UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2003

Commission file number 001-13337

STONERIDGE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Ohio	34-1598949
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
9400 East Market Street, Warren, Ohio	44484
(Address of Principal Executive Offices)	(Zip Code)

(330) 856-2443

Registrant’s Telephone Number, Including Area Code

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No  ¨

The number of Common Shares, without par value, outstanding as of August 12, 2003 was 22,406,811.

STONERIDGE, INC. AND SUBSIDIARIES

INDEX

	Page No.
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002	2
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2003 and 2002	3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002	4
Notes to Condensed Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosure About Market Risk	21
Item 4. Controls and Procedures	21
Part II Other Information	22
Signatures	24
Exhibit Index	25

1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30, 2003			December 31, 2002
	(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	29,476		$	27,235
Accounts receivable, net		95,781			79,342
Inventories, net		48,362			51,139
Prepaid expenses and other		9,137			12,055
Deferred income taxes		6,092			5,904
Total current assets		188,848			175,675
PROPERTY, PLANT AND EQUIPMENT, net		108,031			111,838
OTHER ASSETS:
Goodwill		255,292			255,292
Investments and other, net		29,371			28,322
TOTAL ASSETS	$	581,542		$	571,127
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	1,644		$	1,992
Accounts payable		49,340			43,151
Accrued expenses and other		51,967			45,070
Total current liabilities		102,951			90,213
LONG-TERM LIABILITIES:
Long-term debt, net of current portion		228,181			248,918
Deferred income taxes		18,322			15,278
Other liabilities		940			816
Total long-term liabilities		247,443			265,012
SHAREHOLDERS’ EQUITY:
Preferred shares, without par value, 5,000 authorized, none issued		—			—
Common shares, without par value, 60,000 authorized, 22,402 and 22,399 issued and outstanding at June 30, 2003 and December 31, 2002, respectively, with no stated value		—			—
Additional paid-in capital		141,540			141,516
Retained earnings		90,716			77,379
Accumulated other comprehensive loss		(1,108	)		(2,993	)
Total shareholders’ equity		231,148			215,902
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	581,542		$	571,127

The accompanying notes to the condensed consolidated financial statements are

an integral part of these condensed consolidated statements.

2

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands except for per share data)

	For the three months ended June 30,				For the six months ended June 30,
	2003		2002		2003		2002
NET SALES	$	155,025	$	172,044	$	314,583	$	329,788
COSTS AND EXPENSES:
Cost of goods sold		114,700		123,852		233,332		242,315
Selling, general and administrative expenses		23,993		22,875		47,782		44,483
OPERATING INCOME		16,332		25,317		33,469		42,990
Interest expense, net		6,592		8,154		13,753		16,776
Loss on extinguishment of debt		—		5,771		—		5,771
Other expense, net		695		859		7		988
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE		9,045		10,533		19,709		19,455
Provision for income taxes		2,714		3,714		6,372		7,059
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE		6,331		6,819		13,337		12,396
Cumulative effect of accounting change, net of tax		—		—		—		(69,834	)
NET INCOME (LOSS)	$	6,331	$	6,819	$	13,337	$	(57,438	)
BASIC NET INCOME (LOSS) PER SHARE:
Income before cumulative effect of accounting change	$	0.28	$	0.30	$	0.60	$	0.55
Cumulative effect of accounting change, net of tax		—		—		—		(3.11	)
Basic net income (loss) per share	$	0.28	$	0.30	$	0.60	$	(2.56	)
DILUTED NET INCOME (LOSS) PER SHARE:
Income before extraordinary loss and cumulative effect of accounting change	$	0.28	$	0.30	$	0.59	$	0.55
Cumulative effect of accounting change, net of tax		—		—		—		(3.09	)
Diluted net income (loss) per share	$	0.28	$	0.30	$	0.59	$	(2.54	)

The accompanying notes to the condensed consolidated financial statements

are an integral part of these condensed consolidated statements.

3

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	For the six months ended June 30,
	2003			2002
OPERATING ACTIVITIES:
Net income (loss)	$	13,337		$	(57,438	)
Adjustments to reconcile net income (loss) to net cash from operating activities-
Depreciation and amortization		11,987			12,138
Deferred income taxes		3,268			5,254
Loss (gain) on sale of fixed assets		94			(20	)
Equity in (earnings) loss of unconsolidated subsidiaries		(797	)		172
Loss on extinguishment of debt		—			5,771
Cumulative effect of accounting change		—			69,834
Changes in operating assets and liabilities-
Accounts receivable		(15,222	)		(14,042	)
Inventories		3,755			1,782
Prepaid expenses and other		1,114			4,299
Other assets		(882	)		(999	)
Accounts payable		5,349			2,596
Accrued expenses and other		8,381			16,662
Net cash provided by operating activities		30,384			46,009
INVESTING ACTIVITIES:
Capital expenditures		(7,406	)		(7,251	)
Proceeds from sale of fixed assets		715			20
Other		(3	)		(24	)
Net cash used by investing activities		(6,694	)		(7,255	)
FINANCING ACTIVITIES:
Proceeds from issuance of senior notes		—			200,000
Extinguishment of revolving facility		—			(37,641	)
Extinguishment of term debt		—			(226,139	)
Net repayments under revolving facilities		(347	)		(13,613	)
Proceeds from long-term debt		—			100,000
Repayments of long-term debt		(21,839	)		(9,958	)
Debt issuance costs		—			(10,647	)
Interest rate swap termination costs		—			(5,274	)
Net cash used by financing activities		(22,186	)		(3,272	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		737			387
NET CHANGE IN CASH AND CASH EQUIVALENTS		2,241			35,869
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		27,235			4,369
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	29,476		$	40,238

The accompanying notes to the condensed consolidated financial statements

are an integral part of these condensed consolidated statements.

