DURA AUTOMOTIVE SYSTEMS INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

OR

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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 0-21139

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

DELAWARE 38-3185711
(State 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. [ ]

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 1, 2005, 18,665,286 shares of Class A Common Stock of the
Registrant were outstanding. The aggregate market value of the Class A Common
Stock of the Registrant as of June 30, 2004 (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
$147,123,747.

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 18, 2005 (the "2005 Proxy Statement").
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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) is a holding company
whose predecessor was formed in 1990. Dura Automotive Systems, Inc. and its
subsidiaries (collectively referred to as "Dura") is a leading independent
designer and manufacturer of driver control systems, seating control systems,
glass systems, engineered assemblies, structural door modules and exterior trim
systems for the global automotive and recreation & specialty vehicle ("RVSV")
industries.

Dura sells its products to every major North American, Asian and European
automotive original equipment manufacturer ("OEM") and most RVSV OEM. Dura has
59 manufacturing and product development facilities located in the United States
("U.S."), Brazil, Canada, China, Czech Republic, France, Germany, Mexico,
Portugal, Slovakia, Spain and the United Kingdom ("UK"). Dura also has a
presence in Japan and India through alliances or technical licenses. Dura has
initiated plans to open a manufacturing facility in Romania to support Eastern
European automakers in 2005.

Over the past fifteen years, the automotive components supply and RVSV
industries have 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. The 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 growth 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 58% of 2004 revenues were generated from sales to
the top automotive OEM's in the world including, General Motors ("GM"), Ford,
Toyota, DaimlerChrysler, Renault-Nissan, Volkswagen, PSA Group ("PSA"), Honda
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 ("Lear") and Johnson Controls, Inc. ("JCI") which accounted for
approximately 12% of Dura's revenues in 2004. Additionally, approximately 15% of
Dura's revenues in 2004 came from RVSV customers including Fleetwood, Winnebago,
Coachmen, Jayco and numerous aftermarket distribution channels.

INDUSTRY TRENDS

Dura's performance and growth is directly related to certain trends within
the automotive and RVSV markets.

Increasing Electronic and Technological Content. The electronic and
technological content of vehicles continues to expand, largely driven by
consumer demand for greater vehicle performance, functionality, and affordable
convenience options as a result of increased communication abilities in vehicles
as well as increasingly stringent regulatory standards for energy efficiency,
emissions reduction, and increased safety. Mechatronics, which generally refers
to systems that integrate software algorithms and electronic circuit boards to
drive mechanical actuation devices, continues to grow in popularity as a means
of optimizing vehicle performance by allowing intelligent interaction between
driver commands and vehicle response decisions. This environment will present
substantial growth opportunities to suppliers with the capability to design both
the

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mechanical and electronic portions of mechatronic systems and deliver optimized
system performance and value to OEM customers.

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 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.

Platform Derivatives. Automakers continue to expand the number of unique
models offered from vehicle platforms to provide increased options for vehicle
buyers. Platform derivatives often include a combination of sedans, wagons,
SUVs, crossovers, minivans, hatchbacks and a growing number of other
configurations on a single platform. Additionally, many vehicle platforms offer
certain vehicle models that deliver higher performance through the use of
lighter weight materials and enhanced power trains. The expansion in derivatives
drives an overall increase in platform volume, comprised of several lower volume
model configurations. To maintain a competitive cost structure while expanding
offerings, automakers seek innovative technologies and suppliers that can offer
solutions based on flexible manufacturing concepts that reduce capital and
tooling expenses. Suppliers with technologies that contribute to space frame
architectures for door and body components are able to provide significant
investment advantages for platform derivatives below 100,000 units.

Optimizing Product Value. In order to continue to respond to increasingly
competitive market pricing dynamics, suppliers are establishing comprehensive
plans to remove waste from the enterprise value stream. This includes optimizing
the design of products and manufacturing processes above previous generations
for improved efficiency and value. Suppliers with the ability to generate
savings through processes such as six sigma, lean manufacturing, value analysis
and value engineering ("VA/VE"), and warranty analysis, coupled with strong
execution and disciplines in advanced product quality planning ("APQP") will be
successful in offering continuous improvement in value.

System and Module Sourcing. OEMs increasingly seek suppliers capable of
manufacturing complete systems or modules of a vehicle rather than suppliers who
only produce individual components. By outsourcing complete systems or modules,
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.
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 automotive and RVSV interior mechanisms.

Global Expansion into Emerging Markets. Regions such as Asia, Latin
America and Eastern Europe are expected to experience significant growth in
vehicle demand over the next ten years. Suppliers and OEMs are positioning
themselves to reach these emerging markets in a cost-effective manner by
expanding their geographic presence and marketing products that can be designed
in one vehicle center but customized, produced and sold in many different
geographic markets, thereby reducing 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.

Ongoing Industry Consolidation. 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

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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 OEM practices 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.

BUSINESS STRATEGY

Dura's primary business objective is to capitalize on the technology,
globalization and system sourcing trends in the automotive supply and RVSV
industries in order to be the leading provider of the systems Dura supplies to
customers worldwide.

Presently, Dura is focusing on the following key strategies:

Focus on Core Businesses. Dura continues to bolster its organic growth
strategy by seeking complimentary partnerships and investments that provide a
competitive advantage and growth opportunities for its core businesses. 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.

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.

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, which are anticipated to develop into future domestic
sales to emerging markets.

Reduce Debt. Dura strives to continuously strengthen its balance sheet by
increasing its cash flow and applying proceeds from growth initiatives toward a
reduction of debt. Dura has worked to maximize its cash flow available for debt
reduction by boosting 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 addition, Dura
intends to focus on strategic partnerships and alliances that do not require
significant upfront cash investments to pursue new business opportunities.

COMPANY HISTORY

Dura 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. 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 their attention to Dura's existing operations. After
assisting Dura achieve a sufficient size and stability, Onex, J2R and Hidden
Creek divested their remaining Class B common stock in 2004 and are no longer
affiliated with Dura.

Dura's primary business objective has been 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
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the systems Dura supplies to OEMs worldwide. 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. Throughout
the 1990's and early 2000's Dura's growth through acquisition included acquiring
the following businesses:

In addition to the acquisitions listed above, through the integration
process Dura identified certain businesses as non-core and divested them as
appropriate. Today all of these acquired businesses have been fully integrated
and are managed as one company.

PRODUCTS

Dura is a leading independent designer and manufacturer of driver control
systems, seating control systems, glass systems, engineered assemblies,
structural door modules and exterior trim systems for the global automotive and
RVSV industries.

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.

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

CUSTOMERS AND MARKETING

In 2004, approximately 72 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, Ford, BMW, PSA (Peugeot
and Citroen), Renault-Nissan, and DaimlerChrysler.

The North American automotive industry is led by GM, Ford, Toyota and
DaimlerChrysler. New domestic manufacturers as a whole accounted for
approximately 28 percent of the market in 2004. In North America, Dura supplies
its products primarily to Ford, GM, DaimlerChrysler and 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, Renault-Nissan, Honda and PSA.

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

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The following is a summary of Dura's significant customers based on sales
from continuing operations for 2004, 2003 and 2002:

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 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 RVSV products include Fleetwood, Winnebago,
Thor, Damon, Jayco, Coachmen, Monaco, Motor Coach and Navistar. Sales and
engineering groups are located in Elkhart, Indiana to service these customers.
Customers in the RVSV products market generally negotiate annual pricing
contracts without firm order commitments or long purchase order lead times.
Therefore, the RVSV 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. When deemed appropriate, 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
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 continuously expands the multi-geographic-flexibility of its product
development and manufacturing capabilities to support its customer's
globalization plans. In doing so, Dura offers design, sales and

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manufacturing support near key customers in the major regions of the world. In
2004, Dura added a technology and sales center in Velizy, France, near the
design headquarters of Renault-Nissan, and PSA; began construction of a new
manufacturing facility in Timisoara, Romania; and relocated its RVSV business
from Rockford, Illinois, to Elkhart, Indiana, central to RVSV customers.

Separate advanced technology groups have been established to maintain
Dura's position as a technology leader. The advanced technology groups have
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 600 patents granted or in the application process.
The patents granted expire over several years beginning in 2005. 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.
Dura also pioneered and employs "Super-cell" configurations which locate primary
capital equipment centrally among secondary assembly equipment, to reduce
in-process inventory, improve quality, and reduce manufacturing costs.

Assemblies such as jacks, parking brake levers, gear shifters and latches
consist of between 5 and 50 individual components, which are attached to form an
integrated mechanism. Although these assembly operations are generally performed
in manufacturing cells, high-volume, automated assembly machines are employed
where appropriate. The assembly operations construct the final product through
hot or cold forging machines, staking and riveting the component parts. A large
portion of the component parts are purchased from Dura's outside suppliers.
However, Dura manufactures its own stampings, a process that consists of passing
sheet metal through dies in a stamping press to form the metal into
three-dimensional parts. Dura produces stamped parts using single-stage and
progressive dies in presses, which range up to 800 tons. Through continuous
improvement teams, which stress employee involvement, manufacturing processes
are regularly upgraded to increase flexibility and efficiency; improve operating
safety and quality; and minimize changeover times of the dies and fixtures.

Dura's seat systems, 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 friction 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.
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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 glass 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 processes: Reaction Injection
Molding ("RIM") and High Pressure Injection Molding ("HPIM"). Both processes
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 process provides OEMs with the maximum advantage in terms of cost,
styling imperatives and robustness. The glass panes used in the production of
Dura's glass systems are primarily purchased from outside suppliers. Dura
produces certain of its RVSV glass panes internally.

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

QUALITY

The automotive industry has established a global quality management system
requirement known as ISO/TS 16949:2002. This requirement was specifically
designed by the automotive sector and is recognized by all automotive
manufacturers worldwide. Independent auditors must register suppliers as ISO/TS
16949:2002 compliant, no later than December 31, 2006 as a condition of doing
business with specific automotive customers. Third party registration can only
be obtained by demonstrating continuous improvement in manufacturing capability
and support processes. Dura achieved ISO/TS 16949:2002 registrations at over 90%
of its global automotive facilities as of December 31, 2004. The remaining
facilities will transition by December 31, 2005. In addition, Dura maintains
registration to the ISO 9000 quality management system for facilities that serve
the RVSV markets.

Dura's facilities have been recognized by its customers with various
awards, such as the DaimlerChrysler Gold Award, GM Target for Excellence, Honda
Delivery Performance Award, Isuzu Quality Achievement Award, Lear Hall of Fame
Award, Nissan Quality Master Award, Nummi Delivery Performance Award, Subaru
Quality Achievement Award, Toyota Quality Performance Achievement and Volkswagen
Premier Supplier Award. Dura has also received an "A" rating at Peugeot and
Renault.

Moreover, Dura's RVSV 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 maintains an environmental management system at its automotive
manufacturing locations. The system meets the ISO-14001 standard and is
registered by independent auditors. The system assists Dura in being a clean
corporate citizen and provides a framework for managing environmental aspects.

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 the OEMs manufacture such models for the public.

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Once a supplier 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 by 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 concessions.

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

(1) Driver Control Systems:

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

Parking Brakes. Dura is the leading producer of parking brakes in North
America. Traditional parking brake competitors include Flex-N-Gate, Magna
International Inc. ("Magna"), Ficosa, Otscon and Aisin Seiki. Competitors in the
electronic parking brake market include Kuester, TRW and Siemens VDO.

