and to nearly every major
European OEM. Dura has 67 manufacturing and product development facilities
located in the United States, Brazil, Canada, China, Czech Republic, France,
Germany, Mexico, Portugal, Slovakia, Spain and the United Kingdom. Dura also has
a presence in Japan and India through alliances or technical licenses.

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

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

Dura has continued to focus on the diversification of its customer and
product base. Approximately 60% of Dura's revenues in 2003 were generated from
sales to the top automotive OEM's in the world including, General Motors, Ford,
Toyota, DaimlerChrysler, Renault-Nissan, Volkswagen, PSA Group, Honda, Fiat and
BMW. In addition, the trend toward module sourcing has enabled Dura to expand
its customer base to include large Tier 1 automotive suppliers, including Lear
Corporation and Johnson Controls, which accounted for approximately 13% of
Dura's revenues in 2003. Additionally, approximately 11% of Dura's revenues in
2003 came from recreation vehicle customers including Fleetwood, Winnebago and
numerous aftermarket distribution channels.

INDUSTRY TRENDS

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

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

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supplier policies resulted in significant consolidation of component suppliers
in certain segments, Dura believes that opportunities exist for further
consolidation within the vehicle component supply industry. This is particularly
true in Europe, which has many suppliers with relatively small market shares.

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

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

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

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

Dura has 33 manufacturing facilities outside the United States, including
locations in Brazil, Canada, China, Czech Republic, France, Germany, Mexico,
Portugal, Slovakia, Spain and the United Kingdom. In addition, Dura has formed
strategic alliances, which range from investments in other manufacturers to
informal understandings, which are designed to provide Dura access to new
customers and geographic markets including Japan and India, and also the
capability of offering complementary products. Dura has technical design and
development capabilities in each of the major regions that it has manufacturing
facilities. Dura has also relocated technical personnel resources to locations
in which OEMs will develop "world cars." By participating in the design of these
vehicles and through implementation of manufacturing processes near the point of
use, Dura believes it can continue to expand on its international presence.

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

Utilization of Light-Weight Materials. Concern over the environmental
impact of the automotive industry has been growing resulting in European and
U.S. regulations of vehicle emissions becoming more

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stringent. The automotive manufacturer's need to improve overall fuel economy in
vehicles has led to the trend toward minimizing vehicle weight. The use of
light-weight materials such as aluminum is on the rise and heavier traditional
materials such as steel and iron are being replaced whenever possible.

BUSINESS STRATEGY

Dura's primary business objective is to capitalize on the consolidation,
globalization and system sourcing trends in the automotive supply and recreation
vehicle industries in order to be the leading provider of the systems Dura
supplies to OEMs worldwide. OEMs are increasingly seeking suppliers capable of
providing complete systems rather than suppliers who only provide separate
component parts. A key element of Dura's growth strategy has been to add to its
ability to provide complete systems to its OEM customers. Historically, Dura's
growth has come from acquisitions. Presently Dura's focus is on expanding its
relationships with strategic customers and increasing its portfolio of
differentiated products, which is expected to result in a higher ratio of
organic versus acquisitive growth. Since Dura's inception in 1990, it has
completed several strategic acquisitions that have increased its product and
customer base, as well as increased its global presence.

Presently, Dura is focusing on the following four key strategies:

Aggressively Reduce Debt. Dura's top priority is to reduce debt. Dura has
done so by maximizing its cash flow available for debt reduction by maximizing
operating efficiencies, implementing a disciplined capital expenditure program
and divesting non-core operating assets. Dura intends to continue leveraging its
existing asset base through a disciplined capital expenditure program focused on
return on invested capital in which annual expenditures remain below
depreciation levels. In addition, Dura intends to focus on strategic
partnerships and alliances that do not require significant upfront cash
investments to pursue new business opportunities.

Focus on Business Lines with Acceptable Returns. Dura continues to shift
its growth strategy from one focused on acquisitions to a strategy focused more
on organic growth. As part of this strategy, Dura has placed a greater emphasis
on achieving higher returns on its investments, as well as on each business
line.

Maximize Low-Cost Production Capabilities. Dura continuously implements
strategic initiatives designed to improve product quality while reducing
manufacturing costs. In addition, Dura continually evaluates opportunities to
maximize its facility and asset utilization worldwide. Dura also seeks to
capitalize on opportunities to expand its manufacturing capabilities in low-cost
regions of the world, that are anticipated to develop into future domestic sales
to emerging markets.

Accelerate Investments in New Product and Process Technologies. Dura
intends to accelerate its investments in new product and manufacturing process
technologies to strengthen and differentiate its product portfolio. Dura also
intends to continue its efforts to develop innovative products and manufacturing
processes to serve its customers better globally and improve its product mix and
profit margins.

COMPANY HISTORY

Dura Automotive Systems, Inc. is a holding company whose predecessor was
formed in 1990 by Hidden Creek Industries ("Hidden Creek"), Onex Corporation
("Onex"), J2R Corporation ("J2R') and certain others for the purpose of
acquiring certain operating divisions from the Wickes Manufacturing Company
("Wickes"). Onex is a publicly-owned holding company based in Canada. Onex holds
approximately 35,000 shares of Dura's Class A common stock and approximately 1.4
million shares of Dura's Class B common stock. Hidden Creek is a private
industrial management company that is a partnership comprised of Onex and J2R
and is based in Minneapolis, Minnesota. Hidden Creek has provided certain
strategic, financial and acquisition services to Dura and has been its strategic
partner since Dura's inception, which has enabled its management to devote its
attention to Dura's existing operations. A member of Dura's board of directors
is the founder of Hidden Creek and is the President of J2R.

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Since the completion of the acquisition of the automotive parking brake and
cable business and light duty cable business ("the Brake and Cable Business") of
Alkin Co. ("Alkin"), Dura has successfully completed the following strategic
acquisitions, joint ventures and divestitures:

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

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

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

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

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

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

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

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

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divested this operation resulting in a charge of approximately $7.5
million in the third quarter of 2001. Approximately $2.0 million of this
charge was cash related.

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

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

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

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

- In March 1999, Dura acquired Adwest Automotive plc ("Adwest"), for $213.9
million in cash and the assumption of $106.1 million in indebtedness.
Adwest designs and manufactures driver control mechanisms, engine control
products and automotive cable primarily for the European automotive
market and had annual revenues of $400 million. The acquisition of Adwest
provided Dura with substantial driver control mechanism design and
production capability in Europe and broadened Dura's dealings with
customers such as Volkswagen, BMW, Ford, GM, Peugeot and Renault.

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

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

- In January 2000, Dura purchased the Jack Division of Ausco Products, Inc.
("Ausco") for total cash consideration of $9 million. Ausco, with
operations in Benton Harbor, Michigan, produced automotive jacks
primarily for North American OEMs and had revenues of approximately $13
million. During 2002, in order to improve capacity utilization, Dura
announced a plan to combine the Benton Harbor, Michigan operations with
the Butler, Indiana operations and close the Benton Harbor, Michigan
location. The plan was completed by September 30, 2003.

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

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

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

- During the fourth quarter of 2002, Dura adopted a plan to divest its
Mechanical Assemblies Europe business, as it believed this business would
not assist Dura in reaching its strategic growth and profitability
targets for the future. The Mechanical Assemblies Europe business
generated annualized revenues of approximately $111.9 million from
facilities in Grenoble and Boynes, France; and Woodley, Nottingham and
Stourport, UK. In March 2003, Dura completed the divestiture of its
Mechanical Assemblies Europe business to Magal Engineering and members of
the local management group, located in Woodley, England. The Mechanical
Assemblies Europe divestiture was treated as a discontinued operation
under Statement of Financial Accounting Standards ("SFAS") No. 144 (See
Note 3 to the consolidated financial statements). In conjunction with the
decision to divest this business, Dura recorded a loss from the
Mechanical Assemblies Europe business of approximately $107.4 million in
the fourth quarter of 2002, of which approximately $15.0 million was paid
for in cash. Including the previously disclosed and reported divestiture
of the Steering Gear product line in the second quarter of 2002 and exit
of the European pedal product line in the third quarter of 2002, the
total loss from discontinued operations for the year ended December 31,
2002 was $126.6 million, on which no tax benefit was recorded. These
losses relate primarily to asset write-downs of $53.3 million,
contractual commitments and transaction related costs of $15.0 million,
and year-to-date operating losses of $58.3 million. The operating losses
included a pension settlement charge of $18.1 million and facility
consolidation costs related to the Steering and Pedal product line
disposals completed in second and third quarter of 2002 of $19.2 million
and $2.4 million, respectively. During the quarter ended March 31, 2003,
as part of the final negotiations surrounding the disposal, a net
positive adjustment of $0.9 million was recorded upon disposal of the
discontinued operations, which, when included with the loss from
operations of approximately $1.9 million, resulted in a net loss from
discontinued operations of approximately $1.0 million in the quarter.
Additionally, net negative adjustments totaling $1.8 million were
recorded during 2003 from a less favorable settlement of retained
liabilities than anticipated, resulting in a net loss from discontinued
operations of approximately $2.8 million in the year ended December 31,
2003.

- In July 2003, Dura acquired Creation Group from Heywood Williams Group
PLC (United Kingdom). The Creation Group is a premier designer and
manufacturer of windows, doors and specialty products for the North
American recreation vehicle, motor vehicle accessories and manufactured
housing markets. The Creation Group, headquartered in Elkhart, Indiana,
had 2002 revenues of approximately $145 million, and has approximately
1,100 employees at 10 facilities in Indiana, Ohio and Pennsylvania.
Financial terms of the deal included a purchase price of $57 million,
subject to a working capital adjustment and an earn out provision of an
additional $3 million if the acquired entity achieves certain financial
targets. Dura used cash on hand to finance the transaction. The
acquisition of the Creation Group provided Dura with increased product
offerings and added design and production capability in the recreation
vehicle industry. The acquisition also broadened Dura's dealings with
customers such as Fleetwood and Thor Industries and added new
relationships with Leer Manufacturing, Raider Industries and Century
Fiberglass.

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PRODUCTS

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

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

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

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

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

CUSTOMERS AND MARKETING

The North American vehicle component supply industry is led by GM, Ford and
DaimlerChrysler. New domestic manufacturers as a whole accounted for
approximately 25 percent of the market in 2003. In North America, Dura supplies
its products primarily to Ford, GM, DaimlerChrysler and Lear Corporation (Lear).
Dura has also expanded its global presence through acquisitions and internal
growth. Dura has added new customers and increased penetration into certain
existing customers such as BMW, Volkswagen, Toyota, Nissan-Renault and PSA
(Peugeot and Citroen).

In 2003, over 70 percent of total worldwide light vehicle production
occurred outside of North America. Dura derives a significant amount of its
revenues from sales to OEMs located outside of North America. In Europe, Dura
supplies its products primarily to Volkswagen, GM/Opel, Ford, BMW, PSA, Renault/
Nissan, and DaimlerChrysler. Set forth below is a summary of Dura's sales from
continuing operations by geographic region for 2003, 2002 and 2001:

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

The following is a summary of Dura's significant customers based on sales
from continuing operations for 2003, 2002 and 2001:

Dura's automotive customers award contracts for a particular car platform,
which may include more than one car model. Such contracts range from one year to
the life of the models, which is generally three to seven years, and do not
require the customer to purchase a minimum number of parts. Dura also competes
for new business to supply parts for successor models. Because Dura supplies
parts for a broad cross-section of both

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new and mature models, its reliance on any particular model is minimized. Dura
manufactures products for many of the most popular car, light truck, sport
utility and mini-van models in North America and Europe.

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

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

DESIGN AND ENGINEERING SUPPORT

Dura believes that engineering service and support are key factors in
successfully obtaining new business. Dura utilizes program management with
customer-dedicated program teams, which have full design, development, test and
commercial issues under the operational control of a single manager. In
addition, Dura has established cross-functional teams for each new program to
ensure efficient product development from program conception through product
launch.

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

Dura has approximately 500 patents granted or in the application process.
The patents granted expire over several years beginning in 2004. Although Dura
believes that, taken together, the patents are significant, the loss or
expiration of any particular patent would not be material to Dura.

MANUFACTURING

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

Assemblies such as seat systems, jacks, parking brake levers, gear shifters
and latches consist of between five and 50 individual components, which are
attached to form an integrated mechanism. Although these assembly operations are
generally performed in manufacturing cells, high-volume, automated assembly

10

machines are employed where appropriate. The assembly operations construct the
final product through hot or cold forging machines, staking and riveting the
component parts. A large portion of the component parts are purchased from
Dura's outside suppliers. However, Dura manufactures its own stampings, a
process that consists of passing sheet metal through dies in a stamping press to
form the metal into three-dimensional parts. Dura produces stamped parts using
single-stage and progressive dies in presses, which range in size from 150 to
600 tons. Through continuous improvement teams, which stress employee
involvement, manufacturing processes are regularly upgraded to increase
flexibility, improve operating safety and minimize changeover times of the dies
and fixtures.

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

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

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

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

The automotive industry has maintained a rigorous quality management system
known as QS-9000. Suppliers must be registered as QS-9000 compliant by
independent auditors as a condition of doing business with specific automotive
customers. Dura has received QS-9000 registration at all of its automotive
facilities and maintains this status by demonstrating continuous improvement in
manufacturing capability and support processes. Dura is transitioning its
quality management system from QS-9000 to TS 16949. TS 16949 is more stringent
than QS-9000 and is the first globally commonized automotive specification. The
transition to

11

TS 16949 is targeted for completion in calendar year 2004. In addition, Dura has
received ISO 9000 registration for all facilities that serve the recreation
vehicle markets.

Dura's plants have been recognized by its customers with various awards,
such as the DaimlerChrysler Gold Award, GM Target for Excellence, Isuzu Quality
Achievement Award, Lear Hall of Fame Award, Nissan Quality Master Award, Nummi
Delivery Performance Award and VW Premier Supplier Award. Dura has also received
an "A" rating at PSA and Renault-Nissan. Moreover, Dura's recreation vehicle
group has been the recipient of Fleetwood Industries Circle of Excellence:
Quality Supplier Award for many years as well as WDA Supplier of the Year.

Dura has implemented an environmental management system at its
manufacturing locations. The system meets the ISO-14001 standard and is
registered as compliant by independent auditors. The system assists Dura in
being a clean corporate citizen and provides a framework for managing
environmental aspects. Approximately 90 percent of Dura's manufacturing
locations maintain independent registration to ISO-14001.

COMPETITION

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

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

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

(1) Driver Control Systems:

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

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

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

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

(2) Seating Control Systems: Dura's primary competitors in seat adjusters
are the in-house operations of Lear, JCI, Intier Automotive (Intier) and
Faurecia. In addition to Lear, JCI, Intier and Faurecia,

12

independent competition exists in North America, which includes Brose
Fahrzeagteile Glaswerke GmbH & Co. (Brose) and C. Rob Hammerstein GmbH &
Co. KG (Hammerstein). Independent competition in Europe includes Brose,
Hammerstein and Keiper Recaro GmbH & Co.

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

(4) Engineered Assemblies:

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

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

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

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

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

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

SUPPLIERS AND RAW MATERIALS

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

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

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

SEASONALITY

A significant portion of Dura's business is directly related to automotive
and recreation vehicle sales and production by its customers, which is highly
cyclical and depends on general economic conditions, consumer
13

spending and preferences. Any significant reduction in vehicle production and
sales by Dura's customers would have a material adverse effect on its business.
The North American automotive and recreation vehicle market, Dura's largest
market, experienced a downturn that began in 2000 and continued into 2001. As
such, Dura's sales declined in line with the reduced volumes. To offset the
reduction in production volumes, Dura accelerated its structural cost reduction
efforts. North American sales recovered in 2002 and continued into 2003, with
the help of incentive programs offered by the OEMs. This had a positive effect
on Dura's sales for 2002.

Dura has operations in several major regions of the world and economic
conditions in these regions often differ, which may have varying effects on its
business. The recent strengthening of the Euro relative to the U.S. dollar
resulted in a positive impact to Dura's results of operations during 2002 and
2003.