4

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

1. The accompanying condensed consolidated financial statements have been prepared by Stoneridge, Inc. (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the Commission). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Commission’s rules and regulations. Although the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s 2002 Annual Report to Shareholders.

The results of operations for the three and six months ended June 30, 2003 are not necessarily indicative of the results to be expected for the full year.

2. Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for approximately 66% and 73% of the Company’s inventories at June 30, 2003 and December 31, 2002, respectively, and by the first-in, first-out (FIFO) method for all other inventories. Inventory cost includes material, labor and overhead. Inventories consist of the following:

	June 30, 2003			December 31, 2002
Raw materials	$	25,749		$	28,157
Work in progress		9,156			10,229
Finished goods		14,007			13,313
LIFO reserve		(550	)		(560	)
Total	$	48,362		$	51,139

3. The Company uses derivative financial instruments to reduce exposure to market risks resulting from fluctuations in interest rates (swaps) and currency rates (forward contracts). The Company does not enter into financial instruments for trading purposes. Management believes that its use of these instruments to reduce risk is in the Company’s best interest. At June 30, 2003, the Company had no active interest rate swaps.

The Company has foreign currency forward contracts to purchase $7.4 million of Swedish krona to satisfy krona denominated debt obligations. The estimated fair value of these forward contracts at June 30, 2003, per quoted market sources, was $7.2 million. The contracts are marked to market through earnings.

4. Under Statement of Financial Accounting Standard (SFAS) 142, “Goodwill and Other Intangible Assets,” goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. In accordance with the transition provisions of SFAS 142, the Company completed the two-step transitional goodwill impairment analysis for both reporting units of the Company as of January 1, 2002. The initial impairment test indicated that the carrying values of the reporting units exceeded the corresponding fair values of the reporting units, which were determined based on a combination of valuation techniques including the guideline company method, the transaction method and the discounted cash flow method. The implied fair value of goodwill in these reporting units was then determined through the allocation of the fair values to the underlying assets and liabilities. The January 1, 2002 carrying value of the goodwill in these reporting units exceeded their implied fair value by $90.1 million. The $69.8 million write-down of goodwill to its fair value, which is net of $20.3 million of related tax benefits, was reported as a

5

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

cumulative effect of accounting change in the accompanying condensed consolidated financial statements as of January 1, 2002. The Company performed an annual impairment test of goodwill as of October 1, 2002 and no additional impairment was recognized.

	Vehicle Management & Power Distribution			Control Devices			Total
Goodwill balance at January 1, 2002	$	31,800		$	313,592		$	345,392
Cumulative effect of accounting change		(31,800	)		(58,300	)		(90,100	)
Goodwill balance at December 31, 2002	$	—		$	255,292		$	255,292

There was no change in the carrying value of goodwill by reportable operating segment during the first six months of 2003.

5. In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. Among other things, SFAS 145 requires gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under SFAS 4. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in Accounting Principles Board Opinion 30 for classification as an extraordinary item shall be reclassified. The Company adopted this Statement effective January 1, 2003, and accordingly, the extraordinary loss of $3.6 million, net of tax, recorded in the second quarter of 2002 as a result of the early extinguishment of debt described in Note 10 was reclassified as a component of income from continuing operations. Therefore, income before income taxes and cumulative effect of accounting change as well as the income tax provision for the three and six months ended June 30, 2002 are restated as follows:

	Three months ended June 30, 2002			Six months ended June 30, 2002
Income before income taxes and cumulative effect of accounting change, as originally reported	$	16,304		$	25,226
Loss on extinguishment of debt, pre-tax		(5,771	)		(5,771	)
Income before income taxes and cumulative effect of accounting change, as restated	$	10,533		$	19,455
	Three months ended June 30, 2002			Six months ended June 30, 2002
Provision for income taxes, as originally reported	$	5,878		$	9,223
Tax benefit from loss on extinguishment of debt		(2,164	)		(2,164	)
Provision for income taxes, as restated	$	3,714		$	7,059

6. In July 2002, the FASB issued SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS 146 addresses financial accounting and reporting for costs associated with exit and disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity

6

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

(including Certain Costs Incurred in a Restructuring)”. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 did not have a material impact on the Company’s consolidated financial statements.

7. In December 2002, the FASB issued SFAS 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” as an amendment to SFAS 123. SFAS 148 provides for alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company adopted the disclosure provisions of SFAS 148 effective December 31, 2002. The transition provisions do not currently affect the Company’s consolidated financial statements.

The Company has adopted the disclosure-only provisions of SFAS 123, “Accounting for Stock-Based Compensation.” The Company continues to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its employee share options. Because the exercise price of the Company’s employee share options equaled the market price of the shares on the date of grant, no compensation expense has been recorded.

The following table illustrates the effect on net income (loss) and net income (loss) per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation.

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Net income (loss), as reported	$	6,331	$	6,819	$	13,337	$	(57,438	)
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards		337		375		583		701
Pro forma net income (loss)	$	5,994	$	6,444	$	12,754	$	(58,139	)
Net income (loss) per share:
Basic – as reported	$	0.28	$	0.30	$	0.60	$	(2.56	)
Basic – pro forma	$	0.27	$	0.29	$	0.57	$	(2.60	)
Diluted – as reported	$	0.28	$	0.30	$	0.59	$	(2.54	)
Diluted – pro forma	$	0.26	$	0.28	$	0.56	$	(2.57	)

8. In May 2003, the FASB issued SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS 150 establishes standards for how public companies classify and measure in their statement of financial position certain financial instruments with characteristics of both liabilities and equity. This statement became effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS 150 did not impact the Company’s consolidated financial statements.

