MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

Intier Automotive Inc. management is responsible for the preparation and presentation of the consolidated financial statements and all the information in
this Annual Report. The consolidated financial statements were prepared by management in accordance with accounting principles generally accepted in Canada. Financial statements include certain
amounts based on estimates and judgements. Management has determined such amounts on a reasonable basis designed to ensure that the consolidated financial statements are presented fairly, in all
material respects. Financial information presented elsewhere in this Annual Report has been prepared by management to ensure consistency with that in the consolidated financial statements. The
consolidated financial statements have been reviewed by the Audit Committee and approved by the Board of Directors of Intier Automotive Inc.

Management
is responsible for the development and maintenance of systems of internal accounting and administrative cost controls of high quality, consistent with reasonable cost. Such
systems are designed to provide reasonable assurance that the financial information is accurate, relevant and reliable and that the Company's assets are appropriately accounted for and adequately
safeguarded.

The
Company's Audit Committee is appointed by its Board of Directors annually and is comprised solely of outside directors. The Committee meets periodically with management, as well as
the independent auditors, to satisfy itself that each is properly discharging its responsibilities, to review the consolidated financial statements and the independent auditors' report and to discuss
significant financial reporting issues and auditing matters. The Audit Committee reports its findings to the Board of Directors for consideration when approving the consolidated financial statements
for issuance to the shareholders.

The
consolidated financial statements have been audited by Ernst & Young LLP, the independent auditors, in accordance with auditing standards generally accepted in Canada and the
United States on behalf of the shareholders. The Auditors' Report outlines the nature of their examination and their opinion to the consolidated financial statements of the Company. The independent
auditors have full and unrestricted access to the Audit Committee.

|Donald J. Walker
(Signature)                           |  | Michael E. McCarthy
(Signature)                                         
|------------------------------------------------------ |  | ------------------------------------------------------------------------
|DONALD J. WALKER
President and Chief Executive Officer |  | MICHAEL E. MCCARTHY
Executive Vice-President and Chief Financial Officer

Newmarket, Canada
February 13, 2003



AUDITORS' REPORT

To
the Shareholders of Intier Automotive Inc.

We
have audited the consolidated balance sheets of Intier Automotive Inc. as at December 31, 2002 and 2001 and the consolidated statements of income, retained earnings and
Magna's net investment and cash flows for each of the years in the three-year period ended December 31, 2002. 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 Canadian and United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.

In
our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001 and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2002 in accordance with Canadian generally accepted accounting
principles.

The
Company changed its method of accounting for goodwill and impairment of long-lived assets as described in note 2.

logo

ERNST & YOUNG LLP
Chartered Accountants

Toronto, Canada
February 13, 2003



SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements have been prepared in U.S. dollars following Canadian generally accepted accounting principles ("Canadian GAAP"). These
policies are also in conformity, in all material respects, with United States generally accepted accounting principles ("U.S. GAAP") except as described in note 23 to the consolidated financial
statements.

PRINCIPLES OF CONSOLIDATION

The comparative consolidated balance sheet as at December 31, 2001 gives effect to the corporate reorganization which was completed in August 2001
whereby Intier Automotive Inc. (the "Company") acquired from its parent company, Magna International Inc. ("Magna"), certain operating divisions, subsidiaries, jointly controlled
entities and investments directly or indirectly under the control of Magna. In exchange for the above net assets, the Company issued 42,751,938 Class B Shares of the Company and 2,250,000
Convertible Series Preferred Shares to Magna.

The
consolidated financial statements prior to August 1, 2001 present the historic combined results of operations and cash flows of the assets and liabilities reorganized under
the Company on a carve out basis from Magna. To give effect to the continuity of Magna's interest in the assets and liabilities of the Company, all the assets and liabilities have been recorded in
these consolidated financial statements at Magna's book values except for assets under capital leases related to the distribution of land and buildings by the Company to certain real estate
subsidiaries of Magna during the year ended December 31, 1998.

The
Company was formed to hold and operate the interiors and closures businesses owned by Magna and its subsidiaries. The assets and liabilities recognized under the Company include the
following businesses:

Interior Systems

These businesses engineer, develop and produce complete seat systems, seat tracks, seat frames, integrated child safety seats and other seating components,
cockpit modules, instrument panels, consoles, glove boxes, door modules, door trim panels, package trays, overhead systems, sun visors, acoustics, automotive carpet, interior panels and other interior
garnish trim and components. This group also provides expertise and services for its OEM customers including assembly and sequencing, full vehicle process engineering and integrated interior vehicle
safety systems.

Closure Systems

These businesses engineer, develop, produce and assemble a multitude of closure, latching and power driven door systems. Products include complete door systems,
power liftgates and power sliding doors, window regulators, electronic latching systems, wiper systems and electrical motors.

The
comparative information prior to August 1, 2001 reflects financial statements which present the consolidated financial position, results of operations, changes in Magna's net
investment and cash flows of the Company as if it had operated as a stand-alone entity subject to Magna's control. Certain of the expenses presented in these consolidated financial statements
represent intercompany allocations and management estimates of the cost of services provided by Magna. These allocations and estimates are considered by management to be the best available
approximation of the expenses that the Company would have incurred had it operated on a stand-alone basis over the periods presented.

Interest
expense, as presented in these consolidated financial statements, includes interest on external debt and amounts due to Magna (included in Magna's net investment). Magna's net
investment, which includes both debt and equity components, comprises the accumulated earnings of the Company, contributions by Magna less distributions to Magna and the currency translation
adjustment.

Income
taxes for the Company in the comparative period prior to August 1, 2001 have been recorded at statutory rates based on income before income taxes and minority interest as
reported in the consolidated statements of income as though the Company was a separate tax paying entity. Income taxes payable in respect of historically separate tax paying legal entities have been
presented as a
current liability in the consolidated balance sheets in the comparable period. Income taxes payable in respect of the components which were not historically separate tax paying legal entities have
been included in Magna's net investment. Future income taxes have been presented in the consolidated balance sheets on the basis of temporary differences between the financial reporting and tax bases
of the assets and liabilities of separate tax paying legal entities.

As
a result of the basis of presentation described above, the comparative consolidated statements of income may not necessarily be indicative of the revenues and expenses that would have
resulted had the Company operated as a stand-alone entity prior to August 1, 2001.

The
Company's subsidiaries are included in these consolidated financial statements using the purchase method of accounting from the date they were acquired by Magna. All significant
intercompany balances and transactions have been eliminated.

The
Company proportionately consolidates its interests in jointly controlled operations.

FOREIGN EXCHANGE

Assets and liabilities of the Company's operations having a functional currency other than the U.S. dollar are translated into U.S. dollars using the exchange
rate in effect at the year end and revenues and expenses are translated at the average rate during the year. Exchange gains or losses on translation of the Company's net equity investment in these
operations are deferred as a separate component of shareholders' equity.

The
appropriate amounts of exchange gains or losses accumulated in the separate component of shareholders' equity are reflected in income when there is a reduction in the Company's net
investment in the operations that gave rise to such exchange gains and losses.

Foreign
exchange gains and losses on transactions occurring in a currency other than an operation's functional currency are reflected in income except for gains and losses on foreign
exchange contracts used to hedge specific future commitments in foreign currencies. Gains and losses on these contracts are accounted for as a component of the related hedged transaction. In addition,
gains and losses from foreign denominated debt designated as a hedge on the Company's net investments in foreign operations are not included in income, but are shown in the currency translation
account.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on account, demand deposits and short-term investments with remaining maturities of less than three months at
acquisition.

INVENTORIES

Inventories are valued at the lower of cost and net realizable value, with cost being determined substantially on a first-in, first-out
basis. Cost includes the cost of materials plus direct labour applied to the product and the applicable share of manufacturing overhead.

INVESTMENTS

Investments in which the Company has significant influence are accounted for on the equity basis.

FIXED ASSETS

Fixed assets are recorded at historical cost, which includes acquisition and development costs less related investment tax credits. Development costs include
direct construction costs, interest capitalized on construction in progress and land under development and indirect costs wholly attributable to development.

Depreciation
is provided on a straight-line basis over the estimated useful lives of fixed assets at annual rates of 21/2% to 5% for buildings, 7% to 10% for
general purpose equipment and 10% to 30% for special purpose equipment. Assets under capital leases are amortized over the respective lease terms.

Costs
incurred to establish new facilities, which require substantial time to reach commercial production capability, are expensed as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates long-lived assets for impairment whenever indicators of impairment exist. Indicators of impairment include prolonged operating
losses or a decision to cease or dispose of, or otherwise change the use of, an existing long-lived asset or goodwill impairment.

If
the sum of the future cash flows expected to result from the asset, undiscounted and without interest charges, is less than the reported value of the asset, an asset impairment must
be recognized in the financial statements. The amount of impairment to be recognized is calculated by subtracting the fair value of the asset from the reported value of the asset. Discounted cash
flows are used to measure fair value.

GOODWILL

Goodwill represents the excess of the purchase price of the Company's interest in subsidiary companies over the fair value of the underlying net identifiable
assets arising on acquisitions. The Company reviews the valuation of goodwill on an annual basis. In doing so, the Company evaluates whether there has been an impairment in the value of goodwill based
on a comparison of the fair value of the reporting unit to the underlying carrying value of the reporting unit's net assets, including goodwill. Discounted future cash flows are used to determine the
fair value of the reporting unit.

REVENUE RECOGNITION

Revenue from the sale of manufactured products is recognized when the price is fixed or determinable, collectibility is reasonably assured and upon shipment to
(or receipt by customers depending on contractual terms), and acceptance by, customers.

Revenue
from separately priced engineering service and tooling contracts are recognized on a percentage of completion basis.

Revenue
and cost of sales are presented on a gross basis in the consolidated statements of income where the Company is acting as principal and is subject to significant risks and rewards
in connection with the process of bringing the product to its final state and in the post sale dealings with its customers. Otherwise, components of revenues and related costs are presented on a net
basis.

PREPRODUCTION COSTS RELATED TO LONG-TERM SUPPLY AGREEMENTS

Costs incurred (net of customer subsidies) related to design and engineering, which are reimbursed as part of subsequent related parts production piece price
amounts, are expensed as incurred unless a contractual guarantee for reimbursement exists.

Costs
incurred (net of customer subsidies) related to design and development costs for moulds, dies and other tools that the Company does not own (and that will be used in, and
reimbursed as part of the piece price amounts for subsequent related parts production) are expensed as incurred unless the supply agreement provides a contractual guarantee for reimbursement or the
non-cancellable right to use the moulds, dies and other tools during the supply agreement.

GOVERNMENT FINANCING

The Company makes periodic applications for financial assistance under available government assistance programs in the various jurisdictions in which the Company
operates. Grants relating to capital expenditures are reflected as a reduction of the cost of the related assets. Grants and tax credits relating to current operating expenditures are generally
recorded as a reduction of expense at the time the eligible expenses are incurred. In the case of certain foreign subsidiaries, the Company receives tax super allowances which are accounted for as a
reduction of income tax expense. The Company also receives loans which are recorded as liabilities in amounts equal to the cash received.

RESEARCH AND DEVELOPMENT

The Company carries on various applied research and development programs, certain of which are financially assisted by governments or by customers of the Company.
Funding received is accounted for using the cost reduction approach. Research costs are expensed as incurred.

