As filed with the Securities and Exchange Commission on June 4, 2003
Registration No. 333-103194

________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933

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

STANDARD MOTOR PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

<Table>

NEW YORK 11-1362020
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</Table>

37-18 NORTHERN BOULEVARD
LONG ISLAND CITY, NEW YORK 11101
(718) 392-0200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

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

LAWRENCE I. SILLS
CHIEF EXECUTIVE OFFICER, CHAIRMAN AND DIRECTOR
STANDARD MOTOR PRODUCTS, INC.
37-18 NORTHERN BOULEVARD
LONG ISLAND CITY, NEW YORK 11101
(718) 392-0200
(Name and address, including zip code, and telephone number, including
area code, of agent for service)

WITH COPIES TO:

<Table>

BUD G. HOLMAN, ESQ.
CARMINE J. BROCCOLE, ESQ. DONALD C. WALKOVIK, ESQ.
KELLEY DRYE & WARREN LLP SULLIVAN & CROMWELL LLP
101 PARK AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10178 NEW YORK, NEW YORK 10004
(212) 808-7800 (212) 558-4000
</Table>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

________________________________________________________________________________

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

Subject To Completion. Dated June 4, 2003.

4,750,000 Shares

[STANDARD MOTOR LOGO]

STANDARD MOTOR PRODUCTS, INC.
Common Stock

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

Standard Motor Products, Inc. is offering 4,750,000 shares of common stock
to be sold in the offering.

The common stock is listed on the New York Stock Exchange under the symbol
'SMP.' The last reported sale price of the common stock on June 3, 2003 was
$12.56 per share.

See 'Risk Factors' beginning on page 9 to read about factors you should
consider before buying shares of the common stock.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------

<Table>
<Caption>
Per Share Total
--------- -----

Initial price to public..................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Standard Motor Products,
Inc. ..................................................... $ $
</Table>

To the extent that the underwriters sell more than 4,750,000 shares of
common stock, the underwriters have the option to purchase up to an additional
712,500 shares from Standard Motor Products, Inc. at the initial price to public
less the underwriting discount.

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

The underwriters expect to deliver the shares against payment in New York,
New York on , 2003.

GOLDMAN, SACHS & CO. MORGAN STANLEY

-------------------
Prospectus dated , 2003.

[GRAPHIC OF THE PRODUCTS OF STANDARD MOTOR]

[STANDARD MOTOR LOGO]

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus
and the documents incorporated by reference. This summary does not contain all
of the information that you should consider before investing in our common
stock. You should read this entire prospectus and the documents incorporated by
reference carefully, including 'Risk Factors' beginning on page 9 and the
financial statements and the notes thereto of our company and of Dana
Corporation's Engine Management Group included elsewhere in this prospectus.
Unless otherwise stated, the information contained in this prospectus is based
on the assumption that the underwriters' over-allotment option will not be
exercised.

In this prospectus, 'Standard Motor Products', 'we', 'us' and 'our' refer to
Standard Motor Products, Inc. and its subsidiaries, unless the context requires
otherwise. The words 'the Company' refer only to Standard Motor Products, Inc.
and not to any of its subsidiaries.

ABOUT STANDARD MOTOR PRODUCTS

OUR BUSINESS

We are a leading independent manufacturer and distributor of replacement
parts for motor vehicles in the automotive aftermarket industry. We are
organized into two principal operating divisions, each of which focuses on a
specific segment of replacement parts. Our Engine Management Division
manufactures ignition and emission parts, on-board computers, ignition wires,
battery cables and fuel system parts. Our Temperature Control Division
manufactures and remanufactures air conditioning compressors, and other air
conditioning and heating parts.

We sell our products primarily to warehouse distributors and large retail
chains in the United States, Canada and Latin America. Our European Division
sells our products primarily in Europe. Our customers consist of many of the
leading warehouse distributors, such as Carquest and NAPA Auto Parts, as well as
many of the leading auto parts retail chains, such as Advance Auto Parts and
O'Reilly Automotive. We distribute parts under our own brand names, such as
Standard, Blue Streak and Four Seasons, and through private labels, such as
Carquest and NAPA Auto Parts.

In 2002, our consolidated net sales were $598.4 million, and our operating
income was $25.1 million. The following charts set forth our consolidated net
sales by operating division, geographic region and customer group as a
percentage of consolidated net sales in 2002.

[PIE CHARTS]

2002 Consolidated Net Sales by 2002 Consolidated Net Sales by 2002 Consolidated Net Sales by
Operating Division Geographic Region Customer Group

Europe 6% Rest of the World 9% Other 11%

Temperature Control 43% Canada 5% Retail 28%

Engine Manangement 51% United States 86% Warehouse Distributions 61%

ACQUISITION OF DANA CORPORATION'S ENGINE MANAGEMENT GROUP

On February 7, 2003, we signed an agreement to purchase Dana Corporation's
Engine Management Group, which we refer to throughout this prospectus as Dana's
EMG Business, for a purchase price equal to the closing net book value of the
business, subject to a maximum purchase price of $125 million. Dana's EMG
Business is a leading manufacturer of aftermarket parts in the automotive
industry focused exclusively on engine management, with approximately
$77.8 million in combined net sales for the three months ended March 31,
2003, approximately $300 million in combined net sales in 2002 and
approximately $298 million in combined net

sales in 2001. Similar to our Engine Management Division, Dana's EMG Business
manufactures ignition systems, emission parts, engine computers, ignition wires,
battery cables and fuel system parts. Customers of Dana's EMG Business include
NAPA Auto Parts, CSK Auto, O'Reilly Automotive and Pep Boys, none of which is
currently a material customer of our Engine Management Division. We believe that
the acquisition will allow us to:

increase sales in our Engine Management business;

develop new and improved products to better satisfy the
increasing requirements of customers;

rationalize manufacturing and distribution facilities to
achieve more efficient operations and lower costs for
ourselves and our customers;

consolidate and centralize corporate functions to eliminate
redundant costs;

improve cost structure by realizing increased economies of
scale in the purchasing, processing, production and
distribution of our products; and

increase the proportion of our total sales and profits from
our Engine Management business, which is more stable and
predictable than our seasonal Temperature Control business.

We intend to use our experience in integrating the 15 businesses we have
acquired since January 1996 to integrate successfully Dana's EMG Business into
our Engine Management Division within 18 months of the acquisition closing.

At the closing, assuming the acquisition purchase price is $121 million,
based on the March 31, 2003 unaudited balance sheet of Dana's EMG Business, we
will pay Dana approximately $90.8 million in cash, $15.1 million in the form of
an unsecured promissory note and $15.1 million in the form of shares of our
common stock. The acquisition is subject to our obtaining financing for the
acquisition and other customary closing conditions. We expect to complete the
acquisition on or about June 30, 2003.

OUR STRATEGY

Our goal is to grow revenues and earnings and deliver returns in excess of
our cost of capital by providing high quality, low cost replacement parts in the
engine management and temperature control automotive aftermarkets. The key
elements of our strategy are as follows:

MAINTAIN OUR STRONG COMPETITIVE POSITION IN THE ENGINE
MANAGEMENT AND TEMPERATURE CONTROL BUSINESSES. To maintain a
strong competitive position in our markets, we remain
committed to providing our customers with broad lines of
high quality engine management and temperature control
products.

EVOLVE AND EXPAND OUR PRODUCT LINES. We intend to increase
our sales by continuing to develop and expand the range of
Engine Management and Temperature Control products we offer
to our customers. We are committed to investing the
resources necessary to maintain and expand our technical
capability to manufacture multiple product lines that
incorporate the latest technologies developed by original
equipment manufacturers in North America and Europe.

BROADEN OUR CUSTOMER BASE. Our goal is to increase our
business by marketing our products more broadly to the
distribution businesses of original equipment manufacturers
who sell products to new car dealer service areas.

IMPROVE OPERATING EFFICIENCY AND COST POSITION. We intend to
continue to improve our operating efficiency and cost
position. Our management places significant emphasis on
improving our financial performance, achieving operating
efficiencies and improving asset utilization while
maintaining product quality and high customer order fill
rates. In 2001, we reduced our inventory levels by $57
million while maintaining customer fill rate levels of
approximately 93%, and in 2002, we further reduced inventory
by an additional $8 million.

REDUCE OUR DEBT. We intend to apply any excess cash flow
from operations and the management of working capital to
reduce our outstanding indebtedness.

CORPORATE INFORMATION

Our common stock is traded on the New York Stock Exchange under the symbol
'SMP'. On June 3, 2003, our common stock closed at $12.56. Members of our
founding families continue to be actively involved in our management, and such
founding family members directly or indirectly owned approximately 43% of our
outstanding common stock on March 31, 2003.

We are a New York corporation founded in 1919. Our principal executive
offices are located at 37-18 Northern Boulevard, Long Island City, New York
11101, and our main telephone number at that location is (718) 392-0200.

This prospectus contains our trademarks and trade names and also contains
trademarks and trade names of other parties.

THE OFFERING

<Table>

Common stock offered by us................... 4,750,000 shares

Common stock to be outstanding after this
offering................................... 17,985,238 shares

Use of proceeds.............................. We intend to use all of the net proceeds from this
offering to repay a portion of our outstanding
indebtedness under our revolving credit facility. We
then intend to borrow the entire cash portion of the
purchase price of Dana's EMG Business from our
revolving credit facility to consummate the closing
of the acquisition.

New York Stock Exchange symbol............... SMP
</Table>

The number of shares of our common stock that will be outstanding after this
offering is based on our shares of common stock outstanding as of March 31, 2003
and includes 1,202,229 shares of our common stock to be issued to Dana by us as
part of the acquisition purchase price, assuming for these purposes that the
price per share of our common stock is $12.56 and that the acquisition purchase
price is $121 million at closing. The number of outstanding shares of our common
stock as of March 31, 2003 excludes:

1,245,397 shares of common stock issuable upon the exercise
of options outstanding under our stock option plans at a
weighted average exercise price of $16.49 per share;

19,044 shares of common stock reserved for future grants
under our stock option plans;

525,000 shares held by us in an employee benefits trust,
which are not currently considered outstanding for
calculations of basic or diluted earnings per share;

2,796,120 shares of common stock issuable upon conversion of
our 6.75% convertible subordinated debentures, which are
presently convertible into 31.068 shares of common stock for
each $1,000 of convertible debentures and which have a
conversion price equivalent to approximately $32.19 per
share of common stock; and

up to 712,500 shares that may be issued to the underwriters
if they exercise their option to purchase additional shares
in this offering.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data at and for the years ended
December 31, 2000, 2001 and 2002 have been derived from our audited consolidated
annual financial statements. The following summary consolidated financial data
at and for the three months ended March 31, 2002 and 2003 have been derived from
our condensed consolidated quarterly financial statements, which are unaudited
but in the opinion of our management reflect all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
of operations for such periods. Results of operations for interim periods are
not necessarily indicative of results to be expected for the full fiscal years.
You should read this data in conjunction with the 'Selected Consolidated
Financial Data,' 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' and our consolidated financial statements and the
notes thereto included elsewhere in this prospectus.

STANDARD MOTOR PRODUCTS, INC.

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ -------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net sales................................................ $601,392 $591,652 $598,437 $126,321 $135,725
Gross profit............................................. 162,701 139,055 157,544 31,170 34,540
Operating income......................................... 30,711 15,123 25,068 107 2,328
Earnings (loss) from continuing operations(1)............ 9,729 (2,485) 6,091 (1,921) (607)
Net earnings (loss)(2)(3)................................ 9,729 (2,485) (30,556) (20,590) (955)
PER SHARE DATA:
Earnings (loss) from continuing operations:
Basic................................................. $ .82 $ (.21) $ .51 $ (.16) $ (.05)
Diluted............................................... .81 (.21) .51 (.16) (.05)
Net earnings (loss) per common share:
Basic................................................. .82 (.21) (2.57) (1.74) (.08)
Diluted............................................... .81 (.21) (2.54) (1.74) (.08)
Cash dividends per common share.......................... .36 .36 .36 .09 .09
OTHER DATA:
EBITDA(4)................................................ $ 50,083 $ 36,795 $ 44,383 $ 4,673 $ 6,080
Depreciation and amortization............................ 18,922 18,909 16,128 3,898 4,026
Capital expenditures..................................... 16,652 13,740 7,598 2,508 1,715
Dividends................................................ 4,324 4,236 4,290 1,064 1,076
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents................................ $ 7,699 $ 7,496 $ 9,690 $ 2,520 $ 7,254
Working capital.......................................... 188,091 228,356 216,932 250,677 252,908
Total assets............................................. 549,396 509,429 490,758 523,051 514,345
Total debt............................................... 202,591 205,925 176,917 222,852 211,059
Long-term debt (excluding current portion)............... 150,018 200,066 169,440 220,260 202,601
Stockholders' equity..................................... 194,305 185,687 153,881 164,886 153,579
</Table>

- ---------

(1) Effective January 1, 2003, we adopted the provisions of
Statement of Financial Accounting Standards ('SFAS')
No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13 and Technical Corrections
('Statement No. 145'). Statement No. 145 eliminates the
automatic classification of gain or loss on extinguishment
of debt as an extraordinary item of income and requires that
such gain or loss be evaluated for extraordinary
classification under the criteria of Accounting Principles
Board ('APB') No. 30, Reporting Results of Operations. As a
result, the extraordinary loss on the early extinguishment
of debt of approximately $0.5 million and $2.8 million has
been reclassified to interest expense for December 31, 2000
and 2001, respectively.

(2) Effective January 1, 2002, we adopted the provisions of
Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets ('SFAS No. 142'). In
accordance with SFAS No. 142, goodwill will no longer be
amortized, but instead, will be subject to an annual review
for potential impairment. As a result, we recorded an
impairment loss on goodwill as a cumulative effect of
accounting change of $18.3 million, net of tax, or $1.55 per
diluted share, during the first quarter of 2002. The
impairment loss relates to goodwill pertaining to certain of
our reporting units with our European Division and with our
Temperature Control Division, and we recorded charges of
$10.9 million related to our European Division and
$7.4 million related to our

(footnotes continued on next page)

(footnotes continued from previous page)

Temperature Control Division. Upon adoption of SFAS
No. 142, our earnings before cumulative effect of accounting
change for basic and diluted earnings per share adjusted to
exclude goodwill amortization expense (net of tax) are as
follows:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)

Reported earnings (loss) before cumulative effect of
accounting change.......................................... $ 9,729 $(2,485) $(12,206)
Add back: goodwill amortization expense, net of tax......... 2,574 2,727 --
------- ------- --------
Adjusted earnings (loss) before cumulative effect of
accounting change.......................................... $12,303 $ 242 $(12,206)
------- ------- --------
------- ------- --------
Basic earnings (loss) per share:
Reported basic earnings (loss) per share before
cumulative effect of accounting change.................. $ 0.82 $ (0.21) $ (1.03)
Add back: goodwill amortization expense, net of tax...... 0.22 0.23 --
------- ------- --------
Adjusted basic earnings (loss) per share before cumulative
effect of accounting change................................ $ 1.04 $ 0.02 $ (1.03)
------- ------- --------
------- ------- --------
Diluted earnings per share:
Reported diluted earnings (loss) per share before
cumulative effect of accounting change.................. $ 0.81 $ (0.21) $ (1.01)
Add back: goodwill amortization expense, net of tax...... 0.21 0.23 --
------- ------- --------
Adjusted diluted earnings (loss) per share before cumulative
effect of accounting change................................ $ 1.02 $ 0.02 $ (1.01)
------- ------- --------
------- ------- --------

Upon adoption of SFAS No. 142, our net earnings (loss) for basic and diluted earnings
per share adjusted to exclude goodwill amortization expense (net of tax) are as follows:

<Caption>
YEAR ENDED DECEMBER 31,
----------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)

Reported net earnings (loss)................................ $ 9,729 $(2,485) $(30,556)
Add back: goodwill amortization expense, net of tax......... 2,574 2,727 --
------- ------- --------
Adjusted net earnings (loss)................................ $12,303 $ 242 $(30,556)
------- ------- --------
------- ------- --------
Basic net earnings (loss) per share:
Reported basic net earnings (loss) per share............. $ 0.82 $ (0.21) $ (2.57)
Add back: goodwill amortization expense, net of tax...... 0.22 0.23 --
------- ------- --------
Adjusted basic net earnings (loss) per share................ $ 1.04 $ 0.02 $ (2.57)
------- ------- --------
------- ------- --------
Diluted net earnings (loss) per share:
Reported diluted net earnings (loss) per share........... $ 0.81 $ (0.21) $ (2.54)
Add back: goodwill amortization expense, net of tax...... 0.21 0.23 --
------- ------- --------
Adjusted diluted net earnings (loss) per share.............. $ 1.02 $ 0.02 $ (2.54)
------- ------- --------
------- ------- --------
</Table>

(3) For 2002, we recorded an after tax charge of $18.3 million
as a loss from discontinued operations to account for
potential costs associated with our asbestos-related
liability. See 'Risk Factors -- We may be materially
adversely affected by asbestos claims arising from products
sold by our former brake business, as well as by other
product liability claims' for a more detailed discussion of
the risks we face in connection with our exposure to
asbestos-related claims.

(4) EBITDA is defined as earnings from continuing operations
before interest expense, income taxes, depreciation and
amortization. Under our revolving credit facility, we are
required to maintain specified levels of EBITDA at the end
of each fiscal quarter through June 30, 2004 and, in
consideration of the SEC's Regulation G, we consider EBITDA
primarily as a measure of liquidity. The following is a
reconciliation of net cash provided by (used in) operating
activities to EBITDA:

EBITDA RECONCILIATION

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- -------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

Net cash provided by (used in) operating activities....... $ (953) $ 40,189 $ 60,183 $(13,604) $(34,266)
Gain on disposal of property, plant and equipment......... 99 265 97 140 --
Equity income (loss) from joint ventures.................. 702 844 352 113 (72)
Employee stock ownership plan allocation.................. (1,032) (713) (1,230) (163) (251)
Tax benefit related to employee stock options............. -- (48) (80) -- --
Increase (decrease) in deferred income taxes.............. 897 3,628 (2,550) -- --
Goodwill impairment charge................................ -- -- (3,334) -- --
Change in assets and liabilities, net of effects from
acquisitions............................................. 28,938 (27,741) (31,219) 15,491 38,008
Provision for income taxes................................ 2,522 (831) 7,920 (766) (357)
Interest expense, net..................................... 18,910 21,202 14,244 3,462 3,018
------- -------- -------- -------- --------
EBITDA.................................................... $50,083 $ 36,795 $ 44,383 $ 4,673 $ 6,080
------- -------- -------- -------- --------
------- -------- -------- -------- --------
</Table>

The following summary combined financial data at and for the years ended
December 31, 2000, 2001 and 2002 have been derived from the audited combined
financial statements of Dana's EMG Business. The following summary combined
financial data at and for the three months ended March 31, 2002 and 2003 have
been derived from the unaudited condensed combined quarterly financial
statements of Dana's EMG Business. Results of operations for interim periods are
not necessarily indicative of results to be expected for the full fiscal years.
You should read this data in conjunction with the 'Selected Combined Financial
Data' and the combined financial statements and the notes thereto of Dana's EMG
Business included elsewhere in this prospectus.

DANA CORPORATION'S ENGINE MANAGEMENT GROUP(1)

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ ----------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

STATEMENT OF OPERATIONS DATA:
Net sales.......................................... $357,475 $297,796 $300,254 $ 71,647 $ 77,747
Loss before income taxes........................... (87,797) (101,531) (76,734) (17,335) (2,513)
Net loss........................................... (52,121) (62,467) (46,702) (10,557) (1,531)
OTHER DATA:
EBITDA(2).......................................... $(68,904) $(81,706) $(59,434) $(12,626) $ 840
Depreciation and amortization...................... 18,802 19,216 17,109 4,673 3,432
Capital expenditures............................... 21,557 1,378 2,777 151 624
BALANCE SHEET DATA (AT PERIOD END)(3):
Cash and cash equivalents.......................... $ -- $ 292 $ 1,126 $ 1,054 $ 1,002
Working capital.................................... 172,574 93,027 88,453 110,169 107,632
Total assets....................................... 391,394 262,082 227,379 267,804 232,721
Combined equity.................................... 317,940 170,342 145,852 158,590 155,695
</Table>

- ---------

(1) The combined financial data of Dana's EMG Business include
its water pump and fuel pump product lines, which product
lines we will not acquire and which product lines we deem
immaterial in amount.

(2) EBITDA is defined as earnings from continuing operations
before interest expense, income taxes, depreciation and
amortization. Under our revolving credit facility, we are
required to maintain specified levels of EBITDA at the end
of each fiscal quarter through June 30, 2004 and, in
consideration of the SEC's Regulation G, we consider EBITDA
primarily as a measure of liquidity. The following is a
reconciliation of net cash provided by (used in) operating
activities to EBITDA:

EBITDA RECONCILIATION

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ -------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

Net cash provided by (used in) operating activities..... $ (7,476) $ 54,276 $ (5,600) $ (7,702) $(12,792)
(Loss) gain on disposal of property, plant and
equipment.............................................. (754) 940 (548) 27 --
Asset impairment........................................ -- (25,331) (2,887) (640) --
Change in deferred income taxes......................... (13,866) 1,301 (7,222) -- --
Change in assets and liabilities........................ (11,223) (74,437) (13,336) 2,431 14,693
Provision for income taxes.............................. (35,676) (39,064) (30,032) (6,778) (982)
Interest expense, net................................... 91 609 191 36 (79)
-------- -------- -------- -------- --------
EBITDA.................................................. $(68,904) $(81,706) $(59,434) $(12,626) $ 840
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</Table>

(3) Balance sheet data at December 31, 2000 were derived from
the financial records of Dana's EMG Business and are
unaudited.

RISK FACTORS

You should carefully consider the risks described below before deciding to
invest in our common stock. An investment in our common stock involves a high
degree of risk. The risks and uncertainties described below are not the only
ones we face. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business, financial
condition and results of operations. If any of the following risks actually
occur, our business, financial condition and results of operations could be
harmed. In that case, the trading price of our common stock could decline and
you could lose all or part of your investment. In assessing these risks, you
should also refer to the other information included or incorporated by reference
in this prospectus, including the financial statements and the notes thereto of
our company and of Dana's EMG Business included elsewhere in this prospectus.

RISKS RELATED TO OUR BUSINESS

THERE ARE RISKS ASSOCIATED WITH OUR ACQUISITION AND THE INTEGRATION INTO OUR
COMPANY OF DANA'S EMG BUSINESS, AND THESE RISKS MAY HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

On February 7, 2003, we entered into an agreement to purchase Dana's EMG
Business. We believe that we will integrate Dana's EMG Business into our company
within 18 months of the closing of the acquisition, but we cannot give you any
assurance that we will be able to do so successfully and within the intended
time frame.

We face a variety of uncertainties and challenges regarding the acquisition
and integration of Dana's EMG Business including:

difficulties integrating operational and financial
systems -- we may encounter difficulties integrating
operational and financial systems, which may delay our
integration efforts and extend the time frame in which
integration of Dana's EMG Business into our company and
realization of any associated cost savings will occur;

higher than expected costs of restructuring and
integration -- the costs of restructuring and integration
may be materially higher than we expect; and

lower than expected sales and profitability -- Dana's EMG
Business may not achieve sales and profitability that
justify our investment.

These risks, and the fact that integration of the acquired business will
require a significant amount of our management's and employees' time and
resources, could disrupt our ongoing business. In addition, if we do not achieve
the perceived benefits and anticipated cost savings of the acquisition as
rapidly as, or to the extent, projected, our business, financial condition and
results of operations could be materially adversely affected.

OUR INDUSTRY IS HIGHLY COMPETITIVE, AND OUR SUCCESS DEPENDS ON OUR ABILITY TO
COMPETE WITH SUPPLIERS OF AUTOMOTIVE AFTERMARKET PRODUCTS, SOME OF WHICH HAVE
SUBSTANTIALLY GREATER FINANCIAL, MARKETING AND OTHER RESOURCES THAN WE DO.

The automotive aftermarket industry is highly competitive and our success
depends on our ability to compete with suppliers of automotive aftermarket
products. Our competitors include a number of established independent
manufacturers as well as divisions of companies, such as AC Delco, Delco
Electronics Corporation, Delphi Corporation, Federal-Mogul Corporation, Jordan
Automotive Aftermarket, Inc., KEM Manufacturing Products, Inc., Robert Bosch
Corporation, Transpro Inc., Visteon Corporation and Wells Manufacturing (a UIS,
Inc. subsidiary). In addition, automobile manufacturers supply virtually every
replacement part we sell.

Some of our existing competitors have larger customer bases and
significantly greater financial, technical and marketing resources than we do.
These factors may allow our competitors to:

respond more quickly than we can to new or emerging
technologies and changes in customer requirements by
devoting greater resources than we can to the development,
promotion and sale of automotive aftermarket products and
services;

engage in more extensive research and development;
sell products at a lower price than we do;
undertake more extensive marketing campaigns; and
make more attractive offers to existing and potential
customers and strategic partners.

We cannot assure you that our competitors will not develop products or
services that are equal or superior to our products or that achieve greater
market acceptance than our products or that in the future other companies
involved in the automotive aftermarket industry will not expand their operations
into product lines produced and sold by us. We also cannot assure you that
additional entrants will not enter the automotive aftermarket industry or that
companies in the aftermarket industry will not consolidate. Any of such
competitive pressures could cause us to lose market share or could result in
significant price decreases and could have a material adverse effect upon our
business, financial condition and results of operations.

THERE IS SUBSTANTIAL PRICE COMPETITION IN OUR INDUSTRY, AND OUR SUCCESS AND
PROFITABILITY WILL DEPEND ON OUR ABILITY TO MAINTAIN A COMPETITIVE COST AND
PRICE STRUCTURE.

There is substantial price competition in our industry, and our success and
profitability will depend on our ability to maintain a competitive cost and
price structure. We may have to reduce prices in the future to remain
competitive. Also, our future profitability will depend in part upon our ability
to continue to improve our manufacturing efficiencies and maintain a cost
structure that will enable us to offer competitive prices. Our inability to
maintain a competitive cost structure could have a material adverse effect on
our business, financial condition and results of operations.

WE DEPEND ON A LIMITED NUMBER OF KEY CUSTOMERS, AND THE LOSS OF ANY SUCH
CUSTOMER OR A MATERIAL REDUCTION IN BUSINESS FROM ANY SUCH CUSTOMER COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

Our five largest individual customers accounted for 41% of our consolidated
net sales for the three months ended March 31, 2003 and 46% and 44% of our
consolidated net sales for 2002 and 2001, respectively. Members of one marketing
group represent our largest group of customers and accounted for approximately
15% of our consolidated net sales for the three months ended March 31, 2003 and
for 2002 and 2001. One individual member of this marketing group accounted for
12% of our consolidated net sales for the three months ended March 31, 2003 and
13% and 10% of our consolidated net sales for 2002 and 2001, respectively. In
addition, a significant customer of our Temperature Control Division is a
significant customer of Dana's EMG Business, and following the closing of the
acquisition, we believe this customer would become a significant customer of our
Engine Management Division and would have accounted on a pro forma basis for
approximately 16% of our consolidated net sales for the three months ended
March 31, 2003 and 16% of our consolidated net sales for 2002 and 2001. In
addition, following the closing of the acquisition, two significant customers of
Dana's EMG Business, one of which is a customer of our Temperature Control
Division, would have accounted on a pro forma basis for approximately 5% and 2%
of our consolidated net sales for the three months ended March 31, 2003, 6% and
2%, respectively, of our consolidated net sales for 2002 and 6% and 2%,
respectively, of our consolidated net sales for 2001. The loss of one or more of
these customers could have a materially adverse impact on our business,
financial condition and results of operations.

Also, we do not typically enter into long-term agreements with any of our
customers. Instead, we enter into a number of purchase order commitments with
our customers, based on their current or projected needs. We have in the past
and may in the future lose customers or lose a particular product line of a
customer due to the highly competitive conditions in the automotive aftermarket
industry, including pricing pressures. Recently, we lost AutoZone as a customer
for our Temperature Control Division, which had a negative effect on our
consolidated net sales for the three months ended March 31, 2003. We estimate
that our consolidated net sales in 2003 will decline by approximately
$25 million as a result of losing a majority of our business with AutoZone.
However, the actual impact of the loss of our business with AutoZone could
exceed our

estimate. A decision by any significant customer, whether motivated by
competitive conditions, financial difficulties or otherwise, to materially
decrease the amount of products purchased from us, to change their manner of
doing business with us, or to stop doing business with us, could have a material
adverse effect on our business, financial condition and results of operations.

OUR BUSINESS IS SEASONAL AND IS SUBJECT TO SUBSTANTIAL QUARTERLY FLUCTUATIONS,
WHICH IMPACT OUR QUARTERLY PERFORMANCE AND WORKING CAPITAL REQUIREMENTS.

Historically, our operating results have fluctuated by quarter, with the
greatest sales occurring in the second and third quarters of the year and with
revenues generally being recognized at the time of shipment. It is in these
quarters that demand for our products is typically the highest, specifically in
the Temperature Control segment of our business. In addition to this
seasonality, the demand for our Temperature Control products during the second
and third quarters of the year may vary significantly with the summer weather
and retailer inventories. For example, a cool summer may lessen the demand for
our Temperature Control products, while a hot summer may increase such demand.
As a result of this seasonality and variability in demand of our Temperature
Control products, our working capital requirements peak near the end of the
second quarter, as the inventory build-up of air conditioning products is
converted to sales and payments on the receivables associated with such sales
have yet to be received. During this period, our working capital requirements
are typically funded by borrowing from our revolving credit facility. We
believe, based upon our quarterly fluctuations in operating results, that
period-to-period comparisons of our operating results may not be meaningful.

You should not rely on our past periods as indicators of our future
performance. It is possible that in some future periods our results of
operations may be below historical performance.

WE MAY INCUR MATERIAL LOSSES AND SIGNIFICANT COSTS AS A RESULT OF
WARRANTY-RELATED RETURNS BY OUR CUSTOMERS IN EXCESS OF ANTICIPATED AMOUNTS.

Our products are required to meet rigorous standards imposed by our
customers and our industry. Many of our products carry a warranty ranging from a
90-day limited warranty to a lifetime limited warranty, which generally covers
defects in materials or workmanship and failure to meet industry published
specifications. In the event that there are material deficiencies or defects in
the design and manufacture of our products and/or installer error, the affected
products may be subject to warranty returns and/or product recalls. Although we
maintain a comprehensive quality control program, we cannot give any assurance
that our products will not suffer from defects or other deficiencies or that we
will not experience material warranty returns or product recalls in the future.
We accrue for warranty returns as a percentage of sales, after giving
consideration to recent historical returns. While we believe that we make
reasonable estimates for warranty returns in accordance with our revenue
recognition policies, actual returns may differ from our estimates. We may incur
material losses and significant costs as a result of our customers returning
products to us as a result of warranty-related issues in excess of anticipated
amounts. For example, our financial performance in 1999 was adversely impacted
by an unusually high number of our customers returning products to us that were
under warranty primarily in our Temperature Control Division. Deficiencies or
defects in our products in the future may result in warranty returns and product
recalls in excess of anticipated amounts and may have a material adverse effect
on our business, financial condition and results of operations.

OUR PROFITABILITY MAY BE MATERIALLY ADVERSELY AFFECTED AS A RESULT OF OVERSTOCK
INVENTORY-RELATED RETURNS BY OUR CUSTOMERS IN EXCESS OF ANTICIPATED AMOUNTS.

We permit overstock returns of inventory that we allow customers to return
to us and that may be either new or non-defective or non-obsolete but that we
believe we can re-sell. Customers are generally limited to returning overstocked
inventory according to an annual allowance based on the prior year's purchases,
net of all discounts and allowances. In addition, a customer's annual allowance
cannot be carried forward to the upcoming year.

We accrue for overstock returns as a percentage of sales, after giving
consideration to recent historical returns. While we believe that we make
reasonable estimates for overstock returns in

accordance with our revenue recognition policies, actual returns may differ from
our estimates. For example, our financial performance in 1999 was adversely
impacted by our decision to discontinue offering selected Temperature Control
products, which resulted in customers returning products at levels in excess of
anticipated amounts. To the extent that overstocked returns are materially in
excess of our projections, our business, financial condition and results of
operations may be materially adversely affected.

OVER THE LONG TERM, OUR BUSINESS IS DEPENDENT ON THE AUTOMOTIVE INDUSTRY, AND
OUR FUTURE PERFORMANCE MAY BE MATERIALLY ADVERSELY AFFECTED BY PERSISTENT
DECLINES IN THE AUTOMOTIVE INDUSTRY OR CHANGES IN TECHNOLOGIES AND IMPROVEMENTS
IN THE QUALITY OF NEW VEHICLE PARTS.

Over the long term, our business is dependent upon the sales of automobiles
within the automotive industry, which creates the total number of vehicles
available for repair following the expiration of vehicle warranties. A
persistent decline in automotive sales and production over the long term would
likely affect sales to our aftermarket customers. Changes in automotive
technologies, such as vehicles powered by fuel cells or electricity, could also
negatively affect sales to our aftermarket customers. These factors could result
in less demand for our products thereby resulting in a decline in our results of
operations or a deterioration in our business and financial condition and may
have a material adverse effect on our long term performance.

In addition, the size of the automobile replacement parts market depends, in
part, upon the growth in number of vehicles on the road, increase in average
vehicle age, increase in total miles driven per year, new and modified
environmental regulations, increase in pricing of new cars and new car quality
and related warranties. The automobile replacement parts market has been
negatively impacted by the fact that the quality of more recent automotive
vehicles and their component parts has improved, thereby lengthening the repair
cycle. Generally, if parts last longer, there will be less demand for our
products, and the average useful life of automobile parts has been steadily
increasing in recent years due to innovations in products and technology. These
factors could have a material adverse effect on our business, financial
condition and results of operations.

WE MAY BE MATERIALLY ADVERSELY AFFECTED BY ASBESTOS CLAIMS ARISING FROM PRODUCTS
SOLD BY OUR FORMER BRAKE BUSINESS, AS WELL AS BY OTHER PRODUCT LIABILITY CLAIMS.

In 1986, we acquired a brake business, which we subsequently sold in March
1998. When we originally acquired this brake business, we assumed future
liabilities relating to any alleged exposure to asbestos-containing products
manufactured by the seller of the acquired brake business. In accordance with
the related purchase agreement, we agreed to assume the liabilities for all new
claims filed after September 1, 2001. Our ultimate exposure will depend upon the
number of claims filed against us on or after September 1, 2001 and the amounts
paid for indemnity and defense thereof.

We currently do not have insurance coverage for the defense and indemnity
costs associated with the claims we face. To date, the amounts paid for settled
claims have been immaterial, although a substantial increase in the number of
new claims or increased settlement payments or awards of damages could have a
material adverse affect on our business, financial condition and results of
operations. Actuarial consultants with experience in assessing asbestos-related
liabilities conducted a study to estimate our potential claim liability as of
September 30, 2002. The actuarial study estimated an undiscounted liability for
settlement payments ranging from $27.3 million to $58 million for the period
through 2052. Accordingly, based on the information contained in the actuarial
study and all other available information that we considered, we recorded an
after tax charge of $16.9 million as a loss from discontinued operations during
the third quarter of 2002 to reflect such liability. At December 31, 2001,
approximately 100 cases were outstanding for which we were responsible for any
related liabilities. At December 31, 2002, the number of cases outstanding for
which we were responsible for related liabilities increased to approximately
2,500, which include approximately 1,600 cases filed in December 2002 in
Mississippi. We believe that these Mississippi cases filed against us in
December 2002 were due in large part to potential plaintiffs accelerating the
filing of their claims prior to the effective date of Mississippi's tort reform

statute in January 2003, which statute eliminated the ability of plaintiffs to
file consolidated cases. At March 31, 2003, approximately 2,700 cases were
outstanding for which we were responsible for any related liabilities.

You should be aware that we have only been responsible for dealing with
these asbestos-related claims since September 1, 2001, so our experience may not
be adequate to accurately express a view as to the future extent of our exposure
to these claims. Given the uncertainties associated with projecting
asbestos-related matters into the future, the short period of time that we have
been responsible for defending these claims, and other factors outside our
control, we cannot give any assurance that significant increases in the number
of claims filed against us will not occur, that asbestos-related damages or
settlement awards will not exceed the amount we have in reserve, or that
additional provisions will not be required. Management will continue to monitor
the circumstances surrounding these potential liabilities in determining whether
additional reserves and provisions may be necessary. We currently intend to
perform an annual actuarial analysis updating our assessment of our potential
claim liability during the third quarter of each year for the foreseeable
future.

In addition to asbestos-related claims, our product sales entail the risk of
involvement in other product liability actions. We maintain product liability
insurance coverage, but we cannot give any assurance that current or future
policy limits will be sufficient to cover all possible liabilities. Further, we
can give no assurance that adequate product liability insurance will continue to
be available to us in the future or that such insurance may be maintained at a
reasonable cost to us. In the event of a successful product liability claim
against us, a lack or insufficiency of insurance coverage could have a material
adverse effect on our business, financial condition and results of operations.

OUR SUBSTANTIAL INDEBTEDNESS COULD NEGATIVELY AFFECT OUR FINANCIAL HEALTH.

We have, and after the completion of this offering and the acquisition of
Dana's EMG Business will continue to have, a significant amount of indebtedness.
As of March 31, 2003, our total outstanding indebtedness was $211 million. We
incurred $90 million of indebtedness in July 1999 from the sale of our
convertible debentures. We have an existing revolving bank credit facility of
$225 million with General Electric Capital Corporation, as agent, and a
syndicate of lenders, which we refer to throughout this prospectus as our
revolving credit facility. As of March 31, 2003, we had $110 million of
outstanding indebtedness and approximately $37 million of availability under
this revolving credit facility. The size of the revolving credit facility
increases to $305 million upon our acquisition of Dana's EMG Business, subject
to the terms and conditions of the facility. Following this offering and our
acquisition of Dana's EMG Business, we expect our total outstanding indebtedness
to be approximately $289 million. Our substantial indebtedness could:

increase our vulnerability to general adverse economic and
industry conditions;

limit our ability to fund future working capital, capital
expenditures, research and development costs and other
general corporate requirements;

limit our ability to pay future dividends;

limit our flexibility in planning for, or reacting to,
changes in our business and the industry in which we
operate;

increase the amount of interest expense that we have to pay
because some of our borrowings are at variable rates of
interest, which, if interest rates increase, could result in
a higher interest expense; and

limit, along with the financial and other restrictive
covenants of our indebtedness, among other things, our
ability to borrow additional funds.

In addition, we have granted the lenders under our revolving credit facility
a first priority security interest in substantially all of our currently owned
and future acquired personal property, real property (other than our Long Island
City facility) and other assets. We have also pledged all of the shares of stock
in our subsidiaries to those lenders.

WE MAY NOT BE ABLE TO GENERATE THE SIGNIFICANT AMOUNT OF CASH NEEDED TO SERVICE
OUR INDEBTEDNESS AND FUND OUR FUTURE OPERATIONS.

Our ability either to make payments on or to refinance our indebtedness, or
to fund planned capital expenditures and research and development efforts, will
depend on our ability to generate cash in the future. Our ability to generate
cash is in part subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control.

Based on our current level of operations and the anticipated business
opportunities provided by the acquisition of Dana's EMG Business, we believe our
cash flow from operations, available cash and available borrowings under our
revolving credit facility will be adequate to meet our future liquidity needs
for at least the next few years. Significant assumptions underlie this belief,
including, among other things, that there will be no material adverse
developments in our business, liquidity or capital requirements. If we are
unable to service our indebtedness, we will be forced to adopt an alternative
strategy that may include actions such as:

reducing capital expenditures;

reducing research and development efforts;

selling assets;

restructuring or refinancing our indebtedness; and

seeking additional funding.

We cannot assure you, however, that our business will generate sufficient
cash flow from operations, even with the anticipated sales growth, cost
improvements and increased cash flow from the acquisition of Dana's EMG
Business, or that future borrowings will be available to us under our revolving
credit facility in amounts sufficient to enable us to pay the principal and
interest on our indebtedness or to fund our other liquidity needs. We may need
to refinance all or a portion of our indebtedness on or before maturity. We
cannot assure you that we will be able to refinance any of our indebtedness on
commercially reasonable terms or at all.

OUR BUSINESS IS DEPENDENT ON OUR MAINTAINING SATISFACTORY RELATIONSHIPS WITH
SUPPLIERS, AND THE LOSS OF SEVERAL MAJOR SUPPLIERS OF RAW MATERIALS OR KEY
COMPONENTS MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS.

Our business depends on our relationships with suppliers of raw materials
and components that we use on our product lines and on our ability to purchase
these raw materials and key components at prices and on terms comparable to
similarly-situated companies. We purchase most materials in the U.S. open
market. Although we do not expect that the loss of any one supplier would have a
material adverse effect on us, the loss of several major suppliers would have a
material adverse effect our business, financial condition and results of
operations.

WE MAY INCUR LIABILITIES UNDER GOVERNMENT REGULATIONS AND POLICIES AND
ENVIRONMENTAL LAWS, WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Domestic and foreign political developments and government regulations and
policies directly affect automotive consumer products in the United States and
abroad. Regulations and policies relating to over-the-highway vehicles include
standards established by the United States Department of Transportation for
motor vehicle safety and emissions. The modification of existing laws,
regulations or policies, or the adoption of new laws, regulations or policies,
could have a material adverse effect on our business, financial condition and
results of operations. Our failure to comply with these laws and regulations
could subject us to civil and criminal penalties.