9. In January 2003, the FASB issued interpretation (FIN) 46, “Consolidation of Variable Interest Entities.” FIN 46 requires unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse the risks and rewards of ownership among their owners and other parties involved. The provisions of FIN 46 are applicable immediately to all variable interest entities created after January 31, 2003. For variable interest

7

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

entities created or acquired before February 1, 2003, the provisions must be applied for the first interim or annual period beginning after June 15, 2003. The Company is currently evaluating the effects of the issuance of the interpretation.

10. Other comprehensive income includes foreign currency translation adjustments and derivative transactions, net of related tax. Comprehensive income (loss) consists of the following:

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Net income (loss)	$	6,331	$	6,819	$	13,337	$	(57,438	)
Other comprehensive income		2,696		2,427		1,885		3,020
Comprehensive income (loss)	$	9,027	$	9,246	$	15,222	$	(54,418	)

11. On May 1, 2002, the Company issued $200.0 million aggregate principal amount of senior notes. The $200.0 million notes bear interest at an annual rate of 11.50% and mature on May 1, 2012. Interest is payable on May 1 and November 1 of each year. The Company registered the notes under the Securities Act of 1933 on May 17, 2002. On July 1, 2002, the Company completed an exchange offer of the senior notes for substantially identical notes registered under the Securities Act of 1933.

In conjunction with the issuance of the senior notes, the Company also entered into a new $200.0 million credit agreement (of which $28.8 million was outstanding at June 30, 2003) with a bank group. The credit agreement has the following components: a $100.0 million revolving facility (of which $95.9 million was available at June 30, 2003), including a $10.0 million swing line facility, and a $100.0 million term facility. The revolving facility expires on April 30, 2007 and requires a commitment fee of 0.375% to 0.500% on the unused balance as well as a utilization fee of 0.125% to 0.250% when the unutilized balance equals or exceeds 50.0% of the total revolving commitment. The revolving facility permits the Company to borrow up to half its borrowings in specified foreign currencies. Interest is payable quarterly at either (i) the prime rate plus a margin of 0.50% to 1.50% or (ii) LIBOR plus a margin of 2.00% to 3.00%, depending upon the Company’s ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), as defined. Interest on the swing line facility is payable monthly at the quoted overnight borrowing rate plus a margin of 2.00% to 3.00%, depending upon the Company’s ratio of consolidated total debt to consolidated EBITDA, as defined. The term facility expires on April 30, 2008. Interest is payable quarterly at either (i) the prime rate plus 1.75% or (ii) LIBOR plus 3.25%. The Company has the right to prepay any of the above mentioned loans in whole or in part, without premium or penalty. During the first quarter of 2003, the Company prepaid $20.0 million of the term facility.

Long-term debt consists of the following:

	June 30, 2003		December 31, 2002
11  1/2% Senior notes, due 2012	$	200,000	$	200,000
Borrowings under credit agreement		28,750		49,250
Borrowings payable to foreign banks		637		1,108
Other		438		552
		229,825		250,910
Less: Current portion		1,644		1,992
	$	228,181	$	248,918

8

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

12. The Company presents basic and diluted net income (loss) per share in accordance with SFAS 128, “Earnings Per Share”, which requires the presentation of basic net income (loss) per share and diluted net income (loss) per share. Basic net income (loss) per share was computed by dividing net income (loss) by the weighted-average number of common shares outstanding for each respective period. Diluted net income (loss) per share was calculated by dividing net income (loss) by the weighted-average of all potentially dilutive common shares that were outstanding during the periods presented. Actual weighted-average shares outstanding used in calculating basic and diluted net income (loss) per share were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2003	2002	2003	2002
Basic weighted average shares outstanding	22,402	22,399	22,402	22,399
Effect of dilutive securities	242	247	221	197
Diluted weighted average shares outstanding	22,644	22,646	22,623	22,596

13. SFAS 131, “Disclosures about Segments of an Enterprise and Related Information,” established standards for reporting information about operating segments in financial statements. Operating segments are defined as components of an enterprise that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer.

The Company has two reportable operating segments: Vehicle Management & Power Distribution and Control Devices. These reportable operating segments were determined based on the differences in the nature of the products offered. The Vehicle Management & Power Distribution operating segment produces electronic instrument clusters, electronic control units, driver information systems and electrical distribution systems, primarily wiring harnesses and connectors for electrical power and signal distribution. The Control Devices operating segment produces electronic and electromechanical switches, control actuation devices and sensors.

The accounting policies of the Company’s operating segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” of the Company’s December 31, 2002 Form 10-K. The Company evaluates the performance of its operating segments based primarily on revenues from external customers, net income and capital expenditures. Intersegment sales are accounted for on terms similar to those to third parties and are eliminated upon consolidation.