INCOME TAXES

The Company follows the liability method of tax allocation for accounting for income taxes. Under the liability method of tax allocation, future tax assets and
liabilities are determined based on differences between the financial reporting carrying value and the tax cost bases of assets and liabilities and are measured using the substantively enacted tax
rates and laws that will be in effect when the differences are expected to reverse.

EMPLOYEE BENEFIT PLANS

The Company accrues its obligations under employee benefit plans and the related costs, net of plan assets. The cost of pensions and other retirement benefits
earned by employees is actuarially determined using the projected benefit method pro rated on service and management's best estimate of expected plan investment performance, salary escalation,
retirement ages of employees and expected health care costs. For the purposes of calculating the expected return on plan assets, those assets are valued at fair value. Past service costs from plan
amendments are amortized on a straight-line basis over the average remaining service period of employees active at the date of amendment. The net actuarial gain (loss) is amortized over
the average remaining service period of active employees.

The
cost of providing benefits through defined contribution pension plans is charged to earnings in the period in respect of which contributions become payable.

STOCK-BASED COMPENSATION

No compensation expense is recognized for stock options granted to employees under the Company's Incentive Stock Option Plan as they are accounted for using the
intrinsic value method. Stock options granted to non-employees under the Company's Incentive Stock Option Plan, are accounted for under the fair value method and are expensed as the
options vest. Consideration received on the exercise of stock options is credited to capital stock. The dilutive impact of stock option grants is factored into the Company's diluted reported earnings
per share.

EARNINGS PER CLASS A SUBORDINATE VOTING OR CLASS B SHARE

Basic earnings per Class A Subordinate Voting or Class B Share are calculated on net income less financing charges on the Convertible Series
Preferred Shares using the weighted average number of Class A Subordinate Voting and Class B Shares outstanding during the year.

The
Company uses the treasury stock method in computing diluted earnings per share. Under the treasury stock method, diluted earnings per Class A Subordinate Voting or
Class B Share are calculated on the weighted average number of Class A Subordinate Voting and Class B Shares that would have been outstanding during the year had all the dilutive
options and Convertible Series Preferred Shares been exercised or converted into Class A Subordinate Voting Shares at the beginning of the year, or date of issuance, if later. The proceeds from
the exercise of options are assumed to be used to purchase Class A Subordinate Voting Shares at the average market price during the period. The incremental shares (the difference between the
number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted earnings per share computation.

CONVERTIBLE SERIES PREFERRED SHARES

For the purposes of accounting for the Convertible Series Preferred Shares, three key attributes of these shares were valued as of their date of issuance and are
presented separately in the Company's consolidated financial statements. These three key attributes are:



The
retraction attribute is a liability of the Company and is presented as long-term debt because it is at the option of the holder. The non-cumulative nature of
the dividend means that it is dissimilar to an interest payment on debt and, therefore, the long-term debt is presented as the net present value of (i.e., at a discount to) the carrying
value which becomes payable, at the option of the holder, on the retraction dates. The resultant discount is amortized to income systematically from the date of issuance until the date of retraction
for each series of the Convertible Series Preferred Shares.

The
non-cumulative dividend, for reasons indicated above, is not considered debt-related. However, because holders of the Convertible Series Preferred Shares
expect to receive dividends and it was the Company's expectation, at the date of issuance, to pay dividends, there is a value to the expected stream of dividend payments. The net present value of this
expected dividend stream has, therefore, been presented as equity. As dividends are declared, a systematically calculated portion of the dividend is shown as a return of capital and is deducted from the amount presented as
equity. The dividends on the Convertible Series Preferred Shares as presented in the consolidated statements of income and retained earnings and Magna's net investment reflect the actual dividend
declared net of the amount considered a return on capital.

The
third attribute, the conversion feature, is similar to a stock warrant in that it provides holders with the option to exchange their Convertible Series Preferred Shares for
Class A Subordinate Voting Shares at a fixed price. The residual approach was used to value this attribute and this amount is classified as equity.

COMPARATIVE FIGURES

Certain of the prior year's figures have been reclassified to conform to the current year's presentation.



CONSOLIDATED BALANCE SHEETS

|                                     |                                     |        |    | As at December 31, |        
|------------------------------------ | ----------------------------------- | ------ | -- | ------------------ | -------
|
|Assets                               |                                     |        |    |                    |        
|Current assets:                      |                                     |        |    |                    |        
|                                     | Cash and cash equivalents           |        |    |                    | $      
|                                     | Accounts receivable                 |        | 21 |                    |        
|                                     | Inventories                         |        | 7  |                    |        
|                                     | Prepaid expenses and other          |        |    |                    |        
|                                     | Income taxes receivable             |        | 10 |                    |        
|                                     |                                     |        |    |                    |        
|                                     |                                     |        |    |                    | 1,116.2
|                                     |                                     |        |    |                    |        
|Fixed assets,net                     |                                     | 8, 9   |    |                    | 478.1  
|                                     |                                     |        |    |                    |        
|Goodwill                             |                                     | 9      |    |                    | 100.7  
|                                     |                                     |        |    |                    |        
|Future tax assets                    |                                     | 10     |    |                    | 75.5   
|                                     |                                     |        |    |                    |        
|Other assets                         |                                     | 6      |    |                    | 11.3   
|                                     |                                     |        |    |                    |        
|                                     |                                     |        |    | $                  | 1,781.8
|                                     |                                     |        |    |                    |        
|Liabilities and Shareholders' Equity |                                     |        |    |                    |        
|Current liabilities:                 |                                     |        |    |                    |        
|                                     | Bank indebtedness                   |        | 11 |                    | $      
|                                     | Accounts payable                    |        | 21 |                    |        
|                                     | Accrued salaries and wages          |        |    |                    |        
|                                     | Other accrued liabilities           |        | 5  |                    |        
|                                     | Income taxes payable                |        | 10 |                    |        
|                                     | Long-term debt due within one year  |        | 11 |                    |        
|                                     |                                     |        |    |                    |        
|                                     |                                     |        |    |                    | 835.3  
|                                     |                                     |        |    |                    |        
|Long-term debt                       |                                     | 11, 21 |    |                    | 31.8   
|                                     |                                     |        |    |                    |        
|Other long-term liabilities          |                                     | 12     |    |                    | 25.6   
|                                     |                                     |        |    |                    |        
|Convertible Series Preferred Shares  |                                     | 13     |    |                    | 206.2  
|                                     |                                     |        |    |                    |        
|Future tax liabilities               |                                     | 10     |    |                    | 38.0   
|                                     |                                     |        |    |                    |        
|Minority interest                    |                                     |        |    |                    | 0.9    
|                                     |                                     |        |    |                    |        
|Shareholders'equity:                 |                                     |        |    |                    |        
|                                     | Convertible Series Preferred Shares |        | 13 |                    |        
|                                     | Class A Subordinate Voting Shares   |        | 14 |                    |        
|                                     | Class B Shares                      |        | 14 |                    |        
|                                     | Retained earnings                   |        |    |                    |        
|                                     | Currency translation adjustment     |        | 17 |                    |        
|                                     |                                     |        |    |                    |        
|                                     |                                     |        |    |                    | 644.0  
|                                     |                                     |        |    |                    |        
|                                     |                                     |        |    | $                  | 1,781.8
|                                     |                                     |        |    |                    |        

Commitments
and contingencies (notes 11 and 22)
The accompanying notes are an integral part of these consolidated financial statements.

|On behalf of the Board:   |  |                       
|------------------------- |  | ----------------------
|Lawrence Worrall          |  | Neil G. Davis         
|(Signature)               |  | (Signature)           
|LAWRENCE WORRALL
Director |  | NEIL G. DAVIS
Director



CONSOLIDATED STATEMENTS OF INCOME, RETAINED EARNINGS AND MAGNA'S NET INVESTMENT

|                                                                                          |         |        |  | Years ended December 31, |        
|----------------------------------------------------------------------------------------- | ------- | ------ |  | ------------------------ | -------
|
|Sales                                                                                     |         | 21     |  | $                        | 3,861.6
|Cost of goods sold                                                                        |         | 21     |  |                          | 3,374.9
|Depreciation and amortization                                                             |         | 9      |  |                          | 88.5   
|Selling, general and administrative                                                       |         |        |  |                          | 197.6  
|Affiliation and social fees                                                               |         | 21     |  |                          | 55.3   
|Other charges                                                                             |         | 9      |  |                          | 23.6   
|                                                                                          |         |        |  |                          |        
|Operating income                                                                          |         |        |  |                          | 121.7  
|Interest (income) expense, net                                                            |         | 11, 21 |  |                          | (1.5   
|Amortization of discount on Convertible Series Preferred Shares                           |         | 13, 21 |  |                          | 11.6   
|Equity (income) loss                                                                      |         | 6      |  |                          | (0.6   
|Income before income taxes and minority interest                                          |         |        |  |                          | 112.2  
|Income taxes                                                                              |         | 10     |  |                          | 64.5   
|Minority interest                                                                         |         |        |  |                          | (0.9   
|                                                                                          |         |        |  |                          |        
|Net income                                                                                |         |        |  | $                        | 48.6   
|                                                                                          |         |        |  |                          |        
|Financing charge on Convertible Series Preferred Shares                                   |         | 13, 21 |  |                          | 1.9    
|                                                                                          |         |        |  |                          |        
|Net income attributable to Class A Subordinate Voting and Class B Shares                  |         |        |  |                          | 46.7   
|Retained earnings and Magna's net investment, beginning of year                           |         |        |  |                          | 15.9   
|Adjustment for change in accounting policy for goodwill                                   |         | 9      |  |                          | (35.7  
|Net (distribution to) contribution by Magna                                               |         |        |  |                          |       
|Dividends on Class A Subordinate Voting and Class B Shares                                |         |        |  |                          | (9.7   
|Change in currency translation adjustment                                                 |         | 17     |  |                          |       
|                                                                                          |         |        |  |                          |        
|Retained earnings and Magna's net investment, end of year                                 |         |        |  | $                        | 17.2   
|                                                                                          |         |        |  |                          |        
|Earnings per Class A Subordinate Voting or Class B Share                                  |         | 3      |  |                          |        
|                                                                                          | Basic   |        |  |                          | $      
|                                                                                          | Diluted |        |  |                          | $      
|Average number of Class A Subordinate Voting and
Class B Shares outstanding (in millions) |         | 3      |  |                          |        
|                                                                                          | Basic   |        |  |                          |        
|                                                                                          | Diluted |        |  |                          |        
|                                                                                          |         |        |  |                          |        
|Pro forma earnings per Class A Subordinate Voting or Class B Share                        |         | 4      |  |                          |        
|                                                                                          | Basic   |        |  |                          |        
|                                                                                          | Diluted |        |  |                          |        
|Average number of Class A Subordinate Voting and
Class B Shares outstanding (in millions) |         | 4      |  |                          |        
|                                                                                          | Basic   |        |  |                          |        
|                                                                                          | Diluted |        |  |                          |        
|                                                                                          |         |        |  |                          |        