Our operations and properties are also subject to a wide variety of
increasingly complex and stringent federal, state, local and international laws
and regulations, including those governing the use, storage, handling,
generation, treatment, emission, release, discharge and disposal of materials,
substances and wastes, the remediation of contaminated soil and groundwater and
the health and safety of employees. Such environmental laws, including but not
limited to those under the Comprehensive Environmental Response Compensation &
Liability Act, may impose joint and

several liability 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 wastes or other contamination attributable to
an entity or its predecessors have been sent or otherwise come to be located.
The nature of our operations exposes us to the risk of claims with respect to
such matters, and we can give no assurance that violations of such laws have not
occurred or will not occur or that material costs or liabilities will not be
incurred in connection with such claims. One of our facilities is currently
undergoing minor environmental remediation, which costs are covered by
insurance, subject to a $1.5 million deductible and a $3 million indemnity
limitation. We also maintain a three year $10 million environmental policy to
cover our other existing facilities. Based upon our experience to date, we
believe that the future cost of compliance with existing environmental laws, and
liability for known environmental claims pursuant to such environmental laws,
will not give rise to additional significant expenditures or liabilities that
would be material to us. However, future events, such as new information,
changes in existing environmental laws or their interpretation, and more
vigorous enforcement policies of regulatory agencies, may have a material
adverse effect on our business, financial condition and results of operations.

THE SUCCESS OF OUR BUSINESS IS DEPENDENT ON OUR KEY PERSONNEL, AND THE LOSS OF
ANY OF THESE PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The success of our business is dependent, to a significant extent, upon the
abilities and continued efforts of our senior management team, including
Lawrence I. Sills, our Chairman of the Board and Chief Executive Officer, John
P. Gethin, our President and Chief Operating Officer, James J. Burke, our Vice
President Finance, Chief Financial Officer, and Joseph G. Forlenza, our Vice
President and General Manager of Engine Management Division. None of our
executive officers currently has an employment agreement with us, and we do not
currently maintain key-life insurance on any of our executive officers. The loss
of any of these persons and the inability to attract qualified replacements for
these key personnel could have a material adverse effect on our business,
financial condition and results of operations.

RISKS RELATED TO OUR COMMON STOCK AND THIS OFFERING

OUR PRINCIPAL SHAREHOLDERS HAVE THE ABILITY TO CONTROL US AND THEIR INTERESTS
MAY, AT TIMES, CONFLICT WITH THE INTERESTS OF OUR OTHER SHAREHOLDERS.

At March 31, 2003, members of the families that founded Standard Motor
Products owned, directly or indirectly, approximately 43% of our outstanding
common stock. Specifically, shares of common stock owned directly or indirectly
by members of the family of Lawrence I. Sills, our Chairman of the Board and
Chief Executive Officer, aggregated 2,918,226 shares (approximately 23% of our
outstanding common stock at March 31, 2003), and shares of common stock owned
directly or indirectly by members of the family of Arthur D. Davis, Marilyn Fife
Cragin and Susan F. Davis, three of our directors who are family members of
Bernard Fife, one of our founders, aggregated 2,486,651 shares (approximately
20% of our outstanding common stock at March 31, 2003). To the extent that these
shareholders exercise their voting rights in concert, they may have the ability
to control the election of our board of directors, to appoint new management and
to control the outcome of matters submitted to a vote of the holders of common
stock, which may make it more difficult for a third party to acquire us. The
interests of these equity holders may at times conflict with the interests of
our other shareholders.

SALES OF A SUBSTANTIAL NUMBER OF SHARES OF COMMON STOCK HELD BY DANA OR OUR
MANAGEMENT FOLLOWING THE EXPIRATION OF THEIR RESPECTIVE LOCK-UP PERIODS COULD
HAVE A MATERIAL ADVERSE EFFECT ON THE TRADING PRICE OF OUR COMMON STOCK.

In connection with the acquisition of Dana's EMG Business, assuming a
purchase price of $121 million, based on the March 31, 2003 unaudited balance
sheet of Dana's EMG Business, Dana will receive approximately 1,202,229 shares
of our common stock, representing approximately 6.7% of our outstanding common
stock as of March 31, 2003, as part of the acquisition purchase price. Dana has
agreed not to sell or otherwise transfer these shares of

common stock for a period of two and a half years following the date of the
closing of the acquisition. The shares of common stock received by Dana are not
registered under the Securities Act. We have agreed to register these shares
under the Securities Act should an exemption to registration under the
securities laws be unavailable to Dana following the expiration of such two and
a half year lock-up period. Accordingly, all of the shares of our common stock
that Dana received as part of the acquisition purchase price will be available
for sale in the public market two and a half years after the date of the closing
of the acquisition. In addition, our directors and executive officers have
agreed not to sell or otherwise transfer the shares of common stock held
directly or indirectly by such persons for a period of 90 days following the
effective date of this offering, subject to specified exceptions. Sales of a
substantial number of shares of common stock held by Dana or our management
following the expiration of their respective lock-up periods could have a
material adverse effect on the market price of our common stock.

OUR RESTATED CERTIFICATE OF INCORPORATION AND RESTATED BY-LAWS CONTAIN
PROVISIONS THAT MAY HINDER OR PREVENT A CHANGE OF CONTROL.

Some of the provisions of our restated certificate of incorporation and
restated by-laws could make a takeover difficult, even if such a transaction
would be beneficial to shareholders. Specifically, our restated certificate of
incorporation requires a 75% vote for transactions with the direct or indirect
beneficial owner of at least 5% of the outstanding shares of any class of our
capital stock, and our restated certificate of incorporation and restated
by-laws provide that our directors may be removed without cause only by a vote
of holders of 75% of the outstanding stock.

Section 912 of the New York Business Corporation Law would also prohibit
business combinations with an 'interested shareholder,' which includes a person
or entity who beneficially owns 20% of a company's voting stock directly or
indirectly for five years unless the board of directors of such company approves
the transaction before the person or entity becomes an interested shareholder.
This provision may have the effect of making a takeover of us even more
difficult.

In addition, our shareholder rights plan may make it more difficult for a
person to purchase our company if such purchase is not approved by our board of
directors.

OUR STOCK PRICE MAY BE VOLATILE, AND YOU MAY NOT BE ABLE TO RECOVER YOUR
INVESTMENT IF OUR STOCK PRICE DECLINES.

The market price of our common stock has traditionally fluctuated over a
wide range and may continue to do so in the future. Factors that may affect our
common stock fluctuation include:

quarterly variations in our operating results;

changes in concentration of our equity ownership by families
of our founders and by our other significant shareholders,
including Dana following the acquisition;

quarterly variations in the results of operations or stock
prices of comparable companies;

announcements of new products or services offered by us or
our competitors;

changes in earnings estimates or buy/sell recommendations by
financial analysts;

the stock price performance of our material customers;

existing competitive conditions and the possible entry of
additional competitors or expansion of existing competitors
into our markets; and

general market conditions or market conditions specific to
particular industries.

Factors affecting the automotive aftermarket industry generally and changes
in general market conditions may also have a significant impact on the market
price for our securities.

THE LIMITED TRADING VOLUME OF OUR COMMON STOCK MAY CONTRIBUTE TO ITS PRICE
VOLATILITY, AND AS A RESULT RELATIVELY SMALL TRADES MAY HAVE A SIGNIFICANT
IMPACT ON THE MARKET PRICE OF OUR COMMON STOCK.

Our common stock is traded on The New York Stock Exchange under the symbol
'SMP.' For the first quarter of 2003, the average daily trading volume for our
common stock as reported by the NYSE was approximately 17,068 shares. Even if we
achieve a wider dissemination by means of the shares offered pursuant to this
prospectus, we are uncertain as to whether a more active trading market in our
common stock will develop. As a result, relatively small trades may have a
significant impact on the market price of our common stock.

IF WE NEED TO SELL OR ISSUE ADDITIONAL SHARES OF COMMON STOCK TO REPAY OR
RESTRUCTURE OUR INDEBTEDNESS OR FINANCE OUR OPERATING REQUIREMENTS, THERE IS A
RISK THAT YOUR STOCK OWNERSHIP COULD BE DILUTED.

In order to pay down or restructure our indebtedness or fund our general
operating requirements, we may issue additional equity securities in the future.
The issuance of additional equity securities could be dilutive to our earnings
per share and to your stock ownership, and you may not be able to recover your
investment if there is a dilution of our stock.

SPECIAL NOTES REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this prospectus or incorporated by reference
into this prospectus constitute 'forward-looking statements' within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on current expectations and are indicated by words or
phrases such as 'believe,' 'expect,' 'may,' 'will,' 'should,' 'seek,' 'plan,'
'intend' or 'anticipate' or the negative thereof or comparable terminology, or
by discussion of strategy. Forward-looking statements are primarily contained in
the sections of this prospectus entitled 'Prospectus Summary,' 'Risk Factors,'
'Pro Forma Financial Information,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and 'Business.' Forward-looking
statements represent as of the date of this prospectus our judgment relating to,
among other things, future results of operations, growth plans, sales, capital
requirements and general industry and business conditions applicable to us. Such
forward-looking statements are based largely on our current expectations and are
inherently subject to risks and uncertainties. Our actual results could differ
materially from those that are anticipated or projected as a result of certain
risks and uncertainties, including, but not limited to, a number of factors,
such as:

successful integration of acquired businesses;

economic and market conditions;

the performance of the automotive aftermarket sector;

changes in business relationships with our major customers
and in the timing, size and continuation of our customers'
programs;

the ability of our customers to achieve their projected
sales;

competitive product and pricing pressures;

increases in production or material costs that cannot be
recouped in product pricing;

product liability (including, without limitation, those
related to estimates to asbestos-related contingent
liabilities) matters; and

the other risks and uncertainties that are described in this
prospectus and from time to time in our filings with the
SEC.

Except as otherwise required to be disclosed in periodic reports required to
be filed by public companies with the SEC pursuant to the SEC's rules, we have
no duty to update these statements, and we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks and
uncertainties, we cannot assure you that the forward-looking information
contained in this prospectus will in fact transpire.

THE ACQUISITION AND RELATED TRANSACTIONS

This offering is being made in connection with our acquisition of Dana's EMG
Business. The closing of the acquisition is subject to our financing of the
purchase price. We intend to finance the acquisition and the payment of related
fees and expenses and restructuring and integration costs by (a) drawing on our
revolving credit facility, (b) issuing shares of our common stock to Dana, and
(c) obtaining seller financing.

On February 7, 2003, we signed an agreement to purchase substantially all of
the assets and to assume substantially all of the operating liabilities of
Dana's EMG Business, excluding assets and liabilities related to its water pump
and fuel pump product lines, for a purchase price equal to the closing net book
value of the business, subject to a maximum purchase price of $125 million.
Assuming an acquisition purchase price of $121 million, based upon the
March 31, 2003 unaudited balance sheet of Dana's EMG Business, we will pay to
Dana:

approximately $90.8 million in cash;

an unsecured promissory note in the aggregate principal
amount of approximately $15.1 million; and

shares of our common stock with a value of approximately
$15.1 million.

The acquisition purchase price is subject to a post-closing adjustment based
upon the book value of the acquired assets of Dana's EMG Business less the book
value of the assumed liabilities of Dana's EMG Business as of the close of
business on the closing date.

The acquisition is subject to our obtaining financing for the acquisition
and other customary closing conditions. We expect to complete the acquisition on
or about June 30, 2003.

DANA'S EMG BUSINESS

Dana's EMG Business is a leading manufacturer of aftermarket parts in the
automotive industry focused exclusively on engine management. Dana's EMG
Business had approximately $77.8 million in consolidated net sales for the three
months ended March 31, 2003, and approximately $300 million and $298 million in
consolidated net sales in 2002 and 2001, respectively. Dana's EMG Business
customers consist of many of the leading warehouse distributors, such as NAPA
Auto Parts, as well as many of the leading auto parts retail chains, such as CSK
Auto, O'Reilly Automotive and Pep Boys. Dana's EMG Business products enjoy
strong brand recognition with its many leading automotive product names,
including Echlin, Borg Warner and Niehoff, as well as with private labels
through NAPA Auto Parts. Dana's EMG Business currently includes nine operating
facilities employing approximately 1,900 people. We intend to integrate Dana's
EMG Business into our existing Engine Management Division within 18 months of
the closing of the acquisition.

Dana acquired Echlin Corporation's engine management business in 1998. Over
the past two years, Dana undertook several initiatives to improve the long term
financial performance of Dana's EMG Business and incurred a number of charges to
its earnings as a result of operating and financial restructuring activities.
These initiatives included reductions in work force, the closure of
manufacturing operations, the rationalization of distribution facilities, and
the introduction of new management information systems. These activities had a
negative impact on the financial performance of Dana's EMG Business, as
evidenced by Dana's EMG Business recording an EBITDA loss of approximately $59.4
million for the year ended December 31, 2002. For the three months ended
March 31, 2003, EBITDA was approximately $0.8 million. Net cash used
in operations for the year ended December 31, 2002 and the three
months ended March 31, 2003 amounted to $5.6 million and $12.8 million,
respectively (see 'Summary Consolidated Financial Data -- Dana Corporation's
Engine Management Group -- EBITDA Reconciliation'). The EBITDA loss for the year
ended December 31, 2002 included restructuring charges of $9.4 million. During
2002, Dana also instituted various operating initiatives related to their
distribution facilities and the size of their workforce, resulting in cost
savings that are expected to be approximately $12 million per annum.

In addition to the steps already taken by Dana, we have identified various
opportunities to improve the performance of Dana's EMG Business following the
closing of the acquisition. These opportunities include:

rationalizing excess manufacturing capacity;

improving distribution activities;

consolidating redundant activities such as management
information systems, accounting, and catalog production;

realizing the benefits of scale in purchasing materials; and

moving out of unnecessary operating facilities.

We believe that once we have fully completed the integration of Dana's EMG
Business these cost savings will range from $45 to $50 million per annum.

RELATED DEBT AND EQUITY FINANCINGS

Amendment to Our Revolving Credit Facility. On February 7, 2003, we amended
our revolving credit facility to provide for an additional $80 million
commitment, subject to the terms and conditions therein, which will become
effective upon the closing of our acquisition of Dana's EMG Business. This
additional commitment increases the total amount available for borrowing under
our revolving credit facility to $305 million. After applying all of the net
proceeds from this offering to repay a portion of our outstanding indebtedness
under our revolving credit facility, we intend to borrow the entire cash portion
of the purchase price of Dana's EMG Business from our revolving credit facility.
Following the closing of this acquisition, we expect to have approximately $64
million available under our revolving credit facility.

Seller Note. At the acquisition closing, we will deliver to Dana an
unsecured promissory note in the aggregate principal amount of approximately
$15.1 million, assuming an acquisition purchase price of $121 million, having an
interest rate of 9% per annum for the first year, with such interest rate
increasing by one-half of a percentage point (0.5%) on each anniversary of the
date of issuance. Accrued and unpaid interest is due quarterly under the
promissory note. The maturity date of the promissory note is five and a half
years from the date of issuance. The promissory note may be prepaid in whole or
in part at any time without penalty.

Seller Equity. At the acquisition closing, we will fund a portion of the
acquisition purchase price by issuing to Dana shares of our common stock with a
value of approximately $15.1 million, assuming an acquisition purchase price of
$121 million. Dana would receive approximately 1,202,229 shares of our common
stock, which would represent approximately 6.7% of our outstanding common stock
as of March 31, 2003, assuming that the price of our common stock is $12.56. All
of the shares of our common stock that Dana will receive as part of the
acquisition purchase price will be subject to a 30 month lock-up period.

USE OF PROCEEDS

The net proceeds from our sale of 4,750,000 shares of common stock in this
offering will be approximately $55 million after deducting the underwriting
discount and estimated expenses, assuming a public offering price of $12.56 per
share. If the underwriters exercise in full their option to purchase additional
shares in this offering, our net proceeds will be approximately $63.3 million.
We intend to use all of the net proceeds from this offering to repay a portion
of our outstanding indebtedness under our revolving credit facility. We then
intend to borrow the entire cash portion of the purchase price of Dana's EMG
Business from our revolving credit facility to consummate the closing of the
acquisition.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Our common stock trades publicly on the New York Stock Exchange under the
trading symbol 'SMP.' The following table shows the high and low sales prices
per share of the common stock as reported by the New York Stock Exchange and the
dividends declared per share for the periods indicated:

<Table>
<Caption>
HIGH LOW DIVIDEND
---- --- --------

FISCAL YEAR ENDED DECEMBER 31, 2000
First Quarter......................................... $16.50 $12.63 $0.09
Second Quarter........................................ 15.70 7.38 0.09
Third Quarter......................................... 10.63 7.94 0.09
Fourth Quarter........................................ 8.44 6.44 0.09

FISCAL YEAR ENDED DECEMBER 31, 2001
First Quarter......................................... $10.60 $ 7.44 $0.09
Second Quarter........................................ 14.50 9.90 0.09
Third Quarter......................................... 13.70 11.65 0.09
Fourth Quarter........................................ 14.95 10.45 0.09

FISCAL YEAR ENDED DECEMBER 31, 2002
First Quarter......................................... $15.15 $12.90 $0.09
Second Quarter........................................ 17.04 14.30 0.09
Third Quarter......................................... 17.39 10.63 0.09
Fourth Quarter........................................ 13.90 9.45 0.09

FISCAL YEAR ENDED DECEMBER 31, 2003
First Quarter......................................... $15.70 $11.10 $0.09
Second Quarter (through June 3, 2003)................. $12.76 $11.00 $ --
</Table>

The last reported sale price of our common stock on the NYSE on June 3, 2003
was $12.56 per share. As of June 3, 2003, there were 505 holders of record of
our common stock.

Dividends are declared and paid on the common stock at the discretion of our
board of directors and depend on our profitability, financial condition, capital
needs, future prospects, and other factors deemed relevant by our board. Our
current policy is to pay dividends on a quarterly basis. Our credit agreement
permits dividends and distributions by us provided specific conditions are met.
See 'Description of Capital Stock -- Common Stock' for a discussion of such
conditions under our revolving credit facility.

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2003:

on an actual basis, and

on an as adjusted basis, to reflect

our receipt of the estimated net proceeds of $55 million
from the sale of 4,750,000 shares of our common stock in
this offering at an assumed offering price of $12.56 per
share, after deducting the underwriting discount and
estimated expenses, and

our acquisition of Dana's EMG Business and the related
borrowing and stock issuance.

You should read this table in conjunction with 'Use of Proceeds,' 'Selected
Consolidated Financial Data,' 'Pro Forma Financial Information,' 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
our financial statements and the notes thereto included elsewhere in this
prospectus.

The shares of common stock to be outstanding after this offering exclude:

1,245,397 shares of common stock issuable upon exercise of
options outstanding as of March 31, 2003 under our stock
option plans at a weighted average exercise price of $16.49
per share;

19,044 shares of common stock reserved for future grants
under our stock option plans;

525,000 shares held by us in an employee benefits trust,
which are not currently considered outstanding for
calculations of basic or diluted earnings per share;

2,796,120 shares of common stock issuable upon conversion of
our convertible debentures, which are presently convertible
into 31.068 shares of common stock for each $1,000 of
convertible debentures and which have a conversion price
equivalent to approximately $32.19 per share of common
stock; and

up to 712,500 shares that may be issued to the underwriters
if they exercise their option to purchase additional shares
in this offering.

<Table>
<Caption>
AS OF MARCH 31, 2003
----------------------
AS
ACTUAL ADJUSTED(1)
------ -----------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE AND PER
SHARE DATA)

Cash and cash equivalents................................... $ 7,254 $ 7,254
-------- --------
-------- --------

Notes payable............................................... 4,703 4,703
-------- --------

Payments due within one year on long-term debt.............. 3,755 3,755
-------- --------
Convertible Subordinated Debentures due 2009................ 90,000 90,000
Revolving Credit Facility(2)................................ 109,562 152,502
Other....................................................... 3,039 18,139
-------- --------
Long term debt.......................................... 202,601 260,641
-------- --------

Stockholders' equity:
Preferred stock -- par value $20.00 per share:
Authorized -- 500,000 shares, none issued
Common stock -- par value $2.00 per share:
Authorized -- 30,000,000 shares, issued and
outstanding -- 12,033,009 shares.................. 26,649 38,553
Capital in excess of par value.......................... 1,565 59,721
Retained earnings....................................... 146,655 146,655
Accumulated other comprehensive loss.................... (1,800) (1,800)
Less: Treasury stock -- at cost 1,291,467 shares........ (19,490) (19,490)
-------- --------
Total stockholders' equity.......................... 153,579 223,639
-------- --------
Total capitalization................................ $364,638 $492,738
-------- --------
-------- --------
</Table>

- ---------

(1) Assuming a stock issuance of 4,750,000 shares of our common
stock in this offering and an acquisition purchase price of
Dana's EMG Business of $121 million, based on the March 31,
2003 unaudited balance sheet for Dana's EMG Business, paid
for by drawing $42.9 million on our revolving credit
facility, issuing 1,202,229 shares of common stock to Dana,
issuing an unsecured promissory note in the aggregate
principal amount of $15.1 million to Dana.

(2) Assumes (a) the application of all of the estimated net
proceeds from this offering to pay down a portion of our
outstanding indebtedness under our revolving credit
facility, and (b) the borrowing of the entire cash portion
of the purchase price of Dana's EMG Business from our
revolving credit facility to consummate the closing of the
acquisition.

PRO FORMA FINANCIAL INFORMATION

On February 7, 2003, we entered into an agreement to purchase substantially
all of the assets and to assume substantially all of the operating liabilities
of Dana's EMG Business, excluding any assets related to its water pump and fuel
pump product lines, for a purchase price equal to the closing net book value of
the business. For purposes of preparing the pro forma financial information
contained in this prospectus, we have assumed the acquisition purchase price to
be $121 million, based on the March 31, 2003 unaudited balance sheet of Dana's
EMG Business.

The acquisition purchase price is subject to a post-closing adjustment based
upon the net book value of the acquired assets of Dana's EMG Business less the
net book value of the assumed liabilities of Dana's EMG Business as of the close
of business on the closing date.

The closing of the acquisition is subject to our financing of the purchase
price. We intend to finance the acquisition and the payment of related fees and
expenses, restructuring and integration costs by (a) drawing on our amended
revolving credit facility, (b) issuing shares of our common stock to Dana, and
(c) obtaining seller financing.

The unaudited combined pro forma statements of operations for the year ended
December 31, 2002 and for the three months ended March 31, 2003 give effect to
the acquisition of assets and operating liabilities of Dana's EMG Business
(excluding its water pump and fuel pump product lines, which we will not
acquire), including our financing of the acquisition purchase price, as if such
acquisition had occurred on January 1, 2002. The unaudited combined pro forma
balance sheet gives effect to such acquisition as if it had occurred on March
31, 2003.

The unaudited pro forma combined financial data is based on our historical
consolidated financial statements and the historical combined financial
statements of Dana's EMG Business (adjusted to exclude its water pump and fuel
pump product lines, which we will not acquire), and on the assumptions and
adjustments described in the notes to such unaudited pro forma combined
financial data, including assumptions relating to the allocation of the
consideration paid for Dana's EMG Business to the assets and liabilities of
Dana's EMG Business based on preliminary estimates of their respective fair
values. The actual allocation of such consideration may differ from that
reflected in the unaudited pro forma combined financial data. Amounts allocated
will be based upon the estimated fair values at the time of the acquisition of
Dana's EMG Business which could vary from the amounts assumed. In addition, the
estimated transaction fees and expenses are assumed solely for the purpose of
presenting the unaudited pro forma combined financial data.

In connection with the acquisition, our plans anticipate that we will incur
approximately $35 million of restructuring costs related to severance and exit
costs for Dana-related employees and facilities, which we will account for as a
cost of acquisition (goodwill). In addition, we anticipate $10 million of
integration costs, which we will expense as we incur them. Of the aggregate
total of approximately $45 million, we expect to expend $30 million to $35
million in the first 18 months. As a result of the restructuring and integration
activities, we anticipate realizing significant cost savings. Neither the costs
of the restructuring and integration activities nor the resulting cost savings
have been included in the pro forma combined financial data.

The unaudited combined pro forma financial statements should be read in
conjunction with the financial statements and the notes thereto of our company
and of Dana's EMG Business included elsewhere in this prospectus and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.' The unaudited combined pro forma financial statements represent
management's best estimate of the effects of the acquisition of assets and
operating liabilities of Dana's EMG Business and do not purport to be indicative
of the results that would have actually been obtained had such acquisition been
consummated as of and for the dates and periods presented, or that may be
obtained in the future.

STANDARD MOTOR PRODUCTS, INC.
UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002

<Table>
<Caption>
STANDARD COMBINED
MOTOR PRO FORMA
PRODUCTS, DANA'S EMG RETAINED PRODUCT ACQUISITION-RELATED STATEMENT OF
INC.(1) BUSINESS(2) LINES-DANA(3) ADJUSTMENTS(4) OPERATIONS
------- ----------- ------------- -------------- ----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net sales.............................. $ 598,437 $300,254 $ (8,352) $ (7,938) $ 882,401
Cost of sales.......................... 440,893 296,787 (12,028) (22,070) 703,582
----------- -------- -------- -------- -----------
Gross profit........................ 157,544 3,467 3,676 14,132 178,819
Selling, general and administrative
expenses.............................. 132,476 64,355 196,831
Restructuring charges.................. 9,400 9,400
----------- -------- -------- -------- -----------
Operating income (loss)............. 25,068 (70,288) 3,676 14,132 (27,412)
Other income (expense) -- net.......... 3,187 (6,255) 6,000 2,932
Interest expense....................... 14,244 191 3,504 17,939
----------- -------- -------- -------- -----------
Earnings (loss) from continuing
operations before taxes............ 14,011 (76,734) 3,676 16,628 (42,419)
Income tax (benefit)................... 7,920 (30,032) 15,942 (6,188)
----------- -------- -------- -------- -----------
Earnings (loss) from continuing
operations......................... $ 6,091 $(46,702) $ 3,676 $ 704 $ (36,231)
----------- -------- -------- -------- -----------
----------- -------- -------- -------- -----------
PER SHARE DATA:
Basic earnings (loss) per share from
continuing operations................. $ 0.51 $ (2.03)
----------- -----------
----------- -----------
Diluted earnings (loss) per share from
continuing operations................. $ 0.51 $ (2.03)
----------- -----------
----------- -----------
Weighted average number of common
shares outstanding -- basic(5)........ 11,914,968 17,867,197
----------- -----------
----------- -----------
Weighted average number of common
shares and dilutive common shares(5).. 12,008,496 17,867,197
----------- -----------
----------- -----------
</Table>

- ---------

(1) Represents our historical statement of operations for the
year ended December 31, 2002, derived from our audited
consolidated financial statements, which are included in
this prospectus.

(2) Represents the historical statement of operations of Dana's
EMG Business for the year ended December 31, 2002, derived
from the related audited combined financial statements,
which are included in this prospectus.

(3) Represents the product lines of Dana's EMG Business that are
being retained by Dana and excluded from the acquisition.

(4) Represents the adjustments to give effect to the acquisition
of Dana's EMG Business as if it were consummated at
January 1, 2002. The following adjustments were made $ (in
thousands):

<Table>

(a) Eliminates historical net sales of Dana's EMG
Business to us....................................... $ (7,938)
--------
--------
(b) Cost of Sales:
Elimination of historical depreciation and
amortization (less $277 related to retained product
lines)............................................... $(16,832)
Depreciation of fixed assets at new cost basis........ 2,700
Elimination of historical cost of sales of Dana's EMG
Business net sales to us............................. (7,938)
--------
$(22,070)
--------
--------

(c) Represents $6,000 of transaction expenses incurred by
Dana's EMG Business directly related to our
acquisition of such business.

(d) Interest expense:
Removal of historical interest expense for borrowings
not assumed.......................................... $ (191)
Interest on promissory note to Dana (annual interest
rate of 9%).......................................... 1,359
Interest on additional borrowings under our revolving
credit facility ($42,940 x 4.75%).................... 2,040
Increase in historical borrowing rate under our
revolving credit facility (average borrowings of
$118,334 x .25%)..................................... 296
--------
$ 3,504
--------
--------

(e) Removal of historical income tax benefit related to
the filing of consolidated tax return under Dana...... $ 30,032
Net income tax benefit associated with losses before
income taxes, adjusted for changes in depreciation,
amortization and interest expense of Dana's EMG
Business.............................................. (14,108)
--------
$ 15,924
--------
--------
</Table>

(5) Pro forma weighted average number of common shares
outstanding include 5,952,229 of new shares, 1,202,229 of
which are assumed to be held by Dana.

STANDARD MOTOR PRODUCTS, INC.
UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003

STATEMENT OF OPERATIONS DATA:
Net sales........................... $ 135,725 $ 77,747 $(1,363) $ (2,055) $ 210,054
Cost of sales....................... 101,185 65,565 (2,695) (4,753) 159,302
----------- --------- ------- -------- -----------
Gross profit..................... 34,540 12,182 1,332 2,698 50,752
Selling, general and administrative
expenses........................... 32,212 14,682 46,894
Restructuring charges............... -- --
----------- --------- ------- -------- -----------
Operating income (loss).......... 2,328 (2,500) 1,332 2,698 3,858
Other income (expense) -- net....... (274) (92) (366)
Interest expense (income)........... 3,018 (79) 963 3,902
----------- --------- ------- -------- -----------
Earnings (loss) from continuing
operations before taxes........ (964) (2,513) 1,332 1,735 (410)
Income tax (benefit)................ (357) (982) 1,121 (218)
----------- --------- ------- -------- -----------
Earnings (loss) from continuing
operations..................... $ (607) $ (1,531) $ 1,332 $ 614 $ (192)
----------- --------- ------- -------- -----------
----------- --------- ------- -------- -----------
PER SHARE DATA:
Basic earnings (loss) per share from
continuing operations................. $ (0.05) $ (0.01)
----------- -----------
----------- -----------
Diluted earnings (loss) per share from
continuing operations................. $ (0.05) $ (0.01)
----------- -----------
----------- -----------
Weighted average number of common
shares outstanding -- basic(5)........ 11,972,853 17,925,082
----------- -----------
----------- -----------
Weighted average number of common
shares and dilutive common shares(5).. 11,972,853 17,925,082
----------- -----------
----------- -----------
</Table>

- ---------

(1) Represents our historical statement of operations for the
three months ended March 31, 2003, derived from our
condensed consolidated unaudited quarterly financial
statements, which are included in this prospectus.

(2) Represents the historical unaudited condensed combined
statement of operations of Dana's EMG Business for the three
months ended March 31, 2003, derived from the related
unaudited condensed combined financial statements, which are
included in this prospectus.

(3) Represents the product lines of Dana's EMG Business that are
being retained by Dana and excluded from the acquisition.

(4) Represents the adjustments to give effect to acquisition of
Dana's EMG Business as if it were consummated at January 1,
2002. The following adjustments were made:

<Table>

(a) Eliminates historical net sales of Dana's EMG
Business to us....................................... $(2,055)
-------
-------
(b) Cost of Sales:
Elimination of historical depreciation and
amortization (less $59 related to retained product
lines)............................................... $(3,373)
Depreciation of fixed assets at new cost basis........ 675
Elimination of historical cost of sales related to the
Dana EMG Business net sales to us.................... (2,055)
-------
$(4,753)
-------
-------
(c) Interest expense:
Removal of historical interest income................. $ 79
Interest on promissory note to Dana (annual interest
rate of 9.5%)......................................... 359
Interest on additional borrowings under our revolving
credit facility ($42,940 X 4.35%).................... 466
Increase in historical borrowing rate under our
amended revolving credit facility (average borrowings
of $94,293 X .25%)................................... 59
-------
$ 963
-------
-------

(d) Removal of historical income tax benefit related to
the filing of consolidated tax return under Dana..... $ 982
Net income tax associated with losses before income
taxes, adjusted for changes in depreciation,
amortization and interest expense of Dana's EMG
Business............................................. 139
-------
$ 1,121
-------
-------
</Table>

(5) Pro forma weighted average number of common shares
outstanding include 5,952,229 of new shares, 1,202,229 of
which are assumed to be held by Dana.

STANDARD MOTOR PRODUCTS, INC.
UNAUDITED COMBINED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 2003
(DOLLARS IN THOUSANDS)

<Table>
<Caption>
PRO FORMA ADJUSTMENTS
--------------------------------------------- COMBINED
RETAINED ACQUISITION- PRO FORMA
STANDARD MOTOR DANA'S EMG PRODUCT RELATED BALANCE
PRODUCTS, INC.(1) BUSINESS(2) LINES-DANA(3) ADJUSTMENTS(4) FINANCING(5) SHEET
----------------- ----------- ------------- -------------- ------------ -----

ASSETS:
Current assets:
Cash and cash equivalents....... $ 7,254 $ 1,002 $ (1,002) $(128,100) $128,100 $ 7,254
Accounts receivable, net........ 140,636 43,764 1,526 185,926
Inventories..................... 179,572 93,035 (5,578) 267,029
Other current assets............ 26,597 33,735 (32,974) 27,358
-------- -------- --------- --------- -------- --------
Total current assets......... 354,059 171,536 (38,028) (128,100) 128,100 487,567
Property, plant and equipment,
net of accumulated
depreciation.................... 101,183 60,264 (8,222) (36,042) 117,183
Goodwill, net.................... 16,683 -- 30,108 46,791
Other assets..................... 42,420 921 (921) 42,424
-------- -------- --------- --------- -------- --------
Total assets................. $514,345 $232,721 $ (47,121) $(134,034) $128,104 $693,965
-------- -------- --------- --------- -------- --------
-------- -------- --------- --------- -------- --------
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities:
Notes payable................... $ 4,703 $ 4,703
Current portion of long-term
debt............................ 3,755 -- 3,755
Accounts payable................ 41,233 31,369 (129) 72,473
Sundry payables and accrued
expenses....................... 51,460 32,535 (12,255) 71,740
-------- -------- --------- --------- -------- --------
Total current liabilities.... 101,151 63,904 (12,384) -- -- 152,671

Long-term debt................... 202,601 -- 58,040 260,641
Other liabilities................ 57,014 13,122 (13,122) 57,014
-------- -------- --------- --------- -------- --------
Total liabilities............ 360,766 77,026 (25,506) -- 58,040 470,326
-------- -------- --------- --------- -------- --------
Stockholders' equity:
Common stock.................... 26,649 -- 11,904 38,553
Capital in excess of par
value........................... 1,565 -- 58,156 59,721
Retained earnings............... 146,655 155,695 (21,661) (134,034) 146,655
Accumulated other
comprehensive loss............. (1,800) -- (1,800)
-------- -------- --------- --------- -------- --------
173,069 155,695 (21,661) (134,034) 70,060 243,129
Less: Treasury stock............ 19,490 -- 19,490
-------- -------- --------- --------- -------- --------
Total stockholders' equity... 153,579 155,695 (21,661) (134,034) 70,060 223,639
-------- -------- --------- --------- -------- --------
Total liabilities and
stockholders' equity....... $514,345 $232,721 $ (47,167) $(134,034) $128,100 $693,965
-------- -------- --------- --------- -------- --------
-------- -------- --------- --------- -------- --------
</Table>

- ---------

(1) Represents amounts derived from our condensed consolidated
unaudited balance sheet at March 31, 2003, which is included
in this prospectus.

(2) Represents amounts derived from the unaudited condensed
combined balance sheet of Dana's EMG Business at March 31,
2003, which is included in this prospectus.

(3) Represents the net assets of Dana's EMG Business that are
being retained by Dana at March 31, 2003 and excluded from
the acquisition, such net assets consist primarily of Dana's
deferred income taxes, and inventory and fixed assets of
product lines we are not purchasing.

(4) The acquisition of Dana's EMG Business has been included in
the pro forma combined balance sheet as if the acquisition
were consummated at March 31, 2003. Assuming the purchase
price is approximately $121 million, the excess of the
purchase price over the related net assets acquired is
determined as follows:

(footnotes continued on next page)

STANDARD MOTOR PRODUCTS, INC.
UNAUDITED COMBINED PRO FORMA BALANCE SHEET -- (CONTINUED)
AS OF MARCH 31, 2003

(footnotes continued from previous page)

<Table>
<Caption>
(DOLLARS IN
THOUSANDS)

Total estimated purchase price.............................. $ 121,000
Historical net assets at March 31, 2003..................... (155,695)
Net assets retained by Dana................................. 21,661
Net tangible assets adjustment based on fair value.......... 36,042
---------
Net tangible assets acquired................................ 23,008
Acquisition costs........................................... 7,100
---------
Excess of purchase price over net tangible assets
acquired................................................... $ 30,108
---------
---------

The excess of the purchase price over the related net assets excludes for
purposes of the pro forma balance sheet, approximately $35 million of
restructuring costs related to severance and exit costs for Dana-related
employees and facilities that are anticipated as a direct result of the
acquisition.
</Table>

(5) Represents the net proceeds of this offering, new borrowings
under our revolving credit facility, common stock to be
issued to Dana and an unsecured promissory note payable to
Dana.

<Table>
<Caption>
(DOLLARS IN
THOUSANDS)

Proceeds of the offering.................................... $ 59,660
Common stock to be issued to Dana........................... 15,100
--------
74,760
Less: fees associated with the offering..................... (4,700)
--------
70,060
--------
Net proceeds under our amended revolving credit facility.... 42,940
Promissory note to Dana..................................... 15,100
--------
58,040
--------
Total financing.......................................... $128,100
--------
--------
</Table>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data at and for the years
ended December 31, 1998, 1999, 2000, 2001 and 2002 have been derived from our
audited consolidated annual financial statements. The following selected
consolidated financial data at and for the three months ended March 31, 2002 and
2003 have been derived from our condensed consolidated quarterly financial
statements, which are unaudited but in the opinion of our management reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results of operations for such periods. Results of
operations for interim periods are not necessarily indicative of results to be
expected for the full fiscal years. You should read this data in conjunction
with 'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and our consolidated financial statements and the notes thereto
included elsewhere in this prospectus.

STANDARD MOTOR PRODUCTS, INC.

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- -------------------
1998 1999 2000 2001 2002 2002 2003
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net sales(1).................... $640,179 $653,451 $601,392 $591,652 $598,437 $126,321 $135,725
Gross profit(1)................. 183,657 170,809 162,701 139,055 157,544 31,170 34,540
Operating income................ 43,781 30,223 30,711 15,123 25,068 107 2,328
Earnings (loss) from continuing
operations(2).................. 22,257 7,625 9,729 (2,485) 6,091 (1,921) (607)
Net earnings (loss)(3)(4)....... 22,257 7,625 9,729 (2,485) (30,556) (20,590) (955)
PER SHARE DATA:
Earnings (loss) from continuing
operations:
Basic........................ $ 1.70 $ .58 $ .82 $ (.21) $ .51 $ (.16) $ (.05)
Diluted...................... 1.69 .58 .81 (.21) .51 (.16) (.05)
Net earnings (loss) per common
share:
Basic........................ 1.70 .58 .82 (.21) (2.57) (1.74) (.08)
Diluted...................... 1.69 .58 .81 (.21) (2.54) (1.74) (.08)
Cash dividends per common
share.......................... .16 .34 .36 .36 .36 .09 .09
OTHER DATA:
EBITDA(5)....................... $ 59,527 $ 45,210 $ 50,083 $ 36,795 $ 44,383 $ 4,673 $ 6,080
Depreciation and amortization... 17,274 17,230 18,922 18,909 16,128 3,898 4,026
Capital expenditures............ 15,325 14,423 16,652 13,740 7,598 2,508 1,715
Dividends....................... 2,092 4,456 4,324 4,236 4,290 1,064 1,076
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents....... $ 23,457 $ 40,380 $ 7,699 $ 7,496 $ 9,690 $ 2,520 $ 7,254
Working capital................. 178,324 205,806 188,091 228,356 216,932 250,677 252,908
Total assets.................... 521,556 556,021 549,396 509,429 490,758 523,051 514,345
Total debt...................... 159,708 195,425 202,591 205,925 176,917 222,852 211,059
Long-term debt (excluding
current portion)............... 133,749 163,868 150,018 200,066 169,440 220,260 202,601
Stockholders' equity............ 205,025 203,518 194,305 185,687 153,881 164,886 153,579
</Table>

- ---------

(1) On January 1, 2002, we adopted the guidelines of the merging Issues Task
Force (EITF) entitled 'Accounting for Certain Sales Incentives' and 'Vendor
Income Statement Characterization of Consideration Paid to a Reseller of
the Vendor's Products.' These guidelines address when sales
incentives and discounts should be recognized and the
accounting for certain costs incurred by a vendor on behalf
of a customer, as well as where the related revenues and
expenses should be classified in the financial statements.
Net sales and gross profit amounts for the periods prior to
2002 included in this prospectus have been reclassified to
conform to our 2002 presentation.

(2) Effective January 1, 2003, we adopted the provisions of
Statement of Financial Accounting Standards ('SFAS')
No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13 and Technical Corrections
('Statement No. 145'). Statement No. 145 eliminates the
automatic classification of gain or loss on extinguishment
of debt as an extraordinary item of income and requires that
such gain or loss be evaluated for extraordinary
classification under the criteria of Accounting Principles
Board ('APB') No. 30, Reporting Results of Operations. As a
result, the extraordinary loss on the early extinguishment
of debt

(footnotes continued on next page)

(footnotes continued from previous page)

of approximately $1.1 million, $0.5 million and
$2.8 million has been reclassified to interest expense for
December 31, 1999, 2000 and 2001, respectively.