A summary of financial information by reportable operating segment is as follows:

	For the three months ended June 30, 2003
	Vehicle Management & Power Distribution		Control Devices		Eliminations			Consolidated
Sales from external customers	$	70,133	$	84,892	$	—		$	155,025
Intersegment sales		3,117		487		(3,604	)		—
Total net sales	$	73,250	$	85,379	$	(3,604	)	$	155,025
Net income	$	1,535	$	4,796	$	—		$	6,331
Depreciation and amortization	$	2,157	$	3,350	$	—		$	5,507
Interest expense, net	$	848	$	5,744	$	—		$	6,592
Provision for income taxes	$	658	$	2,056	$	—		$	2,714
Capital expenditures	$	1,195	$	1,854	$	—		$	3,049

9

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

	For the three months ended June 30, 2002
	Vehicle Management & Power Distribution		Control Devices		Eliminations			Consolidated
Sales from external customers	$	69,382	$	102,662	$	—		$	172,044
Intersegment sales		3,768		480		(4,248	)		—
Total net sales	$	73,150	$	103,142	$	(4,248	)	$	172,044
Net income	$	1,299	$	5,520	$	—		$	6,819
Depreciation and amortization	$	2,059	$	3,216	$	—		$	5,275
Interest expense, net	$	1,342	$	6,812	$	—		$	8,154
Loss on extinguishment of debt	$	644	$	5,127	$	—		$	5,771
Provision for income taxes	$	718	$	2,996	$	—		$	3,714
Capital expenditures	$	1,126	$	1,876	$	—		$	3,002

	For the six months ended June 30, 2003
	Vehicle Management & Power Distribution		Control Devices		Eliminations			Consolidated
Sales from external customers	$	139,909	$	174,674	$	—		$	314,583
Intersegment sales		6,855		983		(7,838	)		—
Total net sales	$	146,764	$	175,657	$	(7,838	)	$	314,583
Net income	$	3,192	$	10,145	$	—		$	13,337
Depreciation and amortization	$	4,160	$	6,583	$	—		$	10,743
Interest expense, net	$	1,865	$	11,888	$	—		$	13,753
Provision for income taxes	$	1,525	$	4,847	$	—		$	6,372
Capital expenditures	$	3,223	$	4,183	$	—		$	7,406

10

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

	For the six months ended June 30, 2002
	Vehicle Management & Power Distribution			Control Devices			Eliminations			Consolidated
Sales from external customers	$	132,021		$	197,767		$	—		$	329,788
Intersegment sales		10,556			1,119			(11,675	)		—
Total net sales	$	142,577		$	198,886		$	(11,675	)	$	329,788
Net loss	$	(30,382	)	$	(27,056	)	$	—		$	(57,438	)
Depreciation and amortization	$	4,019		$	6,337		$	—		$	10,356
Interest expense, net	$	2,565		$	14,211		$	—		$	16,776
Loss on extinguishment of debt	$	644		$	5,127		$	—		$	5,771
Provision for income taxes	$	808		$	6,251		$	—		$	7,059
Cumulative effect of accounting change, net of tax	$	(31,800	)	$	(38,034	)	$	—		$	(69,834	)
Capital expenditures	$	3,027		$	4,224		$	—		$	7,251

The following table presents net sales and non-current assets for each of the geographic areas in which the Company operates:

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Net Sales:
North America	$	124,313	$	145,047	$	253,071	$	278,207
Europe and other		30,712		26,997		61,512		51,581
Total	$	155,025	$	172,044	$	314,583	$	329,788

	June 30, 2003		December 31, 2002
Non-Current Assets:
North America	$	340,965	$	344,450
Europe and other		51,729		51,002
Total	$	392,694	$	395,452

11

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

14. The senior notes and the credit facility are fully and unconditionally guaranteed, jointly and severally, by each of the Company’s existing and future domestic wholly-owned subsidiaries (Guarantor Subsidiaries). The Company’s non-U.S. subsidiaries are not guaranteeing the senior notes and the credit facility (Non-Guarantor Subsidiaries).

Presented below are summarized condensed consolidating financial statements of the Parent (which includes certain of the Company’s operating units), the Guarantor Subsidiaries, the Non-Guarantor Subsidiaries and the Company on a consolidated basis, as of June 30, 2003 and December 31, 2002, and for the three and six months ended June 30, 2003 and 2002.

These summarized condensed consolidating financial statements are prepared on the equity method. Separate financial statements for the Guarantor Subsidiaries are not presented based on management’s determination that they do not provide additional information that is material to investors. Therefore, the Guarantor Subsidiaries are combined in the presentation below.

	June 30, 2003
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	20,072		$	25	$	9,379		$	—		$	29,476
Accounts receivable, net		47,418			31,112		20,989			(3,738	)		95,781
Inventories, net		20,128			11,974		16,260			—			48,362
Prepaid expenses and other		(210,217	)		192,553		26,801			—			9,137
Deferred income taxes		3,102			3,185		(195	)		—			6,092
Total current assets	$	(119,497	)	$	238,849	$	73,234		$	(3,738	)	$	188,848
PROPERTY, PLANT AND EQUIPMENT, net		53,373			31,827		22,831			—			108,031
OTHER ASSETS:
Goodwill		234,701			20,591		—			—			255,292
Investments and other, net		35,357			561		559			(7,106	)		29,371
Investment in subsidiaries		315,292			—		—			(315,292	)		—
TOTAL ASSETS	$	519,226		$	291,828	$	96,624		$	(326,136	)	$	581,542
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	1,000		$	—	$	644		$	—		$	1,644
Accounts payable		21,792			16,955		14,289			(3,696	)		49,340
Accrued expenses and other		21,825			12,467		17,717			(42	)		51,967
Total current liabilities		44,617			29,422		32,650			(3,738	)		102,951
LONG-TERM LIABILITIES:
Long-term debt, net of current portion		227,751			—		7,536			(7,106	)		228,181
Deferred income taxes		15,710			4,009		(1,397	)		—			18,322
Other liabilities		—			—		940			—			940
Total long-term liabilities		243,461			4,009		7,079			(7,106	)		247,443
SHAREHOLDERS’ EQUITY		231,148			258,397		56,895			(315,292	)		231,148
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	519,226		$	291,828	$	96,624		$	(326,136	)	$	581,542