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

EMPLOYEES

As of December 31, 2003, Dura employed approximately 9,400 people in North
America, 7,600 in Europe and 800 in other regions of the world. A substantial
number of Dura's employees are members of unions. Dura has collective bargaining
agreements with several unions including: the UAW; the CAW; the International
Brotherhood of Teamsters; and the International Association of Machinists and
Aerospace Workers. Virtually all of Dura's unionized facilities in the United
States and Canada have a separate contract with the union which represents the
workers employed there, with each such contract having an expiration date
independent of its other labor contracts. The majority of Dura's European and
Mexican employees are members of industrial trade union organizations and
confederations within their respective countries. Many of these organizations
and confederations operate under national contracts, which are not specific to
any one employer. Although Dura believes that its relationship with its union
employees is generally good, there can be no assurance that Dura will be able to
negotiate new agreements on favorable terms. In the event Dura is unsuccessful
in negotiating new agreements, these facilities could be subject to work
stoppages, which could have a material adverse effect on the operations of Dura.

(b) SAFE HARBOR PROVISIONS

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

- Reliance on Major Customers and Selected Vehicle Programs. Dura's
largest customers, Ford, GM, Lear, DaimlerChrysler and Volkswagen,
represented approximately 20 percent, 14 percent, 12 percent, 9 percent
and 9 percent, respectively, of Dura's 2003 revenues. Any significant
reduction in the demand for vehicles manufactured by Ford, GM,
DaimlerChrysler or Volkswagen or products manufactured by Lear for which
we produce components and assemblies or for certain other key vehicle
models or group of related vehicle model sold by any of Dura's other
major customers could have a material adverse effect on Dura's existing
and future revenues and net income.

- Industry Cyclicality and Seasonality. The automotive and recreation
vehicle end customer markets are highly cyclical and both markets are
dependent on consumer spending. Economic factors adversely affecting
automotive and recreation vehicle production and consumer spending could
adversely impact
14

Dura. We typically experience decreased volumes during the third quarter
of each year due to the impact of scheduled OEM plant shutdowns in July
and August for vacations and new model changeovers. In addition, because
we have significant fixed production costs, relatively modest declines in
our customers' production levels can have a significant adverse impact on
our profitability.

- Failure to Obtain Business Related to New and Redesigned Model
Introductions. The failure of Dura to obtain new business on new models
or to retain or increase business on redesigned existing models could
adversely affect Dura.

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

- Failure to Obtain Raw Materials at Favorable Prices. Numerous raw
materials are used in the manufacture of Dura's products. Dura's
principal raw materials include (1) coil steel and resin in mechanism
production, (2) metal wire and resin in cable production and (3) glass in
window systems. The types of steel Dura purchases includes hot and cold
rolled, galvanized, organically coated and aluminized steel. Overall,
steel accounted for a significant component of Dura's raw material costs
in 2003. The domestic steel industry has experienced substantial
financial instability due to numerous factors, including energy costs and
the effect of foreign competition and demand. The prices of Dura's
principal raw materials continually fluctuate. Moreover, Dura may be
materially and adversely affected by the failure of our suppliers to
perform as expected. In addition, Dura may be unable to pass on the
increased costs of raw materials to its customers. Dura's inability to
pass on increased raw material costs to its customers could adversely
affect its business, results of operations and financial condition.

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

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

- Substantial Leverage. Dura has a significant amount of indebtedness.
Dura's ability to service its indebtedness will depend on its future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these
factors are beyond Dura's control. In addition, since a portion of Dura's
indebtedness is at variable rates of interest or has been effectively
converted to a variable rate, Dura will be vulnerable to increases in
interest rates, which could have a material adverse effect on its results
of operations, liquidity and financial condition.

15

- Significant Foreign Operations. Dura has significant operations in
Europe, Canada and Latin America. Certain risks are inherent in
international operations, including:

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

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

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

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

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

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

In addition, Dura generates a significant portion of its revenues and
incurs a significant portion of its expenses in currencies other than U.S.
dollars. To the extent that it is unable to match revenues received in foreign
currencies with costs paid in the same currency, exchange rate fluctuations in
any such currency could have an adverse effect on Dura's financial results. The
strengthening of the European currencies in relation to the U.S. dollar had a
positive impact on Dura's revenues in 2003.

(c) AVAILABLE INFORMATION

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

ITEM 2. PROPERTIES

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

Dura believes that the productive capacity and utilization of its
facilities is sufficient to allow Dura to conduct its operations in accordance
with its business strategy. All of Dura's owned facilities are subject to liens
under its new revolving credit facility ("New Credit Agreement"). The following
table shows the principal facilities of Dura as of December 31, 2003:

16

Dura's manufacturing facilities have a combined square footage in excess of
7,967,000, approximately 82 percent of which is owned and approximately 18
percent is leased. To increase efficiency, Dura expects to consolidate the
operations of certain of its manufacturing facilities and technical centers over
the next twelve months.

In some cases, several of Dura's manufacturing sites, technical centers
and/or product development centers and sales activity offices are located at a
single multi-purpose site. As of December 31, 2003, Dura had sites that contain
technical design and development capabilities in each of the major regions that
support customers around the world.

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

ITEM 3. LEGAL PROCEEDINGS

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

In late 1994, Ford issued a recall of a series of manual transmission Ford
F-Series pickups to repair the self-adjust parking brakes originally
manufactured by the brake and cable business of Alkin Co. (which Dura acquired
in August 1994). The type of alleged failures that prompted the F-Series recalls
have led to a number of claims and lawsuits filed against Ford, one of which
culminated in a July 1998 award of punitive damages against Ford of more than
$151.0 million (which was subsequently reduced on appeal to $69.0 million),
which Ford appealed and a new trial on punitive damages has been granted because
the trial court failed to limit the punitive damages award to a reasonable
amount. In December 2003, Ford agreed not to seek any amount from Dura in
connection with this lawsuit. Dura is not presently aware of any open
self-adjusting parking brake claims against Ford with respect to which Ford may
elect to seek contribution from Dura. Dura has worked with Ford to address the
claims previously arising from the self-adjusting parking brakes and does not
believe that those claims have adversely affected its business relationship with
Ford.

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

In June 2000, Dura settled two product recall matters involving speed
control and secondary hood latches manufactured for Ford through a cost sharing
agreement with Ford. In connection with the settlement, we paid $40.0 million
($20 million in July 2000, followed by three equal payments totaling $20 million
in July 2001, July 2002 and July 2003) to resolve Ford's claims relating to
these recalls.

In September 2002, Dura settled a product recall matter involving a parking
brake mechanism manufactured for Land Rover. In connection with the settlement,
Dura agreed to pay Pound Sterling 2.8 million (approximately $4.5 million) and
in return, Dura received a release from further liability as a result of this
recall.

17

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

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

ENVIRONMENTAL MATTERS

Dura is subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. While
Dura devotes resources for maintaining compliance with these requirements, there
can be no assurance that Dura operates at all times in complete compliance with
all such requirements. Dura could be subject to potentially significant fines
and penalties for any noncompliance that may occur. Although Dura has made and
will continue to make capital and other expenditures to comply with
environmental requirements, Dura does not expect to incur material capital
expenditures for environmental controls in 2004.

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

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

18

The Mancelona groundwater contamination matter is subject to an indemnity
from Wickes. In connection with Dura's acquisition of certain assets from Wickes
in 1990, Wickes agreed to indemnify Dura with respect to certain environmental
liabilities associated with Wickes' operation of the subject facilities subject
to a $750,000 basket up to a $2.5 million cap (which has not been reached). Dura
will be obligated to indemnify Wickes with respect to any liabilities above such
cap. Wickes has acknowledged that Dura made a timely and adequate claim for
indemnification with respect to the Mancelona matter, and has been paying
indemnification claims relating to the Mancelona matter, subject to a
reservation of rights.

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

In 1998, Dura entered into a partial consent decree to settle its liability
for past costs at the former Excel Main Street Well Field Site in Elkhart,
Indiana, where TCE was found in a municipal well field near the Elkhart
facility. Dura is one of several potentially responsible parties involved at the
site. Under the settlement, Dura has a continuing payment obligation for
operation and maintenance of a groundwater treatment system and for a soil vapor
extraction system. These obligations will likely continue for several years. The
annual cost to operate these systems is not material. In addition, Dura expects
to receive certain payments from other parties involved at the site.

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

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

There were no matters submitted to a vote of stockholders during the fourth
quarter of 2003.

19

PART II

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

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

As of March 8, 2004, there were 876 holders of record of the outstanding
Class A common stock and 6 holders of record of the outstanding Class B common
stock.

Dura has not declared or paid any dividends on its Common Stock in the past
and does not anticipate paying dividends in the foreseeable future. Any future
payment of dividends is within the discretion of the Board of Directors and will
depend upon, among other factors, the capital requirements, operating results
and financial condition of Dura. In addition, Dura's ability to pay dividends is
limited under the terms of the $400.0 million 8 5/8 percent senior unsecured
notes ("Senior Notes") indenture and $458.5 million and Euro 100.0 million 9
percent senior subordinated notes ("Subordinated Notes") indenture and by the
terms of its New Credit Agreement. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition-Liquidity and Capital Resources."

20

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data for Dura presented below for, and
as of the end of each of the years in the five-year period ended December 31,
2003, is derived from Dura Automotive Systems, Inc.'s Consolidated Financial
Statements. The four year period ended December 31, 2003 has been audited by
Deloitte & Touche LLP, independent public accountants. The consolidated
financial statements at December 31, 2003 and 2002 and for each of the three
years in the period ended December 31, 2003 and the independent auditor's report
thereon are included elsewhere in this report. The consolidated financial
statements at December 31, 2001, 2000 and 1999 and for the years ended December
31, 2000 and 1999 are not included herein. This selected consolidated financial
data should be read in conjunction with "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and Dura's Consolidated Financial
Statements and Notes to Consolidated Financial Statements, included elsewhere in
this report.

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

(a) Dura adopted the provisions of FIN 46 effective December 31, 2003,
resulting in the reclassification of the $55,250 of Mandatorily Redeemable
Trust Preferred Securities from the mezzanine section of the balance sheet
to a long-term liability.

21

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

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

OVERVIEW

Dura's results of operations were impacted by several global economic
factors during 2003. Total North American vehicle production in 2003 was
approximately 15.9 million as compared to 16.4 million in 2002, both increases
from the 2001 level of approximately 15.5 million units. North American vehicle
production during 2003 continued to be favorably impacted by the ongoing sales
incentives provided by the OEM's, which began in late 2001. European vehicle
production was approximately 19.5 million in 2003, 19.2 in 2002 and 19.4 million
in 2001. Approximately 60% of Dura's total revenues were generated in North
America during 2003, as compared to 67% in 2002. Dura's cost of production is
higher in Europe as compared to North America; thus, its future profitability
could be impacted as volumes change and /or as new business is awarded, should
its current cost structure and revenue mix by geographic location remain
consistent. Dura is taking numerous actions to improve its cost structure,
including the various restructuring activities and plant consolidations
undertaken during 2003. Similar actions will continue into 2004 as Dura works to
maximize its facility and asset utilization worldwide.

Given the significance of Dura's operations in Europe, the strengthening of
the Euro against the dollar during 2003, resulted in a $167.5 million positive
impact to revenue in 2003 as compared to 2002. Should the strength of the Euro
stabilize at its current levels, or continue to increase in 2004, Dura would
anticipate a continued growth of the proportion of its revenues from Europe,
resulting in a corresponding increase in cost of sales and downward pressure on
gross margin for the reasons noted above. The strength of the Euro also has a
significant impact on Dura's consolidated debt levels. At December 31, 2003,
approximately $142.9 million of Dura's debt is denominated in Euro or other
foreign currencies. The strengthening of the European currencies during 2003 had
an approximate $23.6 million negative impact on Dura's total debt levels during
2003, holding all other factors constant.

COMPARISON OF YEAR ENDED DECEMBER 31, 2003 TO YEAR ENDED DECEMBER 31, 2002

Revenues. Revenues for the year ended December 31, 2003 increased by $20.5
million, or 0.9 percent, to $2,380.8 million from $2,360.3 million for 2002.
Factors that favorably impacted revenue in 2003 included the partial year impact
of the acquisition of the Creation Group of $61.5 million, the strengthening of
the European currencies in relation to the U.S. dollar of $167.5 million and an
increase in new business in Dura's core products. Factors that offset these
favorable items included the impact of decreased volumes in the North American
automotive market of approximately $75.0 million, continued weaknesses in the
European automotive market impacted revenue by approximately $30.0 million and
the run-out of Dura's conventional window regulator business of approximately
$109.0 million.

Cost of Sales. Cost of sales for the year ended December 31, 2003
increased by $54.2 million, or 2.7 percent, to $2,089.2 million from $2,035.0
million for 2002. Cost of sales as a percentage of revenues for the year ended
December 31, 2003 was 87.8 percent, which is slightly up compared to 86.2
percent for 2002. The increase is due to the strengthening of the European
currencies in relation to the U.S. dollar of approximately $137.8 million and
increased employee benefit costs, partially offset by the net effect of the
mid-year acquisition of the Creation Group and the run-out of the conventional
window regulator business of approximately $39.1 million, operational and
purchasing cost reductions and lower vehicle volumes.

Selling, General, and Administrative Expense. Selling, general, and
administrative expenses for the year ended December 31, 2003 increased by $19.4
million, or 14.3 percent, to $154.9 million from $135.6 million in 2002. As a
percentage of revenue, selling, general and administrative expenses increased to
6.5 percent for 2003, compared to 5.7 percent for 2002. The increase in cost is
primarily the result of the strengthening of the European currencies in relation
to the U.S. dollar impacting selling, general and administrative expenses by
approximately $7.5 million, increased employee benefit costs of approximately
$4.5 million and increased acquisition, legal and insurance costs of
approximately $7.4 million. Dura's goal is to redeploy or eliminate
22

certain of its selling, general and administrative expenses to further support
organic revenue growth in order to reduce selling, general, and administrative
expense as a percentage of revenue to 6.0%.

Facility Consolidation and Other Charges. As part of Dura's ongoing cost
reduction and capacity utilization efforts, Dura has taken numerous actions to
improve its cost structure during 2003. During the fourth quarter of 2003, in
order to improve capacity utilization, Dura announced a plan to exit its Melun,
France facility and combine the business with other Dura operations. This action
resulted in a fourth quarter 2003 restructuring charge of $0.7 million relating
to severance. Dura also expensed as incurred approximately $0.1 million of
facility closure and other costs incurred during the fourth quarter of 2003.
These costs are reflected as facility consolidation and other charges in the
2003 consolidated statement of operations and were accounted for in accordance
with SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS No. 146"). The restructuring actions are anticipated to be
complete by March 31, 2004. Dura expects to incur additional restructuring
charges related to the exit of the Melun facility of approximately $0.4 million
relating to facility closure and other costs through March 31, 2004.

During the fourth quarter of 2003, in order to improve capacity
utilization, Dura announced a plan to restructure its Pamplona, Spain facility
and combine certain businesses with other Dura operations. This action resulted
in a fourth quarter 2003 restructuring charge of $1.3 million, including
severance of $1.2 million and facility closure and other costs of $0.1 million.
Dura also expensed as incurred approximately $0.2 million of facility closure
and other costs incurred during the fourth quarter of 2003. These costs are
reflected as facility consolidation and other charges in the 2003 consolidated
statement of operations and were accounted for in accordance with SFAS No. 146.
Costs incurred and charged to the reserve as of December 31, 2003 amounted to
$1.2 million in severance related costs. Dura does not expect to incur any
additional restructuring charges related to the exit of the Pamplona facility.

During the third quarter of 2003, Dura continued its plan to exit certain
of its non-core products and exited its thermostats product line in North
America. Dura previously exited its European thermostat business in conjunction
with the divestiture of its Mechanical Assemblies Europe business. This North
American action resulted in a third quarter 2003 restructuring charge of $0.6
million, including asset impairment of $0.2 million and other facility
consolidation costs of $0.4 million. These costs are reflected as facility
consolidation and other charges in the 2003 consolidated statement of operations
and were accounted for in accordance with SFAS No. 146. Dura does not expect to
incur any additional restructuring charges related to the exit of the North
American thermostats product line.