(3) Effective January 1, 2002, we adopted the provisions of
Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets ('SFAS No. 142'). In
accordance with SFAS No. 142, goodwill will no longer be
amortized, but instead, will be subject to an annual review
for potential impairment. As a result, we recorded an
impairment loss on goodwill as a cumulative effect of
accounting change of $18.3 million, net of tax, or $1.55 per
diluted share, during the first quarter of 2002. The
impairment loss relates to goodwill pertaining to certain of
our reporting units with our European Division and with our
Temperature Control Division, and we recorded charges of
$10.9 million related to our European Division and $7.4
million related to our Temperature Control Division. Upon
adoption of SFAS No. 142, our earnings before cumulative
effect of accounting change for basic and diluted earnings
per share adjusted to exclude goodwill amortization expense
(net of tax) are as follows:

<Table>
<Caption>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS,
EXPECT PER SHARE DATA)

Reported earnings (loss) before cumulative effect of
accounting change.......................................
$22,257 $ 7,625 $ 9,729 $(2,485) $(12,206)
Add back: goodwill amortization expense, net of tax...... 2,335 2,481 2,574 2,727 --
------- ------- ------- ------- --------
Adjusted earnings before cumulative effect of accounting
change.................................................. $24,592 $10,106 $12,303 $ 242 $(12,206)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Basic earnings per share:
Reported basic earnings (loss) per share before
cumulative effect of accounting change.............. $ 1.70 $ 0.58 $ 0.82 $ (0.21) $ (1.03)
Add back: goodwill amortization expense, net of tax... 0.18 0.19 0.22 0.23 --
------- ------- ------- ------- --------
Adjusted basic earnings per share before cumulative
effect of accounting change......................... $ 1.88 $ 0.77 $ 1.04 $ 0.02 $ (1.03)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Diluted earnings per share:
Reported diluted earnings per share before cumulative
effect of accounting change......................... $ 1.69 $ 0.58 $ 0.81 $ (0.21) $ (1.01)
Add back: goodwill amortization expense, net of tax... 0.18 0.19 0.21 0.23 --
------- ------- ------- ------- --------
Adjusted diluted earnings per share before cumulative
effect of accounting change......................... $ 1.87 $ 0.77 $ 1.02 $ 0.02 $ (1.01)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
</Table>

Upon adoption of SFAS No. 142, our net earnings (loss) for basic and diluted
earnings per share adjusted to exclude goodwill amortization expense (net of
tax) are as follows:

<Table>
<Caption>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS,
EXPECT PER SHARE DATA)

Reported net earnings (loss)............................. $22,257 $ 7,625 $ 9,729 $(2,485) $(30,556)
Add back: goodwill amortization expense, net of tax...... 2,335 2,481 2,574 2,727 --
------- ------- ------- ------- --------
Adjusted net earnings (loss)............................. $24,592 $10,106 $12,303 $ 242 $(30,556)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Basic net earnings (loss) per share:
Reported basic net earnings (loss) per share.......... $ 1.70 $ 0.58 $ 0.82 $ (0.21) $ (2.57)
Add back: goodwill amortization expense, net of tax... 0.18 0.19 0.22 0.23 --
------- ------- ------- ------- --------
Adjusted basic net earnings (loss) per share.......... $ 1.88 $ 0.77 $ 1.04 $ 0.02 $ (2.57)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Diluted net earnings (loss) per share:
Reported diluted net earnings (loss) per share........ $ 1.69 $ 0.58 $ 0.81 $ (0.21) $ (2.54)
Add back: goodwill amortization expense, net of tax... 0.18 0.19 0.21 0.23 --
------- ------- ------- ------- --------
Adjusted diluted net earnings (loss) per share........ $ 1.87 $ 0.77 $ 1.02 $ 0.02 $ (2.54)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
</Table>

(4) For 2002, we recorded an after tax charge of $18.3 million
as a loss from discontinued operations to account for
potential costs associated with our asbestos-related
liability. See 'Risk Factors -- We may be materially
adversely affected by asbestos claims arising from products
sold by our former brake business, as well as by other
product liability claims' for a more detailed discussion of
the risks we face in connection with our exposure to
asbestos- related claims.

(5) EBITDA is defined as earnings from continuing operations
before interest expense, income taxes, depreciation and
amortization. Under our revolving credit facility, we are
required to maintain specified levels of EBITDA at the end
of each fiscal quarter through June 30, 2004 and, in
consideration of the SEC's Regulation G, we consider EBITDA
primarily as a measure of liquidity. The following is a
reconciliation of net cash provided by (used in) operating
activities to EBITDA:

EBITDA RECONCILIATION

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ -----------------------------------
1998 1999 2000 2001 2002 2002 2003
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

Net cash provided by (used in)
operating activities................ $110,376 $25,984 $ (953) $40,189 $60,183 $(13,604) $(34,266)
Loss (gain) on disposal of property,
plant and equipment................. (226) 2,564 99 265 97 140 --
Equity income (loss) from joint
ventures............................ (2,078) (4,118) 702 844 352 113 (72)
Employee stock ownership plan
allocation.......................... (1,665) (1,739) (1,032) (713) (1,230) (163) (251)
Tax benefit related to employee stock
options............................. (510) (290) -- (48) (80) -- --
Increase (decrease) in deferred
income taxes........................ (2,992) 4,552 897 3,628 (2,550) -- --
Loss on sale of business............. (1,500) -- -- -- -- -- --
Goodwill impairment charge........... -- -- -- -- (3,334) -- --
Change in assets and liabilities, net
of effects from acquisitions........ (61,874) (2,098) 28,938 (27,741) (31,219) 15,491 38,008
Provision for income taxes........... 3,577 2,637 2,522 (831) 7,920 (766) (357)
Interest expense, net................ 16,419 17,718 18,910 21,202 14,244 3,462 3,018
-------- ------- ------- ------- ------- -------- --------
EBITDA............................... $ 59,527 $45,210 $50,083 $36,795 $44,383 $ 4,673 $ 6,080
-------- ------- ------- ------- ------- -------- --------
-------- ------- ------- ------- ------- -------- --------
</Table>

The following selected combined financial data at and for the years ended
December 31, 2000, 2001 and 2002 have been derived from the audited combined
financial statements of Dana's EMG Business. The following selected combined
financial data at and for the three months ended March 31, 2002 and 2003 have
been derived from the unaudited condensed combined quarterly financial
statements of Dana's EMG Business. Results of operations for interim periods are
not necessarily indicative of results to be expected for the full fiscal years.
You should read this data in conjunction with the combined financial statements
and the notes thereto of Dana's EMG Business included elsewhere in this
prospectus.

DANA'S ENGINE MANAGEMENT GROUP(1)

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- -------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

STATEMENT OF OPERATIONS DATA:
Net sales........................................ $357,475 $297,796 $300,254 $ 71,647 $ 77,747
Loss before income taxes......................... (87,797) (101,531) (76,734) (17,335) (2,513)
Net loss......................................... (52,121) (62,467) (46,702) (10,557) (1,531)
OTHER DATA:
EBITDA(2)........................................ $(68,904) $(81,706) $(59,434) $(12,626) $ 840
Depreciation and amortization.................... 18,802 19,216 17,109 4,673 3,432
Capital expenditures............................. 21,557 1,378 2,777 151 624
BALANCE SHEET DATA (AT PERIOD END)(3):
Cash and cash equivalents........................ $ -- $ 292 $ 1,126 $ 1,054 $ 1,002
Working capital.................................. 172,574 93,027 88,453 110,169 107,632
Total assets..................................... 391,394 262,082 227,379 267,804 232,721
Combined equity.................................. 317,940 170,342 145,852 158,590 155,695
</Table>

- ---------

(footnotes continued on next page)

(footnotes continued from previous page)

EBITDA RECONCILIATION

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ -------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

Net cash provided by (used in) operating activities....... $ (7,476) $ 54,276 $ (5,600) $ (7,702) $(12,792)
(Loss) gain on disposal of property, plant and
equipment................................................ (754) 940 (548) 27 --
Asset impairment.......................................... -- (25,331) (2,887) (640) --
Change in deferred income taxes........................... (13,866) 1,301 (7,222) -- --
Change in assets and liabilities.......................... (11,223) (74,437) (13,336) 2,431 14,693
Provision for income taxes................................ (35,676) (39,064) (30,032) (6,778) (982)
Interest expense, net..................................... 91 609 191 36 (79)
-------- -------- -------- -------- --------
EBITDA.................................................... $(68,904) $(81,706) $(59,434) $(12,626) $ 840
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</Table>

(3) Balance sheet data at December 31, 2000 were derived from the financial
records of Dana's EMG Business and are unaudited.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial
statements and the notes thereto. This discussion summarizes the significant
factors affecting our results of operations and the financial condition of our
business during the first fiscal quarter of 2003 and each of the fiscal years in
the three year period ended December 31, 2002.

BUSINESS OVERVIEW

CUSTOMERS. We distribute our products through a variety of distribution
channels, including wholesale distributors, retail chains, service chains and
original equipment dealers. Our warehouse distribution channel represents 63% of
our consolidated net sales for the three months ended March 31, 2003 and 61% of
our consolidated net sales for 2002. Our retail channel of distribution has
grown significantly from approximately $41 million in consolidated net sales to
retailers in 1993 (representing 7% of consolidated net sales) to approximately
$138 million in 1997 (representing 26% of consolidated net sales), and to
approximately $169 million in 2002 (representing 28% of consolidated net sales).
In 1997, we commenced distributing our products through the original equipment
service supplier channel, and sold approximately $3 million in consolidated net
sales to original equipment service suppliers (representing 0.6% of consolidated
net sales), which increased to approximately $23 million in 2002 (representing
3.8% of consolidated net sales).

The automotive aftermarket is highly competitive. We have in the past and
may in the future lose customers or lose a particular product line of a customer
over time, and to generate new customers to replace ones we have lost. For
example, in early 2000 we lost a major temperature control retail customer and
then regained this customer in 2001. Recently, we lost AutoZone as a customer
for our Temperature Control Division, which had a negative effect on our
consolidated net sales for the three months ended March 31, 2003. We estimate
that our consolidated net sales in 2003 will decline by approximately
$25 million as a result of losing a majority of our business with AutoZone.

SEASONALITY. Historically, our operating results have fluctuated by quarter,
with the greatest sales occurring in the second and third quarters of the year
and revenues generally being recognized at the time of shipment. It is in these
quarters that demand for our products is typically the highest, specifically in
the Temperature Control segment of our business. In addition to this
seasonality, the demand for our Temperature Control products during the second
and third quarters of the year may vary significantly with the summer weather.
For example, a cool summer may lessen the demand for our Temperature Control
products, while a hot summer may increase such demand. As a result of this
seasonality and variability in demand of our Temperature Control products, our
working capital requirements peak near the end of the second quarter, as the
inventory build-up of air conditioning products is converted to sales and
payments on the receivables associated with such sales have yet to be received.
During this period, our working capital requirements are typically funded by
borrowing from our revolving credit facility.

See 'Risk Factors -- Our business is seasonal and is subject to substantial
quarterly fluctuations, which impact our quarterly performance and working
capital requirements' for a more detailed discussion of the risks related to the
seasonality of our business.

INVENTORY MANAGEMENT. We instituted an aggressive inventory reduction
campaign in 2001. We targeted a minimum $30 million inventory reduction in 2001,
but exceeded our goal by reducing inventory by $57 million that year.
Importantly, while reducing inventory levels, we maintained customer service
fill rate levels of approximately 93%. In 2002, we further reduced inventory by
an additional $8 million.

We face inventory management issues as a result of warranty and overstock
returns. Many of our products carry a warranty ranging from a 90-day limited
warranty to a lifetime limited warranty, which generally covers defects in
materials or workmanship and failure to meet industry published specifications.
In addition to warranty returns, we also permit our customers to return products
to us within customer-specific limits in the event that they have overstocked
their inventories. In particular, the seasonality of demand for our Temperature
Control Division's products requires that we increase our inventory during the
winter season in preparation of the summer selling season and customers
purchasing such inventory have the right to make returns. In 1999, our profits
were negatively affected by warranty and overstock returns in excess of our
initial estimates. See 'Risk Factors -- We may incur material losses and
significant costs as a result of warranty-related returns by our customers in
excess of anticipated amounts' and 'Risk Factors -- Our profitability may be
materially adversely affected as a result of overstock inventory-related returns
by our customers in excess of anticipated amounts' for more detailed discussions
of the risks we face in connection with warranty and overstock returns by our
customers.

In order to better control warranty and overstock return levels, beginning
in 2000 we tightened the rules for authorized warranty returns, placed further
restrictions on the amounts customers can return and instituted a program so
that our management can better estimate potential future product returns. In
addition, with respect to our air conditioning compressors, which products
account for our most significant warranty returns, we established procedures
whereby a warranty will be voided if a customer does not follow a twelve step
warranty return process.

ACQUISITION. On February 7, 2003, we signed an agreement to purchase Dana's
EMG Business, for a purchase price equal to the closing net book value of the
business, subject to a maximum purchase price of $125 million. Dana's EMG
Business is a leading manufacturer of aftermarket parts in the automotive
industry focused exclusively on engine management. Similar to our Engine
Management Division, Dana's EMG Business manufactures ignition systems, emission
parts, engine computers, ignition wires, battery cables and fuel system parts.
Customers of Dana's EMG Business include NAPA Auto Parts, CSK Auto, O'Reilly
Automotive and Pep Boys, none of which is currently a material customer of our
Engine Management Division. We intend to integrate Dana's EMG Business into our
Engine Management Division within 18 months from the closing of the acquisition.

ASBESTOS CONTINGENCIES. In 1986, we acquired a brake business, which we
subsequently sold in March 1998 and which is accounted for as discontinued
operations in the accompanying consolidated annual and quarterly financial
statements. When we originally acquired this brake business, we assumed future
liabilities relating to any alleged exposure to asbestos-containing products
manufactured by the seller of the acquired brake business. In accordance with
the related purchase agreement, we agreed to assume the liabilities for all new
claims filed on or after September 1, 2001. Our ultimate exposure will depend
upon the number of claims filed against us on or after September 1, 2001 and the
amounts paid for indemnity and defense thereof. To date, the amounts paid for
settled claims have been immaterial. We do not have insurance coverage for the
defense and indemnity costs associated with the claims we face.

In evaluating our potential asbestos-related liability, we have considered
various factors including, among other things, an actuarial study performed by a
leading actuarial firm with expertise in assessing asbestos-related liabilities,
our settlement amounts to date, the incidence of claims, the mix of the injuries
of the plaintiffs, the number of cases pending against us and whether there are
any co-defendants, the jurisdiction in which lawsuits are filed, and the status

and results of settlement discussions. Actuarial consultants with experience in
assessing asbestos-related liabilities conducted a study to estimate our
potential claim liability as of September 30, 2002. The methodology used to
project asbestos-related liabilities and costs in the study considered:
(1) historical data available from publicly available studies; (2) an analysis
of our recent claims history to estimate likely filing rates for the remainder
of 2002 through 2052; (3) an analysis of our currently pending claims; and
(4) an analysis of our settlements to date in order to develop average
settlement values. Based upon all the information considered by the actuarial
firm, the actuarial study estimated an undiscounted liability for settlement
payments ranging from $27.3 million to $58 million for the period through 2052.

Accordingly, based on the information contained in the actuarial study and
all other available information that we considered, we recorded an after tax
charge of $16.9 million as a loss from discontinued operations during the third
quarter of 2002 to reflect such liability. For the year ended December 31, 2002,
the total amount of the loss from discontinued operations was $18.3 million. At
December 31, 2001, approximately 100 cases were outstanding for which we were
responsible for any related liabilities. At December 31, 2002, the number of
cases outstanding for which we were responsible for related liabilities
increased to approximately 2,500, which include approximately 1,600 cases filed
in December 2002 in Mississippi. We believe that these Mississippi cases filed
against us in December 2002 were due in large part to potential plaintiffs
accelerating the filing of their claims prior to the effective date of
Mississippi's tort reform statute in January 2003, which statute eliminated the
ability of plaintiffs to file consolidated cases. At March 31, 2003,
approximately 2,700 cases were outstanding for which we were responsible for any
related liabilities. We concluded that no amount within the range of settlement
payments was more likely than any other and, therefore, recorded the low end of
the range as the liability associated with future settlement payments through
2052 in our condensed consolidated financial statements, in accordance with
generally accepted accounting principles. Given the uncertainties associated
with projecting such matters into the future, the short period of time that we
have been responsible for defending these claims, and other factors outside our
control, we can give no assurance that additional provisions will not be
required. We will continue to monitor the circumstances surrounding these
potential liabilities in determining whether additional provisions may be
necessary. We currently intend to perform an annual actuarial analysis updating
our assessment of our potential claim liability during the third quarter of each
year for the foreseeable future. At the present time, however, we do not believe
that any additional provisions would be reasonably likely to have a material
adverse effect on our liquidity or consolidated financial position. See 'Risk
Factors -- We may be materially adversely affected by asbestos claims arising
from products sold by our former brake business, as well as by other product
liability claims' for a more detailed discussion of the risks we face in
connection with our exposure to asbestos-related claims.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2003 TO THE THREE MONTHS ENDED
MARCH 31, 2002

SALES. Consolidated net sales in the three months ended March 31, 2003 were
$135.7 million, an increase of $9.4 million, or 7.4%, compared to $126.3 million
in the three months ended March 31, 2002. Contributing to the sales increase was
Engine Management and Europe, which accounted for $10.8 million and
$2.4 million, respectively. Facilitating the increase in Engine Management was
the expansion of business of certain existing retail customers and new
traditional business. The increase was offset by a decline of $3.6 million of
net sales in Temperature Control, primarily due to the loss of the AutoZone
business, a retail customer. We estimate that our consolidated net sales in 2003
will decline by approximately $25 million as a result of losing a majority of
our business with AutoZone.

GROSS MARGINS. Overall gross margins for the three months ended March 31,
2003 reflected a slight improvement to 25.4% from 24.7%. The loss in business in
Temperature Control noted

above may negatively effect our overhead absorption with decreased volumes.
Appropriate cost cutting measures are being considered to mitigate such loss at
the operating earnings level.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $1.1 million to $32.2 million in the three
months ended March 31, 2003 compared to $31.1 million in the three months ended
March 31, 2002. This increase was primarily due to the overall increase in net
sales. However, as a percentage of net sales, selling, general and
administrative expenses decreased to 23.7% in the three months ended March 31,
2003 from 24.6% in the three months ended March 31, 2002.

GOODWILL. Effective January 1, 2002, we adopted the provisions of Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
('SFAS No. 142'). In accordance with SFAS No. 142, goodwill is no longer
amortized, but instead, is subject to an annual review for potential impairment.
Using the discounted cash flows method, based on our weighted average cost of
capital and market multiples, we reviewed the fair values of each of our
reporting units. The decline in economic and market conditions, higher
integration costs than anticipated and the general softness in the automotive
aftermarket caused a decrease in the fair values of certain of our reporting
units. As a result, we recorded an impairment loss on goodwill as a cumulative
effect of accounting change of $18.3 million, net of tax, or $1.55 per diluted
share during the three months ended March 31, 2002. The impairment loss relates
to goodwill pertaining to certain of our reporting units within our Europe
Division and within our Temperature Control Division and we recorded a charge of
$10.9 million and $7.4 million, respectively.

OPERATING INCOME. Operating income increased by $2.2 million to $2.3 million
in the three months ended March 31, 2003 compared to $0.1 million in the three
months ended March 31, 2002. This increase was primarily due to the overall
increase in net sales and our continued cost reduction activities.

OTHER INCOME (EXPENSE), NET. Other income (expense), net decreased primarily
due to losses related to joint ventures and unfavorable foreign exchange losses.

INTEREST EXPENSE. Interest expense decreased by $0.4 million in the three
months ended March 31, 2003 compared to the same period in 2002, due to lower
average borrowings and lower interest rates.

INCOME TAX PROVISION. The effective tax rate for continuing operations
increased to 37% in the three months ended March 31, 2003 from 29% in the three
months ended March 31, 2002, primarily due to lower earnings at our foreign
operations and operating losses in our European Division, for which we are
recording no income tax benefit. The 37% current effective tax rate reflects our
anticipated tax rate for the balance of the year.

LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations
reflects the charges associated with asbestos, including legal expenses. We
recorded $0.3 million as a loss from discontinued operations for each of the
three months ended March 31, 2003 and 2002. As discussed in Note 14 of the notes
to the our condensed consolidated quarterly financial statements, we are
responsible for certain future liabilities relating to alleged exposure to
asbestos containing products. Based on the information contained in the
September 2002 actuarial study, which estimated an undiscounted liability for
settlement payments ranging from $27.3 million to $58 million, and all other
available information that we considered, and as further set forth in such Note
14, we recorded an after tax charge of $16.9 million as a loss from discontinued
operations during the third quarter of 2002 to reflect such liability, excluding
legal costs. We concluded that no amount within the range of settlement payments
was more likely than any other and, therefore, recorded the low end of the range
as the liability associated with future settlement payments through 2052 in our
condensed consolidated quarterly financial statements, in accordance with
generally accepted accounting principles.

COMPARISON OF FISCAL YEARS 2002 AND 2001

SALES. On a consolidated basis, net sales for 2002 were $598.4 million, an
increase of $6.8 million compared to $591.6 million in 2001. The increase was
driven by a $17.6 million increase

in Engine Management, year over year. New business was the primary contributor
with gains achieved in the retail business where certain customers expanded
their own business; in new wire and cable business acquired from an existing
customer; and in new original equipment customers acquired through our
acquisition of Sagem Inc. in May 2002.

With respect to Temperature Control, net sales for 2002 decreased by $14.8
million to $255.1 million. Net sales were unfavorable due to a combination of a
partial loss in business with a significant retail customer in 2002; 2001 net
sales including approximately $7 million of 'pipeline' orders for a new customer
which did not repeat in 2002; and distributors 'working off' inventory left over
from previous mild summer seasons.

GROSS MARGINS. Gross margins, as a percentage of consolidated net sales,
increased to 26.3% in 2002 from 23.5% in 2001. The improvement in gross margins
reflects the return in 2002 to more normal production levels, as the aggressive
and successful inventory reduction campaign in 2001 benefited 2002, in both of
our major segments. Engine Management gross margins improved approximately 4
percentage points, while Temperature Control improved approximately 3.7
percentage points. 2002 gross margins also benefited from a decrease in warranty
returns in both Engine Management and Temperature Control. Overall, warranty
returns improved by approximately 1 percentage point, as a percentage of net
sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $129.1 million or 21.6% of net sales in
2002, from $123.9 million or 20.9% of net sales in 2001. Contributing to the
increase was approximately $2 million of restructuring costs related to the
consolidation of certain manufacturing and distribution facilities within the
Temperature Control Division. Also contributing to the overall increase was
higher insurance and employee benefit costs.

GOODWILL. Effective January 1, 2002, we adopted the provisions SFAS
No. 142. In accordance with SFAS No. 142, Goodwill will no longer be amortized,
but instead will be subject to an annual review for potential impairment. Using
the discounted cash flows method, based on our weighted average cost of capital
and market multiples, we reviewed the fair values of each of our reporting
units. The recent decline in economic and market conditions, higher integration
costs than anticipated and the general softness in the automotive aftermarket
has caused a decrease in the fair values of certain of our reporting units. As a
result, we recorded an impairment loss on goodwill as a cumulative effect of
accounting change of $18.3 million, net of tax, or $1.55 per diluted share
during the first quarter of 2002. The impairment loss relates to goodwill
pertaining to certain of our reporting units within our European Division and
our Temperature Control Division, and we recorded charges of $10.9 million
related to our European Division and $7.4 million related to our Temperature
Control Division.

During the fourth quarter of 2002, we completed our review of goodwill for
potential impairment. After giving consideration to 2002 losses in Europe and
budgeted 2003 losses, we wrote-off the remaining goodwill balance of $3.3
million associated with Engine Management reporting unit of the European
Division. With respect to the European Division, approximately $1.4 million of
goodwill remains on the December 31, 2002 balance sheet, all of which pertains
to the Temperature Control Division.

OTHER INCOME. Other income, net increased approximately $0.4 million over
2001. Contributing to the increase was the elimination of fees related to an
accounts receivable sales arrangement eliminated in April of 2001.

INTEREST EXPENSE. Interest expense decreased by approximately $7 million, as
compared 2001. Contributing to overall decrease was lower borrowings (during
2002 total debt was reduced approximately $29 million) and lower interest rates.
Effective January 1, 2003, we adopted the provisions of Statement of Financial
Accounting Standards ('SFAS') No. 145, Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13 and Technical Corrections ('Statement
No. 145'). Statement No. 145 eliminates the automatic classification of gain or
loss on extinguishment of debt as an extraordinary item of income and requires
that such gain or loss be evaluated for extraordinary classification under the
criteria of Accounting Principles Board

('APB') No. 30, Reporting Results of Operations ('APB No. 30'). As a result, we
reclassified the $2.8 million extraordinary loss on the early extinguishment of
debt recorded in 2001 to interest expense.

INCOME TAX PROVISION. The overall effective tax rate increased from 25% in
2001 to 57% in 2002. The significant increase is primarily the result of the
operating losses in our European Division, for which no income tax benefit has
been recorded because it is more likely than not that such benefit will not be
realized in the near future. Supplementing the effect Europe had on the
effective rate is the increase in our domestic earnings as a percentage of
overall earnings before taxes.

LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations
reflects the charges associated with asbestos, including legal expenses. As
discussed in Note 18 of the notes to the consolidated financial statements, we
are responsible for certain future liabilities relating to alleged exposure to
asbestos-containing products. Based on the information contained in the
September 2002 actuarial study, which estimated an undiscounted liability for
settlement payments ranging from $27.3 million to $58 million and all other
available information considered by us, and as further set forth in such Note
18, we recorded an after tax charge of $16.9 million as a loss from discontinued
operations during the third quarter of 2002 to reflect such liability. For the
year ended December 31, 2002, the total amount of the loss from discontinued
operations was $18.3 million. We concluded that no amount within the range of
settlement payments was more likely than any other and, therefore, recorded the
low end of the range as the liability associated with future settlement payments
through 2052 in our consolidated financial statements, in accordance with
generally accepted accounting principles. Total legal expenses associated with
asbestos-related matters totaled $0.9 million in 2002.

COMPARISON OF FISCAL YEARS 2001 AND 2000

SALES. After giving consideration to the adoption of Emerging Issues Task
Force guidelines entitled 'Accounting for Certain Sales Incentives' and 'Vendor
Income Statement Characterization of Consideration Paid to a Reseller of the
Vendor's Products', consolidated net sales in 2001 were $591.7 million, a
decrease of $9.7 million compared to consolidated net sales of $601.4 million in
2000. The decrease in consolidated net sales was a result of decreases in our
existing traditional business lines and higher costs for adding a new customer.
The decrease was mitigated by the Engine Management Division, which benefited
from a full year of sales to the new major customer added during the third
quarter of 2000 (with incremental sales of approximately $6 million in 2001),
along with additional wire set business from a major group of warehouse
distributors. The Temperature Control Division regained a major retail customer
we had lost in early 2000 (this customer accounted for consolidated net sales of
approximately $30 million in 2001, excluding filling the initial 'pipeline' of
orders from such customer). Excluding this new business, sales to existing
accounts decreased, primarily a result of another cool summer for air
conditioning, and the continuing inventory reduction program on the part of many
of our customers.

GROSS MARGINS. Gross margins, as a percentage of consolidated net sales,
decreased to 23.5% in 2001, from 27.1% in 2000. Gross margins in our Engine
Management Division were 26.4% in 2001 compared to 29.4% in 2000. Gross margins
in our Temperature Control Division were 18.2% in 2001 compared to 23.4% in
2000. The decrease in gross margins was primarily due to our planned inventory
reduction programs. The reduction in gross margins was across all product lines
as we originally targeted a minimum $30 million inventory reduction in 2001.
Actual inventory reduction amounted to $57 million, while we maintained high
customer service fill levels. These changes reflect the impact of underabsorbed
overhead costs as a result of cutting production and temporarily closing
manufacturing facilities at both Engine Management and Temperature Control
facilities.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased by $8 million to $124 million in 2001,
compared to $132 million in 2000. This decrease reflected the focus on our cost
reduction efforts, with benefits primarily in the marketing and distribution
areas in our Temperature Control Division.

INCOME FROM OPERATIONS. Operating income decreased by $15.6 million compared
to 2000, primarily due to the lower gross margins as discussed above.

OTHER INCOME (EXPENSE), NET. Other income (expense), net increased by $2.3
million compared to 2000. The increase was primarily due to the reduction of
fees related to the termination of the sale of accounts receivable agreement and
an increase in interest and dividend income.

INTEREST EXPENSE. Interest expense increased by $2.3 million in 2001
compared to 2000 as a result of fees incurred in connection with the early
extinguishment of debt. Effective January 1, 2003, we adopted the provisions of
Statement No. 145. Statement No. 145 eliminates the automatic classification of
gain or loss on extinguishment of debt as an extraordinary item of income and
requires that such gain or loss be evaluated for extraordinary classification
under the criteria of APB No. 30. As a result, the extraordinary loss on the
early extinguishment of debt of approximately $0.5 million and $2.8 million has
been reclassified to interest expense for December 31, 2000 and 2001,
respectively.

INCOME TAX PROVISION. Income tax expense decreased to $(1.0) million in 2001
from $2.5 million in 2000. The decrease was primarily due to overall lower
earnings. The effective tax rate increased from 21% in 2000 to 25% in 2001. The
increase was primarily due to a decrease in earnings from our foreign
subsidiaries, which have lower tax rates than the United States statutory rate.

IMPACT OF INFLATION

Although inflation is not a significant issue, management believes it will
be able to continue to minimize any adverse effect of inflation on earnings
through cost reduction programs, including the sale of manufactured products,
and, where competitive situations permit, selling price increases.

FUTURE RESULTS OF OPERATIONS

We continue to face competitive pressures. In order to sell at competitive
prices while maintaining profit margins we are continuing to focus on overhead
and cost reductions.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES. During the three months ended March 31, 2003, cash
used in operations amounted to $34.3 million, compared to $13.6 million in the
same period of 2002. The increase is primarily attributable to payments in
accounts payable and reductions in accrued expenses and other liablities. The
increase was partially offset by lower increases in accounts receivable and
inventory.

During the year ended December 31, 2002, cash provided by operations
amounted to $60.2 million, compared to $40.2 million in 2001 and cash used in
operations of $1 million in 2000. The improvement in 2002 was primarily
attributable to improved earnings from continuing operations, higher accounts
payable and continued reductions in inventory. The improvement in 2001 was
primarily attributable to our efforts to reduce inventory levels from their
elevated levels of December 31, 2000.

For the year ended December 31, 2002, inventory decreased by an additional
$8 million over the $57 million reduction in 2001, which resulted primarily from
reduced production and purchases, and where needed, the temporary closing of
manufacturing facilities. Reductions were realized in both the Engine Management
and Temperature Control Divisions. Inventory turnover was 2.3x in 2002, 2.1x in
2001 and 1.8x in 2000.

INVESTING ACTIVITIES. Cash used in investing activities was $1.7 million in
the three months ended March 31, 2003, compared to $6.8 million in the same
period of 2002. The decrease is primarily due to reductions in capital
expenditures and acquisitions, which in 2002 reflected the acquisition of Hartle
Industries.

Cash used in investing activities was $26.9 million for the year ended
December 31, 2002, compared to $14.2 million in 2001 and $18.7 million in 2000.
The increase was primarily due to acquisitions, partially offset by decreases in
capital expenditures. Assets acquired consist primarily of property, plant and
equipment, receivables and inventory. All acquisitions were financed with funds
provided under our revolving credit facility and seller financing.

In January 2002, we acquired the assets of a temperature control business
from Hartle Industries for $4.8 million. The assets consist primarily of
property, plant and equipment, and inventory. In April 2002, we acquired Carol
Cable Limited, a manufacturer and distributor of wire sets based in the United
Kingdom, for approximately $1.7 million. The assets from this acquisition
consist primarily of property, plant and equipment, and inventory. In addition,
during 2002, we paid approximately an additional $2.8 million for the remaining
equity interest in SMP Holdings Limited. In May 2002, we purchased the
aftermarket fuel injector business of Sagem Inc., a subsidiary of Johnson
Controls, for $10.5 million. Sagem Inc. is a basic manufacturer of fuel
injectors and was our primary supplier prior to the acquisition. Assets acquired
from this acquisition consist primarily of property, plant and equipment, and
inventory. The purchase was partially financed by the seller ($5.4 million to be
paid over a two year period), with the remaining funds being provided under our
revolving credit facility.

Capital expenditures for the three most recent fiscal years ended
December 31 totaled $7.6 million in 2002, $13.7 million in 2001 and $16.7
million in 2000.

FINANCING ACTIVITIES. Cash provided by financing activities was $33.1
million in the three months ended March 31, 2003, compared to $15.9 million in
the same period of 2002. The change is primarily due to the increased borrowings
under our line of credit to finance our seasonal working capital needs. Cash
used in financing activities was $32.7 million for the year ended December 31,
2002, compared to $25.4 million in 2001 and $11.5 million in 2000.

The increase in cash used was primarily due to our focus on reducing our
borrowings. Dividends paid for the three most recent fiscal years ended
December 31 were $4.3 million in 2002, $4.2 million in 2001 and $4.3 million in
2000. The decreased borrowings reflect our focus on reducing capital employed in
the business.

Effective April 27, 2001, we entered into an agreement with General Electric
Capital Corporation, as agent, and a syndicate of lenders for a secured
revolving credit facility. The term of the credit agreement was for a period of
five years and provided for a line of credit up to $225 million. We recorded an
extraordinary loss of $2.8 million, net of taxes, in the second quarter of 2001,
for a prepayment penalty and write-off of unamortized fees for the retirement of
our former debt. As a result of the adoption of Statement No. 145 on January 1,
2003, we reclassified this extraordinary loss to interest expense.

On February 7, 2003, we amended our revolving credit facility to provide for
an additional $80 million commitment, subject to the terms and conditions
therein, which will become effective upon the closing of our acquisition of
Dana's EMG Business. This additional commitment increases the total amount
available for borrowing under our revolving credit facility to $305 million. In
addition, in order to facilitate the aggregate financing of the acquisition, we
intend to raise approximately $59 million from the sale of common stock in this
offering. After applying all of the net proceeds from this offering to repay a
portion of our outstanding indebtedness under our revolving credit facility, we
intend to borrow the entire cash portion of the purchase price of Dana's EMG
Business from our revolving credit facility upon the closing of the offering.
Following the closing of the acquisition, we expect to have approximately
$64 million of availability under this revolving credit facility. Availability
under our revolving credit facility is based on a formula of eligible accounts
receivable, eligible inventory and eligible fixed assets, and includes the
purchased assets of Dana's EMG Business. We expect such availability under the
revolving credit facility, following the initial draw down at the acquisition
closing, to be sufficient to meet our ongoing operating and integration costs.

Direct borrowings under our revolving credit facility bear interest at the
prime rate plus the applicable margin (as defined) or the LIBOR rate plus the
applicable margin (as defined), at our option. Borrowings are collateralized by
substantially all of our assets, including accounts receivable, inventory and
fixed assets, and those of our domestic and Canadian subsidiaries. Our credit
facility prior to the acquisition provides for certain financial covenants
limiting our capital expenditures and requiring us to maintain a certain
tangible net worth at the end of each fiscal quarter. As of March 31, 2003, we
were in compliance with our applicable financial covenants. Following our
acquisition of Dana's EMG Business, the terms of our revolving credit facility
provide for, among other provisions, new financial covenants requiring us, on a
consolidated basis, (1) to

maintain specified levels of EBITDA, ranging from $5 million to $48.5 million,
at the end of each fiscal quarter through June 30, 2004, (2) commencing
September 30, 2004, to maintain specified levels of a fixed charge coverage
ratio at the end of each fiscal quarter (rolling 12 months) through 2007, and
(3) to limit capital expenditure levels for each fiscal year through 2007.

Our profitability and working capital requirements are more seasonal due to
the sales mix of our Temperature Control products. Our working capital
requirements usually peak near the end of the second quarter, as the inventory
build-up of air conditioning products is converted to sales and payments on the
receivables associated with such sales have yet to be received. These increased
working capital requirements are funded by borrowings from our revolving credit
facility. We anticipate that our present sources of funds will continue to be
adequate to meet our needs for the next several years.

During the years 1998 through 2000, our board of directors authorized
multiple repurchase programs under which we could repurchase shares of our
common stock. During such years, an aggregate of $26.7 million of common stock
was repurchased to meet present and future requirements of our stock option
programs and to fund our employee stock option plan. As of March 31, 2003, we
had board authorization to repurchase additional shares at a maximum cost of
$1.7 million. We did not repurchase any shares of our common stock in the three
months ended March 31, 2003 or in 2002 and 2001.

In July 2001, we entered into interest rate swap agreements to manage our
exposure to interest rate changes. The swaps effectively convert a portion of
our variable rate debt under the revolving credit facility to a fixed rate,
without exchanging the notional principal amounts. At December 31, 2002, we had
two outstanding interest rate swap agreements (in an aggregate notional
principal amount of $75 million), one of which matured in January 2003 and one
of which is scheduled to mature in January 2004. Under these agreements, we
receive a floating rate based on the LIBOR interest rate, and pay a fixed rate
of 4.92% on a notional amount of $45 million and 4.37% on a notional amount of
$30 million (matured in January 2003). If, at any time, the swaps are determined
to be ineffective, in whole or in part, due to changes in the interest rate swap
agreements, the fair value of the portion of the interest rate swap determined
to be ineffective will be recognized as gain or loss in the statement of
operations for the applicable period.

On July 26, 1999, we issued our convertible debentures, payable
semi-annually, in the aggregate principal amount of $90 million. The debentures
are convertible into 2,796,120 shares of our common stock, and mature on July
15, 2009. The proceeds from the sale of the debentures were used to prepay an
8.6% senior note, reduce short term bank borrowings and repurchase a portion of
our common stock.

The following is a summary of our contractual commitments associated with
our debt and lease obligations as of December 31, 2002:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
---------------------------------------------
2003 2004 2005 2006 2007 THEREAFTER TOTAL
---- ---- ---- ---- ---- ---------- -----
(DOLLARS IN THOUSANDS)

Principal payments of
long term debt....................
$ 4,108 $ 2,914 $ 75 $76,330 $ 88 $90,033 $173,548
Operating leases.................... 7,706 6,320 5,336 3,736 2,558 4,112 29,768
Interest rate swap agreements....... 113 1,792 -- -- -- -- 1,905
------- ------- ------ ------- ------ ------- --------
Total commitments............... $11,927 $11,026 $5,411 $80,066 $2,646 $94,145 $205,221
------- ------- ------ ------- ------ ------- --------
------- ------- ------ ------- ------ ------- --------
</Table>

CRITICAL ACCOUNTING POLICIES

We have identified the policies below as critical to our business operations
and the understanding of our results of operations. The impact and any
associated risks related to these policies on our business operations is
discussed throughout 'Management's Discussion and Analysis of Financial
Condition and Results of Operations,' where such policies affect our reported
and expected financial results. For a detailed discussion on the application of
these and other accounting policies, see Note 1 of the notes to our consolidated
annual financial statements and Notes 2 and 3 of the notes to our condensed
consolidated quarterly financial statements included elsewhere in this
prospectus. Preparation of our consolidated annual and quarterly financial

statements requires us to make estimates and assumptions that affect the
reported amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of our consolidated financial statements, and the
reported amounts of revenue and expenses during the reporting periods. We can
give no assurance that actual results will not differ from those estimates.

REVENUE RECOGNITION. We derive our revenue primarily from sales of
replacement parts for motor vehicles, from both our Engine Management and
Temperature Control Divisions. We recognize revenue from product sales upon
shipment to customers. As described below, significant management judgments and
estimates must be made and used in connection with the revenue recognized in any
accounting period.

INVENTORY VALUATION. Inventories are valued at the lower of cost or market.
Cost is generally determined on the first-in, first-out basis. Where
appropriate, standard cost systems are utilized for purposes of determining
cost; the standards are adjusted as necessary to ensure they approximate actual
costs. Estimates of lower of cost or market value of inventory are determined at
the reporting unit level and are based upon the inventory at that location taken
as a whole. These estimates are based upon current economic conditions,
historical sales quantities and patterns and, in some cases, the specific risk
of loss on specifically identified inventories.

We also evaluate inventories on a regular basis to identify inventory on
hand that may be obsolete or in excess of current and future projected market
demand. For inventory deemed to be obsolete, we provide a reserve on the full
value of the inventory. Inventory that is in excess of current and projected use
is reduced by an allowance to a level that approximates our estimate of future
demand.

SALES RETURNS AND OTHER ALLOWANCES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS. The
preparation of financial statements requires our management to make estimates
and assumptions that affect the reported amount of assets and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
Specifically, our management must make estimates of potential future product
returns related to current period product revenue. Management analyzes
historical returns, current economic trends, and changes in customer demand when
evaluating the adequacy of the sales returns and other allowances. Significant
management judgments and estimates must be made and used in connection with
establishing the sales returns and other allowances in any accounting period. At
March 31, 2003, the allowance for sales returns totaled $13.8 million.
Similarly, our management must make estimates of the uncollectability of our
accounts receivables. Management specifically analyzes accounts receivable and
analyzes historical bad debts, customer concentrations, customer
credit-worthiness, current economic trends and changes in our customer payment
terms when evaluating the adequacy of the allowance for doubtful accounts. At
March 31, 2003, the allowance for doubtful accounts and for discounts totaled
$5.7 million.

ACCOUNTING FOR INCOME TAXES. As part of the process of preparing our
consolidated financial statements, we are required to estimate our income taxes
in each of the jurisdictions in which we operate. This process involves us
estimating our actual current tax exposure together with assessing temporary
differences resulting from differing treatment of items for tax and accounting
purposes. These differences result in deferred tax assets and liabilities, which
are included within our consolidated balance sheet. We must then assess the
likelihood that our deferred tax assets will be recovered from future taxable
income, and to the extent we believe that recovery is not likely, we must
establish a valuation allowance. To the extent we establish a valuation
allowance or increase this allowance in a period, we must include an expense
within the tax provision in the statement of operations.

Significant management judgment is required in determining our provision for
income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. At March 31, 2003, we
had a valuation allowance of $22 million, due to uncertainties related to our
ability to utilize some of our deferred tax assets. The valuation allowance is
based on our estimates of taxable income by jurisdiction in which we operate and
the period over which our deferred tax assets will be recoverable.

In the event that actual results differ from these estimates, or we adjust
these estimates in future periods, we may need to establish an additional
valuation allowance which could materially impact our business, financial
condition and results of operations.

VALUATION OF LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL. We assess the
impairment of identifiable intangibles and long-lived assets whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. Factors we consider important, which could trigger an impairment
review, include the following: significant underperformance relative to expected
historical or projected future operating results; significant changes in the
manner of our use of the acquired assets or the strategy for our overall
business; and significant negative industry or economic trends. With respect to
goodwill, if necessary we will test for potential impairment in the fourth
quarter of each year as part of our annual budgeting process. We review the fair
values of each of our reporting units using the discounted cash flows method and
market multiples.

RETIREMENT AND POSTRETIREMENT MEDICAL BENEFITS. Each year we calculated the
costs of providing retiree benefits under the provisions of SFAS 87 and
SFAS 106. The key assumptions used in making these calculations are disclosed in
Notes 12 and 13 to our consolidated financial statements. The most significant
of these assumptions are the discount rate used to value the future obligation,
expected return on plan assets and health care cost trend rates. We select
discount rates commensurate with current market interest rates on high-quality,
fixed rate debt securities. The expected return on assets is based on our
current review of the long-term returns on assets held by the plans, which is
influenced by historical averages. The medical cost trend rate is based on our
actual medical claims and future projections of medical cost trends.