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





CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                     |  |        |  | Years ended December 31, |       
|-------------------------------------------------------------------- |  | ------ |  | ------------------------ | ------
|
|Cash provided from (used for):                                       |  |        |  |                          |       
|Operating Activities:                                                |  |        |  |                          |       
|Net income                                                           |  |        |  | $                        | 48.6  
|Items not involving current cash flows                               |  | 19     |  |                          | 155.5 
|                                                                     |  |        |  |                          |       
|                                                                     |  |        |  |                          | 204.1 
|Change in non-cash working capital                                   |  | 19     |  |                          | 111.4 
|                                                                     |  |        |  |                          |       
|                                                                     |  |        |  |                          | 315.5 
|                                                                     |  |        |  |                          |       
|Investment Activities:                                               |  |        |  |                          |       
|Fixed asset additions                                                |  |        |  |                          | (136.8
|Increase in investments and other assets                             |  |        |  |                          | (3.1  
|Proceeds from disposition of fixed assets                            |  |        |  |                          | 4.8   
|                                                                     |  |        |  |                          |       
|                                                                     |  |        |  |                          | (135.1
|                                                                     |  |        |  |                          |       
|Financing Activities:                                                |  |        |  |                          |       
|Increase (decrease) in bank indebtedness                             |  |        |  |                          | 0.6   
|Repayments of long-term debt                                         |  |        |  |                          | (4.6  
|Net (distribution to) contribution by Magna                          |  | 21     |  |                          |      
|Issue of Class A Subordinate Voting Shares, net                      |  | 14     |  |                          | 0.1   
|Dividends on Class A Subordinate Voting and Class B Shares           |  | 14     |  |                          | (9.7  
|Dividends on Convertible Series Preferred Shares                     |  | 13, 14 |  |                          | (8.4  
|                                                                     |  |        |  |                          |       
|                                                                     |  |        |  |                          | (22.0 
|                                                                     |  |        |  |                          |       
|Effect of exchange rate changes on cash and cash equivalents         |  |        |  |                          | 5.8   
|                                                                     |  |        |  |                          |       
|Net increase (decrease) in cash and cash equivalents during the year |  |        |  |                          | 164.2 
|Cash and cash equivalents, beginning of year                         |  |        |  |                          | 77.1  
|                                                                     |  |        |  |                          |       
|Cash and cash equivalents, end of year                               |  |        |  | $                        | 241.3 
|                                                                     |  |        |  |                          |       

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





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars unless otherwise noted and all tabular amounts in millions, except per share figures and number of
shares.)

1.    SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies followed by the Company are set out under "Significant Accounting Policies" preceding these consolidated financial statements.

2.    ACCOUNTING CHANGES

Goodwill

In August 2001, the Canadian Institute of Chartered Accountants issued Handbook Section 3062 "Goodwill and Other Intangible Assets" ("CICA 3062").
CICA 3062 requires the application of the non-amortization and impairment rules for existing goodwill and intangible assets, which meet the criteria for indefinite life beginning with
fiscal years starting after December 15, 2001. In all cases, the standard must be adopted at the beginning of a fiscal year. Effective January 1, 2002, the Company adopted these new
recommendations prospectively without restatement of any comparable period (see note 9).

Stock-Based Compensation

In November 2001, the CICA issued Handbook Section 3870 "Stock-Based Compensation and Other Stock-Based Payments" ("CICA 3870"). CICA 3870 requires
that all stock-based awards granted to non-employees must be accounted for at fair value. The new standard also encourages but does not require the use of the fair value method for all
stock-based compensation paid to employees. However, the fair value method does not have to be applied to options plans where the only choice is for the employee to pay the exercise price and obtain
stock. The new standard only applies to awards granted after the adoption date. The Company has prospectively adopted CICA 3870 effective January 1, 2002 and has elected to continue accounting
for employee stock options using the intrinsic value method. The adoption of CICA 3870 had no effect on the Company's reported earnings for the year ended December 31, 2002 (see
note 15).

Impairment of Long-Lived Assets

In January 2003, the CICA issued Handbook Section 3063 "Impairment of Long-Lived Assets" ("CICA 3063"). CICA 3063 requires an impairment
loss to be recognized when the carrying amount of an asset to be held and used exceeds the sum of the undiscounted cash flows expected from its use and eventual disposition. An impairment loss is
measured as the amount by which the asset's carrying amount exceeds its fair value. As permitted by CICA 3063, discounted cash flows are used to determine fair value. Previously, Canadian GAAP
required that asset impairment be measured as the amount by which the asset's carrying value exceeded the undiscounted future cash flow from the use of the asset. In all cases, the standard must be
adopted for fiscal years beginning April 1, 2003. The Company has elected to adopt these new recommendations early, effective January 1, 2002, prospectively without restatement of any
prior period (see note 9).

3.    EARNINGS PER SHARE AND RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001.

As a result of the reorganization of the Company, as described under "Principles of Consolidation in Significant Accounting Policies", earnings per share and
retained earnings for the year ended December 31, 2001 include net income for the five-month period subsequent to July 31, 2001.

The
following table summarizes the calculation of earnings per share for the year ended December 31, 2002, and for the five-month period ended December 31,
2001:

|                                                                                              |  | Years ended December 31,
|--------------------------------------------------------------------------------------------- |  | ------------------------
|
|Basic earnings per Class A Subordinate Voting or Class B Share:                               |  |                         
|Net income attributable to Class A Subordinate Voting and Class B Shares                      |  | $                       
|                                                                                              |  |                         
|Average number of Class A Subordinate Voting and Class B Shares outstanding during the period |  |                         
|                                                                                              |  |                         
|Basic earnings per Class A Subordinate Voting or Class B Share                                |  | $                       
|                                                                                              |  |                         
|Diluted earnings per Class A Subordinate Voting or Class B Share:                             |  |                         
|Net income attributable to Class A Subordinate Voting and Class B Shares                      |  | $                       
|                                                                                              |  |                         
|Adjustments (net of related tax effects):                                                     |  |                         
|Amortization of discount on Convertible Series Preferred Shares                               |  |                         
|Financing charge on Convertible Series Preferred Shares                                       |  |                         
|                                                                                              |  |                         
|                                                                                              |  | $                       
|                                                                                              |  |                         
|Average number of Class A Subordinate Voting and Class B Shares outstanding during the period |  |                         
|Convertible Series Preferred Shares                                                           |  |                         
|Stock options                                                                                 |  |                         
|                                                                                              |  |                         
|                                                                                              |  |                         
|                                                                                              |  |                         
|Diluted earnings per Class A Subordinate Voting or Class B Share                              |  | $                       
|                                                                                              |  |                         

At
December 31, 2001, the Company had outstanding 2,525,000 incentive stock options and 2,250,000 Convertible Series Preferred Shares, which are anti-dilutive and,
therefore, not included in the December 31, 2001 earnings per share calculation above.

4.    PRO FORMA EARNINGS PER SHARE

The following pro forma adjustments have been made to arrive at pro forma earnings per share for the years ended December 31, 2001 and 2000:



Basic
and diluted pro forma earnings per Class A Subordinate Voting or Class B Share are based on the public offering of 5,476,191 Class A Subordinate Voting Shares
completed in August 2001 and on the assumption that 42,751,938 Class B Shares and 2,250,000 Convertible Series Preferred Shares were issued and outstanding for the entire periods
presented.

The
following table summarizes the calculation of pro forma earnings per share:

|                                                                                            |                                                                 | Years ended December 31, |     
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------ | ----
|
|Pro forma basic earnings per Class A Subordinate Voting or Class B Share:                   |                                                                 |                          |     
|Net income attributable to Class A Subordinate Voting and Class B Shares                    |                                                                 | $                        | 39.0
|Pro forma adjustments (net of related tax effects):                                         |                                                                 |                          |     
|                                                                                            | Amortization of discount on Convertible Series Preferred Shares |                          |     
|                                                                                            | Interest on debt due to Magna                                   |                          |     
|                                                                                            | Net adjustment to affiliation fees and other corporate charges  |                          |     
|                                                                                            | Financing charge on Convertible Series Preferred Shares         |                          |     
|                                                                                            |                                                                 |                          |     
|Pro forma net income attributable to Class A Subordinate Voting and Class B Shares          |                                                                 | $                        | 41.0
|                                                                                            |                                                                 |                          |     
|Average number of Class A Subordinate Voting and Class B Shares outstanding during the year |                                                                 |                          | 44.9
|                                                                                            |                                                                 |                          |     
|Pro forma basic earnings per Class A Subordinate Voting or Class B Share                    |                                                                 | $                        | 0.91
|                                                                                            |                                                                 |                          |     
|Pro forma diluted earnings per Class A Subordinate Voting or Class B Share:                 |                                                                 |                          |     
|Pro forma net income attributable to Class A Subordinate Voting and Class B Shares          |                                                                 | $                        | 41.0
|Pro forma adjustments (net of related tax effects):                                         |                                                                 |                          |     
|                                                                                            | Amortization of discount on Convertible Series Preferred Shares |                          |     
|                                                                                            | Financing charge on Convertible Series Preferred Shares         |                          |     
|                                                                                            |                                                                 |                          |     
|                                                                                            |                                                                 | $                        | 53.6
|                                                                                            |                                                                 |                          |     
|Average number of Class A Subordinate Voting and Class B Shares outstanding during the year |                                                                 |                          | 44.9
|Convertible Series Preferred Shares                                                         |                                                                 |                          | 14.9
|Stock options                                                                               |                                                                 |                          |    
|                                                                                            |                                                                 |                          |     
|                                                                                            |                                                                 |                          | 59.8
|                                                                                            |                                                                 |                          |     
|Pro forma diluted earnings per Class A Subordinate                                          |                                                                 |                          |     
|Voting or Class B Share                                                                     |                                                                 | $                        | 0.90
|                                                                                            |                                                                 |                          |     

5.    RESTRUCTURING PROVISIONS

At December 31, 2002, the Company had a remaining provision of $1.1 million for severance and termination costs for the termination of 72 remaining
employees as part of the relocation of production programs from one facility to another. During the years ended December 31, 2002, 2001 and 2000, the Company utilized severance and termination
accruals of $0.9 million, $0.6 million and $0.3 million, respectively. Such amounts were included in the purchase price allocation of previous business acquisitions.

During
fiscal 2001, the Company recorded a restructuring charge for $2.7 million relating to the downsizing of one of the Company's under-performing divisions. During fiscal 2002,
the Company recorded a further $2.8 million restructuring charge relating to the downsizing of the same under-performing division. At December 31, 2002, the Company had a remaining
provision of $3.1 million for severance, termination and premise costs for the termination of 62 remaining employees and the relocation of production programs from one facility to another.

6.    EQUITY INVESTMENTS

The Company entered into an operating agreement on August 1, 2002 with Rush Group L.L.C. ("Rush") and Dakkota Integrated Systems, L.L.C. ("DIS"), whereby
the Company and Rush each have a membership interest in DIS. The Company's interest in DIS is 45%. DIS is accounted for on an equity basis. DIS is responsible for providing sequencing, logistics
management and assembly services previously provided directly by the Company with respect to interior products, modules and related components to OEMs for several OEM programs under which the
Company is manufacturing and supplying the interior products.

7.    INVENTORIES

Inventories consist of:

|                           |  | December 31,
|-------------------------- |  | ------------
|
|Raw materials and supplies |  | $           
|Work-in-process            |  |             
|Finished goods             |  |             
|Tooling and engineering    |  |             
|                           |  |             
|                           |  | $           
|                           |  |             

Tooling
and engineering inventory represents cost incurred on separately priced tooling and engineering services contracts in excess of unbilled amounts included in accounts receivable.
Unbilled amounts included in accounts receivable at December 31, 2002 totalled $18.3 million (December 31, 2001$1.5 million).