During the third quarter of 2003, in order to improve capacity utilization,
Dura announced a plan to exit its Mount Carroll, Illinois facility and combine
the business with other Dura operations. This action resulted in a third quarter
2003 restructuring charge of $0.4 million relating to severance. In continuation
of these actions, Dura recorded $0.2 million of additional restructuring charges
related to severance in the fourth quarter of 2003. Dura also expensed as
incurred certain facility closure and other costs of $0.2 million during the
third quarter of 2003. These costs are reflected as facility consolidation and
other charges in the 2003 consolidated statement of operations and were
accounted for in accordance with SFAS No. 146. The restructuring actions are
anticipated to be complete by March 31, 2004. Costs incurred and charged to the
reserve as of December 31, 2003 amounted to $0.6 million in severance costs.
Dura does not expect to incur any additional restructuring charges related to
the exit of the Mount Carroll facility.

During the second quarter of 2003, in order to improve capacity
utilization, Dura announced a plan to exit its Fulton, Kentucky facility in
North America. This action resulted in a second quarter 2003 restructuring
charge of $1.5 million, including severance of $0.3 million and facility closure
and other costs of $1.2 million. In continuation of these actions, Dura recorded
$0.6 million of additional restructuring charges in the third quarter of 2003,
including severance of $0.5 million and facility closure and other costs of $0.1
million, and $0.7 million of severance in the fourth quarter of 2003. Dura also
expensed as incurred approximately $2.5 million and $3.4 million of certain
facility closure and other costs incurred during the third and fourth quarters
of 2003, respectively. These costs are reflected as facility consolidation and
other charges in the 2003 consolidated statement of operations and were
accounted for in accordance with SFAS No. 146. The restructuring actions are
anticipated to be complete by March 31, 2004. Costs incurred and charged to the

23

reserve as of December 31, 2003 amounted to $0.8 million in severance related
costs and $1.2 million in facility closure and other costs. Dura expects to
incur additional restructuring charges related to the exit of the Fulton
facility of $0.5 million through March 31, 2004, including severance of $0.2
million and facility closure and other costs of $0.3 million.

During the fourth quarter of 2002, Dura continued to evaluate its worldwide
capacity utilization and opportunities for cost reductions. As a result, Dura
announced a plan to exit its Livonia, Michigan facility and its Cauvigny, France
facility. These actions resulted in a fourth quarter 2002 restructuring charge
of $12.9 million, accounted for in accordance with EITF 94-3. The charge related
to the consolidation of the Livonia facility included severance related costs of
$0.7 million, asset impairment of $3.2 million and other facility consolidation
costs of $0.1 million. Dura also expensed as incurred certain other costs of
$0.2 million, $0.3 million and $0.1 million during the first, second and third
quarters of 2003, respectively. These costs are reflected as facility
consolidation and other charges in the 2003 consolidated statement of
operations. The charge related to the consolidation of the Cauvigny facility
included severance related costs of $7.7 million and asset impairment of $1.2
million. During the third quarter of 2003, Dura reevaluated its French
operations and decided not to close the Cauvigny facility. As a result, Dura
reversed the severance reserves originally established in the fourth quarter of
2002 of approximately $8.5 million, consisting of the original $7.7 million
severance charge as adjusted for the effects of changes in foreign currency
exchange rates. In the fourth quarter of 2003, Dura adopted a plan to sell its
Cauvigny facility for total proceeds of $0.8 million, and to contribute $2.1
million to the buyer. This action resulted in a fourth quarter 2003
restructuring charge of $2.2 million, including the planned payments to the
buyer of $2.1 million and facility closure and other costs of $0.1 million. Dura
also expensed as incurred approximately $2.4 million during the fourth quarter
of 2003, consisting principally of asset impairment. These costs are reflected
as facility consolidation and other charges in the 2003 consolidated statement
of operations and were accounted for in accordance with SFAS No. 146. The
restructuring actions are anticipated to be complete by March 31, 2004. Dura
does not expect to incur any additional restructuring charges related to the
exit of the Cauvigny facility.

During the third quarter of 2002, in order to improve capacity utilization,
Dura announced a plan to combine its Benton Harbor, Michigan and Butler, Indiana
facilities in North America. This action resulted in a third quarter 2002
restructuring charge of $1.1 million, including severance of $0.6 million and
facility closure costs of $0.5 million, accounted for in accordance with EITF
94-3. Additionally, Dura expensed as incurred certain facility consolidation and
other costs of $0.1 million. The decision to close the Benton Harbor facility
resulted in a reduction in the work force of approximately 12 salaried and 44
hourly employees, all of which have been terminated as of December 31, 2003. The
restructuring actions were completed by September 30, 2003. Dura expensed as
incurred certain facility consolidation and other costs of $0.3 million and
other costs of $0.4 million during the fourth quarter of 2002, and an additional
$0.1 million of other costs during the first quarter of 2003 related to the
closure of the Benton Harbor facility. Costs incurred and charged to the reserve
as of December 31, 2003 amounted to $0.6 million in severance related costs and
$0.5 million in facility closure costs. These costs are reflected as facility
consolidation and other charges in the 2003 consolidated statement of
operations.

Amortization Expense. Amortization expense for the year ended December 31,
2003 decreased by $0.6 million to $0.4 million, compared to $1.0 million in
2002. The decrease in amortization expense is due to certain intangible assets
becoming fully amortized during 2003.

Interest Expense. Interest expense for the year ended December 31, 2003
decreased by $2.0 million, or 2.4 percent, to $81.9 million from $83.9 million
in 2002. The decrease in interest expense is due to lower interest rates on
LIBOR contracts of approximately $3.4 million, partially offset by the higher
effective interest cost related to the issuance of $400.0 million of Senior
Notes, in April 2002 and November 2003, of approximately $1.4 million.

Loss on Early Extinguishment of Debt. The loss for the year ended December
31, 2003 represents the write-off of debt issuance costs in connection with the
termination of Dura's existing Credit Agreement. The loss for the year ended
December 31, 2002 represents the write-off of debt issuance costs in connection
with

24

the repayment of borrowings outstanding under the existing Credit Agreement (see
Liquidity and Capital Resources below).

Income Taxes. The effective tax rate for the year ended December 31, 2003
was 34.0 percent compared to the 2002 effective tax rate of 45.2 percent. The
decrease in the effective tax rate relates to the mix of income and loss among
Dura's North American and European tax jurisdictions and the impact of tax
planning strategies slightly offset by not benefiting losses in certain
locations and increases in valuation allowances in certain tax jurisdictions.

Minority Interest. Minority interest for the years ended December 31, 2003
and 2002 represents dividends, net of income tax benefits, on the $55.3 million
7 1/2 percent Convertible Trust Preferred Securities ("Preferred Securities")
which were issued on March 20, 1998.

Income from Continuing Operations. Income from continuing operations for
the year ended December 31, 2003 decreased by $18.0 million, or 41.7 percent, to
$25.1 million from $43.1 million in 2002. The decrease is primarily due to
weaker automotive production volumes in North America and Europe and increases
in SG&A expenses, all as described above. These decreases to income from
continuing operations were partially offset by a decrease in the provision for
income taxes, also described above.

Discontinued Operations. During the fourth quarter of 2002, Dura adopted a
plan to divest its Mechanical Assemblies Europe business, as it believed this
business would not assist Dura in reaching its strategic growth and
profitability targets for the future. The Mechanical Assemblies Europe business
generated annualized revenues of approximately $111.9 million from facilities in
Grenoble and Boynes, France; and Woodley, Nottingham and Stourport, UK. In March
2003, Dura completed the divestiture of its Mechanical Assemblies Europe
business to Magal Engineering and members of the local management group, located
in Woodley, England.

The Mechanical Assemblies Europe divestiture was treated as a discontinued
operation under SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". The results of operations of the Mechanical Assemblies
Europe business and the related charges have been classified as discontinued
operations in the consolidated statements of operations.

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

During the quarter ended March 31, 2003, as part of the final negotiations
surrounding the disposal, a net positive adjustment of $0.9 million was recorded
upon disposal of the discontinued operations, which, when included with the loss
from operations of approximately $1.9 million, resulted in a net loss from
discontinued operations of approximately $1.0 million in the quarter.
Additionally, net negative adjustments totaling $1.8 million were recorded
during 2003 from a less favorable settlement of retained liabilities than
anticipated, resulting in a net loss from discontinued operations of
approximately $2.8 million in the year ended December 31, 2003.

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

25

Net Income (Loss). Net income for the year ended December 31, 2003
increased by $311.0 million to $22.3 million, from a loss of $288.7 million in
2002. The significant increase is due to the loss from discontinued operations,
described above, and the goodwill impairment charge that was recorded during
2002, as described below.

New Accounting Pronouncements. In December 2003, the FASB issued SFAS No.
132(R), a revision to SFAS No. 132, Employers' Disclosure about Pensions and
Other Postretirement Benefits. SFAS No. 132(R) does not change the measurement
or recognition related to pension and other postretirement plans required by
SFAS No. 87, Employers' Accounting for Pensions, SFAS No. 88, Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits, and SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions and retains the disclosure
requirements contained in SFAS No. 132. SFAS No. 132(R) requires additional
disclosures about the assets, obligations, cash flows and net periodic benefit
cost of defined benefit pension plans and other defined benefit postretirement
plans. SFAS No. 132(R) is effective for financial statements with fiscal years
ending after December 15, 2003, with the exception of disclosure requirements
related to foreign plans and estimated future benefit payments which are
effective for fiscal years ending after June 15, 2004. Dura has included the
required disclosures in Note 12 to its consolidated financial statements. The
adoption of SFAS No. 132(R) did not impact Dura's consolidated balance sheet or
results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS
No. 150 requires issuers to classify as liabilities (or assets in some
circumstances) freestanding financial instruments that embody obligations for
the issuer. Generally, SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003 and is otherwise effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS No. 150 did not have a significant impact on Dura's
consolidated balance sheet or results of operations.

In January 2003, the FASB issued FASB Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities". The Interpretation addresses the
consolidation of variable interest entities, including entities commonly
referred to as special purpose entities. Dura is required to apply FIN 46 to all
new variable interest entities created or acquired after January 31, 2003. In
October 2003, the FASB issued FASB Staff Position ("FSP") FIN 46-6, "Effective
Date of FIN 46, Consolidation of Variable Interest Entities." FSP FIN 46-6
extended the required effective date of FIN 46 for variable interest entities
created or acquired prior to February 1, 2003. Dura was required to apply FIN 46
to such entities effective December 31, 2003. The application of FIN 46 resulted
in a reclassification of the Preferred Securities from the mezzanine section of
the balance sheet for 2003 to a long-term liability. In addition, Minority
Interest -- Dividends on Trust Preferred Securities, Net will be reclassified
from its current classification in the statement of operations to a component of
interest expense on a gross basis, prospectively, for periods subsequent to
December 31, 2003.

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

In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 clarifies the requirements for a guarantor's
accounting for and disclosure of certain guarantees issued and outstanding. The
initial recognition and initial measurement provisions of FIN 45 were applicable
to guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 were effective for financial statements of

26

interim or annual periods ending after December 15, 2002. The adoption of FIN 45
did not have a significant impact on Dura's consolidated balance sheet or
results of operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between SFAS No.
146 and EITF 94-3 relates to SFAS No. 146's requirements for the timing of
recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. Under
EITF 94-3, a liability for an exit cost was recognized at the date of an
entity's commitment to an exit plan. SFAS No. 146 must be applied prospectively
for exit or disposal activities that are initiated after December 31, 2002. SFAS
No. 146 also increases the disclosure requirements associated with exit or
disposal activities. During 2003, Dura applied the provisions of SFAS No. 146 in
connection with its various facility consolidation initiatives, and will
continue to apply the provisions of SFAS No. 146 should additional exit or
disposal activities be initiated in the future.

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 APB Opinion No. 30 "Reporting Results of Operations." This statement
also requires sale-leaseback accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions, and makes
various other technical corrections to existing pronouncements. This statement
was effective for Dura beginning January 1, 2003. The application of this
statement resulted in a reclassification of the loss on early extinguishment of
debt recorded during 2002 of $5.5 million from an extraordinary item to a
component of income from continuing operations. In addition, in connection with
the termination of Dura's existing amended and restated $1.15 billion credit
agreement entered into in March 1999 ("Credit Agreement"), Dura wrote off debt
issuance costs of approximately $2.9 million during the fourth quarter of 2003,
which was also classified as a component of income from continuing operations in
accordance with this statement.

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

Revenues. Revenues for the year ended December 31, 2002 increased by $26.6
million, or 1.1 percent, to $2,360.3 million from $2,333.7 million for 2001.
Factors that favorably impacted revenue in 2002 included the impact of an
increase in the North American automotive and recreation vehicle production
volumes of approximately $102.0 million, the strengthening of the European
currencies in relation to the U.S. dollar of approximately $42.0 million and an
increase in new business in Dura's core products. Slightly offsetting these
favorable items was the impact of Dura's divestiture actions by approximately
$88.0 million, the impact of strategically exiting certain of Dura's low margin
non-core businesses in Europe of approximately $28.0 million and continued
weakness in the European automotive market of approximately $12.0 million.

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

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

Facility Consolidation and Other Charges. During the fourth quarter of
2002, Dura continued to evaluate its worldwide capacity utilization and
opportunities for cost reductions. As a result, Dura announced a plan to exit
its Livonia, Michigan facility and its Cauvigny, France facility. These actions
resulted in a fourth quarter 2002 restructuring charge of $12.9 million,
accounted for in accordance with EITF 94-3. The charge related to the
consolidation of the Livonia facility included severance related costs of $0.7
million, asset
27

impairment of $3.2 million and other facility consolidation costs of $0.1
million. Dura also expensed as incurred certain other costs of $0.2 million,
$0.3 million and $0.1 million during the first, second and third quarters of
2003, respectively. These costs are reflected as facility consolidation and
other charges in the December 31, 2003 consolidated statement of operations. The
charge related to the consolidation of the Cauvigny facility included severance
related costs of $7.7 million and asset impairment of $1.2 million. During the
third quarter of 2003, Dura reevaluated its French operations and decided not to
close the Cauvigny facility. As a result, Dura reversed the severance reserves
originally established in the fourth quarter of 2002 of approximately $8.5
million, consisting of the original $7.7 million severance charge as adjusted
for the effects of changes in foreign currency exchange rates. In the fourth
quarter of 2003, Dura adopted a plan to sell its Cauvigny facility for total
proceeds of $0.8 million, and to contribute $2.1 million to the buyer. This
action resulted in a fourth quarter 2003 restructuring charge of $2.2 million,
including the planned payments to the buyer of $2.1 million and facility closure
and other costs of $0.1 million. Dura also expensed as incurred approximately
$2.4 million during the fourth quarter of 2003, consisting principally of asset
impairment. These costs are reflected as facility consolidation and other
charges in the 2003 consolidated statement of operations and were accounted for
in accordance with SFAS No. 146. The restructuring actions are anticipated to be
complete by March 31, 2004. Dura does not expect to incur any additional
restructuring charges related to the exit of the Cauvigny facility.

During the third quarter of 2002, in order to improve capacity utilization,
Dura announced a plan to combine its Benton Harbor, Michigan and Butler, Indiana
facilities in North America. This action resulted in a third quarter 2002
restructuring charge of $1.1 million, including severance of $0.6 million and
facility closure costs of $0.5 million, accounted for in accordance with EITF
94-3. Additionally, Dura expensed as incurred certain equipment relocation costs
of $0.1 million. The decision to close the Benton Harbor facility resulted in a
reduction in the work force of approximately 12 salaried and 44 hourly
employees, all of which have been terminated as of December 31, 2003. The
restructuring actions were completed by September 30, 2003. Dura expensed as
incurred certain equipment relocation costs of $0.3 million and other costs of
$0.4 million during the fourth quarter of 2002, and an additional $0.1 million
of other costs during the first quarter of 2003 related to the closure of the
Benton Harbor facility. Costs incurred and charged to the reserve as of December
31, 2003 amounted to $0.6 million in severance related costs and $0.5 million in
facility closure costs. These costs are reflected as facility consolidation and
other charges in the 2003 consolidated statement of operations.