ASBESTOS RESERVE. We are responsible for certain future liabilities relating
to alleged exposure to asbestos-containing products. A September 2002 actuarial
study estimated a liability for settlement payments ranging from $27.3 million
to $58 million. We concluded that no amount within the range of settlement
payments was more likely than any other and, therefore, recorded the low end of
the range as the liability associated with future settlement payments through
2052 in our consolidated financial statements, in accordance with generally
accepted accounting principles. We plan on performing a similar annual actuarial
analysis during the third quarter of each year for the foreseeable future. Based
on this analysis and all other available information, we will reassess the
recorded liability, and if deemed necessary, record an adjustment to the
reserve, which will be reflected as a loss or gain from discontinued operations.
Legal expenses associated with asbestos related matters are expensed as
incurred.

OTHER LOSS RESERVES. We have numerous other loss exposures, such as
environmental claims, product liability and litigation. Establishing loss
reserves for these matters requires the use of estimates and judgment of risk
exposure and ultimate liability. We estimate losses using consistent and
appropriate methods; however, changes to our assumptions could materially affect
our recorded liabilities for loss.

RECENTLY ISSUED ACCOUNTING ANNOUNCEMENTS

Statement No. 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional
carrying amount is depreciated over the life of the asset. The liability is
accreted at the end of each period through charges to operating expense. If the
obligation is settled for other than the carrying amount of the liability, we
will recognize a gain or loss on settlement. Effective January 1, 2003, we
adopted Statement No. 143, which did not have a material adverse effect on our
condensed consolidated quarterly financial statements and is not expected to
have a material adverse effect on our consolidated financial statements.

In April 2002, the FASB issued Statement of Financial Accounting Standards
('SFAS') No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13 and Technical Corrections ('Statement No. 145'). Statement
No. 145 eliminates the automatic classification of gain or loss on
extinguishment of debt as an extraordinary item of income and requires that such
gain or loss be evaluated for extraordinary classification under the criteria of
Accounting Principles Board ('APB') No. 30, Reporting Results of Operations.
Statement No. 145 also requires sales-leaseback accounting for lease
modifications that have economic effects that are similar to sales-leaseback
transactions, and makes various other technical corrections to existing
pronouncements. Effective January 1, 2003, we adopted Statement No. 145. As a
result, we reclassified the extraordinary loss on the early extinguishment of
debt recorded in prior periods to interest expense.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities ('Statement No. 146'). Statement
No. 146, which is effective prospectively for exit or disposal activities
initiated after December 31, 2002, applies to costs associated with an exit
activity, including restructurings, or with a disposal of long-lived assets.
Those activities can include eliminating or reducing product lines, terminating
employees and contracts and relocating plant facilities or personnel. Statement
No. 146 requires that exit or disposal costs are recorded as an operating
expense when the liability is incurred and can be measured at fair value.
Commitment to an exit plan or a plan of disposal by itself will not meet the
requirement for recognizing a liability and the related expense under Statement
No. 146. The adoption of Statement No. 146 did not have a material adverse
effect on our condensed consolidated quarterly financial statements and is not
expected to have a material adverse effect on our consolidated financial
statements.

In November 2002, the FASB issued interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others ('Interpretation No. 45'). Interpretation
No. 45 elaborates on the existing disclosure requirements for most guarantees,
including loan guarantees such as standby letters of credit. Interpretation
No. 145 also clarifies that at the time a company issues a guarantee, the
company must recognize an initial liability for the fair market value of the
obligations it assumes under that guarantee and must disclose that information
in its interim and annual financial statements. The initial recognition and
measurement provisions of Interpretation No. 45 apply on a prospective basis to
guarantees issued or modified after December 31, 2002. The adoption of
Interpretation No. 45 did not have a material adverse effect on our condensed
consolidated quarterly financial statements and is not expected to have a
material adverse effect on our consolidated financial statements. See Note 14 of
notes to our condensed consolidated quarterly financial statements for
discussion of product warranty claims.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement
No. 123 ('Statement No. 148'). Statement No. 148 amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value method of accounting for
stock-based employee compensation. In addition, Statement No. 148 amends the
disclosure requirements of Statement No. 123 to require prominent disclosures in
both annual and interim financial statements. Certain of the disclosure
modifications are required for fiscal years ending after December 15, 2002.
Effective January 1, 2003, we adopted Statement No. 148 and have provided the
disclosures required under Statement No. 148 in Note 10 of notes to our
condensed consolidated quarterly financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51 ('Interpretation No.
46'). Interpretation No. 46 addresses the consolidation by business enterprises
of variable interest entities as defined in Interpretation No. 46.
Interpretation No. 46 applies immediately to variable interests in variable
interest entities obtained after January 31, 2003. For public enterprises with a
variable interest in a variable interest entity created before February 1, 2003,
Interpretation No. 46 applies to those enterprises no later than the beginning
of the first interim or annual reporting period beginning after June 15, 2003.
Interpretation No. 46 requires certain disclosures in financial statements
issued after January 31, 2003. We currently have no contractual relationship or
other business relationship

with a variable interest entity and therefore the adoption of Interpretation
No. 46 did not have a material adverse effect on our condensed consolidated
quarterly financial statements and is not expected to have a material adverse
effect on our consolidated financial statements. However, if we enter into any
arrangement with a variable interest entity in the future, we will evaluate the
impact of Interpretation No. 46 on our consolidated financial statements and
related disclosures.

In May 2003, the FASB issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity
('Statement No. 150'). Statement No. 150 requires issuers to classify as
liabilities (or assets in some circumstance) three classes of freestanding
financial instruments that embody obligations for the issuer.

Generally, Statement No. 150 is effective for financial instruments entered
into or modified after May 31, 2003, and is otherwise effective at the beginning
of the first interim period beginning after June 15, 2003. Statement No. 150 is
not expected to have a material adverse effect on our consolidated financial
statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, primarily related to foreign currency
exchange and interest rates. These exposures are actively monitored by
management. Our exposure to foreign exchange rate risk is due to certain costs,
revenues and borrowings being denominated in currencies other than one of our
subsidiary's functional currency. Similarly, we are exposed to market risk as
the result of changes in interest rates which may affect the cost of our
financing. It is our policy and practice to use derivative financial instruments
only to the extent necessary to manage exposures. We do not hold or issue
derivative financial instruments for trading or speculative purposes.

EXCHANGE RATE RISK

We have exchange rate exposure, primarily, with respect to the Canadian
dollar and the British pound. As of December 31, 2002, our financial instruments
which are subject to this exposure are immaterial, therefore the potential
immediate loss to us that would result from a hypothetical 10% change in foreign
currency exchange rates would not be expected to have a material impact on our
earnings or cash flows. This sensitivity analysis assumes an unfavorable 10%
fluctuation in both of the exchange rates affecting both of the foreign
currencies in which the indebtedness and the financial instruments described
above are denominated and does not take into account the offsetting effect of
such a change on our foreign-currency denominated revenues.

INTEREST RATE RISK

We manage our exposure to interest rate risk through the proportion of fixed
rate debt and variable rate debt in our debt portfolio. To manage a portion of
our exposure to interest rate changes, we have entered into interest rate swap
agreements. At March 31, 2003, we had approximately $211 million in loans and
financing outstanding, of which approximately $96 million bear interest at fixed
interest rates and approximately $115 million bear interest at variable rates of
interest. We invest our excess cash in highly liquid, short-term investments. As
a result of our refinancing agreement during the second quarter 2001, as
described in the notes to our consolidated annual financial statements and our
condensed consolidated quarterly financial statements found elsewhere in this
prospectus, our percentage of variable rate debt to total debt has increased
from 32% at December 31, 2000 to 56% at December 31, 2001 and decreased to 46%
at December 31, 2002 and increased to 55% at March 31, 2003. Depending upon the
level of borrowings under our revolving credit facility, which may at times
approach $200 million, the effect of a hypothetical, instantaneous and
unfavorable change of 100 basis points in the interest rate may have
approximately $1.2 million negative impact on our earnings or cash flows.

THE AUTOMOTIVE AFTERMARKET

Unless otherwise indicated, industry statistics included throughout this
prospectus are based on reports of independent, third-party sources.

The automotive aftermarket industry is comprised of a large, diverse number
of manufacturers varying in product specialization and size. In addition to
manufacturing, aftermarket companies allocate resources towards an efficient
distribution process and product engineering in order to maintain the
flexibility and responsiveness on which their customers depend. Aftermarket
manufacturers must be efficient producers of small lot sizes and do not have to
provide systems engineering support. Aftermarket manufacturers also must
distribute, with rapid turnaround times, products for a full range of vehicles
on the road.

During periods of economic decline or weakness, more automobile owners may
choose to repair their current automobiles using replacement parts rather than
purchasing new automobiles, which benefits the automotive aftermarket industry,
including suppliers like us. The automotive aftermarket industry is also
dependent on new car sales, although to a lesser degree than original equipment
manufacturers, or OEMs, and their suppliers, because these sales create the
total number of cars available for repair. Despite the current economic climate,
the current interest rate environment and aggressive financing programs by
automakers has increased demand for new cars and trucks, which should benefit
the automotive aftermarket manufacturers in the long term as vehicles age.

The automotive aftermarket industry generated sales of approximately $179
billion in 2001. The automotive aftermarket industry has grown at a compound
annual growth rate of 5.8% from 1992 through 2001. Despite significant
consolidation in the industry, the automotive aftermarket continues to be very
competitive and highly fragmented.

The automotive aftermarket industry differs substantially from the OEM
supply business. Unlike the OEM supply business that primarily follows trends in
new car production, the automotive aftermarket industry's performance primarily
tends to follow different trends, such as:

growth in number of vehicles on the road;

increase in average vehicle age;

increase in total miles driven per year;

new and modified environmental regulations;

increase in pricing of new cars; and

new car quality and related warranties.

Traditionally, the supply arms of OEMs and the independent manufacturers who
supply the original equipment part applications have supplied a majority of the
business to new car dealer networks. However, Ford and General Motors have
recently moved to make their supply arms more independent, which may provide
future opportunities for independent automotive aftermarket manufacturers to
supply replacement parts to the dealer networks of the original equipment
vehicle manufacturers, both for warranty and out-of-warranty repairs.

The primary customers of the automotive aftermarket manufacturers are
national and regional warehouse distributors, large retail chains, automotive
repair chains and the dealer service networks of the original equipment vehicle
manufacturers, as illustrated below.

DISTRIBUTION CHANNELS

[FLOW CHART]

Traditional Distribution Channel Retail Distribution Channel

Standard Motor Products, Inc. Standard Motor Products, Inc.

Warehouse Distributor Automobile Parts Retailer

Jobbing Store Do-it-Yourselfer

Installer Installer

Dealer

Do-it-Yourselfer

Original Equipment Services

Standard Motor Products, Inc.

Vehicle Manufacturer
Parts and Services

Dealer

Installer

Do-it-Yourselfer

Jobber

TRADITIONAL DISTRIBUTION CHANNEL. In the traditional distribution network,
automotive replacement parts are distributed through a number of levels before
reaching the final users. Standard Motor Products and its competitors sell their
products to warehouse distributors who supply over 20,000 local auto parts
jobbers. These jobbers, in turn, sell primarily to professional mechanics at
service stations, garages and repair shops, and also to consumers who perform
automotive repairs themselves (known as 'do-it-yourselfers').

Over the last ten years, there has been a trend toward consolidation in the
distribution chain, both by warehouse distributors and retailers, as large
firms, with their superior buying power and more efficient distribution systems,
have gained market share at the expense of smaller, localized firms. The
proliferation of new car models, which are both produced in greater varieties
and carry more complex parts, may have hastened consolidation. This
proliferation of new car models requires a much greater capital base to support
a higher number and variety of parts that must be maintained in a warehouse
distributor's inventory for same day delivery to mechanics.

RETAIL DISTRIBUTION CHANNEL. Retail chains such as AutoZone, Advance Auto
Parts, Pep Boys, CSK Auto and O'Reilly Automotive sell a substantial amount of
automotive aftermarket parts. While both mechanics and do-it-yourselfers
purchase aftermarket parts from retail chains, as automotive parts grow more
complex, consumers may be less likely to service their own vehicles and may
become more reliant on dealers and mechanics that have traditionally used

warehouse distributors as their parts suppliers. Retailers are currently
expanding into the jobber market and warehouse distributors are seeking means to
better serve do-it-yourselfers, possibly resulting in a long-term consolidation
of the market. Through our strategy of serving all levels of the aftermarket
industry, we believe that we are well-positioned to take advantage of this
consolidation. A listing of the top five independent automotive retailers that
distribute aftermarket parts is below.

TOP FIVE INDEPENDENT AUTO PARTS RETAILERS

<Table>
<Caption>
FISCAL YEAR
RANK CHAIN 2002 STORES 2002 SALES(1)
- ---- ----- ----------- -------------

1 AutoZone (2)................................................ 3,068 $5,325,510
2 Advance Auto Parts (3)...................................... 2,435 3,287,883
3 Pep Boys (4)................................................ 629 2,184,560
4 CSK Auto (5)................................................ 1,130 1,438,585
5 O'Reilly Automotive (6)..................................... 981 1,312,490
</Table>

Source: Annual Reports on Form 10-K filed with the SEC by each of the companies
listed above.

- ---------

(1) Includes all sales volumes for these companies, which sales
are provided in thousands.

(2) For fiscal year ending August 31, 2002.

(3) For fiscal year ending December 28, 2002.

(4) For fiscal year ending February 2, 2002.

(5) For fiscal year ending February 3, 2002.

(6) For fiscal year ending December 31, 2002.

ORIGINAL EQUIPMENT SERVICES. In 2001, there were approximately 21,800 new
automobile dealers in the United States. In addition to new car sales, the
majority of these automobile dealers sell 'name brand' aftermarket parts and
accessories and also service vehicles. The products available through the
dealers are purchased through the original equipment service network, or OES
network, operated by OEMs. As part of the OES network, Standard Motor Products
and its competitors sell their products directly to the vehicle manufacturers'
parts and service segments. These segments then sell the products, usually under
a vehicle manufacturer brand name, directly to the dealer who then sells them to
the installers, jobbers and do-it-yourselfers.

FACTORS INFLUENCING THE AUTOMOTIVE AFTERMARKET

We believe that the automotive aftermarket industry is influenced by a
variety of factors, including:

growth in the number of vehicles on the road;

increases in the number of drivers and number of vehicles
per household;

vehicles are on the road longer and driven more miles per
year;

automotive parts retailers are attempting to displace
traditional jobbers;

environmental laws are becoming more stringent;

broader range in prices for replacement parts;

vehicles are comprised of more complex systems, requiring a
greater specialization of parts;

new cars are being made better and have longer warranties;
and

greater need for increased repair expertise and technology.

We believe that the net impact of the foregoing factors will result in a
minimal rate of growth over the next several years for the North American
automotive aftermarket industry.

GROWTH IN THE NUMBER OF VEHICLES ON THE ROAD. From 1991 to 2001, the number
of registered vehicles in the United States increased at an annual rate of
approximately 2.1% to approximately 216.5 million vehicles, as represented by
the graph below. Growth in light trucks in particular has been strong,
increasing 3.8% in 2001 compared to 2000, continuing a decade of steady growth.
Canada contributes 17 million registered light vehicles on the road and Mexico

contributes another 10 million of such vehicles, bringing the 2001 North
American market to approximately 236 million registered light vehicles.

VEHICLES IN USE -- UNITED STATES
CAGR (1991-2001): 2.1%

[GRAPHIC]

Year (In millions)
---- -------------

1991......... 175
1992......... 181
1993......... 185
1994......... 190
1995......... 191
1996......... 195
1997......... 200
1998......... 197
1999......... 208
2000......... 212
2001......... 216

Source: U.S. Department of Transportation and R.L. Polk & Co.

INCREASES IN THE NUMBER OF DRIVERS AND NUMBER OF VEHICLES PER HOUSEHOLD. The
number of drivers and the number of vehicles per household (vehicle penetration)
impact the size of the aftermarket. In 2000, the number of licensed drivers
reached roughly 190 million drivers, continuing an annual growth rate of 1.3%
since 1991. On a per household basis, the number of vehicles increased to 1.91
per household in 2001, reflecting an annual growth rate of 1.83% since 1991.

VEHICLES ARE ON THE ROAD LONGER AND MORE MILES ARE BEING DRIVEN PER YEAR.
Approximately 40% of the 2001 vehicle population was ten years of age or older.
More importantly, approximately 60% of the vehicles on the road are over six
years of age, a segment which represents the primary customer base of the
independent automotive aftermarket. Dealerships typically service vehicles newer
than five years old, which do not contribute significant sales to aftermarket
distributors or retailers. In 2001, the average car was 9.3 years old, compared
to 8.1 years old in 1992. Trucks have also extended their average life to 8.5
years (see the following graph). The increase in average life per vehicle is
attributable, among other things, to an increase in the structural integrity of
vehicles as well as significant technological innovations in protecting
automobiles from structural and exterior corrosion and improved quality in the
major parts systems such as engines and transmissions.

In addition, the number of miles driven each year has been steadily rising
for the past decade. An increase in the number of miles driven results in
greater wear on a vehicle and a greater need for replacement parts sold in the
aftermarket. In 2000, the average miles driven per vehicle was approximately
11,988, a 16% increase from 1991.

POPULATION OF VEHICLES BY AGE

[GRAPHIC]

Thousands of Vehicles
---------------------
Vehicle Age in Years 1995 2000
- --------------------- ------ ------

Less than 1... 10,100 13,000
1............. 14,500 15,500
2............. 13,500 14,500
3............. 12,500 14,500
4............. 12,700 13,000
5............. 12,700 14,700
6............. 13,500 13,000
7............. 13,500 12,200
8............. 13,200 10,500
9............. 13,200 10,500
10............. 11,500 10,100
11............. 10,000 11,400
12............. 6,500 10,100
13............. 5,000 9,000
14............. 4,500 8,500
15 or more...... 29,500 33,500

Source: R.L. Polk & Co.

AUTOMOTIVE PARTS RETAILERS ARE ATTEMPTING TO DISPLACE TRADITIONAL JOBBERS.
We believe that more aftermarket parts are now being sold through the retail
channel as these stores begin to serve professional mechanics as well as their
traditional retail clients. Given that retailers have conveniently located
stores already in place, they have been able to sell fast-moving product lines
to the jobber client base by simply adding more inventory coverage, a same day
delivery service,

and an overnight emergency order system. The increase in the number of retail
outlets, serving a broader market volume (partially offset by a decrease in the
number of jobbers), results in a net increase in the number of locations
carrying a broader range of replacement parts.

ENVIRONMENTAL LAWS ARE BECOMING MORE STRINGENT. Environmental pressures have
imposed new standards on automobiles manufactured by the OEMs, as well as on
existing automobiles. Recently, several states have begun to impose tighter
emission controls at the inspection station, requiring otherwise 'clean'
vehicles to undergo repair of their emissions systems in order to pass. These
tighter emissions controls translate into a higher utilization of jobbers and
service bays as these vehicles are forced to conform to tighter regulatory
standards. The end result is a greater demand for aftermarket emission parts. In
addition, the growth in anti-fluorocarbon legislation has made similar demands
on the interior temperature control systems of the average vehicle. United
States production of R-12 based refrigerants such as Freon was no longer
permitted as of December 31, 1995, which has forced OEMs to replace the system
with a recyclable coolant variant. As anti-ozone legislation increases, the
average driver will be forced to replace his or her system as well with a
variant that is not only more costly, but also requires a lengthy service bay
visit.

BROADER RANGE IN PRICES FOR REPLACEMENT PARTS. Many price conscious
consumers have demanded lower prices for quality original equipment replacement
parts for their aging cars with a limited remaining life. Aftermarket suppliers
responded by supplying multiple versions of the same product at differing
price/quality points. Supplying multiple versions of the same product has
resulted in lower margins for aftermarket suppliers, and particularly suppliers
who do not have the efficient distribution channels and production capabilities
needed to handle lower margin sales. This factor is contributing heavily to the
consolidation of automotive suppliers. Lower margin products have also made many
of the aftermarket supplier products more attractive compared to original
equipment supplier products in the replacement market, which may work to
increase aftermarket suppliers' share of the automotive replacement parts
business. We believe that in order to continue to offer high quality, low cost
products it is important to be a large, cost-efficient supplier to the
automotive aftermarket.

VEHICLES ARE COMPRISED OF MORE COMPLEX SYSTEMS, REQUIRING A GREATER
SPECIALIZATION OF PARTS. Vehicles are becoming increasingly complex in terms of
their electronics, on a content per vehicle basis. While on average these parts
have a greater longevity than the electromechanical parts they are replacing, we
believe that the sheer volume of parts required and higher average prices per
part outweigh any of the negative effects that longevity may have on aftermarket
sales. In short, we believe that the more complicated the system, the greater
the chance that a replacement part will be needed in some capacity.

NEW CARS ARE BEING MADE BETTER AND HAVE LONGER WARRANTIES. As new technology
makes its way into the interior of cars, it is also entering vehicles in terms
of structural materials. New, corrosive-resistant steel and other materials make
the average vehicle on the road today less likely to fail structurally, raising
the life of the vehicle considerably. Many functional parts are now being
designed to last for 100,000 miles of usage. The extension of the average new
car warranty evidences the change in durability and quality in the structural
and functional components of the vehicles. These longer warranties are likely to
keep car owners returning to their dealer for servicing for a longer period of
time, thus hurting aftermarket sales.

GREATER NEED FOR INCREASED REPAIR EXPERTISE AND TECHNOLOGY. Late model
domestic cars or imported vehicles require more expertise and technology to
repair. As these have become a greater percentage of the vehicles on the road,
non-dealer mechanics have had to invest in greater amounts of equipment and
training to service them or risk losing business. While import vehicle owners
may return more often to their dealer for servicing, we do not believe that this
will substantially hurt aftermarket part sales. Non-dealer repair shops have
been rapidly investing in technology and expertise to compete effectively with
dealers in servicing import cars. The major replacement parts manufacturers have
also responded by providing enhanced ongoing training of professional mechanics
and telephonic services that assist mechanics in diagnosing repairs and
installing parts. In addition, independent manufacturers are designing parts for
ease of installation and providing specialty tools to speed the installation
process.

BUSINESS

OVERVIEW

[PIE CHARTS]

2002 Consolidated Net Sales by 2002 Consolidated Net Sales by 2002 Consolidated Net Sales by
Operating Division Geographic Region Customer Group

Europe 6% Rest of the World 9% Other 11%

Temperature Control 43% Canada 5% Retail 28%

Engine Manangement 51% United States 86% Warehouse Distributions 61%

OUR STRATEGY

CAPITALIZE ON THE ACQUISITION OF DANA'S EMG BUSINESS. The
acquisition will allow us to combine Dana's EMG Business
with our Engine Management Division, thereby creating
opportunities to realize cost savings and grow earnings. We
intend to integrate Dana's EMG Business into our Engine
Management Division within 18 months from the closing of the
acquisition, and intend to capitalize on the acquisition in
the following ways:

increase sales in our Engine Management business, through
our access to Dana's EMG Business customer base and by
strengthening our relationships with our existing customers;

develop new and improved products to better satisfy the
increasing requirements of our customers;

rationalize manufacturing and distribution facilities to
achieve more efficient operations and lower costs for
ourselves and our customers;

consolidate and centralize corporate functions such as sales
and marketing, accounting, tax, information systems, human
resources, cash management and risk management to eliminate
redundant costs;

improve cost structure by realizing increased economies of
scale in the purchasing, processing, production and
distribution of our products, including being able to bring
new products to market faster and more efficiently by
manufacturing more products

ourselves, rather than purchasing such products from third
parties and then reselling such products to our customers;
and

increase the proportion of our total sales and profits from
our Engine Management business which is more stable and
predictable than our seasonal Temperature Control business.

MAINTAIN OUR STRONG COMPETITIVE POSITION IN THE ENGINE
MANAGEMENT AND TEMPERATURE CONTROL BUSINESSES. We are one of
the leading independent manufacturers serving North America
and other geographic areas in our core businesses of Engine
Management and Temperature Control. We believe that our
success is attributable to our emphasis on product quality,
the breadth and depth of our product lines for both domestic
and imported automobiles, and our reputation for outstanding
customer service, as measured by rapid order turn-around
times and high-order fill rates. We believe that the
acquisition of Dana's EMG Business will enhance our success
in these areas.

To maintain our strong competitive position in our markets,
we remain committed to the following:

providing our customers with broad lines of high quality
engine management and temperature control products,
supported by the highest level of customer service and
reliability;

continuing to maximize our production and distribution
efficiencies;

continuing to improve our cost position; and

focusing further our engineering development efforts.

We believe our Engine Management Division will be strengthened by
the acquisition of Dana's EMG Business, allowing us to offer
improved and cost effective existing complimentary products and
expand our customer base.

PROVIDE SUPERIOR CUSTOMER SERVICE, PRODUCT AVAILABILITY AND
TECHNICAL SUPPORT. Our goal is to increase sales to existing
and new customers by leveraging our skills in rapidly
filling orders, maintaining high levels of product
availability and providing technical support in a
cost-effective manner. In addition, our technically-skilled
sales force of approximately 200 sales professionals
provides product selection and application support to our
customers.

EVOLVE AND EXPAND OUR PRODUCT LINES. We intend to increase
our sales by continuing to develop and expand the range of
Engine Management and Temperature Control products that we
offer to our customers. We are committed to investing the
resources necessary to maintain and expand our technical
capability to manufacture multiple product lines that
incorporate the latest technologies developed by OEMs in
North America and Europe.

BROADEN OUR CUSTOMER BASE. Our goal is to increase our
business by marketing our products more broadly to the
distribution businesses of OEMs who sell products to new car
dealer service areas.

IMPROVE OPERATING EFFICIENCY AND COST POSITION. Our
management places significant emphasis on improving our
financial performance, by achieving operating efficiencies
and improving asset utilization, while maintaining product
quality and high customer order fill rates. We have a proven
track record of managing costs and improving operating
efficiency through consolidating redundant functions and
realizing cost savings in our business. In 2001, we reduced
our inventory level by $57 million while retaining customer
fill rates of approximately 93%, and in 2002, we further
reduced inventory by an additional $8 million. We intend to
continue to improve our operating efficiency and cost
position by:

increasing cost-effective vertical integration in key
product lines through internal development;

focusing on efficient inventory management, including
warranty and overstock return management;

maintaining and improving our cost effectiveness and
competitive responsiveness to better serve the automotive
aftermarket customer base;

adopting company-wide programs geared toward manufacturing
and distribution efficiency; and

initiating company-wide overhead and operating expense cost
reduction programs, such as closing excess facilities.

Following an effective integration of Dana's EMG Business
into our company, we anticipate realizing additional
operating efficiencies, cost savings and improved
productivity.

REDUCE OUR DEBT. Following an initial period during which
our cash flows will be used to integrate Dana's EMG Business
into our Engine Management Division, we intend to apply any
excess cash flow from operations and the management of
working capital to reduce our outstanding indebtedness.
Further, we believe leveraging our capital expenditures with
Dana's EMG Business will enhance our ability to generate
increased cash flow for debt reduction.

ACQUISITION HISTORY

Over recent years, we have pursued an acquisition strategy focused on
specific areas in engine management and temperature control, namely:

the broadening of new product lines;

the addition of low cost lines within the main areas of our
business;

vertical integration; and

international expansion.

Since January 1996, we have acquired 15 businesses. The integration of these
businesses has led to improvements in production, distribution and other
operating areas and in the quality and depth of our aftermarket product
offerings. We believe that our customers have benefited from these acquisitions
and our resulting ability to offer a broader portfolio of high quality, cost
effective aftermarket products. We intend to draw on our experience integrating
these past acquisitions to facilitate the integration of Dana's EMG Business.

The following table summarizes acquisitions and divestitures we have made
since January 1, 1996:

<Table>
<Caption>
ACQUISITION ACQUISITION DATE LOCATION BUSINESS OF ACQUIRED COMPANY
- ----------- ---------------- -------- ----------------------------

Sagem, Inc. May 2002 Greenville, South Manufacture and distribution of fuel
(a subsidiary of Johnson Controls) Carolina injectors and other ignition products

Carol Cable Ltd. April 2002 Wellingborough, Manufacture and distribution of
United Kingdom ignition leads

Chillair of Texas, Ltd. and Hartle January 2002 Dallas, Texas and Distribution of temperature control
Industries Grand Prairie, products
Texas

Automotive Heater Exchange July 2000 Massa, Italy Distribution of temperature control
products

Vehicle Air Conditioning Parts January 2000 United Kingdom Distribution of temperature control
products

Lemark Auto Accessories Limited April 1999 United Kingdom Manufacture and distribution primarily
of ignition wire and other engine
management products

Eaglemotive Corporation February 1999 Forth Worth, Texas Manufacture and distribution of fan
clutches and oil coolers

Webcon UK Limited and Injection January 1999 Two locations in Manufacture and distribution of
Correction UK Limited the United Kingdom full-line of engine management
products

Temperature control division of March 1998 Multiple locations Manufacture and distribution of
Cooper Industries in the United full-line temperature control products
States

(table continued on next page)
</Table>

(table continued from previous page)

<Table>
<Caption>
ACQUISITION ACQUISITION DATE LOCATION BUSINESS OF ACQUIRED COMPANY
- ----------- ---------------- -------- ----------------------------

Oxygen sensor manufacturing September 1997 Wilson, North Manufacture oxygen sensors
business of AlliedSignal Carolina

Filko Automotive Division of F&B January 1997 Multiple locations Manufacture and distribution of
Manufacturing in the United ignition wire and other engine
States management products

Hayden Division of the Equion December 1996 Corona, California Assembly and distribution of heavy
Corporation duty cooling products

Fibro Friction, Inc. (since divested) July 1996 Montreal, Canada Manufacture and distribution of brake
parts

Intermotor Holdings Limited July 1996 Nottingham, Manufacture and distribution of engine
England management products, primarily to the
European market

Federal Parts Corporation February 1996 Dallas, Texas Manufacture and distribution of
ignition wire products

<Caption>
DISPOSITION DISPOSITION DATE LOCATION BUSINESS OF DISPOSED COMPANY
- ----------- ---------------- -------- ----------------------------

Pik-A-Nut October 1998 Huntington, General service line
Indiana

Fuel Pump business October 1998 Long Island City, Manufacture and distribution of fuel
New York pumps

Champ/ASL September 1998 Edwardsville, General service line
Kansas

EIS Brake parts March 1998 Berlin, Manufacture of brake parts
Connecticut

EIS Brake Manufacturing (EBM) March 1998 Ontario, Canada Manufacture of brake parts

Fibro Friction, Inc. March 1998 Montreal, Canada Manufacture and distribution of brake
parts
</Table>

FINANCIAL INFORMATION ABOUT OUR OPERATING DIVISIONS

The table below shows our consolidated net sales by operating division and
by major product group within each division for the three years ended
December 31, 2002 and for the three months ended March 31, 2003. Our three
reportable operating divisions are Engine Management, Temperature Control and
Europe.

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------------------- -------------------
2000 2001 2002 2003
--------------------- --------------------- --------------------- -------------------
AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL
------ ---------- ------ ---------- ------ ---------- ------ ----------
(DOLLARS IN THOUSANDS)

ENGINE MANAGEMENT:
Ignition and Emission Parts... $219,337 36.5% $218,694 37.0% $232,511 38.9% $ 63,267 46.6%
Wires and Cables.............. 59,517 9.9% 58,720 9.9% 63,267 10.6% 13,745 10.1%
Fuel System Parts............. 9,386 1.6% 8,084 1.4% 7,334 1.2% 1,794 1.3%
-------- ------ -------- ------ -------- ------ -------- ------
TOTAL ENGINE MANAGEMENT.......... 288,240 48.0% 285,498 48.3% 303,112 50.7% 78,806 58.0%
-------- ------ -------- ------ -------- ------ -------- ------
TEMPERATURE CONTROL:
Compressors................... 118,399 19.7% 117,965 19.9% 105,301 17.6% 17,577 13.0%
Other Air Conditioning
Parts........................ 139,051 23.1% 138,542 23.4% 136,973 22.9% 23,805 17.5%
Heating Parts................. 13,398 2.2% 13,349 2.3% 12,814 2.1% 4,380 3.2%
-------- ------ -------- ------ -------- ------ -------- ------
TOTAL TEMPERATURE CONTROL........ 270,848 45.0% 269,856 45.6% 255,088 42.6% 45,762 33.7%
-------- ------ -------- ------ -------- ------ -------- ------
EUROPE:
Engine Management Parts....... 32,179 5.4% 26,315 4.4% 26,575 4.4% 8,252 6.1%
Temperature Control Parts..... 6,131 1.0% 7,134 1.2% 9,453 1.6% 2,288 1.7%
-------- ------ -------- ------ -------- ------ -------- ------
TOTAL EUROPE..................... 38,310 6.4% 33,449 5.6% 36,028 6.0% 10,540 7.8%
-------- ------ -------- ------ -------- ------ -------- ------
All Other........................ 3,994 0.6% 2,849 0.5% 4,209 0.7% 617 0.5%
-------- ------ -------- ------ -------- ------ -------- ------
TOTAL...................... $601,392 100.0% $591,652 100.0% $598,437 100.0% $135,725 100.0%
-------- ------ -------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------ -------- ------
</Table>

The table below shows our operating profit and identifiable assets by
operating division for the three years ended December 31, 2002 and for the three
months ended March 31, 2003.

<Table>
<Caption>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------------------------------------------------------ MARCH 31,
2000 2001 2002 2003
------------------------ ------------------------ ------------------------ -----------------------
OPERATING IDENTIFIABLE OPERATING IDENTIFIABLE OPERATING IDENTIFIABLE OPERATING IDENTIFIABLE
PROFIT ASSETS PROFIT ASSETS PROFIT ASSETS PROFIT ASSETS
------ ------ ------ ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)

Engine Management.... $ 37,974 $265,336 $ 26,432 $233,564 $ 41,844 $247,318 $ 9,652 $242,207
Temperature Control.. 11,513 224,410 3,624 182,083 10,095 157,343 (2,193) 179,715
Europe............... 517 39,321 (1,718) 40,407 (10,464) 30,728 (486) 28,948
All Other............ (19,293) 20,329 (13,215) 53,375 (16,407) 55,369 (4,645) 63,475
-------- -------- -------- -------- -------- -------- ------- --------
TOTAL.......... $ 30,711 $549,396 $ 15,123 $509,429 $ 25,068 $490,758 $ 2,328 $514,345
-------- -------- -------- -------- -------- -------- ------- --------
-------- -------- -------- -------- -------- -------- ------- --------
</Table>

'All Other' consists of items pertaining to the corporate headquarters
function as well as the Canadian business unit that do not meet the criteria of
a reportable operating division.

ENGINE MANAGEMENT DIVISION

BREADTH OF PRODUCTS. In our Engine Management Division, replacement parts
for automotive ignition and emission control systems accounted for approximately
47% of our consolidated net sales for the three months ended March 31, 2003 and
approximately 39% and 37% of our consolidated net sales in 2002 and 2001,
respectively. These parts include distributor caps and rotors, electronic
ignition control modules, voltage regulators, coils, switches, sensors and EGR
valves. We are a basic manufacturer of many of the ignition parts we market and
continue to develop ways of increasing the number of parts we manufacture,
rather than purchasing such parts from third parties and then reselling such
parts to our customers. We believe our customers benefit from lower prices and
improved quality from our manufacturing such parts. These products cover a wide
range of applications, from 30-year old vehicles to current models, both
domestic and imports, and include passenger cars, light trucks and certain
off-road and marine applications.

We offer products at three different price points under a 'good-better-best'
concept. We began offering ignition parts under the 'Standard' brand name that
are equal in quality to original equipment parts installed on new vehicles. Soon
afterward, we pioneered the concept of offering higher quality parts, sold at
premium prices under the 'Blue Streak' brand name, that are significantly better
than original equipment. We also offer lower-priced lines under the 'COBRA'
brand to compete with lower priced private labels.

COMPUTER CONTROLLED TECHNOLOGY. Nearly all new vehicles are factory-equipped
with computer-controlled engine management systems to control ignition, emission
control and fuel injection. These computer-controlled engine management systems,
as opposed to the traditional breaker-point ignition systems installed in prior
generations of new vehicles, reflect the automobile industry's response to
decades of pressure from the government and environmental groups to reduce
national fuel consumption and the level of pollutants from auto exhaust. The
on-board computers monitor inputs from many types of sensors located throughout
the vehicle, and control a myriad of valves, switches and motors to manage
engine and vehicle performance. Electronic ignition systems enable the engine to
improve fuel efficiency and reduce the level of hazardous fumes in exhaust
gases. We are a leading manufacturer and distributor of replacements for these
engine management component parts, including remanufactured automotive
computers. Electronic control modules and electronic voltage regulators
comprised approximately 10% of our total ignition and emission consolidated net
sales for the three months ended March 31, 2003 and approximately 12% and 13% of
our total ignition and emission consolidated net sales in 2002 and 2001,
respectively.

In 1992, we entered into a 50/50 joint venture in Canada with Blue Streak
Electronics, Inc. to rebuild automotive engine management computers and mass air
flow sensors. The volume of products produced by the joint venture are sold
primarily to us and has positioned us as a key supplier in the growing
remanufactured electronics markets. In 1994, we vastly increased our offering of
remanufactured computers and instituted a program to offer slower-moving items
by

overnight shipment from our factory, which has enabled our customers to expand
their coverage without increasing inventory investment. The Blue Streak joint
venture has further expanded its product range to include computers used in
temperature control, anti-lock brake systems and air bags.

We divide our electronic operations between product design and highly
automated manufacturing operations in Orlando, Florida and assembly operations,
which are performed in assembly plants in Orlando and Hong Kong.

Our sales of sensors, valves, solenoids and related parts have increased
steadily as automobile manufacturers equip their cars with more complex engine
management systems. Government emission laws have been implemented throughout
the majority of the United States. The Clean Air Act, as amended in 1990,
imposes strict emission control test standards on existing and new vehicles, and
remains the preeminent legislation in the area of vehicle emissions. As many
states have implemented required inspection/maintenance tests, the Environmental
Protection Agency, through its rulemaking ability, has also encouraged both
manufacturers and drivers to reduce vehicle emissions. As the Clean Air Act was
'phased in' beginning in 1994, automobiles must now comply with emission
standards from the time they are manufactured, and in most states, until the
last day they are in use. This law has, and in the future we expect this law and
other new government emission laws to have, a positive impact on sales of our
ignition and emission controls parts. Vehicles failing these new, more stringent
tests have required repairs utilizing parts sold by us.

WIRE AND CABLE PRODUCTS. Wire and cable parts accounted for approximately
10% of our consolidated net sales for the three months ended March 31, 2003 and
approximately 11% and 10% of our consolidated net sales in 2002 and 2001,
respectively. These products include ignition (spark plug) wires, battery cables
and a wide range of electrical wire, terminals, connectors and tools for
servicing an automobile's electrical system.

The largest component of this product line is the sale of ignition wire
sets. We have historically offered a premium brand of ignition wires and battery
cables, which capitalize on the market's awareness of the importance of quality.
With the growing customer interest in lower-priced products, we introduced a
second line of wire and cable products in 1989. This line has steadily expanded
to include import coverage, and in 1995 was reintroduced under the Tru-Tech
brand name.

In 1999, we relocated two of our wire and cable operations, one in Dallas,
Texas and the other in Bradenton, Florida, to a new facility in Reynosa, Mexico.
The Mexican operation focuses on assembly and packaging of the economy wire
sets, while our premium line is manufactured at our facility in Edwardsville,
Kansas.

TEMPERATURE CONTROL DIVISION

We manufacture, remanufacture and market a broad line of replacement parts
for automotive temperature control systems (air conditioning and heating),
primarily under the brand names of Four Seasons, Everco, Factory Air, Trumark,
NAPA Auto Parts and Carquest. The major product groups sold by our Temperature
Control Division are compressors, other air conditioning parts including small
motors, fan clutches, dryers, evaporators, accumulators and hoses, and heating
parts, including heater cores and valves. Total sales for our Temperature
Control Division accounted for approximately 34% of our consolidated net sales
for the three months ended March 31, 2003 and approximately 43% and 46% of our
consolidated net sales in 2002 and 2001, respectively.

A major factor in the Temperature Control Division's business is the federal
regulation of chlorofluorocarbon refrigerants. United States legislation phased
out the production of domestic R-12 refrigerant (e.g., DuPont's Freon)
completely by the end of 1995. As the new law became effective, vehicle air
conditioners needing repair or recharge were retrofitted to use the new R-134a
refrigerant. New vehicles began to use the new refrigerants in 1993. Installers
continue to seek training and certification in the new technology and our
Temperature Control Division has

taken the lead in providing this training and certification. Additionally, as
technological changes necessitate many new automotive parts, as well as new
service equipment, in anticipation of the phase-out of chlorofluorocarbon
refrigerants, in 1994 we reengineered our compressor line to be able to operate
efficiently utilizing either R-12 or R-134a refrigerants, and remain a leader in
providing retrofit kits for conversion of R-12 systems.

In 1998, we exchanged our brake business for the Moog automotive temperature
control business of Cooper Industries, which expanded our position in
temperature control. The Moog acquisition also expanded our position in the
small motor and heater parts markets. In 1999, we acquired Eaglemotive
Corporation, a manufacturer of fan clutches and oil coolers. In consolidating
these two businesses with our existing operations, we closed three manufacturing
facilities and consolidated three distribution sites into one.

EUROPE DIVISION

In July 1996, we acquired an equity interest in Standard Motor Products
(SMP) Holdings Limited (formerly Intermotor Holdings Limited) located in
Nottingham, England. This was our first investment in Europe. During 2002, we
acquired the remaining equity interest in SMP Holdings Limited. SMP Holdings
Limited manufactures and distributes a broad line of engine management products
primarily to customers in Europe. In 1996, we expanded our presence in Europe by
opening a European distribution center in Strasbourg, France for temperature
control products. A joint venture (Blue Streak-Europe) between SMP Holdings
Limited and Blue Streak Electronics was also initiated in 1996, which supplies
rebuilt engine computers for the European market.