8.    FIXED ASSETS

Fixed assets consist of:

|                               |                                 | December 31, |      
|------------------------------ | ------------------------------- | ------------ | -----
|
|Cost                           |                                 |              |      
|                               | Land                            |              | $    
|                               | Buildings                       |              |      
|                               | Leasehold improvements          |              |      
|                               | Machinery and equipment         |              |      
|                               | Assets under capital leases (i) |              |      
|                               |                                 |              |      
|                               |                                 | $            | 904.8
|                               |                                 |              |      
|Less: accumulated depreciation |                                 |              |      
|                               | Buildings                       |              |      
|                               | Leasehold improvements          |              |      
|                               | Machinery and equipment         |              |      
|                               | Assets under capital leases (i) |              |      
|                               |                                 |              |      
|                               |                                 | $            | 478.1
|                               |                                 |              |      

---

Notes:

9.    GOODWILL AND LONG-LIVED ASSET IMPAIRMENT

In accordance with the new recommendations of the CICA, the Company completed a goodwill impairment test as at January 1, 2002, the adoption date under
CICA 3062, and determined that unamortized goodwill of $27.6 million, $5.6 million and $2.5 million relating to reporting units in the Interiors Europe, Closures Europe, and
Interiors North America reporting segments, respectively were impaired under the new rules.The impairment loss of $35.7 million net of a nil tax recovery, has been recorded as a change in
accounting policy by a charge to opening retained earnings as of January 1, 2002.

Prior
to CICA 3062 coming into effect, goodwill impairment under Canadian GAAP was assessed based on estimated future undiscounted cash flows for the business to which the goodwill
relates. Under CICA 3062, goodwill impairment is assessed based on a comparison of the fair value of the reporting unit to the underlying carrying value of the reporting unit's net assets, including
goodwill. As recommended by the CICA 3062 accounting standard, discounted future cash flows were used to determine the fair value of the reporting unit. Under CICA 3062, after adoption of new
recommendations, goodwill must be assessed for impairment on an annual basis, and any write-down would be charged against earnings. The Company completed its annual goodwill impairment
test as at December 31, 2002 and determined that unamortized goodwill of $3.5 million relating to one reporting unit in its Interiors Europe reporting segment was impaired under the new
rules. The impairment loss has been recorded in operating income as a charge against earnings for the fiscal year ending December 31, 2002. There was no tax recovery recorded on this charge to
earnings.

In
addition, in accordance with the new recommendations of the CICA, the Company no longer records amortization expense for goodwill. On an adjusted basis, the Company's net income for
the years ended December 31, 2001 and 2000 would have been as follows if it was applied retroactively:

|                                    |  | Years ended December 31,
|----------------------------------- |  | ------------------------
|
|Net income as reported              |  | $                       
|Goodwill amortization, net of taxes |  |                         
|                                    |  |                         
|Adjusted net income                 |  | $                       
|                                    |  |                         

In
conjunction with the review of goodwill, the Company also assessed the recoverability of its long-lived assets in the same reporting unit in its Interiors Europe reporting
segment, following the new accounting recommendations in CICA 3063. CICA 3063 requires an impairment loss to be recognized when the carrying value of an asset to be held and used exceeds the sum of
the undiscounted cash flows expected from its use and eventual disposition. An impairment loss is measured as the amount by which the asset's carrying value exceeds its fair value. As permitted by
CICA 3063, discounted cash flows were used to determine fair value. Previously, Canadian GAAP required that asset impairment be measured as the amount by which the asset's carrying value exceeded the undiscounted future cash flow from the use of the asset. As a result of this review, the Company reduced the carrying value of
machinery and equipment, leasehold improvements and buildings by $17.6 million, $1.4 million and $1.1 million, respectively. As required by CICA 3063, the $20.1 million
write-down of long-lived assets has been recorded in operating income as a charge against earnings for the fiscal year ending December 31, 2002. Net tax assets of
$1.5 million associated with these operations were charged to income tax expense for the fiscal year ending December 31, 2002.

10.  INCOME TAXES

|                                                                |  | Years ended December 31, |     
|--------------------------------------------------------------- |  | ------------------------ | ----
|
|Canadian statutory income tax expense                           |  | $                        | 43.3
|Manufacturing and processing profits deduction                  |  |                          | (4.1
|Foreign rate differentials                                      |  |                          | (5.4
|Losses not benefited                                            |  |                          | 19.5
|Amortization of discount on Convertible Series Preferred Shares |  |                          | 3.8 
|Other                                                           |  |                          | 7.4 
|                                                                |  |                          |     
|Income tax expense                                              |  | $                        | 64.5
|                                                                |  |                          |     

|                   |                        | Years ended December 31, |     
|------------------ | ---------------------- | ------------------------ | ----
|
|Current provision: |                        |                          |     
|                   | Canadian federal taxes |                          | $   
|                   | Provincial taxes       |                          |     
|                   | Foreign taxes          |                          |     
|                   |                        |                          |     
|                   |                        |                          | 37.3
|                   |                        |                          |     
|Future provision:  |                        |                          |     
|                   | Canadian federal taxes |                          |     
|                   | Provincial taxes       |                          |     
|                   | Foreign taxes          |                          |     
|                   |                        |                          |     
|                   |                        |                          | 27.2
|                   |                        |                          |     
|                   |                        | $                        | 64.5
|                   |                        |                          |     



|                                                                         |  | Years ended December 31, |     
|------------------------------------------------------------------------ |  | ------------------------ | ----
|
|Fixed assets tax depreciation greater than book depreciation             |  | $                        | 3.5 
|Other assets tax depreciation (less than) greater than book depreciation |  |                          | (9.8
|Net tax losses utilized (benefited)                                      |  |                          | 33.5
|Other                                                                    |  |                          |    
|                                                                         |  |                          |     
|                                                                         |  | $                        | 27.2
|                                                                         |  |                          |     

|                                             |  | December 31, |      
|-------------------------------------------- |  | ------------ | -----
|
|Benefit of tax loss carryforwards            |  | $            | 86.8 
|Fixed assets                                 |  |              | (24.3
|Other assets                                 |  |              | 20.7 
|                                             |  |              |      
|                                             |  |              | 83.2 
|Valuation allowance                          |  |              | (45.7
|                                             |  |              |      
|Future tax assets, net                       |  | $            | 37.5 
|                                             |  |              |      
|Represented on the balance sheet as follows: |  |              |      
|Future tax assets                            |  | $            | 75.5 
|Future tax liabilities                       |  |              | (38.0
|                                             |  |              |      
|                                             |  | $            | 37.5 
|                                             |  |              |      



11.  DEBT AND COMMITMENTS

|                                                                                                                |  | December 31,
|--------------------------------------------------------------------------------------------------------------- |  | ------------
|
|Loans from governments with a weighted average interest rate of approximately 2% denominated primarily in euros |  | $           
|Bank term debt at a weighted average interest rate of approximately 4% denominated primarily in euros           |  |             
|Obligations under capital leases at an implicit rate of 7.6% (i)                                                |  |             
|Other                                                                                                           |  |             
|                                                                                                                |  |             
|                                                                                                                |  |             
|Less due within one year                                                                                        |  |             
|                                                                                                                |  |             
|                                                                                                                |  | $           
|                                                                                                                |  |             

---

Note:

|2003       |  | $ | 3.0 
|---------- |  | - | ----
|2004       |  |   | 2.3 
|2005       |  |   | 2.5 
|2006       |  |   | 1.8 
|2007       |  |   | 1.9 
|Thereafter |  |   | 1.3 
|           |  |  
|           |  | $ | 12.8
|           |  |  



|                               |                                            | Years ended December 31, |     
|------------------------------ | ------------------------------------------ | ------------------------ | ----
|
|Interest expense:              |                                            |                          |     
|                               | Current                                    |                          | $   
|                               | Long-term                                  |                          |     
|                               | Intercompany to Magna and its affiliates   |                          |     
|                               |                                            |                          |     
|                               |                                            |                          | 7.4 
|                               |                                            |                          |     
|Interest income:               |                                            |                          |     
|                               | Current                                    |                          |     
|                               | Intercompany from Magna and its affiliates |                          |     
|                               |                                            |                          |     
|Interest (income) expense, net |                                            | $                        | (1.5
|                               |                                            |                          |     

Interest
paid in cash for the year ended December 31, 2002 was $6.8 million (for the years ended December 31, 2001 and 2000$3.7 million and
$3.3 million, respectively).

|           |  | Third parties |       | Magna and
its affiliates
|---------- |  | ------------- | ----- | ------------------------
|2003       |  | $             | 26.5  |                         
|2004       |  |               | 20.7  |                         
|2005       |  |               | 17.9  |                         
|2006       |  |               | 13.8  |                         
|2007       |  |               | 11.9  |                         
|Thereafter |  |               | 41.9  |                         
|           |  |               |       |                         
|           |  | $             | 132.7 |                         
|           |  |               |       |                         

For
the year ended December 31, 2002, operating lease expense amounted to $35.1 million (for the years ended December 31, 2001 and
2000$24.4 million and $23.9 million, respectively).

|2003                                                  |  | $ | 3.0 
|----------------------------------------------------- |  | - | ----
|2004                                                  |  |   | 3.3 
|2005                                                  |  |   | 3.3 
|2006                                                  |  |   | 3.3 
|2007                                                  |  |   | 3.3 
|Thereafter                                            |  |   | 20.3
|                                                      |  |  
|                                                      |  |   | 36.5
|Less interest and other charges                       |  |   | 13.3
|                                                      |  |  
|Obligations under capital leases                      |  |   | 23.2
|Less current portion                                  |  |   | 1.2 
|                                                      |  |  
|Long-term portion of obligations under capital leases |  | $ | 22.0
|                                                      |  |  



12.  EMPLOYEE BENEFIT PLANS

Prior to 2001, Magna's Corporate Constitution required that 10% of Magna's qualifying pre-tax profits before profit sharing (defined in its Corporate
Constitution) for any fiscal period be allocated to an Employee Equity and Profit Participation Program ("EEPPP") consisting of the Magna deferred profit sharing plans and a cash distribution to
eligible employees of Magna. Eligible Canadian, United States, United Kingdom, and European employees participate in the EEPPP.

During
2001, Magna amended its Corporate Constitution to allow for the required contributions under its corporate constitution to be made to certain defined benefit pension plans in
addition to the Magna deferred profit sharing plan and cash distributions to eligible employees. All U.S. and Canadian employees that participate in the deferred profit sharing plans were, and all new
employees are, given the option of receiving a reduced percentage entitlement under the deferred profit sharing plan plus a defined benefit pension or continuing to receive their previous percentage
entitlement. The defined benefit pension is payable to retirees at age 65 or older and is based on years of service and compensation levels. Participants may take early retirement after age 55 and
receive a reduced pension package. In 2002, the Company adopted a similar profit sharing arrangement to Magna's, subject to obtaining the necessary regulatory approvals.

In
addition, a limited number of companies in the United Kingdom and Europe sponsor defined benefit pension and similar arrangements for their employees. Pursuant to labour laws and
national labour agreements in certain European countries, the Company is obliged to provide lump sum termination payments to employees on retirement or involuntary termination and long service
payments contingent upon persons reaching a pre-defined number of years of service.

All
pension plans and similar arrangements are funded to the minimum legal funding requirements. In certain circumstances there is no legal requirement to fund this obligation until such
time as they are actually incurred, and as a result, these arrangements are unfunded.

The
cost of pension benefits earned by employees is actuarially determined using the projected benefit method pro rated on service and management's best estimate of expected plan
investment performance, salary escalation and retirement ages of employees.