Transmission Shifters. Dura is a leading producer of transmission shifters
in North America. Major competitors include Grand Haven Stamped Products,
Teleflex, and Tokai Rika. Dura's competitors in Europe include Teleflex, Ficosa,
and Sila.

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

(2) Seating Control Systems:

Dura's primary competitors are the in-house operations of Lear, Intier
(Magna), JCI, and Faurecia. In addition, independent competitors include Brose
Fahrzeagteile Glaswerke GmbH & Co. ("Brose"), C. Rob Hammerstein GmbH & Co. KG,
Fischer and Keiper Recaro GmbH & Co.

(3) Glass Systems:

Dura's primary competitors in glass systems are Magna, Pilkington, PPG
Inc., Guardian Industries, Inc. and Hehr International, Inc. in North America
and Sekurit and Pilkington in Europe.

(4) Engineered Assemblies:

Hood Latches. Dura is a leading producer of hood latches in North America.
Dura's primary competitors include Magna, Aisen Seiki and Pyeong HWA.

Jacks. Dura is a leading producer of jacks in North America. Dura's
primary competitors include Flex-N-Gate and Bosal.

Tire Carriers. Dura is a leading producer of tire carriers in North
America. Dura's primary competitors are Flex-N-Gate, Mivrag Cold Forming
Technology Ltd., Edscha and Fabco.

Hardware. Dura is a leading producer of RVSV hardware in North America.
Dura's primary competitors include Cequent (TriMas Corporation), Shelby
Industries and Lippert Components, Inc.

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(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,
Wagon, Amerimax and Phillips 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 and body color trim include WKW and Aries.

(7) Appliances:

Dura's primary competitors for RVSV appliances include Suburban
Manufacturing (division of Airxcel) and Maytag Appliances/Magic Chef RV
Products.

Dura's competitors in Asia and South America include many of the same
companies listed above by product category, who have opened facilities or formed
joint ventures in these regions with existing manufacturers.

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 does not carry inventories of raw materials or finished products in
excess of those reasonably required to meet production and shipping schedules.

Overall, raw steel and purchased parts with steel content accounted for the
most significant component of Dura's raw materials costs in 2004. Steel prices
increased significantly during 2004 to historical highs. This increase had a
negative impact on Dura's gross profit in 2004. Due to increased steel prices in
2004 and continuing into 2005, Dura has entered into shorter term, 3 to 6 month
supply agreements in 2005 with steel service centers. 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 lower inventories. In addition, Dura occasionally
"spot buys" steel from service centers to meet customer demand, engineering
changes or new part tool trials. Dura established a five-point strategy early in
2004 in an effort to mitigate the effect of rising steel prices on its results
of operations. This strategy included delaying increases from raw material
suppliers; working to minimize the increase from suppliers of purchased parts
with steel content; selling steel offal and scrap at the highest possible price;
increase cost reduction programs throughout the business; and lastly negotiate
price relief from customers. Dura's results of operations will continue to be
adversely affected by higher steel prices unless it is successful in passing
along these increases to Dura's customers or otherwise offset these operating
costs.

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

PRODUCT WARRANTY MATTERS

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,
11

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.

The following are recent product warranty matters:

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, Dura 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 (Ford). 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.

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. In September 2004, Dura settled this matter with
Renault-Nissan. Dura agreed to pay Euro 3.0 million (approximately $3.7 million)
and in return, Dura received a release from further liability as a result of
this recall.

In September 2004, Lear issued a letter to Dura requesting participation by
Dura relating to a recall of Ford Windstar vehicles involving seat latches. The
recall included approximately 335,000 vehicles. Dura has conducted its own
investigation of this matter and believes it has met Lear's specific design
specifications. Based on these facts, Dura believes it has no responsibility for
this recall.

In January 2005, Ford notified Dura of a field service action on its
Explorer vehicle due to alleged malfunction of the rear liftgate that was
manufactured by Dura. The field action was instituted by Ford in September 2004
on a maximum of 956,000 vehicles. Ford has alleged that Dura has some
responsibility for the malfunction but has not quantified what amount it is
seeking from Dura. Dura is currently reviewing the materials provided to it by
Ford in January 2005, and has recently requested additional information from
Ford with respect to this matter. Based on its investigation of the matter to
date, Dura does not believe that it has any responsibility for this matter;
however, because Dura's review of this matter is not complete, it is unable to
predict the ultimate resolution.

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ENVIRONMENTAL MATTERS

Dura is subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. While
Dura devotes resources designed to maintaining compliance with these
requirements, there can be no assurance that Dura operates at all times in
complete compliance with all such requirements. Dura could be subject to
potentially significant fines and penalties for any noncompliance that may
occur. Although Dura has made and will continue to make capital and other
expenditures to comply with environmental requirements, Dura does not expect to
incur material capital expenditures for environmental controls in 2005.

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

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

The Mancelona groundwater contamination matter is subject to an indemnity
from Wickes. In connection with Dura's acquisition of certain assets from Wickes
in 1990, Wickes agreed to indemnify Dura with respect to certain environmental
liabilities associated with Wickes' operation of the subject facilities subject
to a $750,000 basket 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, it does not expect costs to complete the
cleanup will 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

13

assurance, however, that its liability at these sites will not materially exceed
the current amount of Dura's reserves.

SEASONALITY

Essentially all of Dura's business is directly related to automotive and
RVSV OEM production, which has demonstrated seasonality and is highly cyclical
and depends on general economic conditions, consumer spending and confidence.
Any significant reduction in vehicle production by automotive and RVSV OEMs
would have a material adverse effect on Dura's business.

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. Accordingly, third quarter results may
reflect this cyclicality.

EMPLOYEES

As of December 31, 2004, Dura employed approximately 8,800 people in North
America, 7,200 in Europe and 1,000 in other regions of the world. A substantial
number of Dura's employees are members of unions. In the U.S. and Canada, Dura
has collective bargaining agreements with several unions including: the UAW; the
CAW; and the International Association of Machinists and Aerospace Workers.
Virtually all of Dura's unionized facilities in the U.S. 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.

EXECUTIVE OFFICERS OF THE REGISTRANT

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 $1.3 billion business unit of The Dow Chemical Company. Prior to that, he
spent 24 years with Ford, 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 Detroit Economic
Club and Autotemp Company.

14

Keith R. Marchiando was appointed Vice President and Chief Financial
Officer effective March 1, 2005. Mr. Marchiando served as Dura's vice president
and corporate controller since joining Dura in April 2003. Prior to joining
Dura, in 1997 Mr. Marchiando joined The Dow Chemical Company and was
instrumental in the formation of Dow Automotive, a $1.3 billion business unit,
where he held the position of global finance director. Mr. Marchiando began his
career at Ford in 1990, where he held finance positions of increasing
responsibility in manufacturing, purchasing and product development.

John J. Knappenberger has served as Vice President of Administration 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, 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. Prior to that Ms. Skotak was the Director
of Human Resources, N.A. for the Assembly and Test Division of Lucas Industries.

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.

Alfred C. Liddell has served as Vice President of Dura and President of the
Atwood Mobile Products Division since January 2004. From July 2003 to January
2004, Mr. Liddell was Vice President of Operations of the Atwood Mobile Products
Division. From October 2000 to July 2003, Mr. Liddell served as Vice President
of Control Systems, Europe. Mr. Liddell joined Dura in 1986 and served as
Director of Operations for the Cable Business Unit from 1996 to 1998, the
Shifter Business Unit from 1998 to 1999 and the Body and Glass N.A. Business
Unit from 1999 to 2000.

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.

(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, Volkswagen and DaimlerChrysler,
represented approximately 19 percent, 12 percent, 11 percent, 9 percent
and 8 percent, respectively, of Dura's 2004 revenues. Any significant
reduction in the demand
15

for vehicles manufactured by Ford, GM, DaimlerChrysler or Volkswagen or products
manufactured by Lear for which Dura produces components and assemblies or for
certain other key vehicle models or groups of related vehicle models 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 RVSV end
customer markets are highly cyclical and both markets are dependent on
consumer spending. Economic factors adversely affecting automotive and
RVSV production and consumer spending could adversely impact Dura. Dura
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 Dura
has significant fixed production costs, relatively modest declines in its
customers' production levels can have a significant adverse impact on its
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 Dura is unable to
generate sufficient cost savings in the future to offset price
reductions, its 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, raw
steel and purchased parts with steel content accounted for the most
significant component of Dura's raw material costs in 2004. 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 its 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 allegedly 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 Dura 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 Dura's flexibility in dealing
with its workforce. In addition, many OEMs and their suppliers have
unionized workforces. Work stoppages or slow-downs experienced by Dura's
customers or their other 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.
16

- 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.

- 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
U.S.;

- Tax rates in certain foreign countries may exceed those in the U.S. 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 Dura
operates may have an adverse effect on its 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 2004 and a negative impact on gross profit
and consolidated debt levels.

(C) AVAILABLE INFORMATION

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

ITEM 2. PROPERTIES

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

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

17

liens under its revolving credit facility ("2003 Credit Agreement"). The
following table shows the principal facilities of Dura as of December 31, 2004:

Dura's manufacturing facilities have a combined square footage in excess of
7,305,000, approximately 82 percent of which is owned and approximately 18
percent is leased. Going forward, Dura will continue to evaluate its worldwide
capacity utilization and may consolidate the operations of certain of its
manufacturing facilities and technical centers.

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, 2004, Dura had sites that contain
technical design and development capabilities in each of the major regions that
support customers around the world.

Dura 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 automotive and
RVSV production volumes and general economic conditions.

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.

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 2004.

18

PART II

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

The Class A Common Stock is traded on The Nasdaq Stock Market, Inc.
("Nasdaq") 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 1, 2005, there were approximately 906 holders of record of the
outstanding Class A 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 2003 Credit Agreement. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition-Liquidity and Capital Resources."

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data for Dura presented below for, and
as of the end of each of the years in the five-year period ended December 31,
2004, is derived from Dura's Consolidated Financial Statements which have been
audited by Deloitte & Touche LLP, an independent registered public accounting
firm. The consolidated financial statements at December 31, 2004 and 2003 and
for each of the three years in the period ended December 31, 2004 and the
independent auditor's report thereon are included elsewhere in this report. The
consolidated financial statements at December 31, 2002, 2001 and 2000 and for
the years ended December 31, 2001 and 2000 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. The
comparability of the information in the table below is impacted by (i) the
adoption of certain new accounting pronouncements, including Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets" ("SFAS No. 142") on January 1, 2002, Financial Accounting Standards
Board ("FASB") Interpretations ("FIN") 46, "Consolidation of Variable Interest
Entities -- An Interpretation of Accounting Research Bulletin No. 51", ("FIN
46") effective December 31, 2003, SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64; Amendment of FASB Statement No. 13; and Technical
Corrections" and SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities", ("SFAS No. 146") effective January 1, 2003, (ii) Dura's
disposal of the Mechanical Assemblies Europe business, which has been accounted
for as a discontinued operation, and (iii) the Creation Group acquisition, all
of which are more fully discussed in the Management's

19

Discussion and Analysis of Results of Operations and Financial Condition section
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.

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 2004 including vehicle production volumes, steel pricing and
foreign exchange.