Since 1996, we have made a series of smaller acquisitions supplementing both
the Engine Management and Temperature Control portions of the business. With
respect to the engine management business, in January 1999 we acquired Webcon UK
Limited, an assembler and distributor of fuel system components and other engine
management and motor sport performance products, and later in 1999 acquired
Lemark Auto Accessories, a supplier of wire sets. In January 1999, Blue Streak
Europe acquired Injection Correction UK LTD, and in September 2001, it also
acquired TRW Inc.'s electronic control unit remanufacturing division, also
located in the United Kingdom. In April 2002, the wire business was further
expanded by acquiring Carol Cable Limited, a manufacturer and distributor of
wire.

With respect to the Temperature Control portion of the business, following
the opening of the distribution center in France, in 1997 we entered into a
joint venture with Valeo, SA to rebuild air conditioner compressors for the
European market. In addition, in January 2000 we acquired Four Seasons UK Ltd.
(formerly Vehicle Air Conditioning Parts Ltd.), a distributor of components for
the repair of air conditioning systems. In July 2000, the Temperature Control
business was further expanded by purchasing Automotive Heater Exchange SRL in
Italy.

Our European Division accounted for approximately 8% of our consolidated net
sales for the three months ended March 31, 2003 and approximately 6% of our
consolidated net sales in each of 2002 and 2001. Aftermarket margins are under
pressure from original equipment suppliers, while volumes are in a general
decline in the ignition and carburetor product lines. The combination has had a
negative impact on Engine Management product sales with increasing amounts of
underabsorbed overhead. Excluding sales from our 2002 acquisition of Carol
Cable, Engine Management sales in Europe have declined to $22.8 million in 2002
from $32.2 million in 2000. We are currently planning on ways of reducing
manufacturing costs, including outsourcing products where their respective
volumes and margins can be improved by outsourcing. In addition, we have made
investments in capital projects to facilitate the sale of products to new
original equipment niche customers and the aftermarket. We are also giving
preliminary consideration to consolidating certain facilities and reducing
costs.

Unlike European Engine Management sales, European Temperature Control
product sales are increasing. Net sales have increased from $6.1 million in 2000
to $9.5 million in 2002, primarily due to growing demand for our European
Temperature Control products and acquisitions we have made. To date, our focus
has been on product coverage and high customer service levels.

Without sacrificing growth, we are giving preliminary consideration to
consolidating certain facilities and reducing costs wherever we can.

FINANCIAL INFORMATION ABOUT OUR FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

We sell our line of products primarily in the United States, with additional
sales in Europe, Canada and Latin America. Our sales are substantially
denominated in U.S. dollars.

The table below shows our consolidated net sales by geographic area for the
three years ended December 31, 2002 and for the three months ended March 31,
2003:

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
2000 2001 2002 2003
---- ---- ---- ----
(DOLLARS IN THOUSANDS)

United States............................ $521,593 $515,322 $512,055 $110,731
Europe................................... 38,310 33,449 36,028 10,540
Canada................................... 27,942 28,811 32,188 10,556
Other Foreign............................ 13,547 14,070 18,166 3,898
-------- -------- -------- --------
Total................................ $601,392 $591,652 $598,437 $135,725
-------- -------- -------- --------
-------- -------- -------- --------
</Table>

The table below shows our long-lived assets by geographical area for the
three years ended December 31, 2002 and for the three months ended March 31,
2003:

<Table>
<Caption>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
2000 2001 2002 2003
---- ---- ---- ----
(DOLLARS IN THOUSANDS)

United States............................ $122,825 $118,455 $109,778 $107,565
Europe................................... 17,573 17,301 7,153 6,729
Canada................................... 3,511 2,829 2,450 2,511
Other Foreign............................ 1,312 1,101 1,124 1,061
-------- -------- -------- --------
Total................................ $145,221 $139,686 $120,505 $117,866
-------- -------- -------- --------
-------- -------- -------- --------
</Table>

SALES AND DISTRIBUTION

We sell our products under proprietary brand names throughout the United
States, Canada, Europe and Latin America. Products are distributed to warehouse
distributors, including 15,000 jobber outlets located throughout the United
States and Canada. The jobbers sell our products primarily to professional
mechanics and to consumers who perform their own automobile repairs. In
addition, we sell directly to large auto parts retail chains, such as Advance
Auto Parts and O'Reilly Automotive.

As of March 31, 2003, we sold and serviced our products through a direct
sales force of approximately 200 employees and, in some instances, through
independent sales representatives.

We believe that our sales force is the premier direct sales force for our
two product lines. We believe the primary reason for this reputation is our high
concentration of highly-qualified, well-trained salespeople dedicated to
geographic territories, which allows us to provide a level of customer service
that we believe is unmatched. The United States sales force is divided into
three regions, each with five to six zones and approximately eight salespeople
per zone.

From the outset, we thoroughly train our salespeople both in the function
and application of every product line we sell, as well as in proven sales
techniques. Customers therefore depend on these salespeople as a reliable source
for technical information. We give newly hired salespeople extensive instruction
at our training facility in Irving, Texas and have a policy of continuing
education that allows our sales force to stay current on troubleshooting and
repair techniques, as well as the latest automotive parts and systems
technology. We employ a comprehensive

CD-ROM training program that further broadens our capability to provide
real-time updated training to our salespeople.

We generate demand for our products by directing a significant portion of
our sales effort to the end-customers' customers (i.e., jobbers and professional
mechanics), creating demand through our traditional distribution system. We also
conduct instructional clinics, which teach mechanics how to diagnose and repair
complex systems related to our products. To help our salespeople to be teachers
and trainers, we focus our recruitment efforts on candidates who already have
strong technical backgrounds as well as sales experience. We also create demand
for our products through the Standard Plus Club. Our Standard Plus Club, a
professional service dealer network comprised of approximately 7,900 members,
offers technical and business development support and has a technical service
telephone hotline which provides diagnostics and installation support. This club
is available to any jobber or installer and provides training, special discount
programs, on-line diagnostics assistance and logo merchandise.

In connection with our sales activities, we offer several types of discounts
and allowances. We believe these discounts and allowances are a common practice
throughout the automotive aftermarket industry. First, we offer cash discounts
for paying invoices in accordance with the discounted terms of the invoice.
Second, we offer pricing discounts based on volume and different product lines
purchased from us. Supplementally, rebates and discounts are provided to
customers as advertising and sales force allowances. In addition to the
aforementioned discounts and rebates, allowances for warranty and overstock
returns are also provided.

CUSTOMERS

Our customer base is comprised largely of warehouse distributors, jobber
outlets, other manufacturers and export customers. In addition to serving our
traditional customer base, we have expanded into the retail market by selling to
large retail chains such as Advance Auto Parts and O'Reilly Automotive. Our
retail channel of distribution has grown significantly from approximately $41
million in consolidated net sales to retailers in 1993 (representing 7% of
consolidated net sales), to approximately $138 million in 1997 (representing 26%
of consolidated net sales), and to approximately $169 million in 2002
(representing 28% of consolidated net sales). In 1997, we commenced distributing
our products through the original equipment service supplier channel, and sold
approximately $3 million in consolidated net sales to original equipment service
suppliers (representing 0.6% of consolidated net sales), which increased to
approximately $23 million in 2002 (representing 3.8% of consolidated net sales).

Our five largest individual customers accounted for 41% of our consolidated
net sales for the three months ended March 31, 2003 and 46% and 44% of our
consolidated net sales in 2002 and 2001, respectively. Members of one marketing
group represent our largest group of customers and accounted for approximately
15% of our consolidated net sales for the three months ended March 31, 2003, and
for 2002 and 2001. One individual member of this marketing group accounted for
12% of our consolidated net sales for the three months ended March 31, 2003 and
13% and 10% of our consolidated net sales for 2002 and 2001, respectively.
Recently, we lost AutoZone as a customer for our Temperature Control Division,
which had a negative effect on our consolidated net sales for the three months
ended March 31, 2003. We estimate that our consolidated net sales in 2003 will
decline by approximately $25 million as a result of our losing a majority of
AutoZone's business.

We have in the past and may in the future lose customers or lose a
particular product line of a customer. See 'Risk Factors -- We depend on a
limited number of key customers, and the loss of any such customer or a material
reduction in business from any such customer could have a material adverse
effect on our business, financial condition and results of operations' for a
more detailed discussion of our risk of losing customers.

COMPETITION

We are a leading independent manufacturer of replacement parts for the
product lines comprising our two principal operating divisions: Engine
Management and Temperature Control. We compete primarily on the basis of price,
product quality, customer service, product coverage, product availability, order
turn-around time and order fill rate. We believe we differentiate ourselves from
our competitors primarily through:

a value-added, knowledgeable sales force;

extensive product coverage;

a sophisticated parts cataloguing systems; and

inventory levels sufficient to meet the rapid delivery
requirements of customers.

In the engine management business, we are one of the leading independent
manufacturers in the United States. Our significant competitors include Delco
Electronics Corporation, Delphi Corporation, Federal-Mogul Corporation, KEM
Manufacturing Products, Inc., Robert Bosch Corporation and Wells Manufacturing
Corporation (a UIS, Inc. subsidiary).

Our temperature control business is one of the leading independent producers
and distributors of a full line of temperature control products in North America
and other geographic areas. Delphi Corporation, Visteon Corporation, AC Delco,
Transpro, Inc. and Jordan Automotive Aftermarket, Inc. are some of our key
competitors in this market.

Although we are a leading independent manufacturer of automotive replacement
parts with strong brand name recognition, we face substantial competition in all
markets that we serve. The automotive aftermarket is highly competitive and our
success in the marketplace continues to depend on our ability to offer
competitive prices, improved products and expanded offerings in competition with
many other suppliers to the aftermarket. Some major manufacturers of replacement
parts are divisions of companies having greater financial, marketing and other
resources than we do. In addition, automobile manufacturers supply virtually
every replacement part sold by us, although these manufacturers generally supply
parts only for cars they produce. See 'Risk Factors -- Our industry is highly
competitive, and our success depends on our ability to compete with suppliers of
aftermarket automotive products, some of which have substantially greater
financial, marketing and other resources than we do' for a more detailed
discussion of the risks we face in connection with competition in the automotive
aftermarket industry.

SEASONALITY

Historically, our operating results have fluctuated by quarter, with the
greatest sales occurring in the second and third quarters of the year, with
revenues generally being recognized at the time of shipment. It is in these
quarters that demand for our products is typically the highest, specifically in
the Temperature Control segment of our business. In addition to this
seasonality, the demand for our Temperature Control products during the second
and third quarters of the year may vary significantly with the summer weather.
For example, a cool summer may lessen the demand for our Temperature Control
products, while a hot summer may increase such demand. As a result of this
seasonality and variability in demand of our Temperature Control products, our
working capital requirements peak near the end of the second quarter, as the
inventory build-up of air conditioning products is converted to sales and
payments on the receivables associated with such sales have yet to be received.
During this period, our working capital requirements are typically funded by
borrowings from our revolving credit facility.

The seasonality of our business offers significant operational challenges in
our manufacturing and distribution functions. To limit these challenges and to
provide a rapid turnaround time of customer orders, we traditionally offer a
pre-season selling program, known as our 'Spring promotion', in which customers
are offered a choice of a price discount or longer payment terms. See 'Risk
Factors -- Our business is seasonal and is subject to substantial quarterly
fluctuations, which impact our quarterly performance and working capital
requirements' for a more detailed discussion of the risks related to the
seasonality of our business.

WORKING CAPITAL MANAGEMENT

Automotive aftermarket companies have been under increasing pressure to
provide broad SKU (stock keeping unit) coverage in response to parts and brand
proliferation. Since 1996, we have made significant changes to the inventory
management system to reduce inventory requirements. We launched a new
forecasting system in our Engine Management Division that permitted a
significant reduction in safety stocks. Our Engine Management Division also
introduced a new distribution system in the second half of 1999, which permits
pack-to-order systems to be implemented. Such systems permit us to retain slow
moving items in a bulk storage state until an order for a specific brand part is
received. This system reduces the volume of a given part in inventory and
reduces the labor requirements to package and repackage inventory.

We instituted an aggressive inventory reduction campaign in 2001. We
targeted a minimum $30 million inventory reduction in 2001, but exceeded our
goal by reducing inventory by $57 million that year. In addition, while reducing
inventory levels, we maintained customer service fill rate levels of
approximately 93%. In 2002, we further reduced inventory by an additional
$8 million.

Our inventories are increased as a result of warranty and overstock returns.
Many of our products carry a warranty ranging from a 90-day limited warranty to
a lifetime limited warranty, which generally covers defects in materials or
workmanship and failure to meet industry published specifications. In addition
to warranty returns, we also permit our customers to return products to us
within customer-specific limits in the event that they have overstocked their
inventories. In particular, the seasonality of demand for our Temperature
Control Division's products requires that we increase our inventory during the
winter season in preparation of the summer selling season and customers
purchasing such inventory have the right to make returns. See 'Risk
Factors -- We may incur material losses and significant costs as a result of
warranty-related returns by our customers in excess of anticipated amounts' and
'Risk Factors -- Our profitability may be materially adversely affected as a
result of overstock inventory-related returns by our customers in excess of
anticipated amounts' for more detailed discussions of the risks we face in
connection with warranty and overstock returns by our customers.

In order to better control warranty and overstock return levels, beginning
in 2000 we tightened the rules for authorized warranty returns, placed further
restrictions on the amounts customers can return and instituted a program so
that our management can better estimate potential future product returns. In
addition, with respect to our air conditioning compressors, our most significant
customer product warranty returns, we established procedures whereby a warranty
will be voided if a customer does not follow a twelve step warranty return
process.

Our profitability and working capital requirements have become more seasonal
with the increased sales mix of temperature control products. Our working
capital requirements peak near the end of the second quarter, as the inventory
build-up of air conditioning products is converted to sales and payments on the
receivables associated with such sales have yet to be received. These increased
working capital requirements are funded by borrowings from our revolving credit
facility.

SUPPLIERS

The principal raw materials purchased by us consist of brass, electronic
components, fabricated copper (primarily in the form of magnet and insulated
cable), ignition wire, stainless steel coils and rods, aluminum coils and rods,
lead, rubber molding compound, thermo-set and thermo plastic molding powders.
Additionally, we use components and cores (used parts) in our remanufacturing
processes for computerized electronics and air conditioning compressors.

We purchase many materials in the U.S. open market, but do have a limited
number of supply agreements on key components. A number of prime suppliers make
these materials available. In the case of cores, we obtain them either from
exchanges with customers who return cores when purchasing remanufactured parts,
or through direct purchases from a network of core brokers.

We believe there is an adequate supply of primary raw materials and cores.
In order to ensure a consistent, high quality, low cost supply of key components
for each product line, we continue to develop our own sources through internal
manufacturing capacity.

PRODUCTION AND ENGINEERING

We engineer, tool and manufacture many of the components for our products,
except for some commonly available small component parts from outside suppliers.
We also perform our own plastic and rubber molding operations, stamping and
machining operations, automated electronics assembly and a wide variety of other
processes. In the case of remanufactured components, we conduct our own
teardown, diagnostics and rebuilding for computer modules and air conditioning
compressors. We have found this level of vertical integration to provide
advantages in terms of cost, quality and availability. We intend to selectively
continue efforts toward further vertical integration to ensure a consistent
quality and supply of low cost components.

We use the 'just-in-time' cellular manufacturing concept as a major program
to lower costs and improve efficiency. The main thrust of 'just-in-time'
cellular manufacturing is reducing work-in-process and finished goods inventory,
and its implementation reduces the inefficient operations that burden many
manufacturing processes. In 2000, we launched a program for the installation of
a fully integrated enterprise resource planning (ERP) system. The implementation
is expected to be fully completed in 2003 in our Temperature Control Division.
At that time, the system will encompass all aspects of the supply chain,
including procurement, manufacturing, sales, distribution and finance at all of
our Temperature Control facilities. The existing Engine Management information
system continues to meet the need of our Engine Management Division and will be
the foundation for consolidating Dana's EMG Business.

EMPLOYEES

As of March 31, 2003, we employed approximately 2,300 people in the United
States and 1,000 people in Mexico, Canada, Puerto Rico, Europe and Hong Kong. Of
these 3,300 employees, approximately 2,300 are production employees. We operate
primarily in non-union facilities and have binding labor agreements with the
workers at our two unionized facilities. We have approximately 130 production
employees in Edwardsville, Kansas who are covered by a contract with The
International Union, United Automobile, Aerospace and Agricultural Implement
Workers of America ('UAW') that expires April 4, 2006. As of March 31, 2003,
approximately 120 of our production employees in Long Island City, New York are
under a UAW contract that expires October 2, 2004. We also have a union
relationship in Mexico with an agreement negotiated each year. The current union
agreement in Mexico, which covers approximately 260 employees, expires on
January 29, 2004. We believe that our facilities are in favorable labor markets
with ready access to adequate numbers of skilled and unskilled workers, and we
believe our relations with our union and non-union employees are good.

PROPERTIES

We maintain our executive offices and a manufacturing plant in Long Island
City, New York.

The table below describes our principal physical properties.

<Table>
<Caption>
OWNED OR
APPROX. EXPIRATION
STATE OR SQUARE DATE
LOCATION COUNTRY PRINCIPAL BUSINESS ACTIVITY FEET OF LEASE
- -------- ------- --------------------------- ---- --------

Engine Management
Orlando FL Manufacturing (Ignition) 50,640 2007
Edwardsville KS Manufacturing and Distribution (Wire) 355,000 Owned
Wilson NC Manufacturing (Ignition) 31,500 2008
Reno NV Distribution (Ignition) 67,000 Owned
Long Island City NY Administration and Manufacturing (Ignition) 318,000 Owned
Greenville SC Manufacturing (Ignition) 181,525 Owned

(table continued on next page)
</Table>

(table continued from previous page)

<Table>
<Caption>
OWNED OR
APPROX. EXPIRATION
STATE OR SQUARE DATE
LOCATION COUNTRY PRINCIPAL BUSINESS ACTIVITY FEET OF LEASE
- -------- ------- --------------------------- ---- --------

Disputanta VA Distribution (Ignition) 411,000 Owned
Fajardo Puerto Rico Manufacturing (Ignition) 114,000 2007
Hong Kong HK Manufacturing (Ignition) 21,350 2005
Reynosa Mexico Manufacturing (Wire) 62,500 2004
Nottingham England Administration and Distribution (Ignition and Wire) 29,000 Owned
Nottingham England Manufacturing (Ignition) 46,777 Owned
Nottingham England Manufacturing (Ignition) 10,000 2012
Wellingborough England Manufacturing (Wire) 18,500 2017

Temperature Control
-------------------
Corona CA Manufacturing and Distribution 78,200 2008
Lewisville TX Administration and Distribution 415,000 2009
Fort Worth TX Manufacturing and Distribution 204,000 Owned
Fort Worth TX Manufacturing and Distribution 103,000 2004
Grapevine TX Manufacturing 180,000 Owned
St. Thomas Canada Manufacturing 40,000 Owned
Strasbourg France Administration and Distribution 16,146 2004
Massa Italy Administration and Distribution 13,100 2004

Temperature Control/Engine Management
-------------------------------------
Mississauga Canada Administration and Distribution (Ignition, Wire, 128,400 2006
Temperature Control)
Sunbury at Thames England Distribution (Ignition and Temperature Control) 28,095 2007

Other
-----
Cumming GA Vacated 77,000 2007
Grapevine TX Storage 83,125 2004
Irving TX Training Center 13,400 2004
</Table>

The real property we own in Kansas, Nevada, South Carolina, Virginia and
Texas is encumbered by a mortgage or deed of trust, as applicable, in favor of
General Electric Capital Corporation, as agent for our secured revolving credit
facility. We are currently in discussions with JP Morgan Chase Bank for a new 15
year, $10 million mortgage, which will require us to encumber the real property
we own in Long Island City, New York.

LEGAL PROCEEDINGS

On January 28, 2000, a former significant customer of ours which is
currently undergoing a Chapter 7 liquidation in U.S. Bankruptcy Court filed
claims against a number of its former suppliers, including us. The claim against
us alleged $0.5 million of preferential payments in the 90 days prior to the
related Chapter 11 bankruptcy petition. The claim pertaining to the preferential
payments was settled for an immaterial amount during the second quarter of 2002.
In addition, this former customer seeks $9.4 million from us for a variety of
claims including antitrust, breach of contract, breach of warranty and
conversion. These latter claims arise out of allegations that this customer was
entitled to various discounts, rebates and credits after it filed for
bankruptcy. We have purchased insurance with respect to the actions. On August
22, 2002, the court dismissed the antitrust claims. We believe that these
remaining matters will not have a material adverse effect on our business,
financial condition or results of operations.

In 1986, we acquired a brake business, which we subsequently sold in March
1998 and which is accounted for as discontinued operations in the accompanying
consolidated financial statements. When we originally acquired this brake
business, we assumed future liabilities relating to any alleged exposure to
asbestos-containing products manufactured by the seller of the acquired brake
business. In accordance with the related purchase agreement, we agreed to assume
the liabilities for all new claims filed on or after September 1, 2001. Our
ultimate exposure will depend upon the number of claims filed against us on or
after September 1, 2001 and the amounts paid for indemnity and defense thereof.
At December 31, 2001, approximately

100 cases were outstanding for which we were responsible for any related
liabilities. At December 31, 2002, the number of cases outstanding for which we
were responsible for related liabilities increased to approximately 2,500, which
include approximately 1,600 cases filed in December 2002 in Mississippi. We
believe that these Mississippi cases filed against us in December 2002 were due
in large part to potential plaintiffs accelerating the filing of their claims
prior to the effective date of Mississippi's tort reform statute in
January 2003, which statute eliminated the ability of plaintiffs to file
consolidated cases. At March 31, 2003, approximately 2,700 cases were
outstanding for which we were responsible for any related liabilities. To date,
the amounts paid for settled claims have been immaterial. We do not have
insurance coverage for the defense and indemnity costs associated with these
claims. We recorded a liability associated with future settlements through 2052
and recorded an after tax charge of $16.9 million as a loss from discontinued
operations during the third quarter of 2002 to reflect such liability. For the
year ended December 31, 2002, the total amount of the loss from discontinued
operations was $18.3 million.

We are involved in various other litigation and product liability matters
arising in the ordinary course of business. Although the final outcome of any
asbestos-related matters or any other litigation or product liability matter
cannot be determined, based on our understanding and evaluation of the relevant
facts and circumstances, it is our opinion that the final outcome of these
matters will not have a material adverse effect on our business, financial
condition or results of operations. See 'Risk Factors -- We may be materially
adversely affected by asbestos claims arising from products sold by our former
brake business, as well as by other product liability claims' for a more
detailed discussion of the risks we face in connection with our exposure to
asbestos-related claims.

INSURANCE

We maintain basic liability coverage up to $2 million for automobile
liability and general and product liability, and up to $50 million for umbrella
liability coverage. We also maintain a $10 million environmental policy to cover
our existing facilities, except for one of our facilities which is currently
undergoing minor environmental remediation. The environmental remediation costs
at such facility are covered by an insurance policy of $3 million, which is
subject to a $1.5 million deductible. Historically, we have not experienced
casualty losses in any year in excess of our coverage. We have no reason to
expect this experience to change, but can offer no assurances that liability
losses in the future will not exceed our coverage.

MANAGEMENT

Our executive officers and directors, and their ages and positions as of
March 31, 2003, are:

<Table>
<Caption>
EXECUTIVE OFFICERS AND DIRECTORS AGE POSITION
-------------------------------- --- --------

Lawrence I. Sills(4)......................... 63 Chairman of the Board, Chief Executive Officer
and Director
John P. Gethin............................... 54 President and Chief Operating Officer
James J. Burke............................... 47 Vice President Finance, Chief Financial Officer
Joseph G. Forlenza........................... 59 Vice President and General Manager of Engine
Management Division
Donald E. Herring............................ 60 Vice President of Aftermarket Sales
Sanford Kay.................................. 60 Vice President of Human Resources and Secretary
Nitin Parikh................................. 63 Vice President of Information Systems
Robert H. Martin............................. 56 Treasurer and Assistant Secretary
Arthur D. Davis(4)........................... 55 Vice Chairman of the Board and Director
Marilyn Fife Cragin.......................... 51 Director
Susan F. Davis............................... 54 Director
Robert M. Gerrity(1)(2)(3)................... 65 Director
John L. Kelsey(1)(2)(3)...................... 77 Director
Kenneth A. Lehman(1)(2)(3)................... 59 Director
Arthur S. Sills.............................. 59 Director
Peter J. Sills............................... 56 Director
Frederick D. Sturdivant(1)(2)(4)............. 65 Director
William H. Turner(1)(2)(4)................... 63 Director
</Table>

- ---------

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

(3) Member of the Corporate Governance Committee.

(4) Member of the Nominating Committee.

Lawrence I. Sills has been our Chief Executive Officer and Chairman of the
Board since December 2000 and has served as a director since 1986. From 1986 to
December 2000, Mr. Sills served as our President and Chief Operating Officer.
From 1983 to 1986, Mr. Sills served as our Vice President of Operations. Mr.
Sills is the brother of Arthur S. Sills and Peter J. Sills, who are also our
directors.

John P. Gethin has served as our President and Chief Operating Officer since
December 2000. From December 1997 to November 2000, Mr. Gethin served as our
Senior Vice President of Operations. Since October 1998, he has served as
General Manager of our Four Seasons Division (part of our Temperature Control
Division). From October 1995 to December 1997, Mr. Gethin was Vice President and
General Manager of EIS Brake Parts Division (a former business unit of ours).

James J. Burke has served as our Vice President Finance, Chief Financial
Officer since October 1999. From January 1998 to September 1999, Mr. Burke
served as our Director of Finance, Chief Accounting Officer. From March 1993 to
December 1997, Mr. Burke served as our Corporate Controller.

Joseph G. Forlenza has served as Vice President and General Manager of our
Engine Management Division since July 1993. From May 1988 to June 1993, Mr.
Forlenza served as Vice President and General Manager of our Champ Service Line
division (a former business unit of ours).

Donald E. Herring has served as our Vice President of Aftermarket Sales
since January 1993. From January 1990 to December 1992, Mr. Herring served as
our National Sales Manager.

Sanford Kay has served as our Vice President of Human Resources since June
1988 and as our Secretary since May 1993. From January 1987 to June 1988, Mr.
Kay served as our Director of Labor Relations.

Nitin Parikh has served as our Vice President of Information Systems since
June 1985. From June 1978 to June 1985, Mr. Parikh served as our Manager of
Information Systems.

Robert H. Martin has served as our Treasurer and Assistant Secretary since
October 1999. From April 1993 to October 1999, Mr. Martin served as Controller
of our Engine Management Division. From February 1989 to April 1993, Mr. Martin
was the Division Controller of Stanric, Inc., our subsidiary.

Arthur D. Davis has served as our Vice Chairman of the Board since December
2000 and as a director since May 1986. Mr. Davis served as our Vice President of
Materials Management from May 1986 to January 1989. Mr. Davis is currently
retired. Mr. Davis is the husband of Susan F. Davis, one of our directors.

Marilyn Fife Cragin has served as a director since October 1995. Ms. Fife
Cragin has been an independent consultant and a practicing psychotherapist for
more than twenty years. Ms. Fife Cragin is the sister of Susan F. Davis.

Susan F. Davis has served as a director since May 1998. Ms. Davis is the
wife of Arthur D. Davis and sister of Marilyn Fife Cragin.

Robert M. Gerrity has served as a director since July 1996. From 1996 to
2000, Mr. Gerrity served as Chairman and Chief Executive Officer of the Antrim
Group, Inc., a venture capital company. Prior to 1996, Mr. Gerrity served as
Vice Chairman of New Holland, n.v., an agricultural and construction equipment
company. Mr. Gerrity is also a director of the Rimrock Corporation.

John L. Kelsey has served as a director since 1964. Mr. Kelsey is currently
retired. From 1989 to 1994, Mr. Kelsey served as Advisory Director at
PaineWebber Inc. Prior to that time, Mr. Kelsey served as Managing Director of
PaineWebber Inc. (and its predecessor firms) for more than 30 years.

Kenneth A. Lehman has served as a director since April 1999. Mr. Lehman has
been Managing Director of the KKP Group LLC since April 1999. From 1990 to
December 1998, he was the Co-Chairman and Chief Executive Officer of Fel-Pro
Incorporated. He is also a director of Gold Eagle Co.

Arthur S. Sills has served as a director since October 1995. Mr. Sills was
an educator and administrator in Massachusetts school districts for thirty years
prior to his retirement in 2000.

Peter J. Sills has served as a director since December 2000. Mr. Sills has
been a writer for the past ten years and is also an attorney.

Fredrick D. Sturdivant has served as a director since December 2001. Mr.
Sturdivant has been Chairman of the Tyler Group Inc. since April 2002. Mr.
Sturdivant was Chairman of Reinventures LLC from October 2000 to March 2002.
From June 1998 to September 2000, he was Executive Managing Director of
Strategic Decisions Group/Navigant Consulting. From January 1996 to June 1998,
he was President of Index Research and Advisory Services, a subsidiary of
Computer Sciences Corporation, and its general management consulting arm,
CSC Index.

William H. Turner has served as a director since May 1990. Mr. Turner has
been the Chairman of the Advisory Council of PNC Bank, New Jersey since June
2000. From September 1999 to June 2000, he was the Chairman of PNC Bank, N.A.,
New Jersey and Northeast Region and President of PNC from August 1997 to
September 1999. He was President and Co-Chief Executive Officer of Franklin
Electronic Publishers, Inc. from October 1996 to July 1997. He was the Vice
Chairman, Chase Manhattan Bank, and its predecessor, Chemical Banking
Corporation,

prior to his employment with Franklin Electronics Publishers, Inc., where he
currently serves as a director. Mr. Turner is also a director of Volt
Information Sciences, Inc. and New Jersey Resources Corporation.

We intend to comply with all applicable rules promulgated under the
Sarbanes-Oxley Act of 2002 and the applicable New York Stock Exchange rules
relating to corporate governance matters, including those rules relating to
audit committees.

PRINCIPAL SHAREHOLDERS

The following table sets forth information as of March 31, 2003 with respect
to the beneficial ownership of shares of our common stock, by:

each person known by us to be the beneficial owner of more
than 5% of the outstanding shares of our common stock,

our directors, our chief executive officer during 2002 and
each of our other four most highly compensated executive
officers during 2002, and

all of our executive officers and directors as a group.

<Table>
<Caption>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OWNERSHIP(1) OF CLASS
- ---------------- ------------ --------

Gabelli Asset Management Inc. ............................. 2,368,691(2) 18.65%
One Corporate Center
Rye, NY

Lawrence I. Sills(10) ...................................... 1,600,333(3) 12.63
37-18 Northern Boulevard
Long Island, NY

Marilyn Fife Cragin(11) .................................... 1,588,048(4) 12.59
37-18 Northern Boulevard
Long Island City, NY

Arthur D. Davis(12) ........................................ 1,451,580(5) 11.49
37-18 Northern Boulevard
Long Island City, NY

Peter J. Sills(10) ......................................... 1,131,020(6) 9.01
37-18 Northern Boulevard
Long Island City, New York

Arthur S. Sills(10) ........................................ 1,118,779(7) 8.91
37-18 Northern Boulevard
Long Island, NY

Susan F. Davis(11)(12) ..................................... 1,082,261(8) 8.57
37-18 Northern Boulevard
Long Island City, NY

Dimensional Fund Advisors Inc. ............................ 756,150(9) 6.02
1299 Ocean Avenue
Santa Monica, CA

John P. Gethin ............................................. 88,667(13) *
37-18 Northern Boulevard
Long Island City, NY

Joseph G. Forlenza ......................................... 83,007(14) *
37-18 Northern Boulevard
Long Island City, NY

Donald E. Herring .......................................... 67,272(15) *
37-18 Northern Boulevard
Long Island City, NY

James J. Burke ............................................. 61,404(16) *
37-18 Northern Boulevard
Long Island City, NY

John L. Kelsey ............................................. 16,770(17) *
460 Coconut Palm Road
Vero Beach, FL

William H. Turner .......................................... 15,742(18) *
2 Tower Center Blvd.
East Brunswick, NJ
(table continued on next page)
</Table>

(table continued from previous page)

<Table>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OWNERSHIP(1) OF CLASS
- ---------------- ------------ --------

Robert M. Gerrity .......................................... 14,742(19) *
114 Division Street
Bellaire, MI

Kenneth A. Lehman .......................................... 10,726(20) *
2715 Sheridan Road
Evanston, IL

Frederick D. Sturdivant .................................... 4,054(21) *
8 San Clemente Drive
Carmel Valley, CA

Directors and Officers as a group (eighteen persons)........ 6,297,993(22) 47.47%
</Table>

- ---------

* Represents beneficial ownership of less than 1% of the
outstanding shares of common stock.

(1) Applicable percentage of ownership is based on 12,558,009
shares of common stock outstanding as of March 31, 2003.
Beneficial ownership is determined in accordance with the
rules of the SEC. In computing the number of shares
beneficially owned by a person and the percentage ownership
of that person, shares of common stock subject to options,
warrants and our convertible debentures held by that person
that are currently exercisable or exercisable within 60 days
of March 31, 2003 are deemed outstanding. Regarding our
convertible debentures, under Rule 13d-3 of the Exchange
Act, these persons must disclose the share amounts they
would hold upon conversion of our convertible debentures,
even though such conversion has not actually occurred. At
March 31, 2003, our convertible debentures were convertible
into 31.068 shares of common stock for each $1,000
convertible debentures converted and the conversion price
for our convertible debentures was equivalent to
approximately $32.19 per share. Shares subject to options or
our convertible debentures, however, are not deemed
outstanding for the purpose of computing the percentage
ownership of any other person. Except as indicated in the
footnotes to this table, the shareholder named in the table
has sole voting power and sole investment power with respect
to the shares set forth opposite such shareholder's name.

In footnotes 3, 4, 5, 6, 7 and 8, where more than one
director of our company is a co-trustee of a trust,
co-director of a foundation, or joint purchaser of our
convertible debentures, and shares voting power and
investment power with another director or directors with
respect to a certain number of shares, such shares are
counted as being beneficially owned by each director who
shares such voting power and investment power. However, in
computing the aggregate number of shares owned by directors
and officers in footnote 21, these same shares are only
counted once.

(2) The information for Gabelli Asset Management Inc. and
certain of its affiliated entities ('Gabelli') is based
solely on an amendment to its Schedule 13D, filed with the
SEC on December 24, 2002, wherein Gabelli stated that it
beneficially owned an aggregate of 2,368,691 shares of our
common stock. Gabelli states that it has sole voting power
for 2,368,691 shares and has sole investment power for
2,337,691 shares.

(3) Includes 979,180 shares of common stock, of which:
(a) 430,312 shares are held as co-trustee with Arthur S.
Sills and Peter J. Sills for which Lawrence I. Sills has
shared voting and shared investment power; (b) 435,770
shares are held by the estate of Nathaniel I. Sills, of
which Lawrence I. Sills is executor and has sole voting and
sole investment power; (c) 4,844 shares of common stock are
allocated to Lawrence I. Sills under Standard Motor
Products, Inc.'s Employee Stock Ownership Plan (the
'Standard Motor Products ESOP'); (d) 2,812 shares are owned
by Mr. Sills's wife; and (e) 114,000 shares of common stock
subject to options exercisable within 60 days of March 31,
2003. In his capacity as a trustee and executor and for
shares of common stock held by his wife, Mr. Sills disclaims
beneficial ownership of the shares which are deemed
'beneficially owned' by him within the meaning of
Rule 13d-3 of the Exchange Act.

(4) Includes 884,289 shares of common stock, of which:
(a) 447,187 shares are held as co-trustee with, among
others, Arthur D. Davis and Susan F. Davis for which Ms.
Fife Cragin

(footnotes continued on next page)

(footnotes continued from previous page)

has shared voting and shared investment power; (b) 104,063
shares are held by the Fife Family Foundation, Inc., of
which Ms. Fife Cragin is a director and officer and shares
voting power and investment power with, among others, Susan
F. Davis; (c) 137,270 shares are held by Ms. Fife Cragin as
custodian for minor children for which she has sole voting
and sole investment power; (d) 52,400 shares are held as
co-trustee with Arthur D. Davis for which Ms. Fife Cragin
has shared voting and shared investment power; (e) 53,527
shares are deemed beneficially owned by Ms. Fife Cragin in
connection with her purchase of our convertible debentures;
(f) 18,560 shares are held as co-trustee for which she has
shared voting and investment power; (g) 9,307 shares are
owned by Ms. Fife Cragin's husband; and (h) 61,975 shares
are held by Ms. Fife Cragin's husband as trustee for their
children. In her capacity as a trustee, director and officer
of the foundation, for shares held as custodian for minor
children and owned by her spouse, Ms. Fife Cragin disclaims
beneficial ownership of such shares so deemed 'beneficially
owned' by her within the meaning of Rule 13d-3 of the
Exchange Act.

(5) Includes 1,364,183 shares of common stock, of which:
(a) 420,982 shares are held by Arthur D. Davis as trustee
for which he has sole voting and sole investment power;
(b) 52,400 shares are held as co-trustee with Marilyn Fife
Cragin for which Mr. Davis has shared voting and shared
investment power; (c) 129,835 shares are held as co-trustee
with Susan F. Davis for which Mr. Davis has shared voting
and shared investment power; (d) 447,187 shares are held as
co-trustee with, among others, Marilyn Fife Cragin and Susan
F. Davis for which Mr. Davis has shared voting and shared
investment power; (e) approximately 1,287 shares are deemed
beneficially owned by Arthur D. Davis and Susan F. Davis in
connection with their purchase of our convertible
debentures; (f) approximately 53,527 shares are deemed
beneficially owned by Arthur D. Davis and Susan F. Davis in
connection with their purchase of our convertible
debentures; (g) 57 shares are allocated to Mr. Davis under
the Standard Motor Products ESOP; (h) 238,936 shares are
owned by Susan F. Davis; and (i) 20,000 shares are held by
Mr. Davis that were subject to options exercisable within 60
days of March 31, 2003. In his capacity as a trustee and
with regard to the 53,527 shares deemed beneficially owned
by Mr. Davis in connection with the conversion of our
convertible debentures and the 238,936 shares owned by Susan
F. Davis, Mr. Davis disclaims beneficial ownership of the
shares which are deemed 'beneficially owned' by him within
the meaning of Rule 13d-3 of the Exchange Act.

(6) Includes 573,374 shares of common stock, of which:
(a) 430,312 shares are held as co-trustee with Lawrence I.
Sills and Arthur S. Sills for which Peter J. Sills has
shared voting and shared investment power; and (c) 143,062
shares are held by the Sills Family Foundation, Inc., of
which Peter J. Sills is a director and officer and shares
voting and investment power with, among others, Arthur S.
Sills. In his capacity as a trustee and director and officer
of the foundation, Mr. Sills disclaims beneficial ownership
of the shares which are deemed 'beneficially owned' by him
within the meaning of Rule 13d-3 of the Exchange Act.

(7) Includes 573,374 shares of common stock, of which:
(a) 430,312 shares are held as co-trustee with Lawrence I.
Sills and Peter J. Sills for which Arthur S. Sills has
shared voting and shared investment power; and (b) 143,062
shares are held by the Sills Family Foundation, Inc., of
which Arthur S. Sills is a director and officer and shares
voting and investment power with, among others, Peter J.
Sills. In his capacity as a trustee and director and officer
of the foundation, Mr. Sills disclaims beneficial ownership
of the shares which are deemed 'beneficially owned' by him
within the meaning of Rule 13d-3 of the Exchange Act.

(8) Includes 843,297 shares of common stock, of which:
(a) 447,187 shares are held as co-trustee with, among
others, Marilyn Fife Cragin and Arthur D. Davis for which
Ms. Davis has shared voting and shared investment power;
(b) 104,063 shares are held by the Fife Family Foundation,
Inc., of which Ms. Davis is a director and officer and
shares voting power and investment power with, among others,
Marilyn Fife Cragin; (c) 129,835 shares are held as
co-trustee with Arthur D. Davis for which Ms. Davis has
shared voting and shared investment power;
(d) approximately 1,287 shares are deemed beneficially owned
by Susan F. Davis and Arthur D. Davis in connection with
their purchase of our convertible debentures;
(e) approximately 53,527 shares are deemed beneficially
owned by Susan F. Davis and Arthur D. Davis in connection
with their purchase of our convertible debentures;
(f) 20,000

(footnotes continued on next page)

(footnotes continued from previous page)

shares held by Mr. Davis that were subject to options
exercisable within 60 days of March 31, 2003; and
(g) 87,398 shares are owned by Arthur D. Davis. In her
capacity as trustee, director and officer of the foundation
and with regard to the 1,287 shares deemed beneficially
owned by Ms. Davis in connection with the conversion of our
convertible debentures and the 87,398 shares owned by Arthur
D. Davis, Ms. Davis disclaims beneficial ownership of the
shares so deemed 'beneficially owned' by her within the
meaning of Rule 13d-3 of the Exchange Act.

(9) The information for Dimensional Fund Advisors Inc.
('Dimensional Fund') is based solely on an amendment to its
Schedule 13G, filed with the SEC on February 10, 2003
('13G/A'), which states that Dimensional Fund furnishes
investment advice to four investment companies and serves as
investment manager to certain other commingled group trusts
and separate accounts (such companies, trusts and accounts
are referred to as 'Funds'). In connection with its role as
an investment advisor or manager to the Funds, Dimensional
Fund claims in its 13G/A to have sole voting and investment
power over 756,150 shares of our common stock, but disclaims
beneficial ownership of such shares.

(10) Lawrence I. Sills, Arthur S. Sills and Peter J. Sills are
brothers.

(11) Marilyn Fife Cragin and Susan F. Davis are sisters.

(12) Arthur D. Davis and Susan F. Davis are married.

(13) Includes (a) 1,167 shares of common stock allocated to the
account of John P. Gethin under the Standard Motor Products
ESOP and (b) 82,000 shares of common stock held by
Mr. Gethin which were subject to options exercisable within
60 days of March 31, 2003.