The
significant actuarial assumptions adopted in measuring the Company's projected pension benefit obligations are as follows:

|Discount rate                  |  | 5.0 | %-6.75%
|------------------------------ |  | --- | -------
|Rate of compensation increase  |  | 1.5 | %-4.0% 
|Expected return on plan assets |  | 5.0 | %-8.0% 



Information
about the Company's defined benefit pension plans is as follows:

|                                                         |                                                               | Years ended December 31, |     
|-------------------------------------------------------- | ------------------------------------------------------------- | ------------------------ | ----
|
|Benefit obligations:                                     |                                                               |                          |     
|Beginning of year                                        |                                                               | $                        | 48.5
|                                                         | Current service and interest cost                             |                          |     
|                                                         | Actuarial losses (gains) and changes in actuarial assumptions |                          |     
|                                                         | Benefits paid                                                 |                          |     
|                                                         | Currency translation                                          |                          |     
|                                                         |                                                               |                          |     
|End of year                                              |                                                               | $                        | 61.4
|                                                         |                                                               |                          |     
|Plan assets at fair value:                               |                                                               |                          |     
|Beginning of year                                        |                                                               | $                        | 28.5
|                                                         | Return on plan assets                                         |                          |     
|                                                         | Employer contributions                                        |                          |     
|                                                         | Benefits paid                                                 |                          |     
|                                                         | Currency translation                                          |                          |     
|                                                         |                                                               |                          |     
|End of year                                              |                                                               | $                        | 28.4
|                                                         |                                                               |                          |     
|Unfunded amount                                          |                                                               |                          | 33.0
|                                                         | Unrecognized actuarial (losses) gains                         |                          |     
|                                                         |                                                               |                          |     
|Net amount recognized in the consolidated balance sheets |                                                               | $                        | 20.4
|                                                         |                                                               |                          |     
|Net periodic benefit cost:                               |                                                               |                          |     
|Current service and interest costs                       |                                                               | $                        | 7.7 
|                                                         | Expected return on plan assets                                |                          |     
|                                                         | Actuarial losses (gains)                                      |                          |     
|                                                         |                                                               |                          |     
|                                                         |                                                               | $                        | 5.5 
|                                                         |                                                               |                          |     

During
the year ended December 31, 2002, the Company incurred $1.7 million (for the years ended December 31, 2001 and 2000$1.8 million and
$1.9 million, respectively) of defined contribution plan expense.

During
the year ended December 31, 2000, the Company introduced a post retirement medical benefits plan covering eligible employees and retirees. Retirees aged 60 or older with
ten or more years of service will be eligible for benefits. In addition, existing retirees as at August 1, 2000 that meet the above criteria are also eligible for benefits. Benefits are capped
based on years of service.

The
cost of retirement medical benefits earned by employees is actuarially determined using the projected benefit method pro rated on service and estimates of retirement ages of
employees and expected health care costs.

The
significant actuarial assumptions adopted in measuring the Company's projected retirement medical benefit obligations are as follows:

|Discount rate                 |  | 6.75 | %
|----------------------------- |  | ---- | -
|Rate of compensation increase |  | 4.0  | %



Information
about the Company's post retirement medical benefit plans is as follows:

|                                                         |                                                               | Years ended December 31, |    
|-------------------------------------------------------- | ------------------------------------------------------------- | ------------------------ | ---
|
|Benefit obligations:                                     |                                                               |                          |    
|Beginning of year                                        |                                                               | $                        | 7.8
|                                                         | Past service obligations                                      |                          |    
|                                                         | Current service and interest cost                             |                          |    
|                                                         | Actuarial losses (gains) and changes in actuarial assumptions |                          |    
|                                                         | Benefits paid                                                 |                          |    
|                                                         | Currency translation                                          |                          |    
|                                                         |                                                               |                          |    
|End of year                                              |                                                               | $                        | 8.2
|                                                         |                                                               |                          |    
|Plan assets at fair value:                               |                                                               |                          |    
|Beginning of year                                        |                                                               | $                        |   
|                                                         | Employer contributions                                        |                          |    
|                                                         | Benefits paid                                                 |                          |    
|                                                         |                                                               |                          |    
|End of year                                              |                                                               | $                        |   
|Unfunded amount                                          |                                                               | $                        | 8.2
|                                                         | Unrecognized past service obligation                          |                          |    
|                                                         | Unrecognized actuarial gain                                   |                          |    
|                                                         |                                                               |                          |    
|Net amount recognized in the consolidated balance sheets |                                                               | $                        | 5.2
|                                                         |                                                               |                          |    
|Net periodic benefit cost:                               |                                                               |                          |    
|                                                         | Current service and interest costs                            |                          | $  
|                                                         | Past service costs                                            |                          |    
|                                                         |                                                               |                          |    
|                                                         |                                                               | $                        | 1.0
|                                                         |                                                               |                          |    

13.  CONVERTIBLE SERIES PREFERRED SHARES

The Company has issued the following Convertible Series Preferred Shares:

|                           |  | Number of Shares
|-------------------------- |  | ----------------
|Preferred Shares, Series 1 |  | 1,125,000       
|Preferred Shares, Series 2 |  | 1,125,000       

The
Convertible Series Preferred Shares have the following attributes:



The
Convertible Preferred Shares, Series 1 and 2, were issued to Magna in August 2001 in satisfaction of $225.0 million of the Company's indebtedness to Magna.

The
portion of the Convertible Series Preferred Shares classified as long-term debt and the amounts reflected as amortization of discount on Convertible Series Preferred
Shares are as follows:

|                           |  | Series 1 |       | Series 2 |   | Total
|-------------------------- |  | -------- | ----- | -------- | - | -----
|Issued on August 9, 2001   |  | $        | 97.7  |          | $ | 92.1 
|Amortization of discount   |  |          | 2.4   |          |   | 2.4  
|                           |  |          |       |          |   |      
|Balance, December 31, 2001 |  | $        | 100.1 |          | $ | 94.5 
|Amortization of discount   |  |          | 6.0   |          |   | 5.6  
|                           |  |          |       |          |   |      
|Balance, December 31, 2002 |  | $        | 106.1 |          | $ | 100.1

The
liability amounts for the Convertible Series Preferred Shares are presented as long-term liabilities as Magna's retraction rights related to the shares are not
exercisable before December 31, 2003 and December 31, 2004, respectively.

The
portion of the Convertible Series Preferred Shares included in shareholder's equity is as follows:

|                                                               |  | 2002 |      | 2001
|-------------------------------------------------------------- |  | ---- | ---- | ----
|Warrant portion (relating to conversion feature)               |  | $    | 6.7  |     
|Dividend stream portion (relating to non-cumulative dividends) |  |      | 15.3 |     
|                                                               |  |      |      |     
|                                                               |  | $    | 22.0 |     
|                                                               |  |      |      |     



14.  CAPITAL STOCK

(a) Preferred Shares, Class A Subordinate Voting Shares and Class B Shares

The
Company's authorized capital stock includes unlimited preferred shares issuable in series. None of these shares are currently issued or outstanding.

Class A
Subordinate Voting Shares without par value (unlimited amount authorized) are entitled to one vote per share at all meetings of shareholders and shall participate equally
as to cash dividends with each Class B Share.

Class B
Shares without par value (unlimited amount authorized) are entitled to 20 votes per share at all meetings of shareholders, shall participate equally as to cash dividends
with each Class A Subordinate Voting Share and may be converted at any time into fully-paid Class A Subordinate Voting Shares on a one-for-one basis.

In
the event that either the Class A Subordinate Voting Shares or the Class B Shares are subdivided or consolidated, the other class shall be similarly changed to preserve
the relative position of each class.

Outstanding
Class A Subordinate Voting Shares and Class B Shares included in shareholders'equity as at December 31, 2002 and 2001 consist of:

|                                                                                                                                       |  | Class A Subordinate Voting Shares |  | Class B Shares
|-------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- |  | --------------
|
|Issuance of Class A Subordinate Voting                                                                                                 |  |                                   |  |               
|Shares on initial public offering (i)                                                                                                  |  | 5,476,191                         |  | $             
|Issuance of Class B Shares on the reorganization of the Company on August 7, 2001 (convertible into Class A Subordinate Voting Shares) |  |                                  |  |               
|                                                                                                                                       |  |                                   |  |               
|Balance, December 31, 2001                                                                                                             |  | 5,476,191                         |  | $             
|Issuance of Class A Subordinate Voting Shares on exercise of stock options                                                             |  | 5,000                             |  |               
|                                                                                                                                       |  |                                   |  |               
|Balance, December 31, 2002                                                                                                             |  | 5,481,191                         |  | $             
|                                                                                                                                       |  |                                   |  |               

---

Note:

|Total proceeds on 5,476,191 shares  |  | $ | 74.8 |  
|----------------------------------- |  | - | ---- | -
|Expenses of the issue, net of taxes |  |   | (3.1 | )
|                                    |  |   |     
|Net proceeds                        |  | $ | 71.7 |  
|                                    |  |   |     

(b) Incentive Stock Options

Under
the 2001 Incentive Stock Option Plan adopted by the Company on August 9, 2001, the Company may grant options to purchase Class A Subordinate Voting Shares to
employees, officers, directors or consultants of the Company. The remaining number of shares reserved to be issued for options is 5,995,000. The number of the unoptioned shares at December 31,
2002 is 2,840,000.

The
Canadian dollar options under Tranche 1, 2, 3, 5 and 6 vest 1/5 on the grant date and 1/5 on each subsequent July 31 thereafter, Tranche 4 vest
1/5 on the grant date and 1/5 on each subsequent December 31 thereafter. The U.S. dollar options under Tranche 1 vest 1/5 on the grant date and
1/5 on each subsequent July 31 thereafter, with the exception of 750,000 options that vest 1/3 on the grant date and 1/4 of the balance on each
subsequent August 8 thereafter, Tranche 2 and 5 vest 1/5 on the grant date and 1/5 on each subsequent July 31 thereafter, Tranche 3 and 4 vest
1/5 on grant date and 1/5 on each subsequent December 31 thereafter. All options allow the holder to purchase Class A Subordinate Voting Shares at a price
equal to the market price on the trading day immediately prior to date of grant of options.

