<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 --------------
                                    FORM 10-K

(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                                       OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                        COMMISSION FILE NUMBER 333-49011
                        [ADVANCED ACCESSORY SYSTEMS LOGO]
                         ADVANCED ACCESSORY SYSTEMS, LLC
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                                              <C>

                    DELAWARE                                                          13-3848156
          (STATE OR OTHER JURISDICTION                                             (I.R.S. EMPLOYER
       OF INCORPORATION OR ORGANIZATION)                                         IDENTIFICATION NO.)

12900 HALL ROAD, SUITE 200, STERLING HEIGHTS, MI                                        48313
     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                         (ZIP CODE)
</TABLE>


        REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (810) 997-2900
        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE


         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
         
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /

         The aggregate fair market value of the Registrant's Class A Units held
by non-affiliates of the Registrant as of March 15, 1999, based upon the good
faith determination of the Board of Managers was approximately $3,982,000. For
purposes of this disclosure, shares of Class A Units held by persons who hold
more than 5% of the outstanding Class A Units and Class A Units held by officers
and directors of the Registrant have been excluded because such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily conclusive for other purposes.

         The number of the Registrant's Class A Units, outstanding at March 15,
1999 was 16,450. 

                      Documents Incorporated by Reference
                                      None


<PAGE>   2


                         ADVANCED ACCESSORY SYSTEMS, LLC

                                    FORM 10-K
                          YEAR ENDED DECEMBER 31, 1998

                                TABLE OF CONTENTS



                                     PART I

Item 1.  BUSINESS...........................................................  1

Item 2.  PROPERTIES......................................................... 10

Item 3.  LEGAL PROCEEDINGS.................................................. 10

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 10


                                     PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         MEMBERS' MATTERS................................................... 11

Item 6.  SELECTED HISTORICAL FINANCIAL DATA................................. 12

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS................................ 14

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......... 22

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................ 22

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE................................ 48


                                    PART III

Item 10. MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................. 48

Item 11. EXECUTIVE COMPENSATION............................................. 49

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT......................................................... 51

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 52


                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
         FORM 8-K........................................................... 53

SIGNATURES.................................................................. 55


                                       i
<PAGE>   3


                           FORWARD-LOOKING STATEMENTS

         THIS BUSINESS SECTION AND OTHER PARTS OF THIS ANNUAL REPORT ON FORM
10-K CONTAIN FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.
THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED
IN THE FORWARD-LOOKING STATEMENTS, AND SUCH DIFFERENCES MAY BE MATERIAL. FACTORS
THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED BELOW AND IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."

                                     PART I

ITEM 1.    BUSINESS

GENERAL

         Advanced Accessory Systems, LLC (together with its subsidiaries, the
"Company" or "AAS") is one of the world's largest suppliers of towing and rack
systems and related accessories for the automotive original equipment
manufacturer ("OEM") market and the automotive aftermarket. The Company's
products include a complete line of towing systems including accessories such as
trailer balls, ball mounts, electrical harnesses, safety chains and locking
hitch pins. The Company's broad offering of rack systems includes fixed and
detachable racks and accessories which can be installed on vehicles to carry
items such as bicycles, skis, luggage, surfboards and sailboards. The Company's
products are sold as standard accessories or options for a variety of light
vehicles. In 1998, the Company estimates that approximately 45% of its net sales
were generated from products sold for light trucks. For the year ended December
31, 1998, the Company's net sales and EBITDA, as adjusted, were $290.1 million
and $38.4 million, respectively.

         In September 1995, the Company, through its SportRack, LLC subsidiary
("SportRack"), acquired substantially all of the net assets of the MascoTech
Accessories division (the "MascoTech Division") of MascoTech, Inc. ("MascoTech"
or the "Predecessor"). The MascoTech Division was a North American supplier of
rack systems and accessories to the automotive OEM market and aftermarket.

         In October 1996, the Company acquired (the "Brink Acquisition") all of
the capital stock of Brink B.V., a private company with limited liability
incorporated under the laws of The Netherlands and a European supplier of towing
systems to the automotive OEM market and aftermarket. In December 1996,
ownership of Brink B.V. and its subsidiaries was transferred to a newly formed
subsidiary of the Company, Brink International B.V. ("Brink").

         In August 1997, the Company formed Valley Industries, LLC ("Valley") to
acquire (the "Valley Acquisition") the net assets of Valley Industries, Inc.
("Valley Industries"), a North American supplier of towing systems to the
automotive OEM market and aftermarket.

         Two smaller acquisitions were completed in July 1997 by SportRack
International, Inc. ("SportRack International"), a subsidiary of SportRack.
SportRack International acquired from Bell Sports Corporation ("Bell") the net
assets of its sportrack division, a Canadian supplier of rack systems and
accessories to the automotive aftermarket. Chase Capital Partners ("CCP"), an
affiliate of the Company, at that time was a significant equity investor in
Bell. SportRack International also acquired the capital stock of Nomadic Sports,
Inc. ("Nomadic"), a Canadian supplier of rack systems and accessories to the
automotive OEM market and aftermarket. The acquisitions of the sportrack
division of Bell and Nomadic are collectively referred to in this 10-K as the
"SportRack International Acquisition."

         In January 1998, the Company through Brink International B.V., acquired
(the "Ellebi Acquisition") the net assets of the towbar segment of Ellebi S.p.A.
("Ellebi"). Ellebi is an Italian supplier of towing systems to the automotive
OEM market and aftermarket.

    In February 1998, the Company through SportRack International, Inc.,
acquired (the "Tranfo-Rakzs Acquisition") the net assets of Transfo-Rakzs, Inc.
("Transfo-Rakzs"). Transfo-Rakzs is a Canadian supplier of rear hitch rack
carrying systems and related products to the automotive aftermarket.


                                       1
<PAGE>   4


COMPETITIVE ADVANTAGES

    Leading Global Market Position. Based on its knowledge of the industry, the
Company believes that it is one of the world's largest suppliers of towing
systems and one of the world's largest suppliers of rack systems. The Company
also believes, based on its knowledge of the industry, that it is the largest
supplier of towing systems in Europe, the largest supplier of towing systems to
automotive OEMs in North America and the second largest supplier of towing
systems to the aftermarket in North America. The Company also believes that it
is one of the two largest suppliers of rack systems sold to automotive OEMs in
North America. The Company has 25 engineering, manufacturing and distribution
facilities strategically located in North America and Europe. By virtue of its
size and global presence, the Company believes it benefits from several
competitive advantages, including the ability to (i) satisfy local design,
production, quality and timing requirements of global OEMs; (ii) provide
"one-stop shopping" for customers' product and service requirements; (iii)
optimize plant production; (iv) maximize its raw material purchasing power; (v)
spread its selling, administrative and product development expenses over a large
base of net sales; and (vi) develop and maintain state-of-the-art production
facilities.

    Strong Relationships with Diverse Customer Base. The Company has an
established position as a Tier 1 supplier of towing and/or rack systems to most
of the OEMs manufacturing in North America and/or Europe including
DaimlerChrysler, General Motors, Toyota, Opel, Volvo, Isuzu, Ford, BMW, Subaru,
Fiat, Mitsubishi, Nissan, Volkswagen, SEAT, Skoda, Daewoo and Kia. The Company
supplies DaimlerChrysler with substantially all its North American towing
systems and rack systems and accessories. The Company also supplies
approximately 50% of the towing and rack system requirements of General Motors.
Tier 1 status and strong customer relationships are important elements in
achieving continued profitable growth because, as OEMs narrow their supplier
bases, well regarded, existing suppliers have an advantage in gaining new
contracts. The evolution of OEM relationships into strategic partnerships
provides a significant advantage to Tier 1 suppliers with system integration
capabilities (such as the Company) in retaining existing contracts as well as in
participating during the design phase for new vehicles, which is integral to
becoming a supplier for such new platforms. The Company is also a leading
supplier of towing and rack systems to automotive aftermarket wholesalers,
retailers and installers, such as U-Haul, Pep Boys, Balkamp, Advance Auto Parts,
Coast Distribution System, Discount Auto Parts, Ace Hardware, Norauto, Brezan,
Feuvert and Canadian Tire.

    Comprehensive Product Line. The Company continues to position itself as a
leading supplier to its customers for a growing range of products and services.
Through its offering of over 2,000 towing system models, the Company's products
fit virtually every light vehicle produced in North America and Europe. The
Company is one of a limited number of European manufacturers with such a broad
product line that also satisfies European Community ("EC") regulatory safety
standards, even though such standards have not yet been adopted by each EC
member country. Competitors whose products do not satisfy such standards face
substantial design and testing costs to offer a comparable product line that
meets these safety standards. The Company has provided OEMs with fixed rack
systems for approximately half of the light truck models produced in North
America that utilize vehicle-specific fixed racks. The Company believes that its
broad product offerings also facilitate strategic partnerships with automotive
aftermarket wholesalers, retailers and installers.

    Design and Engineering Expertise. The Company has an engineering and
research and development staff that develops new products and processing
technologies. The Company works directly with OEM designers to create innovative
solutions that simplify vehicle assembly and reduce vehicle cost and weight. The
Company is responsible for many industry innovations, including lighter, less
obtrusive, round tube towing hitches as well as push button and pull lever
stanchions on fixed rack systems. The Company believes its design and
engineering capabilities provide significant value to its customers by (i)
shortening OEM new product development cycles; (ii) lowering OEM manufacturing
costs; (iii) providing technical expertise; and (iv) permitting aftermarket
customers to maintain lower inventory levels. The Company also believes that its
design innovations have created value for end users by providing products that
are durable and easy to install and that enhance vehicle utility and appearance.

    High Quality, Low Cost Manufacturing Position. The Company believes that it
is one of the highest quality, lowest cost suppliers of towing and rack systems
in North America and Europe. The Company has received numerous quality and
performance awards, including DaimlerChrysler's Gold Pentastar Award, Ford's Q-1
Award, Toyota's Distinguished Supplier Award and Nissan's Superior Supplier
Performance Award. Supplier quality systems are currently being standardized
across OEMs through the ISO-9000 and QS-9000 programs. The Company has achieved
ISO-9000 or QS-9000 certification for 11 of its 20 manufacturing and engineering
facilities and is in the process of obtaining certification for other of its
facilities. The Company's low cost position is a result of its strict cost
controls and continuous improvement programs designed to enhance productivity.
OEMs typically prefer stable suppliers who can generate productivity gains that
can be shared to reduce OEM costs. The Company's cost controls are closely
integrated with its quality driven manufacturing operations, thereby allowing it
to profitably deliver high quality, easy to install and competitively-priced
components on a just-in-time basis. The Company's focus on low cost
manufacturing also provides benefits when selling products to the less price
sensitive aftermarket.


                                       2
<PAGE>   5

BUSINESS STRATEGY

    The Company's objective is to strengthen its position as a leading global
supplier of automotive exterior accessories, thereby increasing revenue and cash
flow. In order to accomplish its goal, the Company intends to pursue the
following strategies.

    Increase Global Market Share. The Company intends to capitalize on its
expanded presence in North America and Europe by marketing products to its
global automotive OEM customers. Through its past acquisitions of complementary
product lines, the Company is able to offer an expanded range of products and
services to its extended customer base. The Company also expects to secure new
customers by virtue of its expanded market presence and broad product and
service offerings. The Company believes its continued emphasis on new technology
(both product and process), will result in the development of more innovative,
high margin towing and rack system products which it expects to market to its
expanding customer base.

    Maintain and Enhance Strong Customer Relationships. The Company intends to
strengthen and expand its relationships with global automotive OEMs and
aftermarket customers by (i) continuing its commitment to innovative design and
development of products during the early stages of vehicle design and redesign;
(ii) building on its position as a low cost supplier of quality accessory
products; (iii) offering new products in existing and new geographic areas by
taking advantage of existing OEM relationships; and (iv) working with
aftermarket customers to develop new products and marketing strategies.

    Increase Operating Efficiencies. The Company believes there are
opportunities for improvement in margins and cash flow through intercompany
cooperation among its various acquired business units, including (i) realizing
economies of scale from the combined purchasing power of a larger company; (ii)
achieving production and other operating efficiencies through the implementation
of a "best practices" program; (iii) reducing certain selling, general and
administrative and product development expenses; and (iv) reducing capital and
operating expenditures from coordinated use of manufacturing resources.

    Pursue Strategic Acquisitions. In response to the trend in the OEM market
toward systems suppliers, the Company is focused on making strategic
acquisitions that will enhance its ability to provide integrated systems (such
as a towing or rack system) or otherwise leverage its existing business by
providing additional product, manufacturing and service capabilities. The
Company also intends to pursue acquisitions which will expand its customer base
by providing an entree to new customers, including expansion into selected
geographic areas. The Company believes that such acquisitions should provide
additional opportunities for increased net sales and cash flow by enhancing the
Company's manufacturing and marketing capabilities.

AUTOMOTIVE OEM AND AFTERMARKET TRENDS

    As automobile and light truck manufacturers have faced increased global
competition, they have sought to significantly improve quality, reduce costs and
shorten the development time required for new vehicle models. These changes have
altered the OEM/supplier relationship and benefited larger suppliers that have
strong product engineering and development capabilities, superior quality
products, lower unit costs and the ability to deliver products on a timely
basis. As a result, the Company believes that it has benefited and will continue
to benefit from the following automotive OEM and aftermarket trends.

    Consolidation of Supplier Base by OEMs. Since the 1980's, OEMs have
significantly consolidated their supplier base in an effort to reduce their
procurement-related costs, ensure high quality and accelerate new model
development. As a result, many smaller, poorly capitalized suppliers with
limited product lines and engineering and design capabilities have been
eliminated as direct suppliers to OEMs. Consequently, larger suppliers with
broad product lines, in-house design and engineering capabilities and the
ability to effectively manage their own supplier bases, have been able to
significantly increase their market share.

    The consolidation by OEMs has altered the typical structure of supplier
contracts. In the past, OEMs supplied all design, development and manufacturing
expertise for accessory parts and were responsible for consistency of quality
and reliability of delivery. On newer models, however, there has been a trend
toward involving potential suppliers earlier in the design and development
process to encourage suppliers to share design and development responsibility.
In some cases, sole-source supply contracts, which cover the life of a vehicle
or platform, are awarded. Both OEMs and suppliers benefit from the consolidation
trend. Suppliers are able to devote the resources necessary for proprietary
product development with the expectation that they will have the opportunity to
profit on such investment over the multi-year life of a contract. OEMs benefit
from shared manufacturing cost savings attributable to long, multi-year
production runs at high capacity utilization levels.


                                       3
<PAGE>   6


    Emergence of European Community Safety Standards. Trends within the European
towing systems market result primarily from emerging EC safety standards and the
corresponding legislative framework. Such standards provide that a towing system
must fit all the vehicle manufacturer's recommended fitting points, must not
interfere with the vision of the number plate when not in use and must meet
strict testing criteria for durability and safety. These standards have been
adopted by The Netherlands, Germany, Sweden, Italy, the United Kingdom and
Scandinavia. Other EC countries are expected to adopt the legislation within two
years. All of the Company's towing systems sold in Europe currently undergo
rigorous safety testing in order to satisfy these EC regulatory standards.

    Increased Levels of Manufacturing in North America by Transplants. As a
result of the relative cost advantage of producing vehicles in North America,
many foreign automobile manufacturers with manufacturing operations in the
United States ("transplants") have increased their share of North American light
vehicle production from approximately 6% in 1986 to approximately 22% in 1998.
Industry sources forecast that this trend will continue. For example, BMW
commenced manufacturing in the U.S. in 1996. In addition, Toyota has announced
plans to build its T-100 pickup truck in Indiana by 1999, Honda has announced
plans to build its Odyssey minivan in North America by 1999, and BMW has
announced plans to build its E-53 SUV in North America by 1999. The Company
believes that increased levels of manufacturing of light trucks in North America
by transplants will benefit full service, high quality suppliers with North
American operations such as the Company.

    Outsourcing by OEMs. In an effort to facilitate and enhance product design,
reduce costs and simplify manufacturing processes, automotive OEMs are
increasingly outsourcing the manufacture of many components that were previously
manufactured internally. This trend results from independent suppliers being
generally able to design, manufacture and deliver components at a lower cost
than OEMs as a result of (i) their significantly lower direct labor, fringe
benefit and overhead costs; (ii) their ability to spread research and
development and engineering costs over products provided to multiple OEMs; and
(iii) the economies of scale inherent in product specialization. Independent
suppliers such as the Company have benefited from outsourcing because the
aggregate number, complexity and value of components that they manufacture have
increased dramatically. OEMs, in turn, have benefited because outsourcing has
allowed them to reduce costs and to focus on overall vehicle design and consumer
marketing.

PRODUCTS

    The principal product lines of the Company are towing systems and rack
systems and accessories. In 1998, towing systems constituted approximately 60%
and rack systems and accessories constituted approximately 40% of the Company's
net sales. The Company believes it offers a more comprehensive product line than
any of its competitors. The Company has devoted considerable resources to the
engineering and designing of its products and, as a result, considers itself a
market leader in the research and new product development of towing systems and
rack systems.

    Towing Systems. The Company designs, manufactures and supplies towing
systems to automotive OEMs and the automotive aftermarket which fit virtually
every light vehicle produced in North America and Europe. In the aggregate, the
Company supplies over 2,000 different towing systems, including a complete line
of towing accessories.

    The Company's towing systems sold in Europe are installed primarily on
passenger cars. The Company's primary product within the European market is the
fixed ball towbar that is specifically designed to be mounted on a particular
car model in accordance with the OEM's specified mounting points. The Company
also markets sophisticated detachable ball systems which are popular with owners
of more expensive cars or cars on which the license plate would otherwise be
blocked by a fixed ball towbar. The Company's towing system products sold in
Europe currently undergo rigorous safety testing in order to satisfy EC
regulatory standards. Competitors whose products do not satisfy such standards
face substantial design and testing costs to offer a comparable product line
that meets the safety standards.

    The Company's towing systems sold in North America are installed primarily
on light trucks. Two of the Company's most innovative product designs have been
the tubular trailer hitch which is lighter in weight, less obtrusive and
stronger than the conventional hitch, and a device which ensures secure
attachment of a towing product to the vehicle. These product innovations have
enabled the Company to improve the functionality and safety of towing systems
while, at the same time, enhancing the overall appearance of vehicles utilizing
these towing products.

    The Company offers a complete line of towing accessories, including trailer
balls, ball mounts, electrical harnesses, safety chains and locking hitch pins.
To capitalize on the strong growth trend in light trucks, the Company has
recently expanded its product line to include other products designed
specifically for this market, such as grille guards, brush guards and spare tire
carriers.


                                       4
<PAGE>   7


    Fixed Rack Systems. The Company supplies fixed roof rack systems for
individual vehicle models that are generally sold to the automotive OEMs for
installation at the factory or dealership. These rack systems typically remain
on a model for the life of its design, which generally ranges from four to six
years. The Company has been an industry leader in developing designs which not
only complement the styling themes of a particular vehicle, but also increase
the utility and functionality of the rack system.

    Most of the fixed rack systems sold by the Company are composed of side
rails which run along both sides of the vehicle's roof, feet which mount the
side rails to the vehicle's roof, and cross rails which run between the side
rails. Cross rails, which are attached to the side rails with stanchions, are
typically movable and can be used to carry a load. The Company uses advanced
materials such as lightweight, high strength plastics and roll formed aluminum
to develop durable rack systems that optimize vehicle performance. Many of these
products incorporate innovative features such as push button and pull lever
stanchions, which allow easy movement of the cross rails to accommodate various
size loads. These rack systems are utilized on a large number of light trucks,
including Jeep Grand Cherokee and Cherokee, DaimlerChrysler minivans, GM
Suburban, Tahoe and Yukon and Mercedes Benz ML320.

    Detachable Rack Systems. The Company supplies detachable roof and rear mount
rack systems for distribution in both the automotive and sporting accessory
aftermarkets. A detachable rack system typically consists of cross rails which
are attached to the roof of a vehicle by removable mounting clips. The Company
offers a full line of detachable rack systems, including the SportRack(R),
SnapRack(TM) and Mondial(R) rack systems.

    Rack System Accessories. The Company designs and manufactures lifestyle
accessories for distribution in both the automotive and sporting accessory
aftermarkets. These accessories typically attach to the Company's rack systems
and are used for carrying items such as bicycles, skis, luggage, surfboards and
sailboards.

CUSTOMERS AND MARKETING

    Management believes that the Company's strong and diverse industry
relationships are based on its reputation for high service levels, strong
technical support, innovative product development, high quality and competitive
pricing. Sales to OEM and aftermarket customers represented approximately 68%
and 32% of the Company's net sales, respectively, in 1998. In addition, sales to
DaimlerChrysler and General Motors were approximately 32% and 11%, respectively,
of the Company's aggregate net sales in 1998.

    Automotive OEMs. The Company obtains most of its new orders through a
presourcing process by which the customer invites one or a few preferred
suppliers to manufacture and design a component or system that meets certain
price, timing, functional and aesthetic parameters. Upon selection at the
development stage, the Company and the customer typically agree to cooperate in
developing the product to meet the specified parameters. Upon completion of the
development stage and the award of the manufacturing business, the Company
receives a purchase order that covers parts to be supplied for a particular car
model. Such supply arrangements typically involve annual renewals of the
purchase order over the life of the model, which is generally four to six years.
In addition, the Company enters into long-term contracts with certain OEM
customers which require the Company to make annual price reductions. The Company
also competes to supply parts for successor models even though the Company may
currently supply parts on the predecessor model. Sales to OEMs are made directly
by the Company's internal sales staff of 52 individuals and 44 outside sales
representatives.

    The Company sells its products to most of the automotive OEMs selling light
vehicles in North America and/or Europe, including DaimlerChrysler, General
Motors, Toyota, Opel, Volvo, Isuzu, Ford, BMW, Subaru, Fiat, Mitsubishi, Nissan,
Volkswagen, SEAT, Skoda, Daewoo and Kia. The Company supplies DaimlerChrysler
with substantially all of its North American towing systems and rack systems and
accessories. The Company also supplies approximately 50% of the towing system
and rack system requirements of General Motors. The following chart sets forth
information regarding vehicle models on which the Company's automotive products
are used or for which the Company has been awarded business.

<TABLE>
<CAPTION>
                                                                                              AWARDED BUSINESS ON
                PRODUCT          OEM CUSTOMER              1998 PRODUCTION(a)                FUTURE PRODUCTION(b)
           ---------------    ------------------  ------------------------------------ --------------------------

<S>                           <C>                 <C>                                   <C>
           Towing Systems     DaimlerChrysler     Cherokee, Grand Cherokee, Caravan,    Cherokee, Plymouth
                                                  Voyager, Town & Country, Ram          Prowler, Ram Van, 300M, Neon
                                                  Pick-up,
                                                  Dakota, Wrangler, Durango
                              General Motors      Suburban, Yukon, Tahoe, Astro,        Frontera, Corsa, Arena (van),
                                                  Safari, CK Pick-up, ML Van, S-10      Vectra
                                                  Blazer, APV Vans, Bravada, Jimmy,
                                                  Geo Tracker, Blazer, Corsa, Astra
                                                  (hatchback), Astra (Sedan),
</TABLE>


                                       5

<PAGE>   8

<TABLE>
<CAPTION>
                                                                                               AWARDED BUSINESS ON
    PRODUCT             OEM CUSTOMER                1998 PRODUCTION(a)                         FUTURE PRODUCTION(b)
---------------      ------------------      ------------------------------------             --------------------------

<S>                     <C>                     <C>                                             <C>
Towing Systems       General Motors          Astra (Station wagon), Calibra, Vectra
(continued)          (continued)             (Hatchback), Vectra (Sedan), Vectra
                                             (Station wagon), Omega (Sedan), Omega
                                             (Station wagon), Campo, Frontera,
                                             Monterey, Zafira
                     Ford                    Expedition, Explorer, Ranger,                    Explorer, Focus, Focus Wagon, Ranger,
                                             Aerostar Minivan, Mercury Villager,              Mondeo
                                             Windstar Minivan, Navigator, Fiesta,
                                             Escort (all models), Mondeo, Mondeo
                                             (Wagon), Scorpio (Sedan), Scorpio
                                             (Wagon), Maverick, Transit
                     Renault                 Laguna (Station wagon), Laguna,                  Twingo, Laguna, Clio
                                             Megane, Twingo, Espace
                     Isuzu                   Rodeo, Trooper
                     Toyota                  4-Runner, Land Cruiser, RAV4, Lexus,             Corolla, Lexus LS200, Carina,
                                             646T, 477T, 860T, Corolla, Carina,               Carina Wagon, Yaris
                                             Camry, Hi-Lux, Picnic, Previa,
                                             Hi-Ace, Celica
                     Nissan                  Pathfinder, Pick-up, Quest, Infiniti             Almera, Primera Wagon, Micra,
                                             Vehicle, QW Truck, Micra, Sunny,                 Patrol, Terrano
                                             Almera, Primera, Maxima, King Cab,
                                             Terrano, Patrol
                     Mazda                   121, MPV, Xedos-9, Xedos-6, 626, 323             626 Wagon, 323
                     Honda                   Passport                                         PF Van, CRV
                     Mitsubishi              Montero, Carisma, L200                           Spacestar, Challenger
                     FIAT                    Almost all models
                     Alpha Romeo             Almost all models
                     Lancia                  Almost all models
                     Subaru                  Outback                                          79V
                     Range Rover             Range Rover, Land Rover
                     Volvo                   900 series (Sedan), 900 series                   900 series, S/V 70 series
                                             (Station wagon), 850 (Sedan), 850
                                             (Station wagon)
                     SAAB                    9000 series, 900 series                          900 series, 9000 series, 9000
                                                                                              station wagon, small car 9-3,
                                                                                              small car 9-5, small station wagon
                     Peugeot                 106, 306, 406 (Sedan), 406 (Station              206, 206 Sport, 207, 306 Break
                                             wagon), 406 (Coupe), 605, 806, J5
                                             (Van), Boxer (Van)
                     Suzuki                  Wagon R.                                         Grand Vitara
                     Daihatsu                Sirion, More, Charade
                     SEAT                    Toledo
                     Skoda                   SK240
                     Volkswagen              Gold Combi, Vento
                     Daewoo                  LD100
Rack Systems         DaimlerChrysler         Cherokee, Grand Cherokee, Caravan,               Cherokee, Caravan,
                                             Voyager, Town & Country, Durango                 Voyager, Town & Country, Neon PT,
                                             Pronto, Mercedes ML320                           BW 72
                     General Motors          Suburban, Yukon, Tahoe, Astro, Safari            Suburban, Yukon, Tahoe, Jimmy,
                                             Escalade, Denali                                 Blazer, Bravada
                     Honda                   Accord
                     Mitsubishi              Montero
                     Subaru                  Outback, Impreza, Legacy
                     KIA                     Sportage
                     SEAT                    Vario                                            GP99
                     Opel                    Astra
                     BMW                                                                      E-53 (SUV)
</TABLE>

----------

(a) Represents models for which the Company produced products in 1998.