(14) Includes (a) 3,707 shares of common stock allocated to the
account of Joseph G. Forlenza under the Standard Motor
Products ESOP; (b) 66,800 shares of common stock held by
Mr. Forlenza which were subject to options exercisable
within 60 days of March 31, 2003; and (c) 2,500 shares of
common stock owned by Mr. Forlenza's wife, of which
Mr. Forlenza disclaims 'beneficial ownership' of such
shares within the meaning of Rule 13d-3 of the Exchange Act.

(15) Includes (a) 2,871 shares of common stock allocated to the
account of Donald E. Herring under the Standard Motor
Products ESOP and (b) 60,000 shares of common stock held by
Mr. Herring which were subject to options exercisable within
60 days of March 31, 2003.

(16) Includes (a) 3,154 shares of common stock allocated to the
account of James J. Burke under the Standard Motor Products
ESOP and (b) 53,250 shares of common stock held by
Mr. Burke which were subject to options exercisable within
60 days of March 31, 2003.

(17) Includes 11,000 shares of common stock held by John L.
Kelsey which were subject to options exercisable within 60
days of March 31, 2003.

(18) Includes 11,000 shares of common stock held by William H.
Turner which were subject to options exercisable within 60
days of March 31, 2003.

(19) Includes 11,000 shares of common stock held by Robert M.
Gerrity which were subject to options exercisable within 60
days of March 31, 2003.

(20) Includes 6,000 shares of common stock held by Kenneth A.
Lehman which were subject to options exercisable within 60
days of March 31, 2003.

(21) Includes 2,000 shares of common stock held by Frederick D.
Sturdivant which were subject to options exercisable within
60 days of March 31, 2003.

(22) All of our officers and directors as a group have 601,050
shares, which were subject to options that are exercisable
within 60 days of March 31, 2003, 23,475 shares allocated to
all officers under the Standard Motor Products ESOP and
approximately 108,341 shares of common stock in connection
with the purchase of our convertible debentures.

DESCRIPTION OF CAPITAL STOCK

We are currently authorized by our Restated Certificate of Incorporation, as
amended, to issue up to:

30,000,000 shares of common stock, par value $2.00 per
share, and

500,000 shares of preferred stock, par value $20.00 per
share, of which 30,000 shares of preferred stock have been
designated as Series A participating preferred stock, par
value $20.00 per share, and reserved for future issuance
upon exercise of rights under our Rights Agreement (as
described below).

As of March 31, 2003, there were 12,558,009 shares of common stock
outstanding and no shares of preferred stock outstanding. At June 3, 2003, we
had 505 holders of record.

The statements under this caption are brief summaries of material provisions
of (1) our Restated Certificate of Incorporation, as amended, (2) our Restated
By-laws, (3) the Indenture, dated as of July 26, 1999, between us and HSBC Bank
USA, as trustee, and (4) the Rights Agreement, dated as of February 15, 1996,
between us and Registrar & Transfer Co., as rights agent. Such summaries do not
purport to be complete, and are subject to, and are qualified in their entirety
by reference to, such documents.

COMMON STOCK

Holders of our common stock are entitled to one vote per share on all
matters on which holders of common stock are entitled to vote. The holders of
shares of our common stock do not have cumulative voting rights. Therefore, the
holders of more than 50% of the shares of common stock voting for the election
of directors can elect all of the directors, and the remaining holders will not
be able to elect any directors. Subject to the rights of the holders of any
shares of preferred stock, holders of our common stock are entitled to receive
ratably such dividends as may from time to time be declared by our board of
directors out of funds legally available therefor. Our current policy is to pay
dividends on a quarterly basis. Our credit agreement with General Electric
Capital Corporation, as agent, in connection with our revolving credit facility
will permit dividends and distributions by us, provided specific conditions are
met. Such conditions include:

no default or event of default exists under the credit
agreement or would result from such dividend distribution;

we will not have paid dividends in an amount greater than
$9 million in any 12 month period; and

we will have excess borrowing availability as determined
under the credit agreement of not less than $15.25 million
or 5% of the total credit facility (whichever is greater)
for our prior fiscal quarter.

Holders of our common stock have no pre-emptive, conversion, redemption,
subscription or similar rights. In the event of our liquidation, dissolution or
winding up, whether voluntary or involuntary, holders of shares of our common
stock are entitled to share ratably in our assets that are legally available for
distribution, if any, remaining after the payment or provision for the payment
of all of our debts and other liabilities and the payment of any preferential
amount due to the holders of shares of any series of preferred stock. All of the
outstanding shares of our common stock are fully paid and non-assessable.

The transfer agent for our common stock is Registrar and Transfer Co.

PREFERRED STOCK

Our Restated Certificate of Incorporation authorizes our board of directors
to issue from time to time up to 500,000 shares of preferred stock in one or
more series and to establish and fix the number of shares of such series and the
relative rights, preferences and limitations of each series. Preferred stock, if
issued, will rank senior to our common stock as to dividends and

liquidation preference and could decrease the amount of earnings and assets
available for distribution to holders of our common stock. The issuance of the
preferred stock may have the effect of delaying, deterring or preventing a
change in control of us and may adversely affect the rights of holders of our
common stock. Preferred stock, upon issuance, against full payment of the
purchase price therefor, will be fully paid and non-assessable. As of March 31,
2003, no shares of preferred stock are outstanding. However, 30,000 shares of
preferred stock have been reserved for issuance as Series A participating
preferred stock upon exercise of certain rights under our Rights Agreement.

CONVERTIBLE DEBENTURES

On July 26, 1999, we issued convertible debentures in the aggregate
principal amount of $90 million under an Indenture between us and HSBC Bank USA,
as trustee. The convertible debentures bear interest at the rate per annum of
6.75% and will mature on July 15, 2009. The convertible debentures are general
unsecured subordinated obligations. We pay the interest due on the convertible
debentures every six months, on January 15 and July 15. The convertible
debentures are convertible at the option of the holder at anytime into shares of
our common stock. If so converted, the holder will receive 31.0680 shares of our
common stock for each $1,000 of convertible debentures that are converted
(equivalent to a conversion price of approximately $32.19 per share). The number
of shares of our common stock to be issued upon conversion of the convertible
debentures is subject to adjustments, including, among others:

dividends and other distributions payable in common stock on
shares of our capital stock;

the issuance of certain rights, options or warrants to all
holders of our common stock that entitles them, as of a
specified record date, to subscribe for or purchase our
common stock at less than the then current market price of
our common stock; and

subdivisions, combinations and reclassifications of our
common stock.

We may redeem the convertible debentures at our option, at any time on or after
July 15, 2004, in whole or in part, at a redemption price of 103.375% in 2004,
102.700% in 2005, 102.025% in 2006, 101.350% in 2007, 100.675% 2008 and 100% of
the principal amount on July 15, 2009, in each case together with accrued
interest to the redemption date. We also may repurchase the convertible
debentures at the option of the holders upon a change of control at a purchase
price equal to 101% of the aggregate principal amount of the convertible
debentures on their date of purchase, plus accrued interest, if any.

RIGHTS AGREEMENT

On January 17, 1996, our board of directors declared a dividend of one
preferred share purchase right, which we refer to as a 'right,' for each
outstanding share of our common stock. The dividend was payable on March 1, 1996
to the shareholders of record as of February 15, 1996. All shares of our common
stock issued subsequently also include these rights. Under certain conditions,
each right may be exercised to purchase from us one one-thousandth of a share of
Series A participating preferred stock at a price of $80.00 per one
one-thousandth of a share of Series A participating preferred stock, subject to
adjustment.

Our Restated Certificate of Incorporation provides that holders of Series A
participating preferred stock will be entitled to 1,000 votes per share of
Series A participating preferred stock, to a minimum preferential quarterly
dividend payment of $10.00 per share and to an aggregate dividend per share of
1,000 times the aggregate dividend declared per share of common stock. Dividends
on the Series A participating preferred stock are cumulative. Further, holders
of Series A participating preferred stock will be entitled to a minimum
preferential liquidation payment of $1,000 per share but will be entitled to an
aggregate payment of 1,000 times the payment made per share of common stock. In
addition, holders of Series A participating preferred stock will be entitled to
vote together as a class to elect two directors to our board of directors
whenever dividends payable on Series A participating preferred stock are in
default.

The rights are exercisable only if, without the prior written consent of our
board of directors, a person or group acquires, or announces a tender offer to
acquire, 20% or more of the outstanding shares of our common stock. In addition,
if we are acquired in a merger or other business combination, or if 50% or more
of our consolidated assets or earning power is sold after a person or group of
affiliated or associated persons has acquired beneficial ownership of 20% or
more of the outstanding shares of our common stock, each right (other than
rights beneficially owned by the acquiring person (which will thereafter be
void)) will entitle its holder to purchase, at the right's then current exercise
price, a number of shares of equity securities of the acquiring company having a
market value of two times the exercise price of the right. The rights are
redeemable at our option at any time prior to a person or group acquiring 20% or
more of the outstanding shares of our common stock at a purchase price of
one-tenth of one percent per right. The rights may be exchanged by us, in whole
or in part, at any time after a person or group acquires 20% or more of the
outstanding shares of our common stock, but before such person or group acquires
50% or more of the outstanding shares of our common stock, at an exchange ratio
of one share of common stock, or one one-thousandth of a share of preferred
stock, per right, subject to adjustment. Until a right is exercised, the holder
of such right has none of the rights of our shareholders, including the right to
vote or to receive dividends. The rights expire on February 28, 2006, unless
extended by us or unless the rights have been earlier redeemed or exchanged.

The rights are designed to protect and maximize the value of the outstanding
shares of our common stock in the event of an unsolicited attempt by a person or
entity to acquire us in a manner or on terms not approved by our board of
directors. The rights may have the effect of rendering more difficult or
discouraging an acquisition of us that is deemed undesirable by our board of
directors. The rights may cause substantial dilution to a person or group that
attempts to acquire us on terms or in a manner not approved by our board of
directors, except an offer conditioned upon the negation, purchase or redemption
of the rights.

NEW YORK BUSINESS CORPORATION LAW

We are subject to Section 912 of the Business Corporation Law of New York,
which prohibits certain 'business combinations' (as defined in Section 912
generally to include mergers, sales and leases of assets, issuances of
securities and similar transactions) by us or one of our subsidiaries with an
'interested shareholder' (as defined in Section 912 and as applied to us
this generally means any person or entity, other than us or any of our
subsidiaries, that (1) beneficially owns, directly or indirectly, 20% or more of
our outstanding voting stock or (2) is an affiliate or associate of us and was,
at any time within five years prior to the date of the proposed business
combination, the beneficial owner, directly or indirectly, of 20% or more of our
outstanding voting stock) for five years after the person or entity becomes an
interested shareholder, unless (a) our board of directors shall have approved
the transaction before the person became an interested shareholder, or (b) the
business combination is approved by the holders of our outstanding voting stock,
excluding shares held by the interested shareholder, five years after such
interested shareholder's acquisition.

In addition, Article 16 of the Business Corporation Law of New York requires
that any offeror making a takeover bid for a New York corporation file with the
New York Attorney General, as soon as practicable on the date of commencement of
the takeover bid, a registration statement containing specified details
regarding the proposed takeover. The Business Corporation Law of New York also
contains provisions permitting directors taking action (including action
relating to a change in control) to consider employees, retirees, customers,
creditors and the community, and preventing New York corporations from paying
'greenmail' without a shareholder vote. These statutory provisions may have the
effect of delaying, deterring or preventing a future takeover or change in
control of us, unless such takeover or change in control is approved by our
board of directors.

RESTATED CERTIFICATE OF INCORPORATION AND RESTATED BY-LAWS

In addition to the rights discussed above, our Restated Certificate of
Incorporation, as amended, and Restated By-laws include other provisions that
are intended to enhance the likelihood of continuity and stability in our
ownership and that may have the effect of delaying, deterring or preventing a
future takeover or change in control of us without approval from our board of
directors. Pursuant to our Restated Certificate of Incorporation, as amended,
prior to:

any merger or consolidation of us or any of our subsidiaries
with or into any other corporation;

any sale, lease, exchange or other disposition by us or any
of our subsidiaries of all or substantially all of our or
such subsidiaries' assets to any other corporation, person
or entity; or

any purchase, lease or other acquisition by us, or any of
our subsidiaries, of any assets and/or securities from any
other corporation, person or entity, whereby, in connection
with such purchase, lease or other acquisition, we were to
issue our voting securities or the voting securities of any
of our subsidiaries, including any securities convertible
into our voting securities or options, warrants or rights to
purchase our voting securities;

and, if as of the record date for determination of shareholders entitled to
notice and to vote on any of the transactions described in the bullets above:

such corporation, person or entity is the other party to any
of the transactions listed above and is the beneficial
owner, directly or indirectly, of 5% or more of the
outstanding shares of any class of our shares entitled to
vote on such transaction;

then, in order to consummate such transaction, we would be required to get the
affirmative vote of the holders of our shares, determined as of a specified
record date, of:

at least 75% of the remaining outstanding shares of each
class of our capital stock entitled to vote in an election
of directors; and

at least a majority of the outstanding shares of each class
of our capital stock entitled to vote in elections of
directors, excluding those which are, as determined by the
board of directors, directly or indirectly beneficially
owned by the other corporation, person or entity to the
transaction.

To repeal or amend the provisions of our Restated Certificate of Incorporation,
as amended, outlined above requires a vote of at least 75% of the outstanding
shares of each class of our capital stock.

Our Restated Certificate of Incorporation, as amended, and Restated By-laws
also provide that any director may be removed at any time, without cause, by the
affirmative vote at any shareholders' meeting of the holders of at least 75% of
the outstanding shares of each class of our capital stock entitled to vote at
such meeting.

UNDERWRITING

The Company and the underwriters for this offering named below have entered
into an underwriting agreement with respect to the shares being offered. Subject
to certain conditions, each underwriter has severally agreed to purchase the
number of shares indicated in the following table. Goldman, Sachs & Co. and
Morgan Stanley & Co. Incorporated are the representatives of the underwriters.

<Table>
<Caption>
Number of
Underwriters Shares
------------ ------

Goldman, Sachs & Co.....................................
Morgan Stanley & Co. Incorporated.......................
---------
Total............................................... 4,750,000
---------
---------
</Table>

The underwriters are committed to take and pay for all of the shares being
offered, if any are taken, other than the shares covered by the option described
below unless and until this option is exercised.

If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional 712,500
shares from the Company to cover these sales. They may exercise this option for
30 days. If any shares are purchased pursuant to this option, the underwriters
will severally purchase shares in approximately the same proportion as set forth
in the table above.

The following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters by the Company. Such amounts are
shown assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares.

<Table>
<Caption>
Paid By the Company No Exercise Full Exercise
------------------- ----------- -------------

Per Share................................................... $ $
Total....................................................... $ $
</Table>

Shares sold by the underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial price to public. Any such securities
dealers may resell any shares purchased from the underwriters to certain other
brokers or dealers at a discount of up to $ per share from the initial price
to public. If all the shares are not sold at the initial price to public, the
representatives may change the offering price and the other selling terms.

The Company and its officers and directors have agreed with the underwriters
not to offer, sell, contract to sell, pledge, grant any option to purchase, make
any short sale or otherwise dispose of any shares of its common stock, or any
options or warrants to purchase any shares of its common stock, or any
securities convertible into, exchangeable for or that represent the right to
receive shares of its common stock, whether now owned or hereinafter acquired,
owned directly by the undersigned (including holding as a custodian) or with
respect to which it or such officer or director, as the case may be, has
beneficial ownership within the rules and regulations of the SEC, during the
period from the date of this prospectus continuing through the date 90 days
after the date of this prospectus, except with the prior written consent of
Goldman, Sachs & Co. This agreement does not apply to any existing employee
benefit plans or to any existing pledges of common stock.

In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering. 'Covered'
short sales are sales made in an amount not greater than the underwriters'
option to purchase additional shares from the Company in this offering. The
underwriters may close out any covered short position by either exercising their
option to purchase additional shares or purchasing

shares in the open market. In determining the source of shares to close out the
covered short position, the underwriters will consider, among other things, the
price of shares available for purchase in the open market as compared to the
price at which they may purchase shares through the overallotment option.
'Naked' short sales are any sales in excess of such option. The underwriters
must close out any naked short position by purchasing shares in the open market.
A naked short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of the common stock
in the open market after pricing that could adversely affect investors who
purchase in the offering. Stabilizing transactions consist of various bids for
or purchases of common stock made by the underwriters in the open market prior
to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of the
common stock, and together with the imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the common stock. As
a result, the price of the common stock may be higher than the price that
otherwise might exist in the open market. If these activities are commenced,
they may be discontinued at any time. These transactions may be effected on the
New York Stock Exchange, in the over-the-counter market or otherwise.

The Company estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$1,000,000.

The Company has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

Certain of the underwriters and their affiliates have in the past provided,
and may in the future from time to time provide, commercial or investment
banking services to the Company, for which they have in the past received, and
may in the future receive, customary fees. Goldman, Sachs & Co. has provided us
with financial advisory services in connection with the acquisition of Dana's
EMG Business, for which they will receive customary fees.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement under the Securities Act
of 1933 with respect to the shares of common stock to be sold in this offering.
As permitted by the rules and regulations of the SEC, this prospectus omits some
information contained in the registration statement. For further information
with respect to us and the shares of common stock to be sold in this offering,
you should refer to the registration statement and to its exhibits and
schedules. Statements contained in this prospectus regarding the contents of any
agreement or other document are not necessarily complete. You should refer in
each instance to the copy of the agreement or other document filed or
incorporated by reference as an exhibit to the registration statement, each such
statement being qualified in all respects by the document to which it refers. We
are also required to file annual, quarterly and special reports, proxy
statements and other information with the SEC.

You can read the registration statement and the exhibits and schedules filed
with the registration statement or our annual, quarterly and special reports,
proxy statements or other information we have filed with the SEC, at the public
reference facility maintained by the SEC at 450 Fifth Street, N.W., Judiciary
Plaza, Room 1024, Washington, D.C. 20549. Copies of such material can also be
obtained at prescribed rates by mail from the Public Reference Branch of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference services. In
addition, the SEC maintains a website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. You may also

inspect our SEC reports and other information at the New York Stock Exchange, 20
Broad Street, New York, New York 10005.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

This prospectus is part of the registration statement that we filed with the
SEC. The SEC permits us to incorporate by reference the information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we subsequently
file with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below filed by us with the SEC:

our Annual Report on Form 10-K for the year ended
December 31, 2002, filed on March 31, 2003, excluding our
(i) consolidated annual financial statements and the related
independent auditors' report dated February 24, 2003, which
have been superceded by the consolidated annual financial
statements included herein, which financial statements give
retroactive effect to the adoption of SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13 and Technical Corrections, and
(ii) Management's Discussion and Analysis of Financial
Condition and Results of Operations;

our Current Report on Form 8-K, filed on February 10, 2003;

our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2003, filed on May 15, 2003;

our Proxy Statement on Schedule 14A, filed April 22, 2003,
for our annual meeting of stockholders held on May 22, 2003;

the description of our common stock contained in our
registration statement on Form 8-A (File No. 001-04743),
filed on April 11, 1996; and

description of our preferred stock purchase rights contained
in our registration statement on Form 8-A (File No.
001-04743), filed on March 1, 1996, and amended on
April 11, 1996.

In addition, all reports and other documents we subsequently file pursuant
to Section 12, 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the
initial filing of the registration statement and until the time that we sell all
the securities described in this prospectus shall be deemed to be incorporated
in this prospectus and to be a part of this prospectus from the date of filing
of such reports and documents. Any statement contained in a previously filed
document incorporated by reference in this prospectus is modified or superseded
to the extent that a statement contained in this prospectus modifies or
supersedes such statement. Any statement contained in this prospectus or in a
document incorporated by reference in this prospectus is modified or superseded
to the extent that a statement contained in any subsequently filed document
which is or is deemed to be incorporated by reference in this prospectus
modifies or supersedes such statement. Only the modified or superseded statement
shall constitute a part of this prospectus.

You may request a copy of these filings, other than their exhibits, at no
cost, by oral or written request to: Standard Motor Products, Inc., 37-18
Northern Boulevard, Long Island City, New York 11101, Attention: James J. Burke,
Vice President Finance, Chief Financial Officer, (718) 392-0200.

VALIDITY OF COMMON STOCK

The validity of our common stock offered in this offering will be passed
upon for us by Kelley Drye & Warren LLP, New York, New York, and for the
underwriters by Sullivan & Cromwell LLP, New York, New York.

EXPERTS

Our audited consolidated financial statements at December 31, 2001 and 2002
and for each of the years in the three-year period ended December 31, 2002, have
been included herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere and incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.

The audited combined financial statements of Dana's EMG Business as of
December 31, 2001 and 2002 and for each of the three years in the period ended
December 31, 2002 included in this registration statement have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
PAGE NO.
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES --------

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (Audited)
Independent Auditors' Report................................ F-2
Consolidated Statements of Operations for the years ended
December 31, 2000, 2001 and 2002.......................... F-3
Consolidated Balance Sheets as of December 31, 2001 and
2002...................................................... F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 2001 and 2002.......................... F-5
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 2000, 2001 and 2002...... F-6
Notes to Consolidated Annual Financial Statements........... F-7

CONDENSED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS
(Unaudited)
Condensed Consolidated Statements of Operations and Retained
Earnings for the three months ended March 31, 2002 and
2003...................................................... F-30
Condensed Consolidated Balance Sheets as of December 31,
2002 and March 31, 2003................................... F-31
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2002 and 2003................ F-32
Notes to Condensed Consolidated Quarterly Financial
Statements................................................ F-33

<Caption>
DANA CORPORATION'S ENGINE MANAGEMENT GROUP PAGE NO.
--------

COMBINED ANNUAL FINANCIAL STATEMENTS (Audited)
Report of Independent Accountants........................... F-42
Combined Statements of Operations for the years ended
December 31, 2000, 2001 and 2002.......................... F-43
Combined Balance Sheets as of December 31, 2001 and 2002.... F-44
Combined Statements of Cash Flows for the years ended
December 31, 2000, 2001 and 2002.......................... F-45
Combined Statements of Changes in Combined Equity for the
years ended December 31, 2000, 2001 and 2002.............. F-46
Notes to Combined Annual Financial Statements............... F-47

CONDENSED COMBINED QUARTERLY FINANCIAL STATEMENTS
(Unaudited)
Condensed Combined Statements of Operations for the three
months ended March 31, 2002 and 2003...................... F-62
Condensed Combined Balance Sheets as of December 31, 2002
and March 31, 2003........................................ F-63
Condensed Combined Statements of Cash Flows for the three
months ended March 31, 2002 and 2003...................... F-64
Notes to Condensed Combined Quarterly Financial
Statements................................................ F-65
</Table>

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Standard Motor Products, Inc.:

We have audited the consolidated balance sheets of Standard Motor Products, Inc.
and subsidiaries as of December 31, 2002 and 2001, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 2002. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Standard Motor
Products, Inc. and subsidiaries as of December 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Note 1, the Company adopted Emerging Issues Task Force Issue
No. 01-9, Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products), as of January 1, 2002. As
described in Note 6, the Company adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, as of January 1, 2002.
Also as described in Note 1, these consolidated financial statements have been
revised to account for the loss on early extinguishment of debt in accordance
with Statement of Financial Accounting Standards No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which was adopted by the Company as of January 1, 2003.

/s/ KPMG LLP

New York, New York
February 24, 2003

F-2

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
YEARS ENDED DECEMBER 31,
---------------------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)

Net sales (Note 7).................................. $ 601,392 $ 591,652 $ 598,437
Cost of sales....................................... 438,691 452,597 440,893
----------- ----------- -----------
Gross profit.................................... 162,701 139,055 157,544
Selling, general and administrative expenses........ 131,990 123,932 129,142
Goodwill impairment charge (Note 6)................. -- -- 3,334
----------- ----------- -----------
Operating income................................ 30,711 15,123 25,068
Other income (expense), net (Notes 3 and 14)........ 450 2,763 3,187
Interest expense.................................... 18,910 21,202 14,244
----------- ----------- -----------
Earnings (loss) from continuing operations
before taxes.................................. 12,251 (3,316) 14,011
Provision for income taxes (Note 15)................ 2,522 (831) 7,920
----------- ----------- -----------
Earnings (loss) from continuing operations...... 9,729 (2,485) 6,091
Loss from discontinued operations, net of tax of
$6,099 (Note 18).................................. -- -- (18,297)
----------- ----------- -----------
Earnings (loss) before cumulative effect of
accounting change................................. 9,729 (2,485) (12,206)
Cumulative effect of accounting change, net of tax
of $2,473 (Note 6)................................ -- -- (18,350)
----------- ----------- -----------
Net earnings (loss)............................. $ 9,729 $ (2,485) $ (30,556)
----------- ----------- -----------
----------- ----------- -----------
Net earnings (loss) per common share -- Basic:
Earnings from continuing operations............. $ 0.82 $ (0.21) $ 0.51
Discontinued operations......................... -- -- (1.54)
Cumulative effect of accounting change.......... -- -- (1.54)
----------- ----------- -----------
Net earnings (loss) per common share -- Basic....... $ 0.82 $ (0.21) $ (2.57)
----------- ----------- -----------
----------- ----------- -----------
Net earnings (loss) per common share -- Diluted:
Earnings from continuing operations............. $ 0.81 $ (0.21) $ 0.51
Discontinued operations......................... -- -- (1.52)
Cumulative effect of accounting change.......... -- -- (1.53)
----------- ----------- -----------
Net earnings (loss) per common share -- Diluted..... $ 0.81 $ (0.21) $ (2.54)
----------- ----------- -----------
----------- ----------- -----------
Average number of common shares..................... 11,933,774 11,774,591 11,914,968
----------- ----------- -----------
----------- ----------- -----------
Average number of common shares and dilutive common
shares............................................ 11,974,341 11,830,737 12,008,496
----------- ----------- -----------
----------- ----------- -----------
</Table>

See accompanying notes to consolidated financial statements.

F-3

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
DECEMBER 31,
-----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 7,496 $ 9,690
Marketable securities................................... -- 7,200
Accounts receivable, less allowances for discounts and
doubtful accounts of $4,362 and $4,882 in 2001 and
2002, respectively (Notes 3 and 8).................... 117,965 117,644
Inventories (Notes 4 and 8)............................. 177,291 174,785
Deferred income taxes (Note 15)......................... 12,316 12,213
Prepaid expenses and other current assets............... 13,881 6,828
-------- --------
Total current assets............................ 328,949 328,360
-------- --------
Property, plant and equipment, net (Notes 5 and 8).......... 101,646 103,822
-------- --------
Goodwill, net (Note 6)...................................... 38,040 16,683
-------- --------
Other assets (Notes 7 and 12)............................... 40,794 41,893
-------- --------
Total assets.................................... $509,429 $490,758
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable (Note 8).................................. $ 4,075 $ 3,369
Current portion of long-term debt (Note 8).............. 1,784 4,108
Accounts payable........................................ 26,110 35,744
Sundry payables and accrued expenses.................... 41,968 39,723
Accrued customer returns................................ 18,167 16,341
Payroll and commissions................................. 8,489 12,143
-------- --------
Total current liabilities....................... 100,593 111,428
-------- --------
Long-term debt (Notes 8 and 9).............................. 200,066 169,440
-------- --------
Postretirement medical benefits and other accrued
liabilities (Notes 12 and 13)............................. 23,083 30,414
-------- --------
Accrued asbestos liabilities................................ -- 25,595
-------- --------
Commitments and contingencies (Notes 8, 10, 11, 12, 13 and
18)
Stockholders' equity (Notes 8, 9, 10, 11 and 12):
Common Stock -- par value $2.00 per share:
Authorized 30,000,000 shares, issued and outstanding
11,823,650 and 11,957,009 in 2001 and 2002,
respectively...................................... 26,649 26,649
Capital in excess of par value.......................... 1,877 1,764
Retained earnings....................................... 183,532 148,686
Accumulated other comprehensive loss.................... (3,722) (2,581)
-------- --------
208,336 174,518
Less: Treasury stock -- at cost (1,500,826 and 1,367,467
shares in 2001 and 2002, respectively).................... 22,649 20,637
-------- --------
Total stockholders' equity...................... 185,687 153,881
-------- --------
Total liabilities and stockholders' equity...... $509,429 $490,758
-------- --------
-------- --------
</Table>

See accompanying notes to consolidated financial statements.

F-4

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
YEARS ENDED DECEMBER 31,
------------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)..................................... $ 9,729 $ (2,485) $(30,556)
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization....................... 18,922 18,909 16,128
Gain on disposal of property, plant & equipment..... (99) (265) (97)
Equity income from joint ventures................... (702) (844) (352)
Employee stock ownership plan allocation............ 1,032 713 1,230
Tax benefit related to employee stock options....... -- 48 80
Increase (decrease) in deferred income taxes........ (897) (3,628) 2,550
Cumulative effect of accounting change.............. -- -- 18,350
Loss from discontinued operations................... -- -- 18,297
Goodwill impairment charge.......................... -- -- 3,334
Change in assets and liabilities, net of effects from
acquisitions:
Decrease in accounts receivable, net................ 14,793 13,296 1,302
(Increase) decrease in inventories.................. (44,666) 56,966 7,996
Decrease (increase) in prepaid expenses and other
current assets.................................... 388 (1,821) 7,485
Decrease (increase) in other assets................. 4,312 (4,948) (4,307)
(Decrease) increase in accounts payable............. 14,413 (30,502) 9,152
Decrease in sundry payables and accrued expenses.... (16,360) (8,774) (3,215)
(Decrease) increase in other liabilities............ (1,818) 3,524 12,806
-------- -------- --------
Net cash provided by (used in) operating
activities.................................... (953) 40,189 60,183
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and
equipment............................................. 657 652 520
Capital expenditures, net of effects from
acquisitions.......................................... (16,652) (13,740) (7,598)
Payments for acquisitions, net of cash acquired......... (2,718) (1,069) (19,855)
-------- -------- --------
Net cash used in investing activities........... (18,713) (14,157) (26,933)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under line-of-credit
agreements............................................ 36,285 71,935 (31,246)
Issuance of long-term debt.............................. -- -- 5,419
Payments of other long-term debt........................ (29,119) (93,601) (3,181)
Proceeds from exercise of employee stock options........ -- 473 589
Purchase of treasury stock.............................. (14,345) -- --
Dividends paid.......................................... (4,324) (4,236) (4,290)
-------- -------- --------
Net cash used in financing activities........... (11,503) (25,429) (32,709)
-------- -------- --------
Effect of exchange rate changes on cash..................... (1,512) (806) 1,653
-------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (32,681) (203) 2,194
CASH AND CASH EQUIVALENTS at beginning of year.............. 40,380 7,699 7,496
-------- -------- --------
CASH AND CASH EQUIVALENTS at end of year.................... $ 7,699 $ 7,496 $ 9,690
-------- -------- --------
-------- -------- --------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest............................................ $ 18,943 $ 17,403 $ 14,362
-------- -------- --------
-------- -------- --------
Income taxes........................................ $ 2,776 $ 2,792 $ 1,549
-------- -------- --------
-------- -------- --------
</Table>

See accompanying notes to consolidated financial statements.

F-5

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002

<Table>
<Caption>
ACCUMULATED
CAPITAL IN OTHER
COMMON EXCESS OF RETAINED COMPREHENSIVE TREASURY
STOCK PAR VALUE EARNINGS INCOME (LOSS) STOCK TOTAL
----- --------- -------- ------------- ----- -----
(DOLLARS IN THOUSANDS)

BALANCE AT DECEMBER 31, 1999........... $26,649 $2,957 $184,848 $ 714 $(11,650) $203,518
Comprehensive Income:
Net earnings....................... 9,729 9,729
Foreign currency translation
adjustment....................... (1,305) (1,305)
--------
Total comprehensive
income....................... 8,424
Cash dividends paid.................... (4,324) (4,324)
Employee Stock Ownership Plan.......... (416) 1,448 1,032
Purchase of treasury stock............. (14,345) (14,345)
------- ------ -------- ------- -------- --------
BALANCE AT DECEMBER 31, 2000........... 26,649 2,541 190,253 (591) (24,547) 194,305
Comprehensive Loss:
Net loss........................... (2,485) (2,485)
Foreign currency translation
adjustment....................... (1,086) (1,086)
Unrealized loss on interest rate
swap agreements.................. (2,045) (2,045)
--------
Total comprehensive loss....... (5,616)
Cash dividends paid.................... (4,236) (4,236)
Exercise of employee stock options..... (295) 768 473
Tax benefits applicable to the exercise
of employee stock options............ 48 48
Employee Stock Ownership Plan.......... (417) 1,130 713
------- ------ -------- ------- -------- --------
BALANCE AT DECEMBER 31, 2001........... 26,649 1,877 183,532 (3,722) (22,649) 185,687
Comprehensive Loss:
Net loss........................... (30,556) (30,556)
Foreign currency translation
adjustment....................... 1,295 1,295
Unrealized loss on interest rate
swap agreements, net of tax of
$205............................. 617 617
Minimum pension liability
adjustment....................... (771) (771)
--------
Total comprehensive loss....... (29,415)
Cash dividends paid.................... (4,290) (4,290)
Exercise of employee stock options..... (291) 880 589
Tax benefits applicable to the exercise
of employee stock options............ 80 80
Employee Stock Ownership Plan.......... 98 1,132 1,230
------- ------ -------- ------- -------- --------
BALANCE AT DECEMBER 31, 2002........... $26,649 $1,764 $148,686 $(2,581) $(20,637) $153,881
------- ------ -------- ------- -------- --------
------- ------ -------- ------- -------- --------
</Table>

See accompanying notes to consolidated financial statements.

F-6

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

Standard Motor Products, Inc. (the 'Company') is engaged in the manufacture
and sale of automotive replacement parts. The consolidated financial statements
include the accounts of the Company and all subsidiaries in which the Company
has more than a 50% equity ownership. The Company's investments in
unconsolidated affiliates are accounted for on the equity method. All
significant intercompany items have been eliminated.

USE OF ESTIMATES

In conformity with generally accepted accounting principles, management of
the Company has made a number of estimates and assumptions relating to the
reporting of assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements. Some of the more significant estimates include allowances for
doubtful accounts, inventory valuation reserves, depreciation and amortization
of long-lived assets, product liability, asbestos and litigation matters,
deferred tax asset valuation allowance and sales return allowances. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Where appropriate, certain amounts in 2000 and 2001 have been reclassified
to conform with the 2002 presentation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.

MARKETABLE SECURITIES

At December 31, 2001 and 2002, held-to-maturity securities amounted to $7.2
million. Held-to-maturity securities consist primarily of U.S. Treasury Bills
and corporate debt securities which are reported at amortized cost which
approximates fair value. As of December 31, 2002, the held-to-maturity
securities mature within one year.

INVENTORIES

Inventories are stated at the lower of cost (determined by means of the
first-in, first-out method) or market.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative instruments are accounted for in accordance with SFAS No. 133,
'Accounting for Derivative Instruments and Hedging Activities' and SFAS
No. 138, 'Accounting for Certain Derivative Instruments and Certain Hedging
Activities.' These statements establish accounting and reporting standards
requiring that every derivative instrument be recorded on the balance sheet as
either an asset or liability measured at its fair value. For derivatives that
have been formally designated as a cash flow hedge (interest rate swap
agreements), the effective portion of changes in the fair value of the
derivatives are recorded in 'other comprehensive income (loss).' Payment or
receipts on interest rate swap agreements are recorded in the 'interest expense'
caption in the statement of operations.

F-7

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

These assets are recorded at cost and are depreciated using the
straight-line method of depreciation over the estimated useful lives as follows:

<Table>
<Caption>
ESTIMATED LIFE
-------------------------

Buildings and improvements................................. 10 to 33 1/2 years
Machinery and equipment.................................... 7 to 12 years
Tools, dies and auxiliary equipment........................ 3 to 8 years
Furniture and fixtures..................................... 3 to 12 years
Computer software.......................................... 3 to 10 years
Leasehold improvements..................................... 10 years or life of lease
</Table>

GOODWILL, OTHER INTANGIBLE AND LONG-LIVED ASSETS

Goodwill is the excess of the purchase price over the fair value of
identifiable net assets acquired in business combinations accounted for as
purchases. The Company adopted Statement of Financial Accounting Standards
('SFAS 142') in January 2002. Goodwill and certain other intangible assets
having indefinite lives, which were previously amortized on a straight-line
basis over the periods benefited, are no longer being amortized to earnings, but
instead are subject to periodic testing for impairment. Intangible assets
determined to have definite lives are amortized over their remaining useful
lives.

Goodwill of a reporting unit is tested for impairment on an annual basis or
between annual tests if an event occurs or circumstances change that would
reduce the fair value of a reporting unit below its carrying amount. To the
extent the carrying amount of a reporting unit exceeds the fair value of the
reporting unit, the Company is required to perform a second step, as this is an
indication that the reporting unit goodwill may be impaired. In this step, the
Company compares the implied fair value of the reporting unit goodwill with the
carrying amount of the reporting unit goodwill. The implied fair value of
goodwill is determined by allocating the fair value of the reporting unit to all
of the assets (recognized and unrecognized) and liabilities of the reporting
unit in a manner similar to a purchase price allocation, in accordance with SFAS
No. 141, 'Business Combinations.' The residual fair value after this allocation
is the implied fair value of the reporting unit goodwill.

Intangible and other long-lived assets are reviewed for impairment whenever
events such as product discontinuance, plant closures, product dispositions or
other changes in circumstances indicate that the carrying amount may not be
recoverable. In reviewing for impairment, the Company compares the carrying
value of such assets to the estimated undiscounted future cash flows expected
from the use of the assets and their eventual disposition. When the estimated
undiscounted future cash flows are less than their carrying amount, an
impairment loss is recognized equal to the difference between the assets fair
value and their carrying value.

Prior to the adoption of SFAS No. 142, goodwill was assessed for
recoverability by determining whether the amortization of the goodwill balance
over its remaining life could be recovered through undiscounted future operating
cash flows of the acquired operation. The amount of goodwill and other
intangible asset impairment, if any, was measured based on projected discounted
future operating cash flows using a discount rate reflecting the Company's
average cost of funds.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities are translated into U.S. dollars at year end exchange
rates and revenues and expenses are translated at average exchange rates during
the year. The resulting translation

F-8

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

adjustments are recorded as a separate component of accumulated other
comprehensive income (loss) and remains there until the underlying foreign
operation is liquidated or substantially disposed of.

REVENUE RECOGNITION

The Company recognizes revenues from product sales upon shipment to
customers. The Company estimates and records provisions for cash discounts,
quantity rebates, sales returns and warranties, in the period the sale is
recorded, based upon its prior experience.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The annual net postretirement benefit liability and related expense under
the Company's benefit plans are determined on an actuarial basis. Benefits are
determined primarily based upon employees' length of service.

INCOME TAXES

Income taxes are calculated using the asset and liability method in
accordance with the provisions of Statement of Financial Accounting Standards
('SFAS') No. 109, 'Accounting for Income Taxes.' Deferred tax assets and
liabilities are determined based on the estimated future tax effects of
temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities, as measured by the current enacted tax
rates. Deferred tax expense (benefit) is the result of changes in the deferred
tax asset and liability.

NET EARNINGS PER COMMON SHARE

The Company presents two calculations of earnings per common share. 'Basic'
earnings per common share equals net income divided by weighted average common
shares outstanding during the period. 'Diluted' earnings per common share equals
net income divided by the sum of weighted average common shares outstanding
during the period plus potentially dilutive common shares. Potentially dilutive
common shares that are anti-dilutive are excluded from net earnings per common
share.

The following is a reconciliation of the shares used in calculating basic
and dilutive net earnings per common share.

<Table>
<Caption>
2000 2001 2002
---- ---- ----
(IN THOUSANDS)

Weighted average common shares........................... 11,934 11,775 11,915
Effect of stock options.................................. 40 56 93
------ ------ ------
Weighted average common equivalent shares outstanding
assuming dilution...................................... 11,974 11,831 12,008
------ ------ ------
------ ------ ------
</Table>

The average shares listed below were not included in the computation of
diluted earnings per share because to do so would have been anti-dilutive for
the periods presented.

<Table>
<Caption>
2000 2001 2002
---- ---- ----
(IN THOUSANDS)

Stock options............................................ 861 625 574
------ ------ ------
------ ------ ------
Convertible debentures................................... 2,796 2,796 2,796
------ ------ ------
------ ------ ------
</Table>

F-9

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK OPTION PLANS

The Company accounts for its stock option plans in accordance with the
provisions of SFAS No. 123 'Accounting for Stock Based Compensation.' As
permitted by this statement, the Company has chosen to continue to apply the
intrinsic value-based method of accounting as prescribed by Accounting
Principles Board Opinion No. 25, 'Accounting for Stock Issued to Employees' and
related interpretations including SFAS interpretation No. 44, 'Accounting for
certain transactions involving stock compensation and interpretation of
APB No. 25,' issued in March 2001. Accordingly, no compensation expense has been
recognized for options granted because the exercise price is equal to the fair
value of the stock at the date of grant. As required, the Company provides pro
forma net income and pro forma earnings per share disclosures for stock option
grants, as if the fair value based method defined in SFAS No. 123 had been
applied.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company places its cash investments with high quality
financial institutions and limits the amount of credit exposure to any one
institution. With respect to accounts receivable, such receivables are primarily
from warehouse distributors and major retailers in the automotive aftermarket
industry located in the United States. The Company performs ongoing credit
evaluations of its customers' financial conditions. Members of one marketing
group represent the Company's largest group of customers and accounted for
approximately 15%, 15% and 15% of consolidated net sales for the years ended
December 31, 2000, 2001 and 2002, respectively. One individual member of this
marketing group accounted for 10%, 10%, and 13% of net sales for the years ended
December 31, 2000, 2001 and 2002, respectively. The Company's five largest
individual customers, including members of this marketing group, accounted for
33%, 44% and 46% of net sales in 2000, 2001 and 2002, respectively.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On January 1, 2002, the Company adopted the guidelines of the Emerging
Issues Task Force Issue No. 01-09, Accounting Consideration Given by a Vendor to
a Customer (Including Reseller of the Vendor's Products) ('EITF 01-09'). These
guidelines address when sales incentives and discounts should be recognized and
the accounting for certain costs incurred by a vendor on behalf of a customer,
as well as where the related revenues and expenses should be classified in the
financial statements. Historically, the Company has provided certain
consideration, including rebates, product and discounts to customers and treated
such costs as advertising, marketing and sales force expenses. Such costs are
now treated as a reduction of revenues or as costs of sales. As a result,
certain costs of approximately $25.4 million and $30.4 million, respectively,
have been reclassified from selling, general and administrative expenses for the
two fiscal years ended December 31, 2000 and 2001. These reclassifications had
no effect on net earnings.