The
following is a continuity schedule of options outstanding:

|Canadian dollar options          |  | Number    |   | Weighted average
exercise price |  | Options
exercisable
|-------------------------------- |  | --------- | - | ------------------------------- |  | -------------------
|Granted                          |  | 1,400,000 |   | Cdn.$21.00                      |  |                    
|Vested                           |  |           |   |                                 |  | 280,000            
|                                 |  |           |   |                                 |  |                    
|Outstanding at December 31, 2001 |  | 1,400,000 |   | Cdn.$21.00                      |  | 280,000            
|                                 |  |           |   |                                 |  |                    
|Granted                          |  | 375,000   |   | Cdn.$25.99                      |  |                    
|Exercised                        |  | (5,000    | ) | Cdn.$21.00                      |  |                    
|Cancelled                        |  | (50,000   | ) | Cdn.$26.85                      |  |                    
|Vested                           |  |           |   |                                 |  | 361,000            
|                                 |  |           |   |                                 |  |                    
|Outstanding at December 31, 2002 |  | 1,720,000 |   | Cdn.$21.92                      |  | 641,000            
|                                 |  |           |   |                                 |  |                    

|U.S. dollar options              |  | Number    |   | Weighted average
exercise price |  | Options
exercisable
|-------------------------------- |  | --------- | - | ------------------------------- |  | -------------------
|Granted                          |  | 1,125,000 |   | U.S.$13.72                      |  |                    
|Vested                           |  |           |   |                                 |  | 325,000            
|                                 |  |           |   |                                 |  |                    
|Outstanding at December 31, 2001 |  | 1,125,000 |   | U.S.$13.72                      |  | 325,000            
|                                 |  |           |   |                                 |  |                    
|Granted                          |  | 335,000   |   | U.S.$16.55                      |  |                    
|Expired                          |  | (4,000    | ) | U.S.$13.72                      |  |                    
|Cancelled                        |  | (21,000   | ) | U.S.$13.72                      |  |                    
|Vested                           |  |           |   |                                 |  | 262,000            
|                                 |  |           |   |                                 |  |                    
|Outstanding at December 31, 2002 |  | 1,435,000 |   | U.S.$14.38                      |  | 587,000            
|                                 |  |           |   |                                 |  |                    



At
December 31, 2002, the outstanding options consist of the following:

|Canadian dollar options outstanding         |  | Exercise
price |       | Number |           | Remaining
contractual
life (years) |     | Options
exercisable
|------------------------------------------- |  | -------------- | ----- | ------ | --------- | ---------------------------------- | --- | -------------------
|Tranche 1                                   |  | $              | 21.00 |        | 1,385,000 |                                    | 8.6 |                    
|Tranche 2                                   |  | $              | 21.00 |        | 10,000    |                                    | 8.6 |                    
|Tranche 3                                   |  | $              | 23.56 |        | 40,000    |                                    | 9.1 |                    
|Tranche 4                                   |  | $              | 29.40 |        | 5,000     |                                    | 9.5 |                    
|Tranche 5                                   |  | $              | 26.85 |        | 245,000   |                                    | 9.6 |                    
|Tranche 6                                   |  | $              | 21.00 |        | 35,000    |                                    | 9.9 |                    
|                                            |  |                |       |        |           |                                    |     |                    
|                                            |  |                |       |        | 1,720,000 |                                    |     |                    
|                                            |  |                |       |        |           |                                    |     |                    
|Weighted Average Exercise Price             |  | $              | 21.92 |        |           |                                    |     |                    
|                                            |  |                |       |        |           |                                    |     |                    
|Weighted Average Remaining Contractual Life |  |                |       |        |           |                                    | 8.8 |                    
|                                            |  |                |       |        |           |                                    |     |                    

|U.S. dollar options outstanding             |  | Exercise
price |       | Number |           | Remaining
contractual
life (years) |     | Options
exercisable
|------------------------------------------- |  | -------------- | ----- | ------ | --------- | ---------------------------------- | --- | -------------------
|Tranche 1                                   |  | $              | 13.72 |        | 1,060,000 |                                    | 8.6 |                    
|Tranche 2                                   |  | $              | 13.72 |        | 40,000    |                                    | 8.6 |                    
|Tranche 3                                   |  | $              | 18.34 |        | 20,000    |                                    | 9.2 |                    
|Tranche 4                                   |  | $              | 18.78 |        | 5,000     |                                    | 9.4 |                    
|Tranche 5                                   |  | $              | 16.40 |        | 310,000   |                                    | 9.6 |                    
|                                            |  |                |       |        |           |                                    |     |                    
|                                            |  |                |       |        | 1,435,000 |                                    |     |                    
|                                            |  |                |       |        |           |                                    |     |                    
|Weighted Average Exercise Price             |  | $              | 14.38 |        |           |                                    |     |                    
|                                            |  |                |       |        |           |                                    |     |                    
|Weighted Average Remaining Contractual Life |  |                |       |        |           |                                    | 8.8 |                    
|                                            |  |                |       |        |           |                                    |     |                    

(c) Maximum Number of Shares

The
following table presents the maximum number of Class A Subordinate Voting and Class B Shares that would be outstanding if all of the outstanding options and Convertible
Series Preferred Shares issued and outstanding as at December 31, 2002 were exercised or converted:

|                                                                      |  | Number of Shares
|--------------------------------------------------------------------- |  | ----------------
|Class A Subordinate Voting Shares outstanding as at December 31, 2002 |  | 5,481,191       
|Class B Shares outstanding as at December 31, 2002                    |  | 42,751,938      
|Options to purchase Class A Subordinate Voting Shares                 |  | 3,155,000       
|Convertible Series Preferred Shares, convertible at $15.09 per share  |  | 14,910,537      
|                                                                      |  |                 
|                                                                      |  | 66,298,666      
|                                                                      |  |                 

(d) Dividends

Dividends
declared and paid on outstanding Class A Subordinate Voting and Class B Shares were as follows:

|                                                                     |  | Per Class A Subordinate
Voting and Class B Share |      | Total
|-------------------------------------------------------------------- |  | ------------------------------------------------ | ---- | -----
|Dividends declared and paid in respect of the:                       |  |                                                  |      |      
|Three-month period ended September 30, 2001                          |  | $                                                | 0.04 |      
|                                                                     |  |                                                  |      |      
|Charged to retained earnings during the year ended December 31, 2001 |  |                                                  |      |      
|                                                                     |  |                                                  |      |      
|Three-month period ended December 31, 2001                           |  | $                                                | 0.05 |      
|Three-month period ended March 31, 2002                              |  | $                                                | 0.05 |      
|Three-month period ended June 30, 2002                               |  | $                                                | 0.05 |      
|Three-month period ended September 30, 2002                          |  | $                                                | 0.05 |      
|                                                                     |  |                                                  |      |      
|Charged to retained earnings during the year ended December 31, 2002 |  |                                                  |      |      
|                                                                     |  |                                                  |      |      

Dividends
declared on outstanding Series 1 and Series 2 Preferred Shares aggregated to $11.3 million for the year ended December 31, 2002 ($1.9 million
for the year ended December 31, 2001). Dividends paid on outstanding Series 1 and Series 2 Preferred Shares aggregated to $8.4 million for the year ended
December 31, 2002 ($1.9 million for the year ended December 31, 2001).

15.  STOCK-BASED COMPENSATION

The Company does not recognize compensation expense for its outstanding fixed price stock options. Under CICA 3870, the Company is now required to disclose
compensation expense for fixed price stock options issued subsequent to January 1, 2002, assuming compensation expense for the stock option plan had been determined based upon the fair value at
the grant date, consistent with the methodology prescribed by the CICA.

The
fair value of stock options is estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

|                             |  |              
|---------------------------- |  | -------------
|Risk free interest rate      |  | 3.96% - 5.27%
|Expected dividend yield      |  | 1.20%        
|Expected volatility          |  | 26% - 37%    
|Expected time until exercise |  | 5 years      

The
Black-Scholes options valuation model used by the Company to determine fair values was developed for use in estimating the fair value of freely traded options which are fully
transferable and have no vesting restrictions. In addition, this model requires the input of highly subjective assumptions, including future stock price volatility and expected time until exercise.
Because the Company's outstanding stock options have characteristics which are significantly different from those of traded options, and because changes in any of the assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the stock options.

On
a pro forma basis, the net income, basic and diluted earnings per Class A Subordinate Voting and Class B Share for the year ended December 31, 2002 would have
been $47.7 million, $0.95 and $0.93, respectively.

The
weighted average fair value of the 710,000 options granted during the year ended December 31, 2002 was $ 5.63 per option.

16.  FINANCIAL INSTRUMENTS

(a) Foreign Exchange Risk

The
Company operates globally, which gives rise to risk that its earnings and cash flows may be adversely impacted by fluctuations in foreign exchange. The Company uses foreign exchange
contracts to manage foreign exchange risk from its underlying customer contracts. In particular, the Company uses foreign exchange forward contracts for the sole purpose of hedging certain of the
Company's future committed U.S. dollar, euro and British pound outflows and inflows. Gains and losses on these hedging instruments are recognized in the same period as, and part of, the hedged
transaction. The Company does not enter into foreign exchange contracts for speculative purposes.

The
Company had outstanding foreign exchange forward contracts representing commitments to buy and (sell) foreign currencies in exchange for Canadian dollars as follows:

|     |  | December 31, 2002
|---- |  | -----------------
|
|2003 |  | $                
|2003 |  |                  
|2004 |  |                  
|2004 |  |                  
|2005 |  |                  
|2005 |  |                  
|2006 |  |                  
|     |  |                  
|     |  | $                
|     |  |                  

At
December 31, 2002, the Company had other outstanding foreign exchange contracts to buy and sell various foreign currencies in exchange for either euros, U.S. dollars or British
pounds. The total amount of such contracts were to buy euros 59.4 million, buy U.S. dollars 46.2 million and sell British pounds 50.9 million.

Based
on forward exchange rates as at December 31, 2002 for contracts with similar remaining terms to maturity, the unrecognized net losses relating to the Company's significant
foreign exchange forward contracts are approximately $14.7 million. If the Company's forward exchange contracts ceased to be effective as hedges, for example if projected net foreign cash
inflows declined significantly, previously unrecognized gains or losses pertaining to the portion of the hedging transactions in excess of projected foreign denominated cash flows would be recognized
in income at the time this condition was identified.

(b) Fair Value

The
Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies, however considerable judgement is required to develop
these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair value amounts can be
materially affected by the use of different assumptions or methodologies. The methods and assumptions used to estimate the fair value of financial instruments are described below.

Cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and accrued liabilities

Due to the short period to maturity of the instruments, the carrying values as presented in the consolidated balance sheets are reasonable estimates of fair
value.



Long-term debt

The fair value of the Company's long-term debt (including debt portion of the Convertible Series Preferred Shares), based on current rates for debt
with similar terms and maturities, is not materially different from its carrying value.

(c) Credit Risk

The
Company's financial assets that are exposed to credit risk consist primarily of cash and cash equivalents, accounts receivable and forward exchange contracts with positive values.

Cash
and cash equivalents which consist of short-term investments, including commercial paper, are only invested in governments and corporations with an investment grade
credit rating. Credit risk is further reduced by limiting the amount that is invested in any one government or corporation.

The
Company, in the normal course of business, is exposed to credit risk from its customers, substantially all of which are in the automotive industry. These accounts receivable are
subject to normal industry credit risks.

The
Company is also exposed to credit risk from the potential default by any of its counterparties on foreign exchange forward contracts. The Company mitigates this credit risk by
dealing with counterparties who are major financial institutions and who the Company anticipates will satisfy their obligations under the contracts.

(d) Interest Rate Risk

The
Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and current liabilities. In addition, the Company's
exposure to interest rate risk
on fixed rate long-term instruments is also reduced given the minimum periods to redemption with respect to Convertible Series Preferred Shares.