20

Total North American automotive vehicle production in 2004 was
approximately 15.7 million units as compared to 15.9 million units in 2003 and
16.4 million units in 2002. North American vehicle production during 2004
continued to be favorably impacted by the ongoing sales incentives provided by
the OEM's; however, the domestic OEM's continued to lose market share to the new
domestic OEMs. European vehicle production was approximately 20.1 million units
in 2004, 19.5 in 2003 and 19.2 million in 2002. Approximately 59% of Dura's
total revenues were generated in North America during 2004 as compared to 60% in
2003 and 67% in 2002. The ratio decreased slightly versus the prior year as the
impact of the stronger Euro and lower North American automotive production more
than offset the impact of increased North American sales due to the full-year
impact of the Creation Group acquisition completed in July 2003 and a record
production year in the recreation vehicle industry. 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.

Steel prices escalated in 2004 resulting in a negative impact to Dura's
results of operations for the year. Dura established a five-point strategy early
in 2004 in an attempt to mitigate the effect on gross profit; however, it was
unable to completely offset the increases. In addition to the cost reduction
efforts relating to steel, Dura is taking numerous actions to improve its cost
structure, including the various restructuring activities and plant
consolidations undertaken during 2004. These actions will continue into 2005 as
Dura works to maximize its facility and asset utilization worldwide. From a
geographic standpoint, the impact of steel was felt more severely in Dura's
domestic operations as steel pricing increased more significantly in North
America during 2004.

Given the significance of Dura's operations in Europe, the strengthening of
the Euro against the dollar during 2004 resulted in a $116.5 million positive
impact to revenue as compared to 2003. Should the strength of the Euro stabilize
at its current levels, or continue to increase in 2005, Dura would anticipate
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, 2004, approximately
$143.3 million of Dura's debt is denominated in Euro or other foreign
currencies. The strengthening of the European currencies during 2004 had an
approximate $10.4 million negative impact on Dura's total debt levels, holding
all other factors constant.

COMPARISON OF YEAR ENDED DECEMBER 31, 2004 TO YEAR ENDED DECEMBER 31, 2003

Revenues. Revenues for the year ended December 31, 2004 increased by
$111.7 million, or 4.7 percent, to $2,492.5 million from $2,380.8 million for
2003. Factors that favorably impacted revenue in 2004 included the strengthening
of foreign currencies in relation to the U.S. dollar of $116.5 million, the
effect of the acquisition of the Creation Group of $84.8 million and a
strengthening RVSV market of $18.8 million. Factors that offset these favorable
items were the impact of lower North American production volumes and selling
price reductions.

Cost of Sales. Cost of sales for the year ended December 31, 2004
increased by $124.9 million, or 6.0 percent, to $2,214.1 million from $2,089.2
million for 2003. Cost of sales as a percentage of revenues for the year ended
December 31, 2004 was 88.8 percent, which is slightly up compared to 87.8
percent for 2003. The increase is due to the strengthening of foreign currencies
in relation to the U.S. dollar of approximately $96.7 million, the acquisition
of the Creation Group and the impact of elevated steel pricing. These increases
were partially offset by operational and purchasing cost reductions.

Selling, General, and Administrative Expense. Selling, general, and
administrative expenses for the year ended December 31, 2004 decreased by $4.4
million, or 2.9 percent, to $150.5 million from $154.9 million in 2003. As a
percentage of revenue, selling, general and administrative expenses decreased to
6.0 percent for 2004, compared to 6.5 percent for 2003. The decrease as a
percentage of sales is primarily the result of Dura's continued effort to
redeploy or eliminate certain of its selling, general and administrative
expenses and lower employee benefit costs, partially offset by the impact of
foreign exchange. Dura's goal is to reallocate certain of

21

its selling, general and administrative expenses to further support organic
growth while maintaining a 6.0 percent expense as a percentage of revenue.

Facility Consolidation and Other Charges.

Facility Consolidations: During the fourth quarter of 2004, Dura closed
its Bondoufle, France sales and engineering facility and relocated to Velizy,
France, which is located near its French OEM customers. This action resulted in
a restructuring charge of $0.3 million related to facility closure and other
costs.

During the second quarter of 2004, in order to improve capacity
utilization, Dura announced a plan to consolidate certain of its Body & Glass
Division product lines in Europe. This action resulted in a restructuring charge
of $1.5 million and $2.5 million in the second and third quarters of 2004,
respectively, relating primarily to severance, which completed the facility
consolidation charges to be incurred related to this action. Additionally, there
was a $0.2 million adjustment to decrease the reserve in the fourth quarter of
2004. Costs incurred and charged to the reserve as of December 31, 2004 amounted
to $2.1 million in severance related costs. In addition, during the second
quarter of 2004, Dura announced a plan to exit two manufacturing facilities in
Rockford, Illinois and combine the business with other Dura operations. Dura
also announced the relocation of its Atwood Mobile Products division
headquarters from Rockford, Illinois to Elkhart, Indiana. These actions resulted
in a restructuring charge of $1.7 million, $1.2 million, and $0.8 million in the
second, third and fourth quarters of 2004, relating primarily to severance.
Costs incurred and charged to the reserve as of December 31, 2004 amounted to
$1.7 million in severance related costs. Dura also expensed as incurred
approximately $0.3 million and $1.8 million of facility closure and other costs
in the third quarter and fourth quarters of 2004, of which $0.2 million is
related to equipment write-downs. Dura expects to incur additional restructuring
charges related to the exit of the Rockford facilities of approximately $0.9
million relating to severance and facility closure costs through December 31,
2005.

During the first quarter of 2004, in order to improve capacity utilization,
Dura announced a plan to exit its Brookfield, Missouri facility and combine the
business with other Dura operations. This action resulted in a restructuring
charge of $0.1 million, $0.4 million, $0.2 million and $0.2 million in the
first, second, third and fourth quarters of 2004, respectively, relating
primarily to severance. Dura also expensed as incurred approximately $0.1
million of facility closure and other costs in each of the second, third and
fourth quarters of 2004. Costs incurred and charged to the reserve as of
December 31, 2004 amounted to $0.2 million in severance related costs. Dura
expects to incur $0.3 million of additional restructuring charges associated
with the exit of the Brookfield facility through December 31, 2005. In addition,
during the first quarter of 2004, Dura announced a plan to exit its Pikeville,
Tennessee facility and combine the business with other Dura operations. This
action resulted in a restructuring charge of $0.4 million and $0.5 million in
the first and second quarters of 2004, respectively, relating to severance.
Costs incurred and charged to the reserve as of December 31, 2004 amounted to
$0.8 million in severance related costs. In continuation of these actions, Dura
expensed as incurred approximately $0.1 million of facility closure and other
costs in the second and third quarters of 2004, combined. Netted in this charge
is an additional $0.2 million related to fixed asset write-downs and a $0.2
million adjustment to reduce the facility consolidation charge in the third
quarter. Dura does not expect to incur any additional restructuring charges
related to the exit of the Pikeville facility.

During the fourth quarter of 2003, 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.
Costs incurred and charged to the reserve as of December 31, 2004 amounted to
$0.7 million in severance related costs. In continuation of these actions, Dura
recorded an additional restructuring charge of $0.2 million for facility closure
and other costs and adjusted the severance reserve down by $0.2 million in the
second quarter of 2004. Dura may incur an immaterial amount of additional
restructuring charges related to facility and other costs associated with the
exit of the Melun facility through March 31, 2005.

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

22

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 $1.1 million in severance related costs. Dura expects to incur no
additional restructuring charges related to this action.

In the fourth quarter of 2003, Dura adopted a plan to sell its Cauvigny,
France 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. Costs incurred and charged
to the reserve as of December 31, 2004 amounted to $2.3 million in facility
closure and other costs including the impact of foreign exchange. In
continuation of these actions, Dura expensed as incurred approximately $0.3
million and $0.1 million in the first and second quarters of 2004, respectively,
of additional facility closure and other costs, which completed the facility
consolidation charges to be incurred related to this action.

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. 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, Dura announced a plan to exit its
Fulton, Kentucky facility. 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 during 2003, Dura recorded $1.3 million of additional restructuring
charges, including severance of $1.2 million and facility closure and other
costs of $0.1 million. 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. During 2004, Dura continued
such actions and recorded $0.2 million and $0.4 million in the first and third
quarters, respectively, of additional restructuring charges for severance
related costs. Dura also expensed as incurred $0.1 million, $0.2 million, and
$0.1 million in the first, second and fourth quarters of 2004, respectively,
related to severance costs and $0.2 million of facility closure and other costs
in the first quarter of 2004. Costs incurred and charged to the reserve as of
December 31, 2004 amounted to $1.7 million in severance related costs and $1.4
million in facility closure and other costs. Dura does not expect to incur any
additional restructuring charges related to the exit of the Fulton facility.

Costs incurred and charged to the reserve related to the consolidation of
the Livonia, Michigan 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

23

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
Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (Including
Certain Costs Incurred in a Restructuring)" ("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.

Asset Impairments: During 2004, Dura recorded $7.1 million in asset
impairment charges related to building write-downs for the facility
consolidation actions taken during 2004 and 2003. These costs are reflected as
facility consolidation and other charges in the consolidated statement of
operations and were accounted for in accordance with SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144").

Amortization Expense. Amortization expense for the year ended December 31,
2004 was $0.4 million, which is unchanged compared to $0.4 million in 2003.

Interest Expense. Interest expense for the year ended December 31, 2004
increased by $7.6 million, or 9.3 percent, to $89.5 million from $81.9 million
in 2003. The increase in interest expense is due to the prospective
classification of the Minority Interest - Dividends on Trust Preferred
Securities included as a component of interest expense on a gross basis in
accordance with Dura's adoption of FIN 46 effective December 31, 2003. In
addition, interest expense increased due to higher average interest rates on
LIBOR based borrowings during 2004.

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 amended and restated $1.15 billion credit
agreement entered into in March 1999 ("1999 Credit Agreement") (see Liquidity
and Capital Resources below).

Income Taxes. The effective tax rate for the year ended December 31, 2004
was 22.7 percent compared to the 2003 effective tax rate of 34.0 percent. The
2004 rate was favorably impacted by a tax holiday benefit in the Czech Republic,
the impact of tax planning strategies and the overall mix of income and loss
between the U.S. and foreign operations. In addition, during 2004, Dura
experienced higher earnings in certain jurisdictions where effective tax rates
are lower than the U.S. effective tax rate.

Minority Interest. Minority interest for the year ended December 31, 2004
has been classified as a component of interest expense on a gross basis in
accordance with Dura's adoption of FIN 46 effective December 31, 2003. Minority
interest for the year ended December 31, 2003 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, 2004 decreased by $12.7 million, or 50.4 percent, to
$12.5 million from $25.1 million in 2003. The decrease is primarily due to
weaker North American automotive production volumes and elevated steel pricing
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.
24

Discontinued Operations. Discontinued operations for the year ended
December 31, 2004 was a loss of $0.7 million, an improvement of $2.1 million, or
73.2 percent from the loss of $2.8 million in 2003. These amounts relate to
adjustments associated with the March 2003 divestiture of Dura's Mechanical
Assemblies Europe business. The adjustments principally related to the
finalization of certain retained liabilities of the discontinued operations in
2004. We do not believe that future charges will be significant.

The Mechanical Assemblies Europe divestiture was treated as a discontinued
operation under SFAS No. 144. 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.