12

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

Supplemental condensed consolidating financial statements (continued):

	December 31, 2002
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	18,698		$	167	$	8,370		$	—		$	27,235
Accounts receivable, net		35,941			30,295		16,137			(3,031	)		79,342
Inventories, net		23,940			13,346		13,853			—			51,139
Prepaid expenses and other		(177,321	)		168,489		20,887			—			12,055
Deferred income taxes		3,051			3,043		(190	)		—			5,904
Total current assets		(95,691	)		215,340		59,057			(3,031	)		175,675
PROPERTY, PLANT AND EQUIPMENT, NET		55,714			33,875		22,249			—			111,838
OTHER ASSETS:
Goodwill		234,701			20,591		—			—			255,292
Investments and other, net		40,514			507		914			(13,613	)		28,322
Investment in subsidiaries		287,092			—		—			(287,092	)		—
TOTAL ASSETS	$	522,330		$	270,313	$	82,220		$	(303,736	)	$	571,127
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	1,000		$	—	$	992		$	—		$	1,992
Accounts payable		19,025			16,864		10,219			(2,957	)		43,151
Accrued expenses and other		24,521			5,423		15,200			(74	)		45,070
Total current liabilities		44,546			22,287		26,411			(3,031	)		90,213
LONG-TERM LIABILITIES:
Long-term debt, net of current portion		247,565			—		14,966			(13,613	)		248,918
Deferred income taxes		13,984			3,879		(2,585	)		—			15,278
Other liabilities		333			—		483			—			816
Total long-term liabilities		261,882			3,879		12,864			(13,613	)		265,012
SHAREHOLDERS’ EQUITY		215,902			244,147		42,945			(287,092	)		215,902
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	522,330		$	270,313	$	82,220		$	(303,736	)	$	571,127

13

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

Supplemental condensed consolidating financial statements (continued):

	For the three months ended June 30, 2003
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
NET SALES	$	70,193		$	51,885	$	38,698	$	(5,751	)	$	155,025
COSTS AND EXPENSES:
Cost of goods sold		54,525			37,665		28,261		(5,751	)		114,700
Selling, general and administrative expenses		9,996			7,294		6,703		—			23,993
OPERATING INCOME		5,672			6,926		3,734		—			16,332
Interest expense, net		6,585			—		7		—			6,592
Other (income) expense, net		(498	)		790		403		—			695
Equity earnings from subsidiaries		(6,483	)		—		—		6,483			—
INCOME BEFORE INCOME TAXES		6,068			6,136		3,324		(6,483	)		9,045
(Benefit) Provision for income taxes		(263	)		1,841		1,136		—			2,714
NET INCOME	$	6,331		$	4,295	$	2,188	$	(6,483	)	$	6,331
	For the three months ended June 30, 2002
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
NET SALES	$	75,769		$	64,198	$	37,257	$	(5,180	)	$	172,044
COSTS AND EXPENSES:
Cost of goods sold		56,698			44,509		27,825		(5,180	)		123,852
Selling, general and administrative expenses		10,293			7,466		5,116		—			22,875
OPERATING INCOME		8,778			12,223		4,316		—			25,317
Interest expense, net		7,803			—		351		—			8,154
Loss on extinguishment of debt		5,771			—		—		—			5,771
Other (income) expense, net		(228	)		544		543		—			859
Equity earnings from subsidiaries		(10,195	)		—		—		10,195			—
INCOME (LOSS) BEFORE INCOME TAXES		5,627			11,679		3,422		(10,195	)		10,533
(Benefit) Provision for income taxes		(1,192	)		4,088		818		—			3,714
NET INCOME	$	6,819		$	7,591	$	2,604	$	(10,195	)	$	6,819

14

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

Supplemental condensed consolidating financial statements (continued):

	For the six months ended June 30, 2003
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
NET SALES	$	139,780		$	107,585		$	78,456		$	(11,238	)	$	314,583
COSTS AND EXPENSES:
Cost of goods sold		110,326			76,596			57,648			(11,238	)		233,332
Selling, general and administrative expenses		20,215			15,021			12,546			—			47,782
OPERATING INCOME		9,239			15,968			8,262			—			33,469
Interest expense, net		13,645			—			108			—			13,753
Other (income) expense, net		(1,287	)		1,641			(347	)		—			7
Equity earnings from subsidiaries		(15,760	)		—			—			15,760			—
INCOME BEFORE INCOME TAXES		12,641			14,327			8,501			(15,760	)		19,709
(Benefit) Provision for income taxes		(696	)		4,584			2,484			—			6,372
NET INCOME	$	13,337		$	9,743		$	6,017		$	(15,760	)	$	13,337
	For the six months ended June 30, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
NET SALES	$	145,400		$	124,280		$	69,876		$	(9,768	)	$	329,788
COSTS AND EXPENSES:
Cost of goods sold		110,172			87,544			54,367			(9,768	)		242,315
Selling, general and administrative expenses		19,439			14,986			10,058			—			44,483
OPERATING INCOME		15,789			21,750			5,451			—			42,990
Interest expense, net		16,243			—			533			—			16,776
Loss on extinguishment of debt		5,771			—			—			—			5,771
Other (income) expense, net		(726	)		1,089			625			—			988
Equity losses from subsidiaries		20,078			—			—			(20,078	)		—
INCOME (LOSS) BEFORE INCOME TAXES		(25,577	)		20,661			4,293			20,078			19,455
(Benefit) Provision for income taxes		(1,497	)		7,231			1,325			—			7,059
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE		(24,080	)		13,430			2,968			20,078			12,396
Cumulative effect of accounting change, net of tax		(33,358	)		(4,701	)		(31,775	)		—			(69,834	)
NET (LOSS) INCOME	$	(57,438	)	$	8,729		$	(28,807	)	$	20,078		$	(57,438	)