In November 2001, Dura entered into a definitive agreement to divest its
Plastic Products business for total proceeds of approximately $41.0 million. The
transaction closed on January 28, 2002. The Plastic Products business designed,
engineered, and manufactured plastic components for a wide variety of automotive
vehicle applications, focusing on the metal to plastic conversion and dual
plastic applications markets. This business employed approximately 750 people in
three facilities located in Mishawaka, Indiana; Bowling Green, Kentucky; and
Jonesville, Michigan and generated approximately $80.0 million in annual
revenue. Two members of Dura's Board of Directors are members of management of
an investor group which is the 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 subsequent operating results has not been significant.

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

Interest Expense. Interest expense for the year ended December 31, 2002
decreased by $16.6 million, or 16.5 percent, to $83.9 million from $100.5
million in 2001. The decrease in interest expense is due to lower interest rates
on LIBOR contracts, offset by the higher effective interest cost related to the
issuance of $350.0 million of Senior Notes (see below).
28

Loss on Early Extinguishment of Debt. The loss for the year ended December
31, 2002 represents the write-off of debt issuance costs in connection with the
repayment of borrowings outstanding under the existing Credit Agreement (see
Liquidity and Capital Resources below).

Income Taxes. The effective tax rate for the year ended December 31, 2002
was 45.2 percent compared to the 2001 effective tax rate of 30.8 percent. The
increase in the effective tax rate relates to the mix of income and loss among
Dura's tax jurisdictions, not benefiting losses in certain locations, increases
in valuation allowances in certain tax jurisdictions and not benefiting the
facility consolidation charge related to Cauvigny.

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

Income from Continuing Operations. Income from continuing operations for
the year ended December 31, 2002 increased by $21.9 million, or 103.1 percent,
to $43.1 million from $21.2 million in 2001. The increase is primarily due to an
increase in revenues and decreases in both amortization expense and interest
expense, as described above. This increase to income from continuing operations
was offset by an increase in the provision for income taxes, also described
above.

Discontinued Operations. During the fourth quarter of 2002, Dura adopted a
plan to divest its Mechanical Assemblies Europe business, as it believed this
business would not assist Dura in reaching its strategic growth and
profitability targets for the future. The Mechanical Assemblies Europe business
generated annualized revenues of approximately $111.9 million from facilities in
Grenoble and Boynes, France; and Woodley, Nottingham and Stourport, UK. In March
2003, Dura completed the divestiture of its Mechanical Assemblies Europe
business to Magal Engineering and members of the local management group, located
in Woodley, England.

The Mechanical Assemblies Europe divestiture was treated as a discontinued
operation under SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". The results of operations of the Mechanical Assemblies
Europe business and the related charges have been classified as discontinued
operations in the consolidated statements of operations, and prior periods have
been recast to present Mechanical Assemblies Europe as a discontinued operation
in all periods presented.

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

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

Net Income (Loss). Net income (loss) for the year ended December 31, 2002
decreased by $299.9 million to a loss of $288.7 million, from income of $11.2
million in 2001. The decrease primarily relates to the loss from discontinued
operations and the write-off of goodwill, as described above. Further
contributing to the decrease was the write-off, net of income taxes, of debt
issuance costs, as well as the additional fluctuations in income from continuing
operations described above.

29

LIQUIDITY AND CAPITAL RESOURCES

During 2003, Dura provided cash from operations of $134.3 million, compared
to $204.2 million in 2002. Cash generated from operations before changes in
working capital items was $103.4 million for 2003 compared to $136.9 million for
2002. Working capital generated cash of $30.9 million in 2003 compared to $67.3
million in 2002. The strengthening of the European currencies in relation to the
U.S. dollar resulted in a reduction of cash generated from working capital of
approximately $38.2 million in 2003.

Net cash used in investing activities was $125.5 million for 2003 as
compared to $23.3 million in 2002. In 2003, $57.8 million was used for the
acquisition of the Creation Group and net capital expenditures totaled $67.7
million. The capital expenditures were primarily for equipment and dedicated
tooling purchases related to new or replacement programs. This compares with net
proceeds from the disposition of the Plastic Products business of $31.0 million
and net capital expenditures of $54.3 million in 2002. Dura continues to focus
on cash management and expects future annual capital expenditures to be below
the level of its annual depreciation expense.

Net cash provided by financing activities totaled $38.6 million for 2003 as
compared to $20.7 million used in 2002. The net cash provided by financing
activities during 2003 is a result of cash provided from the offering of 8 5/8
percent senior unsecured notes ("2003 Senior Notes"), due April 2012 of $50.0
million and proceeds from stock option exercises of approximately $2.1 million
partially offset by debt issuance costs incurred related to issuance of the 2003
Senior Notes of approximately $4.9 million and repayments of outstanding
indebtedness of approximately $8.2 million. The net cash used in financing
activities during 2002 is principally the result of repayment of outstanding
indebtedness during the year, net of the issuances of the 8 5/8 percent senior
unsecured notes ("2002 Senior Notes"), due April 2012 and the tranche C term
loan.

Net cash flow provided from discontinued operations was $3.3 million for
2003 as compared to $53.2 million used in 2002. The net cash flow from
discontinued operations is a result of the realization of the net current assets
of discontinued operations existing at December 31, 2002 of approximately $6.1
million, partially offset by the loss from operations incurred during 2003 prior
to the disposal. The loss from operations is net of adjustments resulting from
final negotiations surrounding the disposal of approximately $1.0 million and
net negative adjustments recorded during 2003 as a result of less favorable
settlement of retained liabilities than anticipated of approximately $1.8
million.

In March 1999, Dura entered into its Credit Agreement. The Credit Agreement
originally provided 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 ("2002 Senior Notes"), due April 2012. The interest on
the 2002 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. In addition, the
revolving credit facility was decreased to $390.0 million. Borrowings under the
tranche C term loan are based on LIBOR and are due and payable in quarterly
installments through December 2008 with no early payment penalties. In
conjunction with these transactions, Dura obtained an amendment to the Credit
Agreement to allow for the 2002 Senior Notes offering and to further adjust
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 issuance costs of approximately $5.5 million during the second
quarter of 2002. In accordance with the adoption of SFAS No. 145, "Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections", effective January 1, 2003, Dura reclassified the $5.5
million loss on early extinguishment of debt to a component of income from
continuing operations and the related income tax benefit of $2.1 million to the
provision for income taxes.

30

In November 2003, Dura completed the offering of its 2003 Senior Notes. The
interest on the 2003 Senior Notes is payable semi-annually beginning April 15,
2004. Net proceeds from this offering of approximately $48.5 million were used
to replenish cash balances used to fund the acquisition of the Creation Group.
In conjunction with this transaction, Dura amended and restated its revolving
credit facility. The New Credit Agreement provides for $175.0 million of
revolving credit, available until October 2008. The existing tranche C term loan
remained outstanding. Dura also entered into a fixed to floating interest rate
swap (notional amount of $75.0 million) with various financial institutions that
more closely mirrors the cost of its bank debt. In connection with the
termination of Dura's existing Credit Agreement, Dura wrote off debt issuance
costs of approximately $2.9 million during the fourth quarter of 2003. The
write-off of debt issuance costs was classified as a component of income from
continuing operations in accordance with the provisions of SFAS No. 145.

Included in interest expense, net, in the consolidated statements of
operations is approximately $2.6 million, $2.4 million and $2.3 million of
interest income earned on Dura's cash balances in the years ended December 31,
2003, 2002 and 2001, respectively.

As of December 31, 2003, the rate on borrowings under the New Credit
Agreement was based on LIBOR and was 3.66 percent. The New Credit Agreement
contains various restrictive covenants which amongst other things, limit
indebtedness, investments, capital expenditures and certain dividends. The New
Credit Agreement also requires Dura to maintain certain financial ratios
including debt and interest coverage. Dura was in compliance with the covenants
as of December 31, 2003. Borrowings under the New Credit Agreement are
collateralized by substantially all assets of Dura.

The New 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 $50.8 million. As of December 31, 2003, Dura had no borrowings
outstanding under the revolver.

Dura's New Credit Facility provided for $175.0 million of revolving credit.
At December 31, 2003, Dura had unused borrowing capacity of approximately $155.0
million, all of which was available under its most restrictive debt covenant and
$20.0 million in letters of credit outstanding. Dura also utilizes uncommitted
overdraft facilities to satisfy the short-term working capital requirements of
its foreign subsidiaries. At December 31, 2003, Dura had overdraft facilities
outstanding of $0.1 million, which is included in current maturities of
long-term debt on the balance sheet. At December 31, 2003, Dura had overdraft
facilities available from banks of approximately $53.0 million. The average
interest rates on the outstanding overdraft facilities at December 31, 2003 was
approximately 6.25 percent.

In April 1999, Dura completed the offering of its Subordinated Notes, due
May 2009. The interest on the Subordinated Notes is payable semiannually. 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 semiannually. 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.

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

Dura's principal source of liquidity is cash flow generated from operations
and borrowings under its $175 million revolving credit facilities. Dura believes
that such funds will be sufficient to meet its liquidity needs for at least the
next twelve months. Dura's principal use of liquidity will be to meet debt
service requirements, finance capital expenditures and to provide working
capital availability. Dura expects that

31

capital expenditures in 2004 will be approximately $70.0 million. These capital
expenditures will be used primarily for equipment and dedicated tooling
purchases and facility improvements.

Dura's ability to service its indebtedness will depend on its future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these factors are
beyond Dura's control. Dura believes that, based upon current levels of
operations, it will be able to meet its debt service obligations when due.
Significant assumptions underlie this belief, including, among other things,
that Dura will continue to be successful in implementing its business strategy
and that there will be no material adverse developments in its business,
liquidity or capital requirements. If Dura cannot generate sufficient cash flow
from operations to service its indebtedness and to meet its other obligations
and commitments, Dura might be required to refinance its debt or to dispose of
assets to obtain funds for such purpose. There is no assurance that refinancing
or asset dispositions could be effected on a timely basis or on satisfactory
terms, if at all, or would be permitted by the terms of the New Credit
Agreement. In the event that Dura is unable to refinance the New Credit
Agreement or raise funds through asset sales, sales of equity or otherwise, its
ability to pay principal of, and interest on, its debt would be impaired.

CONTRACTUAL OBLIGATIONS

The following table presents Dura's contractual obligations at December 31,
2003 (in thousands):

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

(a) Operating leases include lease commitments of $19.8 million that are
recorded in facility consolidation cost reserves.

In addition to the obligations noted above, Dura has obligations reported
as other long term liabilities that consist principally of pension and
post-retirement benefits, obligations for facility closure and consolidation
costs and legal and environmental liabilities.

At December 31, 2003, Dura is not party to an significant purchase
obligations for goods or services.

OFF BALANCE SHEET ARRANGEMENTS

Dura uses standby letters of credit to guarantee its performance under
various contracts and arrangements, principally in connection with our workers
compensation liabilities with insurers. These letters of credit contracts expire
annually and are usually extended on a year-to-year basis. At December 31, 2003,
Dura had outstanding letters of credit of $20.0 million. Dura does not believe
that they will be required to be drawn.

Dura currently has no non-consolidated special purpose entity arrangements.

SIGNIFICANT ACCOUNTING POLICIES

Dura's significant accounting policies are more fully described in Note 2
of the consolidated financial statements. Certain of Dura's accounting policies
require the application of significant judgment by management

32

in selecting appropriate assumptions for calculating financial estimates. By
their nature, these judgments are subject to an inherent degree of uncertainty.

Revenue Recognition and Sales Commitments. Dura recognizes revenue as its
products are shipped to its customers. Dura enters into agreements with its
customers at the beginning of a given vehicle's life to produce products. Once
such agreements are entered into by Dura, fulfillment of the customers'
purchasing requirements is the obligation of Dura for the entire production life
of the vehicle, with terms of up to seven years, and Dura has no provisions to
terminate such contracts. In certain instances, Dura may be committed under
existing agreements to supply product to its customers at selling prices which
are not sufficient to cover the direct cost to produce such product. In such
situations, Dura records a liability for the estimated future amount of such
losses. Such losses are recognized at the time that the loss is probable and
reasonably estimable and are recorded at the minimum amount necessary to fulfill
Dura's obligations to its customers.

Valuation of Goodwill and Other Intangible Assets. Goodwill represents the
excess of the purchase price over the fair value of the net assets acquired,
and, prior to the adoption of SFAS No. 142, "Goodwill and Other Intangible
Assets," was amortized over 40 years. Effective January 1, 2002, goodwill is no
longer amortized, but is instead subjected to annual impairment testing in
accordance with the provisions of SFAS No. 142. Other assets principally consist
of pension plan assets in excess of accumulated benefits; debt financing costs,
which are being amortized over the term of the applicable agreements; other
intangible assets; and deferred income taxes. Other intangible assets at
December 31, 2003 are approximately $9.2 million primarily consisting of
non-amortizable trademarks and amortizable license agreements.

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 for
impairment 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 adopted SFAS No. 142 effective January 1,
2002.

Upon adoption of SFAS No. 142, Dura completed step one of the transitional
goodwill impairment test, using a combination of valuation techniques, including
the discounted cash flow approach and the market multiple approach, for each of
its four reporting units (Control Systems, Body & Glass, Mobile Products and
Other Operating Companies). Upon completion of the required assessments under
SFAS No. 142, it was determined that the fair market value of the goodwill
assigned to Dura's Control Systems and Other Operating Companies reporting units
was lower than its book value, resulting in a transitional impairment charge of
approximately $205.2 million, representing the write-off of 25 percent of the
Control Systems reporting unit goodwill and 100 percent of the Other Operating
Companies reporting unit goodwill. The write-off was recorded as a cumulative
effect of a change in accounting principle in Dura's consolidated statement of
operations for the quarter ended March 31, 2002. Under the valuation techniques
and approach applied by Dura in its SFAS No. 142 analysis, a change in certain
key assumptions applied, such as the discount rate, projected future cash flows
and mix cash flows by geographic region could significantly impact the results
of Dura's assessment.

Dura performs impairment tests annually, during the second quarter, and
whenever events or circumstances occur indicating that goodwill or other
intangible assets might be impaired. Based upon Dura's annual assessment during
2003, no impairment of goodwill or other intangible assets has occurred.

Accounting for Income Taxes. As part of the process of preparing its
consolidated financial statements Dura is required to estimate its income taxes
in each of the jurisdictions in which it operates. This process involves Dura
estimating its actual current tax expense together with assessing temporary
differences resulting from differing treatment of items for tax and accounting
purposes. These differences result in deferred tax assets and liabilities, which
are included within Dura's consolidated balance sheet. Dura must then assess the
likelihood that its deferred tax assets will be recovered from future taxable
income and to the extent it believes that recovery is not likely, Dura must
establish a valuation allowance. To the extent Dura establishes a

33

valuation allowance or increases this allowance in a period, it must include an
expense within the tax provision in the statement of operations. Significant
management judgment is required in determining Dura's provision for income
taxes, deferred tax assets and liabilities and any valuation allowance recorded
against its net deferred tax assets. Dura has recorded a valuation allowance of
$49.1 million as of December 31, 2003, due to uncertainties related to its
ability to utilize some of its deferred tax assets, primarily certain net
operating loss carryovers before they expire. The valuation allowance is based
on Dura's estimates of taxable income by jurisdiction in which it operates and
the period over which its deferred tax assets will be recoverable. In the event
that actual results differ from these estimates or Dura adjusts these estimates
in future periods, the effects of these adjustments could materially impact
Dura's financial position and results of operations. The net deferred tax asset
as of December 31, 2003 was $31.9 million, net of a valuation allowance of $49.1
million.