At December 31, 2004, Dura had remaining reserves related to the
divestiture of the Mechanical Assemblies Europe business of $18.7 million,
primarily related to the facilities retained by Dura, principally lease costs,
and are anticipated to be completed in 2021. Also included in the $18.7 million
is $3.0 million of acquisition integration reserves related to facility
closures. The reserve as of December 31, 2004 includes an increase related to
foreign exchange of $0.5 million and net adjustments to the long-term lease
commitment and other reserves of $1.2 million. Costs incurred and charged to the
reserve during 2004 included $1.3 million related to facility closure and other
costs and a $0.6 million adjustment to decrease the reserve.

New Accounting Pronouncements. In December 2004, the FASB revised SFAS No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123")with SFAS No.
123R: Share Based Payment ("SFAS No. 123R"). This Statement supercedes
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees" ("APB No. 25"), which resulted in no stock-based employee
compensation cost related to stock options if the options granted had an
exercise price equal to the market value of the underlying common stock on the
date of grant. SFAS No. 123R requires recognition of employee services provided
in exchange for a share-based payment based on the grant date fair market value.
Dura is required to adopt SFAS No. 123R as of July 1, 2005. As of the effective
date, this Statement applies to all new awards issued as well as awards
modified, repurchased, or cancelled. Additionally, for stock-based awards issued
prior to the effective date, compensation cost attributable to future services
will be recognized as the remaining service is rendered. Dura may also elect to
restate prior periods by applying a modified retrospective method to periods
prior to the effective date. Dura is in the process of determining which method
of adoption it will elect (see Note 6 to the consolidated financial statements
for SFAS No. 123 required disclosures).

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs" ("SFAS
No. 151"). This Statement requires that abnormal amounts of idle facility
expense, freight, handling costs, and spoilage be recognized as current period
charges. The Statement also requires that fixed production overhead be allocated
to conversion costs based on the normal capacity of the production facilities.
SFAS No. 151 is effective for inventory costs incurred by Dura beginning in
fiscal year 2006. Dura does not believe the adoption of this Statement will have
a material impact on its consolidated financial position or results of
operations.

In May 2004, the FASB issued FASB Staff Position ("FSP") FAS 106-2,
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003". This FSP provides guidance on
accounting for the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 ("the Act"), to employers that sponsor postretirement
health care plans where the prescription drug benefits available under the plan
are actuarially equivalent to Medicare Part D and thus qualify for the subsidy
under the Act and the expected subsidy will offset or reduce the employer's
share of the cost of the underlying postretirement prescription drug coverage on
which the subsidy is based. The FSP also requires certain disclosures related to
the impact of the Act. Dura adopted this FSP on July 1, 2004. The adoption of
this FSP did not have a material impact on Dura's consolidated balance sheet or
results of operations.

In December 2003, the FASB issued SFAS No. 132(R), "Employers' Disclosures
about Pensions and Other Postretirement Benefits -- An Amendment of FASB
Statements No. 87, 88, and 106" ("SFAS No. 132(R)")a revision to SFAS No. 132,
"Employers' Disclosure about Pensions and Other Postretirement Benefits -- An
Amendment of FASB Statements No. 87, 88, and 106" ("SFAS No. 132"). 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. 87"),
25

SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits" ("SFAS No. 88"), and SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
("SFAS No. 106") 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"). 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 FIN 46. 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 FIN 46-6, "Effective Date of FIN 46, Consolidation
of Variable Interest Entities" ("FIN 46-6"). 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 has been classified in
the statement of operations as a component of interest expense on a gross basis,
for periods subsequent to December 31, 2003.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure" ("SFAS No. 148"), which amends SFAS
No. 123. 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"). 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. SFAS No. 146 addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies EITF 94-3. 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

26

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. 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" ("APB No. 30"). 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 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, 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 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.

27

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.

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.

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. Costs incurred and charged to the
reserve as of December 31, 2003 amounted to $0.6 million in severance costs. The
restructuring actions were complete as of December 31, 2004.

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. 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.

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
28

$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.

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 1999 Credit Agreement. The loss for the year ended
December 31, 2002 represents the write-off of debt issuance costs in connection
with the repayment of a portion of the borrowings outstanding under the existing
1999 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 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 selling, general and administrative 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

29

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. 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 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 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).

LIQUIDITY AND CAPITAL RESOURCES

During 2004, Dura provided cash from operations of $109.2 million, compared
to $134.3 million in 2003. Cash generated from operations before changes in
working capital items was $96.2 million for 2004 compared to $115.3 million for
2003. Working capital generated cash of $13.0 million in 2004 compared to $19.0
million in 2003. This slight increase in cash generated from working capital is
primarily the result of the timing of accounts receivable and cash payments
partially offset by an increase in inventory due to certain facility
consolidation actions and the strengthening of the European currencies in
relation to the U.S. dollar.

Net cash used in investing activities was $80.5 million for 2004 as
compared to $125.5 million in 2003. In 2004, $13.3 million was used for
acquisitions, of which $12.6 million was used for the final purchase price for
the Reiche acquisition and $0.7 million was used for the working capital
adjustment for the Creation Group acquisition. This compares to the $57.8
million that was used for the acquisition of the Creation Group, in 2003. Net
capital expenditures totaled $67.2 million in 2004 compared to $67.7 million in
2003. The capital expenditures were primarily for equipment and dedicated
tooling purchases related to new or replacement programs.

Net cash used in financing activities totaled $16.9 million for 2004 as
compared to $38.6 million provided in 2003. The net cash used in 2004 was
principally for the net repayment of outstanding indebtedness of $18.7 million
partially offset by proceeds from stock option exercises of $2.4 million. Net
cash provided in 2003 was primarily related to financing activities during 2003
as 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 net repayments of outstanding indebtedness of
approximately $8.2 million.

30

Net cash flow used in discontinued operations was $0.7 million for 2004 as
compared to $3.3 million provided in 2003. The net cash flow from discontinued
operations in 2004 is the result of less favorable settlements of retained
liabilities. The net cash flow from discontinued operations in 2003 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 1999 Credit Agreement. The 1999 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 1999
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 1999 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,
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 2003 Senior Notes offering of $50.0
million. 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 2003 Credit Agreement provides for $175.0
million of revolving credit, available until October 2008. At December 31, 2004,
Dura had unused borrowing capacity of approximately $154.9 million, of which
$13.1 million was available under its most restrictive debt covenant and $20.1
million in letters of credit outstanding. No borrowings under the revolving
credit facility occurred during 2004. The existing tranche C term loan remains
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 1999 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 $3.0 million, $2.6 million and $2.4 million of
interest income earned on Dura's cash balances in the years ended December 31,
2004, 2003 and 2002, respectively.

As of December 31, 2004, the rate on borrowings under the 2003 Credit
Agreement was based on LIBOR and was 4.92 percent. The 2003 Credit Agreement
contains various restrictive covenants which amongst other things, limit
indebtedness, investments, capital expenditures and certain dividends. The 2003
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, 2004. Borrowings under the 2003 Credit Agreement are
collateralized by substantially all assets of Dura.

31

The 2003 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 $54.6 million. As of December 31, 2004, 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, 2004, Dura had overdraft facilities available from banks of approximately
$26.9 million, of which, it had no borrowings outstanding.

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 Automotive Systems, Inc. ("DASI") is a holding company whose sole
source of operating income and cash flow is derived from Dura Operating Corp.
("DOC") and whose only material asset is the capital stock of DOC. DOC is
limited under its various financing arrangements in its ability to declare or
make certain dividend payments or other distributions to DASI. Specifically,
under the 2003 Credit Agreement, DASI and DOC are prohibited paying dividends on
account of their respective capital stock, subject to certain exceptions,
including, among others, payments required on Dura's Trust Preferred Securities
and dividends or stock repurchases by DASI utilizing 25% of its cumulative net
income arising after December 31, 2002 provided that after giving effect to such
payment its total debt to EBITDA would be less than or equal to 4.25 to 1. Under
the terms of the indentures relating to the Senior Notes and Subordinated Notes,
DOC is restricted in its ability to pay dividends or make other distributions to
DASI unless certain conditions are satisfied, including that the cumulative
amount of such dividends or distributions does not exceed the sum of 50% of its
consolidated net income (100% of net loss) from March 31, 1999, proceeds
received from equity sales, restricted investments and contributions of
productive assets since that date. These restrictions are subject to certain
exceptions, including, among others, payments made to DASI (i) to pay ordinary
operating expenses not to exceed $5.0 million per year, (ii) to make certain
required tax payments, (iii) to make distributions as required under Dura's
Preferred Securities.

Dura's principal source of liquidity is cash flow generated from operations
and borrowings under its $175 million revolving credit facilities. Dura intends
to rely primarily on cash generated from operations after satisfying its working
capital and capital expenditure needs to reduce indebtedness. Dura generated
cash from operations of $109.2 million, $134.3 million and $204.2 million in
2004, 2003 and 2002, respectively. Dura's willingness to use its excess cash to
repay indebtedness prior to its scheduled maturity, however, is subject to
current industry conditions and its liquidity needs. During 2004, Dura
accumulated significant cash in lieu of repaying indebtedness due in part to
lower North American production volumes and higher steel prices. As a result,
Dura had cash of $191.6 million as of December 31, 2004. Dura expects that
capital expenditures in 2005 will be approximately $70.0 million. These capital
expenditures will be used primarily for equipment and dedicated tooling
purchases and facility improvements.

In February 2005, Dura amended its 2003 Credit Agreement to, among other
things, adjust the total leverage, senior leverage and interest coverage ratios
that it was required to maintain over the next six quarters beginning March 31,
2005. In addition, Dura repaid $35.0 million of the tranche C term loan. Dura
believes that cash flow from operations and borrowings under its 2003 Credit
Agreement as amended, will be sufficient to meet its liquidity needs for at
least the next twelve months.

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

32

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. Dura's business
strategies include the maximization of cash flow available for debt reduction by
executing planned operating efficiencies and implementing a disciplined capital
expenditure program (see Item 1(a) - Business -- Business Strategy for a more
detailed discussion and description of our business strategies and their
potential impact on our liquidity and capital resource position). 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 2003 Credit Agreement. In the event that Dura is unable to refinance the
2003 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,
2004 (in thousands):

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

(a) Interest expense obligations were calculated holding interest rates constant
as of December 31, 2004.

(b) Operating leases include lease commitments of $18.6 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 obligations for
facility closure and consolidation costs and warranty and environmental
liabilities.

At December 31, 2004, Dura is not party to any 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 its 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, 2004,
Dura had outstanding letters of credit of $20.1 million. Dura does not believe
that they will be required to be drawn.

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

33

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 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 from its facilities to its customers, which is when title
passes to the customer for substantially all sales. 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
generally 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. The
estimated amount of such losses as of December 31, 2004 and 2003 were not
significant.

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 it 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 intangible assets at December 31, 2004 are approximately $15.9
million primarily consisting of non-amortizable trademarks and amortizable
license agreements.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations," ("SFAS
No. 141") and SFAS No. 142. SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting. Under SFAS No. 142, goodwill and intangible assets with indefinite
lives are no longer amortized, but reviewed 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, if a change in
certain key assumptions is applied, such as the discount rate, projected future
cash flows and mix of cash flows by geographic region, it could significantly
impact the results of Dura's assessment. At May 1, 2004, holding other variables
constant, a fifty basis point increase in the discount rate used by Dura in its
SFAS No. 142 analysis would not result in an impairment of goodwill.