15

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per share amounts)

Supplemental condensed consolidating financial statements (continued):

	For the six months ended June 30, 2003
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	24,855		$	1,663		$	10,375		$	(6,509	)	$	30,384
INVESTING ACTIVITIES:
Capital expenditures		(3,016	)		(1,805	)		(2,585	)		—			(7,406	)
Proceeds from sale of fixed assets		12			—			703			—			715
Other		(6	)		—			3			—			(3	)
Net cash used for investing activities		(3,010	)		(1,805	)		(1,879	)		—			(6,694	)
FINANCING ACTIVITIES:
Net repayments under revolving credit facilities		—			—			(347	)		—			(347	)
Repayments of long-term debt		(20,471	)		—			(7,877	)		6,509			(21,839	)
Net cash used for financing activities		(20,471	)		—			(8,224	)		6,509			(22,186	)
Effect of exchange rate changes on cash and cash equivalents		—			—			737			—			737
Net change in cash and cash equivalents		1,374			(142	)		1,009			—			2,241
Cash and cash equivalents at beginning of period		18,698			167			8,370			—			27,235
Cash and cash equivalents at end of period	$	20,072		$	25		$	9,379		$	—		$	29,476
	For the six months ended June 30, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	17,794		$	20,813		$	5,552		$	1,850		$	46,009
INVESTING ACTIVITIES:
Capital expenditures		(2,791	)		(3,253	)		(1,207	)		—			(7,251	)
Proceeds from sale of fixed assets		—			—			20			—			20
Other		(55	)		—			(403	)		434			(24	)
Net cash used for investing activities		(2,846	)		(3,253	)		(1,590	)		434			(7,255	)
FINANCING ACTIVITIES:
Proceeds from issuance of senior notes		200,000			—			—			—			200,000
Extinguishment of revolving facility		(37,641	)		—			—			—			(37,641	)
Extinguishment of term debt		(226,139	)		—			—			—			(226,139	)
Net repayments under revolving facilities		(10,142	)		—			(3,471	)		—			(13,613	)
Proceeds from long-term debt		100,000			—			—			—			100,000
Repayments of long-term debt		9,289			(17,569	)		606			(2,284	)		(9,958	)
Debt issuance costs		(10,647	)		—			—			—			(10,647	)
Interest rate swap termination costs		(5,274	)		—			—			—			(5,274	)
Net cash provided by (used for) financing activities		19,446			(17,569	)		(2,865	)		(2,284	)		(3,272	)
Effect of exchange rate changes on cash and cash equivalents		—			—			387			—			387
Net change in cash and cash equivalents		34,394			(9	)		1,484			—			35,869
Cash and cash equivalents at beginning of period		714			29			3,626			—			4,369
Cash and cash equivalents at end of period	$	35,108		$	20		$	5,110		$	—		$	40,238

15. Certain prior period amounts have been reclassified to conform to their 2003 presentation in the condensed consolidated financial statements.

16

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Six Months Ended June 30, 2003 Compared To Six Months Ended June 30, 2002

Net Sales. Net sales for the six months ended June 30, 2003 decreased by $15.2 million, or 4.6%, to $314.6 million from $329.8 million for the corresponding period in 2002. The decrease in sales was primarily due to lower vehicle production in the Company’s served markets and the reduced sales from an exited product line.

Sales for the six months ended June 30, 2003 for North America decreased $25.1 million to $253.1 million from $278.2 million for the corresponding period in 2002. North American sales accounted for 80.4% of total sales for the first six months of 2003 compared with 84.4% for the corresponding period in 2002. The decrease in sales was primarily due to lower light and commercial vehicle production in the Company’s served markets and the reduced sales from an exited product line. Sales for the six months ended June 30, 2003 outside North America increased $9.9 million to $61.5 million from $51.6 million for the corresponding period in 2002. Sales outside North America accounted for 19.6% of total sales for the six months ended June 30, 2003 compared with 15.6% for the corresponding period in 2002. The increase in sales outside North America was primarily attributable to favorable currency exchange rates.

Net sales for the Vehicle Management & Power Distribution operating segment were $146.8 million for the first six months of 2003 as compared to $142.6 million for the corresponding period in 2002. Increased content per vehicle and favorable currency exchange rates positively impacted sales for the first six months. Net sales for the Control Devices operating segment were $175.7 million for the first six months of 2003 as compared to $198.9 million for the corresponding period in 2002. The decrease in sales was primarily due to lower light and commercial vehicle production in the Company’s served markets and the reduced sales from an exited product line.

Cost of Goods Sold. Cost of goods sold for the first six months of 2003 decreased by $9.0 million, or 3.7%, to $233.3 million from $242.3 million in the first six months of 2002. As a percentage of sales, cost of goods sold increased to 74.2% from 73.5% for the first six months of 2003 and 2002, respectively. The increase as a percent of sales was primarily attributable to lower sales levels.

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses increased by $3.3 million to $47.8 million in the first six months of 2003 from $44.5 million for the corresponding period in 2002. As a percentage of sales, SG&A expenses increased to 15.2% for the first six months of 2003 from 13.5% for the corresponding period in 2002. The increase in SG&A expenses reflects increased investment in the Company’s design and development activity and increased sales and marketing efforts.