(b) The amount of products produced under these awards is dependent on the
    number of vehicles manufactured by the OEMs. Many of the models are versions
    of vehicles not yet in production. There can be no assurance that any of
    these vehicles will be produced or that the Company will generate certain
    revenues under these awards even if the models are produced.


                                       6
<PAGE>   9

    Automotive Aftermarket. The Company sells its products directly into the
automotive aftermarket through a number of channels, including wholesalers,
retailers and installers, through its internal sales force and outside sales
representatives. The largest of the Company's aftermarket customers include
U-Haul, Pep Boys, Balkamp, Advance Auto Parts, Coast Distribution System,
Discount Auto Parts, Ace Hardware, Norauto, Brezan, Feuvert and Canadian Tire.
The Company believes that it has established a reputation as a highly reliable
aftermarket supplier able to meet its customers' requirements for on-time
deliveries while minimizing the carrying levels of inventory. For example,
Valley began supplying towing systems to U-Haul (which the Company believes,
based on its research, is the largest installer of towing systems in the United
States) in 1994 and for the year ended December 31, 1998, supplied approximately
50% of U-Haul's towing system requirements. The Company believes aftermarket
customers such as U-Haul represent opportunities to cross-sell existing products
such as rack systems and accessories.

MANUFACTURING PROCESS

    The Company's manufacturing operations are directed toward achieving ongoing
quality improvements, reducing manufacturing and overhead costs, realizing
efficiencies and adding flexibility. The manufacturing operations utilized by
the Company include metal cutting, bending, cold forming, roll forming,
stamping, welding, plastic injection molding, painting, assembly and packaging.
The Company performs most manufacturing operations in-house but outsources
certain processes depending on the capabilities and capacities of individual
plants and cost considerations. For example, while some of the Company's towing
systems manufacturing facilities have painting capabilities, the Company has
chosen to outsource the painting of its rack systems.

    In some cases, the Company develops special machinery to meet its particular
needs. For example, the hardware that accompanies certain towing systems is
selected automatically by special equipment and is then weighed and transferred
into the final package without human intervention. The Company has developed
specialized, computer operated machinery to enable it to efficiently perform
this operation. The Company has organized its production process to minimize the
number of manufacturing functions and the frequency of material handling,
thereby improving quality and reducing costs. In addition, the Company uses
cellular manufacturing which improves scheduling flexibility, productivity and
quality while reducing work in process and costs.

    The Company has established quality procedures at each of its facilities and
strives to manufacture the highest quality product possible. The Company has
achieved ISO-9000 or QS-9000 certification for 11 of its 20 manufacturing and
engineering facilities and is in the process of obtaining certification for
other of its facilities. The Company has received numerous quality and
performance awards from its OEM customers, including DaimlerChrysler's Gold
Pentastar Award, Ford Q-1 Award, Toyota's Distinguished Supplier Award and the
Nissan Superior Supplier Performance Award.

PRODUCT DESIGN, DEVELOPMENT AND TESTING

    The Company believes that it is a leader in the design of towing systems and
rack systems and accessories. The Company believes it offers products that
possess greater quality, reliability and performance than the products sold by
many of its competitors. The 94 members of the Company's engineering and design
staff possess strong technical skills. The Company currently holds more than 150
U.S. and foreign patents, and has numerous patent applications pending. The
expiration of such patents are not expected to have a material adverse effect on
the Company's operations.

    The Company spent $9.6 million, $5.9 million and $3.5 million on
engineering, research and development in 1998, 1997 and 1996, respectively. The
Company works closely with OEMs to constantly improve design and manufacturing
technology and product functionality. When an OEM is in the process of
developing a new model, it typically approaches an established or incumbent
supplier with a request to supply the required towing system or rack system. The
Company is typically contacted two to four years prior to the start of
production of the new model. The Company's product development engineers then
work closely with the OEM to develop a product that satisfies the OEM's
aesthetic and functional requirements. This relationship also provides the
Company with a competitive advantage in the aftermarket because the Company
already possesses the knowledge to create a system compatible with new model
vehicles prior to release.

    The Company has extensive testing capabilities which enable it to test and
certify its products. The Company subjects its products to tests which it
believes are more demanding than conditions which would occur during normal use.
The Company has specialized equipment which it has purchased or developed for
use in its testing laboratories.


                                       7
<PAGE>   10


         Since May 1994, six European countries enacted the new EC regulatory
standards which require that towing systems undergo significant safety testing
prior to gaining approval for sale. This safety testing requires that a towing
system be extensively tested for fatigue and includes subjecting a towing system
to upwards of two million high load pulses. The Company does its testing in its
own laboratory under the control of an independent institute that is authorized
by the EC to approve the towing systems for sale. The quality assurance system
is regularly audited by an independent institute and by the automotive OEMs
themselves. The Company has continually been awarded the highest distinction of
achievement by the independent institute.

RAW MATERIALS

         The principal raw material used in the Company's products is steel,
which is purchased in sheets, rolls, bars or tubes and represents approximately
50% of the Company's raw material costs. The Company also purchases significant
amounts of aluminum and plastics. The Company has various suppliers globally and
has not had difficulties in procuring raw materials nor does it expect to have
any problems in the future. The Company is committed to supplier development and
long-term supplier relationships. However, most of the Company's raw material
demands are for commodities and, as such, can be purchased on the open market on
an as needed basis. The Company selects among available suppliers by comparing
cost, consistent quality and timely delivery as well as compliance with QS-9000
and ISO-9000 standards.

         The Company customarily obtains its supplies through individual
purchase orders. In some instances, the Company will enter into short-term
contracts with its suppliers which generally run one year or less. However, the
Company has signed a long-term supply agreement which terminates in 2004 with
one of its painting suppliers, Crown Group, Inc. ("Crown"), under which Crown
opened a state-of-the-art paint line in a facility adjacent to the Company's
Port Huron, Michigan facility.

COMPETITION

         The Company's industry is highly competitive. A large number of actual
or potential competitors exist, some of which are larger than the Company and
have substantially greater resources than the Company. The Company competes
primarily on the basis of product quality, cost, timely delivery, customer
service, engineering and design capabilities and new product innovation in both
the OEM market and the automotive aftermarket. The Company believes that as OEMs
continue to strive to reduce new model development cost and time, innovation and
design and engineering capabilities will become more important as a basis for
distinguishing competitors. The Company believes it has an outstanding
reputation in both of these areas. In the automotive aftermarket, the Company
believes that its wide range of product applications is a competitive advantage.
For example, the Company has developed towing systems to fit substantially all
the light vehicles produced in North America and Europe. The Company believes
its competitive advantage in the aftermarket is enhanced by its close
relationship with OEMs, allowing the Company access to automobile design at an
earlier time than its competitors.

         In the towing systems market, the Company competes with Draw-Tite Inc.
and Reese Products Inc., both of which are subsidiaries of MascoTech, Bosal
Holding B.V., The Oris Group, Production Stamping Inc. and numerous smaller
competitors.

         In the rack systems and accessories market, the Company's competitors
include JAC Holding Corp., Thule, which is a wholly-owned subsidiary of Eldon AB
(a Swedish company), Yakima Products, Inc., Barrecrafters, Graber Products Inc.
and several smaller competitors.

ENVIRONMENTAL REGULATION

         The Company's operations are subject to foreign, state and local
environmental laws and regulations that limit the discharges into the
environment and establish standards for the handling, generation, emission,
release, discharge, treatment, storage, and disposal of certain materials,
substances and wastes. In many jurisdictions, these laws are complex, change
frequently and have tended to become stronger over time.

         In jurisdictions such as the United States, such obligations, including
but not limited to those under the Comprehensive Environmental Response,
Compensation & Liability Act ("CERCLA"), may be joint and several and may apply
to conditions at properties presently or formerly owned or operated by an entity
or its predecessors, as well as to conditions at properties at which waste or
other contamination attributable to an entity or its predecessors have been sent
or otherwise come to be located. The Company believes that its operations are in
substantial compliance with the terms of all applicable environmental laws and
regulations as currently interpreted. In addition, to the best of the Company's
knowledge, there are no existing or potential environmental claims against the
Company nor has the Company received any notification nor is there any current
investigation regarding, the disposal,


                                       8
<PAGE>   11

release, or threatened release at any location of any hazardous substance
generated or transported by the Company. However, the Company cannot predict
with any certainty that it will not in the future incur liability under
environmental laws and regulations with respect to contamination of sites
currently or formerly owned or operated by the Company (including contamination
caused by prior owners and operators of such sites), or the off-site disposal of
hazardous substances.

    While historically the Company has not had to make significant capital
expenditures for environmental compliance, the Company cannot predict with any
certainty its future capital expenditures for environmental compliance because
of continually changing compliance standards and technology. Future events, such
as changes in existing environmental laws and regulations or unknown
contamination of sites owned or operated by the Company (including contamination
caused by prior owners and operators of such sites), may give rise to additional
compliance costs which could have a material adverse effect on the Company's
financial condition. Furthermore, actions by foreign, federal, state and local
governments concerning environmental matters could result in laws or regulations
that could increase the cost of producing the products manufactured by the
Company or otherwise adversely affect the demand for its products. Additionally,
the Company does not currently have any insurance coverage for environmental
liabilities and does not anticipate obtaining such coverage in the future.

EMPLOYEES

    At December 31, 1998, the Company had approximately 1,800 employees of whom
approximately 1,500 are hourly employees and approximately 300 are salaried
personnel. Approximately 160 of the Company's employees in the United States at
the Port Huron, Michigan facility are represented by the Teamsters Union.
Collective bargaining agreements with the Teamsters Union affecting these
employees expire in April 2004. As is common in many European jurisdictions,
substantially all of the Company's employees in Europe are covered by
country-wide collective bargaining agreements. The Company believes that its
relations with its employees are good.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS


    For financial information about foreign and domestic operations of the
Company, see "Note 12" of the Company's "Notes to Consolidated Financial
Statements".


                                       9
<PAGE>   12


    ITEM  2.      PROPERTIES

    The Company's executive offices are located in 14,550 square feet of leased
space in Sterling Heights, Michigan. The Company has 25 facilities with a total
of 2,054,050 square feet of space. The Company believes that substantially all
of its property and equipment is in good condition and that it has sufficient
capacity to meet its current and projected manufacturing and distribution needs.

    The Company's facilities are as follows:
<TABLE>
<CAPTION>
                                                                SQUARE    OWNED/         LEASE
          LOCATION                       FUNCTION                FEET     LEASED     EXPIRATION**
---------------------------   -----------------------------   --------- ---------  --------------
<S>                           <C>                             <C>       <C>        <C> 
North America                                                                       
-------------
Shelby Township, Michigan*    Manufacturing                     42,800    Owned                 --
Shelby Township, Michigan*    Manufacturing and warehousing     13,000   Leased               2008
Port Huron, Michigan*         Manufacturing and warehousing    200,000    Owned                 --
Sterling Heights, Michigan*   Administration and engineering    14,550   Leased               2003
Mt. Clemens, Michigan         Warehousing                       25,000   Leased     Month to Month
Lodi, California              Administration, manufacturing,   150,000    Owned                 --
                              engineering and warehousing                           
Lodi, California              Warehousing                       25,000   Leased     Month to Month
Auburn Hills, Michigan        Warehousing                       49,000   Leased               2005
Madison Heights, Michigan*    Administration and                90,000   Leased               2002
                              manufacturing
Madison Heights, Michigan*    Engineering and manufacturing     18,000   Leased               2002
Granby, Quebec                Administration, manufacturing     72,000   Leased               2001
                              and
                              warehousing                                           
Granby, Quebec                Warehousing                       14,000   Leased     Month to Month
Bromptonville, Quebec         Manufacturing                      2,000   Leased               1999
Hamer Bay, Ontario            Manufacturing and                  7,500    Owned                 --
                              administration

Europe                                                                              
------
Sandhausen, Germany           Administration and engineering     5,000   Leased     Month to Month
Barcelona, Spain              Manufacturing and                  6,200   Leased               1999
                              administration
Staphorst, The Netherlands*   Administration, manufacturing,   405,000    Owned                 --
                              warehousing and engineering                           
Hoogeveen, The Netherlands*   Manufacturing and warehousing    185,000    Owned                 --
Fensmark, Denmark*            Manufacturing and warehousing     95,000    Owned                 --
Nuneaton, United Kingdom*     Manufacturing and warehousing     75,000    Owned                 --
Vanersborg, Sweden*           Manufacturing, warehousing and   160,000   Leased               2004
                              engineering                                           
Wolsztyn, Poland              Warehousing                        5,000   Leased     Month to Month
Reims, France                 Manufacturing and warehousing    115,000    Owned                 --
St. Victoria di Gualtieri,    Administration, manufacturing,   170,000   Leased               2003
Italy                         warehousing and engineering
St. Victoria di Gualtieri,    Manufacturing and warehousing    110,000   Leased               2003
Italy
</TABLE>

----------

 * QS 9000 and/or ISO 9000 certification.
** Gives effect to all renewal options.


ITEM 3.    LEGAL PROCEEDINGS

    From time to time, the Company is subject to legal proceedings and other
claims arising in the ordinary course of its business. The Company believes that
it is not presently a party to any litigation the outcome of which would have a
material adverse effect on its financial condition or results of operations. The
Company maintains insurance coverage against claims in an amount which it
believes to be adequate.


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

    None.


                                       10
<PAGE>   13

                                     PART II

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

    There is no established public trading market for the Company's Class A
Units. At March 15, 1999, there were 22 holders of record of Class A Units.
Except as set forth below with respect to quarterly tax distributions to
Members, the Company has never declared or paid dividends (or made any other
distributions) on the Class A Units and does not anticipate doing so in the
foreseeable future. Under certain loan agreements, the Company is prohibited
from declaring or paying any cash dividend or making distributions thereon,
except for quarterly distributions to Members to the extent of any tax liability
with respect to the Class A Units and except for repurchases of Class A Units
from employees upon a termination of their employment with the Company pursuant
to an Employment Agreement and the Operating Agreement.

    As listed below, since September 1995, the Company has issued unregistered
securities to investors and to certain other individuals. Each such issuance was
made in reliance upon the exemption from the registration requirements of the
Securities Act of 1933, as amended, contained in Section 4(2) of the Securities
Act on the basis that such transactions did not involve a public offering.

    1)       On September 28, 1995, pursuant to their respective subscription
             agreements, the Company issued an aggregate of 13,860 of its Class
             A Units for an aggregate purchase price of $13.9 million, to Chase
             Venture Capital Associates (an affiliate of CCP), F. Alan Smith,
             Barry Banducci, Richard Borghi, Marshall Gladchun and MascoTech.

    2)       On September 30, 1996 pursuant to their respective subscription
             agreements, the Company issued an aggregate of 279 of its Class A
             Units for an aggregate purchase price of $279,000, to Chase Venture
             Capital Associates (an affiliate of CCP), Marshall Gladchun, the
             Laverne A. Farris Trust, and certain employees of SportRack LLC.

    3)       On October 30, 1996 pursuant to an Agreement for the Sale and
             Purchase of Shares in Brink BV dated October 30, 1996, the Company
             issued an aggregate of 1,230 of its Class A Units for an aggregate
             purchase price of $4.3 million, to the former shareholders of Brink
             B.V.

    4)       On August 5, 1997 pursuant to an Asset Purchase Agreement among
             Valley Industries, LLC, Valley Industries, Inc., certain affiliates
             of Valley Industries, Inc., Robert L. Fisher and Roger T. Morgan
             dated August 5, 1997, the Company issued an aggregate of 802 of its
             Class A Units for an aggregate purchase price of $4.5 million, to
             Robert L. Fisher and Roger T. Morgan.

    5)       On October 31, 1997 pursuant to an Asset Purchase Agreement among
             Bell Sports Corp., Bell Sports Canada, Inc. and Advanced Accessory
             Systems Canada Inc./Les Systems d' Accessorie Advanced Canada Inc.
             dated as of July 2, 1997, the Company issued an aggregate of 100 of
             its Class A Units for an aggregate purchase price of $500,000 to
             Jean M. Maynard.

    6)       On December 31, 1997 the Company issued 140 of its Class A Units to
             CB Capital Investors, Inc. (an affiliate of CCP) in exchange for
             its 1% interest in SportRack.

    7)       On April 22, 1998 pursuant to their respective subscription
             agreements, the Company issued an aggregate of 43 of its Class A
             Units for an aggregate purchase price of approximately $150,000, to
             Gerrit de Graaf and J. Wim Rengelink.


                                       11
<PAGE>   14


ITEM 6.    SELECTED HISTORICAL FINANCIAL DATA

    The information below presents historical financial data of the MascoTech
Division ("Predecessor") for the year ended December 31, 1994 and the period
from January 1, 1995 through September 27, 1995 (the period prior to the
acquisition of the net assets of MascoTech Division by the Company). The data as
of and for the year ended December 31, 1994 have been derived from the unaudited
financial statements of the MascoTech Division and the data for the period from
January 1, 1995 through September 27, 1995 have been derived from the audited
financial statements of the MascoTech Division. The data as of and for the
period from September 28, 1995 through December 31, 1995 and for the years ended
December 31, 1996, 1997 and 1998 represent consolidated financial data of the
Company subsequent to the acquisition of the MascoTech Division, and include (i)
the operations of Brink subsequent to the Brink Acquisition on October 30, 1996;
(ii) the operations of the sportrack division of Bell and Nomadic subsequent to
the SportRack International Acquisition on July 2, 1997 and July 24, 1997,
respectively, (iii) the operations of Valley subsequent to the Valley
Acquisition on August 5, 1997, (iv) the operations of Ellebi subsequent to the
Ellebi Acquisition on January 2, 1998, (v) the operations of Tranfo-Rakzs
subsequent to the Tranfo-Rakzs Acquisition on February 7, 1998, and have been
derived from the audited financial statements of the Company. The following
table should be read in conjunction with the financial statements of the Company
and notes thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                                    COMPANY                                      PREDECESSOR
                                          ------------------------------------------------------------  -------------------------
                                                                                         PERIOD FROM       PERIOD FROM
                                                            YEAR ENDED                 SEPTEMBER 28, TO   JANUARY 1 TO
                                                           DECEMBER 31,                  DECEMBER 31,     SEPTEMBER 27,
                                            -----------------------------------------       
                                              1998(3)       1997(2)         1996(1)         1995             1995        1994
                                           ------------  ------------   -------------  ----------------  -------------- --------
                                                       (DOLLARS IN THOUSANDS)                        (DOLLARS IN THOUSANDS)
<S>                                   <C>           <C>            <C>            <C>               <C>            <C>     
STATEMENT OF OPERATIONS DATA:
Net sales..........................         $290,139      $188,678       $ 81,466         $  16,299        $ 48,698      $ 60,882
Cost of sales(4)...................          213,435       135,556         53,607            12,458          38,645        47,716
                                            --------      --------       --------         ---------        --------      --------
  Gross profit.....................           76,704        53,122         27,859             3,841          10,053        13,166
Selling, administrative and product        
  development expenses(4)..........           50,839        31,350         13,413             1,472           6,107         7,313
Amortization of intangible assets..            3,551         2,336          2,475               546             --            --
Impairment charge(4)...............            7,863           --             --                --              --            --
                                            --------      --------       --------         ---------        --------      -------
  Operating income.................           14,451        19,436         11,971             1,823           3,946         5,853
Other (income) expense                     
  Interest expense(5)..............           18,633        12,627          4,312               975             --            --
  Foreign currency (gain) loss(6)..           (4,995)        6,097          1,330               --              --            --
  Other, net.......................              --            --             (80)              (22)             65          (105)
                                            --------      --------       --------         ---------        --------      --------
  Income before minority interest,         
    extraordinary charge and income        
    taxes..........................              813           712          6,409               870           3,881         5,958
Provision (benefit) for income             
  taxes(7).........................              903        (2,856)          (491)              --            1,324         2,114
                                            --------      --------       --------         ---------        --------      --------
  Income before minority interest 
    and extraordinary charge.......              (90)        3,568          6,900               870           2,557         3,844
Minority interest..................              --             97             69                 9             --            --
                                            --------      --------       --------         ---------        --------      -------
  Income before extraordinary              
    charge.........................              (90)        3,471          6,831               861           2,557         3,844
Extraordinary charge(8)............              --          7,416          1,970               --              --            --
                                            --------      --------       --------         ---------        --------      -------
  Net income (loss)................         $    (90)     $ (3,945)      $  4,861         $     861        $  2,557      $  3,844
                                            ========      ========       ========         =========        ========      ========
OTHER DATA:                                                                                                             
Cash flows from operating                  
  activities.......................         $ 21,879      $  6,982       $  9,917         $   1,390        $  3,741      $  1,165
EBITDA(9)..........................           38,364        27,916         16,448             2,651           4,735         6,773
Depreciation.......................           10,857         6,144          2,002               282             789           920
Capital expenditures...............            9,998         7,751          3,124               491           2,079         1,392
Ratio of EBITDA to interest                     2.06x         2.21x          3.81x            2.72x             --            --
expense(5)........................         
Ratio of earnings to fixed                      1.04x         1.06x          2.43x            1.89x             --            --
charges(5)(10)....................         
BALANCE SHEET DATA (AT END OF                                                                            
PERIOD)                                    
Cash..............................          $ 11,240      $ 27,348       $  2,514         $   1,637        $      3      $      8
Working capital...................            49,232        65,803         14,368             3,960           4,002         3,518
Total assets......................           258,981       265,558        148,359            59,979          24,698        21,743
Total debt, including current                187,524       197,126         93,142            34,900             --            --
  maturities(5)...................         
Mandatorily redeemable warrants(5)             4,409         3,507          3,498               200             --            --
Members' equity...................            15,147        16,444         18,463            14,221          15,794        13,664
</TABLE>                               

----------

(1) In October 1996, the Company acquired Brink. The Brink Acquisition has been
    accounted for in accordance with the purchase method of accounting.
    Accordingly, the operating results of Brink are included in the consolidated
    operating results of the Company subsequent to October 30, 1996.


                                       12
<PAGE>   15

(2)  The Company acquired the net assets of the sportrack division of Bell on
     July 2, 1997, Nomadic on July 24, 1997, and the net assets of Valley
     Industries on August 5, 1997. The SportRack International Acquisition and
     Valley Acquisition have been accounted for in accordance with the purchase
     method of accounting. Accordingly, the operating results of SportRack
     International and Valley are included in the consolidated operating results
     of the Company subsequent to the respective acquisition dates.