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
2004, no impairment of goodwill or other intangible assets has occurred.

Accounting for Income Taxes. Dura accounts for income taxes in accordance
with SFAS No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). As part of
the process of preparing its consolidated

34

financial statements Dura estimates its income tax expense in each of the
jurisdictions in which it operates. This process includes an assessment of
temporary differences which result from the differing treatment of items for
financial reporting and income tax reporting purposes. These differences result
in deferred tax assets and liabilities, which are included within Dura's
consolidated balance sheet. The deferred tax balances are adjusted to reflect
tax rates, based on currently enacted tax laws, which will be in effect in the
years in which the temporary differences are expected to reverse. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
the results of operations in the period that included the enactment date.

A valuation allowance is required when it is more likely than not that all
or a portion of a deferred tax asset will not be realized. Significant 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 $63.1 million as
of December 31, 2004, due to uncertainties related to its ability to utilize
some of its deferred tax assets, primarily certain net operating loss
carryovers. The valuation allowance is based on Dura's review of all available
positive and negative evidence, including its past and future performance in the
jurisdictions in which it operates, the market environment in which it operates,
the utilization of tax attributes in the past, the length of carryback and
carryforward periods in jurisdictions and evaluation of potential tax planning
strategies. 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, 2004 was $47.4 million, net of a
valuation allowance of $63.1 million. In addition, during 2003 and 2002, Dura
recorded total losses from discontinued operations of $129.4 million related to
the disposition of the Mechanical Assemblies Europe business. Dura has not
recorded tax benefits for these losses as it believes it is more likely than not
that such losses will not be realized.

Dura operates within multiple tax jurisdictions and is subject to audits in
these jurisdictions. Upon audit, these taxing jurisdictions could retroactively
disagree with Dura's tax treatment of certain items. Consequently, the actual
liabilities with respect to any year may be determined long after financial
statements have been issued. Dura establishes tax reserves for estimated tax
exposures. These potential exposures result from varying applications of
statutes, rules, regulations, case law and interpretations. The settlement of
these exposures primarily occurs upon finalization of tax audits. However, the
amount of the exposures can also be impacted by changes in tax laws and other
factors. On a quarterly basis, Dura evaluates the reserve amounts in light of
any additional information and adjusts the reserve balances as necessary to
reflect the best estimate of the probable outcomes. Dura believes that it has
established the appropriate reserves for these estimated exposures. However,
actual results may differ from these estimates. The resolution of these tax
matters in a particular future period could have a material impact on Dura's
consolidated statement of operations and provision for income taxes.

Defined Benefit Plans and Postretirement Benefits. Dura sponsors 17
defined benefit type plans that cover certain hourly and salaried employees in
the U.S. 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 nine 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 2004, Dura assumed discount rates of 4.50 to 6.25
percent for its pension benefits, and 6.00 percent for its postretirement
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 weighted average
discount rate would have increased Dura's expense by $2.0 million and
obligations by $44.7 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
35

rate of return on plan assets would have increased Dura's expense by $0.8
million. Dura expects to contribute $7.3 million to its pension plans and $2.9
million to its postretirement medical benefit plans in 2005.

Dura employs a total return on 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
September 30, 2004, Dura's measurement date, its domestic pension assets are
comprised of 1% equity securities, 12% debt securities and 87% other investments
(cash). This asset allocation is substantially different from Dura's preferred
allocation due to the transferring of U.S. plan assets to a new pension asset
manager on October 1, 2004. As of September 30, 2004 these U.S. plan assets were
held in cash prior to the transfer to the new manager. Dura's preferred asset
allocation is approximately 60 percent equity securities and 40 percent bond
securities. At September 30, 2004, Dura's measurement date, its foreign pension
assets are comprised of 58% equity securities, 35% debt securities and 7% other
investments (cash).

Specifically related to Dura's postretirement 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 postretirement
benefit obligation by approximately $2.0 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.

GEOGRAPHICAL RESULTS OF OPERATIONS

Dura's results of operations by geographic region are impacted by various
factors including vehicle production volumes, foreign exchange and general
economic conditions.

Dura sells its products to every major North American, Asian and European
automotive OEM and most RVSV OEMs. Dura has 59 manufacturing and product
development facilities located in the U.S., Brazil, Canada, China, Czech
Republic, France, Germany, Mexico, Portugal, Slovakia, Spain and the UK. Dura
also has a presence in Japan and India through alliances or technical licenses.
Dura has initiated plans to open a manufacturing facility in Romania to support
Eastern European automakers in 2005.

Dura's foreign business has been increasing as a percentage of total
revenue due to the strengthening of foreign currencies in relation to the U.S.
dollar and lower North American automotive production volumes. Foreign currency
positively impacted revenue by $ $116.5 million in 2004 and $167.5 in 2003.
Partially offsetting these items during 2004 was the full-year impact of the
Creation Group acquisition completed in July 2003 and a record production year
in the recreation vehicle industry, which are predominately domestic businesses
and together positively impacted domestic revenue by $103.6 million in 2004.
Dura's 2003 revenue as compared to 2002 was further impacted geographically by
Dura's run-out of its conventional window regulator business with revenue of
$109.0 million, which was a domestic business.

Geographically, Dura has experienced significant variability in income from
continuing operations between each of the last three years. Dura's domestic
income from continuing operations has decreased over this period and foreign
income from continuing operations has been relatively consistent.

Dura's profitability in the domestic region weakened in 2004 as compared to
2003 due to the reduction in automotive production volumes; increased interest
expense due to higher average interest rates; and the impact of steel was felt
more severely in Dura's domestic operations as steel pricing increased more
significantly in North America during 2004. Dura's profitability in the domestic
region weakened in 2003 as compared to 2002 due to the reduction in automotive
production volumes; the run-out of the conventional window regulator business
which was a domestic business; the elimination of certain intercompany
borrowings resulting in the elimination of interest income in the domestic
region and interest expense in the foreign regions; and the refinancing of third
party debt under Dura's 1999 Credit Agreement in April 2002, which moved
essentially all of Dura's interest expense to the domestic region.
36

Dura's profitability in the foreign region weakened in 2004 as compared to
2003 due to an increase in facility consolidation costs; higher overall material
costs and a negative net impact from foreign exchange. Dura's profitability in
the foreign region strengthened in 2003 as compared to 2002 due to operational
improvements resulting from the execution of facility consolidation actions; the
elimination of certain intercompany borrowings resulting in the elimination of
interest income in the domestic region and interest expense in the foreign
regions; and the positive impact of new business.

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

EFFECTS OF INFLATION

Inflation potentially affects Dura in two principal ways. First, a
significant portion of Dura's debt is tied to prevailing short-term interest
rates which may change as a result of inflation rates, translating into changes
in interest expense. Second, general inflation can impact material purchases,
labor and other costs. In many cases, Dura has limited ability to pass through
inflation-related cost increases due to the competitive nature of the markets
that Dura serves. In the past few years, other than material costs, 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 mitigate 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, 2004, giving effect to the
interest rate swaps discussed below, Dura had fixed rate debt of $652.3 million
and variable rate debt of $564.6 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, 2004 by approximately $60.4 million, $23.0 million of which relates
to Dura's interest rate swap agreements (see below), and would be expected to
have an estimated reduction in pre-tax earnings and cash flows for the next year
of approximately $5.5 million.

At December 31, 2004, 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
(5.69 percent to approximately 8.625 percent at December 31, 2004). 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, 2004,
the fair value of the interest rate swap contracts was a net gain position for
Dura of approximately $18.3 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, 2004 balance sheet.

From time to time, Dura also uses forward exchange contracts to hedge its
foreign currency exposure related to certain intercompany transactions. Dura may
designate such contracts at their inception as a cash flow hedge. At December
31, 2004, Dura had no outstanding forward exchange contracts.

37

FOREIGN CURRENCY TRANSACTIONS

A significant portion of Dura's revenues during the year ended December 31,
2004 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, 2004 are based in
its foreign operations and are translated into U.S. dollars at foreign currency
exchange rates in effect as of the end of each period, with the effect of such
translation reflected as a separate component of stockholders' investment.
Accordingly, Dura's consolidated stockholders' investment will fluctuate
depending upon the weakening or strengthening of the U.S. dollar against the
respective foreign currency.

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

38

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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. and subsidiaries (the "Company") as of December 31,
2004 and 2003, and the related consolidated statements of operations,
stockholders' investment, and cash flows for each of the three years in the
period ended December 31, 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004 and 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2004, in conformity with accounting principles generally accepted
in the United States of America.

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

We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness of the
Company's internal control over financial reporting as of December 31, 2004,
based on the criteria established in Internal Control -- Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission,
and our report dated March 7, 2005 expressed an unqualified opinion on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
March 7, 2005

40

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

41

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to consolidated financial statements.
42

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT

See notes to consolidated financial statements.
43

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to consolidated financial statements.
44

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003

1. ORGANIZATION AND BASIS OF PRESENTATION:

Dura Automotive Systems, Inc. (a Delaware Corporation) and its subsidiaries
(collectively referred to as "Dura") is a leading independent designer and
manufacturer of driver control systems, seating control systems, glass systems,
engineered assemblies, structural door modules and exterior trim systems for the
global automotive and recreation & specialty vehicle ("RVSV") industries.

Dura sells its products to every major North American, Asian and European
automotive OEM and nearly every RVSV OEM. Dura has 59 manufacturing and product
development facilities located in the U.S., Brazil, Canada, China, Czech
Republic, France, Germany, Mexico, Portugal, Slovakia, Spain and the UK. 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 or procurement of customer-owned
tooling to be used by Dura in the manufacture of its products.

45

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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 NONCURRENT 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, 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 noncurrent assets principally consisted of
deferred income taxes of $43.9 million, debt financing costs of $19.2 million,
which are being amortized over the term of the applicable agreements; notes
receivable of $6.9 million and other intangible assets of $15.9 million at
December 31, 2004. At December 31, 2003 other noncurrent assets principally
consisted of deferred income taxes of $16.2 million, debt financing costs of
$22.2 million, notes receivable of $7.3 million and other intangible assets of
$11.2 million, primarily consisting of non-amortizable trademarks and
amortizable license agreements. The amortization of other intangible assets was
not significant in 2004 and 2003.

In July 2001, the FASB issued SFAS No. 141 and SFAS No. 142. SFAS No. 141
requires all business combinations initiated after June 30, 2001 to be accounted
for using the purchase method of accounting. Under SFAS No. 142, goodwill and
intangible assets with indefinite lives are no longer amortized, but reviewed
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.

46

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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
2004, no impairment of goodwill or other intangible assets has occurred.

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

ACCRUED LIABILITIES:

Accrued liabilities consisted of the following (in thousands):

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 from its facilities to
its customers, which is when title passes to the customer for substantially all
sales. 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 generally has no provisions to terminate such contracts.

47

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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. The estimated amount of such losses as of December 31, 2004 and
2003 were not significant.

INCOME TAXES:

Dura accounts for income taxes in accordance with the provisions of SFAS
No. 109, 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 differing treatment of items for financial
reporting and income tax reporting purposes. The deferred tax balances are
adjusted to reflect tax rates by tax jurisdiction, based on currently enacted
tax laws, which will be in effect in the years in which the temporary
differences are expected to reverse.