Defined Benefit Plans and Post-retirement Benefits. Dura sponsors 15
defined benefit plans that cover certain hourly and salaried employees in the
United States and certain European countries. Dura's policy is to make annual
contributions to the plans to fund the normal cost as required by local
regulations. In addition, Dura has ten postretirement medical benefit plans for
certain employee groups and has recorded a liability for its estimated
obligation under these plans. In calculating obligation and expense, Dura is
required to select certain actuarial assumptions. These assumptions include
discount rate, expected long-term rate of return on plan assets and rates of
increase in compensation and healthcare costs. Dura's assumptions are determined
based on current market conditions, historical information and consultation with
and input from its actuaries. Dura has historically used September 30 as its
annual measurement date. For 2003, Dura assumed a discount rate of 5.0 to 6.25
percent for its pension benefits, and 6.25 percent for its post-retirement
benefits other than pensions to determine its benefit obligations. Holding other
variables constant (such as expected return on plan assets and rate of
compensation increase), a one percentage point decrease in the discount rate
related to Dura's most significant plans would have increased Dura's expense by
$1.5 million and obligations by $14.9 million.

Dura employs a building block approach in determining the expected
long-term rate of return for plan assets, based on historical markets, long-term
historical relationships between equities and fixed income and considering
current market factors such as inflation and interest rates. Holding other
variables constant (such as discount rate and rate of compensation increase) a
one percentage point decrease in the expected long-term rate of return on plan
assets related to Dura's most significant plans would have increased Dura's
expense by $0.7 million. Dura expects to contribute $5.8 million to its pension
plans and $2.0 million to its postretirement medical benefit plans in 2004.

Dura employs a total return investment approach in managing pension plan
assets whereby a mix of equities and fixed income investments are used to
maximize the long-term return of plan assets for a prudent level of risk. At
December 31, 2003, Dura's U.S. pension assets are comprised of 53% equity
securities, 44% debt securities and 3% other investments.

Specifically related to Dura's post-retirement medical benefit plans,
assumed health care cost trend rates have a significant effect on the amounts
reported for these plans. Holding other variables constant, a one
percentage-point decrease in assumed health care cost trend rates would have
decreased Dura's expense by approximately $0.2 million and post-retirement
benefit obligation by approximately $1.9 million.

While any negative impact of these Significant Accounting Policies would
generally result in non-cash charges to earnings, the severity of any charge and
its impact on stockholders' investment could adversely affect Dura's borrowing
agreements, cost of capital and ability to raise external capital. Dura's senior
management has reviewed these Critical Accounting Policies with the Audit
Committee of its board of Directors, and the Audit Committee has reviewed its
disclosure in this management discussion and analysis.

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 recreation vehicle market is seasonal in
that sales in the fourth quarter are normally at reduced levels.

34

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.

MARKET RISK

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 counterparties are major
financial institutions.

Dura manages its interest rate risk by balancing the amount of fixed and
variable debt. For fixed rate debt, interest rate changes affect the fair market
value of such debt, but do not impact earnings or cash flows. Conversely for
variable rate debt, interest rate changes generally do not affect the fair
market value of such debt but do impact future earnings and cash flows, assuming
other factors are held constant. At December 31, 2003, giving effect to the
interest rate swaps discussed below, Dura had fixed rate debt of $650.7 million
and variable rate debt of $567.4 million. Holding other variables constant (such
as foreign exchange rates and debt levels), a one percentage point increase in
interest rates would have decreased the fair market value of Dura's debt at
December 31, 2003 by approximately $62.6 million, $26.8 million of which relates
to Dura's interest rate swap agreements (see below), and would be expected to
have an estimated impact on pre-tax earnings and cash flows for the next year of
approximately $5.5 million.

At December 31, 2003, Dura had outstanding interest rate swap contracts
that effectively converted $400.0 million of its Senior Notes into floating rate
obligations. Under these swap contracts, which expire in April 2012, Dura
receives payments at fixed rates, while it makes payments at variable rates (8.6
percent to approximately 4.1 percent at December 31, 2003). The net interest
paid or received is included in interest expense. Dura designated these swap
contracts as fair value hedges at their inception. At December 31, 2003, the
fair value of the interest rate swap contracts was a net gain position for Dura
of approximately $19.4 million, representing the estimated benefit that would
accrue to Dura to terminate the agreements, and is included in current and
noncurrent assets with a corresponding increase to debt in the accompanying
consolidated December 31, 2003 balance sheet.

From time to time, 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 December
31, 2003, Dura had no outstanding forward exchange contracts.

FOREIGN CURRENCY TRANSACTIONS

A significant portion of Dura's revenues during the year ended December 31,
2003 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 December 31, 2003 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

35

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 (see discussion above on "Market Risk").

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Market Risk" and "Foreign Currency Transactions" sections of Item 7.

36

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

37

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Dura Automotive Systems, Inc.

We have audited the accompanying consolidated balance sheets of Dura
Automotive Systems, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 2003 and 2002 and the related consolidated statements of
operations, stockholders' investment and cash flows for each of the three years
in the period ended December 31, 2003. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Dura Automotive Systems, Inc.
and subsidiaries as of December 31, 2003 and 2002 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2003 in conformity with accounting principles generally accepted in
the United States of America.

As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill and
other intangible assets.

DELOITTE & TOUCHE LLP

Minneapolis, Minnesota
January 28, 2004

38

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See notes to consolidated financial statements.

39

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to consolidated financial statements.

40

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT

See notes to consolidated financial statements.

41

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to consolidated financial statements.

42

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

1. ORGANIZATION AND BASIS OF PRESENTATION:

Dura Automotive Systems, Inc. (a Delaware Corporation) and subsidiaries
(Dura) designs and manufactures components and systems for the global automotive
industry and North American recreation vehicle and specialty vehicle industries.
Dura has 67 manufacturing and product development facilities located in the
United States, Brazil, Canada, China, Czech Republic, France, Germany, Mexico,
Portugal, Slovakia, Spain and the United Kingdom. Dura also has a presence in
Japan and India through alliances or technical licenses.

2. SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION:

The accompanying consolidated financial statements include the accounts of
Dura and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.

CASH EQUIVALENTS:

Cash equivalents consist of money market instruments with original
maturities of three months or less and are stated at cost, which approximates
fair value.

INVENTORIES:

Inventories are valued at the lower of first-in, first-out cost or market.

Inventories consisted of the following (in thousands):

OTHER CURRENT ASSETS:

Other current assets consisted of the following (in thousands):

Excess of cost over billings on uncompleted tooling projects represents
costs incurred by Dura in the production of customer-owned tooling to be used by
Dura in the manufacture of its products. Dura receives a specific purchase order
for this tooling and is reimbursed by the customer within one operating cycle.
Costs are deferred until reimbursed by the customer. Forecasted losses on
incomplete projects are recognized currently.

43

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment are stated at cost. For financial reporting
purposes, depreciation is provided on the straight-line method over the
following estimated useful lives:

Buildings................................................... 20 to 30 years
Machinery and equipment..................................... 3 to 20 years

Accelerated depreciation methods are used for tax reporting purposes.

Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of property,
plant and equipment retired or otherwise disposed of are removed from the
related accounts, and any residual values are charged or credited to income.

GOODWILL AND OTHER ASSETS:

Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired, and, prior to the adoption of SFAS No. 142, "Goodwill
and Other Intangible Assets," was amortized over 40 years. Effective January 1,
2002, goodwill is no longer amortized, but is instead subjected to annual
impairment testing in accordance with the provisions of SFAS No. 142. Other
assets principally consist of pension plan assets in excess of accumulated
benefits; debt financing costs, which are being amortized over the term of the
applicable agreements; other intangible assets; and deferred income taxes. Other
intangible assets at December 31, 2003 are approximately $9.2 million, primarily
consisting of non-amortizable trademarks and amortizable license agreements.

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 for
impairment 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 adopted SFAS No. 142 effective January 1,
2002.

Upon adoption of SFAS No. 142, Dura completed step one of the transitional
goodwill impairment test, using a combination of valuation techniques, including
the discounted cash flow approach and the market multiple approach, for each of
its four reporting units (Control Systems, Body & Glass, Mobile Products and
Other Operating Companies). Upon completion of the required assessments under
SFAS No. 142, it was determined that the fair market value of the goodwill
assigned to Dura's Control Systems and Other Operating Companies reporting units
was lower than its book value, resulting in a transitional impairment charge of
approximately $205.2 million, representing the write-off of 25 percent of the
Control Systems reporting unit goodwill and 100 percent of the Other Operating
Companies reporting unit goodwill. The write-off was recorded as a cumulative
effect of a change in accounting principle in Dura's consolidated statement of
operations for the quarter ended March 31, 2002.

Dura performs impairment tests annually, during the second quarter, and
whenever events or circumstances occur indicating that goodwill or other
intangible assets might be impaired. Based upon Dura's annual assessment during
2003, no impairment of goodwill or other intangible assets has occurred.

44

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the carrying amount of goodwill is as follows (in thousands):

Upon adoption of SFAS No. 142, Dura discontinued the amortization of
goodwill. The following table presents a reconciliation of net income (loss) and
earnings (loss) per share adjusted for the exclusion of goodwill amortization,
net of tax (in thousands, except per share amounts):

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

(1) See Note 6 for calculation of diluted shares outstanding.

ACCRUED LIABILITIES:

Accrued liabilities consisted of the following (in thousands):

45

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER NONCURRENT LIABILITIES:

Other noncurrent liabilities consisted of the following (in thousands):

REVENUE RECOGNITION AND SALES COMMITMENTS:

Dura recognizes revenue as its products are shipped to its customers. Dura
enters into agreements with its customers at the beginning of a given vehicle's
life to produce products. Once such agreements are entered into by Dura,
fulfillment of the customers' purchasing requirements is the obligation of Dura
for the entire production life of the vehicle, with terms of up to seven years,
and Dura has no provisions to terminate such contracts. In certain instances,
Dura may be committed under existing agreements to supply product to its
customers at selling prices which are not sufficient to cover the direct cost to
produce such product. In such situations, Dura records a liability for the
estimated amount of such future losses. Such losses are recognized at the time
that the loss is probable and reasonably estimable and are recorded at the
minimum amount necessary to fulfill Dura's obligations to its customers.

INCOME TAXES:

Dura accounts for income taxes following the provisions of SFAS No. 109,
"Accounting for Income Taxes," which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
currently enacted tax rates.

COMPREHENSIVE INCOME (LOSS):

Dura follows the provisions of SFAS No. 130, "Reporting Comprehensive
Income," which established standards for reporting and display of comprehensive
income (loss) and its components. Comprehensive income (loss) reflects the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources. For Dura, comprehensive
income (loss) represents net income adjusted for foreign currency translation
adjustments, the deferred gain/loss on certain derivative instruments utilized
to hedge Dura's interest and foreign exchange exposures, and additional minimum
pension liability. In accordance with SFAS No. 130, Dura has chosen to disclose
comprehensive income (loss) in the consolidated statements of stockholders'
investment.

46

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of accumulated other comprehensive income (loss) are as
follows (in thousands):

FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying amount of cash and cash equivalents, accounts receivable,
inventory, accounts payable, accrued liabilities and revolving credit facilities
approximates fair value because of the short maturity of these instruments. The
carrying amount of Dura's nonsubordinated long-term debt approximates fair value
because of the variability of the interest cost associated with these
instruments. The fair value of Dura's Senior Notes, based on quoted market
activity, approximated $432.0 million as of December 31, 2003. The fair value of
Dura's Subordinated Notes, based on quoted market activity, approximated $469.9
million and Euro 91.9 million, respectively, as of December 31, 2003. The fair
value of Dura's Preferred Securities, based on NASDAQ market quote activity,
approximated $51.9 million as of December 31, 2003.

Dura also uses forward exchange contracts to hedge its foreign currency
exposure related to certain intercompany transactions. Dura designates these
contracts at their inception as cash flow hedges. At December 31, 2003, Dura had
no outstanding forward exchange contracts.

In April 2002 and November 2003, in connection with the offering of the
Senior Notes, Dura entered into fixed-to-floating interest rate swaps (total
notional amount of $400.0 million) with various financial institutions. At their
inception Dura designated these contracts as fair value hedges. At December 31,
2003, based upon market quotes, Dura's swap contracts outstanding had a fair
value of approximately $19.5 million and this amount is included in the
consolidated balance sheet as of December 31, 2003.

The counterparties to the above agreements are major financial
institutions. Dura does not enter into or hold derivatives for trading or
speculative purposes.

NEW ACCOUNTING PRONOUNCEMENTS:

In December 2003, the FASB issued SFAS No. 132(R), a revision to SFAS No.
132, Employers' Disclosure about Pensions and Other Postretirement Benefits.
SFAS No. 132(R) does not change the measurement or recognition related to
pension and other postretirement plans required by SFAS No. 87, Employers'
Accounting for Pensions, SFAS No. 88, Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and
SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions and retains the disclosure requirements contained in SFAS No. 132. SFAS
No. 132(R) requires additional disclosures about the assets, obligations, cash
flows and net periodic benefit cost of defined benefit pension plans and other
defined benefit postretirement plans. SFAS No. 132(R) is effective for financial
statements with fiscal years ending after December 15, 2003, with the exception
of disclosure requirements related to foreign plans and estimated future benefit
payments which are effective for fiscal years ending after June 15, 2004. Dura
has included the required disclosures in Note 12 to its consolidated financial
statements. The adoption of SFAS No. 132(R) did not impact Dura's consolidated
balance sheet or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS
No. 150 requires issuers to classify as liabilities (or

47

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assets in some circumstances) freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. The adoption of SFAS No. 150 did not have a significant impact on Dura's
consolidated balance sheet or results of operations.

In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities". The Interpretation addresses the consolidation of variable
interest entities, including entities commonly referred to as special purpose
entities. Dura is required to apply FIN 46 to all new variable interest entities
created or acquired after January 31, 2003. In October 2003, the FASB issued FSP
FIN 46-6, "Effective Date of FIN 46, Consolidation of Variable Interest
Entities." FSP FIN 46-6 extended the required effective date of FIN 46 for
variable interest entities created or acquired prior to February 1, 2003. Dura
was required to apply FIN 46 to such entities effective December 31, 2003. The
application of FIN 46 resulted in a reclassification of the Preferred Securities
from the mezzanine section of the balance sheet for 2003 to a long-term
liability. In addition, Minority Interest -- Dividends on Trust Preferred
Securities, Net will be reclassified from its current classification in the
statement of operations to a component of interest expense on a gross basis,
prospectively, for periods subsequent to December 31, 2003.

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

In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 clarifies the requirements for a guarantor's
accounting for and disclosure of certain guarantees issued and outstanding. The
initial recognition and initial measurement provisions of FIN 45 were applicable
to guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 were effective for financial statements of interim or
annual periods ending after December 15, 2002. The adoption of FIN 45 did not
have a significant impact on Dura's consolidated balance sheet or results of
operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between SFAS No.
146 and EITF 94-3 relates to SFAS No. 146's requirements for the timing of
recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. Under
EITF 94-3, a liability for an exit cost was recognized at the date of an
entity's commitment to an exit plan. SFAS No. 146 must be applied prospectively
for exit or disposal activities that are initiated after December 31, 2002. SFAS
No. 146 also increases the disclosure requirements associated with exit or
disposal activities. During 2003, Dura applied the provisions of SFAS No. 146 in
connection with its various facility consolidation initiatives, and will
continue to apply the provisions of SFAS No. 146 should additional exit or
disposal activities be initiated in the future.

48

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 APB Opinion No. 30 "Reporting Results of Operations." This statement
also requires sale-leaseback accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions, and makes
various other technical corrections to existing pronouncements. This statement
was effective for Dura beginning January 1, 2003. The application of this
statement resulted in a reclassification of the loss on early extinguishment of
debt recorded during 2002 of $5.5 million from an extraordinary item to a
component of income from continuing operations. In addition, in connection with
the termination of Dura's Credit Agreement, Dura wrote off debt issuance costs
of approximately $2.9 million during the fourth quarter of 2003, which was also
classified as a component of income from continuing operations in accordance
with this statement.