(3)  The Company acquired the towbar segment of Ellebi S.p.A. on January 2, 1998
     and the net assets of Tranfo-Rakzs on February 7, 1998. The Ellebi
     Acquisition and Transfo-Rakzs Acquisition have been accounted for in
     accordance with the purchase method of accounting. Accordingly, the
     operating results of Ellebi and Tranfo-Rakzs are included in the
     consolidated operating results of the Company subsequent to the respective
     acquisition dates.

(4)  In June 1998, information became available that indicated that certain
     assets acquired from Bell (accounts receivable, inventory and tooling) had
     a fair value less than originally recorded. The SportRack International
     purchase was renegotiated and a $2.0 million reimbursement was received
     from Bell. Accounts receivable, inventory and tooling were reduced by $6.5
     million and additional goodwill of $4.5 million, net of the $2.0 million
     reimbursement from Bell, was recorded. During the second half of 1998,
     management further reassessed the operations of SportRack International,
     took actions to restructure the operations, and recorded restructuring
     charges totaling $1.9 million. Restructuring charges have been included in
     cost of sales ($1.1 million) and in selling, administrative and product
     development expenses ($832,000) in the Company's consolidated statement of
     operations. Management believes that substantially all restructuring costs
     have been incurred as of December 31, 1998. Concurrent with the
     reassessment of the SportRack International operations, management reviewed
     the carrying value of goodwill and other intangible assets, determined that
     future cash flows would not be sufficient to recover recorded amounts, and
     recorded an impairment charge of $7.9 million.

(5)  Prior to its acquisition by the Company on September 28, 1995, the
     Predecessor was a division of MascoTech and, accordingly, had no
     outstanding indebtedness.

(6) Primarily represents net currency gains and loss on indebtedness of the
    Company's foreign subsidiaries denominated in currencies other than their
    functional currency.

(7) The Predecessor, as a division of MascoTech, was allocated a portion of the
    consolidated income tax provision, which approximated the division's federal
    income tax provision on a stand-alone basis. The Company is a limited
    liability corporation and, as such, the earnings of the Company and its
    domestic subsidiaries are included in the taxable income of the Company's
    unitholders and no federal income tax provision is required. The Company's
    foreign subsidiaries provide for income taxes on their results of
    operations.

(8) In connection with the indebtedness extinguished as a result of the Brink
    Acquisition, a prepayment penalty of $220,000 and unamortized deferred debt
    issuance costs of $1.8 million were charged to operations during 1996. In
    connection with indebtedness extinguished as a result of issuing the Notes
    (as defined below), a prepayment penalty of $1.4 million, $3.1 million of
    unamortized debt discount, and unamortized deferred debt issuance costs of
    $3.2 million were charged to operations during 1997. The debt extinguishment
    charges in 1997 were reduced by $365,000 representing the income tax benefit
    recognized by Brink.

(9) EBITDA is defined as operating income plus depreciation and amortization
    adjusted in 1998 for the non-cash portion of impairment and restructuring
    charges ($9.5 million for the year ended December 31, 1998), which
    definition may not be comparable to similarly titled measures reported by
    other companies. EBITDA is presented because it is generally accepted as
    providing useful information regarding a company's ability to service and/or
    incur indebtedness. However, EBITDA should not be considered in isolation
    from or as an alternative to net income, cash flows from operating
    activities and other consolidated income or cash flow statement data
    prepared in accordance with generally accepted accounting principles or as a
    measure of profitability or liquidity. In addition, funds depicted by the
    EBITDA measurement are not fully available for discretionary use because of
    debt service requirement, expenditures for capital replacement and
    expansion, and the need to conserve funds for other commitments and
    uncertainties.

(10)For purposes of determining the ratio of earnings to fixed charges,
    "earnings" are defined as income (loss) before minority interest,
    extraordinary charge and income taxes, plus fixed charges. "Fixed charges"
    consist of interest expense on all indebtedness (including amortization of
    deferred debt issuance costs) and the component of operating lease rental
    expense that management believes is representative of the interest component
    of rent expense.


                                       13
<PAGE>   16


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

    The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the financial
statements and notes thereto of the Company included elsewhere in this Form
10-K. This Form 10-K contains forward-looking statements. Discussions containing
such forward-looking statements may be found in the material set forth below and
under "Business," as well as in this Form 10-K generally. Any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties. Actual events or results may differ materially from
those discussed in the forward-looking statements as a result of various factors
set forth in this Form 10-K generally.

GENERAL

    Chase Capital Partners ("CCP") and certain members of the Company's
management formed the Company in September 1995 to make strategic acquisitions
of automotive exterior accessory manufacturers and to integrate those
acquisitions into a global enterprise that would be a preferred supplier to the
automotive industry.

ACQUISITIONS

    In September 1995, the Company, through its SportRack subsidiary, acquired
the MascoTech Division of MascoTech. The MascoTech Division was a North American
supplier of rack systems and accessories to the automotive OEM market and
aftermarket.

    In October 1996, the Company consummated the Brink Acquisition by acquiring
all of the capital stock of Brink B.V., a private company with limited liability
incorporated under the laws of The Netherlands and a European supplier of towing
systems to the automotive OEM market and aftermarket. In December 1996,
ownership of Brink B.V. and its subsidiaries was transferred to Brink, a newly
formed subsidiary of the Company.

    In August 1997, the Company formed Valley to effect the Valley Acquisition
by acquiring the net assets of Valley Industries, a North American supplier of
towing systems to the automotive OEM market and aftermarket.

    Two smaller acquisitions were completed in July 1997 by SportRack
International. SportRack International acquired from Bell the net assets of its
sportrack division, a Canadian supplier of rack systems and accessories to the
automotive aftermarket. CCP at that time was a significant equity investor in
Bell. SportRack International also acquired the capital stock of Nomadic, a
Canadian supplier of rack systems and accessories to the automotive OEM market
and aftermarket. The acquisitions of the sportrack division of Bell and Nomadic
are collectively referred to in this 10-K as the "SportRack International
Acquisition."

    In January 1998, the Company through Brink International B.V., acquired the
net assets of the towbar segment Ellebi S.p.A., an Italian supplier of towing
systems to the automotive OEM market and aftermarket.

    In February 1998, the Company through SportRack International, Inc.,
acquired the net assets of Transfo-Rakzs, a Canadian supplier of rear hitch rack
carrying systems and related products to the automotive aftermarket.


                                       14
<PAGE>   17

SUMMARY RESULTS OF OPERATIONS

    The following table presents the major components of the statement of
operations together with percentages of each component as a percentage of net
sales.
<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                             ---------------------------------------------------------------------------
                                                        1998                       1997                       1996
                                            ----------------------     ----------------------     ---------------------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                         <C>            <C>         <C>            <C>         <C>            <C>
        Net sales ......................     $ 290,139      100.0%      $ 188,678      100.0%      $  81,466      100.0%
          Gross profit .................        76,704       26.4%         53,122       28.2%         27,859       34.2%
        Selling, administrative and
        product development expenses ...        50,839       17.5%         31,350       16.6%         13,413       16.5%
                              
        Amortization of intangible 
          assets .......................         3,551        1.2%          2,336        1.2%          2,475        3.0%
        Impairment charge ..............         7,863        2.7%           --         --              --         --
          Operating income .............        14,451        5.0%         19,436       10.3%         11,971       14.7%
        Interest expense ...............        18,633        6.4%         12,627        6.7%          4,312        5.3%
        Foreign currency (gain) loss ...        (4,995)      (1.7%)         6,097        3.2%          1,330        1.6%
        Income before minority interest,
          extraordinary charge and
          income taxes .................           813        0.3%            712        0.4%          6,409        7.9%
        Income tax provision (benefit) .           903        0.4%         (2,856)      (1.5%)          (491)      (0.2%)
        Extraordinary charge ...........          --         --             7,416        3.9%          1,970        2.4%
        Net income (loss) ..............           (90)       0.0%         (3,945)      (2.1%)         4,861        6.0%
          </TABLE>

RESULTS OF OPERATIONS

1998 COMPARED TO 1997

    Net sales. Net sales for 1998 were $290.1 million, representing an increase
of $101.5 million, or 53.8% over net sales for 1997. The increase resulted
primarily from the Ellebi Acquisition in January 1998, the Transfo-Rakzs
Acquisition in February 1998, the Valley Acquisition in August 1997 and the
SportRack International Acquisition in July 1997. The 1998 sales increase
resulting from these acquisitions was $80.1 million. The remaining sales
increase of $21.4 million resulted primarily from increased sales volumes of OEM
rack systems on existing programs and the effect of having a full year of sales
on new OEM rack system programs launched during 1997. On a pro forma basis, if
the net sales of Ellebi and Tranfo-Rakzs and the net sales of Valley and
SportRack International prior to acquisition were included with those of the
Company for 1997 net sales for 1997 would have been $268.5 million, as compared
to net sales of $290.1 million for 1998, an increase of $21.6 million, or 8.1%.

    Gross profit. Gross profit for 1998 was $76.7 million, representing an
increase of $23.6 million, or 44.4%, over the gross profit for 1997. This
increase resulted from the increase in net sales offset by a decrease in the
gross margin. Gross profit as a percentage of net sales was 26.4% in 1998
compared to 28.2% in 1997. The decrease in gross margin resulted primarily from
lower gross margins of newly acquired businesses, lower gross profit margins
from sales of OEM rack systems resulting from increased sales of lower margin
programs and restructuring charges (as further discussed below) related to the
operations of SportRack International.

    Selling, administrative and product development expenses. Selling,
administrative and product development expenses for 1998 were $50.8 million,
representing an increase of $19.5 million, or 62.2% over selling, administrative
and product development expenses for 1997, reflecting the increase in net sales.
Selling, administrative and product development expenses as a percentage of net
sales increased to 17.5% in 1998 from 16.6% in 1997. This increase is the result
of increased spending on research and development activities, higher selling,
administrative and product development expenses as a percentage of nets sales
for Ellebi, increased costs in the roof rack aftermarket as a percentage of net
sales and restructuring charges (as further discussed below) related to the
operations of SportRack International.

    Impairment and restructuring charges. In June 1998, information became
available that indicated that certain assets acquired from Bell (accounts
receivable, inventory and tooling) had a fair value less than originally
recorded. The SportRack International purchase price was renegotiated and a $2.0
million reimbursement was received from Bell. Accounts receivable, inventory and
tooling were reduced by $6.5 million and additional goodwill of $4.5 million,
net of the $2.0 million reimbursement from Bell, was recorded.

    During the second half of 1998, management further reassessed the operations
of SportRack International, and as a result took actions to restructure the
operations, rationalize the product offerings, customer and supplier base,
distribution channels and warehousing, and terminated 14 employees, including
certain members of SportRack International's senior management. A restructuring
charge totaling $1.9 million was recorded including cash expenditures made
during 1998 totaling $258,000 consisting of outside legal and accounting fees,
employee severance and costs to dispose of obsolete inventory. Non-cash expenses
included in the restructuring charge totaling $1.6 million included recording of
inventory reserves related to the product rationalization of $1.1 million


                                       15
<PAGE>   18
and recording of customer allowances, bad debts and other items of $574,000. The
restructuring charge related to inventory ($1.1 million) has been included in
cost of sales and other restructuring costs ($832,000) have been included in
selling, administrative and product development expenses in the Company's
consolidated statement of operations.

    Concurrent with the reassessment of SportRack International's operations,
management reviewed the revised carrying value of goodwill and other intangible
assets, determined that future cash flows would not be sufficient to recover
recorded amounts, and recorded an impairment charge of $7.9 million. No
impairment or restructuring charge was recorded during 1997.

    Operating income. Operating income for 1998 was $14.5 million, a decrease of
$5.0 million, or 25.6%, compared to operating income for 1997. The decrease was
due primarily to an impairment and restructuring charge in 1998. Excluding the
impairment and restructuring charges, operating income in 1998 would have been
$24.2 million, representing an increase of $4.8 million, or 24.6% over operating
income for 1997. Excluding the impairment and restructuring charge, operating
income as a percentage of net sales decreased to 8.3% in 1998 from 10.3% in 1997
as a result of lower gross margins and higher selling, administrative and
product development expenses as a percentage of net sales in 1998.

    Interest expense. Interest expense for 1998 was $18.6 million, an increase
of $6.0 million, or 47.6%, over interest expense for 1997. The increase was
primarily due to additional borrowings to finance (i) the SportRack
International Acquisition in July 1997, (ii) the Valley Acquisition in August
1997, (iii) the Ellebi Acquisition in January 1998, (iv) the Tranfo-Rakzs
Acquisition in February 1998, and (vi) the effect of the issuance of the Notes
(as defined below), of which a portion of the proceeds were used to repay debt
from the Valley Acquisition and other then existing debt. These increases were
partially offset by lower interest expense due to lower average line of credit
borrowings during the year and lower interest rates on the Company's variable
rate debt.

    Foreign currency (gain) loss. Foreign currency gain in 1998 was $5.0
million. The foreign currency gain primarily relates to the debt of Brink (whose
functional currency was the Dutch Guilder through December 31, 1998) which is
denominated in U.S. Dollars including intercompany debt and substantially all
outstanding loans under the Company's Second Amended and Restated Credit
Agreement, except for Term note A (as defined below) which was changed from a
U.S. Dollar denominated loan to a Dutch Guilder denominated loan in October
1998. During 1998, the U.S. dollar weakened significantly in relation to the
Dutch Guilder. At December 31, 1997, the exchange rate of the Dutch Guilder to
the U.S. dollar was 2.02:1, whereas at December 31, 1998 the exchange rate was
1.89:1, or a 6.4% increase in the relative value of the Dutch Guilder.

    Provision (benefit) for income taxes. The Company and certain of its
domestic subsidiaries have elected to be taxed as limited liability companies
for federal income tax purposes. As a result of this election, the Company's
domestic taxable income accrues to the individual members. Certain of the
Company's domestic subsidiaries and foreign subsidiaries are subject to income
taxes in their respective jurisdictions. During 1998, the Company had a loss
before income taxes for its taxable subsidiaries totaling $9.2 million and
recorded a provision for income taxes of $903,000. The effective tax rate
differs from the U.S. federal income tax rate primarily due to changes in
valuation allowances on the deferred tax assets of SportRack International
recorded during 1998 and differences in the tax rates of foreign countries.
During 1997, the Company had a loss before income taxes for its taxable
subsidiaries totaling $9.9 million and recorded a benefit for income taxes of
$3.2 million.

    Extraordinary charge. There were no extraordinary charges incurred by the
Company during the year ended December 31, 1998. The extraordinary charge
resulting from debt extinguishment in 1997 was $7.4 million. In connection with
the issuance of $125 million aggregate principal amount of 9 3/4% Senior
Subordinated Promissory Notes due 2007 (the "Notes"), the Company repaid, in
full, its Senior Subordinated Debt and Junior Subordinated Guilder Note and
repaid a portion of certain term notes under the Amended and Restated Credit
Agreement. In connection with such debt extinguishments, the Company recorded an
extraordinary charge comprised of $1.4 million in prepayment penalties, $3.1
million of unamortized debt discount and $3.2 million of unamortized debt
issuance costs, less $365,000 of tax benefit.

         Net income (loss). The net loss for 1998 was $90,000 as compared to a
net loss of $3.9 million in 1997, a decrease of $3.9 million. Operating income
for 1998 was $14.5 million, representing a decrease of $5.0 million, or 25.6%
compared to operating income for 1997. The decreased operating income, resulting
from the impairment and restructuring charges offset by the inclusion of Valley
and SportRack International's operating results for a full year in 1998 as
compared to five and six months, respectively, in 1997, the Ellebi acquisition
in January 1998 and the Tranfo-Rakzs acquisition in February 1998, and increased
interest expense ($6.0 million) was offset by the foreign currency gain in 1998
as compared with a foreign currency loss in 1997 related to Brink Acquisition
debt denominated in U.S. dollars ($11.1 million), and no extraordinary charge in
1998 compared with an extraordinary charge resulting from debt extinguishment in
1997 ($7.4 million), and reduced by the provision for income taxes in 1998 as
compared to an income tax benefit in 1997 ($3.8 million).


                                       16
<PAGE>   19
1997 COMPARED TO 1996

    Net sales. Net sales for 1997 were $188.7 million, representing an increase
of $107.2 million, or 131.6% over net sales for 1996. The increase was due
primarily to the Valley Acquisition in August 1997, $37.9 million (representing
net sales for the five month period ended December 31, 1997, the period of 1997
subsequent to acquisition), the SportRack International Acquisition in July
1997, $2.5 million (representing net sales for the six month period ended
December 31, 1997, the period 1997 subsequent to acquisition), and the full year
sales of Brink in 1997 as compared to two months in 1996 ($54.8 million
representing net sales for the ten month period ended October 31, 1997, the
period of 1997 comparable to the period prior to acquisition in 1996). In
addition, sales for SportRack increased $12.0 million because of increased sales
of rack systems to OEMs for installation on new light truck models and increased
OEM production of certain light truck models which use SportRack's systems. On a
pro forma basis, if the net sales of Valley and SportRack International, prior
to their respective acquisition dates, were included with those of the Company
for 1996 and 1997, and Brink sales, prior to its acquisition date, were included
with those of the Company for 1996, net sales for 1997 would have been $246.7
million, as compared to net sales of $233.5 million for 1996, an increase of
$13.2 million, or 5.7%.

    Gross profit. Gross profit for 1997 was $53.1 million, representing an
increase of $25.3 million, or 90.7%, over the gross profit for 1996. This
increase resulted from the increase in net sales offset by a decrease in the
gross margin. Gross profit as a percentage of net sales was 28.2% in 1997
compared to 34.2% in 1996. The decrease in gross margin resulted from a lower
gross margin on sales contributed by Valley and a lower gross margin on sales of
rack systems to the OEMs due to (i) launch costs related to new programs, (ii)
lower margins on certain newly launched programs, and (iii) price givebacks on
certain OEM programs.

    Selling, administrative and product development expenses. Selling,
administrative and product development expenses for 1997 were $31.4 million,
representing an increase of $17.9 million, or 133.7% over selling,
administrative and product development expenses for 1996, reflecting the
increase in net sales. Selling, administrative and product development expenses
as a percentage of net sales increased to 16.6% in 1997 from 16.5% in 1996.
Certain selling, administrative and product development expenses are relatively
fixed and do not increase proportionately with sales. The effect of these fixed
expenses was offset by higher expenses associated with the Company's European
expansion and new corporate headquarters. In addition, selling, administrative
and product development expenses were higher as a percentage of net sales for
Brink, which was acquired in October 1996, and SportRack International, which
was acquired in July 1997, than for the Company.

    Operating income. Operating income for 1997 was $19.4 million, an increase
of $7.5 million, or 62.4%, over operating income for 1996. The increase was due
primarily to inclusion of Brink operating results for the full year in 1997 as
compared to two months in 1996 together with the increases from the SportRack
International and Valley Acquisitions in July and August of 1997, respectively.
Operating income as a percentage of net sales decreased to 10.3% in 1997 from
14.7% in 1996 reflecting a decrease in gross margins offset by reduced
amortization of intangible assets as a result of changing the goodwill
amortization period from 15 years to 30 years in 1997.

    Interest expense. Interest expense for 1997 was $12.6 million, an increase
of $8.3 million, or 192.8%, over interest expense for 1996. The increase was
primarily due to additional borrowings to finance (i) the Brink Acquisition in
October 1996, (ii) the SportRack International Acquisition in July 1997, (iii)
the Valley Acquisition in August 1997, and (iv) the effect of the issuance of
the Notes (as defined below), of which a portion of the proceeds were used to
repay debt from the Valley Acquisition and the Brink Acquisition.

    Foreign currency (gain) loss. Foreign currency loss in 1997 was $6.1
million. The foreign currency loss primarily relates to the debt of Brink (whose
functional currency was the Dutch Guilder through December 31, 1998) which is
denominated in U.S. Dollars including intercompany debt and substantially all
outstanding loans under the Company's Second Amended and Restated Credit
Agreement. During 1997, the U.S. dollar strengthened significantly in relation
to the Dutch Guilder. At December 31, 1996, the exchange rate of the Dutch
Guilder to the U.S. dollar was 1.75:1, whereas at December 31, 1997 the exchange
rate was 2.02:1, or a 15.4% decline in the relative value of the Dutch Guilder.

    Provision (benefit) for income taxes. The Company and certain of its
domestic subsidiaries have elected to be taxed as limited liability companies
for federal income tax purposes. As a result of this election, the Company's
domestic taxable income accrues to the individual members. Certain of the
Company's domestic subsidiaries and foreign subsidiaries are subject to income
taxes in their respective jurisdictions. During 1997, the Company had a loss
before income taxes for its taxable subsidiaries totaling $9.9 million and
recorded a benefit for income taxes of $3.2 million. During 1996, the Company
had a loss before income taxes for its taxable subsidiaries totaling $1.8
million and recorded a benefit for income taxes of $491,000.


                                       17
<PAGE>   20
    Extraordinary charge. The extraordinary charge resulting from debt
extinguishment in 1997 was $7.4 million. In connection with the issuance of $125
million aggregate principal amount of 9 3/4% Senior Subordinated Promissory
Notes due 2007 (the "Notes"), the Company repaid, in full, its Senior
Subordinated Debt and Junior Subordinated Guilder Note and repaid a portion of
certain term notes under the Amended and Restated Credit Agreement. In
connection with such debt extinguishments, the Company recorded an extraordinary
charge comprised of $1.4 million in prepayment penalties, $3.1 million of
unamortized debt discount and $3.2 million of unamortized debt issuance costs,
less $400,000 of tax benefit.

    Net income (loss). The net loss for 1997 was $3.9 million as compared to net
income of $4.9 million in 1996, a decrease of $8.8 million. Operating income for
1997 was $19.4 million, representing an increase of $7.5 million, or 62.4% over
operating income for 1996. The increased operating income, resulting from
inclusion of Brink's operating results for a full year in 1997 as compared to
two months in 1996, the Valley Acquisition in August 1997, and the SportRack
International Acquisition in July 1997, was offset by increased interest costs
associated with such acquisitions ($8.3 million), increased foreign currency
loss related to Brink Acquisition debt denominated in U.S. dollars ($4.8
million), and an increase in an extraordinary charge resulting from debt
extinguishment ($5.4 million), collectively offset by an increase in the related
income tax benefit ($2.4 million).


LIQUIDITY AND CAPITAL RESOURCES

    The Company's principal liquidity requirements are to service its debt and
meet its working capital and capital expenditure needs. The Company's
indebtedness at December 31, 1998 was $187.5 million including current
maturities of $4.5 million. The Company expects to be able to meet its liquidity
requirements through cash provided by operations and through borrowings
available under the Second Amended and Restated Credit Agreement ("U.S. Credit
Facility").

Working Capital and Cash Flows

Working capital and key elements of the consolidated statement of cash flows
are:
<TABLE>
<CAPTION>
                                               1998           1997         1996
                                             ---------     ---------     --------
<S>                                          <C>           <C>           <C>
        Working Capital ................     $ 49,232      $ 65,803      $ 14,368
        Cash flows provided by operating
          activities ...................       21,879         6,982         9,917
        Cash flows (used for) investing
          activities ...................      (31,618)      (79,733)      (57,463)
        Cash flows provided by (used
          for) financing activities ....       (8,367)       97,080        48,605
</TABLE>

Working capital

    Working capital decreased by $16.6 million to $49.2 million at December 31,
1998 from $65.8 million at December 31, 1997 due to a decrease in cash of $16.1
million, a decrease of $5.7 million in working capital of SportRack
International related to the change in estimated fair value of accounts
receivable and inventory recorded in June 1998 and restructuring charges
recorded in 1998 (as discussed above) and a decrease in accounts receivable of
$5.9 million primarily related to the timing of collections of accounts
receivable from large customers, primarily OEMs. Offsetting these decreases are
increases in working capital of $9.7 million attributable to the Ellebi and
Tranfo-Rakzs acquisitions. Working capital increased by $51.4 million to $65.8
million at December 31, 1997 from $14.4 million at December 31, 1996 due to an
increase in cash of $24.8 million ($21.0 million of which was used to acquire
Ellebi on January 2, 1998), an increase of $17.6 million attributable to the
Valley and SportRack International acquisitions and an increase in accounts
receivable of $8.6 million primarily attributable to the timing of collections
of accounts receivable from large customers, primarily OEMs.

    Cash decreased by $16.1 million to $11.2 million at December 31, 1998 from
$27.3 million at December 31, 1997 primarily due to cash used for investing and
financing activities of $31.6 million and $8.4 million, respectively, offset by
cash provided by operating activities of $21.9 million. Cash increased by $24.8
million to $27.3 million at December 31, 1997 from $2.5 million at December 31,
1996 primarily due to cash provided by operating and financing activities of
$7.0 million and $97.8 million (of which $21.0 million was borrowed to finance
the acquisition of Ellebi on January 2, 1998), respectively, offset by cash used
for investing activities of $79.7 million.