Interest Expense, net. Net interest expense for the first six months of 2003 decreased by $3.0 million to $13.8 million in 2003 from $16.8 million in 2002. Average outstanding indebtedness was $237.0 million and $290.9 million for the first six months of 2003 and 2002, respectively. The decrease in interest expense reflects the Company’s lower debt balance as well as interest income of $0.3 million related to a tax refund.

Loss on Extinguishment of Debt. The Company recognized a non-cash loss of $5.8 million during the first six months of 2002 in connection with the early extinguishment of debt related to the Company’s debt refinancing.

Other Expense, net. Other expense primarily represented equity losses of unconsolidated subsidiaries and effects of foreign exchange for the six months ended June 30, 2003 and 2002.

17

Income Before Income Taxes and Cumulative Effect of Accounting Change. As a result of the foregoing, income before income taxes and cumulative effect of accounting change increased by $0.2 million for the first six months of 2003 to $19.7 million from $19.5 million in 2002.

Provision for Income Taxes. The Company recognized provisions for income taxes of $6.4 million, or 32% of pre-tax income, and $7.1 million, or 36% of pre-tax income, for federal, state and foreign income taxes for the first six months of 2003 and 2002, respectively. The decrease in the effective tax rate was primarily due to tax refunds related to the completion of several tax initiatives and to the higher proportion of non-U.S. pre-tax income, which is taxed at a lower rate than U.S. pre-tax income.

Income Before Cumulative Effect of Accounting Change. As a result of the foregoing, income before cumulative effect of accounting change increased by $0.9 million to $13.3 million for the first six months of 2003 from $12.4 million in 2002.

Cumulative Effect of Accounting Change, net of tax. In accordance with the transition provisions of SFAS 142, the Company completed the two-step transitional goodwill impairment analysis in 2002. As a result, on January 1, 2002 the Company recorded as a cumulative effect of accounting change, a non-cash, after-tax charge of $69.8 million, to write off a portion of the carrying value of goodwill. The Company performed an annual impairment test of goodwill as of October 1, 2002 and no additional impairment was recognized. See Note 4 to the Company’s consolidated financial statements for more information on the Company’s application of this new accounting standard.

Net Income. As a result of the foregoing, net income increased by $70.8 million to $13.3 million for the first six months of 2003 from a loss of $57.4 million in 2002.

Three Months Ended June 30, 2003 Compared To Three Months Ended June 30, 2002

Net Sales. Net sales for the quarter ended June 30, 2003 decreased by $17.0 million, or 9.9%, to $155.0 million from $172.0 million for the corresponding period in 2002. The decrease in sales was primarily due to lower vehicle build rates in the Company’s markets and the reduced sales from an exited product line.

Sales for the quarter ended June 30, 2003 for North America decreased $20.7 million to $124.3 million from $145.0 million for the corresponding period in 2002. North American sales accounted for 80.2% of total sales for the second quarter ended June 30, 2003 compared with 84.3% for the corresponding period in 2002. An exited product line and reduced production volumes in both the light and commercial vehicle markets accounted for the reduction in North American sales. Sales for the second quarter of 2003 outside North America increased by $3.7 million to $30.7 million from $27.0 million for the corresponding period in 2002. Sales outside North America accounted for 19.8% of total sales for the second quarter of 2003 compared with 15.7% for the corresponding period in 2002. The increase in sales outside North America was primarily attributable to favorable currency exchange rates.

Net sales for the Vehicle Management & Power Distribution operating segment were $73.3 million for the second quarter of 2003 as compared to $73.2 million for the corresponding period in 2002. Increased content per vehicle and favorable currency exchange rates positively impacted sales for the first six months. Net sales for the Control Devices operating segment were $85.4 million for the second quarter of 2003 as compared to $103.1 million for the corresponding period in 2002. The decrease in sales was primarily due to lower light and commercial vehicle production in the Company’s served markets and the reduced sales from an exited product line.

Cost of Goods Sold. Cost of goods sold for the quarter ended June 30, 2003 decreased by $9.2 million, or 7.4%, to $114.7 million from $123.9 million for the corresponding period in 2002. As a percentage of sales, cost of goods sold increased to 74.0% from 72.0% for the second quarter of 2003 and 2002, respectively. The increase as a percent of sales was primarily attributable to lower sales levels.

18

Selling, General and Administrative Expenses. SG&A expenses increased by $1.1 million to $24.0 million in the second quarter of 2003 from $22.9 million for the corresponding period in 2002. As a percentage of sales, SG&A expenses increased to 15.5% for the second quarter of 2002 from 13.3% for the corresponding period in 2002. The increase in SG&A expenses reflects increased investment in the Company’s design and development activity and increased sales and marketing efforts.

Interest Expense, net. Net interest expense for the second quarter of 2003 decreased by $1.6 million to $6.6 million from $8.2 million in 2002. Average outstanding indebtedness was $230.1 million and $294.6 million for the second quarter of 2003 and 2002, respectively. The decrease in interest expense reflects the Company’s lower debt balance as well as interest income of $0.3 million related to a tax refund.

Loss on Extinguishment of Debt. The Company recognized a non-cash loss of $5.8 million during the second quarter of 2002 in connection with the early extinguishment of debt related to the Company’s debt refinancing.

Other expense, net. Other expense, which primarily represented equity losses of unconsolidated subsidiaries and effects of foreign exchange, was $0.7 million for the six months ended June 30, 2003 and $0.9 million for the corresponding period in 2002.