The
following table summarizes the Company's interest rate risk as at December 31, 2002:

|                                     |                                                                 | Floating rate |       | Fixed interest rate |   | Non-interest bearing |        | Total |       
|------------------------------------ | --------------------------------------------------------------- | ------------- | ----- | ------------------- | - | -------------------- | ------ | ----- | ------
|Financial Assets:                    |                                                                 |               |       |                     |   |                      |        |       |       
|                                     | Cash and cash equivalents                                       |               | $     | 241.3               |   | $                    |       |       | $     
|                                     | Accounts receivable                                             |               |       |                    |   |                      |       |       |       
|Financial Liabilities:               |                                                                 |               |       |                     |   |                      |        |       |       
|                                     | Bank indebtedness                                               |               |       | (48.6               | ) |                      |       |       |       
|                                     | Accounts payable and all other accrued liabilities and payables |               |       |                    |   |                      |       |       |       
|                                     | Long-term debt due within one year                              |               |       |                    |   |                      | (4.2   | )     |       
|                                     | Long-term debt                                                  |               |       |                    |   |                      | (31.8  | )     |       
|                                     | Convertible Series Preferred Shares                             |               |       |                    |   |                      | (206.2 | )     |       
|                                     | Other long-term liabilities                                     |               |       | (25.6               | ) |                      |       |       |       
|                                     |                                                                 |               |       |                     |   |                      |        |       |       
|                                     |                                                                 | $             | 167.1 |                     | $ | (242.2               | )      | $     | (202.6
|                                     |                                                                 |               |       |                     |   |                      |        |       |       
|Average fixed rate of long-term debt |                                                                 |               |       |                     |   | 5.0                  | %      |       |       
|                                     |                                                                 |               |       |                     |   |                      |        |       |       

(e)  Electricity Swaps

Since May 2002, the Company pays a floating hourly price for electricity in the deregulated Ontario, Canada electricity market. At December 31,
2002, the Company had entered into electricity swap contracts to manage the cash flow risk from its Ontario electricity purchase contracts with an annual notional energy volume of 88,000 megawatt
hours ("MWh") under which it pays a weighted average fixed price of $54.50 per MWh and receives a floating average price per MWh based on the hourly Ontario energy price. These contracts expire at various dates until April 2005. The net settlements under the electricity swap contracts are recognized in the same period as, and as
part of, the hedged transaction. The Company does not enter into electricity swap contracts for speculative purposes.

The
Company estimates the fair value of these electricity contracts as at December 31, 2002 is $0.5 million, representing a financial benefit to the Company. In
December 2002, the Ontario government passed Bill 210, which freezes the electricity price for low volume and designated customers. Although the Company is not directly affected, Bill 210 has
disrupted the forward market for Ontario electricity contracts and significantly reduced liquidity. The Company has estimated fair value based on available broker quotes but given the current
illiquidity of the market, the fair value is subject to significant measurement uncertainty.

17.  CURRENCY TRANSLATION ADJUSTMENT

Unrealized translation adjustments, which arise on the translation to U.S. dollars of assets and liabilities of the Company's operations with a functional
currency of other than the U.S. dollar, resulted in an unrealized currency translation gain of $42.1 million for the year ended December 31, 2002. The unrealized gains resulted primarily
from the strengthening of the euro, British pound and Canadian dollar against the U.S. dollar.

The
Company has designated the debt portion of the Convertible Series Preferred Shares (note 13) as a hedge of its net investment in its operations in the United States. Gains and
losses from this hedge are not included in the income statement, but are shown in the currency translation adjustment account. The Company recorded a foreign exchange gain of $3.4 million in
the currency translation account related to such shares.

18.  INTERESTS IN JOINTLY CONTROLLED ENTITIES

The following is the Company's proportionate share of the major components of the financial statements of the jointly controlled entities in which the Company has
an interest (before eliminations):

Balance sheets

|                      |  | December 31,
|--------------------- |  | ------------
|
|Current assets        |  | $           
|Long-term assets      |  | $           
|Current liabilities   |  | $           
|Long-term liabilities |  | $           

Statements of income

|                                               |  | Years ended December 31,
|---------------------------------------------- |  | ------------------------
|
|Sales                                          |  | $                       
|Costs of goods sold, expenses and income taxes |  |                         
|                                               |  |                         
|Net income                                     |  | $                       
|                                               |  |                         



Statements of cash flows

|                               |  | Years ended December 31, |     
|------------------------------ |  | ------------------------ | ----
|
|Cash provided from (used for): |  |                          |     
|Operating activities           |  | $                        | 16.9
|                               |  |                          |     
|Investment activities          |  | $                        | (6.3
|                               |  |                          |     
|Financing activities           |  | $                        | (7.7
|                               |  |                          |     

At
December 31, 2002, the Company's share of equity in jointly controlled entities includes undistributed earnings of $21.1 million (December 31,
2001$19.0 million).

19.  DETAILS OF CASH FROM OPERATING ACTIVITIES

(a)  Items not involving current cash flows

|                                                                |  | Years ended December 31, |      
|--------------------------------------------------------------- |  | ------------------------ | -----
|
|Depreciation and amortization                                   |  | $                        | 88.5 
|Future income taxes                                             |  |                          | 27.2 
|Pension and retirement medical obligations                      |  |                          | 6.5  
|Loss (gain) on disposals of fixed assets                        |  |                          | 2.1  
|Other charges                                                   |  |                          | 23.6 
|Amortization of discount on Convertible Series Preferred Shares |  |                          | 11.6 
|Other                                                           |  |                          | (4.0 
|                                                                |  |                          |      
|                                                                |  | $                        | 155.5
|                                                                |  |                          |      

(b)  Changes in non-cash working capital

|                                         |  | Years ended December 31, |      
|---------------------------------------- |  | ------------------------ | -----
|
|Accounts receivable                      |  | $                        | 31.9 
|Inventories                              |  |                          | (4.0 
|Prepaid expenses and other               |  |                          | (2.6 
|Accounts payable and accrued liabilities |  |                          | 86.1 
|                                         |  |                          |      
|                                         |  | $                        | 111.4
|                                         |  |                          |      

20.  SEGMENTED INFORMATION



The
Company is organized by two product groups; Interior Systems and Closure Systems. Each group includes the following products and services:



Effective
January 1, 2002, the Company changed its measurement of segment profitability from income (loss) before income taxes to operating income (loss).

|                                               |               | Year ended December 31, 2002
|---------------------------------------------- | ------------- | ----------------------------
|
|Interior Systems                               |               |                             
|                                               | North America |                             
|                                               | Europe        |                             
|Closure Systems                                |               |                             
|                                               | North America |                             
|                                               | Europe        |                             
|Corporate, other and intersegment eliminations |               |                             
|                                               |               |                             
|Total reportable segments                      |               | $                           
|                                               |               |                             
|Current assets                                 |               |                             
|Goodwill, future tax and other assets          |               |                             
|                                               |               |                             
|Total assets                                   |               |                             
|                                               |               |                             

---



|                                               |               | Year ended December 31, 2001
|---------------------------------------------- | ------------- | ----------------------------
|
|Interior Systems                               |               |                             
|                                               | North America |                             
|                                               | Europe        |                             
|Closure Systems                                |               |                             
|                                               | North America |                             
|                                               | Europe        |                             
|Corporate, other and intersegment eliminations |               |                             
|                                               |               |                             
|Total reportable segments                      |               | $                           
|                                               |               |                             
|Current assets                                 |               |                             
|Goodwill, future tax and other assets          |               |                             
|                                               |               |                             
|Total assets                                   |               |                             
|                                               |               |                             

|                                               |               | Year ended December 31, 2000
|---------------------------------------------- | ------------- | ----------------------------
|
|Interior Systems                               |               |                             
|                                               | North America |                             
|                                               | Europe        |                             
|Closure Systems                                |               |                             
|                                               | North America |                             
|                                               | Europe        |                             
|Corporate, other and intersegment eliminations |               |                             
|                                               |               |                             
|Total reportable segments                      |               | $                           
|                                               |               |                             
|Current assets                                 |               |                             
|Goodwill, future tax and other assets          |               |                             
|                                               |               |                             
|Total assets                                   |               |                             
|                                               |               |                             



|                  |  | Year ended December 31, 2002
|----------------- |  | ----------------------------
|
|Sales             |  | $                           
|Fixed assets, net |  | $                           
|Goodwill, net     |  | $                           
|                  |  |                             

|                  |  | Year ended December 31, 2001
|----------------- |  | ----------------------------
|
|Sales             |  | $                           
|Fixed assets, net |  | $                           
|Goodwill, net     |  | $                           
|                  |  |                             

|                  |  | Year ended December 31, 2000
|----------------- |  | ----------------------------
|
|Sales             |  | $                           
|Fixed assets, net |  | $                           
|Goodwill, net     |  | $                           
|                  |  |                             

21.  TRANSACTIONS WITH RELATED PARTIES

|                                                                |  | Years ended December 31,
|--------------------------------------------------------------- |  | ------------------------
|
|Charges by Magna and its affiliates:                            |  |                         
|Interest expense, net                                           |  | $                       
|                                                                |  |                         
|Amortization of discount on Convertible Series Preferred Shares |  |                         
|                                                                |  |                         
|Financing charge on Convertible Series Preferred Shares         |  |                         
|                                                                |  |                         
|Management and administrative services                          |  |                         
|                                                                |  |                         
|Affiliation and social fees                                     |  |                         
|                                                                |  |                         
|Rent                                                            |  |                         
|                                                                |  |                         
|Depreciation of assets under capital lease                      |  |                         
|                                                                |  |                         
|Sales of materials to Magna and its affiliates                  |  |                         
|                                                                |  |                         
|Purchases of materials from Magna and its affiliates            |  |                         
|                                                                |  |                         

At
December 31, 2002, the Company's accounts receivable include accounts receivable from Magna controlled entities of $11.7 million (December 31,
2001$36.9 million) and accounts payable include accounts payable to Magna controlled entities of $49.3 million (December 31, 2001$43.9 million).

Magna
provides certain management and administrative services to the Company, including legal, environmental, immigration, administrative, tax, internal audit, treasury, information
systems and employee relations services, in return for a specific amount negotiated between the Company and Magna. Commencing January 1, 2002, the Company began reporting amounts paid to Magna
for management and administrative services in selling, general and administrative expenses ("SG&A"). Affiliation and social fees continue to be shown separately in the consolidated statements of
income. All comparative period amounts have been reclassified to conform with the current period's presentation.

During
2001, the Company entered into new or amended existing affiliation agreements with Magna that were effective January 1, 2001. The affiliation agreements provide for the
payment by the Company to Magna of an affiliation fee. The affiliation agreements:



Pursuant
to the Company's affiliation agreements with Magna, the affiliation fees payable by the Company to Magna in respect of each fiscal year will be an aggregate amount equal to:



Sales
from acquired businesses will not be subject to a fee until January 1 of the year following the date of acquisition, and will be subject to a fee equal to 50% of the fee
with respect to the Company's sales in the calendar year following the date of the acquisition, and to the full fee in the second calendar year following the date of the acquisition and thereafter.

The
affiliation fee included in "Affiliation and social fees" was $53.6 million for the year ended December 31, 2002 (for the years ended December 31, 2001 and
2000$47.6 million and $28.0 million, respectively).

The
Company's Corporate Constitution provides that a maximum of 2% of its pre-tax profits in each fiscal year shall be allocated to the promotion of social objectives. Of
this maximum, the social commitment agreement the Company entered into with Magna during the year ended December 31, 2001, effective January 1, 2001, requires the Company to contribute
1.5% of its pre-tax profits in each
fiscal year to social and charitable programs coordinated by Magna or other charitable or non-profit organizations on behalf of Magna and its affiliates, including Intier.

The
social commitment fee included in "Affiliation and social fees" was $1.7 million for the year ended December 31, 2002 (for the years ended December 31, 2001 and
2000$1.2 million and $1.8 million, respectively).

Affiliation
and social fees in prior years were calculated on a different basis than the 2002 and 2001 affiliation fee and social commitment fees and are therefore not comparable.