                                       18
<PAGE>   21
Operating Activities

    Cash flow provided by operating activities for 1998 was $21.9 million,
compared to $7.0 million in 1997 and $9.9 million in 1996. Cash flow for 1998
increased due to the cash flows provided by acquisitions completed in 1998,
including the Ellebi Acquisition and the Transfo-Rakzs Acquisition, and the full
year effect of acquisitions completed in 1997, including the Valley Acquisition
and the SportRack International Acquisition. Acquisition related increases in
operating cash flow totaled $4.0 million. The remaining increase in operating
cash flows is attributable to improved operating performance and lower working
capital of SportRack. SportRack's working capital decreased primarily as a
result of the timing of collections of accounts receivable from large customers,
primarily OEMs.

    The Company's European and Canadian subsidiaries have income tax net
operating loss carryforwards ("NOLs") of approximately $1.3 million and $11.0
million, respectively, at December 31, 1998. The European NOLs have no
expiration date and the Canadian NOLs expire primarily in 2005. Management
believes that it is more likely than not that a portion of the deferred tax
assets of the Canadian subsidiaries will not be realized and a valuation
allowance of $4.2 million has been recorded against such assets. No valuation
allowance has been recorded for the European NOLs as it is management's belief
that it is more likely than not that the related deferred tax asset will be
realized.

Investing Activities

    Investing cash flows include acquisitions of property and equipment of $10.0
million, $7.8 million, and $3.1 million in 1998, 1997 and 1996, respectively.
The increase in capital expenditures during 1998 was primarily attributable to
the capital expenditures of Ellebi and Transfo-Rakzs, which were acquired in
1998, and the increased capital expenditures of Valley and SportRack
International, which were acquired during 1997. The Company estimates that
capital expenditures for 1999 will be primarily for the expansion of capacity,
productivity and process improvements and maintenance. The Company's 1999
capital expenditures are anticipated to include approximately $5.0 million for
replacing and upgrading existing equipment. The Company's ability to make
capital expenditures is subject to restrictions in the Amended and Restated
Credit Agreement, including a maximum of $12.5 million of capital expenditures
annually.

    Investing cash flows also include $22.8 million, $70.8 million, and $54.3
million in 1998, 1997, and 1996, respectively, for the acquisition of the Ellebi
and Tranfo-Rakzs (January and February 1998, respectively), SportRack
International and Valley (July and August 1997, respectively) and Brink (October
1996).

Financing Activities

    During 1998, financing cash flows were primarily limited to scheduled
payments of principal on the Company's term indebtedness of $3.7 million and net
repayments of borrowing under the Company's revolving loans of $4.5 million.
Financing cash flows in 1997 and 1996 include borrowings of $90.5 million, and
$46.1 million, respectively for the acquisition of the SportRack International,
Valley and Ellebi (July, August and December 1997, respectively) and Brink
(October 1996). Although the Ellebi Acquisition was consummated in January 1998,
proceeds related to borrowing for the purchase were received in December 1997
and were included in the Company's cash at December 31, 1997. Debt issuance
costs in connection with such borrowings were $2.6 million in both 1997 and
1996. In October 1997 the Company issued the Notes (as defined below). Proceeds
from the issuance, which totaled $124.5 million, were used to reduce or
eliminate certain of the Company's outstanding senior and subordinated debt and
to pay $4.7 million in offering costs. Proceeds from the issuance of membership
units were not significant in 1998 and were $5.0 million, and $4.6 million in
1997, and 1996, respectively. Distributions to members, in amounts sufficient to
meet the tax liability on the Company's domestic taxable income which accrues to
individual members, were not significant in 1998 and were $2.9 million in 1997
and $3.7 million in 1996.

Debt and Credit Sources

    Borrowings under the Company's U.S. Credit Facility and the Company's First
Amended and Restated Credit Agreement ("Canadian Credit Facility") bear interest
at floating rates which require interest payments on varying dates depending on
the interest rate option selected by the Company. Under the terms of these
credit facilities, the Company will be required to make principal payments
totaling approximately $4.5 million in 1999, $11.0 million in 2000, $11.8
million in 2001 and $11.8 million in 2002. The Company is also required to
purchase and maintain interest rate protection with respect to a portion of the
term loans for three years. The Notes bear interest at 9.75% which is payable
semiannually in arrears. See "Note 4" to the Company's "Consolidated Financial
Statements" for additional information regarding the U.S. Credit Facility, the
Canadian Credit Facility and the Senior Subordinated Notes.

                                       19
<PAGE>   22
    The Company is exposed to interest rate volatility with regard to variable
rate debt. The Company uses interest rate swaps to reduce interest rate
volatility. At December 31, 1998 and 1997 the notional value of interest rate
swaps was $18.5 million. Under the terms of the interest rate swap agreements,
the Company pays a fixed interest rate on the notional principal amount. The
effects of interest rate swaps are reflected in interest expense and are not
material.

    The Company expects that its primary sources of cash will be from operating
activities and borrowings under the U.S. Credit Facility and Canadian Credit
Facility each of which provide the Company with revolving notes. As of December
31, 1998, the Company had no amounts borrowed under the revolving note of either
the U.S. Credit Facility or the Canadian Credit Facility and has $25.0 million
available borrowing capacity. As part of the U.S. Credit Facility, Chase and NBD
committed to provide a $22.0 million Acquisition Revolving Note to finance
acquisitions. On December 31, 1997, the Company borrowed $21.0 million under the
Acquisition Revolving Note and used such proceeds to acquire the net operating
assets of the towbar segment of Ellebi S.p.A. on January 2, 1998. Future
acquisitions, if any, may require additional third party financing and there can
be no assurances that such funds would be available on terms satisfactory to the
Company, if at all.

    The Company's ability to satisfy its debt obligations will depend upon its
future operating performance, which will be affected by prevailing economic
conditions and financial, business, and other factors, certain of which are
beyond its control, as well as the availability of revolving credit borrowings
under the Amended and Restated Credit Agreement or a successor facility. The
Company anticipates that, based on current and expected levels of operations,
its operating cash flow, together with borrowings under the U.S. Credit Facility
and the Canadian Credit Facility, should be sufficient to meet its debt service,
working capital and capital expenditure requirements for the foreseeable future,
although no assurances can be given in this regard, including as to the ability
to increase revenues or profit margins. If the Company is unable to service its
indebtedness, it will be forced to take actions such as reducing or delaying
acquisitions and/or capital expenditures, selling assets, restructuring or
refinancing its indebtedness, or seeking additional equity capital. There is no
assurance that any of these remedies can be effected on satisfactory terms, if
at all, including, whether, and on what terms, the Company could raise equity
capital. See "Forward Looking Statements".

    The Company conducts operations in several foreign countries including
Canada, The Netherlands, Denmark, the United Kingdom, Sweden, France, Germany,
Poland, Spain and, Italy. Net sales from international operations during 1998
were approximately $99.8 million, or 34.4% of the Company's net sales. At
December 31, 1998, assets associated with these operations were approximately
42.6% of total assets, and the Company had indebtedness denominated in
currencies other than the U.S. dollar of approximately $26.4 million.

    The Company's international operations may be subject to volatility because
of currency fluctuations, inflation and changes in political and economic
conditions in these countries. Most of the revenues and costs and expenses of
the Company's operations in these countries are denominated in the local
currencies. The financial position and results of operations of the Company's
foreign subsidiaries are measured using the local currency as the functional
currency. Certain of the Company's foreign subsidiaries have debt denominated in
currencies other than their functional currency. As the exchange rates between
the currency of the debt and the subsidiaries functional currency change the
Company is subject to foreign currency gains and losses.

    The Company may periodically use foreign currency forward option contracts
to offset the effects of exchange rate fluctuations on cash flows denominated in
foreign currencies. The Company has no outstanding foreign currency forward
options at December 31, 1998 and does not use derivative financial instruments
for trading or speculative purposes.

YEAR 2000

General

    The "Year 2000 Issue" is the result of computer programs that were written
using two digits rather than four to define the applicable year. If the
Company's computer programs with date-sensitive functions are not Year 2000
compliant, they may recognize a date using "00" as the Year 1900 rather than the
Year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities.

    The Company and each of its operating subsidiaries are in the process of
implementing Year 2000 readiness programs with the objective of having all of
their significant business systems, including those that affect facilities and
manufacturing activities, functioning properly with respect to the Year 2000
Issue before June 30, 1999. Each operating subsidiary is in a different stage of
Year 2000 readiness.


                                       20
<PAGE>   23
Project

    Generally each subsidiary's Year 2000 program is divided into three major
sections internal business software and hardware, internal non-financial
software and embedded chip technology and external compliance by customers and
suppliers. The general phases common to all sections are: (1) inventorying Year
2000 items; (2) assessing the Year 2000 compliance of identified items; (3)
repairing or replacing material items that are determined not to be Year 2000
compliant; (4) testing material items; and (5) designing and implementing
contingency and business continuation plans for each organization and company
location.

    The internal business software and hardware section of the Company's Year
2000 plans vary by operating subsidiary and include either the conversion or
reprogramming of applications software that is not Year 2000 compliant, the
inclusion of acquired companies on the Company's existing Enterprise Resource
Planning System (ERP System) or, where available from the supplier, the
upgrading of such software to a Year 2000 compliant version. The Company
estimates that this phase is on schedule to be completed by June 1999.

    The testing phase of this section, scheduled for completion by June 1999, is
ongoing. The Company does not currently have contingency plans in place for its
internal business software and hardware. Such contingency plans will be
developed in the second quarter of 1999 should the current implementation plans
fall behind schedule.

    The total cost associated with required modifications to the Company's
internal business software and hardware to become Year 2000 compliant is not
expected to be material to the Company's financial position. The estimated total
cost of the Year 2000 program is approximately $935,000. The total amount
expended on the program through December 31, 1998, was $570,000, of which
approximately $170,000 related to the cost of software modification and
approximately $400,000 related to the cost of and upgrading existing software to
Year 2000 compliant versions. The estimated future cost of completing the Year
2000 program is estimated to be approximately $165,000 for reprogramming of
applications software and approximately $200,000 related to the cost of
including acquired companies on existing ERP Systems. Funds for the program are
provided from existing operating budgets for all items and are included in
operating expenses as incurred.

    The Company has completed all phases of its Year 2000 plan related to
non-financial software, embedded chip technology, and its non-financial systems
such as manufacturing equipment, security equipment, etc. Few of these systems
have been identified as not being in compliance. Accordingly, the cost of
achieving Year 2000 compliance for these systems was minimal.

    The Company has identified and contacted its critical suppliers, service
providers and contractors to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remedy their
own Year 2000 issues. Each of the suppliers contacted have indicated that they
are currently undergoing or have completed programs related to the Year 2000
problem within their organizations. Due to the satisfactory responses with its
critical suppliers, the Company does not intend to change suppliers, service
providers or contractors. The Company has not independently verified the status
of its critical suppliers, service providers and contractors Year 2000
readiness. Many of the Company's customers are large OEMs which are preparing
for the Year 2000 Issue and it is believed that they will be compliant by the
Year 2000. However, the Company does not currently have any formal information
concerning the Year 2000 compliance status of its customers, particularly in the
aftermarket, but has received indications that most of its customers are working
on Year 2000 compliance.

Risks

    The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in large part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on its results of operations,
liquidity or financial condition. The Year 2000 program is expected to
significantly reduce the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 compliance and readiness of its
material customers and suppliers. The Company believes that, with the
implementation of new business systems and completion of the program as
scheduled, the possibility of significant interruptions of normal operations
should be reduced.

                                       21
<PAGE>   24
NEW ACCOUNTING PRONOUNCEMENTS

    In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued SOP 98-1, "Accounting For the Costs of Computer Software
Developed For or Obtained For Internal Use" ("SOP 98-1"). SOP 98-1 is effective
for the Company beginning on January 1, 1999. SOP 98-1 will require the
capitalization of certain costs incurred after the date of adoption in
connection with developing or obtaining software for internal use. This
statement will be applied prospectively, however, the impact of this new
standard is not expected to have a significant effect on the Company's financial
position or results of operations.

    In April 1998, the AICPA issued Statement of Position ("SOP 98-5"),
"Reporting the Costs of Start-up Activities" (SOP 98-5). SOP 98-5 is effective
beginning on January 1,1999, and requires that start-up costs capitalized prior
to January 1, 1999 be written off and any future start-up costs to be expensed
as incurred. The Company believes it is in compliance with the standards
established by SOP 98-5 and as such SOP 98-5 will not impact the Company's
future earnings or financial position.

    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities"("FAS 133"). The statement is effective for fiscal years
beginning after June 15, 1999. The Company plans to adopt this statement at the
beginning of fiscal 2000. The Company is completing an analysis of FAS 133 which
is not expected to have a material impact on the Company's results of
operations.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company is exposed to certain market risks which exist as a part of its
ongoing business operations. Primary exposures include fluctuations in the value
of foreign currency investments in subsidiaries, volatility in the translation
of foreign currency earnings to U.S. Dollars and movements in Federal Funds
rates and the London Interbank Offered Rate ("LIBOR"). The Company uses
derivative financial instruments, where appropriate, to manage these risks. The
Company, as a matter of policy, does not engage in trading or speculative
transactions.


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S>                                                                                                                   <C>
         Report of Independent Accountants...........................................................................   23

         Consolidated Balance Sheets -- December 31, 1998 and 1997...................................................   24

         Consolidated Statements of Operations -- Years Ended December 31, 1998, 1997 and 1996.......................   25

         Consolidated Statements of Cash Flows -- Years Ended December 31, 1998, 1997 and 1996.......................   26

         Consolidated Statements of Changes in Members' Equity -- Years Ended December 31, 1998, 1997 and 1996.......   27

         Notes to Consolidated Financial Statements..................................................................   28
</TABLE>


                                       22
<PAGE>   25
                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers
and Members of
Advanced Accessory Systems, LLC

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) present fairly, in all material respects, the
financial position of Advanced Accessory Systems, LLC and its subsidiaries at
December 31, 1998 and 1997, and the results of their operations, their cash
flows and changes in members' equity for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule listed
in the index appearing under Item 14 (a) (2) presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Bloomfield Hills, Michigan
March 15, 1999


                                       23
<PAGE>   26
                         ADVANCED ACCESSORY SYSTEMS, LLC

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                         -----------------------
                                                                            1998         1997
                                                                        ---------      ---------
                                                                            (DOLLAR AMOUNTS IN
                                                                               THOUSANDS)
<S>                                                                     <C>            <C>
                                    ASSETS
        Current assets
          Cash ....................................................     $  11,240      $  27,348
          Accounts receivable, less reserves of $2,766 and $1,699,
             respectively .........................................        40,727         43,523
          Inventories .............................................        43,087         34,408
          Deferred income taxes ...................................           280           --
          Other current assets ....................................         3,964          6,531
                                                                        ---------      ---------
               Total current assets ...............................        99,298        111,810
        Property and equipment, net ...............................        61,295         53,560
        Goodwill, net .............................................        87,079         85,889
        Other intangible assets, net ..............................         6,592          9,963
        Deferred income taxes .....................................         1,933          3,626
        Other noncurrent assets ...................................         2,784            710
                                                                        ---------      ---------
                                                                        $ 258,981      $ 265,558
                                                                        =========      =========
                       LIABILITIES AND MEMBERS' EQUITY
        Current liabilities
          Current maturities of long-term debt ....................     $   4,536      $   3,746
          Accounts payable ........................................        23,115         23,018
          Accrued liabilities .....................................        21,335         17,910
          Deferred income taxes ...................................         1,080          1,333
                                                                        ---------      ---------
               Total current liabilities ..........................        50,066         46,007
                                                                        ---------      ---------
        Noncurrent liabilities
          Deferred income taxes ...................................         1,790          3,545
          Other noncurrent liabilities ............................         4,581          2,675
          Long-term debt, less current maturities .................       182,988        193,380
                                                                        ---------      ---------
               Total noncurrent liabilities .......................       189,359        199,600
                                                                        ---------      ---------
        Commitments and contingencies (Note 11)
        Mandatorily redeemable warrants ...........................         4,409          3,507
                                                                        ---------      ---------
        Members' equity
          Class A Units 25,000 authorized, 16,450 and 16,411 issued
            at December 31, 1998 and 1997, respectively............        22,276         23,163
          Class B Units, 2,000 authorized, no Units issued at
            December 31, 1998 and 1997.............................            --             --
          Other comprehensive loss ................................          (615)          (490)
          Accumulated deficit .....................................        (6,514)        (6,229)
                                                                        ---------      ---------
                                                                           15,147         16,444
                                                                        ---------      ---------
                                                                        $ 258,981      $ 265,558
                                                                        =========      =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       24
<PAGE>   27
                         ADVANCED ACCESSORY SYSTEMS, LLC

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                      YEAR ENDED
                                                                     DECEMBER 31,
                                                       ---------------------------------------
                                                          1998           1997          1996
                                                       ---------      ---------      ---------
                                                             (DOLLAR AMOUNTS IN THOUSANDS)
<S>                                                    <C>            <C>            <C>
        Net sales ................................     $ 290,139      $ 188,678      $  81,466
        Cost of sales ............................       213,435        135,556         53,607
                                                       ---------      ---------      ---------
          Gross profit ...........................        76,704         53,122         27,859
        Selling, administrative and product
          development expenses ...................        50,839         31,350         13,413
        Amortization of intangible assets ........         3,551          2,336          2,475
        Impairment charge ........................         7,863           --             --
                                                       ---------      ---------      ---------
          Operating income .......................        14,451         19,436         11,971
                                                       ---------      ---------      ---------
        Other (income) expense
          Interest expense .......................        18,633         12,627          4,312
          Foreign currency (gain) loss ...........        (4,995)         6,097          1,330
          Other (income) expense .................          --             --              (80)
                                                       ---------      ---------      ---------
        Income before minority interest,
          extraordinary charge and income
          taxes ..................................           813            712          6,409
        Provision (benefit) for income taxes .....           903         (2,856)          (491)
                                                       ---------      ---------      ---------
        Income (loss) before minority interest and
          extraordinary charge ...................           (90)         3,568          6,900
        Minority interest ........................          --               97             69
        Extraordinary charge resulting from debt
          extinguishment .........................          --            7,416          1,970
                                                       ---------      ---------      ---------
        Net income (loss) ........................     $     (90)     $  (3,945)     $   4,861
                                                       =========      =========      =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       25
<PAGE>   28
                         ADVANCED ACCESSORY SYSTEMS, LLC

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        YEAR ENDED
                                                                       DECEMBER 31,
                                                          ---------------------------------------
                                                             1998           1997          1996
                                                          ---------      ---------      ---------
                                                                (DOLLAR AMOUNTS IN THOUSANDS)
<S>                                                       <C>            <C>            <C>
        CASH FLOWS PROVIDED BY (USED FOR)
          OPERATING ACTIVITIES ......................     $     (90)     $  (3,945)     $   4,861
        Net income (loss)
        Adjustments to reconcile net income (loss) to
          net cash provided by operating activities
          Depreciation and amortization .............        15,093          9,360          4,689
          Deferred taxes ............................          (688)        (3,146)          (363)
          Impairment and restructuring charge .......         9,505           --             --
          Foreign currency (gain) loss ..............        (4,948)         5,500          1,118
          Loss on disposal of assets ................           191           --               10
          Extraordinary charge resulting from debt
             extinguishment .........................          --            7,416          1,970
          Changes in assets and liabilities:
             Accounts receivable ....................         5,873         (8,661)          (118)
             Inventories ............................        (1,457)           582         (3,736)
             Other current assets ...................         1,513            378         (1,742)
             Other noncurrent assets ................        (1,934)          (482)           (67)
             Accounts payable .......................        (3,032)        (2,719)         1,995
             Accrued liabilities ....................         1,133          2,819          3,144
             Other noncurrent liabilities ...........           720           (217)        (1,913)
             Minority interest in consolidated
               subsidiaries .........................          --               97             69
                                                          ---------      ---------      ---------
               NET CASH PROVIDED BY OPERATING
                  ACTIVITIES ........................        21,879          6,982          9,917
                                                          ---------      ---------      ---------
        CASH FLOWS PROVIDED BY (USED FOR)
          INVESTING ACTIVITIES
        Acquisition of machinery and equipment ......        (9,998)        (7,751)        (3,124)
        Amount due from sellers of Valley Industries,
          Inc .......................................         1,150         (1,150)          --
        Acquisition of subsidiaries, net of cash
          acquired ..................................       (22,770)       (70,832)       (54,339)
                                                          ---------      ---------      ---------
               NET CASH USED FOR INVESTING
                  ACTIVITIES ........................       (31,618)       (79,733)       (57,463)
                                                          ---------      ---------      ---------
        CASH FLOWS PROVIDED BY (USED FOR)
          FINANCING ACTIVITIES
        Proceeds from issuance of debt ..............          --          215,050         88,842
        Proceeds from issuance of warrants ..........          --             --            3,498
        Increase (decrease) in revolving loan .......        (4,505)           504          4,300
        Extinguishment of warrants ..................          --             --           (1,600)
        Repayment of debt ...........................        (3,682)      (113,248)       (44,628)
        Debt issuance costs .........................          --           (7,280)        (2,643)
        Issuance of membership units ................            29          4,999          4,562
        Repurchase of membership units ..............           (14)          --             --
        Distributions to members ....................          (195)        (2,945)        (3,726)
                                                          ---------      ---------      ---------
               NET CASH PROVIDED BY (USED FOR)
                  FINANCING ACTIVITIES ..............        (8,367)        97,080         48,605
                                                          ---------      ---------      ---------
        Effect of exchange rate changes .............         1,998            505           (182)
        Net increase (decrease) in cash .............       (16,108)        24,834            877
        Cash at beginning of period .................        27,348          2,514          1,637
                                                          ---------      ---------      ---------
        Cash at end of period .......................     $  11,240      $  27,348      $   2,514
                                                          =========      =========      =========
        Cash paid for interest ......................     $  17,559      $   8,302      $   4,215
                                                          =========      =========      =========
        Cash paid for income taxes ..................     $     934      $     581      $    --
                                                          =========      =========      =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       26
<PAGE>   29
                         ADVANCED ACCESSORY SYSTEMS, LLC

              CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
                          (DOLLAR AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                OTHER           RETAINED       TOTAL
                                                                    MEMBERS'    COMPREHENSIVE   EARNINGS      MEMBERS'
                                                                    CAPITAL     INCOME (LOSS)  (DEFICIT)      EQUITY
                                                                    --------    ------------    ---------     ---------
<S>                                                                <C>           <C>           <C>           <C>
        Balance at December 31, 1995...........................     $ 13,360      $   --        $    861      $ 14,221

        Issuance of additional units ..........................        4,562          --            --           4,562
        Accretion of membership warrants ......................         --            --          (1,400)       (1,400)
        Distributions to members, net of minority .............         --            --          (3,692)       (3,692)
        interest
        Comprehensive income:
          Currency translation adjustment .....................         --             (89)         --            --
          Net income for 1996 .................................         --            --           4,861          --
            Total comprehensive income ........................         --            --            --           4,772
                                                                    --------      --------      --------      --------
        Balance at December 31, 1996 ..........................       17,922           (89)          630        18,463

        Issuance of additional units ..........................        5,250          --            --           5,250
        Accretion of membership warrants ......................           (9)         --            --              (9)
        Distributions to members, net of minority .............         --            --          (2,914)       (2,914)
        interest
        Comprehensive loss:
          Currency translation adjustment .....................         --            (401)         --            --
          Net loss for 1997 ...................................         --            --          (3,945)         --
            Total comprehensive loss ..........................         --            --            --          (4,346)
                                                                    --------      --------      --------      --------
        Balance at December 31, 1997 ..........................       23,163          (490)       (6,229)       16,444

        Issuance of additional units ..........................          150          --            --             150
        Notes receivable for unit purchase.....................         (121)         --            --            (121)
        Repurchase of membership units.........................          (14)         --            --             (14)
        Accretion of membership warrants ......................         (902)         --            --            (902)
        Distributions to members ..............................         --            --            (195)         (195)
        Comprehensive loss:
          Currency translation adjustment .....................         --            (125)         --            --
          Net loss for 1998 ...................................         --            --             (90)         --
            Total comprehensive loss ..........................         --            --            --            (215)
                                                                    --------      --------      --------      --------
        Balance at December 31, 1998 ..........................     $ 22,276      $   (615)     $ (6,514)     $ 15,147
                                                                    ========      ========      ========      ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       27
<PAGE>   30
                                 ADVANCED ACCESSORY SYSTEMS, LLC

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

1.       SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS ACTIVITIES

    Advanced Accessory Systems, LLC (formerly AAS Holdings, LLC) (the "Company")
is engaged in the design, manufacture and supply of towing and rack systems and
accessories for the automotive original equipment manufacturer ("OEM") market
and the automotive aftermarket. The Company's business commenced on September
28, 1995, with the acquisition of certain of the net assets of MascoTech
Accessories (the "Predecessor"), a division of MascoTech, Inc., through the
Company's majority-owned subsidiary, SportRack, LLC. As described in Note 2, in
October 1996 the Company acquired Brink B.V., in July and August of 1997
acquired the sportrack division of Bell Sports Corporation, Nomadic Sports, Inc.
and Valley Industries, Inc. and in January and February 1998 acquired the net
assets of the towbar segment of Ellebi S.p.A. and the net assets of
Transfo-Rakzs, Inc.