COMPREHENSIVE INCOME (LOSS):

Dura follows the provisions of SFAS No. 130, "Reporting Comprehensive
Income," ("SFAS No. 130") 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.

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 $416.0 million as of December 31, 2004. The fair value of
Dura's Subordinated Notes, based on quoted market activity, approximated $452.8
million and Euro 92.5 million, respectively, as of December 31, 2004. The fair
value of Dura's Preferred Securities, based on NASDAQ market quote activity,
approximated $51.9 million as of December 31, 2004.

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, 2004, Dura had
no outstanding forward exchange contracts.

48

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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,
2004, based upon market quotes, Dura's swap contracts outstanding had a fair
value of approximately $18.3 million and this amount is included in the
consolidated balance sheet as of December 31, 2004.

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 2004, the FASB revised SFAS No. 123 and issued SFAS No. 123(R).
This Statement supercedes APB No. 25, which resulted in no stock-based employee
compensation cost related to stock options if the options granted had an
exercise price equal to the market value of the underlying common stock on the
date of grant. SFAS No. 123R requires recognition of employee services provided
in exchange for a share-based payment based on the grant date fair market value.
Dura is required to adopt SFAS No. 123R as of July 1, 2005. As of the effective
date, this Statement applies to all new awards issued as well as awards
modified, repurchased, or cancelled. Additionally, for stock-based awards issued
prior to the effective date, compensation cost attributable to future services
will be recognized as the remaining service is rendered. Dura may also elect to
restate prior periods by applying a modified retrospective method to periods
prior to the effective date. Dura is in the process of determining which method
of adoption it will elect (see Note 6 for SFAS No. 123 required disclosures).

In November 2004, the FASB issued SFAS No. 151. This Statement requires
that abnormal amounts of idle facility expense, freight, handling costs, and
spoilage be recognized as current period charges. The Statement also requires
that fixed production overhead be allocated to conversion costs based on the
normal capacity of the production facilities. SFAS No. 151 is effective for
inventory costs incurred by Dura beginning in fiscal year 2006. Dura does not
believe the adoption of this Statement will have a material impact on its
consolidated financial position or results of operations.

During May 2004, the FASB issued FSP 106-2. This FSP provides guidance on
accounting for the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, to employers that sponsor postretirement health care
plans where the prescription drug benefits available under the plan are
actuarially equivalent to Medicare Part D and thus qualify for the subsidy under
the Act and the expected subsidy will offset or reduce the employer's share of
the cost of the underlying postretirement prescription drug coverage on which
the subsidy is based. The FSP also requires certain disclosures related to the
impact of the Act. Dura adopted this FSP on July 1, 2004. The adoption of this
FSP did not have a material impact on Dura's consolidated balance sheet or
results of operations.

In December 2003, the FASB issued SFAS No. 132(R), a revision to SFAS No.
132. SFAS No. 132(R) does not change the measurement or recognition related to
pension and other postretirement plans required by SFAS No. 87, SFAS No. 88, ,
and SFAS No. 106 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. SFAS No. 150 requires issuers to
classify as liabilities (or assets in some circumstances) freestanding financial
instruments that embody obligations for the issuer.

49

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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. 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 46-6. FSP 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 classified in the statement of
operations as 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 which amends SFAS No. 123.
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. 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. SFAS No. 146 addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies EITF 94-3. 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. 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 No. 30. 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
50

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

termination of Dura's 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.

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. As of December 31, 2004, there
were no shares of Class B common stock outstanding.

STOCK OPTIONS:

Dura accounts for stock options under the provisions of APB No. 25 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, are included in Note 6.

USE OF ESTIMATES:

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the U.S. 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.

WARRANTY AND ENVIRONMENTAL:

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 its 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. In addition, Dura is subject to the requirements of federal,
state, local and foreign environmental and occupational health and safety laws
and regulations. Some of Dura's operations generate hazardous substances. Like
all manufacturers, if a release of hazardous substances occurs or has occurred
at or from any of Dura's current or former properties or at a landfill or
another location where Dura has disposed of wastes, Dura may be held liable for
the contamination, and the amount of such liability could be material. Dura's
policy is to record reserves for customer warranty and environmental 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 and
environmental reserves 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 no longer
carries insurance for recall matters, as the cost and availability for such
insurance, in the opinion of
51

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

management, is cost prohibitive or not available. The following presents a
summary of Dura's warranty and environmental position (in thousands):

WARRANTY:

ENVIRONMENTAL:

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. 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 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 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.

52

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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. During the year ended December 31, 2004, net negative
adjustments totaling $0.7 million were recorded resulting from less favorable
settlement of retained liabilities than anticipated. Dura does not believe
future changes will be significant.

At December 31, 2004, Dura had remaining reserves related to the
divestiture of the Mechanical Assemblies Europe business of $18.7 million,
primarily related to the facilities retained by Dura, principally lease costs,
and are anticipated to be completed in 2021. Also included in the $18.7 million
is $3.0 million of acquisition integration reserves related to facility
closures. The reserve as of December 31, 2004 includes an increase related to
foreign exchange of $0.5 million and net adjustments to the long-term lease
commitment and other reserves of $1.2 million. Costs incurred and charged to the
reserve during 2004 included $1.3 million related to facility closure and other
costs and a $0.6 million adjustment to decrease the reserve.

4. ACQUISITIONS:

2003 ACQUISITIONS:

On June 19, 2003, Dura reached an agreement with Heywood Williams Group PLC
("Heywood Williams") (UK) 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 $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 earnout provision of an
additional $3 million if the acquired entity achieved certain financial targets.
The targets under the earnout provision were not achieved. Dura used cash on
hand to finance the transaction, which closed on

53

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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. Changes to the preliminary estimates within one year
of the purchase date were reflected as an adjustment to goodwill. In March 2004,
Dura paid Heywood Williams $0.7 million relating to a working capital adjustment
to the original purchase price. The purchase price adjustment was recorded as an
increase to goodwill as of March 31, 2004. Additionally in 2004, Dura made a
final purchase price adjustment of $0.3 million resulting in an increase to
goodwill. The final allocation of purchase price was not materially different
from preliminary allocations. 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 fair values of the assets acquired and liabilities assumed at the date
of the Creation Group acquisition are as follows (in thousands):

Current assets.............................................. $27,843
Property, plant and equipment............................... 18,795
Goodwill.................................................... 18,982
Intangible assets........................................... 9,000
Long-term assets............................................ 627
-------
Total assets acquired....................................... 75,247
-------
Current liabilities......................................... 12,176
Long-term liabilities....................................... 4,550
-------
Total liabilities assumed................................... 16,726
-------
Net assets acquired......................................... $58,521
=======

In the first six months of 2004, Dura made a $12.6 million final payment
relating to its acquisition of Reiche in 2000 of which $1.3 million related to
an earn out payment resulting in an increase to goodwill. Reiche, located in
Germany, manufactures steering columns and steering column components for
European and North American OEMs.

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, 2004, purchase liabilities recorded in conjunction with the
acquisitions included approximately $9.1 million for costs associated with the
shutdown and consolidation of certain acquired facilities and $2.5 million for
severance and other related costs. Costs incurred and charged to these reserves
amounted to $2.4 million related to the consolidation of certain acquired
facilities and $0.4 million related to severance during the year ended December
31, 2004. In addition, there was an increase to the reserve of $0.9 million
which included the impact of foreign exchange of $0.7 million and additions to
the reserve of $0.2 million. The remaining employee terminations and facility
closures were completed by December 31, 2004 except for contractual obligations,
consisting principally of facility lease payments, that will continue through
2005.

54

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. FACILITY CONSOLIDATION AND OTHER CHARGES:

Facility Consolidation

During the fourth quarter of 2004, Dura closed its Bondoufle, France sales
and engineering facility and relocated to Velizy, France, which is located near
its French OEM customers. This action resulted in a restructuring charge of $0.3
million related to facility closure and other costs.

During the second quarter of 2004, in order to improve capacity
utilization, Dura announced a plan to consolidate certain of its Body & Glass
Division product lines in Europe. This action resulted in a restructuring charge
of $1.5 million and $2.5 million in the second and third quarters of 2004,
respectively, relating primarily to severance, which completed the facility
consolidation charges to be incurred related to this action. Additionally, there
was a $0.2 million adjustment to decrease the reserve in the fourth quarter of
2004. Costs incurred and charged to the reserve as of December 31, 2004 amounted
to $2.1 million in severance related costs. In addition, during the second
quarter of 2004, Dura announced a plan to exit two manufacturing facilities in
Rockford, Illinois and combine the business with other Dura operations. Dura
also announced the relocation of its Atwood Mobile Products division
headquarters from Rockford, Illinois to Elkhart, Indiana. These actions resulted
in a restructuring charge of $1.7 million, $1.2 million, and $0.8 million in the
second, third and fourth quarters of 2004, relating primarily to severance.
Costs incurred and charged to the reserve as of December 31, 2004 amounted to
$1.7 million in severance related costs. Dura also expensed as incurred
approximately $0.3 million and $1.8 million of facility closure and other costs
in the third quarter and fourth quarters of 2004, of which $0.2 million is
related to equipment write-downs. Dura expects to incur additional restructuring
charges related to the exit of the Rockford facilities of approximately $0.9
million relating to severance and facility closure costs through December 31,
2005.

During the first quarter of 2004, in order to improve capacity utilization,
Dura announced a plan to exit its Brookfield, Missouri facility and combine the
business with other Dura operations. This action resulted in a restructuring
charge of $0.1 million, $0.4 million, $0.2 million and $0.2 million in the
first, second, third and fourth quarters of 2004, respectively, relating
primarily to severance. Dura also expensed as incurred approximately $0.1
million of facility closure and other costs in each of the second, third and
fourth quarters of 2004. Costs incurred and charged to the reserve as of
December 31, 2004 amounted to $0.2 million in severance related costs. Dura
expects to incur $0.3 million of additional restructuring charges associated
with the exit of the Brookfield facility through December 31, 2005. In addition,
during the first quarter of 2004, Dura announced a plan to exit its Pikeville,
Tennessee facility and combine the business with other Dura operations. This
action resulted in a restructuring charge of $0.4 million and $0.5 million in
the first and second quarters of 2004, respectively, relating to severance.
Costs incurred and charged to the reserve as of December 31, 2004 amounted to
$0.8 million in severance related costs. In continuation of these actions, Dura
expensed as incurred approximately $0.1 million of facility closure and other
costs in the second and third quarters of 2004, combined. Netted in this charge
is an additional $0.2 million related to fixed asset write-downs and a $0.2
million adjustment to reduce the facility consolidation charge in the third
quarter. Dura does not expect to incur any additional restructuring charges
related to the exit of the Pikeville facility.

During the fourth quarter of 2003, 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.
Costs incurred and charged to the reserve as of December 31, 2004 amounted to
$0.7 million in severance related costs. In continuation of these actions, Dura
recorded an additional restructuring charge of $0.2 million for facility closure
and other costs and adjusted the severance reserve down by $0.2 million in the
second quarter of 2004. Dura may incur an immaterial amount of additional
restructuring charges related to facility and other costs associated with the
exit of the Melun facility through March 31, 2005.