Income Before Income Taxes. As a result of the foregoing, income before income taxes decreased $1.5 million for the second quarter of 2003 to $9.0 million from $10.5 million in 2002.

Provision for Income Taxes. The Company recognized provisions for income taxes of $2.7 million, or 30% of pre-tax income, and $3.7 million, or 35% of pre-tax income, for federal, state and foreign income taxes for the second quarter of 2003 and 2002, respectively. The decrease in the effective tax rate was primarily due to tax refunds related to the completion of several tax initiatives and to the higher proportion of non-U.S. pre-tax income, which is taxed at a lower rate than U.S. pre-tax income.

Net Income. As a result of the foregoing, net income decreased by $0.5 million to $6.3 million for the second quarter of 2003 from $6.8 million in 2002.

Liquidity and Capital Resources

Net cash provided by operating activities was $30.4 million and $46.0 million for the six months ended June 30, 2003 and 2002, respectively. The decrease in net cash from operating activities of $15.6 million was primarily attributable to a combination of higher levels of working capital and a decrease in net income.

Net cash used by investing activities was $6.7 million and $7.3 million for the six months ended June 30, 2003 and 2002, respectively. The decrease in net cash used by investing activities of $0.6 million was primarily attributable to an increase in capital expenditures offset by proceeds received from asset sales.

Net cash used by financing activities was $22.2 million and $3.3 million for the six months ended June 30, 2003 and 2002, respectively. Cash flows from operations for the first six months of 2003 were used primarily to pay down outstanding debt.

The Company has entered into foreign currency forward contracts to purchase $7.4 million of Swedish krona to satisfy krona denominated debt obligations. The estimated fair value of these forward contracts at June 30, 2003, per quoted market sources, was $7.2 million. The contracts are marked to market through earnings. The Company does not use derivatives for speculative or profit-motivated purposes.

19

Management believes that cash flows from operations and the availability of funds from the Company’s credit facilities and senior notes will provide sufficient liquidity to meet the Company’s growth and operating needs.

Inflation and International Presence

Management believes that the Company’s operations have not been adversely affected by inflation. By operating internationally, the Company is affected by the economic conditions of certain countries. Based on the current economic conditions in these countries, management believes they are not significantly exposed to adverse economic conditions.

Forward-Looking Statements

Portions of this report may contain “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, the Company’s (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, and (iv) growth opportunities related to awarded business. Forward-looking statements may be identified by the words “will,” “may,” “designed to,” “believes,” “plans,” “expects,” “continue,” and similar expressions. The forward-looking statements in this report are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other factors:

• the loss of a major customer;

• a decline in automotive, medium- and heavy-duty truck, agricultural or off-highway vehicle production;

• a decline in general economic conditions in any of the various countries in which the Company operates;

• labor disruptions at the Company’s facilities or at any of the Company’s significant customers or suppliers;

• the ability of the Company’s suppliers to supply it with parts and components at competitive prices on a timely basis;

• the significant amount of debt and the restrictive covenants contained in the Company’s credit facility;

• customer acceptance of new products;

• capital availability or costs, including changes in interest rates or market perceptions of the Company;

• changes by the Financial Accounting Standards Board or the Securities and Exchange Commission of authoritative generally accepted accounting principles or policies;

• the impact of laws and regulations, including environmental laws and regulations; and

• the occurrence or non-occurrence of circumstances beyond the Company’s control.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to certain market risks, primarily resulting from the effects of changes in interest rates. To reduce exposures to market risks resulting from fluctuations in interest rates, the Company uses a combination of variable and fixed rate debt. At June 30, 2003, approximately 13% of the Company’s debt was variable rate debt. The Company believes that a 1.0% increase or decrease in the interest rate on variable rate debt could affect earnings by approximately $0.3 million.

The Company’s risks related to commodity price and foreign currency exchange risks have historically not been material. The Company does not expect the effects of these risks to be material in the future based on current operating and economic conditions in the countries and markets in which it operates. Therefore, a 10.0% change in the value of the U.S. dollar would not significantly affect the Company’s financial position.

ITEM 4. CONTROLS AND PROCEDURES

As of June 30, 2003, an evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2003.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, the Company is involved in various legal proceedings, workers’ compensation and product liability disputes. The Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on the results of operations or the financial position of the Company.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

(a) The Annual Meeting of Shareholders of Stoneridge, Inc. was held on May 12, 2003.

(b) The following matters were submitted to a vote at the meeting:

      The election of the following nominees as directors of the Company. The vote with respect to each nominee was as  
      follows:

Nominee	For	Withheld
D.M. Draime	19,837,190	1,112,689
Cloyd J. Abruzzo	19,837,190	1,112,689
Avery S. Cohen	17,842,886	3,106,993
Richard E. Cheney	20,795,912	153,967
Sheldon J. Epstein	20,795,462	154,417
Earl L. Linehan	20,796,712	153,167

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

(b) Reports on Form 8-K

1.	On April 15, 2003, the Company filed a Current Report on Form 8-K for a press release announcing that it expected its earnings per share to exceed its prior guidance and the current First Call consensus estimate.
2.	On April 24, 2003, the Company filed a Current Report on Form 8-K for a press release announcing first quarter 2003 earnings.

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SIGNATURES

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

	STONERIDGE, INC.
Date: August 12, 2003		/s/ Cloyd J. Abruzzo
		Cloyd J. Abruzzo
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 12, 2003		/s/ Kevin P. Bagby
		Kevin P. Bagby
		Vice President and Chief Financial Officer
		(Principal Financial and Chief Accounting Officer)

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STONERIDGE, INC.

EXHIBIT INDEX

Exhibit Number	Exhibit
31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

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