COMMON STOCK:

The holder of each share of Class A common stock outstanding is entitled to
one vote per share, and the holder of each share of Class B common stock
outstanding is entitled to ten votes per share.

STOCK OPTIONS:

Dura accounts for stock options under the provisions of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," under which no compensation expense
is recognized when the stock options are granted at market value. The pro forma
effects, had Dura followed the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," are included in Note 6.

USE OF ESTIMATES:

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The ultimate results could
differ from those estimates.

FOREIGN CURRENCY TRANSLATION:

Assets and liabilities of Dura's foreign operations are translated using
the year-end rates of exchange. Results of operations are translated using the
average rates prevailing throughout the period. Translation gains or losses are
included in accumulated other comprehensive income (loss), a separate component
of stockholders' investment.

LEGAL, ENVIRONMENTAL AND WARRANTY:

Dura is subject to various legal actions and claims incidental to its
business, including those arising out of alleged defects, product warranties,
employment-related matters and environmental matters. For example, Dura faces an
inherent business risk of exposure to product liability and warranty claims in
the event that its products fail to perform as expected and such failure of our
products results, or is alleged to result, in bodily injury and/or property
damage. OEMs are increasingly requiring their outside suppliers to guarantee or
warrant their products and bear the costs of repair and replacement of such
products under new vehicle warranties. Depending on the terms under which Dura
supplies products to an OEM, an OEM may hold Dura responsible for some or all of
the repair or replacement costs of defective products under new vehicle
warranties when the product supplied did not perform as represented. Dura's
policy is to record reserves for

49

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

legal, environmental and customer warranty costs on a case by case basis at the
time it believes such amount is probable and estimable and to review these
determinations on a quarterly basis, or more frequently, as additional
information is obtained. Dura has established reserves for issues that are
probable and estimable in amounts management believes are adequate to cover
reasonable adverse judgments. Dura determines its warranty reserve based on
identified claims and the estimated ultimate projected claim cost. The final
amounts determined to be due related to these matters could differ significantly
from recorded estimates. Dura carries insurance for certain legal matters
including product liability; however, it no longer carries insurance for recall
matters, as the cost and availability for such insurance, in the opinion of
management, is cost prohibitive or not available. The following presents a
summary of Dura's legal, environmental and warranty position (in thousands):

3. DISCONTINUED OPERATIONS:

During the fourth quarter of 2002, Dura adopted a plan to divest its
Mechanical Assemblies Europe business, as it believed this business would not
assist Dura in reaching its strategic growth and profitability targets for the
future. The Mechanical Assemblies Europe business generated annualized revenues
of approximately $111.9 million from facilities in Grenoble and Boynes, France;
and Woodley, Nottingham and Stourport, UK. In March 2003, Dura completed the
divestiture of its Mechanical Assemblies Europe business to Magal Engineering
and members of the local management group, located in Woodley, England.

The Mechanical Assemblies Europe divestiture was treated as a discontinued
operation under SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". The results of operations of the Mechanical Assemblies
Europe business and the related charges have been classified as discontinued
operations in the consolidated statements of operations, and prior periods have
been recast to present Mechanical Assemblies Europe as a discontinued operation
in all periods presented.

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

At December 31, 2003, Dura had reserves related to the divestiture of the
European Mechanical Assemblies business of $18.9 million, primarily related to
facility closure and other contractual commitments. The contractual commitments
related to the facilities, principally lease costs, are anticipated to be
completed in 2021.

50

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net assets of discontinued operations included the following (in
thousands):

Summary operating results of the discontinued operations are as follows (in
thousands):

Facility consolidation and other charges included severance related costs
of $0.6 million, asset impairment of $20.7 million, and facility closure costs
of $0.3 million for the year ended December 31, 2002 related to the previously
discussed Steering Gear and European pedal product lines. In addition to the
operating results above, Dura also recorded a $68.3 million loss on the disposal
of discontinued operations in 2002. During the quarter ended March 31, 2003, as
part of the final negotiations surrounding the disposal, a net positive
adjustment of $0.9 million was recorded upon disposal of the discontinued
operations, which, when included with the loss from operations of approximately
$1.9 million, resulted in a net loss from discontinued operations of
approximately $1.0 million in the quarter. Additionally, net negative
adjustments totaling $1.8 million were recorded during 2003 from a less
favorable settlement of retained liabilities than anticipated, resulting in a
net loss from discontinued operations of approximately $2.8 million in the year
ended December 31, 2003.

51

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. ACQUISITIONS:

2003 ACQUISITIONS:

On June 19, 2003, Dura reached an agreement with Heywood Williams Group PLC
(United Kingdom) to acquire its Creation Group, a premier designer and
manufacturer of windows, doors and specialty products for the North American
recreation vehicle, motor vehicle accessories and manufactured housing markets.
The Creation Group, headquartered in Elkhart, Indiana, had 2002 revenues of
approximately $145 million, and has approximately 1,100 employees at 10
facilities in Indiana, Ohio and Pennsylvania. Financial terms of the deal
included a purchase price of $57 million, subject to a working capital
adjustment and an earn out provision of an additional $3 million if the acquired
entity achieves certain financial targets. Dura used cash on hand to finance the
transaction, which closed on July 23, 2003. The acquisition was accounted for
using the purchase method of accounting and, accordingly, the assets acquired
and liabilities assumed were recorded at fair value as of the date of
acquisition, with the excess purchase price recorded as goodwill. Dura does not
believe the final allocation of purchase price will be materially different from
preliminary allocations. Changes to the preliminary estimates within one year of
the purchase date will be reflected as an adjustment to goodwill. The operating
results of the Creation Group have been included in the consolidated financial
statements of Dura since the date of acquisition. The pro forma effects of this
transaction are not material to Dura's results of operations.

The estimated fair values of the assets acquired and liabilities assumed at
the date of the Creation Group acquisition are as follows (in thousands):

Current assets.............................................. $27,682
Property, plant and equipment............................... 18,795
Goodwill.................................................... 17,712
Intangible assets........................................... 9,000
-------
Total assets acquired....................................... 73,189
-------
Current liabilities......................................... 11,681
Long-term liabilities....................................... 3,508
-------
Total liabilities assumed................................... 15,189
-------
Net assets acquired......................................... $58,000
=======

ACQUISITION INTEGRATIONS:

Dura has developed and implemented the majority of the facility
consolidation plans designed to integrate the operations of past acquisitions.
As of December 31, 2003, purchase liabilities recorded in conjunction with the
acquisitions included approximately $10.7 million for costs associated with the
shutdown and consolidation of certain acquired facilities and $2.8 million for
severance and other related costs. Additional liabilities of $0.3 million for
severance costs were recorded during the third quarter of 2003 related to the
acquisition of the Creation Group. Costs incurred and charged to these reserves
amounted to $0.7 million related to acquired facilities during the year ended
December 31, 2003. The remaining employee terminations and facility closures
were completed by December 31, 2002 except for contractual obligations,
consisting principally of facility lease payments, that will continue through
2005.

52

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. FACILITY CONSOLIDATION AND OTHER CHARGES:

BUSINESS EXITS:

In November 2001, Dura entered into a definitive agreement to divest its
Plastic Products business for total proceeds of approximately $41.0 million. The
transaction closed on January 28, 2002. The Plastic Products business designed,
engineered, and manufactured plastic components for a wide variety of automotive
vehicle applications, focusing on the metal to plastic conversion and dual
plastic applications markets. This business employed approximately 750 people in
three facilities located in Mishawaka, Indiana; Bowling Green, Kentucky; and
Jonesville, Michigan and generated approximately $80.0 million in annual
revenue. Two members of Dura's Board of Directors are members of management of
an investor group which is the 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 subsequent operating results has not been significant.

In October 2001, Dura successfully completed the sale of its Thixotech
business located in Canada for total proceeds of approximately $4.1 million.
Thixotech generated approximately $10.0 million of revenue on an annualized
basis, and is a manufacturer of magnesium injection molded products for the
electronics, communications, power tools and automotive industries. Dura
recorded a noncash charge related to this transaction of approximately $5.2
million in the fourth quarter of 2001. The effect of this divestiture on
subsequent operating results has not been significant.

In August 2001, Dura divested its Australian operations resulting in a
charge of approximately $7.5 million in the third quarter of 2001. Approximately
$2.0 million of this charge was cash related. The Australian operations
generated approximately $10.0 million of revenue on an annualized basis and
produced parking brakes, jacks, pedal assemblies, hinges and latches for the
automotive industry. The effect of this divestiture on subsequent operating
results has not been significant.

FACILITY CONSOLIDATION:

During the fourth quarter of 2003, in order to improve capacity
utilization, Dura announced a plan to exit its Melun, France facility and
combine the business with other Dura operations. This action resulted in a
fourth quarter 2003 restructuring charge of $0.7 million relating to severance.
Dura also expensed as incurred approximately $0.1 million of facility closure
and other costs incurred during the fourth quarter of 2003. These costs are
reflected as facility consolidation and other charges in the 2003 consolidated
statement of operations and were accounted for in accordance with SFAS No. 146.
The restructuring actions are anticipated to be complete by March 31, 2004. Dura
expects to incur additional restructuring charges related to the exit of the
Melun facility of approximately $0.4 million relating to facility closure and
other costs through March 31, 2004.

During the fourth quarter of 2003, in order to improve capacity
utilization, Dura announced a plan to restructure its Pamplona, Spain facility
and combine certain businesses with other Dura operations. This action resulted
in a fourth quarter 2003 restructuring charge of $1.3 million, including
severance of $1.2 million and facility closure and other costs of $0.1 million.
Dura also expensed as incurred approximately $0.2 million of facility closure
and other costs incurred during the fourth quarter of 2003. These costs are
reflected as facility consolidation and other charges in the 2003 consolidated
statement of operations and were accounted for in accordance with SFAS No. 146.
Costs incurred and charged to the reserve as of December 31, 2003 amounted to
$1.2 million in severance related costs. Dura does not expect to incur any
additional restructuring charges related to the exit of the Pamplona facility.

53

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During the third quarter of 2003, Dura continued its plan to exit certain
of its non-core products and exited its thermostats product line in North
America. Dura previously exited its European thermostat business in conjunction
with the divestiture of its Mechanical Assemblies Europe business. This North
American action resulted in a third quarter 2003 restructuring charge of $0.6
million, including asset impairment of $0.2 million and other facility
consolidation costs of $0.4 million. These costs are reflected as facility
consolidation and other charges in the 2003 consolidated statement of operations
and were accounted for in accordance with SFAS No. 146. Dura does not expect to
incur any additional restructuring charges related to the exit of the North
American thermostats product line.

During the third quarter of 2003, in order to improve capacity utilization,
Dura announced a plan to exit its Mount Carroll, Illinois facility and combine
the business with other Dura operations. This action resulted in a third quarter
2003 restructuring charge of $0.4 million relating to severance. In continuation
of these actions, Dura recorded $0.2 million of additional restructuring charges
related to severance in the fourth quarter of 2003. Dura also expensed as
incurred certain facility closure and other costs of $0.2 million during the
third quarter of 2003. These costs are reflected as facility consolidation and
other charges in the 2003 consolidated statement of operations and were
accounted for in accordance with SFAS No. 146. The restructuring actions are
anticipated to be complete by March 31, 2004. Costs incurred and charged to the
reserve as of December 31, 2003 amounted to $0.6 million in severance costs.
Dura does not expect to incur any additional restructuring charges related to
the exit of the Mount Carroll facility.

During the second quarter of 2003, in order to improve capacity
utilization, Dura announced a plan to exit its Fulton, Kentucky facility in
North America. This action resulted in a second quarter 2003 restructuring
charge of $1.5 million, including severance of $0.3 million and facility closure
and other costs of $1.2 million. In continuation of these actions, Dura recorded
$0.6 million of additional restructuring charges in the third quarter of 2003,
including severance of $0.5 million and facility closure and other costs of $0.1
million, and $0.7 million of severance in the fourth quarter of 2003. Dura also
expensed as incurred approximately $2.5 million and $3.4 million of certain
facility closure and other costs incurred during the third and fourth quarters
of 2003, respectively. These costs are reflected as facility consolidation and
other charges in the 2003 consolidated statement of operations and were
accounted for in accordance with SFAS No. 146. The restructuring actions are
anticipated to be complete by March 31, 2004. Costs incurred and charged to the
reserve as of December 31, 2003 amounted to $0.8 million in severance related
costs and $1.2 million in facility closure and other costs. Dura expects to
incur additional restructuring charges related to the exit of the Fulton
facility of $0.5 million through March 31, 2004, including severance of $0.2
million and facility closure and other costs of $0.3 million.

During the fourth quarter of 2002, Dura continued to evaluate its worldwide
capacity utilization and opportunities for cost reductions. As a result, Dura
announced a plan to exit its Livonia, Michigan facility and its Cauvigny, France
facility. These actions resulted in a fourth quarter 2002 restructuring charge
of $12.9 million, accounted for in accordance with EITF 94-3. The charge related
to the consolidation of the Livonia facility included severance related costs of
$0.7 million, asset impairment of $3.2 million and other facility consolidation
costs of $0.1 million. Dura also expensed as incurred certain other costs of
$0.2 million, $0.3 million and $0.1 million during the first, second and third
quarters of 2003, respectively. These costs are reflected as facility
consolidation and other charges in the 2003 consolidated statement of
operations. The charge related to the consolidation of the Cauvigny facility
included severance related costs of $7.7 million and asset impairment of $1.2
million. During the third quarter of 2003, Dura reevaluated its French
operations and decided not to close the Cauvigny facility. As a result, Dura
reversed the severance reserves originally established in the fourth quarter of
2002 of approximately $8.5 million, consisting of the original $7.7 million
severance charge as adjusted for the effects of changes in foreign currency
exchange rates. In the fourth quarter of 2003, Dura adopted a plan to sell its
Cauvigny facility for total proceeds of $0.8 million, and to contribute $2.1
million to the buyer. This action resulted in a fourth quarter 2003
restructuring charge of $2.2 million, including the planned payments to the
buyer of $2.1 million and facility closure and other costs of
54

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$0.1 million. Dura also expensed as incurred approximately $2.4 million during
the fourth quarter of 2003, consisting principally of asset impairment. These
costs are reflected as facility consolidation and other charges in the 2003
consolidated statement of operations and were accounted for in accordance with
SFAS No. 146. The restructuring actions are anticipated to be complete by March
31, 2004. Dura does not expect to incur any additional restructuring charges
related to the exit of the Cauvigny facility.

Costs incurred and charged to the reserve related to the consolidation of
the Livonia facility as of December 31, 2003 amounted to $0.7 million in
severance related costs. The decision to exit the Livonia facility resulted in a
reduction in the work force of approximately 10 salaried and 88 hourly
employees, all of which have been terminated as of December 31, 2003. The
restructuring actions were completed by December 31, 2003.

During the third quarter of 2002, in order to improve capacity utilization,
Dura announced a plan to combine its Benton Harbor, Michigan and Butler, Indiana
facilities in North America. This action resulted in a third quarter 2002
restructuring charge of $1.1 million, including severance of $0.6 million and
facility closure costs of $0.5 million, accounted for in accordance with EITF
94-3. Additionally, Dura expensed as incurred certain equipment relocation costs
of $0.1 million. The decision to close the Benton Harbor facility resulted in a
reduction in the work force of approximately 12 salaried and 44 hourly
employees, all of which have been terminated as of December 31, 2003. The
restructuring actions were completed by September 30, 2003. Dura expensed as
incurred certain equipment relocation costs of $0.3 million and other costs of
$0.4 million during the fourth quarter of 2002, and an additional $0.1 million
of other costs during the first quarter of 2003 related to the closure of the
Benton Harbor facility. Costs incurred and charged to the reserve as of December
31, 2003 amounted to $0.6 million in severance related costs and $0.5 million in
facility closure costs. These costs are reflected as facility consolidation and
other charges in the 2003 consolidated statement of operations.