55

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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
$1.1 million in severance related costs. Dura expects to incur no additional
restructuring charges related to this action.

In the fourth quarter of 2003, Dura adopted a plan to sell its Cauvigny,
France 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. Costs incurred and charged
to the reserve as of December 31, 2004 amounted to $2.3 million in facility
closure and other costs including the impact of foreign exchange. In
continuation of these actions, Dura expensed as incurred approximately $0.3
million and $0.1 million in the first and second quarters of 2004, respectively,
of additional facility closure and other costs, which completed the facility
consolidation charges to be incurred related to this action.

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. 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, Dura announced a plan to exit its
Fulton, Kentucky facility. 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 during 2003, Dura recorded $1.3 million of additional restructuring
charges, including severance of $1.2 million and facility closure and other
costs of $0.1 million. 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. During 2004, Dura continued
such actions and recorded $0.2 million and $0.4 million in the first and third
quarters, respectively, of additional restructuring charges for severance
related costs. Dura also expensed as incurred $0.1 million, $0.2 million, and
$0.1 million in the first, second and fourth quarters of 2004, respectively,
related to severance costs and $0.2 million of facility closure and other costs
in the first quarter of 2004. Costs incurred and charged to the reserve as of
December 31, 2004 amounted to $1.7 million

56

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in severance related costs and $1.4 million in facility closure and other costs.
Dura does not expect to incur any additional restructuring charges related to
the exit of the Fulton facility.

Costs incurred and charged to the reserve related to the consolidation of
the Livonia, Michigan 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.

ASSET IMPAIRMENTS

During 2004, Dura recorded $7.1 million in asset impairment charges related
to building write-downs for the facility consolidation actions taken during 2004
and 2003. These costs are reflected as facility consolidation and other charges
in the consolidated statement of operations and were accounted for in accordance
with SFAS No. 144.

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, "Earnings per Share" ("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 2004
and 2003 includes the effects of outstanding stock options using the treasury
stock method. Diluted loss

57

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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):

Potential common shares of 2,360,827, 1,880,575 and 1,381,517 related to
Dura's outstanding stock options were excluded from the computation of diluted
earnings per share for 2004, 2003 and 2002. Potential common shares of 1,289,000
related to Dura's Preferred Securities were excluded from the computation of
diluted earnings per share for 2004 and 2003, as inclusion of these shares would
have been antidilutive.

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 selects 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 defined in the 1998 Plan, subject to certain adjustments reflecting
changes in Dura's capitalization. Such option grants vest up to four years from
the date of grant. Options available for future grants to purchase

58

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shares of Dura's Class A common stock were 962,095 at December 31, 2004.
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, 2004:

The weighted average exercise price of options exercisable at the end of
year was $15.11 per share at December 31, 2004, $16.47 at December 31, 2003, and
$20.74 at December 31, 2002. The weighted average remaining contractual life of
outstanding options was 6.9 years at December 31, 2004, 7.1 years at December
31, 2003, and 7.7 years at December 31, 2002.

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, 2004,
Dura had granted options under the Director Option Plan to acquire 21,000 shares
of

59

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Dura's Class A common stock at an exercise price of $24.50 to $25.50 per share.
As of December 31, 2004, 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, 96,944, 93,069, and 114,482 shares of Class A common
stock were issued to employees during the years ended December 31, 2004, 2003
and 2002, respectively. The weighted average fair value of shares purchased in
2004, 2003 and 2002 was $9.67, $7.28, and $9.05, 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 2004, 22,407 shares were distributed to employees
leaving 96,627 units remaining to be distributed. During 2003 and 2002, 26,725
and 20,570 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, 2004, 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. During 2004, 48,879 shares were distributed to directors
leaving 140,382 shares remaining to be distributed. No shares had been
distributed prior to 2004. 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,
2004, 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.

60

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK-BASED COMPENSATION PLANS:

Dura has elected to continue accounting for the above plans under APB No.
25, under which no compensation cost has been recognized during the three years
ended December 31, 2004, as all options are 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 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 3.7 percent in 2004, 2.5 percent in
2003, 3.1 percent in 2002; expected life of four years for 2004, 2003, and 2002;
an average expected volatility of 74 percent in 2004, 82 percent in 2003, and 81
percent in 2002.

The effect of the stock issued under the Employee Stock Purchase Plan was
not material for 2004, 2003 and 2002.

DIVIDENDS:

Dura has not declared or paid any cash dividends in the past. As discussed
in Note 8, Dura's 2003 Credit Agreement restricts the amount of dividends Dura
can declare or pay. As of December 31, 2004, under the terms of the Senior
Notes, Subordinated Notes and most restrictive debt covenants of the 2003 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 $42.875 per share. The net proceeds of
the offering were used to repay outstanding indebtedness. 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 7.5 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, 2004 are as follows
(in thousands):

2005........................................................ $ 2,968
2006........................................................ 2,916
2007........................................................ 2,616
2008........................................................ 142,877
2009........................................................ 590,477
Thereafter.................................................. 475,078
----------
$1,216,932
==========

In March 1999, Dura entered into its 1999 Credit Agreement. The 1999 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. The interim term loan was repaid in
conjunction with the Subordinated Notes offering.

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 1999
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

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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

borrowings outstanding under the 1999 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, 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 2003 Senior Notes offering of $50.0
million. 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 2003 Credit Agreement provides for $175.0
million of revolving credit, available until October 2008. At December 31, 2004,
Dura had unused borrowing capacity of approximately $154.9 million, of which
$13.1 million was available under its most restrictive debt covenant and $20.1
million in letters of credit outstanding. No borrowings under the revolving
credit facility occurred during 2004. The existing tranche C term loan remains
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 1999 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.

In February 2005, Dura amended its 2003 Credit Agreement to, among other
things, adjust the total leverage, senior leverage and interest coverage ratios
that it was required to maintain over the next six quarters beginning March 31,
2005. In addition, Dura repaid $35.0 million of the tranche C term loan (See
Note 17 for subsequent event disclosure).

Included in interest expense, net, in the consolidated statements of
operations is approximately $3.0 million, $2.6 million and $2.4 million of
interest income earned on Dura's cash balances in the years ended December 31,
2004, 2003 and 2002, respectively.

As of December 31, 2004, the rate on borrowings under the 2003 Credit
Agreement was based on LIBOR and was 4.92 percent. The 2003 Credit Agreement
contains various restrictive covenants which amongst other things, limit
indebtedness, investments, capital expenditures and certain dividends. The 2003
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, 2004. Borrowings under the 2003 Credit Agreement are
collateralized by substantially all assets of Dura.

The 2003 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 $54.6 million. As of December 31, 2004, Dura had no borrowings
outstanding under the indebtedness.

Dura also utilizes uncommitted overdraft facilities to satisfy the
short-term working capital requirements of its foreign subsidiaries. At December
31, 2004, Dura had overdraft facilities available from banks of approximately
$26.9 million, of which, it had no borrowings outstanding.

9. SENIOR SUBORDINATED NOTES:

Dura has $589.5 million of 9 percent Subordinated Notes, due May 2009
outstanding as of December 31, 2004. The interest on the Subordinated Notes is
payable semiannually. These notes are collateralized by guarantees of certain of
Dura's subsidiaries.

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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):

The 2004 foreign tax expense was reduced by tax credits and tax holiday
benefits. The 2004 deferred tax (benefit) includes amounts attributable to net
operating loss carryforwards, tax credits, adjustments to deferred tax assets
and liabilities arising from changes in enacted tax rates in foreign
jurisdictions and net future deductions that Dura expects to utilize against
future operating income.

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

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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

Current and non-current deferred tax assets and liabilities, within the
same tax jurisdiction, are offset for presentation in the consolidated balance
sheet. The 2004 consolidated balance sheet includes $21.6 million and $43.9
million of current and non-current deferred tax assets, respectively. Also
included in the 2004 consolidated balance sheet are $3.2 million and $14.9
million of current and non-current deferred tax liabilities, respectively. The
2003 consolidated balance sheet includes $15.7 million and $16.2 million of
current and non-current deferred tax assets, respectively.

The valuation allowance primarily relates to the uncertainty regarding the
use of certain of Dura's net operating loss and capital loss carryforwards. In
2004 and 2003, the valuation allowance increased by $14.0 million and $7.9
million, respectively, primarily to reflect the current year losses including a
current capital loss in certain jurisdictions where there is negative evidence
which indicates that it is more likely than not that loss carryforwards will not
be utilizable, 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,
2004, Dura had approximately $269.9 million of net operating loss carryforwards,
of which $138.4 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, $98.0 million
have no expiration and $171.9 million expire in 2005 through 2024. Capital loss
carryforwards of $1.7 million and $8.1 million will expire in 2005 and 2006,
respectively. Capital loss carryforwards of $3.5 million have no expiration
date. Dura has recorded a valuation allowance on a majority of the capital loss
carryforwards as Dura believes that it is more likely than not that a
significant portion of these losses are not realizable. The utilization of
Dura's research and development credit carryforwards expire in 2010 through
2024. Dura has been granted tax holidays in certain countries in which it
operates. In 2004, Dura recognized total tax holiday benefits of approximately
$2.7 million.

Dura operates within multiple tax jurisdictions and is subject to audits in
these jurisdictions. Upon audit, these taxing jurisdictions could retroactively
disagree with Dura's tax treatment of certain items. Consequently, the actual
liabilities with respect to any year may be determined long after financial
statements have

65

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

been issued. Dura establishes tax reserves for estimated tax exposures. These
potential exposures result from varying applications of statutes, rules,
regulations, case law and interpretations. The settlement of these exposures
primarily occurs upon finalization of tax audits. However, the amount of the
exposures can also be impacted by changes in tax laws and other factors. On a
quarterly basis, Dura evaluates the reserve amounts in light of any additional
information and adjusts the reserve balances as necessary to reflect the best
estimate of the probable outcomes. Dura believes that it has established the
appropriate reserves for these estimated exposures. However, actual results may
differ from these estimates. The resolution of these tax matters in a particular
future period could have a material impact on Dura's consolidated statement of
operations.

As discussed in Note 3, during 2003 and 2002, Dura recorded total losses
from discontinued operations of $129.4 million related to the disposition of the
Mechanical Assemblies Europe business. Dura has not recorded tax benefits for
these losses as it believes it is more likely than not that such losses will not
be realized.

The new repatriation provisions in the 2004 American Jobs Creation Act (the
"AJC Act") creates a temporary incentive for U.S. Corporations to repatriate
accumulated income earned abroad by providing an 85 percent dividend received
deduction for certain dividends from controlled foreign corporations. Dura is
currently reviewing whether any foreign earnings will be repatriated in 2005
under these provisions, and expects to complete its evaluation by the end of the
third quarter of 2005. At this time, Dura cannot reasonably estimate the amount
of unremitted earnings that may be repatriated if any.

11. SEGMENT REPORTING:

Dura follows the provisions of SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS No. 131"). 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 administration 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 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.

66

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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, 2004 were as
follows:

As of December 31, 2004 and 2003, receivables from these customers
represented 41 percent and 38 percent of total accounts receivable,
respectively.

12. EMPLOYEE BENEFIT PLANS:

DEFINED BENEFIT PLANS AND POSTRETIREMENT BENEFITS:

Dura sponsors 17 defined benefit type plans that cover certain hourly and
salaried employees in the U.S., Canada 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 nine postretirement medical
benefit plans for 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.