SFAS 143

F-10

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

We are required and plan to adopt the provisions of Statement No. 143 for
the quarter ending March 31, 2003. To accomplish this, we must identify all
legal obligations for asset retirement obligations, if any, and determine the
fair value of these obligations on the date of adoption. The determination of
fair value is complex and will require us to gather market information and
develop cash flow models. Additionally, we will be required to develop processes
to track and monitor these obligations. The adoption of Statement No. 143 is not
expected to have a material effect on our financial statements.

SFAS 145

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections
('Statement No. 145'). Statement No. 145 eliminates the automatic classification
of gain or loss on extinguishment of debt as an extraordinary item of income and
requires that such gain or loss be evaluated for extraordinary classification
under the criteria of Accounting Principles Board (APB) No. 30, Reporting
Results of Operations. Statement No. 145 also requires sales-lease-back
accounting for lease modifications that have economic effects that are similar
to sales-leaseback transactions, and make various other technical corrections to
existing pronouncements. Statement No. 145 will be effective for the year ending
December 31, 2003. Effective January 1, 2003, we adopted the provisions of
Statement No. 145. As a result, the extraordinary loss on the early
extinguishment of debt of approximately $0.5 million and $2.8 million has been
reclassified to interest expense for December 31, 2000 and 2001, respectively.

SFAS 146

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associates with Exit or Disposal Activities ('Statement No. 146'). Statement No.
146, which is effective prospectively for exit or disposal activities initiated
after December 31, 2002, applies to costs associated with an exit activity,
including restructurings, or with a disposal of long-lived assets. Those
activities can include eliminating or reducing product lines, terminating
employees and contracts and relocating plant facilities or personnel. Statement
No. 146 requires that exit or disposal costs are recorded as an operating
expense when the liability is incurred and can be measured at fair value.
Commitment to an exit plan or a plan of disposal by itself will not meet the
requirement for recognizing a liability and the related expense under Statement
No. 146. Statement No. 146 grandfathers the accounting for liabilities that were
previously recorded under EITF Issue 94-3. We do not believe the adoption of
Statement No. 146 will have a material effect on our financial statements.

FASB INTERPRETATION NO 45

In November 2002, the FASB issued Interpretation No. 45. 'Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others' ('Interpretation'). This Interpretation
elaborates on the existing disclosure requirements for most guarantees,
including loan guarantees such as standby letters of credit. It also clarifies
that at the time a company issues a guarantee, the company must recognize an
initial liability for the fair market value of the obligations it assumes under
that guarantee and must disclose that

F-11

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

information in its interim and annual financial statements. The initial
recognition and measurement provisions of the Interpretation apply on a
prospective basis to guarantees issued or modified after December 31, 2002. We
do not believe the adoption of this interpretation will have a material effect
on our financial statements.

SFAS 148

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require prominent disclosures in both annual and interim
financial statements. Certain of the disclosure modifications are required for
fiscal years ending after December 15, 2002. We do not believe the adoption of
Statement No.148 will have a material effect on our financial statements.

FASB INTERPRETATION NO. 46

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation
addresses the consolidation by business enterprises of variable interest
entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The application of this Interpretation is not
expected to have a material effect on the Company's financial statements. The
Interpretation requires certain disclosures in financial statements issued after
January 31, 2003 if it is reasonably possible that the Company will consolidate
or disclose information about variable interest entities when the Interpretation
becomes effective.

2. ACQUISITIONS

In January 2000, the Company completed the purchase of Vehicle Air
Conditioning Parts, located in England, which has subsequently been named 'Four
Seasons UK, LTD.' In July 2000, the Company completed the purchase of Automotive
Heater Exchange SRL in Massa, Italy. Such 2000 acquisitions had an immaterial
effect on net earnings.

In January 2002, the Company acquired the assets of a Temperature Control
business from Hartle Industries for $4.8 million. The assets acquired consist
primarily of property, plant and equipment, and inventory.

In April 2002, the Company acquired Carol Cable Limited, a manufacturer and
distributor of wire sets, based in England, for $1.7 million. The assets
acquired consist primarily of property, plant and equipment, and inventory. In
addition, during 2002 the Company acquired the remaining equity interest in SMP
Holdings Limited resulting in a $2.8 million increase in goodwill.

In May 2002, the Company purchased the aftermarket fuel injector business of
Sagem Inc., a subsidiary of Johnson Controls, for $10.5 million. Sagem Inc. is a
basic manufacturer of fuel injectors, and was the primary supplier to the
Company prior to its acquisition. The assets acquired consist primarily of
property, plant and equipment, and inventory. The purchase was partially
financed by the seller ($5.4 million to be paid over a two-year period), with
the remaining funds being provided under the Company's revolving credit
facility.

Such 2002 acquisitions had an immaterial effect on net earnings.

F-12

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. SALE OF ACCOUNTS RECEIVABLE

The Company sold certain accounts receivable through its wholly-owned
subsidiary, SMP Credit Corp., a qualifying special-purpose corporation. In May
1999 SMP Credit Corp. and an independent financial institution entered into a
three year agreement whereby SMP Credit Corp. could sell up to a $25 million
undivided ownership interest in a designated pool of certain of these eligible
receivables. This agreement was terminated in 2001 as part of the new credit
facility described in Note 8. At December 31, 2000, net accounts receivables
amounting to $25 million had been sold under this agreement. These sales were
reflected as reductions of trade accounts receivable and the related fees and
discounting expense were recorded as other expense (Note 14).

4. INVENTORIES

<Table>
<Caption>
DECEMBER 31,
-----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

Finished goods.............................................. $141,799 $141,487
Work in process............................................. 3,155 2,417
Raw materials............................................... 32,337 30,881
-------- --------
Total inventories....................................... $177,291 $174,785
-------- --------
-------- --------
</Table>

5. PROPERTY, PLANT AND EQUIPMENT

<Table>
<Caption>
DECEMBER 31,
-----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

Land, buildings and improvements............................ $ 60,665 $ 66,200
Machinery and equipment..................................... 109,617 120,655
Tools, dies and auxiliary equipment......................... 17,815 19,962
Furniture and fixtures...................................... 26,211 25,831
Computer software........................................... 11,663 12,120
Leasehold improvements...................................... 7,450 7,164
Construction in progress.................................... 6,440 4,169
-------- --------
239,861 256,101
Less accumulated depreciation and amortization.............. 138,215 152,279
-------- --------
Total property, plant and equipment, net................ $101,646 $103,822
-------- --------
-------- --------
</Table>

Depreciation expense was $15.4 million, $15.3 million and $16.1 million for
2000, 2001 and 2002, respectively.

6. GOODWILL

Effective January 1, 2002, the company adopted the provisions of Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
('SFAS No. 142'). In accordance with SFAS No. 142, goodwill is no longer being
amortized, but instead, is subject to an annual review for potential impairment.
Using the discounted cash flows method, based on our weighted average cost of
capital, and market multiples, the company reviewed the fair values of each
reporting unit. The decline in economic and market conditions, higher
integration costs than anticipated and the general softness in the automotive
aftermarket caused a decrease in the fair values of certain reporting units. As
a result, we recorded an impairment loss on goodwill as a cumulative effect of
accounting change of $18.3 million, net of tax, or $1.55 per diluted share
during the first quarter of 2002. The impairment loss relates to the European
and Temperature Control Divisions for which charges of $10.9 million and $7.4
million, were recorded, respectively.

F-13

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During the fourth quarter of 2002, the Company completed its review of
goodwill for potential impairment. After giving consideration to 2002 losses and
budgeted 2003 losses, the Company wrote-off the remaining goodwill associated
with Engine Management reporting unit of the European Division. With respect to
the European Division, approximately $1.4 million of goodwill remains on the
December 31, 2002 balance sheet, all of which pertains to the Temperature
Control reporting unit.

<Table>
<Caption>
ENGINE TEMPERATURE
MANAGEMENT CONTROL EUROPE TOTAL
---------- ------- ------ -----
(IN THOUSANDS)

Balance as of December 31, 2001................ $10,490 $14,713 $ 12,837 $ 38,040
Goodwill acquired.............................. -- -- 2,800 2,800
Change in accounting principle................. -- (9,891) (10,932) (20,823)
Impairment loss................................ -- -- (3,334) (3,334)
------- ------- -------- --------
Balance as of December 31, 2002................ $10,490 $ 4,822 $ 1,371 $ 16,683
------- ------- -------- --------
------- ------- -------- --------
</Table>

Upon adoption of SFAS No. 142, our earnings before cumulative effect of
accounting change and net earnings for basic and diluted earnings per share
adjusted to exclude goodwill amortization expense (net of taxes) were as
follows:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)

Reported earnings (loss) before cumulative effect of
accounting change.........................................
$ 9,729 $(2,485) $(12,206)
Add back: goodwill amortization expense, net of tax......... 2,574 2,727 --
-------- ------- --------
Adjusted earnings (loss) before cumulative effect of
accounting change......................................... $ 12,303 $ 242 $(12,206)
-------- ------- --------
Basic earnings per share:
Reported basic earnings per share before cumulative
effect of accounting change........................... $ 0.82 $ (0.21) $ (1.03)
Add back: goodwill amortization expense, net of tax..... 0.22 0.23 --
-------- ------- --------
Adjusted basic earnings (loss) per share before cumulative
effect of accounting change............................... $ 1.04 $ 0.02 $ (1.03)
-------- ------- --------
Diluted earnings (loss) per share:
Reported diluted earnings (loss) per share before
cumulative effect of accounting change................ $ 0.81 $ (0.21) $ (1.01)
Add back: goodwill amortization expense, net of tax..... 0.21 0.23 --
-------- ------- --------
Adjusted diluted earnings (loss) per share before cumulative
effect of accounting change............................... $ 1.02 $ 0.02 $ (1.01)
-------- ------- --------
Reported net earnings (loss)................................ $ 9,729 $(2,485) $(30,556)
Add back: goodwill amortization expense, net of tax......... 2,574 2,727 --
-------- ------- --------
Adjusted net earnings (loss)................................ $ 12,303 $ 242 $(30,556)
-------- ------- --------
Basic net earnings (loss) per share:
Reported basic net earnings (loss) per share............ $ 0.82 $ (0.21) $ (2.57)
Add back: goodwill amortization expense, net of tax..... 0.22 0.23 --
-------- ------- --------
Adjusted basic net earnings (loss) per share................ $ 1.04 $ 0.02 $ (2.57)
-------- ------- --------
Diluted net earnings (loss) per share:
Reported diluted net earnings (loss) per share.......... $ 0.81 $ (0.21) $ (2.54)
Add back: goodwill amortization expense, net of tax..... 0.21 0.23 --
-------- ------- --------
Adjusted diluted net earnings (loss) per share.............. $ 1.02 $ 0.02 $ (2.54)
-------- ------- --------
</Table>

F-14

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. OTHER ASSETS

<Table>
<Caption>
DECEMBER 31,
------------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

Marketable securities....................................... $ 7,200 $ --
Unamortized customer supply agreements...................... 1,892 1,419
Equity in joint ventures.................................... 2,149 2,202
Deferred income taxes....................................... 12,653 18,692
Deferred loan costs......................................... 5,389 4,472
Other....................................................... 11,511 15,108
------- -------
Total other assets...................................... $40,794 $41,893
------- -------
------- -------
</Table>

Included in Other is a preferred stock investment in a customer of the
Company. Net sales to such customer amounted to $57.4 million, $57.9 million and
$76.1 million in 2000, 2001 and 2002, respectively.

8. CREDIT FACILITIES AND LONG-TERM DEBT

The Company, effective April 27, 2001, entered into an agreement with GE
Capital Corp. and a syndicate of lenders for a new secured revolving credit
facility. The former unsecured revolving credit facility was set to expire on
November 30, 2001. The term of the new credit agreement is for a period of five
years and provides for a line of credit up to $225 million. The initial proceeds
were used to refinance approximately $97 million of the outstanding indebtedness
under the Company's former bank line of credit, a 7.56% senior note of $52
million, a $25 million accounts receivable sales arrangement and a Canadian
Credit Facility of $5 million. The Company recorded an extraordinary loss of
approximately $2.8 million, net of taxes, in the second quarter of 2001, for a
prepayment penalty and write-off of unamortized fees for the retirement of the
above related debt. This charge was reclassified to interest expense as the
Company adopted the provisions of Statement No. 145. Availability under the new
credit facility is based on a formula of eligible accounts receivable, eligible
inventory and eligible fixed assets. Direct borrowings bear interest at the
Prime Rate plus the applicable margin (as defined) or the LIBOR Rate plus the
applicable margin (as defined), at the option of the Company. At December 31,
2001 and 2002, the interest rate on the Company's revolving credit facilities
was 4.3% and 3.4%, respectively. Borrowings are collateralized by accounts
receivable, inventory and fixed assets of the Company and its subsidiaries. The
terms of the new revolving credit facility contain, among other provisions,
requirements of maintaining defined levels of tangible net worth and specific
limits or restrictions on additional indebtedness, capital expenditures, liens
and acquisitions. The Company was in compliance with the covenants at
December 31, 2002.

In addition, a foreign subsidiary of the Company has a revolving credit
facility. The amount of short-term bank borrowings outstanding under that
facility was $4.1 million and $3.4 million at December 31, 2001 and 2002,
respectively. At December 31, 2002, the foreign subsidiary was not in compliance
with certain covenants, for which it received a waiver. The weighted average
interest rates on these borrowings at December 31, 2001 and 2002 were 6.4% and
6.5%, respectively.

On July 26, 1999, the Company completed a public offering of convertible
subordinated debentures amounting to $90 million. The Convertible Debentures
carry an interest rate of 6.75%, payable semi-annually, and will mature on July
15, 2009. The Debentures are convertible into approximately 2,796,000 shares of
the Company's common stock. The Company may, at its option, redeem some or all
of the Debentures at any time on or after July 15, 2004, for a redemption price
equal to the issuance price plus accrued interest. In addition, if a change in
control, as defined, occurs at the Company, the Company will be required to make
an offer to

F-15

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

purchase the convertible debentures at a purchase price equal to 101% of their
aggregate principal amount, plus accrued interest.

<Table>
<Caption>
DECEMBER 31,
-----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

6.75% convertible subordinated debentures................... $ 90,000 $ 90,000
Revolving credit facility................................... 106,790 76,249
Other....................................................... 5,060 7,299
-------- --------
201,850 173,548
Less current portion........................................ 1,784 4,108
-------- --------
Total non-current portion of long-term debt............. $200,066 $169,440
-------- --------
-------- --------
</Table>

Maturities of long-term debt during the five years ending December 31, 2003
through 2007 are $4.1 million, $2.9 million, $0.1 million, $76.3 million and
$0.1 million, respectively.

9. INTEREST RATE SWAP AGREEMENTS

The Company does not enter into financial instruments for trading or
speculative purposes. The principal financial instruments used for cash flow
hedging purposes are interest rate swaps.

In July 2001, the Company entered into interest rate swap agreements to
manage its exposure to interest rate changes. The swaps effectively convert a
portion of the Company's variable rate debt under the revolving credit facility
to a fixed rate, without exchanging the notional principal amounts. At December
31, 2002, the Company had two outstanding interest rate swap agreements (in an
aggregate notional principal amount of $75 million), one of which matured in
January 2003 and the other is scheduled to mature in January 2004. Under these
agreements the Company receives a floating rate based on the LIBOR interest
rate, and pays a fixed rate of 4.92% on a notional amount of $45 million and
4.37% on a notional amount of $30 million. If, at any time, the swaps are
determined to be ineffective, in all or in part, due to changes in the interest
rate swap agreements, the fair value of the portion of the interest rate swap
determined to be ineffective will be recognized as gain or loss in the statement
of operations in the period. It is not expected that any gain or loss will be
reported in the statement of operations during the year ending December 31, 2003
nor was any recorded in 2001 or 2002.

10. STOCKHOLDERS' EQUITY

The Company has authority to issue 500,000 shares of preferred stock, $20
par value, and the Board of Directors is vested with the authority to establish
and designate series of preferred, to fix the number of shares therein and the
variations in relative rights as between series. On December 18, 1995, the Board
of Directors established a new series of preferred shares designated as Series A
Participating Preferred Stock. The number of shares constituting the Series A
Preferred Stock is 30,000. The Series A Preferred Stock is designed to
participate in dividends, ranks senior to the Company's common stock as to
dividends and liquidation rights and has voting rights. Each share of the Series
A Preferred Stock shall entitle the holder to one thousand votes on all matters
submitted to a vote of the stockholders of the Company. No such shares were
outstanding at December 31, 2002.

On January 17, 1996, the Board of Directors adopted a Shareholder Rights
Plan ('Plan'). Under the Plan, the Board declared a dividend of one Preferred
Share Purchase Right ('Right') for each outstanding common share of the Company.
The dividend was payable on March 1, 1996, to the shareholders of record as of
February 15, 1996. The Rights are attached to and automatically trade with the
outstanding shares of the Company's common stock.

F-16

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Rights will become exercisable only in the event that any person or
group of affiliated persons becomes a holder of 20% or more of the Company's
outstanding common shares, or commences a tender or exchange offer which, if
consummated, would result in that person or group of affiliated persons owning
at least 20% of the Company's outstanding common shares. Once the rights become
exercisable they entitle all other shareholders to purchase, by payment of an
$80.00 exercise price, one one-thousandth of a share of Series A Participating
Preferred Stock, subject to adjustment, with a value of twice the exercise
price. In addition, at any time after a 20% position is acquired and prior to
the acquisition of a 50% position, the Board of Directors may require, in whole
or in part, each outstanding Right (other than Rights held by the acquiring
person or group of affiliated persons) to be exchanged for one share of common
stock or one one-thousandth of a share of Series A Preferred Stock. The Rights
may be redeemed at a price of $0.001 per Right at any time prior to their
expiration on February 28, 2006.

During the years 1998 through 2000, the Board of Directors authorized
multiple repurchase programs under which the Company could repurchase shares of
its common stock. During such years, $26.7 million (in aggregate) of common
stock has been repurchased to meet present and future requirements of the
Company's stock option programs and to fund the Company's ESOP. As of December
31, 2002, the Company has Board authorization to repurchase additional shares at
a maximum cost of $1.7 million. During 2001 and 2002, the Company did not
repurchase any shares of its common stock.

11. STOCK OPTIONS

The Company has principally two fixed stock-based compensation plans. Under
the 1994 Omnibus Stock Option Plan, as amended, the Company is authorized to
issue 1,500,000 stock options. The options become exercisable over a three to
five year period and expire at the end of five years following the date they
become exercisable. Under the 1996 Independent Directors' Stock Option Plan, the
Company is authorized to issue 50,000 stock options. The options become
exercisable one year after the date of grant and expire at the end of ten years
following the date of grant. At December 31, 2002, in aggregate 1,266,441 shares
of authorized but unissued common stock were reserved for issuance under the
Company's stock option plans.

As permitted under SFAS No. 123, the Company continues to apply the
provisions of APB Opinion No. 25 for stock-based awards granted to employees.
Accordingly, no compensation cost has been recognized for the fixed stock option
plans. Had compensation cost for the Company's stock-based compensation plans
been determined based on the fair value method of SFAS No. 123, the Company's
net earnings (loss) per share would have changed to the pro forma amounts as
follows:

<Table>
<Caption>
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)

Net earnings (loss)........................ As reported $9,729 $(2,485) $(30,556)
Pro forma $8,708 $(2,697) $(30,791)
Basic earnings (loss)...................... As reported $ 0.82 $ (0.21) $ (2.57)
per share.............................. Pro forma $ 0.73 $ (0.23) $ (2.59)
Diluted earnings........................... As reported $ 0.81 $ (0.21) $ (2.54)
(loss) per share....................... Pro forma $ 0.72 $ (0.23) $ (2.56)
</Table>

F-17

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions:

<Table>
<Caption>
2000 2001 2002
---- ---- ----

Expected option life........................... 4.3 years 4.0 years 3.9 years
Expected stock volatility...................... 39.1% 38.6% 38.7%
Expected dividend yield........................ 3.8% 2.8% 2.6%
Risk-free interest rate........................ 4.6% 4.2% 1.8%
Fair value of option........................... $2.53 $3.71 $4.07
</Table>

A summary of the status of the Company's stock option plans follow:

<Table>
<Caption>
2000 2001 2002
----------------- ----------------- -----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ ----- ------ ----- ------ -----
(SHARES IN THOUSANDS)

Outstanding at beginning
of year.......................
808 $20.40 1,189 $16.60 1,011 $16.76
Granted......................... 498 10.73 10 13.05 10 14.43
Exercised....................... -- -- (55) 9.29 (54) 9.74
Forfeited....................... (117) 17.78 (133) 18.18 (57) 16.91
----- ------ ----- ------ ----- ------
Outstanding at end of year...... 1,189 $16.60 1,011 $16.76 910 $17.14
----- ------ ----- ------ ----- ------
----- ------ ----- ------ ----- ------
Options exercisable at end of
year.......................... 526 671 748
----- ----- -----
</Table>

STOCK OPTIONS OUTSTANDING

<Table>
<Caption>
SHARES WEIGHTED-AVERAGE
RANGE OF OUTSTANDING REMAINING CONTRACTUAL WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/31/02 LIFE (YEARS) EXERCISE PRICE
--------------- ----------- ------------ --------------
(SHARES IN
THOUSANDS)

$6.56 - $11.29 325 5.3 $ 9.93
$13.05 - $16.94 115 2.3 $15.83
$20.50 - $24.84 470 2.5 $22.43
</Table>

STOCK OPTIONS EXERCISABLE

<Table>
<Caption>
RANGE OF SHARES EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/31/02 EXERCISE PRICE
--------------- ----------- --------------
(SHARES IN
THOUSANDS)

$6.56 - $24.84 748 $18.55
</Table>

12. RETIREMENT BENEFIT PLANS

The Company had a defined benefit pension plan covering certain former
employees of the Company's former brake business. During 2002, the Company
settled its benefit obligation by purchasing non-participating annuity
contracts.

The following table represents a reconciliation of the beginning and ending
benefit obligation, the fair value of plan assets and the funded status of the
plan:

F-18

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
DECEMBER 31,
----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

Benefit obligation at beginning of year..................... $ 8,957 $ 8,813
Interest cost............................................... 629 368
Actuarial loss.............................................. 93 1,096
Settlement.................................................. -- (9,793)
Benefits paid............................................... (866) (484)
------- -------
Benefit Obligation at End of Year........................... $ 8,813 $ --
------- -------
------- -------
Fair value of plan assets at beginning of year.............. $12,063 $11,062
Settlement.................................................. -- (9,793)
Actual return on plan assets................................ (135) (39)
Benefits paid............................................... (866) (484)
------- -------
Fair value of plan assets at end of year.................... $11,062 $ 746
------- -------
Funded status............................................... 2,249 746
Unrecognized net actuarial gain (loss)...................... (1,386) 56
------- -------
Prepaid benefit cost........................................ $ 863 $ 802
------- -------
------- -------
</Table>

Weighted average assumptions are as follows:

<Table>
<Caption>
DECEMBER 31,
---------------------------
2000 2001 2002
---- ---- ----

Discount rates........................................... 7.50% 7.25% 6.50%
Expected long-term rate of return on assets.............. 8.00% 8.00% 8.00%
</Table>

Components of net periodic (benefit) cost follow:

<Table>
<Caption>
DECEMBER 31,
---------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

Interest cost............................................. $ 658 $ 629 $ 368
Return on assets.......................................... (988) (928) (530)
Settlement................................................ -- -- 228
Recognized actuarial (gain) loss.......................... (127) (112) (5)
----- ----- -----
Net periodic (benefit) cost............................... $(457) $(411) $ 61
----- ----- -----
----- ----- -----
</Table>

In addition, the Company participates in several multi employer plans which
provide defined benefits to substantially all unionized workers. The
Multi-employer Pension Plan Amendments Act of 1980 imposes certain liabilities
upon employers associated with multi employer plans. The Company has not
received information from the plans' administrators to determine its share, if
any, of unfunded vested benefits.

The Company and certain of its subsidiaries also maintain various defined
contribution plans, which include profit sharing and provide retirement benefits
for other eligible employees.

The provisions for retirement expense in connection with the plans are as
follows:

<Table>
<Caption>
MULTI- DEFINED CONTRIBUTION
EMPLOYER PLANS AND OTHER PLANS
-------------- ---------------

Years ended December 31,
2000 $344,000 $2,319,000
2001 299,000 2,449,000
2002 306,000 2,553,000
</Table>

F-19

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has an Employee Stock Ownership Plan and Trust for employees who
are not covered by a collective bargaining agreement. 75,000 shares each were
granted to employees during 2000, 2001 and 2002, under the terms of the ESOP.
These shares were funded directly from treasury stock.

In fiscal 2000, the Company created an employee benefits trust to which it
contributed 750,000 shares of treasury stock. The Company is authorized to
instruct the trustees to distribute such shares toward the satisfaction of the
Company's future obligations under employee benefit plans. The shares held in
trust are not considered outstanding for purposes of calculating earnings per
share until they are committed to be released. The trustees will vote the shares
in accordance with its fiduciary duties.

The provision for expense in connection with the ESOP was approximately $1.0
million in 2000, $0.7 million in 2001 and $1.2 million in 2002.

In August 1994 the Company established an unfunded Supplemental Executive
Retirement Plan ('SERP') for key employees of the Company. Under the plan, these
employees may elect to defer a portion of their compensation and, in addition,
the Company may at its discretion make contributions to the plan on behalf of
the employees. Such contributions were $24,000, $37,000 and $46,000 in 2000,
2001 and 2002, respectively.

On October 1, 2001, the Company adopted a second unfunded SERP. The SERP is
a defined benefit plan pursuant to which the Company will pay supplemental
pension benefits to certain key employees upon retirement based upon the
employees' years of service and compensation.

<Table>
<Caption>
DECEMBER 31,
-----------------
2001 2002
---- ----
(IN THOUSANDS)

Benefit obligation at beginning of year................. $ -- $ 1,342
Initial unrecognized prior service cost................. 1,270 --
Service cost............................................ 49 211
Interest cost........................................... 23 140
Actuarial loss.......................................... -- 582
------- -------
Benefit obligation at end of year....................... $ 1,342 $ 2,275
------- -------
Funded status........................................... $(1,342) $(2,275)
Unrecognized prior service cost......................... 1,242 1,132
Minimum pension liability............................... (830) (1,298)
Unrecognized net actuarial gain......................... -- 538
------- -------
Accrued benefit cost................................ $ (930) $(1,903)
------- -------
------- -------
</Table>

Components of net periodic benefit cost follow:

<Table>
<Caption>
DECEMBER 31,
--------------
2001 2002
---- ----
(IN THOUSANDS)

Service cost............................................ $49 $211
Interest cost........................................... 23 140
Amortization of prior service cost...................... 27 110
Amortization of unrecognized loss....................... -- 44
--- ----
Net periodic benefit cost........................... $99 $505
--- ----
--- ----
</Table>

F-20

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Actuarial assumptions used to determine costs and benefit obligations are as
follows:

<Table>
<Caption>
DECEMBER 31,
---------------
2001 2002
---- ----

Discount rates.............................................. 7.25% 6.50%
Salary increase............................................. 4.00% 4.00%
</Table>

13. POSTRETIREMENT MEDICAL BENEFITS

The Company provides certain medical and dental care benefits to eligible
retired employees. The Company's current policy is to fund the cost of the
health care plans on a pay-as-you-go basis.

The following table represents a reconciliation of the beginning and ending
benefit obligation and the funded status of the plan.

<Table>
<Caption>
DECEMBER 31,
----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

Benefit obligation at beginning of year..................... $ 17,447 $ 20,484
Service cost................................................ 1,500 1,765
Interest cost............................................... 1,314 1,517
Actuarial (gain) loss....................................... 1,180 3,375
Benefits paid............................................... (957) (953)
-------- --------
Benefit obligation at end of year........................... $ 20,484 $ 26,188
-------- --------
-------- --------
Funded status............................................... $(20,484) $(26,188)
Unrecognized prior service cost............................. 914 790
Unrecognized net actuarial gain............................. (2,582) 846
-------- --------
Accrued benefit cost........................................ $(22,152) $(24,552)
-------- --------
-------- --------
</Table>

Components of net periodic benefit cost follow:

<Table>
<Caption>
DECEMBER 31,
------------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

Service cost............................................ $1,377 $1,500 $1,765
Interest cost........................................... 1,152 1,314 1,517
Amortization of prior service cost...................... 124 124 124
Recognized actuarial gain............................... (275) (232) (53)
------ ------ ------
Net periodic benefit cost............................... $2,378 $2,706 $3,353
------ ------ ------
------ ------ ------
</Table>

Actuarial assumptions used to determine costs and benefit obligations are as
follows:

<Table>
<Caption>
2000 2001 2002
---- ---- ----

Discount rate............................................. 7.50% 7.25% 6.50%
Current medical cost trend rate........................... 10.00% 9.00% 12.00%
Current dental cost trend rate............................ 5.50% 5.00% 5.00%
Ultimate medical cost trend rate.......................... 5.00% 5.00% 5.00%
Year trend rate declines to ultimate...................... 2005 2005 2005
</Table>

Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects for 2002:

F-21

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
1-PERCENTAGE- 1-PERCENTAGE-
POINT INCREASE POINT DECREASE
-------------- --------------
(DOLLARS IN THOUSANDS)

Effect on total of service and interest cost $ 345 $ (277)
components...........................................
Effect on post retirement benefit obligation........... $2,154 $(1,787)
</Table>

14. OTHER INCOME (EXPENSE), NET

<Table>
<Caption>
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

Interest and dividend income.......................... $ 1,038 $ 1,336 $1,338
Loss on sale of accounts receivable (Note 3).......... (1,567) (484) --
Income (loss) from joint ventures..................... 702 844 352
Gain on disposal of property, plant and equipment..... 99 265 97
Other -- net.......................................... 178 802 1,400
------- ------- ------
Total other income (expense), net................. $ 450 $ 2,763 $3,187
------- ------- ------
------- ------- ------
</Table>

15. INCOME TAXES

The income tax provision (benefit) consists of the following:

<Table>
<Caption>
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

Current:
Domestic.......................................... $ 896 $ 1,124 $ 2,422
Foreign........................................... 2,523 1,673 2,948
------- ------- -------
Total Current......................................... 3,419 2,797 5,370
------- ------- -------
Deferred:
Domestic.......................................... (1,103) (3,408) 3,350
Foreign........................................... 206 (220) (800)
------- ------- -------
Total Deferred........................................ (897) (3,628) 2,550
------- ------- -------
Total income tax provision (benefit).................. $ 2,522 $ (831) $ 7,920
------- ------- -------
------- ------- -------
</Table>

The Company has not provided for federal income taxes on the undistributed
income of its foreign subsidiaries because of the availability of foreign tax
credits and/or the Company's intention to permanently reinvest such
undistributed income. Cumulative undistributed earnings of foreign subsidiaries
on which no United States income tax has been provided were $27.5 million at the
end of 2000, $28.2 million at the end of 2001 and $10.7 million at the end of
2002.

Earnings (loss) before income taxes for foreign operations (excluding Puerto
Rico) amounted to approximately $4 million, $3 million, and $(5) million in
2000, 2001 and 2002, respectively. U.S. taxes on earnings of the Puerto Rican
subsidiary are largely eligible for tax credits against U.S. income taxes
(phased out effective 2005) and are partially exempt from Puerto Rican income
taxes under a tax exemption grant currently being renewed and expected to expire
in 2016. The tax benefits of the exemption, reduced by a minimum tollgate tax
instituted in 1993, amounted to $0.13 per share in 2002 (2001 -- $0.12;
2000 -- $0.23).

Reconciliations between the U.S. federal income tax rate and the Company's
effective income tax rate as a percentage of earnings from continuing operations
before income taxes are as follows:

F-22

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
2000 2001 2002
---- ---- ----

U.S. federal income tax rate................................ 35.0% 35.0% 35.0%
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax
benefit................................................... 1.2 21.4 4.1
Non-deductible items, net................................... 0.1 60.5 3.4
Foreign tax rate differential............................... (15.3) (91.9) (2.4)
Change in foreign valuation allowance....................... -- -- 16.4
----- ----- -----
Effective tax rate.......................................... 21.0% 25.0% 56.5%
----- ----- -----
----- ----- -----
</Table>

The following is a summary of the components of the net deferred tax assets
and liabilities recognized in the accompanying consolidated balance sheets:

<Table>
<Caption>
DECEMBER 31,
----------------------
2001 2002
---- ----
(DOLLARS IN THOUSANDS)

Deferred Tax Assets:
Inventories............................................. $ 6,044 $ 6,025
Allowance for customer returns.......................... 7,069 6,152
Postretirement benefits................................. 8,751 10,390
Allowance for doubtful accounts......................... 1,587 1,442
Accrued salaries and benefits........................... 2,938 3,339
Net operating loss and tax credit carryforwards......... 15,390 14,084
Goodwill................................................ -- 3,578
Accrued asbestos liabilities............................ 1,497 10,765
Other................................................... 5,054 5,580
-------- --------
48,330 61,355
-------- --------
Valuation allowance..................................... (14,571) (21,698)
-------- --------
Total............................................... $ 33,759 $ 39,657
-------- --------
-------- --------
Deferred Tax Liabilities:
Depreciation............................................ $ 6,702 $ 7,565
Promotional costs....................................... 1,036 1,106
Other................................................... 1,052 81
-------- --------
Total............................................... 8,790 8,752
-------- --------
Net deferred tax assets............................. $ 24,969 $ 30,905
-------- --------
-------- --------
</Table>

During 2002 the Company increased the valuation allowance by $7.1 million.
At December 31, 2002, the Company has approximately $15.8 million of domestic
and foreign net operating loss carryforwards of which $6.8 million will expire
in 2021 and the remainder (foreign) have an indefinite carryforward period. The
Company also has foreign tax credit carryforwards of approximately $2.1 million
which expire between 2003 and 2007. The Company also has alternative minimum tax
credit carryforwards of approximately $6.6 million for which there is no
expiration date.

The Company believes that it is more likely than not that the results of
future operations will generate sufficient taxable income to realize the net
deferred tax assets. However, if the Company is unable to generate sufficient
taxable income in the future through its operations, increases in the valuation
allowance may be required.

16. INDUSTRY SEGMENT AND GEOGRAPHIC DATA

Under the provisions of SFAS No. 131, the Company has three reportable
operating segments which are the major product areas of the automotive
aftermarket in which the Company

F-23

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

competes. Engine Management consists primarily of ignition and emission parts,
wire and cable, and fuel system parts. Temperature Control consists primarily of
compressors, other air conditioning parts and heater parts. The third reportable
operating segment is Europe which consists of both Engine Management and
Temperature Control reporting units. The accounting policies of each segment are
the same as those described in the summary of significant accounting policies
(see Note 1). The following tables contain financial information for each
reportable segment:

<Table>
<Caption>
FOR THE YEAR ENDED DECEMBER 31, 2000
---------------------------------------------------------------
ENGINE TEMPERATURE OTHER
MANAGEMENT CONTROL EUROPE ADJUSTMENTS CONSOLIDATED
---------- ------- ------ ----------- ------------
(DOLLARS IN THOUSANDS)

Net sales................ $288,240 $270,848 $38,310 $ 3,994 $601,392
-------- -------- ------- -------- --------
Depreciation and
amortization........... 10,293 6,116 1,902 611 18,922
-------- -------- ------- -------- --------
Operating income......... 37,974 11,513 517 (19,293) 30,711
-------- -------- ------- -------- --------
Investment in equity
affiliates............. 105 -- 96 1,755 1,956
-------- -------- ------- -------- --------
Capital expenditures..... 8,914 6,454 380 904 16,652
-------- -------- ------- -------- --------
Total assets............. $265,336 $224,410 $39,321 $ 20,329 $549,396
-------- -------- ------- -------- --------
</Table>

<Table>
<Caption>
FOR THE YEAR ENDED DECEMBER 31, 2001
---------------------------------------------------------------
ENGINE TEMPERATURE OTHER
MANAGEMENT CONTROL EUROPE ADJUSTMENTS CONSOLIDATED
---------- ------- ------ ----------- ------------
(DOLLARS IN THOUSANDS)

Net sales................ $285,498 $269,856 $33,449 $ 2,849 $591,652
-------- -------- ------- -------- --------
Depreciation and
amortization........... 9,649 6,462 1,961 837 18,909
-------- -------- ------- -------- --------
Operating income......... 26,432 3,624 (1,718) (13,215) 15,123
-------- -------- ------- -------- --------
Investment in equity
affiliates............. 105 -- 166 1,878 2,149
-------- -------- ------- -------- --------
Capital expenditures..... 4,724 6,781 775 1,460 13,740
-------- -------- ------- -------- --------
Total assets............. $233,564 $182,083 $40,407 $ 53,375 $509,429
-------- -------- ------- -------- --------
</Table>

<Table>
<Caption>
FOR THE YEAR ENDED DECEMBER 31, 2002
---------------------------------------------------------------
ENGINE TEMPERATURE OTHER
MANAGEMENT CONTROL EUROPE ADJUSTMENTS CONSOLIDATED
---------- ------- ------ ----------- ------------
(DOLLARS IN THOUSANDS)

Net sales................ $303,112 $255,088 $36,028 $ 4,209 $598,437
-------- -------- ------- -------- --------
Depreciation and
amortization........... 8,660 5,484 902 1,082 16,128
-------- -------- ------- -------- --------
Operating income......... 41,844 10,095 (10,464) (16,407) 25,068
-------- -------- ------- -------- --------
Investment in equity
affiliates............. -- -- 185 2,017 2,202
-------- -------- ------- -------- --------
Capital expenditures..... 3,465 2,066 1,831 236 7,598
-------- -------- ------- -------- --------
Total assets............. $247,318 $157,343 $30,728 $ 55,369 $490,758
-------- -------- ------- -------- --------
</Table>

Other Adjustments consist of items pertaining to the corporate headquarters
function, as well as our Canadian business unit that does not meet the criteria
of a reportable operating segment under SFAS No. 131.

F-24

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
REVENUE
------------------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

United States.................................... $521,593 $515,322 $512,055
Europe........................................... 38,310 33,449 36,028
Canada........................................... 27,942 28,811 32,188
Other Foreign.................................... 13,547 14,070 18,166
-------- -------- --------
Total........................................ $601,392 $591,652 $598,437
-------- -------- --------
-------- -------- --------
</Table>

<Table>
<Caption>
LONG LIVED ASSETS
------------------------------------
2000 2001 2002
---- ---- ----
(DOLLARS IN THOUSANDS)

United States.................................... $122,825 $118,455 $109,778
Europe........................................... 17,573 17,301 7,153
Canada........................................... 3,511 2,829 2,450
Other Foreign.................................... 1,312 1,101 1,124
-------- -------- --------
Total........................................ $145,221 $139,686 $120,505
-------- -------- --------
-------- -------- --------
</Table>

Revenues are attributed to countries based upon the location of the
customer.

17. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

CASH AND CASH EQUIVALENTS

The carrying amount approximates fair value because of the short maturity of
those instruments.

MARKETABLE SECURITIES

The fair values of investments are estimated based on quoted market prices
for these or similar instruments.

LONG-TERM DEBT

The fair value of the Company's long-term debt is estimated based on quoted
market prices or current rates offered to the Company for debt of the same
remaining maturities.

INTEREST RATE SWAPS

The fair value of the Company's financial instruments are based on market
quotes and represents the net amount required to terminate the position, taking
into consideration market rates and counterparty credit risk.

The estimated fair values of the Company's financial instruments are as
follows:

F-25

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
CARRYING
AMOUNT FAIR VALUE
------ ----------
(DOLLARS IN THOUSANDS)

DECEMBER 31, 2001
Cash and cash equivalents................................... $ 7,496 $ 7,496
Marketable securities....................................... 7,200 7,200
Long-term debt.............................................. (201,850) (177,520)
Interest rate swaps......................................... $ (2,045) $ (2,045)

DECEMBER 31, 2002
Cash and cash equivalents................................... $ 9,690 $ 9,690
Marketable securities....................................... 7,200 7,200
Long-term debt.............................................. (173,548) (156,437)
Interest rate swaps......................................... $ (1,905) $ (1,905)
</Table>

18. COMMITMENTS AND CONTINGENCIES

Total rent expense for the three-years ended December 31, 2002 was as
follows:

<Table>
<Caption>
REAL
TOTAL ESTATE OTHER
----- ------ -----
(DOLLARS IN THOUSANDS)

2000...................................................... $9,797 $7,217 $2,580
2001...................................................... $8,673 $6,508 $2,165
2002...................................................... $8,434 $6,282 $2,152
</Table>

At December 31, 2002, the Company is obligated to make minimum rental
payments through 2011, under operating leases, which are as follows:

<Table>
<Caption>
(DOLLARS IN
THOUSANDS)

2003.......................................... $ 7,706
2004.......................................... 6,320
2005.......................................... 5,336
2006.......................................... 3,736
2007.......................................... 2,558
Thereafter.................................... 4,112
-------
Total..................................... $29,768
-------
-------
</Table>

The Company also has lease and sub-lease agreements in place for various
properties under its control. The Company expects to receive operating lease
payments from lessees during the five years ending December 31, 2003 through
2007 of $1.0 million, $0.6 million, $0.6 million, $0.6 million and $0.6 million,
respectively.

The Company generally warrants its products against certain manufacturing
and other defects. These product warranties are provided for specific periods of
time of the product depending on the nature of the product. As of December 31,
2001 and 2002, the Company has accrued $12.7 million and $10.4 million,
respectively, for estimated product warranty claims. The accrued product
warranty costs are based primarily on historical experience of actual warranty
claims. Warranty claims expense for each of the years 2000, 2001, and 2002 were:
$55.1 million, $52.2 million, and $46.7 million, respectively.