Throughout 2000 and 2001 Dura has evaluated manufacturing capacity issues
and opportunities for cost reduction given the reduced demand in the North
America automotive and recreation vehicle markets and the available capacity
within Dura's operations. As a result, beginning in the fourth quarter of 2000,
Dura began to implement several actions including discontinuing operations in
two North American facilities, combining the Driver Control and Engineered
Products divisions into one (Control Systems), and reducing and consolidating
certain support activities to achieve an appropriate level of support personnel
relative to remaining operations and future business requirements. These actions
resulted in a fourth quarter 2000 restructuring charge of $6.8 million,
including severance related payments of $6.2 million and facility closure costs
of approximately $0.6 million. Additionally in 2000, Dura expensed as incurred
equipment relocation costs of $0.8 million. In continuation of the actions taken
in 2000, Dura recorded $2.4 million of additional restructuring charges in the
first quarter and $2.0 million in the fourth quarter of 2001 relating to
employee severance. Dura also expensed as incurred approximately $0.2 million of
equipment relocation costs incurred during the first quarter of 2001. These
costs are reflected as facility consolidation and other charges in the 2001
consolidated statements of operations.

Costs incurred and charged to the reserves as of December 31, 2003 amounted
to $11.3 million in severance related costs and $1.0 million in facility closure
costs. During 2001 and 2002, additional adjustments were made of $0.1 million
and $0.3 million, respectively, to decrease the reserve for employee severance
as the actual costs incurred were less than originally estimated.

The decision to exit the two facilities resulted in a reduction in the work
force of approximately 52 salaried and 408 hourly employees, all of which have
been terminated as of December 31, 2003. Additionally, the decision to
consolidate two divisions into one and to reduce support personnel to a level
consistent with future business requirements resulted in a reduction of
approximately 217 salaried employees, all of which have been terminated as of
December 31, 2003.

55

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. STOCKHOLDERS' INVESTMENT:

EARNINGS PER SHARE:

Basic earnings (loss) per share was computed by dividing net income (loss)
by the weighted average number of Class A and Class B common shares outstanding
during the year. In accordance with SFAS No. 128, an entity that reports a
discontinued operation, an extraordinary item, or the cumulative effect of an
accounting change in a period shall use income from continuing operations,
adjusted for preferred dividends, as the control number in determining whether
those potential common shares are dilutive or antidilutive. As a result, diluted
earnings (loss) per share, and all other diluted per share amounts presented,
were computed utilizing the same number of potential common shares used in
computing the diluted per share amount for income from continuing operations,
regardless if those amounts were antidilutive to their respective basic per
share amounts. Diluted earnings per share for 2003 and 2001 includes the effects
of outstanding stock options using the treasury stock method. Potential common
shares of 1,289,000 related to Dura's Preferred Securities were excluded from
the computation of diluted earnings per share for 2003 and 2001, as inclusion of
these shares would have been antidilutive. Diluted loss per share for 2002
includes (i) the effects of outstanding stock options using the treasury stock
method, and (ii) the conversion of the Preferred Securities as follows (in
thousands, except per share amounts):

THE 1998 STOCK INCENTIVE PLAN:

Certain individuals who are full-time, salaried employees of Dura (Employee
Participants) are eligible to participate in the 1998 Stock Incentive Plan (the
1998 Plan). A committee of the Board of Directors approves the Employee
Participants and determines the terms and conditions of granted options. The
1998 Plan provides for the issuance of options at exercise prices equal to the
stock market price on the date of grant to Employee Participants covering up to
1,000,000 shares of Class A common stock of Dura plus any shares carried over
from the 1996 Key Employee Stock Option Plan (the 1996 Plan) plus an annual
increase, as

56

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

defined in the 1998 Plan, subject to certain adjustments reflecting changes in
Dura's capitalization. Such option grants vest between one and four years from
the date of grant. Options available for future grants to purchase shares of
Dura's Class A common stock was 851,020 at December 31, 2003. Information
regarding options outstanding from the 1996 Plan and the 1998 Plan is as
follows:

The following table summarizes information about stock options outstanding
at December 31, 2003:

The weighted average exercise price of options exercisable at the end of
year was $16.47 per share at December 31, 2003, $20.74 at December 31, 2002, and
$23.13 at December 31, 2001. The weighted average remaining contractual life of
outstanding options was 7.1 years at December 31, 2003, 7.7 years at December
31, 2002, and 7.2 years at December 31, 2001.

INDEPENDENT DIRECTOR STOCK OPTION PLAN:

The Dura Automotive Systems, Inc. Independent Director Stock Option Plan
(the Director Option Plan) provides for the issuance of options to Independent
Directors, as defined, to acquire up to 100,000 shares of Dura's Class A common
stock, subject to certain adjustments reflecting changes in Dura's
capitalization. The option exercise price must be at least 100 percent of the
market value of the Class A common stock at the time the option is issued. Such
option grants vest six months from the date of grant. As of December 31, 2003,

57

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Dura had granted options under the Director Option Plan to acquire 21,000 shares
of Dura's Class A common stock at an exercise price of $24.50 to $25.50 per
share. As of December 31, 2003, 21,000 of these options were exercisable. No
granted options have been exercised or forfeited.

EMPLOYEE STOCK DISCOUNT PURCHASE PLAN:

The Dura Automotive Systems, Inc. Employee Stock Discount Purchase Plan
(the Employee Stock Purchase Plan) provides for the sale of up to 1,000,000
shares of Dura's Class A common stock at discounted purchase prices, subject to
certain limitations. The cost per share under this plan is 85 percent of the
market value of Dura's Class A common stock at the date of purchase, as defined.
Pursuant to this plan, 93,069, 114,482, and 159,165 shares of Class A common
stock were issued to employees during the years ended December 31, 2003, 2002
and 2001, respectively. The weighted average fair value of shares purchased in
2003, 2002 and 2001 was $7.28, $9.05, and $5.94, respectively.

DEFERRED INCOME LEADERSHIP STOCK PURCHASE PLAN:

During 1999, Dura established the Deferred Income Leadership Stock Purchase
Plan, which allows certain employees to defer receipt of all or a portion of
their annual cash bonus. Dura makes a matching contribution of one-third of the
employee's deferral. Dura's matching contribution vests on the first day of the
third plan year following the date of the employee's deferral. In accordance
with the terms of the plan, the employee's deferral and Dura's matching
contribution have been placed in a "Rabbi" trust, which invests solely in Dura's
Class A common stock. During 2003, 26,725 shares were distributed to employees
leaving 83,654 units remaining to be distributed. During 2002 and 2001, 20,570
and 17,422 shares, respectively, were distributed to employees. This trust
arrangement offers the employee a degree of assurance for ultimate payment of
benefits without causing constructive receipt for income tax purposes.
Distributions to the employee can only be made in the form of Dura's Class A
common stock. Under the terms of the plan, Dura has the option to buy the shares
to be distributed in the open market or issue shares that have been authorized
under the plan. The plan provides for the issuance of up to 500,000 shares of
Dura's Class A common stock. At December 31, 2003, 500,000 shares remain
available for issuance under the plan. The assets of the trust remain subject to
the creditors of Dura and are not the property of the employees; therefore, they
are included as a separate component of stockholders' investment under the
caption Treasury Stock.

DIRECTOR DEFERRED STOCK PURCHASE PLAN:

During 2000, Dura established the Director Deferred Stock Purchase Plan,
which allows outside directors to defer receipt of all or a portion of their
annual director retainer fee. Dura makes a matching contribution of one-third of
the director's deferral. Dura's matching contribution vests on the first day of
the third plan year following the date of the director's deferral. In accordance
with the terms of the Plan, the director's deferral and Dura's matching
contribution have been placed in a "Rabbi" trust, which invests solely in Dura's
Class A common stock. There have been no shares distributed to directors as of
December 31, 2003 leaving 149,621 units remaining to be distributed. This trust
arrangement offers the director a degree of assurance for ultimate payment of
benefits without causing constructive receipt for income tax purposes.
Distributions to the director can only be made in the form of Dura's Class A
common stock. Under the terms of the plan, Dura has the option to buy the shares
to be distributed in the open market or issue shares that have been authorized
under the plan. The plan provides for the issuance of up to 200,000 shares of
Dura's Class A common stock. At December 31, 2003, 200,000 shares remain
available for issuance under the plan. The assets of the trust remain subject to
the creditors of Dura and are not the property of the directors; therefore, they
are included as a separate component of stockholders' investment under the
caption Treasury Stock.

STOCK-BASED COMPENSATION PLANS:

Dura has elected to continue accounting for the above plans under APB
Opinion No. 25, under which no compensation cost has been recognized during the
three years ended December 31, 2003, as all options are

58

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

granted at market value. Had compensation cost for these plans been determined
as required under SFAS No. 123, Dura's pro forma net income (loss) and pro forma
earnings (loss) per share would have been as follows (in thousands, except per
share amounts):

The effect of the stock issued under the Employee Stock Purchase Plan was
not material for 2003, 2002 and 2001. The fair value of each option grant is
estimated on the date of the grant using the Black-Scholes option-pricing model
with the following weighted average assumptions: risk-free interest rates of 2.5
percent in 2003, 3.1 percent in 2002, 5.4 percent to 5.6 percent in 2001;
expected life of four years for 2003, 2002, and 2001; an average expected
volatility of 82 percent in 2003, 81 percent in 2002, and 64 percent in 2001.

DIVIDENDS:

Dura has not declared or paid any cash dividends in the past. As discussed
in Note 8, Dura's New Credit Agreement restricts the amount of dividends Dura
can declare or pay. As of December 31, 2003, under the terms of the Senior
Notes, Subordinated Notes and most restrictive debt covenants of the Credit
Agreement, Dura could not have paid any cash dividends.

7. MANDATORILY REDEEMABLE CONVERTIBLE TRUST PREFERRED SECURITIES:

In March 1998, Dura Automotive Systems Capital Trust (the "Issuer"), a
wholly owned statutory business trust of Dura, completed the offering of its
Preferred Securities, resulting in net proceeds to Dura of approximately $52.6
million. The Preferred Securities are currently redeemable, in whole or part,
and must be redeemed no later than March 31, 2028. The Preferred Securities are
convertible at the option of the holder into Class A common stock of Dura at a
rate of 0.5831 shares of Class A common stock for each Preferred Security, which
is equivalent to a conversion price of $42 7/8 per share. The net proceeds of
the offering were used to repay outstanding indebtedness. Dividends on the
Preferred Securities, net of the related income tax benefit, are reflected as
minority interest in the consolidated statements of operations.

Refer to Note 2 for discussion related to Dura's accounting for the
Preferred Securities and related dividends in accordance with FIN 46, adopted
December 31, 2003.

No separate financial statements of the Issuer have been included herein.
Dura does not consider that such financial statements would be material to
holders of Preferred Securities because (i) all of the voting securities of the
Issuer are owned, directly or indirectly, by Dura, a reporting company under the
Exchange Act; (ii) the Issuer has no independent operations and exists for the
sole purpose of issuing securities representing undivided beneficial interests
in the assets of the Issuer and investing the proceeds thereof in

59

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7 1/2 percent convertible subordinated debentures due March 2028 issued by Dura;
and (iii) the obligations of the Issuer under the Preferred Securities are fully
and unconditionally guaranteed by Dura.

8. DEBT:

Debt consisted of the following (in thousands):

Future maturities of long-term debt as of December 31, 2003 are as follows
(in thousands):

2004........................................................ $ 5,738
2005........................................................ 7,820
2006........................................................ 3,215
2007........................................................ 2,937
2008........................................................ 142,795
Thereafter.................................................. 1,055,582
----------
$1,218,087
==========

In March 1999, Dura entered into its Credit Agreement. The Credit Agreement
originally provided 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 ("2002 Senior Notes"), due April 2012. The interest on
the 2002 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. In addition, the
revolving credit facility was decreased to $390.0 million. Borrowings under the
tranche C term loan are based on LIBOR and are due and payable in quarterly
installments through December 2008 with no early payment penalties. In
conjunction with these transactions, Dura obtained an amendment to the Credit
Agreement to allow for the 2002 Senior Notes offering and to further adjust
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 issuance costs of approximately $5.5 million during the second
quarter of 2002. In accordance with the adoption of SFAS No. 145, "Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical

60

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Corrections", effective January 1, 2003, Dura reclassified the $5.5 million loss
on early extinguishment of debt to a component of income from continuing
operations and the related income tax benefit of $2.1 million to the provision
for income taxes.

In November 2003, Dura completed the offering of $50.0 million 8 5/8
percent senior unsecured notes ("2003 Senior Notes"), due April 2012. The
interest on the 2003 Senior Notes is payable semi-annually beginning April 15,
2004. Net proceeds from this offering of approximately $48.5 million were used
to replenish cash balances used to fund the acquisition of the Creation Group.
In conjunction with this transaction, Dura amended and restated its revolving
credit facility. The new revolving credit facility ("New Credit Agreement")
provides for $175.0 million of revolving credit, available until October 2008.
At December 31, 2003, Dura had unused borrowing capacity of approximately $155.0
million, all of which was available under its most restrictive debt covenant and
$20.0 million in letters of credit outstanding. The existing tranche C term loan
remained outstanding. Dura also entered into a fixed to floating interest rate
swap (notional amount of $75.0 million) with various financial institutions that
more closely mirrors the cost of its bank debt. In connection with the
termination of Dura's existing Credit Agreement, Dura wrote off debt issuance
costs of approximately $2.9 million during the fourth quarter of 2003. The
write-off of debt issuance costs was classified as a component of income from
continuing operations in accordance with the provisions of SFAS No. 145.

Included in interest expense, net, in the consolidated statements of
operations is approximately $2.6 million, $2.4 million and $2.3 million of
interest income earned on Dura's cash balances in the years ended December 31,
2003, 2002 and 2001, respectively.

As of December 31, 2003, the rate on borrowings under the New Credit
Agreement was based on LIBOR and was 3.66 percent. The New Credit Agreement
contains various restrictive covenants which amongst other things, limit
indebtedness, investments, capital expenditures and certain dividends. The New
Credit Agreement also requires Dura to maintain certain financial ratios
including debt and interest coverage. Dura was in compliance with the covenants
as of December 31, 2003. Borrowings under the New Credit Agreement are
collateralized by substantially all assets of Dura.

The New 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 $50.8 million. As of December 31, 2003, 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 December
31, 2003, Dura had $0.1 million outstanding under its overdraft facilities. At
December 31, 2003, Dura had overdraft facilities available from banks of
approximately $53.0 million.

9. SENIOR SUBORDINATED NOTES:

In April 1999, Dura completed the offering of its Subordinated Notes, due
May 2009. The interest on the Subordinated Notes is payable semiannually. 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 semiannually. 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.

61

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES:

The summary of income from continuing operations before provision for
income taxes and minority interest consisted of the following (in thousands):

The provision for income taxes consisted of the following (in thousands):

A reconciliation of the provision for income taxes at the statutory rates
to the reported income tax provision is as follows (in thousands):

62

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of deferred tax assets (liabilities) is as follows (in
thousands):

Net current deferred tax assets of $15.7 million in 2003 and $27.5 million
in 2002 are included in other current assets. Net long-term deferred tax assets
of $16.2 million in 2003 and $0.7 million in 2002 are included in other assets.
The valuation allowance has been provided primarily related to the uncertainty
regarding the use of certain of Dura's net operating loss and capital loss
carryforwards. In 2003 and 2002, the valuation allowance increased by $7.9
million and $17.7 million, respectively, to primarily reflect changes in the
uncertainties related to specific net operating loss and capital loss
carryforwards, as well as the impact of foreign exchange. No provision has been
made for U.S. income taxes related to undistributed earnings of foreign
subsidiaries that are intended to be permanently reinvested. As of December 31,
2003, Dura had approximately $195.2 million of net operating loss carryforwards,
of which $109.0 million related to certain foreign subsidiaries. Utilization of
these losses is subject to the tax laws of the applicable foreign jurisdiction
and will be limited by the ability of such foreign subsidiary to generate
taxable income. Of the total net operating loss carryforwards, $80.5 million
have no expiration and $114.7 million expire in 2009 through 2023. The
utilization of Dura's research and development credit carryforwards expire in
2010 through 2023. Dura has been granted tax holidays in certain countries in
which it operates. In 2003, Dura recognized a tax benefit of approximately $0.4
million in countries with tax holidays.