PRINCIPLES OF CONSOLIDATION

    The Company includes the accounts of the following:
<TABLE>
<S>                                       <C>
        SportRack, LLC.................   100% owned by Advanced Accessory Systems, LLC
          SportRack Automotive, GmbH...   A German corporation, 100% owned by SportRack, LLC
          SportRack International,
            Inc and its consolidated     
            subsidiary.................   A Canadian corporation, 100% owned by SportRack, LLC
        AAS Holdings, Inc..............   100% owned by Advanced Accessory Systems, LLC
        Brink International B.V and
          its consolidated                
          subsidiaries.................   A Dutch corporation, 100% owned by AAS Holdings,
                                          Inc.
        Valley Industries, LLC.........   99% owned by Advanced Accessory Systems, LLC and 1%
                                          owned by SportRack, LLC
        ValTek, LLC....................   99% owned by Advanced Accessory Systems, LLC and 1%
                                          owned by SportRack, LLC
        AAS Capital Corporation........   100% owned by Advanced Accessory Systems, LLC
</TABLE>

    All intercompany transactions have been eliminated in consolidation.

REVENUE RECOGNITION

    Revenue and related cost of goods sold are recognized upon shipment of the
product to the customer. Sales allowances, discounts, rebates and other
adjustments are recorded or accrued in the period of the sale.

SIGNIFICANT ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the fiscal period. Actual results could differ from those
estimates.

FINANCIAL INSTRUMENTS

    Financial instruments at December 31, 1998 and 1997, including cash,
accounts receivable and accounts payable, are recorded at cost, which
approximates fair value due to the short-term maturities of these assets and
liabilities. The carrying value of the obligations under the bank agreements are
considered to approximate fair value as the agreements provide for interest rate
revisions based on changes in prevailing market rates or were entered into at
rates that approximate market rates at December 31, 1998 and 1997. The carrying
value of the Notes (as defined below) approximate fair value based upon quoted
prices at December 31, 1998 in the market in which the Notes are traded.



                                       28
<PAGE>   31
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

1.   SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

    The Company is exposed to certain market risks which exist as a part of its
ongoing business operations. Primary exposures include fluctuations in the value
of foreign currency investments in subsidiaries, volatility in the translation
of foreign currency earnings to U.S. Dollars and movements in Federal Funds
rates and the London Interbank Offered Rate (LIBOR). The Company uses derivative
financial instruments, where appropriate, to manage these risks. The Company, as
a matter of policy, does not engage in trading or speculative transactions.

CASH EQUIVALENTS

    For purposes of the statement of cash flows, the Company considers all
highly-liquid investments with a maturity of three months or less from the date
of purchase to be cash equivalents.

CURRENCY TRANSLATION

    The functional currency for the Company's foreign subsidiaries is the
applicable local currency. Assets and liabilities of foreign subsidiaries are
translated into U.S. dollars at the exchange rates in effect at the balance
sheet date; translation adjustments are reported as a separate component of
members' equity. Revenues, expenses and cash flows for foreign subsidiaries are
translated at average exchange rates during the period; foreign currency
transaction gains and losses are included in current earnings. The accompanying
consolidated statement of operations for the years ended December 31, 1998, 1997
and 1996 includes net currency gains (losses) of $4,995, $(6,097) and $(1,330),
respectively, relating primarily to debt denominated in U.S. Dollars at Brink
International B.V., whose functional currency was the Dutch Guilder through
December 31, 1998. At December 31, 1998, U.S. Dollar denominated debt recorded
at Brink includes intercompany debt and substantially all outstanding loans
under the Company's Second Amended and Restated Credit Agreement, except for the
term A note (as defined below) which was changed from a U.S. Dollar denominated
loan to a Dutch Guilder denominated loan in October 1998.

INVENTORIES

    Inventories are stated at the lower of cost or market, with cost being
determined on the first-in, first-out (FIFO) method. Inventories are
periodically reviewed and reserves established for excess and obsolete items.

TOOLING

    The Company incurs costs to develop new tooling used in the manufacture of
products sold to OEMs. Tooling costs that are reimbursed by the OEMs as the
tooling is completed are included in other current assets. All other customer
tooling costs are included in other noncurrent assets and amortized over the
expected product life, generally four to six years. Company owned tooling is
included in property and equipment and depreciated over its expected useful
life, generally three to five years. Management periodically evaluates the
recoverability of tooling costs, based on estimated future cash flows, and makes
provisions for tooling costs that will not be recovered, if any, when such
amounts are known.

PROPERTY AND EQUIPMENT

    Property and equipment is stated at acquisition cost, which reflects the
fair market value of assets acquired at the acquisition date for all
subsidiaries. Property and equipment purchased other than through the
acquisitions described in Note 2 is stated at cost. Expenditures for normal
repairs and maintenance are charged to operations as incurred. Depreciation is
computed using the straight-line method over the following estimated useful
lives:
<TABLE>
<CAPTION>
                                                                                YEARS
                                                                                -----
<S>                                                                             <C>
          Buildings and improvements.................................           5-50
          Machinery, equipment and tooling...........................           2-10
          Furniture and fixtures.....................................            5-7
</TABLE>


                                       29
<PAGE>   32
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

1.   SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

GOODWILL AND OTHER INTANGIBLE ASSETS

    Goodwill of $87,079 and $85,889 (net of accumulated amortization of $8,400
and $5,251) at December 31, 1998 and 1997, respectively, represents the costs in
excess of net assets acquired and is amortized using the straight line method
over periods of up to 30 years.

    Debt issuance costs of $5,958 and $6,467, net of accumulated amortization at
December 31, 1998 and 1997, respectively, are amortized over the terms of the
loan agreements, which are six to ten years. Debt issuance cost amortization of
$587, $551 and $212 for 1998, 1997 and 1996, respectively, has been included in
interest expense.

IMPAIRMENT OF LONG-LIVED ASSETS

    The Company reviews long-lived assets and certain identifiable intangibles
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. The Company determines
the impairment of long-lived assets by comparing the undiscounted future net
cash flows to be generated by the assets to their carrying value. Impairment
losses are then measured as the amount by which the carrying amount of the asset
exceeds the fair value of the asset. In 1998, as described in Note 3, the
Company determined that certain intangible assets of its subsidiary, SportRack
International, Inc. had been impaired.

INCOME TAXES

    The Company and certain of its domestic subsidiaries have elected to be
taxed as limited liability companies for federal income tax purposes. As a
result of this election, the Company's domestic taxable income accrues to the
individual members. Distributions are made to the members in amounts sufficient
to meet the tax liability on the Company's domestic taxable income accruing to
the individual members. Distributions to members, net of minority interest, of
$195, $2,914 and $3,692 were made during 1998, 1997 and 1996, respectively.

    Certain of the Company's domestic subsidiaries and foreign subsidiaries are
subject to income taxes in their respective jurisdictions. Income tax provisions
for these entities are based on the U.S. Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". Deferred tax assets and
liabilities are provided for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of such entities'
assets and liabilities. Deferred tax assets are reduced by a valuation allowance
for tax benefits that are not expected to be realized. The Company does not
provide for U.S. income taxes or foreign withholding taxes on the undistributed
earnings of foreign subsidiaries because of management's intent to permanently
reinvest in such operations.

    The Company and certain subsidiaries are subject to taxes, including
Michigan Single Business Tax and Canadian capital tax, which are based primarily
on factors other than income. As such, these amounts are included in selling,
administrative and product development expenses in the accompanying consolidated
statements of income. Deferred taxes related to Michigan Single Business Tax are
provided on the temporary differences resulting from capital acquisitions and
depreciation.

RESEARCH, DEVELOPMENT AND ENGINEERING

    Research, development and engineering costs are expensed as incurred and
aggregated approximately $9,611, $5,860 and $3,548 for the years ended December
31, 1998, 1997 and 1996, respectively, for the Company.

RECLASSIFICATIONS

    Certain amounts from the 1997 financial statements have been reclassified to
conform with the 1998 financial statement presentation.


                                       30
<PAGE>   33
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

2.   ACQUISITIONS

    Acquisitions of the Company from inception through December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
                                                                     PURCHASE      GOODWILL
                ACQUIRED COMPANY                  ACQUISITION DATE     PRICE       RECORDED     LOCATION    PRODUCT LINES
    -----------------------------------------    ------------------  --------     ----------  -----------  --------------
<S>                                              <C>                 <C>          <C>         <C>          <C>
    MascoTech Accessories....................    September 28, 1995   $46,050      $32,781    United       Rack systems
                                                                                              States
    Brink B.V................................    October 30, 1996      54,339       27,730    Europe       Towing systems
    Sportrack division of Bell Sports........    July 2, 1997          13,505        1,198    Canada       Rack systems
    Nomadic Sports, Inc......................    July 24, 1997            849          433    Canada       Rack systems
    Valley Industries, Inc...................    August 5, 1997        56,478       32,891    United       Towing systems
                                                                                              States
    Towbar segment of Ellebi S.p.A...........    January 2, 1998       21,938        5,645    Italy        Towing systems
    Tranfo-Rakzs, Inc........................    February 7, 1998       1,040          902    Canada       Rack systems
</TABLE>

    The above acquisitions have each been accounted for in accordance with the
purchase method of accounting. Accordingly, the respective purchase price of
each acquisition has been allocated to assets acquired and liabilities assumed
based upon their estimated fair values at the acquisition date. The excess of
the aggregate purchase price over the estimated fair value of the net assets
acquired has been recorded as goodwill. The operating results of these entities
have been included in the Company's consolidated financial statements since the
date of each acquisition. Each acquisition represented the purchase of the net
assets of the respective company with the exceptions of Brink B.V. and Nomadic
Sports, Inc. which were purchases of the outstanding shares. Each company was
purchased for cash except for Brink B.V. which was purchased for $54,339 in cash
and a 12,500 Junior Subordinated Note ($7,340) denominated in Dutch Guilders, to
Brink Holdings, B.V.

Pro Forma Data

    The following unaudited pro forma consolidated results of operations have
been prepared as if the Valley, SportRack International, Inc., Ellebi and
Tranfo-Rakzs, Inc. acquisitions had occurred on January 1, 1997.
<TABLE>
<CAPTION>
                                                                                 1997
                                                                                 ----
<S>                                                                           <C>
                    Net sales...........................................      $ 268,489
                    Income before extraordinary charge..................          2,015
                    Net loss............................................         (5,401)
</TABLE>

    Pro forma results for 1998 have not been presented as they are substantially
the same as the Company's actual results. The pro forma data is not intended to
be a projection of future results.

    The pro forma data included above includes adjustments to historical results
of operations for increased depreciation expense, intangible asset amortization
and interest expense, net of the related tax benefits.

3.  IMPAIRMENT AND RESTRUCTURING CHARGES

    In July 1997, the Company acquired the net assets of the sportrack division
of Bell Sports Corporation ("Bell") for approximately $13,500 and recorded
goodwill of approximately $1,200, representing the excess of the purchase price
over the then estimated fair value of net assets acquired. In June 1998
information became available which indicated that certain assets acquired from
Bell (accounts receivable, inventory, and tooling) had a fair value less than
originally recorded. The SportRack International purchase was renegotiated and a
$2,000 reimbursement was received from Bell. Accounts receivable, inventory and
tooling were reduced by $6,500 and additional goodwill of $4,500, net of the
$2,000 reimbursement from Bell, was recorded.

    During the second half of 1998, management further reassessed the operations
of SportRack International, and as a result took actions to restructure the
operations and rationalize the product offerings, customer and supplier base,
distribution channels and warehousing, and terminated 14 employees, including
certain members of SportRack International's senior management. Concurrent with
the reassessment of the SportRack International's operations, management
reviewed the revised carrying value of goodwill and other intangible assets,
determined that future cash flows would not be sufficient to recover recorded
amounts, and recorded an impairment charge of $7,863.


                                       31
<PAGE>   34
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

3.  IMPAIRMENT AND RESTRUCTURING CHARGE -- (CONTINUED)

    The SportRack International impairment and restructuring charges are
comprised of the following:

<TABLE>
<S>                                     <C>       <C>
        Impairment of:
          Goodwill ...............     $6,116
          Other intangible assets       1,747     $7,863
                                       ------

        Restructuring charges for:
          Product rationalization       1,068
          Other costs ............        832      1,900
                                       ------     ------
                                                  $9,763
                                                  ======
</TABLE>

    The restructuring charge related to inventory has been included in cost of
sales and other costs have been included in selling, administrative and product
development expenses in the accompanying 1998 consolidated statement of
operations. Management believes that substantially all restructuring costs have
been incurred as of December 31, 1998, including cash expenditures during 1998
of $258.

    Sales for SportRack International during the year ended December 31, 1998
were approximately $4,000 and total assets as of December 31 1998 were
approximately $7,100 after the impairment charge.

4.       LONG-TERM DEBT

    Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
                                                                                      OUTSTANDING AT
                                                                INTEREST RATE AT      DECEMBER 31,
                                                                  DECEMBER 31,   ---------------------
                                                                     1998           1998        1997
                                                                ---------------  ----------   --------
<S>                                                              <C>             <C>          <C>
        Senior Subordinated Notes, less discount of $435
          and $464, respectively .......................            9.75%        $124,565     $124,536
        Second Amended and Restated Credit Agreement
          (U.S. Credit Facility)
             Term note A ...............................            5.09%          14,777       17,065
             Term note B ...............................            7.54%          15,592       15,883
             Revolving line of credit note .............            --               --          1,900
             Acquisition revolving note ................            7.09%          21,000       21,000
        First Amended and Restated Credit Agreement
          (Canadian Credit Facility)
             Canadian term note ........................            7.50%          11,590       13,952
             Canadian revolving line of credit note ....            --               --          2,790
                                                                                 --------     --------
                                                                                  187,524      197,126
        Less -- current portion ........................                            4,536        3,746
                                                                                 --------     --------
                                                                                 $182,988     $193,380
                                                                                 ========     ========
</TABLE>

    During 1998, the Company exchanged 100% of its Senior Subordinated Notes
(the "Old Notes") for a new series of notes issued under a registration
statement having terms substantially identical to the Old Notes.


                                       32
<PAGE>   35
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

4.  LONG-TERM DEBT -- (CONTINUED)

SENIOR SUBORDINATED NOTES

    Borrowings under the Company's Series B Senior Subordinated Notes (the
"Notes"), due October 1, 2007, are unsecured and are subordinated in right of
payment to all existing and future senior indebtedness of the Company, including
the loans under the U.S. and Canadian Credit Agreements described below. The
Company, at its option, may redeem the Notes, in whole or in part, together with
accrued and unpaid interest subsequent to October 1, 2002 at certain redemption
prices as set forth by the indenture, under which the Notes have been issued. In
addition, at any time on or prior to October 1, 2000, the Company may redeem up
to 35% of the aggregate principal amount of the Notes with the net cash proceeds
of one or more public equity offerings at a redemption price equal to 109.75% of
the principal amount to be redeemed. Upon the occurrence of a change of control
of the Company, as defined by the indenture, the Company is required to make an
offer to repurchase the Notes at a price equal to 101% of the principal amount
of the notes. The indenture places certain limits on the Company, the most
restrictive of which include, the incurrence of additional indebtedness by the
Company, the payment of dividends on, and redemption of capital of the Company,
the redemption of certain subordinated obligations, investments, sales of assets
and stock of certain subsidiaries, transactions with affiliates, consolidations,
mergers and transfers of all or substantially all of the Company's assets.
Interest on the Notes is payable semi-annually in arrears on April 1 and October
1 of each year.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

    The Company's Second Amended and Restated Credit Agreement ("U.S. Credit
Facility"), which is administered by First Chicago NBD Bank ("NBD") and The
Chase Manhattan Bank ("Chase"), is secured by substantially all the assets of
the Company and places certain restrictions on the Company related to
indebtedness, sales of assets, investments, capital expenditures, dividend
payments, management fees, and members' equity transactions. In addition, the
agreement subjects the Company to certain restrictive covenants, including the
attainment of designated operating ratios and minimum net worth levels. The
Company, at its election, may make prepayments of the term notes under the
credit agreement on a pro-rata basis. Additionally, mandatory prepayments of the
term notes are required in the event of sales of assets meeting certain
criteria, as set forth by the agreement, or based upon periodic calculations of
excess cash flows, as defined by the agreement.

    The U.S. Credit Facility provides for two term notes (Term note A and Term
note B), a revolving line of credit note and an acquisition revolving note.
Loans under each of the term notes and the revolving note can be converted, at
the election of the Company, in whole or in part, into Base Rate Loans or
Eurocurrency Loans. Interest is payable in arrears quarterly on Base Rate Loans,
and in arrears in one, two or three months on Eurocurrency Loans, as determined
by the length of the Eurocurrency Loan, as selected by the Company. Interest is
charged at an adjustable rate plus the applicable margin. The applicable margin
is based upon the Company's Senior Debt Ratio, as defined by the Credit
Agreement. Eurocurrency Loans under the Term A note can be made in U.S. dollars
or certain other currencies, at the option of the Company. The U.S. Credit
Facility also provides for a Letter of Credit Facility. At December 31, 1998, no
letters of credit were outstanding.

Term note A

    On October 30, 1996 the Company borrowed $65,000 under Term note A. On
October 1, 1997 the Company made a mandatory prepayment totaling $43,475 in
connection with the issuance of the Old Notes. In October 1998, the loan under
Term note A, which was denominated in U.S. Dollars, was exchanged for a loan
denominated in Dutch Guilders. All other provisions of Term note A were
unchanged. At December 31, 1998 the principal balance of Term note A was 27,913
Dutch Guilders. The applicable margin for Term note A ranges from .75% to 2.0%
for Base Rate Loans and from 1.75% to 3.0% for Eurocurrency Loans. Repayments
under the note are required in the following installments:
<TABLE>
<CAPTION>
                                 QUARTERLY
                ------------------------------------------
<S>                                                                              <C>
                March 31, 1999 through September 30, 1999......................    $  552
                December 31, 1999 through September 30, 2000...................       736
                December 31, 2000 through June 30, 2003........................       883
                Final installment on October 30, 2003..........................       464
</TABLE>


                                       33
<PAGE>   36
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

4.   LONG-TERM DEBT -- (CONTINUED)

Term note B

    On August 5, 1997, the Company borrowed $55,000 under Term note B. On
October 1, 1997 the Company made a mandatory prepayment totaling $39,044 in
connection with the issuance of the Old Notes. The applicable margin for Term
note B ranges from 1.25% to 2.5% for Base Rate Loans and from 2.25% to 3.5% for
Eurocurrency Loans. Repayments under Term note B are required in the following
installments:
<TABLE>
<S>                                                                                                    <C>
                March 31, 1999 through September 30, 2003 (quarterly)................................    $    73
                December 31, 2003....................................................................      2,912
                March 30, 2004, June 30, 2004 and October 30, 2004...................................      3,764
</TABLE>

Revolving line of credit note

    The Company has the ability to borrow up to $25,000 under the revolving line
of credit which expires on October 30, 2003. Available borrowings, however, are
limited to a defined borrowing base amount equal to 85% eligible domestic
accounts receivable and 80% of certain eligible foreign accounts receivable. The
base borrowing amount is increased by the lesser of the sum of 50% of domestic
eligible inventory and 40% to 50% of certain eligible foreign inventory or
$10,000. Available borrowings are reduced by amounts outstanding under the
Canadian revolving line of credit note described below. The applicable margin
for the revolving line of credit ranges from .75% to 2.0% for Base Rate Loans
and from 1.75% to 3.0% for Eurocurrency Loans. A commitment fee of .375% to .5%
is charged on the unused balance based on the Company's Senior Leverage Ratio,
as defined. At December 31, 1998, $25,000 was available under the facility.

Acquisition revolving note

    On December 31, 1997, the Company borrowed $21,000 under its $22,000
acquisition revolving note. The proceeds were used to acquire the net assets of
Ellebi on January 2, 1998, as discussed in Note 2. The note is available to the
Company on a revolving credit basis until September 24, 1999 at which time the
outstanding principal balance will convert to a term loan which will amortize in
sixteen equal quarterly installments with a final maturity of October 30, 2003.
The applicable margin for the acquisition revolving note ranges from .75% to
2.0% for Base Rate Loans and from 1.25% to 3.0% for Eurocurrency Loans. A
commitment fee of .375% to .5% is charged on the unused balance based on the
Company's Senior Leverage Ratio, as defined.

FIRST AMENDED AND RESTATED CREDIT AGREEMENT

    The Company's First Amended and Restated Credit Agreement ("Canadian Credit
Facility"), which is administered by NBD and Chase, is secured by substantially
of all the assets of the Company's Canadian subsidiaries and is guaranteed by
the Company.

    The Canadian Credit Facility provides for a C$20,000 term note and a C$4,000
revolving note, (U.S. $13,068 and U.S. $2,614) at December 31, 1998,
respectively. Loans under each of the notes can be converted at the election of
the company, in whole or in part, into Floating Rate advances, U.S. Base Rate
advances or LIBOR advances. Floating rate advances are denominated in Canadian
dollars and bear interest at a variable rate based on the bank's prime lending
rate plus a variable margin. U.S. Base Rate advances are denominated in U.S.
dollars and bear interest at the bank's prime lending rate plus a variable
margin. LIBOR advances are denominated in U.S. dollars and bear interest at
LIBOR plus a variable margin. The variable margin is based upon the Company's
Senior Debt Ratio, as defined by the Canadian Credit Facility and ranges from
 .5% to 1.75% for U.S. Base Rate advances and from 1.5% to 2.75% for LIBOR
advances.


                                       34
<PAGE>   37
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

4.   LONG-TERM DEBT -- (CONTINUED)

Canadian term note

    Repayments under the Canadian term note are required in the following
installments:
<TABLE>
<CAPTION>
                               QUARTERLY
              ------------------------------------------
<S>                                                                                  <C>
              March 31, 1999 through September 30, 1999..........................    $  430
              December 31, 1999 through September 30, 2000.......................       563
              December 31, 2000 through June 30, 2003............................       671
              Final installment on October 30, 2003..............................       667
</TABLE>

Canadian revolving line of credit note

    A commitment fee of .5% is charged on the unused balance of the Canadian
revolving line of credit note.


SENIOR SUBORDINATED LOANS

    On October 30, 1996, the Company borrowed $20,000 under its Senior
Subordinated Note Purchase Agreement ("Senior Subordinated Loans") with CB
Capital and International Mezzanine. The Senior Subordinated Loans were repaid
in full on October 1, 1997 with the proceeds of the Notes discussed above.
Interest on the Senior Subordinated Loans was payable in arrears semiannually
and accrued at a rate of 12.5% per annum. The Senior Subordinated Loans provided
for a prepayment penalty if the Senior Subordinated Loans were paid prior to
October 30, 2002. Under this provision, a prepayment penalty totaling $1,400 was
paid in 1997 and is included in the extraordinary charge resulting from debt
extinguishment.

    In connection with the issuance of the Senior Subordinated Loans, the
Company issued warrants to purchase 1,002 membership units. The warrants have an
exercise price of one cent per warrant, are exercisable immediately, and expire
October 30, 2004. As provided in the Warrant Agreement, the warrant holder can
put the warrants and membership units acquired through the exercise of the
warrants back to the Company after October 30, 2001 or upon occurrence of a
Triggering Event, as defined, but prior to the earlier of October 30, 2004 or
the consummation of a Qualified Public Offering for an amount equal to Fair
Market Value, as defined. Additionally, as provided in the Warrant Agreement,
the Company may call the warrants and membership units acquired through the
exercise of the warrants at any time after the sixth anniversary of the Closing
Date, but prior to the earlier of October 30, 2004 or a Qualified Public
Offering for an amount equal to Fair Market Value, as defined.

    At the date of issuance, the proceeds from the Senior Subordinated Loans
were allocated between the Senior Subordinated Loans and the warrants based upon
their estimated relative fair market value; accordingly, the Senior Subordinated
Loans were recorded at a discount of $3,498, which was partially amortized prior
to repayment on October 1, 1997. The remaining unamortized balance of $3,145 was
charged to 1997 operations as part of the extraordinary charge resulting from
debt extinguishment.