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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 $150.1 million at December 31, 2004 and $139.7 million at December 31, 2003.
As of December 31, 2004 and 2003, all of Dura's defined benefit and
postretirement medical benefit plans had accumulated benefit obligations that
exceeded plan assets.

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

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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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):

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):

69

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Dura's domestic pension plan weighted-average asset allocations at the
September 30, 2004 and 2003 measurement dates were as follows:

The above asset allocation is substantially different from Dura's preferred
allocation due to the transferring of domestic plan assets to a new pension
asset manager on October 1, 2004. As of September 30, 2004 these domestic plan
assets were held in cash prior to the transfer to the new manager. Dura's
preferred asset allocation is approximately 60 percent equity securities and 40
percent fixed income and debt securities.

The investment strategy for the domestic defined benefit pension plans is
becoming more conservative due to the cessation of accepting new participants.
The focus is on diminishing the underfunding of $42.4 million at December 31,
2004 and at the same time protecting the participants' positions. Consequently,
the current target investment mix is 60% in equity securities and 40% in fixed
income and debt securities.

Dura's foreign pension plan weighted-average asset allocations at the
September 30, 2004 and 2003 measurement dates were as follows:

The investment strategy for the foreign defined benefit pension plans is
becoming more conservative due to the cessation of accepting new participants.
The focus is on diminishing the underfunding of $22.4 million at December 31,
2004 and at the same time protecting the participants' positions. Consequently,
the current target investment mix is 60% in equity securities and 40% in fixed
income and debt securities.

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 capitalization companies. 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 $7.3 million to its pension plans and $2.9
million to its postretirement medical benefit plans in 2005.

70

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents Dura's projected benefit payments as of
December 31, 2004 (in thousands):

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 $8.5 million, $8.6 million, and $7.5 million during the
years ended 2004, 2003, and 2002, respectively.

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 these lease commitments,
$18.6 million are included in facility closure and consolidation costs reserves.
Future annual rental commitments at December 31, 2004 under these operating
leases are as follows (in thousands):

LITIGATION:

Dura is involved in various legal proceedings. Due to their nature, such
legal proceedings involve inherent uncertainties, including, but not limited to,
court rulings, negotiations between affected parties and governmental
intervention. Dura has established reserves for matters that are probable and
estimable in amounts it believes are adequate to cover reasonable adverse
judgments not covered by insurance. Based upon the information available to Dura
and discussions with legal counsel, it is the opinion of Dura 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 outcome of individual matters are not
predictable with assurance.

14. RELATED PARTY TRANSACTIONS:

Dura incurred fees to Hidden Creek, a former affiliate of Dura, of
approximately $0.3 million in 2004 related to business development services. In
2003, Dura incurred fees to Hidden Creek of approximately

71

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$1.1 million 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 Hidden Creek 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 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. Dura currently holds a note
receivable from the acquiring company for $6.0 million as of December 31, 2004.

During 1999, Dura and the former chairman of Dura's Board of Directors,
formed Automotive Aviation Partners, LLC ("AAP") to facilitate the purchase of a
corporate airplane. Dura owned 25 percent of AAP and Dura's former chairman
owned 75 percent. Each party provided guarantees for their ownership percent in
favor of the AAP's lending institution; Dura's guarantee was 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 had 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. As of December 31, 2004,
the former chairman owed approximately $0.6 million to Dura under this
arrangement. In March 2004, a wholly-owned subsidiary of Dura acquired the
former chairman's 75 percent interest in AAP in exchange for nominal
consideration. Dura has repaid the loan to AAP's lending institution and the
former chairman has been released from his guaranty to such lender. The former
chairman remains liable under his guaranty to Dura.

In March 2003, Dura entered into a two year agreement with its former Chief
Executive Officer. 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,
2004, all 270,000 of the additional options have been granted.

During April 2004, Onex, Dura's controlling shareholder, converted all of
its remaining Class B common stock into Class A common stock, resulting in a
single class of voting shares outstanding and effectively eliminated their
majority voting control over shareholder matters of Dura. As a result, during
June 2004, Dura entered into change of control agreements ("the Agreements")
with certain key officers and directors. The Agreements provide for severance
pay including incentive compensation, continuation of certain other benefits,
gross-up of payments deemed to be excess parachute payments, additional years of
credited service under Dura's supplemental executive retirement plan and
undiscounted lump-sum payment of the benefit due there-under within ten days of
the termination date, and indemnification of the individual with respect to
certain matters associated with their employment by Dura. In the event of a
change of control, the benefit to be received by certain key officers and
directors from existing agreements and the Agreements noted above is $21.9
million as of December 31, 2004. "Change of control" is defined as the
accumulation by any person, entity or group of affiliated entities meeting
certain levels of voting power of Dura's voting stock or the occurrence of
certain other specified events, as defined in the Agreements.

72

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. QUARTERLY FINANCIAL DATA (UNAUDITED):

The following is a condensed summary of actual quarterly results of
operations for 2004 and 2003 (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.

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.

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 Subordinated Notes issued
by DOC, 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.

73

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2004

74

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, 2004

75

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, 2004

76

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DURA AUTOMOTIVE SYSTEMS, INC.

CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2003

77

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

78

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

79

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

80

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

81

DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. SUBSEQUENT EVENTS:

In February 2005, Dura amended its 2003 Credit Agreement to, among other
things, adjust the total leverage, senior leverage and interest coverage ratios
that it was required to maintain over the next six quarters beginning March 31,
2005. In addition, Dura repaid $35.0 million of the tranche C term loan.

82

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 (the "Company") as of December 31, 2004 and 2003,
and for each of the three years in the period ended December 31, 2004,
management's assessment of the effectiveness of the Company's internal control
over financial reporting as of December 31, 2004, and the effectiveness of the
Company's internal control over financial reporting as of December 31, 2004, and
have issued our reports thereon dated March 7, 2005 (which report on the
consolidated financial statements expresses an unqualified opinion and includes
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 reports are included elsewhere in this Form 10-K. Our
audits also included the consolidated financial statement schedule of the
Company 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.

/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
March 7, 2005

83

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, 2004,
2003 and 2002 were as follows (in thousands):

FACILITY CONSOLIDATION:

The transactions in the facility consolidation reserve account for the year
ending December 31, 2004, 2003 and 2002 were as follows (in thousands):

84

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

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of December 31, 2004, an evaluation was carried out under the
supervision and with the participation of Dura's management, including its Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of its disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based
upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that the design and operation of these disclosure controls and
procedures were effective to ensure that information required to be disclosed by
Dura in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
applicable rules and forms.

INTERNAL CONTROL OVER FINANCIAL REPORTING

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Dura is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934. Dura's internal control
system is designed to provide reasonable assurance to our management and board
of directors regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Dura's internal control over financial
reporting includes those policies and procedures that:

- Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
assets of the company;

- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and

- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Dura's internal control over
financial reporting as of December 31, 2004. In making this assessment, we used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control -- Integrated Framework. Based on
management's assessment and those criteria, it believes that, as of December 31,
2004, Dura maintained effective internal control over financial reporting.

Dura's independent registered public accounting firm has audited
management's assessment of the effectiveness of Dura's internal control over
financial reporting as of December 31, 2004, as stated in the Report of
Independent Registered Public Accounting Firm, appearing under Item 9A, which
expresses

85

unqualified opinions on management's assessment and on the effectiveness of
Dura's internal controls over financial reporting as of December 31, 2004.

/s/ LAWRENCE A. DENTON
--------------------------------------
Lawrence A. Denton
President, Chief Executive Officer and
Director

/s/ KEITH R. MARCHIANDO
--------------------------------------
Keith R. Marchiando
Vice President and Chief Financial
Officer

March 7, 2005

86

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting appearing under
Item 9A, that Dura Automotive Systems, Inc. and subsidiaries (the "Company")
maintained effective internal control over financial reporting as of December
31, 2004, based on criteria established in Internal Control -- Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management's assessment that the Company maintained
effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the criteria established in
Internal Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

87

We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended December 31, 2004 of the Company, and
our reports dated March 7, 2005 expressed an unqualified opinion on those
financial statements.

/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
March 7, 2005

88

ITEM 9B. OTHER INFORMATION

None.

89

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

CODE OF ETHICS

Dura has adopted a Conflict of Interest and Code of Conduct which applies
to all of its employees and directors. The Conflict of Interest and Code of
Conduct is published on Dura's website at www.duraauto.com. Any amendments to
the Conflict of Interest and Code of Conduct and waivers of the Conflict of
Interest and Code of Conduct for its Chief Executive Officer, Chief Financial
Officer or Controller will be published on its website. Dura will provide a copy
of its Conflict of Interest and Code of Conduct, free of charge, upon request.
To request a copy, please submit your request to: Dura Automotive Systems, Inc.
,2791 Research Drive, Rochester Hills, MI 48309, Attn: Corporate Secretary.

The information included under the headings "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in its definitive
proxy statement for its Annual Meeting of Shareholders to be held May 18, 2005,
is incorporated herein by reference.

Pursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item
401(b) of Regulation S-K, information regarding its executive officers is
provided in Item 1 of Part I of this Annual Report on Form 10-K under the
caption "Executive Officers of the Registrant."

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 2005 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 2005 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 2005 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 Auditor Fees" which appears in Dura's 2005
Proxy Statement.

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:

- Report of Independent Registered Public Accounting Firm

- Consolidated Balance Sheets as of December 31, 2004 and 2003

- Consolidated Statements of Operations for the Years Ended December 31,
2004, 2003 and 2002
90

- Consolidated Statements of Stockholders' Investment for the Years Ended
December 31, 2004, 2003 and 2002

- Consolidated Statements of Cash Flows for the Years Ended December 31,
2004, 2003 and 2002

- 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 28, 2004, under Item
2.02 and Item 9.01 (Commission File No. 0-21139).

91

DURA AUTOMOTIVE SYSTEMS, INC.

EXHIBIT INDEX TO ANNUAL REPORT

ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

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

* Incorporated by reference.

** Indicates compensatory arrangement.

96

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 11, 2005

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.

97

EXHIBIT INDEX

10.21 First Amendment, dated as of February 25, 2005 to the
Amended and Restated Credit Agreement, dated as of March 19,
1999, as amended and restated as of October 31, 2003, among
Dura Automotive Systems, Inc., as Parent Guarantor, Dura
Operating Corp., Trident Automotive Limited, Dura Holding
Germany GmbH, Dura Automotive Systemes Europe S.A., Dura
Automotive Systems (Canada), Ltd. as Borrowers; the several
banks and other financial institutions or entities from time
to time parties to the Credit Agreement; JPMorgan Chase
Bank, N.A., as administrative agent and Bank of America,
N.A., as syndication agent and collateral agent.
10.22 Plan participants of the Dura Automotive Systems, Inc. 2003
Supplemental Executive Retirement Plan as of March 1, 2005.
10.23 Plan participants of the Dura Automotive Systems, Inc.
Change of Control Agreements.
12.1 Statement of Computation of Ratio of Earnings to Fixed
Charges.
21.1 Subsidiaries of Dura Automotive Systems, Inc.
23.1 Consent of Deloitte and Touche LLP filed herewith.
31.1 Certification Pursuant to Rule 13a-14(a)/15d-14(a), As
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification Pursuant to Rule 13a-14(a)/15d-14(a), As
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.