11. SEGMENT REPORTING:

Dura follows the provisions of SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." Dura is organized in three divisions
based on the products that each division offers to vehicle OEM customers. Each
division reports their results of operations, submits budgets, and makes capital
expenditure requests to the chief operating decision-making group. This group
consists of the president and chief executive officer, the presidents of the
three divisions, the chief financial officer and the vice-presidents of sales
and human resources. Dura's operating segments have been aggregated into one
reportable segment, as Dura believes it meets the aggregation criteria of SFAS
No. 131. Dura's divisions, each with a separate management team, are dedicated
to providing vehicle components and systems to OEM customers. Each of the
divisions demonstrate similar economic performance, mainly driven by vehicle
production volumes of the customers for which they service. All of Dura's
operations use similar manufacturing techniques and utilize
63

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

common cost-saving tools. These techniques include continuous improvement
programs designed to reduce Dura's overall cost base and to enable Dura to
better handle OEM volume fluctuations.

The following table presents revenues and long-lived assets for each of the
geographic areas in which Dura operates (in thousands):

Revenues are attributed to geographic locations based on the location of
product production.

The following is a summary composition by product category of Dura's
revenues (in thousands):

Customers that accounted for a significant portion of consolidated revenues
for each of the three years in the period ended December 31, 2003 were as
follows:

As of December 31, 2003 and 2002, receivables from these customers
represented 38 percent and 42 percent of total accounts receivable,
respectively.

12. EMPLOYEE BENEFIT PLANS:

DEFINED BENEFIT PLANS AND POST-RETIREMENT BENEFITS:

Dura sponsors 15 defined benefit plans that cover certain hourly and
salaried employees in the United States and certain European countries. Dura's
policy is to make annual contributions to the plans to fund the normal cost as
required by local regulations. In addition, Dura has ten postretirement medical
benefit plans for

64

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

certain employee groups and has recorded a liability for its estimated
obligation under these plans. The tables below are based on a September 30
measurement date.

The change in benefit obligation, plan assets and funded status for the
plans related to continuing operations consisted of the following (in
thousands):

The accumulated benefit obligation for all defined benefit pension plans
was $122.2 million at December 31, 2003 and $102.2 million at December 31, 2002.

65

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following weighted-average assumptions were used to determine benefit
obligations:

The following weighted-average assumptions were used to determine net
periodic benefit costs:

Dura employs a building block approach in determining the expected
long-term rate of return for plan assets. Historical markets are studied and
long-term historical relationships between equities and fixed income are
preserved consistent with the widely-accepted capital market principle that
assets with higher volatility generate a greater return over the long run.
Current market factors such as inflation and interest rates are evaluated before
long-term capital market assumptions are determined. The expected long-term
portfolio return is established via a building block approach with proper
consideration of diversification and rebalancing. Peer data and historical
returns are reviewed to check for reasonability and appropriateness.

The following health care cost trend rates were used to account for the
plans:

The components of net periodic benefit costs are as follows (in thousands):

66

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Assumed health care cost trend rates have a significant effect on the
amounts reported for the post-retirement medical benefit plans. A one
percentage-point change in assumed health care cost trend rates would have the
following effects (in thousands):

The weighted-average asset allocations of Dura's U.S. pension assets at
December 31, 2003 and 2002, by asset category, are as follows:

Dura employs a total return investment approach whereby a mix of equities
and fixed income investments are used to maximize the long-term return of plan
assets for a prudent level of risk. The intent of this strategy is to minimize
plan expenses by outperforming plan liabilities over the long run. Risk
tolerance is established through careful consideration of plan liabilities, plan
funded status, and corporate financial condition. The investment portfolio
contains a diversified blend of equity and fixed income investments.
Furthermore, equity investments are diversified across U.S. and non-U.S. stocks
as well as growth, value, and small and large capitalizations. Other assets such
as real estate, private equity, and hedge funds are used judiciously to enhance
long-term returns while improving portfolio diversification. Derivatives may be
used to gain market exposure in an efficient and timely manner; however,
derivatives may not be used to leverage the portfolio beyond the market value of
the underlying investments. Investment risk is measured and monitored on an
ongoing basis through annual liability measurements, periodic asset/liability
studies, and quarterly investment portfolio reviews.

Dura expects to contribute $5.8 million to its pension plans and $2.0
million to its postretirement medical benefit plans in 2004.

RETIREMENT SAVINGS PLANS:

Dura sponsors various employee retirement savings plans that allow
qualified employees to provide for their retirement on a tax-deferred basis. In
accordance with the terms of the retirement savings plans, Dura is required to
match certain of the participants' contributions and/or provide employer
contributions based on Dura's performance and other factors. Dura's
contributions totaled $8.6 million, $7.5 million, and $5.8 million during fiscal
2003, 2002, and 2001.

13. COMMITMENTS AND CONTINGENCIES:

LEASES:

Dura leases office and manufacturing space and certain equipment under
operating lease agreements which require it to pay maintenance, insurance, taxes
and other expenses in addition to annual rentals. Of

67

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

these lease commitments, $19.8 million are included in facility closure and
consolidation costs reserves. Future annual rental commitments at December 31,
2003 under these operating leases are as follows (in thousands):

LITIGATION:

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

14. RELATED PARTY TRANSACTIONS:

Dura incurred fees to Hidden Creek Industries (HCI), an affiliate of Dura,
of approximately $1.1 million in 2003 in connection with the offering of the
2003 Senior Notes, the acquisition of the Creation Group and other business
development services. In 2002, Dura incurred fees to HCI of approximately $2.5
million in connection with the offering of the 2002 Senior Notes, the tranche C
term loan, and other business development services. In 2001, Dura paid fees to
HCI of $1.6 million in connection with the amendment to the Credit Agreement,
the offering of the Subordinated Notes, the divestitures of Australia, Thixotech
and Plastic Products businesses, and other business development services.

In November 2001, Dura entered into a definitive agreement to divest its
Plastic Products business for total proceeds of approximately $41.0 million. The
transaction closed on January 28, 2002. 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.

68

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During 1999, Dura and its former chairman, who is currently a member of
Dura's Board of Directors, formed Automotive Aviation Partners, LLC ("AAP") to
facilitate the purchase of a corporate airplane. Dura owns 25 percent of AAP and
Dura's former chairman owns 75 percent. Each party provided guarantees for their
ownership percent in favor of the AAP's lending institution; Dura's guarantee is
for $1.25 million. In 2001, Dura loaned approximately $1.2 million to AAP (the
"Dura Loan") to enable it to make a principal and interest payment to the
lending institution. The former chairman has personally guaranteed repayment of
75 percent of this loan. The Dura Loan was due and payable in October 2002.
Subsequently, Dura and its former chairman established a repayment schedule with
respect to the former chairman's guarantee, for which payments are current.

In March 2003, Dura entered into a two year agreement with its former Chief
Executive Officer and current Vice Chairman. Under the terms of the agreement,
this individual will receive an annual consulting fee of $525,000 for two years,
stock options for 270,000 shares of Class A Common Stock, and his existing
vested options exercise period were extended to the remaining life of those
options. As of December 31, 2003, 195,000 of the additional options have been
granted. The remaining 75,000 options will be granted during 2004 and are being
accounted for as variable stock options.

15. QUARTERLY FINANCIAL DATA (UNAUDITED):

The following is a condensed summary of actual quarterly results of
operations for 2003 and 2002 (in thousands, except per share amounts):

- ---------------
(a) See Note 6 for discussion on the computation of diluted shares outstanding.

(b) Includes $2,852 for loss on early extinguishment of debt.

(c) Restated for adoption of SFAS No. 142.

(d) Includes $5,520 for loss on early extinguishment of debt.

(e) Includes loss on disposal of discontinued operations of $68,322.

The sum of the per share amounts for the quarters does not equal the total
for the year due to the application of the treasury stock method.

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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:

The following consolidating financial information presents balance sheets,
statements of operations 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 percent 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.

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2003

70

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DEC. 31, 2003

71

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DEC. 31, 2003

72

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2002

73

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DEC. 31, 2002

74

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DEC. 31, 2002

75

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DEC. 31, 2001

76

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DEC. 31, 2001

77

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Dura Automotive Systems, Inc.

We have audited the consolidated financial statements of Dura Automotive
Systems, Inc. and subsidiaries as of December 31, 2003 and 2002, and for each of
the three years in the period ended December 31, 2003, and have issued our
reports thereon dated January 28, 2004 (which reports express an unqualified
opinion and include an explanatory paragraph relating to the change in the
Company's method of accounting for goodwill and other intangible assets); such
consolidated financial statements and report are included elsewhere in this Form
10-K. Our audits also included the consolidated financial statement schedule of
Dura Automotive Systems, Inc. and subsidiaries, listed in Item 15. This
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP

Minneapolis, Minnesota
January 28, 2004

78

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS

ADDITIONAL PURCHASE LIABILITIES RECORDED IN CONJUNCTION WITH ACQUISITIONS:

The transactions in the purchase liabilities account recorded in
conjunction with acquisitions account for the years ending December 31, 2003,
2002 and 2001 were as follows (in thousands):

FACILITY CONSOLIDATION:

The transactions in the facility consolidation reserve account for the year
ending December 31, 2003, 2002 and 2001 were as follows (in thousands):

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There were no changes in or disagreements with accountants on accounting
and financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

In response to recent legislation and additional requirements, Dura
reviewed its internal control structure and its disclosure controls and
procedures during the fourth quarter of 2003. As a result of such review Dura
formalized and documented the procedures in place. Dura has designed its
disclosure controls and procedures to ensure that material information related
to Dura, including its consolidated subsidiaries, is made known to its
disclosure committee, including its principal executive officer and principal
financial officer, on a regular basis, in particular during the period in which
the quarterly and annual reports are being prepared. As required, Dura will
continue to evaluate the effectiveness of these disclosure controls and
procedures on a quarterly basis, and last did so as of December 31, 2003. Dura
believes as of that date, such controls and procedures are operating effectively
as designed.

79

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

A. DIRECTORS OF THE REGISTRANT

The information required by Item 10 with respect to the directors is
incorporated herein by reference to the section labeled "Election of Directors"
which appears in Dura's 2004 Proxy Statement.

B. EXECUTIVE OFFICERS

The following table sets forth certain information with respect to Dura's
executive officers as of March 1, 2004:

Lawrence A. Denton joined Dura as President and Chief Executive Officer in
January 2003. From 1996 until 2002, Mr. Denton was President of Dow Automotive,
a $1 billion business unit of The Dow Chemical Company. Prior to that, he spent
24 years with Ford Motor Company, where he held a variety of senior management
positions with increasing responsibility in manufacturing, quality, sales and
marketing, engineering and purchasing. Mr. Denton is also currently a member of
the Board of Directors of the Original Equipment Suppliers Association, the
Motor & Equipment Manufacturer's Association, Kettering University, The Economic
Club of Detroit and Autotemp Company.

David R. Bovee has served as Vice President and Chief Financial Officer of
Dura since January 2001 and from November 1990 to May 1997. From May 1997 until
January 2001, Mr. Bovee served as Vice President of Business Development. Mr.
Bovee also serves as Assistant Secretary for Dura. Prior to joining Dura, Mr.
Bovee served as Vice President at Wickes in its Automotive Group from 1987 to
1990.

John J. Knappenberger has served as Vice President of Quality and Materials
of Dura since December 1995. Mr. Knappenberger assumed responsibility for sales
and marketing in June 1997 and information technology in March 1999. Prior to
joining Dura, Mr. Knappenberger was Director of Quality for Carrier
Corporation's North American Operations, manufacturers of heating and air
conditioning systems, from February 1992. From 1985 to 1991, Mr. Knappenberger
was employed by TRW Inc., a supplier of components to the automotive industry,
beginning as Director of Quality in 1985 for the Steering and Suspension
Division and becoming Vice President, Quality for the Automotive Sector in 1990.

Theresa L. Skotak has served as Vice President of Human Resources since May
2002. From March 1999 until May 2002 Ms. Skotak served as Director of Corporate
Human Resources and from April 1997 until March 1999, Ms. Skotak served as
Director of Human Resources for Excel Industries, Inc. Prior to that Ms. Skotak
was the Director of Human Resources, N.A. for the Assembly and Test Division of
Lucas Industries.

80

Milton D. Kniss has served as Vice President of Operations of Dura since
January 1994 and President of the Control Systems Division since October 2000.
From April 1991 until January 1994, Mr. Kniss served as Director of Michigan
Operations for Dura. Mr. Kniss joined the predecessor in 1981 as a Divisional
Purchasing Manager, served as Plant Manager of East Jordan, Michigan from 1982
until 1986, and Plant Manager of Gordonsville, Tennessee until 1991.

Jurgen von Heyden has served as Vice President of Dura and President of the
Body & Glass Division since February 2000. Mr. von Heyden served as Managing
Director of Dura Body & Glass Systems GmbH in Plettenberg, Germany from March
1999 to February 2000. Prior to the acquisition of Excel, Mr. von Heyden served
as the Managing Director/CEO of Excel's European Body & Glass division since
1997. Before joining Excel he was the Managing Director of Happich, later
becoming Becker-Group. Mr. von Heyden has been in the automotive supplier
industry since 1984 with professional training of Diplom-Ingenieur and Diplom-
Wirtschaftsingenieur.

There are no family relationships between any of Dura's executive officers
or directors.

C. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The information required by Item 10 with respect to compliance with
reporting requirements is incorporated herein by reference to the section
labeled "Section 16(a) Beneficial Ownership Reporting Compliance" which appears
in Dura's 2004 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to
the sections labeled "Compensation of Directors" and "Executive Compensation"
which appear in Dura's 2004 Proxy Statement, excluding information under the
headings "Compensation Committee Report on Executive Compensation" and
"Performance Graph."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information required by Item 12 is incorporated herein by reference to
the sections labeled "Ownership of Dura Common Stock" and "Equity Compensation
Plans," which appear in Dura's 2004 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated herein by reference to
the section labeled "Certain Relationships and Related Transactions" which
appears in Dura's 2004 Proxy Statement.

ITEM 14. PRINCIPLE ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is incorporated herein by reference to
the section labeled "Independent Auditors Fees" which appears in Dura's 2004
Proxy Statement.

81

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) DOCUMENTS FILED AS PART OF THIS REPORT ON FORM 10-K

(1) Financial Statements:

- Independent Auditors' Report

- Consolidated Balance Sheets as of December 31, 2003 and 2002

- Consolidated Statements of Operations for the Years Ended December 31,
2003, 2002 and 2001

- Consolidated Statements of Stockholders' Investment for the Years
Ended December 31, 2003, 2002 and 2001

- Consolidated Statements of Cash Flows for the Years Ended December 31,
2003, 2002 and 2001

- Notes to Consolidated Financial Statements

(2) Financial Statement Schedules:

- Financial Statement Schedule II -- Valuation and Qualifying Accounts

(3) Exhibits: See "Exhibit Index"

(B) REPORTS ON FORM 8-K

(1) Dura's current report on Form 8-K dated October 23, 2003, under Item 12
(Commission File No. 0-21139).

(2) Dura's current report on Form 8-K dated October 28, 2003, under Item 7
(Commission File No. 0-21139).

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DURA AUTOMOTIVE SYSTEMS, INC.

EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

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

* Incorporated by reference.

** Indicates compensatory arrangement.

86

SIGNATURES

Pursuant to the requirements of Section 13 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.

By /s/ SCOTT D. RUED
------------------------------------
Scott D. Rued,
Chairman

Date: March 8, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

87

DURA AUTOMOTIVE SYSTEMS, INC.

EXHIBIT INDEX