    The warrants are being accreted to their redemption value through periodic
charges against Members' Equity through the earlier of October 30, 2001 or the
time redemption first becomes available. Thereafter the warrants will be
recorded at redemption value. The aforementioned warrants have been presented as
mandatorily redeemable warrants in the accompanying balance sheets.

JUNIOR SUBORDINATED NOTE

    On October 30, 1996, the Company issued a 12,500 Junior Subordinated Note
("Junior Note"), denominated in Dutch Guilders, to Brink Holdings B.V. as part
of the consideration paid for the purchase of Brink B.V. The Junior Note was due
April 30, 2005, but was repaid in full on October 1, 1997 with the proceeds of
the Old Notes discussed above. The Junior Note accrued interest at a rate of 7%
per annum, payable semi-annually in arrears.


                                       35
<PAGE>   38
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

4.   LONG-TERM DEBT -- (CONTINUED)

EXTINGUISHMENT OF DEBT

1997 Extinguishments

    As discussed above, on October 1, 1997 the Company repaid, in full, its
Senior Subordinated Loans and Junior Note and prepaid a portion of the term
notes under the U.S. Credit Facility. In connection with this extinguishment,
the Company recorded an extraordinary charge of $7,416, net of a tax benefit of
$365. The extinguishment charge is comprised of $1,400 prepayment penalties,
$3,145 of unamortized debt discount and $3,236 of unamortized debt issuance
costs.

1996 Extinguishments

    On October 30, 1996, the Company prepaid all amounts outstanding under a
$30,000 credit agreement and a prior $11,000 senior subordinated loan agreement.
In connection with these extinguishments, the Company recorded an extraordinary
charge of $1,970. The extinguishment charge is comprised of prepayment penalties
totaling $220, unamortized debt discount totaling $150 and debt issuance costs
of $1,600.

    In connection with the issuance of the prior senior subordinated loan, the
Company issued warrants to purchase 617 membership units. The proceeds from the
issuance were allocated based on the estimated relative fair market values;
accordingly, the notes were recorded at a discount of $200. As part of the
extinguishment of the prior senior subordinated loan, the Company paid $1,600 to
redeem the warrants.

INTEREST RATE RISK

    The Company is exposed to interest rate volatility with regard to variable
rate debt. The Company uses interest rate swaps to reduce interest rate
volatility. At December 31, 1998 and 1997, the notional value of interest rate
swaps was $18,500. Under the terms of the interest rate swap agreements, the
Company pays a fixed interest rate on debt equal to the notional value. The
effects of interest rate swaps are reflected in interest expense.

SCHEDULED MATURITIES

    The aggregate scheduled annual principal payments due in each of the years
ending December 31, is as follows:
<TABLE>
<S>                                                                       <C>
       1999............................................................   $   4,536
       2000............................................................      10,994
       2001............................................................      11,757
       2002............................................................      11,757
       2003............................................................      12,623
       2004 and thereafter.............................................     136,292
                                                                          ---------
                                                                            187,959
       Less -- discount................................................         435
                                                                          ---------
                                                                          $ 187,524
                                                                          =========
</TABLE>


                                       36
<PAGE>   39
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

5.   INCOME TAXES

    The Company's C corporation subsidiaries and taxable foreign subsidiaries
account for income taxes in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". The Company and certain
domestic subsidiaries are limited liability corporations; as such, the Company's
earnings are included in the taxable income of the Company's members. Income
(loss) before minority interest, income taxes and the pre-tax charge resulting
from debt extinguishment were attributable to the following sources:
<TABLE>
<CAPTION>

                                                           YEAR ENDED
                                                          DECEMBER 31,
                                             ------------------------------------
                                               1998          1997          1996
                                             --------      --------      --------
<S>                                          <C>           <C>           <C>
        United States ..................     $ 10,002      $  2,872      $  6,283
        Foreign ........................       (9,189)       (9,941)       (1,844)
                                             --------      --------      --------
                                             $    813      $ (7,069)     $  4,439
                                             ========      ========      ========
</TABLE>

    The provision (benefit) for income taxes, including $365 of income tax
benefit allocated to the extraordinary charge in 1997, is comprised of the
following:
<TABLE>
<CAPTION>
                                                      YEAR ENDED
                                                    DECEMBER 31,
                                           ---------------------------------
                                             1998         1997         1996
                                           -------      -------      -------
<S>                                        <C>          <C>          <C>
        CURRENTLY PAYABLE (REFUNDABLE)
          United States ..............     $  --        $  --        $  --
          Foreign ....................       1,591          290         (128)
                                           -------      -------      -------
                                             1,591          290         (128)
                                           -------      -------      -------
        DEFERRED
          United States ..............        --           --           --
          Foreign ....................        (688)      (3,511)        (363)
                                           -------      -------      -------
                                               903       (3,511)        (363)
                                           -------      -------      -------
                                           $   903      $(3,221)     $  (491)
                                           =======      =======      =======
</TABLE>


The effective tax rates differ from the U.S. federal income tax rate as follows:
<TABLE>
<CAPTION>
                                                                                           YEAR ENDED
                                                                                          DECEMBER 31,
                                                                            --------------------------------------
                                                                               1998           1997            1996
                                                                            -----------    -----------     -------
<S>                                                                          <C>            <C>             <C>
             Income tax provision (benefit) at U.S. statutory rate (35%)     $   286        $(2,474)        $ 1,554
             U. S. income taxes attributable to members.................      (3,502)        (1,005)         (2,200)
             Change in valuation allowance..............................       4,225            --              --
             Nondeductible foreign goodwill.............................         270            229             102
             Foreign rate differences and other, net....................        (376)            29              53
                                                                             -------        -------         -------
                                                                             $   903        $(3,221)        $  (491)
                                                                             =======        =======         =======
</TABLE>

    Deferred tax assets and liabilities, related primarily to the Company's
foreign subsidiaries, comprise the following:
<TABLE>
<CAPTION>
                                                                                                     DECEMBER 31,
                                                                                               --------------------
                                                                                                 1998         1997
                                                                                               -------      -------
<S>                                                                                            <C>          <C>
             DEFERRED TAX ASSETS
             Net operating loss carryforwards of foreign subsidiaries.....................     $ 4,689      $ 3,255
             Fixed assets.................................................................       5,185          296
             Goodwill.....................................................................         621          --
             Inventory....................................................................         150          --
             Other........................................................................         427           75
                                                                                               -------      -------
                                                                                                11,072        3,626
                                                                                               -------      -------
             DEFERRED TAX LIABILITIES
             Fixed assets.................................................................      (5,816)      (3,296)
             Inventory....................................................................      (1,363)      (1,244)
             Employee benefits and other..................................................        (159)        (176)
             Other........................................................................        (166)        (162)
                                                                                               -------      -------
                                                                                                (7,504)      (4,878)
             Valuation allowance..........................................................      (4,225)         --
                                                                                               -------      ------
             Net deferred tax liability...................................................     $  (657)     $(1,252)
                                                                                               =======      =======
</TABLE>


                                       37
<PAGE>   40
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

5.       INCOME TAXES -- (CONTINUED)

    The net operating loss carryforwards of the Company's European subsidiaries
approximate $1,300 at December 31, 1998 and have no expiration date. The net
operating loss carryforwards of the Company's Canadian subsidiaries approximate
$11,000 at December 31, 1998 and expire primarily in 2005. During 1998, the
Company recorded a valuation allowance of $4,225 based upon management's current
assessment of the likelihood of realizing the Canadian subsidiaries' deferred
tax assets. Management believes that it is more likely than not that the related
deferred tax assets recorded for its other subsidiaries will be realized and no
valuation allowance has been provided against such amounts as of December 31,
1998. If certain substantial changes in the Company's ownership should occur,
there could be an annual limit on the amount of certain carryforwards which can
be utilized.

6.       RELATED PARTY TRANSACTIONS AND ALLOCATIONS

    In connection with the acquisition of Brink B.V., the Company entered into
the Junior Note Agreement, with Brink Holdings B.V., as described in Note 4 to
the financial statements. Concurrent with this acquisition, owners of Brink
Holdings B.V. purchased 1,230 membership units of the Company for cash of $4,286
($3,485 per unit).

    A portion of the Company's U.S. Credit Facility and $20,000 Senior
Subordinated Loans, as described in Note 4, is with Chase and CB Capital
Investors, Inc., respectively, affiliates of certain members of the Company.

    Charges to operations related to consulting services provided to the Company
by certain members of the Company aggregated approximately, $386, $350 and $243
for the years ended December 31, 1998, 1997 and 1996, respectively.

    Certain employees and consultants of the Company hold Class A Units of the
Company.

7.       OPTION PLAN

    The Company adopted the disclosure requirements of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation". The
Company, however, has elected to continue to measure compensation cost using the
intrinsic value method, in accordance with APB Opinion 25 ("APB 25"),
"Accounting for Stock Issued to Employees".

    The Company has issued options to purchase Class A Units which are
outstanding under the Company's 1995 Option Plan ("the Plan"). As of December
31, 1998 and 1997, the Company was authorized under the Plan to issue options to
purchase up to 4,200 Class A Units to officers, directors and employees of the
Company and its subsidiaries. At December 31, 1998, there were 229 options that
remained available for grant under the Plan.

    Information concerning options to purchase Class A Units is as follows:
<TABLE>
<CAPTION>
                                                         1998                       1997                      1996
                                               ------------------------   ------------------------  -----------------------
                                                              WEIGHTED                  WEIGHTED                  WEIGHTED
                                                               AVERAGE                   AVERAGE                   AVERAGE
                                                NUMBER OF     EXERCISE     NUMBER OF    EXERCISE    NUMBER OF     EXERCISE
                                                  UNITS         PRICE        UNITS        PRICE       UNITS         PRICE
                                                ---------     --------     ---------    --------    ---------     --------
<S>                                              <C>          <C>            <C>        <C>            <C>        <C>
        Outstanding at January 1..............    3,903        $ 1,415        3,525      $ 1,000        2,925      $ 1,000
        Options granted.......................      280        $ 3,135          378      $ 5,287          600      $ 1,000
        Options exercised.....................      --            --           --           --           --           --
        Options cancelled.....................      212        $ 5,035         --           --           --           --
                                                  -----                     -------                   -------
        Outstanding at December 31............    3,971        $ 1,343        3,903      $ 1,415        3,525      $ 1,000
                                                  =====                     =======                   =======
        Exercisable at December 31............    1,654        $ 1,367          938      $ 1,000          480      $ 1,000
                                                  =====                     =======                   =======
</TABLE>


                                       38
<PAGE>   41
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

7.       OPTION PLAN -- (CONTINUED)

    Options granted vest as follows:
<TABLE>
<CAPTION>
                         WEIGHTED
                          AVERAGE
         NUMBER OF       EXERCISE
            UNITS          PRICE                                          VESTING PERIOD
         ---------      ---------    ---------------------------------------------------
<S>                     <C>          <C>
              215        $ 3,029       Options vest immediately.
            2,854        $ 1,200       Options vest over periods, generally up to ten years, as determined by the Option
                                       Committee. Vesting may be accelerated based on the results of a Liquidity Event, as
                                       defined in the Plan, or based upon the achievement of certain operating results of
                                       the Company or its subsidiaries.
              275        $ 1,000       Options vest based on the results of a Liquidity Event, as defined in the Plan.
              627        $ 1,566       Options vest based upon achievement of certain operating results of the Company.
</TABLE>

    The Company has elected to continue applying the provisions of APB 25 and
accordingly, recognized compensation cost of $558, $263 and $332 for the years
ended December 31, 1998, 1997 and 1996, respectively. If compensation cost and
the fair value of options granted had been determined based upon the fair value
method in accordance with SFAS 123, the pro forma net income (loss) of the
Company would have been ($290), ($3,985) and $4,846 the years ended December 31,
1998, 1997 and 1996, respectively. The weighted average fair value of options
granted was $2.4, $0.2 and $0.4 for the years ended December 31, 1998, 1997 and
1996, respectively.

    The fair value of options granted and related pro forma compensation cost
were estimated using the Black-Scholes option-pricing model with the following
assumptions:
<TABLE>
<CAPTION>
                                             1998       1997       1996
                                           -------    -------    ------
<S>                                         <C>       <C>       <C>
        Dividend yield ................      0.0%      0.0%      0.0%
        Risk-free rate of return ......     5.50%     6.12%     6.21%
        Expected option term (in years)        8         8         8
</TABLE>


   The following table summarizes the status of the Company's options
outstanding and exercisable at December 31, 1998:
<TABLE>
<CAPTION>
                                  OPTIONS OUTSTANDING
                         -----------------------------
                                          WEIGHTED
                                          AVERAGE
                                         REMAINING
        EXERCISE                        CONTRACTUAL      OPTIONS
        PRICES           UNITS             LIFE        EXERCISABLE
        ------           -----             ----        -----------
<S>                     <C>                <C>          <C>
        $1,000           3,525              12           1,396
        $3,029             215              14             215
        $3,485              65              14              13
        $5,610             166              14              30
</TABLE>


8.       PENSION PLANS

    The Company has a defined benefit pension plan covering substantially all of
SportRack, LLC's domestic employees covered under a collective bargaining
agreement. An employee's monthly pension benefit is determined by multiplying a
defined dollar amount by the years of credited service earned. Plan assets are
comprised principally of marketable equity securities and short-term
investments. The Company's funding policy is to contribute annually the amounts
necessary to comply with ERISA funding requirements.


                                       39
<PAGE>   42
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

8.       PENSION PLANS -- (CONTINUED)

    The following table sets forth the change in the plan's benefit obligations
and plan assets, and the funded status of the plan as of and for the years ended
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
                                                                                                      DECEMBER 31,
                                                                                                ---------------------
                                                                                                   1998          1997
                                                                                                ---------     -------
<S>                                                                                              <C>           <C>
             Change in benefit obligation:
                Benefit obligation at beginning of year....................................      $ 1,929       $ 1,637
                Benefits earned during the year............................................           99            76
                Interest on projected benefit obligation...................................          140           124
                Actuarial loss.............................................................          202           217
                Benefits paid..............................................................          (69)         (125)
                                                                                                  ------        ------
                Benefit obligation at end of year..........................................        2,301         1,929
                                                                                                  ------        ------
             Change in plan assets:
                Market value of assets at beginning of year................................        1,586         1,308
                Actual return on plan assets...............................................          167           303
                Employer contributions.....................................................          147           100
                Benefits paid..............................................................          (69)         (125)
                                                                                                 -------       -------
                Market value of assets at end of year......................................        1,831         1,586
                                                                                                 -------       -------
             Funded status.................................................................         (470)         (343)
             Unrecognized prior service cost...............................................            9            11
             Unrecognized net (gain) loss..................................................           49          (133)
                                                                                                 -------       -------
             Accrued pension cost..........................................................      $  (412)      $  (465)
                                                                                                 =======       =======
</TABLE>


    The weighted average discount rate used in determining the actuarial present
value of the accumulated benefit obligation was 6.75% and 7.00% at December 31,
1998 and 1997, respectively. The expected long-term rate of return on plan
assets was 9.00% at December 31, 1998 and 1997.

    The Company has various defined contribution retirement plans for its
domestic and certain foreign subsidiaries, including 401(k) plans, whereby
participants can contribute a portion of their salary up to certain maximums
established by the related plan documents. The Company makes matching
contributions, which are based upon the amounts contributed by employees. The
Company's matching contributions charged to operations aggregated $306, $229 and
$130 in 1998, 1997 and 1996, respectively.

    Substantially all of the employees of Brink International B.V. are covered
by a union-sponsored, collectively-bargained, multi-employer defined benefit
plan. Pension expense was $1,302, $660 and $118 for the years ended December 31,
1998 and 1997 and for the two-month period from November 1, 1996 through
December 31, 1996, respectively.

9.       OPERATING LEASES

    The Company leases certain equipment under leases expiring on various dates
through 2004. Future minimum annual lease payments required under leases that
have a noncancellable lease term in excess of one year at December 31, 1998 are
as follows:
<TABLE>

<S>                                                                                                <C>
         1999..................................................................................      $ 2,927
         2000..................................................................................        2,332
         2001..................................................................................        1,924
         2002..................................................................................        1,478
         2003 and thereafter...................................................................          868
                                                                                                     -------
                                                                                                     $ 9,529
                                                                                                     =======
</TABLE>

    Rental expense charged to operations was approximately $3,947, $2,252 and
$669 for the years ended December 31, 1998, 1997 and 1996, respectively.


                                       40
<PAGE>   43
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

10.      ACCOUNT BALANCES

    Account balances included in the consolidated balance sheets are comprised
of the following:
<TABLE>
<CAPTION>
                                                                                                  DECEMBER 31,
                                                                                             ----------------------
                                                                                               1998           1997
                                                                                             ---------      ------
<S>                                                                                          <C>            <C>
         INVENTORIES
         Raw materials..............................................................         $12,805        $13,744
         Work-in-process............................................................          12,707          5,040
         Finished goods.............................................................          17,575         15,624
                                                                                             -------        -------
                                                                                             $43,087        $34,408
                                                                                             =======        =======
         PROPERTY AND EQUIPMENT
         Land, buildings and improvements...........................................         $22,552        $20,966
         Furniture, fixtures and computer hardware..................................           8,137          6,299
         Machinery, equipment and tooling...........................................          46,003         32,458
         Construction-in-progress...................................................           1,984          1,985
                                                                                             -------        -------
                                                                                              78,676         61,708
         Less -- accumulated depreciation...........................................         (17,381)        (8,148)
                                                                                             -------        -------
                                                                                             $61,295        $53,560
                                                                                             =======        =======
         ACCRUED LIABILITIES
         Compensation and benefits..................................................         $ 9,239        $ 8,900
         Interest...................................................................           3,256          3,154
         Income taxes...............................................................           1,692            646
         Other taxes................................................................             766            478
         Other......................................................................           6,382          4,732
                                                                                             -------        -------
                                                                                             $21,335        $17,910
                                                                                             =======        =======
</TABLE>

11.      COMMITMENTS AND CONTINGENCIES

    The Company is party to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of business.
Management believes that the resolution of these matters will not have a
material adverse effect on the financial position, results of operations or cash
flows of the Company.

12.      SEGMENT INFORMATION

    The Company operates in one reportable segment, providing towing and rack
systems and related accessories to the automotive OEM and aftermarket. All sales
are to unaffiliated customers. Revenues by geographic area, accumulated by the
geographic area where the revenue originated, revenues by product line and
long-lived assets, which include net property and equipment and net goodwill and
debt issuance costs, by geographic area are as follows:
<TABLE>
<CAPTION>
                                                                                                YEAR ENDED
                                                                                               DECEMBER 31,
                                                                                  ----------------------------------
                                                                                      1998         1997         1996
                                                                                  -----------  -----------  --------
<S>                                                                                <C>          <C>           <C>
         REVENUES
           United States....................................................       $ 190,300    $ 122,294     $73,895
           The Netherlands..................................................          35,543       36,268       2,791
           Italy............................................................          19,900          --          --
           Other foreign....................................................          44,396       30,116       4,780
                                                                                   ---------    ---------     -------
                                                                                   $ 290,139    $ 188,678     $81,466
                                                                                   =========    =========     =======
</TABLE>
<TABLE>
<CAPTION>
                                                                                                YEAR ENDED
                                                                                               DECEMBER 31,
                                                                                  ----------------------------------
                                                                                      1998         1997         1996
                                                                                  -----------  -----------  --------
<S>                                                                                <C>          <C>          <C>
         REVENUES
           Towing systems..................................................        $ 175,236    $ 100,293    $   7,571
           Rack systems....................................................          114,903       88,385       73,895
                                                                                   ---------    ---------    ---------
                                                                                   $ 290,139    $ 188,678    $  81,466
                                                                                   =========    =========    =========
</TABLE>


                                       41
<PAGE>   44
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

12.      SEGMENT INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                        ------------------------
                                                                                           1998           1997
                                                                                        -----------    ---------
<S>                                                                                      <C>            <C>
           LONG-LIVED ASSETS
             United States........................................................       $ 93,628       $ 94,931
             The Netherlands......................................................         33,432         32,508
             Italy................................................................         10,774            --
             Other foreign........................................................         16,511         20,845
                                                                                         --------       --------
                                                                                         $154,345       $148,284
                                                                                         ========       ========
</TABLE>

    The Company has two significant customers in the automotive OEM industry.
Sales to these customers represented 32% and 11% for the year ended December 31,
1998, 29% and 13% for the year ended December 31, 1997 and 60% and 21% for the
year ended December 31, 1996. Accounts receivable from these customers
represented 42% and 6% of the Company's trade accounts receivable at December
31, 1998, and 33% and 8% at December 31, 1997, respectively.

    Although the Company is directly affected by the economic well being of the
industries and customers referred to above, management does not believe
significant credit risk exists at December 31, 1998. Consistent with industry
practice, the Company does not require collateral to reduce such credit risk.

13.      CONDENSED CONSOLIDATING INFORMATION

    The Notes have been issued by the Company and its wholly-owned subsidiary,
AAS Capital Corporation and are guaranteed on a full and unconditional and joint
and several basis, by all of the Company's wholly-owned domestic subsidiaries.
The following condensed consolidating financial information for 1998 and 1997
presents the financial position, results of operations and cash flows of (i) the
Company as parent, as if it accounted for its subsidiaries on the equity method,
and AAS Capital Corporation as issuers; (ii) guarantor subidiaries which are
domestic, wholly-owned subidiaries and include SportRack LLC, AAS Holdings,
Inc., Valley Industries, LLC, and ValTek LLC; and (iii) the non-guarantor
subsidiaries which are foreign, wholly-owned subsidiaries and include Brink
International B.V., SportRack International, Inc., and SportRack Automotive,
GmbH. The financial position and operating results of the guarantor and
non-guarantor subsidiaries for the year ended December 31, 1998 include a
management fee of $1,198 and $318, respectively, in addition to having been
charged interest on their intercompany balances. For the year ended December 31,
1997 the financial position and operating results of the guarantor and
non-guarantor subsidiaries do not include any allocation of overhead or similar
charges except that certain foreign subsidiaries were charged interest on their
intercompany debt balance. Separate financial statements of the guarantor
subsidiaries are not presented because management has determined that the
separate financial statements are not material to investors. Since its formation
in September 1997, AAS Capital Corporation has had no operations and has no
assets or liabilities at December 31, 1998.

    Guarantor subsidiaries for 1996 include SportRack LLC and AAS Holdings, Inc.
and their financial statements are substantially those of the Company and
include Brink, a non-guarantor subsidiary acquired October 30, 1996. The 1996
consolidated results of operations include Brink for the two months ended
December 31, 1996 and reflect Brink's net sales of $7,571 and a net loss of 
$1,353.  At December 31, 1996, Brink's total assets and total liabilities were 
$86,348 and $75,574, respectively. ValTek, LLC was formed in November 1997 and 
is not significant.