Pursuant
to the Company's Corporate Constitution, 10% of the Company's employee pre-tax profit before profit sharing of participating Intier divisions for any fiscal year is
required to be allocated to an Employee Equity and Profit Participation Program (the "Intier EEPPP"). During 2002, the Company's Board of Directors approved the establishment of the Intier EEPPP,
subject to obtaining necessary regulatory approvals. The Company's eligible employees in Canada, the United States, the United Kingdom and Austria participate in the Intier EEPPP. Prior to fiscal
2002, the Company's employees participated in the Magna EEPPP. The Company's portion of the costs associated with the Magna EEPPP for the years ended December 31, 2001 and 2000 was
$28.0 million and $25.7 million, respectively.

Various
land and buildings used in the Company's operations are leased from Magna and its affiliates under operating and capital lease agreements (see note 11).

Transactions
with Magna and its affiliates are effected on normal commercial terms.

22.  CONTINGENCIES





23.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements are prepared using Canadian generally accepted accounting principles which conform with United States generally accepted
accounting principles except for the following:







|                                                                                                                               |                                                                                                                           | Years ended December 31, |      
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------- | ------------------------ | -----
|
|Net income attributable to Class A Subordinate Voting and Class B Shares under Canadian GAAP                                   |                                                                                                                           | $                        | 46.7 
|Adjustments (net of related tax effects):                                                                                      |                                                                                                                           |                          |      
|                                                                                                                               | Amortization of discount on Convertible Series Preferred Shares                                                           |                          |      
|                                                                                                                               | Return of capital on Convertible Series Preferred Shares                                                                  |                          |      
|                                                                                                                               | In-house tooling and engineering                                                                                          |                          |      
|                                                                                                                               | Derivative instruments                                                                                                    |                          |      
|                                                                                                                               | Operating leases                                                                                                          |                          |      
|                                                                                                                               | Non-employee stock option compensation expense                                                                            |                          |      
|                                                                                                                               |                                                                                                                           |                          |      
|Net income attributable to Class A Subordinate Voting and Class B Shares under U.S. GAAP before cumulative catch-up adjustment |                                                                                                                           | $                        | 43.0 
|Cumulative adjustment for change in accounting policy related to goodwill                                                      |                                                                                                                           |                          | (35.7
|                                                                                                                               |                                                                                                                           |                          |      
|Net income attributable to Class A Subordinate Voting and Class B Shares under U.S. GAAP after cumulative catch-up adjustment  |                                                                                                                           | $                        | 7.3  
|Other comprehensive income (net of related tax effects):                                                                       |                                                                                                                           |                          |      
|                                                                                                                               | Derivative instruments                                                                                                    |                          |      
|                                                                                                                               | Electricity swap contracts                                                                                                |                          |      
|                                                                                                                               | Cumulative adjustment at January 1, 2001 for the change in derivative instrument accounting                               |                          |      
|                                                                                                                               | Adjustment for derivative instruments,matured during the period, included in the cumulative adjustment at January 1, 2001 |                          |      
|                                                                                                                               | Unrealized foreign exchange gains (losses) on translation of self-sustaining foreign entities                             |                          |      
|                                                                                                                               |                                                                                                                           |                          |      
|Comprehensive income under U.S. GAAP                                                                                           |                                                                                                                           | $                        | 63.8 
|                                                                                                                               |                                                                                                                           |                          |      



The following table presents net income, comprehensive income and basic earnings per share information under U.S. GAAP for the year ended December 31, 2002 and for the
five-month period ended December 31, 2001:

|                                                                                                                               |                                                                 | Years ended December 31, |      
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------- | ------------------------ | -----
|
|Net income attributable to Class A Subordinate Voting and Class B Shares under Canadian GAAP                                   |                                                                 | $                        | 46.7 
|Adjustments (net of related tax effects):                                                                                      |                                                                 |                          |      
|                                                                                                                               | Amortization of discount on Convertible Series Preferred Shares |                          |      
|                                                                                                                               | Return of capital on Convertible Series Preferred Shares        |                          |      
|                                                                                                                               | In-house tooling and engineering                                |                          |      
|                                                                                                                               | Derivative instruments                                          |                          |      
|                                                                                                                               | Operating leases                                                |                          |      
|                                                                                                                               | Non-employee stock option compensation expense                  |                          |      
|                                                                                                                               |                                                                 |                          |      
|Net income attributable to Class A Subordinate Voting and Class B Shares under U.S. GAAP before cumulative catch-up adjustment |                                                                 | $                        | 43.0 
|Cumulative adjustment for change in accounting policy related to goodwill                                                      |                                                                 |                          | (35.7
|                                                                                                                               |                                                                 |                          |      
|Net income attributable to Class A Subordinate Voting and Class B Shares under U.S. GAAP after cumulative catch-up adjustment  |                                                                 | $                        | 7.3  
|                                                                                                                               |                                                                 |                          |      
|Other comprehensive income (net of related tax effects):                                                                       |                                                                 |                          |      
|Derivative instruments                                                                                                         |                                                                 |                          | 9.9  
|Electricity swap contracts                                                                                                     |                                                                 |                          | 0.3  
|Adjustment for derivative instruments, matured during the period, included in the cumulative adjustment at January 1, 2001     |                                                                 |                          | 4.2  
|Unrealized foreign exchange losses on translation of self-sustaining foreign entities                                          |                                                                 |                          | 42.1 
|                                                                                                                               |                                                                 |                          |      
|Comprehensive income under U.S. GAAP                                                                                           |                                                                 | $                        | 63.8 
|                                                                                                                               |                                                                 |                          |      
|Basic earnings per Class A Subordinate Voting or Class B Share:                                                                |                                                                 |                          |      
|Before cumulative catch-up adjustment                                                                                          |                                                                 | $                        | 0.89 
|Cumulative adjustment                                                                                                          |                                                                 | $                        | (0.74
|After cumulative catch-up adjustment                                                                                           |                                                                 | $                        | 0.15 
|                                                                                                                               |                                                                 |                          |      
|Average number of Class A Subordinate Voting and Class B Shares outstanding during the period                                  |                                                                 |                          | 48.2 
|                                                                                                                               |                                                                 |                          |      



The
following table presents diluted earnings per share information under U.S. GAAP for the year ended December 31, 2002 and for the five-month period ended
December 31, 2001:

|                                                                                                                                                             |                                                                               | Years ended December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------- | ------------------------
|
|Net income attributable to Class A Subordinate Voting and Class B Shares under U.S. GAAP before cumulative catch-up adjustment                               |                                                                               | $                       
|Adjustment (net of related tax effect):                                                                                                                      |                                                                               |                         
|                                                                                                                                                             | Return of capital and financing charge on Convertible Series Preferred Shares |                         
|                                                                                                                                                             |                                                                               |                         
|                                                                                                                                                             |                                                                               | $                       
|Cumulative adjustment for change in accounting related to goodwill                                                                                           |                                                                               |                         
|                                                                                                                                                             |                                                                               |                         
|Net income attributable to Class A Subordinate Voting and Class B Shares under U.S. GAAP after cumulative catch-up adjustment for diluted earnings per share |                                                                               | $                       
|Diluted earnings per Class A Subordinate Voting or Class B Share:                                                                                            |                                                                               |                         
|Before cumulative catch-up adjustment                                                                                                                        |                                                                               | $                       
|Cumulative adjustment                                                                                                                                        |                                                                               | $                       
|After cumulative catch-up adjustment                                                                                                                         |                                                                               | $                       
|                                                                                                                                                             |                                                                               |                         
|Average number of Class A Subordinate Voting and Class B Shares outstanding during the period                                                                |                                                                               |                         
|Convertible Series Preferred Shares                                                                                                                          |                                                                               |                         
|Stock options                                                                                                                                                |                                                                               |                         
|                                                                                                                                                             |                                                                               |                         
|                                                                                                                                                             |                                                                               |                         
|                                                                                                                                                             |                                                                               |                         

|                                    |  | December 31, 2002
|----------------------------------- |  | -----------------
|
|Future tax assets                   |  | $                
|Other accrued liabilities           |  |                  
|Convertible Series Preferred Shares |  |                  
|Shareholders' Equity                |  |                  

|                                    |  | December 31, 2001
|----------------------------------- |  | -----------------
|
|Future tax assets                   |  | $                
|Other accrued liabilities           |  |                  
|Convertible Series Preferred Shares |  |                  
|Shareholders' Equity                |  |                  



The
fair value of the stock options is estimated at the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:

Risk free interest rate

3.96% - 5.27%Expected dividend yield

1.20%Expected volatility

26% - 37%Expected time until exercise

5 years


The
Black-Scholes options valuation model used by the Company to determine fair values was developed for use in estimating the fair value of freely traded options which are fully
transferable and have no vesting restrictions. In addition, this model requires that input of highly subjective assumptions, including future stock price volatility and expected time until exercise.
Because the Company's outstanding stock options have characteristics which are significantly different from those of traded options, and because changes in any of the assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options.

The
weighted average fair value of 710,000 options granted during the year ended December 31, 2002 was $ 5.63 per option (2001$4.18).

On
a pro forma basis, under Statement 123, the 2002 net income attributable to Class A Subordinate Voting and Class B Shares, and basic and diluted earnings per
Class A Subordinate Voting or Class B Share would have been $ 4.6 million and $0.10 and $0.10, respectively (2001$17.5 million and $0.37 and $0.35,
respectively).

CANADIAN GAAP STANDARDS

In December 2002, the CICA amended Handbook Section 3475, "Disposal of Long-Lived Assets and Discontinued Operations" ("CICA 3475").
CICA 3475 provides guidance on differentiating between assets held for sale and held for disposal other than by sale and on the presentation of discontinued operations. CICA 3475 applies to disposal
activities initiated on or after May 1, 2003.

In
December 2001, the CICA approved proposed amendments to Accounting Guideline, AcG-13, "Hedging Relationships" ("AcG-13"). The proposed amendments
clarify certain of the requirements in AcG-13 and provide additional application guidance. The proposed amendments will be finalized in the first half of 2003 and will be applicable when AcG-13 becomes effective for fiscal years beginning on or after July 1, 2003.

Although
the Company is currently reviewing CICA 3475 and AcG-13 the impact, if any, of these pronouncements on its consolidated financial statements has not been determined.

U.S. GAAP STANDARDS

During 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("FAS 143"). FAS 143 requires that legal obligations arising from the retirement of tangible long-lived assets, including obligations identified by a company
upon acquisition and construction and during the operating life of a long-lived asset, be recorded and amortized over the assets' useful life using a systematic and rational allocation
method. FAS 143 is effective for fiscal years beginning after June 15, 2002.

During
2002, the FASB issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("FAS 146").
FAS 146 requires that costs associated
with an exit or disposal activity be recognized and measured at fair value in the period in which the liability is incurred. FAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002.

In
2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN
45"). FIN 45 requires certain guarantees to be recorded at fair value; previously a liability was only recorded when a loss under a guarantee was probable and reasonably estimable. The initial
recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002.

In
January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 requires that a variable interest entity be
consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns
or both. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and apply to existing variable interest entities in the first
fiscal year or interim period beginning after June 15, 2003.

During
2002, the Emerging Issues Task Force ("EITF") issued EITF Abstract 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables" ("EITF 00-21").
EITF 00-21 addresses how to account for arrangements that involve the delivery or performance of multiple products and services. EITF 00-21 is effective for agreements entered
into in fiscal periods beginning after June 15, 2003.

Although
the Company is currently reviewing FAS 143, FAS 146 and EITF 00-21 and the recognition and measurement requirements of FIN 45 and FIN 46, the impact,
if any, of these pronouncements on its consolidated financial statements has not been determined.