                                       42
<PAGE>   45
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

13.      CONDENSED CONSOLIDATING INFORMATION -- (CONTINUED)

                      CONDENSED CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                 GUARANTOR     NON-GUARANTOR     ELIMINATIONS/
                                                  ISSUERS      SUBSIDIARIES    SUBSIDIARIES       ADJUSTMENTS   CONSOLIDATED
                                               ------------     -----------      -----------      ------------     ---------
<S>                                             <C>              <C>             <C>              <C>              <C>
   ASSETS
   Current assets
     Cash...................................    $       --       $    5,636      $     5,604      $       --       $   11,240
     Accounts receivable....................            --           28,437           12,290              --           40,727
     Inventories............................            --           15,630           27,457              --           43,087
     Deferred income taxes and other
      current assets........................              4           2,687            1,553              --            4,244
                                                -----------     -----------      -----------      -----------      ----------
          Total current assets..............              4          52,390           46,904              --           99,298
                                                -----------     -----------      -----------      -----------      ----------
   Property and equipment, net..............            --           28,416           32,879              --           61,295
   Goodwill, net............................          1,105          59,261           26,713              --           87,079
   Other intangible assets, net.............          4,846             300            1,446              --            6,592
   Deferred income taxes and other
     noncurrent assets......................             28           2,285            2,404              --            4,717
   Investment in subsidiaries...............         34,373          10,022              --           (44,395)            --
   Intercompany notes receivable............        109,300             --               --          (109,300)            --
                                               ------------     -----------      -----------      ------------     ---------
          Total assets......................   $    149,656     $   152,674      $   110,346      $  (153,695)     $  258,981
                                               ============     ===========      ===========      ===========      ==========

   LIABILITIES AND MEMBERS'
     EQUITY
   Current liabilities
     Current maturities of long-term debt...  $         --      $       --       $     4,536      $       --       $    4,536
     Accounts payable.......................            --           14,260            8,855              --           23,115
     Accrued liabilities and deferred
       income taxes.........................          3,702           6,995           11,718              --           22,415
                                               ------------     -----------      -----------      -----------      ----------
          Total current liabilities.........          3,702          21,255           25,109              --           50,066
                                               ------------     -----------      -----------      -----------      ----------
   Deferred income taxes and other
     noncurrent liabilities.................          1,153           1,255            3,963              --            6,371
   Long-term debt, less current maturities..        124,565             --            58,423              --          182,988
   Intercompany debt........................            --           77,951           31,349         (109,300)            --
   Mandatorily redeemable warrants..........          4,409             --               --               --            4,409
   Members' equity..........................         15,827          52,213           (8,498)         (44,395)         15,147
                                               ------------     -----------      -----------      -----------      ----------
          Total liabilities and members'
          equity............................   $    149,656     $   152,674      $   110,346       $ (153,695)     $  258,981
                                               ============     ===========      ===========       ==========      ==========
</TABLE>


                                       43
<PAGE>   46
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

13.      CONDENSED CONSOLIDATING INFORMATION -- (CONTINUED)

                      CONDENSED CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                 GUARANTOR     NON-GUARANTOR     ELIMINATIONS/
                                                  ISSUERS      SUBSIDIARIES    SUBSIDIARIES       ADJUSTMENTS     CONSOLIDATED
                                                -----------     -----------      -----------      -----------      ----------
<S>                                             <C>              <C>             <C>              <C>              <C>
   ASSETS
   Current assets
     Cash...................................    $       --       $    2,217      $    25,131      $       --       $   27,348
     Accounts receivable....................            --           31,649           11,874              --           43,523
     Inventories............................            --           14,835           19,573              --           34,408
     Other current assets...................            --            4,912            1,619              --            6,531
                                                -----------     -----------      -----------      -----------      ----------
          Total current assets..............            --           53,613           58,197              --          111,810
                                                -----------     -----------      -----------      -----------      ----------
   Property and equipment, net..............            --           28,009           25,551              --           53,560
   Goodwill, net............................          1,145          61,431           23,313              --           85,889
   Other intangible assets, net.............          5,558             722            3,683              --            9,963
   Deferred income taxes and other
     noncurrent assets......................            --              384            3,952              --            4,336
   Investment in subsidiaries...............         26,500          10,022              --           (36,522)            --
   Intercompany notes receivable............        115,056             --               --          (115,056)            --
                                               ------------     -----------      -----------      -----------      ---------
          Total assets......................   $    148,259     $   154,181      $   114,696      $  (151,578)     $  265,558
                                               ============     ===========      ===========      ===========      ==========

   LIABILITIES AND MEMBERS'
     EQUITY
   Current liabilities
     Current maturities of long-term debt...   $        --      $       --       $     3,746      $       --       $    3,746
     Accounts payable.......................            --           19,053            3,965              --           23,018
     Accrued liabilities and deferred
       income taxes.........................          3,607           7,180            8,456              --           19,243
                                                -----------     -----------      -----------      -----------      ----------
          Total current liabilities.........          3,607          26,233           16,167              --           46,007
                                               ------------     -----------      -----------      -----------      ----------
   Deferred income taxes and other
     noncurrent liabilities.................            595           1,318            4,307              --            6,220
   Long-term debt, less current maturities..        126,436             --            66,944              --          193,380
   Intercompany debt........................            --           89,218           25,838         (115,056)            --
   Mandatorily redeemable warrants..........          3,507             --               --               --            3,507
   Members' equity..........................         14,114          37,412            1,440          (36,522)         16,444
                                               ------------     -----------      -----------      -----------      ----------
          Total liabilities and members'
          equity............................   $    148,259     $   154,181      $   114,696      $  (151,578)     $  265,558
                                               ============     ===========      ===========      ===========      ==========
</TABLE>


                                       44
<PAGE>   47
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

13.      CONDENSED CONSOLIDATING INFORMATION -- (CONTINUED)

                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                                                 GUARANTOR     NON-GUARANTOR     ELIMINATIONS/
                                                  ISSUERS      SUBSIDIARIES    SUBSIDIARIES       ADJUSTMENTS      CONSOLIDATED
                                                 ----------      ----------     -----------        ----------      ----------
<S>                                              <C>             <C>            <C>                <C>             <C>
   Net sales................................     $      --       $  190,300     $    99,839        $      --       $  290,139
   Cost of sales............................            --          142,156          71,279               --          213,435
                                                 ----------      ----------     -----------        ----------      ----------
     Gross profit...........................            --           48,144          28,560               --           76,704
   Selling, administrative and product
     development expenses...................          1,560          23,631          25,648               --           50,839
   Amortization of intangible assets........             40           2,314           1,197               --            3,551
   Impairment charge                                    --              --            7,863               --            7,863
                                                 ----------      ----------     -----------        ----------      ----------
     Operating income (loss)................         (1,600)         22,199          (6,148)              --           14,451
   Interest expense.........................          3,700           6,888           8,045               --           18,633
   Equity in net income (loss) of
     subsidiaries                                     5,024             --              --             (5,024)            --
   Foreign currency gain....................            --              --            4,995               --            4,995
                                                 ----------      ----------     -----------        ----------      ----------
   Income (loss) before income taxes........           (276)         15,311          (9,198)           (5,024)            813
   Provision for income taxes...............            --              --              903               --              903
                                                 ----------      ----------     -----------        ----------      ----------
   Net income (loss)........................     $     (276)     $   15,311     $   (10,101)       $   (5,024)     $      (90)
                                                 ==========      ==========     ===========        ==========      ==========
</TABLE>


                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>

                                                                 GUARANTOR     NON-GUARANTOR     ELIMINATIONS/
                                                  ISSUERS      SUBSIDIARIES    SUBSIDIARIES       ADJUSTMENTS      CONSOLIDATED
                                                 ----------      ----------     -----------        ----------      ----------
<S>                                              <C>             <C>            <C>                <C>             <C>
   Net sales................................     $      --       $  122,294     $    66,384        $      --       $  188,678
   Cost of sales............................            --           89,647          45,909               --          135,556
                                                 ----------      ----------     -----------        ----------      ----------
     Gross profit...........................            --           32,647          20,475               --           53,122
   Selling, administrative and product
     development expenses...................            721          14,685          15,944               --           31,350
   Amortization of intangible assets........             53           1,571             712               --            2,336
                                                 ----------      ----------     -----------        ----------      ----------
     Operating income (loss)................           (774)         16,391           3,819               --           19,436
   Interest expense.........................          3,348           3,760           5,519               --           12,627
   Equity in net income (loss) of
     subsidiaries...........................          5,169             --              --             (5,169)            --
   Foreign currency gain (loss).............          1,041             --           (7,138)              --           (6,097)
                                                 ----------      ----------     -----------        ----------      ----------
   Income (loss) before minority interest
      and income taxes......................          2,088          12,631          (8,838)           (5,169)            712
   Provision (benefit) for income taxes.....            --              --           (2,856)              --           (2,856)
                                                 ----------      ----------     -----------        ----------      -----------
     Income (loss) before minority
       interest.............................          2,088          12,631          (5,982)           (5,169)          3,568
   Minority interest........................            --               97             --                --               97
                                                 ----------      ----------      ----------        ----------      ----------
   Extraordinary charge resulting from debt
       extinguishment.......................          6,153             525             738               --            7,416
                                                 ----------      ----------     -----------        ----------      ----------
   Net income (loss)........................     $   (4,065)     $   12,009     $    (6,720)       $   (5,169)     $   (3,945)
                                                 ==========      ==========     ===========        ==========      ===========
</TABLE>


                                       45
<PAGE>   48
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

13.      CONDENSED CONSOLIDATING INFORMATION -- (CONTINUED)

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                                                 GUARANTOR     NON-GUARANTOR      ELIMINATIONS/
                                                    ISSUERS    SUBSIDIARIES    SUBSIDIARIES        ADJUSTMENTS     CONSOLIDATED
                                                 ----------      ----------     -----------        ----------      ----------
<S>                                              <C>            <C>             <C>                <C>            <C>
   Net cash provided by (used for) operating
     activities..............................    $   (4,216)    $  18,479       $    7,616         $      --      $   21,879
                                                 -----------    ---------       ----------         ----------     ----------

   Cash flows from investing activities:
     Acquisition of property and
       equipment.............................           --         (4,358)          (5,640)               --          (9,998)
     Amount due from sellors of Valley
       Industries, Inc.......................           --          1,150              --                 --           1,150
     Acquisition of subsidiaries, net of cash
       acquired..............................           --            --           (22,770)               --         (22,770)
                                                 ----------     ---------       ----------         ----------     ----------
       Net cash used for investing activities           --         (3,208)         (28,410)               --         (31,618)
                                                 ----------     ----------      ----------         ----------     ----------
   Cash flows provided by (used for)
        financing activities:
     Change in intercompany debt.............         6,101       (11,657)           5,556                --             --
     Net reduction in revolving loan.........        (1,900)          --            (2,605)               --          (4,505)
     Repayment of debt.......................           --            --            (3,682)               --          (3,682)
     Issuance of membership units............            29           --               --                 --              29
     Repurchase of membership units                     (14)          --               --                 --             (14)
     Distributions from subsidiaries.........           195           --               --                (195)           --
     Distributions to members................          (195)         (195)             --                 195           (195)
                                                 ----------     ---------       ----------         ----------     ----------
       Net cash provided by (used for)
         financing activities................         4,216       (11,852)            (731)               --          (8,367)
                                                 ----------     ---------       ----------         ----------     ----------

   Effect of exchange rate changes...........           --            --             1,998                --           1,998
                                                 ----------     ---------       ----------         ----------      ---------
   Net increase (decrease) in cash...........           --          3,419          (19,527)               --         (16,108)
   Cash at beginning of period...............           --          2,217           25,131                --          27,348
                                                 ----------     ---------       ----------         ----------     ----------
   Cash at end of period.....................    $      --      $   5,636       $    5,604         $      --      $   11,240
                                                 ==========     =========       ==========         ==========     ==========
</TABLE>



                                       46
<PAGE>   49
                         ADVANCED ACCESSORY SYSTEMS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT UNIT RELATED DATA)

13.      CONDENSED CONSOLIDATING INFORMATION -- (CONTINUED)

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>

                                                                 GUARANTOR     NON-GUARANTOR      ELIMINATIONS/
                                                    ISSUERS    SUBSIDIARIES    SUBSIDIARIES        ADJUSTMENTS    CONSOLIDATED
                                                 ----------     ---------       ----------         ----------     ----------
<S>                                              <C>            <C>             <C>                <C>            <C>
   Net cash provided by (used for ) operating
     activities..............................    $    3,522     $   5,092       $   (1,632)        $      --      $    6,982
                                                 ----------     ---------       ----------         ----------     ----------

   Cash flows from investing activities:
     Acquisition of property and
       equipment.............................           --         (6,005)          (1,746)               --          (7,751)
     Amount due from sellors of Valley
       Industries, Inc.                                 --         (1,150)             --                 --          (1,150)
     Acquisition of subsidiaries, net of cash
       acquired..............................           --        (56,478)         (14,354)               --         (70,832)
                                                 ----------     ---------       ----------         ----------     ----------
       Net cash used for investing activities           --        (63,633)         (16,100)               --         (79,733)
                                                 ----------     ----------      ----------         ----------     ----------
   Cash flows provided by (used for)
          financing activities:
     Change in intercompany debt.............       (99,971)       76,412           23,559                --             --
     Proceeds from issuance of debt..........       124,529        55,000           35,521                --         215,050
     Increase (decrease) in revolving loan...         1,900        (4,300)           2,904                --             504
     Repayment of debt.......................       (27,699)      (63,500)         (22,049)               --        (113,248)
     Debt issuance costs.....................        (7,280)          --               --                 --          (7,280)
     Issuance of membership units............         4,999           --               --                 --           4,999
     Distributions from subsidiaries.........         2,915           --               --              (2,915)           --
     Distributions to members................        (2,915)       (2,945)             --               2,915         (2,945)
                                                 ----------     ---------       ----------         ----------     ----------
       Net cash provided by (used for)
         financing activities................        (3,522)       60,667           39,935                --          97,080
                                                 -----------    ---------       ----------         ----------     ----------

   Effect of exchange rate changes...........           --            --               505                --             505
                                                 ----------     ---------       ----------         ----------      ---------
   Net increase in cash......................           --          2,126           22,708                --          24,834
   Cash at beginning of period...............           --             91            2,423                --           2,514
                                                 ----------     ---------       ----------         ----------     ----------
   Cash at end of period.....................    $      --      $   2,217       $   25,131         $      --      $   27,348
                                                 ==========     =========       ==========         ==========     ==========
</TABLE>


                                       47
<PAGE>   50
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

                  None.

                                    PART III

ITEM 10.   MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The following table sets forth the names and ages of each of the individuals
that currently serves as a member (each, a "Board Member") of the Company's
board of managers (the "Board of Managers"), executive officer and other
significant employee of the Company.
<TABLE>
<CAPTION>
                                  NAME             AGE                       POSITION
                         ---------------------    ----  -----------------------------------------------
<S>                                                <C>  <C>
                         F. Alan Smith........     67   Chairman of the Board of Managers of the Company
                         Marshall D. Gladchun.     51   President and Chief Executive Officer of the
                                                        Company and SportRack; Board Member
                         Roger T. Morgan......     54   President and Chief Executive Officer of Valley;
                                                        Board Member
                         Gerrit de Graaf......     35   General Manager and Chief Executive Officer of
                                                        Brink; Board Member
                         Terence C. Seikel....     42   Vice President of Finance and Administration and
                                                        Chief Financial Officer of the Company and SportRack
                         Richard E. Borghi....     52   Executive Vice President and Chief Operating
                                                        Officer of SportRack
                         J. Wim Rengelink.....     44   Managing Director of Brink
                         Gary K. Houston......     45   Vice President of OEM Operations of Valley
                         Bryan A. Fletcher....     39   Vice President of Aftermarket Operations of Valley
                         Donald J. Hofmann, Jr     41   Board Member, Vice President and Secretary of the Company 
                         Barry Banducci.......     63   Board Member
                         Gerard J. Brink......     55   Board Member
</TABLE>

    F. Alan Smith has served in the automotive industry for 37 years and has
been Chairman of the Board of Managers of the Company since its formation in
September 1995. He served in various assignments at General Motors from 1956 to
1992, including President of GM Canada from 1978 to 1980. He was a member of the
Board of Directors of General Motors from 1981 to 1992 and Chief Financial
Officer of General Motors from 1981 to 1988. Mr. Smith is a director of The
Minnesota Mining and Manufacturing Corporation ("3M"), TransPro, Inc.
("TransPro").

    Marshall D. Gladchun has served in the automotive industry for 25 years and
has been President and Chief Executive Officer of the Company and SportRack
since September 1995. From 1986 to 1995, he held various senior management
positions with MascoTech, and was President and Chief Operating Officer of the
MascoTech Division at the time of its acquisition by the Company.

    Roger T. Morgan has served in the automotive industry for 36 years and has
been President and Chief Executive Officer of Valley since June 1990. Prior to
joining Valley, he worked for General Motors for 12 years and Rockwell
International Automotive Group as Vice President --Operations for 14 years.

    Gerrit de Graaf has been General Manager and Chief Executive Officer of
Brink since November 1996. From 1989 to 1996, Mr. de Graaf worked for Philips
Medical Systems as a consultant and most recently as Philips' Marketing Manager
in the United States.

    Terence C. Seikel has served in the automotive industry for 15 years and has
been Vice President of Finance and Administration and Chief Financial Officer of
the Company and SportRack since January 1996. From 1985 to 1996, Mr. Seikel was
employed by Larizza Industries, a publicly held supplier of interior trim to the
automotive industry, in various capacities including Chief Financial Officer.

    Richard E. Borghi has served in the automotive industry for 31 years and has
been Executive Vice President of Operations and Chief Operating Officer of
SportRack since 1995. From 1988 to 1995, Mr. Borghi held various senior
management positions with MascoTech, and was the Executive Vice President of
Operations of the MascoTech Division at the time of its acquisition by the
Company.

    J. Wim Rengelink has served in the automotive industry for 12 years and has
been Managing Director of Brink since 1995. From 1988 to 1995 he worked in
Brink's internal audit department.

                                       48
<PAGE>   51
    Gary K. Houston has served in the automotive industry for 25 years and has
been Vice President of OEM Operations of Valley since 1995. From 1991 to 1995 he
was Vice President of Manufacturing of Valley. Prior thereto, Mr. Houston worked
for Rockwell International for 18 years, most recently as a manufacturing
manager.

    Bryan A. Fletcher has served in the automotive industry for 10 years and has
been Vice President of Aftermarket Operations of Valley since 1991.

   Donald J. Hofmann, Jr. has been a Board Member, Vice President and Secretary
of the Company since October 1995. Mr. Hofmann has been a General Partner of CCP
since 1992. Prior to joining CCP, Mr. Hofmann held positions in the Acquisition
Finance Division of Manufacturers Hanover and at Smith Barney. Mr. Hofmann is a
director of Penske Corporation and Berry Plastics.

   Barry Banducci has been a Board Member of the Company since October 1995.
Since September 1995, Mr. Banducci has been the Chairman of TransPro. Prior
thereto, Mr. Banducci served in various capacities at Equion Corporation, a
supplier of automotive components, from 1983 to 1995, including President, Chief
Executive Officer and Vice Chairman. Mr. Banducci is a director of TransPro and
Aristotle Corporation.

   Gerard J. Brink has been a Board Member of the Company since October 1996.
Mr. Brink was General Manager of Brink from 1965 to 1996.

BOARD MEMBER COMPENSATION

   The Board Members do not currently receive compensation for their service on
the Board of Managers or any committee thereof but are reimbursed for their
out-of-pocket expenses. In addition, Messrs. Smith and Banducci have consulting
agreements with the Company. See "Executive Compensation - Consulting
Agreements."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    The Board of Managers has an Audit Committee consisting of Messrs. Banducci
and Brink, and a Compensation Committee consisting of Messrs. Hofmann and Smith.
The Audit Committee reviews the scope and results of audits and internal
accounting controls and all other tasks performed by the independent public
accountants of the Company. The Compensation Committee determines compensation
for executive officers of the Company and administers the Company's 1995 Option
Plan.


ITEM 11.   EXECUTIVE COMPENSATION

    The following table sets forth information concerning the compensation for
1998 and 1997 for the chief executive officer of the Company and the four next
most highly compensated executive officers of the Company.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                                        LONG-TERM      
                                                                                                      COMPENSATION     
                                                                 ANNUAL COMPENSATION                     AWARDS        
                                                  -----------------------------------------------  ----------------
                                                                                      OTHER                           
                                                                                      ANNUAL           SECURITIES       ALL OTHER
                                         FISCAL       SALARY          BONUS        COMPENSATION        UNDERLYING      COMPENSATION
     NAME AND PRINCIPAL POSITION          YEAR          ($)            ($)              ($)            OPTIONS(#)          ($)
------------------------------------    --------  -------------  -------------  -----------------  -----------------  -----------
<S>                                     <C>        <C>            <C>           <C>                <C>                 <C>
F. Alan Smith.......................      1998       217,000        105,000             --                 32                 --
  Chairman of the Company...........      1997       200,000        100,000             --                 --                 --

Marshall D. Gladchun................      1998       382,300        200,000             --                 86                 --
  President and Chief Executive           1997       362,500        195,000             --                 --                 --
  Officer of the Company and SportRack
Terence C. Seikel...................      1998       215,000         95,000             --                 65                 --
  Vice President of Finance and           1997       200,600         94,000             --                 --                 --
  Administration and Chief Financial
  Officer of the Company and SportRack
Roger T. Morgan.....................      1998       250,000         87,500             --                 --                 --
  President and Chief Executive           1997       107,220         73,000             --                178                 --
  Officer of Valley
Richard E. Borghi...................      1998       219,965        115,000             --                 32                 --
  Executive Vice President and Chief      1997       206,500         94,000             --                 --                 --
  Operating Officer of SportRack                                                                                       
</TABLE>

                                       49
<PAGE>   52
                              OPTION GRANTS IN 1998

    The following tables set forth information with respect to membership unit 
options pursuant to the 1995 Option Plan granted to the named executive officers
of the Company during 1998. All options were granted at an exercise price less
than the fair market value per share of Class A Units on the date of grant.

<TABLE>
<CAPTION>
                                                     INDIVIDUAL GRANTS                                  POTENTIAL REALIZABLE VALUE
                         ------------------------------------------------------------------------         AT ASSUMED ANNUAL RATES
                            NUMBER OF                                                                      OF CLASS A UNIT PRICE
                           SECURITIES      PERCENT OF TOTAL         EXERCISE                              APPRECIATION FOR OPTION
                           UNDERLYING       OPTIONS GRANTED          OR BASE                                    TERM($)(1)
                             OPTIONS        TO EMPLOYEES IN           PRICE         EXPIRATION     --------------------------------
        NAME               GRANTED(#)           1998(%)              ($/SH)            DATE               5%                10%
--------------------    --------------- ----------------------  ---------------- ----------------  ----------------  --------------
<S>                            <C>                 <C>               <C>          <C>               <C>               <C>       
F. Alan Smith.......           32                  11.4              3,029            7/1/13          $  105,000        $  308,000
Marshall D. Gladchun           86                  30.7              3,029            7/1/13             281,000           818,000
Terence C. Seikel...           65                  23.2              3,029            7/1/13             212,000           626,000
Roger T. Morgan.....           --                  --                   --                --                  --                --
Richard E. Borghi...           32                  11.4              3,029            7/1/13             105,000           308,000
</TABLE>

<TABLE>
<CAPTION>
                                                                         NUMBER OF SECURITIES
                                                                              UNDERLYING             VALUE OF UNEXERCISED
                                                                          UNEXERCISED OPTIONS        IN-THE-MONEY OPTIONS
                                      SHARES                                AT YEAR END(#)              AT YEAR END($)
                                    ACQUIRED ON            VALUE             EXERCISABLE/                EXERCISABLE/
               NAME                 EXERCISE(#)         REALIZED($)          UNEXERCISABLE               UNEXERCISABLE
       --------------------    --------------------  ---------------   -------------------------  --------------------
<S>                             <C>                   <C>                <C>                       <C>    
       F. Alan Smith.......             --                  --                  218/264                741,000/ 833,000
       Marshall D. Gladchun             --                  --                  696/890              2,366,000/ 2,852,000
       Terence C. Seikel...             --                  --                  265/400               901,000/ 1,228,000
       Roger T. Morgan.....             --                  --                  72/106                      --/ --
       Richard E. Borghi...             --                  --                  276/356               938,000/ 1,145,000
</TABLE>

----------

 (1) Potential realizable value is based on the assumption that the price of the
     Company's Class A Units appreciate at the annual rate shown, compounded
     annually, from the date of grant until the end of the 15-year option term.
     The values are calculated in accordance with rules promulgated by the
     Securities and Exchange Commission and do not reflect the Company's
     estimate of future Class A Unit price appreciation.

EMPLOYMENT AGREEMENTS

    Each of Marshall D. Gladchun, Roger T. Morgan, Terence C. Seikel, Richard E.
Borghi and Gerrit de Graaf has entered into an employment agreement
(collectively, the "Employment Agreements") with the Company. Mr. Gladchun's
Employment Agreement provides for an annual base salary of $277,304, subject to
increases at the sole discretion of the Board of Managers, a bonus in the range
of 50-70% of his base salary, and a one-time bonus of $400,000 on the earlier of
(i) September 20, 2002, (ii) his termination date, and (iii) a sale of the
Company (any such bonus an "Ending Bonus"). Mr. Morgan's Employment Agreement
provides for an annual base salary of $250,000, subject to increases at the sole
discretion of the Board of Managers, and a bonus in the range of 50% to 70% of
his base salary. Mr. Seikel's Employment Agreement provides for an annual base
salary of $165,000 subject to increases at the sole discretion of the Board of
Managers, and a bonus in the range of 30-50% of his base salary. Mr. Borghi's
Employment Agreement provides for an annual base salary of $161,200, subject to
increases at the sole discretion of the Board of Managers, a bonus in the range
of 30-50% of his base salary, and an Ending Bonus of $100,000. Mr. de Graaf's
Employment Agreement provides for an annual base salary of NLG 170,000, subject
to increases at the sole discretion of the Board of Managers, and a bonus in the
range of 30% to 50% of his base salary. The Employment Agreements also provide
for twelve months of severance pay to the executive officer in the event such
officer is terminated without cause (as defined in the Employment Agreement.)

    The Employment Agreements expire at various times between June 30, 2000 and
December 31, 2000 (except that Gerrit de Graaf's Employment Agreement may be
terminated by either party upon three month's prior written notice) but
automatically extend for successive two-year terms unless terminated by the
Company upon 30 days notice prior to the expiration of the current term. Each
Employment Agreement prohibits the executive officer from disclosing non-public
information about the Company. The Employment Agreements also require the
executive officers to assign to the Company any designs, inventions and other
related items and intellectual property rights developed or acquired by the
executive officer during the term of his employment. In addition, for a period
of five years after termination of employment (two years if the termination is
without cause) each executive officer has agreed, in his 


                                       50
<PAGE>   53
respective Employment Agreement, not to (i) engage in any Competitive Business
(as defined in the Employment Agreements), (ii) interfere with or disrupt any
relationship between the Company and its customers, suppliers and employees and
(iii) induce any employee of the Company to terminate his or her employment with
the Company or engage in any Competitive Business.

CONSULTING AGREEMENTS

    F. Alan Smith and Barry Banducci, both members of the Board of Managers,
have each entered into consulting agreements (the "Consulting Agreements") with
the Company dated as of September 28, 1995. Mr. Smith's Consulting Agreement
provides for an annual consulting fee of $150,000 subject to increases at the
sole discretion of the Board of Managers, and a performance based bonus in the
range of 30-50% of the annual consulting fee. Mr. Banducci's Consulting
Agreement provides for an annual consulting fee of $50,000. The initial term of
the Consulting Agreements expired on March 28, 1997. The Consulting Agreements
automatically extend for successive six-month periods unless terminated by the
Company upon 30 days notice prior to the expiration of the then current term.
The Consulting Agreements prohibit Messrs. Smith and Banducci from disclosing
non-public information about the Company.

MEMBERS' AGREEMENT

    Pursuant to the Second Amended and Restated Members' Agreement dated as of
August 5, 1997 (the "Members' Agreement") among the Company and certain of the
holders of outstanding units (the "Units") of the Company, affiliates of CCP
have the ability to appoint a majority of the members of the Company's Board of
Managers.


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    As of March 15, 1999, the outstanding membership interests of the Company
consisted of 16,450 Units. The following table sets forth certain information
regarding the beneficial ownership of the Units by (i) each person known by the
Company to own more than 5% of the Units, (ii) each named director, (iii) each
named executive officer and (iv) all of the Company's directors and executive
officers treated as a group. To the knowledge of the Company, each of such
holders of Units has sole voting and investment power as to the Units owned
unless otherwise noted.
<TABLE>
<CAPTION>
                                                                                             PERCENTAGE
                                       NAME AND ADDRESS(1)                 UNITS OWNED      OWNERSHIP(2)
                          -------------------------------------------      -----------      ------------
<S>                                                                        <C>                <C>   
                          CB Capital Investors, L.P.(3)..............        10,251             60.47%
                            380 Madison Avenue, 12th Floor
                            New York, New York 10017
                          MascoTech, Inc.............................         1,500              9.12
                            275 Rex Boulevard
                            Auburn Hills, Michigan 48326
                          Celerity Partners..........................         1,500              9.12
                            C/o Mark Benham
                            300 Sand Hill Road
                            Building 4, Suite 230
                            Menlo Park, California 94025
                          F. Alan Smith(4)...........................           518              3.11
                          Marshall D. Gladchun(5)....................         1,196              6.98
                          Roger T. Morgan(6).........................           119              0.72
                          Gerrit de Graaf(7).........................            34              0.21
                          Terence C. Seikel(8).......................           505              3.01
                          Richard E. Borghi(9).......................           476              2.85
                          Barry Banducci(10).........................           405              2.44
                            59 Old Quarry Road
                            Guildford, Connecticut 06437
                          Gerard J. Brink............................           410              2.49
                            Lijsterbeslaan 10
                            B-2950 Kapellen
                            Belgium
                          All directors and executive officers as a
                          group (nine persons).......................         3,694             20.33
</TABLE>

----------


(1) Unless otherwise indicated, address is c/o Advanced Accessory Systems, LLC,
    12900 Hall Road, Suite 200, Sterling Heights, Michigan 48313.

(2) Beneficial ownership is determined in accordance with the rules of the
    Commission and includes voting and investment power 


                                       51
<PAGE>   54
    with respect to the Units. Units subject to options or warrants currently
    exercisable or exercisable within 60 days of March 15, 1999 are deemed
    outstanding for purposes of computing the percentage ownership of the person
    holding such options or warrants, but are not deemed outstanding for
    purposes of computing the percentage of any other person.

(3) CB Capital Investors, L.P. is an affiliate of CCP. Includes 501 Units
    subject to warrants exercisable within 60 days.

(4) Includes 218 Units subject to options exercisable within 60 days. 300 Units
    are owned by the F. Alan Smith Family Limited Partnership.

(5) Includes 696 Units subject to options exercisable within 60 days.

(6) Includes 30 Units subject to options exercisable within 60 days.

(7) Includes 8 Units subject to options exercisable within 60 days.

(8) Includes 305 Units subject to options exercisable within 60 days.

(9) Includes 276 Units subject to options exercisable within 60 days.

(10) Includes 155 Units subject to options exercisable within 60 days. All Units
     are owned by the Banducci Family, LLC.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Chase Securities Inc. ("CSI"), The Chase Manhattan Bank ("Chase"), The Chase
Manhattan Bank of Canada ("Chase Canada") and CCP are affiliates of CB Capital
Investors, L.P., which owns approximately 47.8% of the Company's issued and
outstanding voting securities on a fully diluted basis. CSI acted as an Initial
Purchaser in connection with the Offering, for which it received customary fees.
Chase is agent bank and a lender to the Company under the Amended and Restated
Credit Agreement and has received customary fees and reimbursement of expenses
in such capacities. Chase Canada is agent bank and a lender to the Company under
the Canadian Credit Agreement and has received customary fees and reimbursement
of expenses in such capacities. Chase received its proportionate share, $6.0
million, of the repayment by the Company of $90.0 million under the Amended and
Restated Credit Agreement from the proceeds of the Offering. An affiliate of CCP
and CSI held a portion of the Senior Subordinated Debt and received its
proportionate share, $10.7 million, including prepayment penalties of $700,000,
of the repayment by the Company of such debt from the proceeds of the Offering.
As a result of the Offering, such affiliate was relieved of its obligation to
provide up to an additional $20.0 million of senior subordinated debt financing.
In addition, an affiliate of CSI and CCP purchased a portion of the Notes in
connection with the Offering. Donald J. Hofmann, Jr., a general partner of CCP,
is a member of the Board of Managers of the Company. In addition, CSI, Chase and
their affiliates participate on a regular basis in various investment banking
and commercial banking transactions for the Company and its affiliates.

    The Company is a party to the Consulting Agreements with F. Alan Smith, the
Chairman of the Company, and Barry Banducci, a Board Member of the Company. See
"Executive Compensation -- Consulting Agreements."

    In connection with the acquisition of the MascoTech Division by the Company,
the Company loaned Messrs. Gladchun and Borghi $400,000 and $100,000,
respectively, to enable them to make their initial equity investments in the
Company. The loans bear interest at 6.2% and mature in September 2002.


                                       52
<PAGE>   55
                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a) The following documents are filed as part of this Form 10-K:

              1.  Financial Statements:

              A list of the Consolidated Financial Statements, related notes and
              Reports of Independent Accountants is set forth in Item 8 of this
              report on Form 10-K.

              2.  Financial Statement Schedules:

              Schedule II - Valuation and Qualifying Accounts

              All other schedules for which provision is made in the applicable
              accounting regulations of the Commission are not required under
              the related instructions, are inapplicable or not material, or the
              information called for thereby is otherwise included in the
              financial statements and therefore have been omitted.

              3.  Index to Exhibits:


                    EXHIBIT                                       
                    NUMBER                        DESCRIPTION
                    ------      -----------------------------------------------

                  3.1      Amended and Restated Certificate of Formation of AAS.
                           Incorporated by reference to Exhibit 3.1 to AAS'
                           Registration Statement on Form S-4 (File
                           No.333-49011).

                  3.2      Second Amended and Restated Operating Agreement of
                           AAS. Incorporated by reference to Exhibit 3.2 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  3.3      Amended Bylaws of AAS Incorporated by reference to
                           Exhibit 3.3 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  4.1      Indenture dated as of October 1, 1997 for the Notes
                           (including the form of New Note attached as Exhibit B
                           thereto) among the Issuers, the Guarantors named
                           therein and First Union National Bank, as Trustee
                           Incorporated by reference to Exhibit 4.1 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.1     Asset Purchase Agreement among MascoTech Automotive
                           Systems Group, Inc., MascoTech Accessories, Inc. and
                           Advanced Accessory Systems, LLC dated as of September
                           28, 1995 Incorporated by reference to Exhibit 10.1 to
                           AAS' Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.2     Agreement for the Sale and Purchase of Shares in
                           Brink BV dated October 30, 1996 among AAS Holdings,
                           Inc., AAS Holdings, LLC, Brink Holding BV and Brink
                           BV Incorporated by reference to Exhibit 10.2 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.3     Asset Purchase Agreement among Bell Sports Corp.,
                           Bell Sports Canada, Inc. and Advanced Accessory
                           Systems Canada Inc./Les Systemes d'Accessoire
                           Advanced Canada Inc. dated as of July 2, 1997
                           Incorporated by reference to Exhibit 10.3 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.4     Stock Purchase Agreement dated July 24, 1997 among
                           Robert Boulard and Alan Hamer and Advanced Accessory
                           Systems Canada Inc. / Les Systems d'Accessoire
                           Advanced Canada Inc. Incorporated by reference to
                           Exhibit 10.4 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  10.5     Asset Purchase Agreement among Valley Industries,
                           LLC, Valley Industries, Inc., certain affiliates of
                           Valley Industries, Inc., Robert L. Fisher and Roger
                           T. Morgan dated as of August 5, 1997 Incorporated by
                           reference to Exhibit 10.5 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.6     Preliminary Agreement for the Transfer of a Business
                           dated December 16, 1997 between Ellebi S.p.A. and
                           Brink Italia S.r.1. and Brink International B.V.
                           Incorporated by reference to Exhibit 10.6 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.7     Second Amended and Restated Credit Facility among
                           AAS, SportRack, LLC, Brink International BV, Brink BV
                           and Valley Industries, LLC, as Borrowers, NBD Bank as
                           Administrative Agent and Documentation and Collateral
                           Agent and The Chase Manhattan Bank as
                           Co-Administrative Agent and Syndication Agent dated
                           August 5, 1997. Incorporated by reference to Exhibit
                           10.7 to AAS' Registration Statement on Form S-4 (File
                           No. 333-49011).

                  10.7(a)  Amendment No 1. Dated as of September 5, 1997 to
                           Second Amended and Restated Credit Agreement Dated as
                           of August 5, 1997 and Security Agreements Dated as of
                           October 5, 1996.

                  10.7(b)  Amendment No.2 Dated as of September 24, 1997 to
                           Second Amended and Restated Credit Agreement Dated as
                           of August 5, 1997.

                  10.7(c)  Amendment No. 3 Dated as of December 29, 1997 to
                           Second Amended and Restated Credit Agreement dated as
                           of August 5, 1997.

                  10.7(d)  Amendment No. 4 Dated as of December 31, 1997 to
                           Second Amended and restated Credit Agreement Dated as
                           of August 5, 1997.

                                       53
<PAGE>   56
                  10.7(e)  Amendment No. 5 and Waiver Dated as of December 31,
                           1998 to Second Amended and Restated Credit Agreement
                           Dated as of August 5, 1997.

                  10.8     First Amended and Restated Credit Agreement among
                           SportRack International, Inc. and First Chicago NBD
                           Bank, Canada, The Chase Manhattan Bank of Canada and
                           The Bank of Nova Scotia dated as of March 19, 1998.
                           Incorporated by reference to Exhibit 10.8 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.9     Employment Agreement between AAS and Richard Borghi
                           dated September 28, 1995. Incorporated by reference
                           to Exhibit 10.9 to AAS' Registration Statement on
                           Form S-4 (File No. 333-49011).

                  10.10    Employment Agreement between AAS and Marshall
                           Gladchun dated September 28, 1995. Incorporated by
                           reference to Exhibit 10.10 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.11    Management Consulting Agreement between AAS and Barry
                           Banducci dated September 28, 1995. Incorporated by
                           reference to Exhibit 10.11 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.12    Management Consulting Agreement between AAS and F.
                           Alan Smith dated September 28, 1995. Incorporated by
                           reference to Exhibit 10.12 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.13    Employment Agreement between AAS and Terence C.
                           Seikel dated January 22, 1996. Incorporated by
                           reference to Exhibit 10.13 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.14    Employment Agreement between AAS and Roger T. Morgan
                           dated August 5, 1997. Incorporated by reference to
                           Exhibit 10.14 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  10.15    Employment Agreement between Brink B.V. and Gerrit de
                           Graaf dated November 1, 1996. Incorporated by
                           reference to Exhibit 10.15 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.17    Lease dated as of January 24, 1997 between Valley
                           Industries Realty, L.P. and Valley Industries, Inc.
                           Incorporated by reference to Exhibit 10.17 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.18    Addendum to Sublease dated as of July 2, 1997 between
                           Bell Sports Canada, Inc. and SportRack International,
                           Inc. (formerly known as Advanced Accessory Systems
                           Canada Inc./ Les Systems d'Accessoire Advanced Canada
                           Inc.). Incorporated by reference to Exhibit 10.18 to
                           AAS' Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.19    Lease dated May 25, 1994 between VBG Towbars AB and
                           VBG Produkter AB. Incorporated by reference to
                           Exhibit 10.19 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  10.20    Lease Agreement for commercial use between Ellebi
                           S.p.A. and Brink Italia S.r.l. Incorporated by
                           reference to Exhibit 10.20 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.21    Registration Rights Agreement dated September 25,
                           1997 by and among Advanced Accessory Systems, LLC,
                           AAS Capital Corporation, the Guarantors named therein
                           and Chase Securities, Inc. and First Chicago Capital
                           Markets, Inc. Incorporated by reference to Exhibit
                           10.21 to AAS' Registration Statement on Form S-4
                           (File No. 333-49011).

                  12.1     Statement Re: Computation of ratios

                  24.1     Marshall D. Gladchun Power of Attorney

                  24.2     F. Alan Smith Power of Attorney

                  24.3     Barry Banducci Power of Attorney

                  24.4     Gerard Jacobus Brink Power of Attorney

                  24.5     Donald J. Hofmann Power of Attorney

                  24.6     Roger T. Morgan Power of Attorney

                  24.7     Gerrit de Graaf Power of Attorney

                  21.1     Subsidiaries of the Registrant Incorporated by
                           reference to Exhibit 21.1 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  27.1     Financial Data Schedule

         (b)  Reports of form 8-K:

              None

----------


                                       54
<PAGE>   57
SIGNATURES

         Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

                              Advanced Accessory Systems, LLC

                              By:     /s/       TERENCE C. SEIKEL
                                 ---------------------------------------------
                                              Terence C. Seikel

                                  Vice President, Finance and Administration
                                           -Chief Financial Officer
                                   (Chief Accounting Officer and Authorized
                                                  Signatory)

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on the 26th day of March, 1999, by the following
persons on behalf of the registrant and in the capacities as indicated.
<TABLE>
<CAPTION>

           Signature                                     Title
           ---------                                     -----
<S>                                <C> 

                *                   President, Chief Executive Officer and
------------------------------      Director (Principal Executive Officer)
       Marshall D. Gladchun         

   /s/  TERENCE C. SEIKEL           Vice President of Finance and Administration and
------------------------------      Chief Financial Officer (Principal Financial and
         Terence C. Seikel          Accounting Officer)
                                    

                *                   Chairman of the Board of Managers
------------------------------
           F. Alan Smith

                *                   Manager
------------------------------
          Barry Banducci

                *                   Manager
------------------------------
       Gerard Jacobus Brink

                *                   Manager
------------------------------
         Donald J. Hofmann

                *                   Manager
------------------------------
          Roger T. Morgan

                *                   Manager
------------------------------
          Gerrit de Graaf

*By:   /s/  TERENCE C. SEIKEL
------------------------------
 Terence C. Seikel, Attorney-in-Fact
</TABLE>


                                       55
<PAGE>   58
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

Other than this annual report filed on Form 10-K, none.


                                       56
<PAGE>   59
                        ADVANCED ACCESSORY SYSTEMS, LLC-
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996,
                          (DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                 ADDITIONS
                                                                       ------------------------
                                                           BALANCE AT    CHARGED TO      CHARGED                     BALANCE
                                                         BEGINNING OF   COSTS AND        TO OTHER                    AT END OF
                                                            YEAR        EXPENSES        ACCOUNTS (1)    WRITE-OFFS      YEAR
                                                        -----------    ----------       -----------    -----------   -----------
<S>                                                     <C>             <C>             <C>             <C>             <C>   
         ALLOWANCE FOR DOUBTFUL ACCOUNTS
         For the year ended December 31,
          1998 .................................          $1,699          $2,413          $  523          $1,869          $2,766
          1997 .................................             605             458             734              98           1,699
          1996 .................................             368              54             268              85             605

         ALLOWANCE FOR INVENTORY AND
         LOWER OF COST OR MARKET RESERVE
         For the year ended December 31,
          1998 .................................          $2,590          $4,735          $   15          $3,423          $3,917
          1997 .................................           1,579             423           1,303             715           2,590
          1996 .................................             564              70           1,173             228           1,579

        ALLOWANCE FOR REIMBURSABLE TOOLING
         For the year ended December 31,
          1998 .................................          $  890          $  294          $ --            $  860          $  324
          1997 .................................             368             195             493             166             890
          1996 .................................             257             300            --               189             368
</TABLE>

----------

    (1) Charges to other accounts includes amounts related to acquired companies
and the effects of changing foreign currency exchange rates for the Company's
foreign subsidiaries.


                                       57
<PAGE>   60
                                 EXHIBIT INDEX                             

                  NUMBER                        DESCRIPTION
                  ------   -----------------------------------------------

                  3.1      Amended and Restated Certificate of Formation of AAS.
                           Incorporated by reference to Exhibit 3.1 to AAS'
                           Registration Statement on Form S-4 (File
                           No.333-49011).

                  3.2      Second Amended and Restated Operating Agreement of
                           AAS. Incorporated by reference to Exhibit 3.2 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  3.3      Amended Bylaws of AAS Incorporated by reference to
                           Exhibit 3.3 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  4.1      Indenture dated as of October 1, 1997 for the Notes
                           (including the form of New Note attached as Exhibit B
                           thereto) among the Issuers, the Guarantors named
                           therein and First Union National Bank, as Trustee
                           Incorporated by reference to Exhibit 4.1 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.1     Asset Purchase Agreement among MascoTech Automotive
                           Systems Group, Inc., MascoTech Accessories, Inc. and
                           Advanced Accessory Systems, LLC dated as of September
                           28, 1995 Incorporated by reference to Exhibit 10.1 to
                           AAS' Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.2     Agreement for the Sale and Purchase of Shares in
                           Brink BV dated October 30, 1996 among AAS Holdings,
                           Inc., AAS Holdings, LLC, Brink Holding BV and Brink
                           BV Incorporated by reference to Exhibit 10.2 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.3     Asset Purchase Agreement among Bell Sports Corp.,
                           Bell Sports Canada, Inc. and Advanced Accessory
                           Systems Canada Inc./Les Systemes d'Accessoire
                           Advanced Canada Inc. dated as of July 2, 1997
                           Incorporated by reference to Exhibit 10.3 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.4     Stock Purchase Agreement dated July 24, 1997 among
                           Robert Boulard and Alan Hamer and Advanced Accessory
                           Systems Canada Inc. / Les Systems d'Accessoire
                           Advanced Canada Inc. Incorporated by reference to
                           Exhibit 10.4 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  10.5     Asset Purchase Agreement among Valley Industries,
                           LLC, Valley Industries, Inc., certain affiliates of
                           Valley Industries, Inc., Robert L. Fisher and Roger
                           T. Morgan dated as of August 5, 1997 Incorporated by
                           reference to Exhibit 10.5 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.6     Preliminary Agreement for the Transfer of a Business
                           dated December 16, 1997 between Ellebi S.p.A. and
                           Brink Italia S.r.1. and Brink International B.V.
                           Incorporated by reference to Exhibit 10.6 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.7     Second Amended and Restated Credit Facility among
                           AAS, SportRack, LLC, Brink International BV, Brink BV
                           and Valley Industries, LLC, as Borrowers, NBD Bank as
                           Administrative Agent and Documentation and Collateral
                           Agent and The Chase Manhattan Bank as
                           Co-Administrative Agent and Syndication Agent dated
                           August 5, 1997. Incorporated by reference to Exhibit
                           10.7 to AAS' Registration Statement on Form S-4 (File
                           No. 333-49011).

                  10.7(a)  Amendment No 1. Dated as of September 5, 1997 to
                           Second Amended and Restated Credit Agreement Dated as
                           of August 5, 1997 and Security Agreements Dated as of
                           October 5, 1996.

                  10.7(b)  Amendment No.2 Dated as of September 24, 1997 to
                           Second Amended and Restated Credit Agreement Dated as
                           of August 5, 1997.

                  10.7(c)  Amendment No. 3 Dated as of December 29, 1997 to
                           Second Amended and Restated Credit Agreement dated as
                           of August 5, 1997.

                  10.7(d)  Amendment No. 4 Dated as of December 31, 1997 to
                           Second Amended and restated Credit Agreement Dated as
                           of August 5, 1997.

                                       58

<PAGE>   61
                  10.7(e)  Amendment No. 5 and Waiver Dated as of December 31,
                           1998 to Second Amended and Restated Credit Agreement
                           Dated as of August 5, 1997.

                  10.8     First Amended and Restated Credit Agreement among
                           SportRack International, Inc. and First Chicago NBD
                           Bank, Canada, The Chase Manhattan Bank of Canada and
                           The Bank of Nova Scotia dated as of March 19, 1998.
                           Incorporated by reference to Exhibit 10.8 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.9     Employment Agreement between AAS and Richard Borghi
                           dated September 28, 1995. Incorporated by reference
                           to Exhibit 10.9 to AAS' Registration Statement on
                           Form S-4 (File No. 333-49011).

                  10.10    Employment Agreement between AAS and Marshall
                           Gladchun dated September 28, 1995. Incorporated by
                           reference to Exhibit 10.10 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.11    Management Consulting Agreement between AAS and Barry
                           Banducci dated September 28, 1995. Incorporated by
                           reference to Exhibit 10.11 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.12    Management Consulting Agreement between AAS and F.
                           Alan Smith dated September 28, 1995. Incorporated by
                           reference to Exhibit 10.12 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.13    Employment Agreement between AAS and Terence C.
                           Seikel dated January 22, 1996. Incorporated by
                           reference to Exhibit 10.13 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.14    Employment Agreement between AAS and Roger T. Morgan
                           dated August 5, 1997. Incorporated by reference to
                           Exhibit 10.14 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  10.15    Employment Agreement between Brink B.V. and Gerrit de
                           Graaf dated November 1, 1996. Incorporated by
                           reference to Exhibit 10.15 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.17    Lease dated as of January 24, 1997 between Valley
                           Industries Realty, L.P. and Valley Industries, Inc.
                           Incorporated by reference to Exhibit 10.17 to AAS'
                           Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.18    Addendum to Sublease dated as of July 2, 1997 between
                           Bell Sports Canada, Inc. and SportRack International,
                           Inc. (formerly known as Advanced Accessory Systems
                           Canada Inc./ Les Systems d'Accessoire Advanced Canada
                           Inc.). Incorporated by reference to Exhibit 10.18 to
                           AAS' Registration Statement on Form S-4 (File No.
                           333-49011).

                  10.19    Lease dated May 25, 1994 between VBG Towbars AB and
                           VBG Produkter AB. Incorporated by reference to
                           Exhibit 10.19 to AAS' Registration Statement on Form
                           S-4 (File No. 333-49011).

                  10.20    Lease Agreement for commercial use between Ellebi
                           S.p.A. and Brink Italia S.r.l. Incorporated by
                           reference to Exhibit 10.20 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  10.21    Registration Rights Agreement dated September 25,
                           1997 by and among Advanced Accessory Systems, LLC,
                           AAS Capital Corporation, the Guarantors named therein
                           and Chase Securities, Inc. and First Chicago Capital
                           Markets, Inc. Incorporated by reference to Exhibit
                           10.21 to AAS' Registration Statement on Form S-4
                           (File No. 333-49011).

                  12.1     Statement Re: Computation of ratios

                  24.1     Marshall D. Gladchun Power of Attorney

                  24.2     F. Alan Smith Power of Attorney

                  24.3     Barry Banducci Power of Attorney

                  24.4     Gerard Jacobus Brink Power of Attorney

                  24.5     Donald J. Hofmann Power of Attorney

                  24.6     Roger T. Morgan Power of Attorney

                  24.7     Gerrit de Graaf Power of Attorney

                  21.1     Subsidiaries of the Registrant Incorporated by
                           reference to Exhibit 21.1 to AAS' Registration
                           Statement on Form S-4 (File No. 333-49011).

                  27.1     Financial Data Schedule

                                       59