F-26

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table provides the changes in the Company's product
warranties:

<Table>
(DOLLARS IN THOUSANDS)

January 1, 2002............................................. $ 12,743
Liabilities accrued for current year sales.................. 46,671
Settlements of warrants claims.............................. (49,054)
--------
December 31, 2002........................................... $ 10,360
--------
--------
</Table>

At December 31, 2002, the Company had outstanding letters of credit
aggregating approximately $3.5 million. The contract amount of the letters of
credit is a reasonable estimate of their value as the value for each is fixed
over the life of the commitment.

The Company has entered into Change in Control arrangements with two key
officers of the Company. In the event of a Change of Control (as defined), each
executive will receive severance payments (as defined) and certain other
benefits.

On January 28, 2000, a former significant customer of the Company currently
undergoing a Chapter 7 liquidation in U.S. Bankruptcy Court filed claims against
a number of its former suppliers, including the Company. The claim against the
Company alleges $0.5 million of preferential payments in the 90 days prior to
the related bankruptcy petition. The claim pertaining to the preferential
payments was settled for an immaterial amount during the second quarter of 2002.
In addition, this former customer seeks $9.4 million from the Company for a
variety of claims including antitrust, breach of contract, breach of warranty
and conversion. These latter claims arise out of allegations that this customer
was entitled to various discounts, rebates and credits after it filed for
bankruptcy. The Company has purchased insurance with respect to the actions. On
August 22, 2002, the court dismissed the antitrust claims. The Company believes
that these remaining matters will not have a material adverse effect on the
Company's consolidated financial statements taken as a whole.

In 1986, the Company acquired a brake business, which it subsequently sold
in March 1998 and which is accounted for as discontinued operations in the
accompanying consolidated financial statements. When the Company originally
acquired this brake business, the Company assumed future liabilities relating to
any alleged exposure to asbestos-containing products manufactured by the seller
of the acquired brake business. In accordance with the related purchase
agreement, the Company agreed to assume the liabilities for all new claims filed
on or after September 1, 2001. The ultimate exposure to the Company will depend
upon the number of claims filed against the Company on or after September 1,
2001 and the amounts paid for indemnity and defense thereof. At December 31,
2001, approximately 100 cases were outstanding for which the Company was
responsible for any related liabilities. At December 31, 2002, the number of
cases outstanding for which the Company was responsible for related liabilities
increased to approximately 2,500, which include approximately 1,600 cases filed
in December 2002 in Mississippi. The Company believes that these Mississippi
cases filed against the Company in December 2002 were due in large part to
potential plaintiffs accelerating the filing of their claims prior to the
effective date of Mississippi's tort reform statute in January 2003, which
statute eliminated the ability of plaintiffs to file consolidated cases. To
date, the amounts paid for settled claims have been immaterial. The Company does
not have insurance coverage for the defense and indemnity costs associated with
these claims.

In evaluating its potential asbestos-related liability, the Company has
considered various factors including, among other things, an actuarial study
performed by a leading actuarial firm with expertise in assessing
asbestos-related liabilities, settlement amounts of the Company and whether
there are any co-defendants, the jurisdiction in which lawsuits are filed, and
the status and results of settlement discussions. Actuarial consultants with
experience in assessing asbestos-related liabilities completed a study in
September 2002 to estimate the Company's potential claim liability. The
methodology used to project asbestos-related liabilities and costs in the study

F-27

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

considered: (1) historical data available from publicly available studies; (2)
an analysis of the Company's recent claims history to estimate likely filing
rates for the remainder of 2002 through 2052; (3) an analysis of the Company's
currently pending claims; and (4) an analysis of the Company's settlements to
date in order to develop average settlement values. Based upon all the
information considered by the actuarial firm, the actuarial study estimated an
undiscounted liability for settlement payments ranging from $27.3 million to $58
million for the period through 2052.

Accordingly, based on the information contained in the actuarial study and
all other available information considered by the Company, the Company recorded
an after tax charge of $16.9 million as a loss from discontinued operations
during the third quarter of 2002 to reflect such liability. The Company
concluded that no amount within the range of settlement payments was more likely
than any other and, therefore, recorded the low end of the range as the
liability associated with future settlement payments through 2052 in the
Company's consolidated financial statements, in accordance with generally
accepted accounting principles. Given the uncertainties associated with
projecting such matters into the future, the short period of time that the
Company has been responsible for defending these claims, and other factors
outside the control of the Company, the Company can give no assurance that
additional provisions will not be required. Management will continue to monitor
the circumstances surrounding these potential liabilities in determining whether
additional provisions may be necessary. At the present time, however, the
Company does not believe that any additional provisions would be reasonably
likely to have a material adverse effect on the Company's liquidity or
consolidated financial position.

The Company is involved in various other litigation and product liability
matters arising in the ordinary course of business. Although the final outcome
of these matters cannot be determined, it is management's opinion that the final
resolution of these matters will not have a material effect on the Company's
financial statements taken as a whole.

19. SUBSEQUENT EVENTS (UNAUDITED)

ACQUISITION

On February 7, 2003, the Company signed an agreement to purchase Dana
Corporation's Engine Management Group (EMG), for a purchase price equal to the
closing net book value of the business, subject to a maximum purchase price of
$125 million. Dana's EMG is a leading manufacturer of aftermarket parts in the
automotive industry focused exclusively on engine management. The Company
intends to finance the acquisition and the closing payment of related fees and
expenses and restructuring and integration costs by (a) drawing on the revolving
credit facility, as amended, (b) issuing shares of common stock and (c)
obtaining seller financing.

The acquisition is subject to obtaining financing for the acquisition and
other customary closing conditions. The Company expects to close the acquisition
during the second quarter of 2003.

F-28

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
2001 2001 2001 2001
QUARTER ENDED ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net sales................................ $154,463 $183,167 $157,590 $ 96,432
-------- -------- -------- --------
Gross profit............................. 37,431 41,831 41,151 18,642
-------- -------- -------- --------
Earnings (loss) from continuing
operations............................. 619 (522) 3,748 (6,330)
-------- -------- -------- --------
Net earnings (loss)...................... $ 619 $ (522) $ 3,748 $ (6,330)
-------- -------- -------- --------
Net earnings (loss) from continuing
operations per common share:
Basic................................ $ 0.05 $ (0.05) $ 0.32 $ (0.54)
Diluted.............................. $ 0.05 $ (0.05) $ 0.32 $ (0.54)
-------- -------- -------- --------
Net earnings (loss) per common share:
Basic................................ $ 0.05 $ (0.05) $ 0.32 $ (0.54)
Diluted.............................. $ 0.05 $ (0.05) $ 0.32 $ (0.54)
-------- -------- -------- --------
</Table>

<Table>
<Caption>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
2002 2002 2002 2002
QUARTER ENDED ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net sales................................ $126,321 $180,629 $183,631 $107,856
-------- -------- -------- --------
Gross profit............................. 30,976 46,833 50,608 29,127
-------- -------- -------- --------
Earnings (loss) from continuing
operations............................. (1,921) 6,267 9,832 (8,087)
-------- -------- -------- --------
Loss from discontinued operations, net of
taxes.................................. (319) (806) (16,918) (254)
Cumulative effect of accounting change,
net of taxes........................... (18,350) -- -- --
-------- -------- -------- --------
Net earnings (loss)...................... $(20,590) $ 5,461 $ (7,086) $ (8,341)
-------- -------- -------- --------
Net earnings (loss) from continuing
operations per common share:
Basic................................ $ (.16) $ .53 $ .82 $ (.68)
Diluted.............................. $ (.16) $ .48 $ .72 $ (.68)
-------- -------- -------- --------
Net earnings (loss) per common share:
Basic................................ $ (1.74) $ .46 $ (.59) $ (.70)
Diluted.............................. $ (1.74) $ .43 $ (.42) $ (.70)
-------- -------- -------- --------
</Table>

The fourth quarter of 2002 reflects unfavorable adjustments including
approximately $1.6 million of restructuring costs related to the consolidation
of certain manufacturing and distributing facilities within the Temperature
Control Division; and a writeoff of approximately $3.3 million for the
impairment of goodwill associated with the Engine Management reporting unit of
the Europe Division.

F-29

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(IN THOUSANDS, EXCEPT FOR SHARES AND PER SHARE DATA)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2003
---- ----
(UNAUDITED)

Net sales................................................... $ 126,321 $ 135,725
Cost of sales............................................... 95,151 101,185
----------- -----------
Gross profit............................................ 31,170 34,540
Selling, general and administrative expenses................ 31,063 32,212
----------- -----------
Operating income........................................ 107 2,328
Other income (expense) -- net............................... 668 (274)
Interest expense............................................ 3,462 3,018
----------- -----------
Loss from continuing operations before taxes............ (2,687) (964)
Income tax benefit.......................................... (766) (357)
----------- -----------
Loss from continuing operations......................... (1,921) (607)
Loss from discontinued operations, net of tax............... (319) (348)
----------- -----------
Loss before cumulative effect of accounting change...... (2,240) (955)
Cumulative effect of accounting change, net of tax (Note
3)........................................................ (18,350) --
----------- -----------
Net loss................................................ (20,590) (955)
Retained earnings at beginning of period.................... 183,532 148,686
----------- -----------
162,942 147,731
Less: cash dividends for period............................. 1,064 1,076
----------- -----------
Retained earnings at end of period.......................... $ 161,878 $ 146,655
----------- -----------
----------- -----------
PER SHARE DATA:
Net loss per common share -- basic:
Loss per share from continuing operations............... $ (0.16) $ (0.05)
Discontinued operations................................. (0.03) (0.03)
Cumulative effect of accounting change.................. (1.55) --
----------- -----------
Net loss per common share -- basic...................... $ (1.74) $ (0.08)
----------- -----------
----------- -----------
Net loss per common share -- diluted:
Loss per share from continuing operations............... $ (0.16) $ (0.05)
Discontinued operations................................. (0.03) (0.03)
Cumulative effect of accounting change.................. (1.55) --
----------- -----------
Net loss per common share -- diluted.................... $ (1.74) $ (0.08)
----------- -----------
----------- -----------
Average number of common shares............................. 11,827,636 11,972,853
----------- -----------
----------- -----------
Average number of common and dilutive shares................ 11,827,636 11,972,853
----------- -----------
----------- -----------
</Table>

See accompanying notes to consolidated financial statements.

F-30

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARES AND PER SHARE DATA)

<Table>
<Caption>
DECEMBER 31, MARCH 31,
2002 2003
---- ----
(UNAUDITED)

ASSETS
Current Assets:
Cash and cash equivalents............................... $ 9,690 $ 7,254
Marketable securities................................... 7,200 7,200
Accounts receivable, net of allowance for doubtful
accounts and discounts of $5,726 (2002 -- $4,882)
(Note 7).............................................. 117,644 140,636
Inventories (Notes 5 and 7)............................. 174,785 179,572
Deferred income taxes................................... 12,213 12,122
Prepaid expenses and other current assets............... 6,828 7,275
-------- --------
Total current assets............................ 328,360 354,059
-------- --------
Property, plant and equipment, net of accumulated
depreciation (Notes 6 and 7).............................. 103,822 101,183
Goodwill, net (Note 3)...................................... 16,683 16,683
Other assets................................................ 41,893 42,420
-------- --------
Total assets.................................... $490,758 $514,345
-------- --------
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable........................................... $ 3,369 $ 4,703
Current portion of long-term debt (Note 7).............. 4,108 3,755
Accounts payable........................................ 35,744 41,233
Sundry payables and accrued expenses.................... 39,723 30,769
Accrued customer returns................................ 16,341 13,831
Payroll and commissions................................. 12,143 6,860
-------- --------
Total current liabilities....................... 111,428 101,151
-------- --------
Long-term debt (Note 7)..................................... 169,440 202,601
Postretirement medical benefits and other accrued
liabilities............................................... 30,414 31,437
Accrued asbestos liabilities................................ 25,595 25,577
-------- --------
Total liabilities............................... 336,877 360,766
-------- --------
Commitments and contingencies (Notes 7, 8, 10, 12 and 14)
Stockholders' equity (Notes 7, 8, 9, 10 and 12):
Common stock -- par value $2.00 per share:
Authorized -- 30,000,000 shares, issued and
outstanding (11,957,009 and 12,033,009 shares in
2002 and 2003, respectively)...................... 26,649 26,649
Capital in excess of par value...................... 1,764 1,565
Retained earnings....................................... 148,686 146,655
Accumulated other comprehensive loss.................... (2,581) (1,800)
Treasury stock -- at cost (1,367,467 and 1,291,467
shares in 2002 and 2003, respectively)................ (20,637) (19,490)
-------- --------
Total stockholders' equity...................... 153,881 153,579
-------- --------
Total liabilities and stockholders' equity...... $490,758 $514,345
-------- --------
-------- --------
</Table>

See accompanying notes to consolidated financial statements.

F-31

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<Table>
<Caption>
MARCH 31,
-------------------
2002 2003
---- ----
(UNAUDITED)

Cash flows from operating activities:
Net loss................................................ $(20,590) $ (955)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................... 3,898 4,026
Gain on sale of property, plant & equipment......... (140) --
Equity (income) loss from joint ventures............ (113) 72
Employee stock ownership plan allocation............ 163 251
Cumulative effect of accounting change, net of
tax............................................... 18,350 --
Change in assets and liabilities, net of effects from
acquisitions:
Increase in accounts receivable, net................ (29,615) (22,992)
Increase in inventories............................. (6,100) (4,787)
(Increase) decrease in prepaid expenses and other
current assets.................................... (1,335) 331
Decrease (increase) in other assets................. 5,748 (599)
Increase in accounts payable........................ 17,675 5,489
Decrease in sundry payables and accrued expenses.... (1,978) (8,954)
Increase (decrease) in other liabilities............ 433 (6,148)
-------- --------
Net cash used in operating activities........... (13,604) (34,266)
-------- --------
Cash flows from investing activities:
Proceeds from the sale of property, plant & equipment... 513 58
Capital expenditures.................................... (2,508) (1,715)
Payments for acquisitions, net of cash acquired......... (4,831) --
-------- --------
Net cash used in investing activities........... (6,826) (1,657)
-------- --------
Cash flows from financing activities:
Net borrowings under line-of-credit agreements.......... 17,215 34,647
Principal payments and retirement of long-term debt..... (288) (505)
Proceeds from exercise of employee stock options........ 74 10
Dividends paid.......................................... (1,064) (1,076)
-------- --------
Net cash provided by financing activities....... 15,937 33,076
-------- --------
Effect of exchange rate changes on cash..................... (483) 411
Net decrease in cash and cash equivalents................... (4,976) (2,436)
Cash and cash equivalents at beginning of the period........ 7,496 9,690
-------- --------
Cash and cash equivalents at end of the period.............. $ 2,520 $ 7,254
-------- --------
-------- --------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................ $ 4,971 $ 4,495
-------- --------
-------- --------
Income taxes........................................ $ 121 $ 1,055
-------- --------
-------- --------
</Table>

See accompanying notes to consolidated financial statements.

F-32

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

Standard Motor Products, Inc. (the 'Company') is engaged in the manufacture
and distribution of replacement parts for motor vehicles in the automotive
aftermarket industry.

The accompanying unaudited financial information should be read in
conjunction with the audited consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.

The unaudited condensed consolidated financial statements include the
accounts of the Company and all domestic and international companies in which
the Company has more than a 50% equity ownership. The Company's investments in
unconsolidated affiliates are accounted for on the equity method. All
significant inter-company items have been eliminated.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation have
been included. The results of operations for the interim periods are not
necessarily indicative of the results of operations for the entire year.

Where appropriate, certain amounts in 2002 have been reclassified to conform
with the 2003 presentation.

NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

In June 2001, the Financial Accounting Standards Board ('FASB') issued
Statement No. 143, Accounting for Asset Retirement Obligations ('Statement No.
143'), which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. Statement No. 143 applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and/or normal use of the asset. Statement
No. 143 requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The fair value of the liability is added to
the carrying amount of the associated asset and this additional carrying amount
is depreciated over the life of the asset. The liability is accreted at the end
of each period through charges to operating expense. If the obligation is
settled for other than the carrying amount of the liability, we will recognize a
gain or loss on settlement. Effective January 1, 2003, the Company adopted
Statement No. 143, which did not have a material effect on its condensed
consolidated financial statements.

RESCISSION OF FASB STATEMENTS

In April 2002, the FASB issued Statement of Financial Accounting Standards
('SFAS') No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13 and Technical Corrections ('Statement No. 145'). Statement
No. 145 eliminates the automatic classification of gain or loss on
extinguishment of debt as an extraordinary item of income and requires that such
gain or loss be evaluated for extraordinary classification under the criteria of
Accounting Principles Board ('APB') No. 30, Reporting Results of Operations
('APB No. 30'). Statement No. 145 also requires sales-leaseback accounting for
lease modifications that have economic effects that are similar to
sales-leaseback transactions, and makes various other technical corrections to
existing pronouncements. Effective January 1, 2003, the Company adopted

F-33

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

Statement No. 145, which did not have a material effect on its condensed
consolidated financial statements. Statement No. 145 will require prior periods
to be reclassified for any loss on extinguishment of debt not meeting the
criteria of APB No. 30.

ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT AND DISPOSAL ACTIVITIES

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities ('Statement No. 146'). Statement No.
146, which is effective prospectively for exit or disposal activities initiated
after December 31, 2002, applies to costs associated with an exit activity,
including restructurings, or with a disposal of long-lived assets. Those
activities can include eliminating or reducing product lines, terminating
employees and contracts and relocating plant facilities or personnel. Statement
No. 146 requires that exit or disposal costs are recorded as an operating
expense when the liability is incurred and can be measured at fair value.
Commitment to an exit plan or a plan of disposal by itself will not meet the
requirement for recognizing a liability and the related expense under Statement
No. 146. The adoption of Statement No. 146 did not have a material effect on the
Company's condensed consolidated financial statements.

ACCOUNTING FOR AND DISCLOSURES OF GUARANTEES

In November 2002, the FASB issued interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others ('Interpretation No. 45'). Interpretation
No. 45 elaborates on the existing disclosure requirements for most guarantees,
including loan guarantees such as standby letters of credit. Interpretation
No. 45 also clarifies that at the time a company issues a guarantee, the company
must recognize an initial liability for the fair market value of the obligations
it assumes under that guarantee and must disclose that information in its
interim and annual financial statements. The initial recognition and measurement
provisions of Interpretation No. 45 apply on a prospective basis to guarantees
issued or modified after December 31, 2002. The adoption of Interpretation No.
45 did not have a material effect on the Company's condensed consolidated
financial statements. See Note 14 of notes to condensed consolidated financial
statements for discussion of product warranty claims.

ACCOUNTING FOR STOCK-BASED COMPENSATION

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123 ('Statement No. 148'). Statement No. 148 amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value method of accounting for
stock-based employee compensation. In addition, Statement No. 148 amends the
disclosure requirements of Statement No. 123 to require prominent disclosures in
both annual and interim financial statements. Certain of the disclosure
modifications are required for fiscal years ending after December 15, 2002.
Effective January 1, 2003, the Company adopted Statement No. 148 and have
provided the disclosures required under Statement No. 148 in Note 10 of notes to
condensed consolidated financial statements.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

F-34

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

no later than the beginning of the first interim or annual reporting period
beginning after June 15, 2003. Interpretation No. 46 requires certain
disclosures in financial statements issued after January 31, 2003. The Company
currently has no contractual relationship or other business relationship with a
variable interest entity and therefore the adoption of Interpretation No. 46 did
not have a material effect on its condensed consolidated financial statements.
However, if the Company enters into any arrangement with a variable interest
entity in the future, it will evaluate the impact of Interpretation No. 46 on
its condensed consolidated financial statements and related disclosures.

NOTE 3. GOODWILL

Effective January 1, 2002, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
('SFAS No. 142'). In accordance with SFAS No. 142, goodwill is no longer
amortized, but instead, is subject to an annual review for potential impairment.
Using the discounted cash flows method, based on the Company's weighted average
cost of capital and market multiples, the Company reviewed the fair values of
each of its reporting units. The decline in economic and market conditions,
higher integration costs than anticipated and the general softness in the
automotive aftermarket caused a decrease in the fair values of certain of the
Company's reporting units. As a result, the Company recorded an impairment loss
on goodwill as a cumulative effect of accounting change of $18.3 million, net of
tax, or $1.55 per diluted share during the first quarter of 2002. The impairment
loss relates to goodwill pertaining to certain of the Company's reporting units
within its Europe Division for segment reporting and within its Temperature
Control Division and recorded a charge of $10.9 million and $7.4 million,
respectively.

NOTE 4. ACQUISITION

On February 7, 2003, the Company signed an agreement to purchase Dana
Corporation's Engine Management Group ('Dana's EMG Business') for a purchase
price equal to the closing net book value of the business, subject to a maximum
purchase price of $125 million. Dana's EMG Business is a leading manufacturer of
aftermarket parts in the automotive industry focused exclusively on engine
management. The Company intends to finance the acquisition and the payment of
related fees and expenses and restructuring and integration costs by (a) drawing
on its revolving credit facility, (b) issuing shares of its common stock and (c)
obtaining seller financing.

The acquisition is subject to the Company obtaining financing for the
acquisition and other customary closing conditions. The Company expects to close
the acquisition during the second quarter of 2003.

F-35

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

NOTE 5. INVENTORIES

<Table>
<Caption>
MARCH 31,
DECEMBER 31, 2003
2002 (UNAUDITED)
--------------- -----------
(IN THOUSANDS)

Finished Goods............................................ $141,487 $142,111
Work in Process........................................... 2,417 2,598
Raw Materials............................................. 30,881 34,863
-------- --------
Total inventories..................................... $174,785 $179,572
-------- --------
-------- --------
</Table>

NOTE 6. PROPERTY, PLANT AND EQUIPMENT

<Table>
<Caption>
MARCH 31,
DECEMBER 31, 2003
2002 (UNAUDITED)
--------------- -----------
(IN THOUSANDS)

Land, buildings and improvements.......................... $ 66,200 $ 66,435
Machinery and equipment................................... 120,655 121,012
Tools, dies and auxiliary equipment....................... 19,962 20,114
Furniture and fixtures.................................... 25,831 25,656
Computer software......................................... 12,120 12,165
Leasehold improvements.................................... 7,164 7,152
Construction in progress.................................. 4,169 4,753
-------- --------
256,101 257,287
Less: accumulated depreciation and amortization........... 152,279 156,104
-------- --------
Total property, plant and equipment -- net............ $103,822 $101,183
-------- --------
-------- --------
</Table>

NOTE 7. CREDIT FACILITIES AND LONG-TERM DEBT

<Table>
<Caption>
MARCH 31,
DECEMBER 31, 2003
2002 (UNAUDITED)
--------------- -----------
(IN THOUSANDS)

Long Term Debt Consists of:
6.75% convertible subordinated debentures.................. $ 90,000 $ 90,000
Revolving credit facility.................................. 76,249 109,562
Other...................................................... 7,299 6,794
-------- --------
173,548 206,356
Less: current portion...................................... 4,108 3,755
-------- --------
Total non-current portion of long-term debt................ $169,440 $202,601
-------- --------
-------- --------
</Table>

Effective April 27, 2001, the Company entered into an agreement with General
Electric Capital Corporation, as agent, and a syndicate of lenders for a secured
revolving credit facility. The term of the credit agreement was for a period of
five years and provided for a line of credit up to $225 million. The Company
recorded an extraordinary loss of approximately $2.8 million, net of taxes, in
the second quarter of 2001, for a prepayment penalty and write-off of
unamortized fees for the retirement of our former debt.

On February 7, 2003, the Company amended its revolving credit facility to
provide for an additional $80 million commitment, subject to the terms and
conditions therein, which will become

F-36

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

effective upon the closing of its acquisition of Dana's EMG Business. This
additional commitment increases the total amount available for borrowing under
the Company's revolving credit facility to $305 million. In addition, in order
to facilitate the aggregate financing of the acquisition, the Company intends to
raise approximately $59 million from the sale of common stock in a public
offering, which will occur in connection with the closing of the acquisition.
After applying all of the net proceeds from the public offering of the Company's
common stock to repay a portion of its outstanding indebtedness under its
revolving credit facility, the Company intends to borrow the entire cash portion
of the purchase price of Dana's EMG Business from its revolving credit facility
upon the closing of the acquisition. Availability under the Company's revolving
credit facility is based on a formula of eligible accounts receivable, eligible
inventory and eligible fixed assets, and includes the purchased assets of Dana's
EMG Business. The Company expects such availability under the revolving credit
facility, following the initial draw down at the acquisition closing, to be
sufficient to meet its ongoing operating and integration costs.

Direct borrowings under the Company's revolving credit facility bear
interest at the prime rate plus the applicable margin (as defined) or the LIBOR
rate plus the applicable margin (as defined), at the Company's option.
Borrowings are collateralized by substantially all of the Company's assets,
including accounts receivable, inventory and fixed assets, and those of its
domestic and Canadian subsidiaries. The Company's credit facility prior to the
acquisition provides for certain financial covenants limiting its capital
expenditures and requiring it to maintain a certain tangible net worth at the
end of each fiscal quarter. Following the Company's acquisition of Dana's EMG
Business, the terms of the Company's revolving credit facility provide for,
among other provisions, new financial covenants requiring the Company, on a
consolidated basis, (1) to maintain specified levels of EBITDA at the end of
each fiscal quarter through June 30, 2004, (2) commencing September 30, 2004, to
maintain specified levels of fixed charge coverage at the end of each fiscal
quarter (rolling twelve months) through 2007, and (3) to limit capital
expenditure levels for each fiscal year through 2007.

On July 26, 1999, the Company completed a public offering of convertible
subordinated debentures amounting to $90 million. The convertible debentures
carry an interest rate of 6.75%, payable semi-annually, and will mature on July
15, 2009. The convertible debentures are convertible into 2,796,000 shares of
the Company's common stock.

NOTE 8. INTEREST RATE SWAP AGREEMENTS

The Company does not enter into financial instruments for trading or
speculative purposes. The principal financial instruments used for cash flow
hedging purposes are interest rate swaps.

In July 2001, the Company entered into interest rate swap agreements to
manage its exposure to interest rate changes. The swaps effectively convert a
portion of the Company's variable rate debt under the revolving credit facility
to a fixed rate, without exchanging the notional principal amounts. At December
31, 2002, the Company had two outstanding interest rate swap agreements (in an
aggregate notional principal amount of $75 million), one of which matured in
January 2003 and one of which is scheduled to mature in January 2004. Under
these agreements, the Company receives a floating rate based on the LIBOR
interest rate, and pay a fixed rate of 4.92% on a notional amount of $45 million
and 4.37% on a notional amount of $30 million (matured in January 2003). If, at
any time, the swaps are determined to be ineffective, in whole or in part, due
to changes in the interest rate swap agreements, the fair value of the portion
of the interest rate swap determined to be ineffective will be recognized as
gain or loss in the statement of operations for the applicable period.

F-37

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

NOTE 9. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss), net of income tax expense is as follows:

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
--------------------
2002 2003
---- ----
(IN THOUSANDS)

Net loss as reported........................................ $(20,590) $(955)
Foreign currency translation adjustments.................... (207) 457
Change in fair value of interest rate swap agreements....... 986 324
-------- -----
Total comprehensive loss, net of taxes...................... $(19,811) $(174)
-------- -----
-------- -----
</Table>

NOTE 10. STOCK BASED COMPENSATION PLAN

Under Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation ('Statement No. 123'), the Company accounts for
stock-based compensation using the intrinsic value method in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Stock options granted during the three months ended March 31,
2003 were exercisable at prices equal to the fair market value of the Company's
common stock on the dates the options were granted; therefore, no compensation
cost has been recognized for the stock options granted. There were no stock
options granted during the first quarter of 2003.

If the Company accounted for stock-based compensation using the fair value
method of Statement No. 123, as amended by Statement No. 148, the effect on net
income (loss) and basic and diluted earnings (loss) per share would have been as
follows:

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2003
---- ----
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

Net loss, as reported...................................... $(20,590) $ (955)
Less: Total stock-based employee compensation expense
determined under fair value method for all awards, net of
related tax effects...................................... (59) (34)
-------- ------
Pro forma net loss......................................... $(20,649) $ (989)
-------- ------
-------- ------
Loss per share:
Basic and diluted -- as reported....................... $ (1.74) $(0.08)
-------- ------
-------- ------
Basic and diluted -- pro forma......................... $ (1.75) $(0.08)
-------- ------
-------- ------
</Table>

At March 31, 2003, in aggregate 1,265,441 shares of authorized but unissued
common stock were reserved for issuance under the Company's stock option plans.

NOTE 11. EARNINGS (LOSS) PER SHARE

Following are reconciliations of the earnings (loss) available to common
stockholders and the shares used in calculating basic and dilutive net earnings
(loss) per common share:

F-38

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31, (UNAUDITED)
-------------------------
2002 2003
---- ----
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)

Loss from continuing operations.......................... $ (1,921) $ (607)
Loss from discontinued operations........................ (319) (348)
Cumulative effect of accounting change................... (18,350) --
----------- -----------
Net loss available to common stockholders................ $ (20,590) $ (955)
----------- -----------
----------- -----------
Weighted average common shares outstanding -- basic...... 11,827,636 11,972,853
Dilutive effect of stock options......................... -- --
----------- -----------
Weighted average common shares outstanding -- diluted.... 11,827,636 11,972,853
----------- -----------
----------- -----------
</Table>

The average shares listed below were not included in the computation of
diluted earnings (loss) per share because to do so would have been anti-dilutive
for the periods presented.

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2003
---- ----

Stock options............................................ 720,752 1,001,908
Convertible debentures................................... 2,796,120 2,796,120
--------- ---------
--------- ---------
</Table>

NOTE 12. EMPLOYEE BENEFITS

In fiscal 2000, the Company created an employee benefits trust to which it
contributed 750,000 shares of treasury stock. The Company is authorized to
instruct the trustees to distribute such shares toward the satisfaction of the
Company's future obligations under Employee Benefit Plans. The shares held in
trust are not considered outstanding for purposes of calculating earnings per
share until they are committed to be released. The trustees will vote the shares
in accordance with its fiduciary duties. During March 2003, the Company
committed 75,000 shares to be released leaving 525,000 shares remaining in the
trust.

NOTE 13. INDUSTRY SEGMENTS

The Company's three reportable operating segments are Engine Management,
Temperature Control and Europe.

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------
2002 2003
------------------------- -------------------------
OPERATING OPERATING
NET SALES INCOME (LOSS) NET SALES INCOME (LOSS)
--------- ------------- --------- -------------
(IN THOUSANDS)

Engine Management.......................... $ 67,979 $ 7,140 $ 78,806 $ 9,652
Temperature Control........................ 49,325 (2,148) 45,762 (2,193)
Europe..................................... 8,102 217 10,540 (486)
All Other.................................. 915 (5,102) 617 (4,645)
-------- ------- -------- -------
Consolidated............................... $126,321 $ 107 $135,725 $ 2,328
-------- ------- -------- -------
-------- ------- -------- -------
</Table>

All other consists of items pertaining to Canadian operations and the
corporate headquarters function, which do not meet the criteria of a reportable
operating segment.

F-39

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

The carrying value of goodwill for the Company's segments as of March 31,
2003 were as follows:

<Table>
<Caption>
(IN THOUSANDS)

Engine Management........................................... $10,490
Temperature Control......................................... 4,822
Europe...................................................... 1,371
-------
Goodwill, net........................................... $16,683
-------
-------
</Table>

NOTE 14. COMMITMENTS AND CONTINGENCIES

On January 28, 2000, a former significant customer of the Company, which is
currently undergoing a Chapter 7 liquidation in U.S. Bankruptcy Court, filed
claims against a number of its former suppliers, including the Company. The
claim against the Company alleged $0.5 million of preferential payments in the
90 days prior to the related Chapter 11 bankruptcy petition. The claim
pertaining to the preferential payments was settled for an immaterial amount
during the second quarter of 2002. In addition, this former customer seeks $9.4
million from the Company for a variety of claims including antitrust, breach of
contract, breach of warranty and conversion. These latter claims arise out of
allegations that this customer was entitled to various discounts, rebates and
credits after it filed for bankruptcy. The Company has purchased insurance with
respect to the actions. On August 22, 2002, the court dismissed the antitrust
claims. The Company believes that these remaining matters will not have a
material adverse effect on its business, financial condition or results of
operations.

In 1986, The Company acquired a brake business, which it subsequently sold
in March 1998 and which is accounted for as discontinued operations in the
accompanying condensed consolidated financial statements. When the Company
originally acquired this brake business, it assumed future liabilities relating
to any alleged exposure to asbestos-containing products manufactured by the
seller of the acquired brake business. In accordance with the related purchase
agreement, the Company agreed to assume the liabilities for all new claims filed
on or after September 1, 2001. The Company's ultimate exposure will depend upon
the number of claims filed against it on or after September 1, 2001 and the
amounts paid for indemnity and defense thereof. At December 31, 2001,
approximately 100 cases were outstanding for which the Company was responsible
for any related liabilities. At December 31, 2002, the number of cases
outstanding for which the Company was responsible for related liabilities
increased to approximately 2,500, which include approximately 1,600 cases filed
in December 2002 in Mississippi. The Company believes that these Mississippi
cases filed against it in December 2002 were due in large part to potential
plaintiffs accelerating the filing of their claims prior to the effective date
of Mississippi's tort reform statue in January 2003, which statute eliminated
the ability of plaintiffs to file consolidated cases. At March 31, 2003,
approximately 2,700 cases were outstanding for which the Company was responsible
for any related liabilities. To date, the amounts paid for settled claims have
been immaterial. The Company does not have insurance coverage for the defense
and indemnity costs associated with these claims.

In evaluating its potential asbestos-related liability, the Company has
considered various factors including, among other things, an actuarial study
performed by a leading actuarial firm with expertise in assessing
asbestos-related liabilities, its settlement amounts and whether there are any
co-defendants, the jurisdiction in which lawsuits are filed, and the status and
results of settlement discussions. Actuarial consultants with experience in
assessing asbestos-related liabilities completed a study in September 2002 to
estimate the Company's potential claim liability. The methodology used to
project asbestos-related liabilities and costs in the study considered:
(1) historical data available from publicly available studies; (2) an analysis
of the Company's

F-40

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

recent claims history to estimate likely filing rates for the remainder of 2002
through 2052; (3) an analysis of the Company's currently pending claims; and (4)
an analysis of the Company's settlements to date in order to develop average
settlement values. Based upon all the information considered by the actuarial
firm, the actuarial study estimated an undiscounted liability for settlement
payments, excluding legal costs, ranging from $27.3 million to $58 million for
the period through 2052.

Accordingly, based on the information contained in the actuarial study and
all other available information considered by us, the Company recorded an after
tax charge of $16.9 million as a loss from discontinued operations during the
third quarter of 2002 to reflect such liability, excluding legal costs. The
Company concluded that no amount within the range of settlement payments was
more likely than any other and, therefore, recorded the low end of the range as
the liability associated with future settlement payments through 2052 in its
consolidated financial statements, in accordance with generally accepted
accounting principles. The Company plans on performing a similar annual
actuarial analysis during the third quarter of each year for the foreseeable
future. Given the uncertainties associated with projecting such matters into the
future, the short period of time that the Company has been responsible for
defending these claims, and other factors outside its control, the Company can
give no assurance that additional provisions will not be required. Management
will continue to monitor the circumstances surrounding these potential
liabilities in determining whether additional provisions may be necessary. At
the present time, however, the Company does not believe that any additional
provisions would be reasonably likely to have a material adverse effect on its
liquidity or consolidated financial position.

The Company is involved in various other litigation and product liability
matters arising in the ordinary course of business. Although the final outcome
of any asbestos-related matters or any other litigation or product liability
matter cannot be determined, based on its understanding and evaluation of the
relevant facts and circumstances, it is the Company's opinion that the final
outcome of these matters will not have a material adverse effect on its
business, financial condition or results of operations.

The Company generally warrants its products against certain manufacturing
and other defects. These product warranties are provided for specific periods of
time of the product depending on the nature of the product. As of March 31, 2002
and 2003, the Company has accrued $15.6 million and $11.3 million, respectively,
for estimated product warranty claims. The accrued product warranty costs are
based primarily on historical experience of actual warranty claims. Warranty
claims expense for the three month periods ended March 31, 2002 and 2003, were
$11.6 million and $10.2 million, respectively.

The following table provides the changes in the Company's product
warranties:

<Table>
<Caption>
(IN THOUSANDS)

Balance at January 1, 2003.................................. $10,360
Liabilities accrued for current year sales.................. 10,165
Settlements of warranty claims.............................. (9,220)
-------
Balance at March 31, 2003................................... $11,305
-------
-------
</Table>

F-41

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Dana Corporation

In our opinion, the accompanying combined balance sheet and the related
combined statements of operations, of equity and of cash flows present fairly,
in all material respects, the financial position of Engine Management (a
business of Dana Corporation) at December 31, 2001 and 2002, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, 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 our opinion.

As discussed in Note 14, on February 7, 2003, Dana Corporation entered into
an agreement to sell substantially all of Engine Management to Standard Motor
Products, Inc.

/s/ PricewaterhouseCoopers LLP
Toledo, Ohio
March 25, 2003

F-42

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------------
2000 2001 2002
---- ---- ----

NET SALES................................................ $357,475 $297,796 $300,254
-------- -------- --------
COSTS AND EXPENSES
Cost of sales........................................ 359,201 287,070 296,787
Selling, general and administrative expenses......... 85,522 66,616 64,355
Restructuring charges................................ -- 44,276 9,400
Transaction expenses................................. -- -- 6,000
Interest expense, net................................ 91 609 191
Other expense........................................ 458 756 255
-------- -------- --------
445,272 399,327 376,988
-------- -------- --------
LOSS BEFORE INCOME TAXES................................. (87,797) (101,531) (76,734)
ESTIMATED INCOME TAX BENEFIT............................. (35,676) (39,064) (30,032)
-------- -------- --------
NET LOSS................................................. $(52,121) $(62,467) $(46,702)
-------- -------- --------
-------- -------- --------
</Table>

The accompanying notes are an integral part of the combined financial
statements.

F-43

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
COMBINED BALANCE SHEET
(IN THOUSANDS)

<Table>
<Caption>
DECEMBER 31,
-----------------------
2001 2002
---- ----

ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 292 $ 1,126
Accounts receivable, less allowance for doubtful
accounts of $2,196 -- 2001 and $2,632 -- 2002......... 41,922 34,020
Inventories............................................. 98,178 93,192
Deferred tax assets..................................... 36,478 32,389
Other current assets.................................... 881 737
-------- --------
Total current assets................................ 177,751 161,464
Property, plant and equipment, net.......................... 83,034 64,990
Other non-current assets.................................... 1,297 925
-------- --------
Total assets........................................ $262,082 $227,379
-------- --------
-------- --------
LIABILITIES AND COMBINED EQUITY
CURRENT LIABILITIES:
Short-term borrowings................................... $ 13,949 $ --
Accounts payable........................................ 22,807 32,501
Accrued payroll and employee benefits................... 8,119 9,461
Other accrued liabilities............................... 39,849 31,049
-------- --------
Total current liabilities........................... 84,724 73,011
-------- --------
Deferred tax liability...................................... 2,631 5,560
Other noncurrent liabilities................................ 4,385 2,956
Commitments and contingencies (Note 11)
Combined equity............................................. 170,342 145,852
-------- --------
Total liabilities and combined equity............... $262,082 $227,379
-------- --------
-------- --------
</Table>

The accompanying notes are an integral part of the combined financial
statements.

F-44

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
--------------------------------------
2000 2001 2002
---- ---- ----

NET CASH FLOWS -- OPERATING ACTIVITIES.................. $ (7,476) $ 54,276 $ (5,600)
Cash flows from (used in) investing activities:
Purchases of property, plant and equipment...... (21,557) (1,378) (2,777)
Proceeds from sales of assets................... 74 22,621 276
Other........................................... (80) (707) 353
-------- -------- --------
Net cash flows -- investing activities.......... (21,563) 20,536 (2,148)
-------- -------- --------
Cash flows from (used in) financing activities:
Net transactions with Dana.......................... 29,039 (74,520) 8,582
-------- -------- --------
NET CASH FLOWS -- FINANCING ACTIVITIES.................. 29,039 (74,520) 8,582
-------- -------- --------
Net increase in cash and cash equivalents....... -- 292 834
Cash and cash equivalents -- beginning of
year.......................................... -- -- 292
-------- -------- --------
CASH AND CASH EQUIVALENTS -- end of year................ $ -- $ 292 $ 1,126
-------- -------- --------
-------- -------- --------
Reconciliation of net loss to net cash flows from
(used in) operating activities:
Net loss........................................ $(52,121) $(62,467) $(46,702)
Depreciation and amortization................... 18,802 19,216 17,109
Loss (gain) on disposal of property, plant and
equipment..................................... 754 (940) 548
Asset impairment................................ -- 25,331 2,887
Deferred income taxes........................... 13,866 (1,301) 7,222
Change in accounts receivable................... 9,858 29,652 7,902
Change in inventories........................... 24,325 34,378 4,986
Change in other operating assets................ 3,651 471 144
Change in operating liabilities................. (26,611) 9,936 304
-------- -------- --------
Net cash flows -- operating activities.......... $ (7,476) $ 54,276 $ (5,600)
-------- -------- --------
-------- -------- --------
</Table>

The accompanying notes are an integral part of the combined financial
statements.

F-45

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
STATEMENTS OF CHANGES IN COMBINED EQUITY
(IN THOUSANDS)

<Table>
<Caption>
NET
COMBINED
EQUITY
------

BALANCE, DECEMBER 31, 1999.................................. $341,022
Net loss for the year ended December 31, 2000............... (52,121)
Transactions with Dana Corporation, net..................... 29,039
--------
BALANCE, DECEMBER 31, 2000.................................. 317,940
--------
Net loss for the year ended December 31, 2001............... (62,467)
Transactions with Dana Corporation, net..................... (41,169)
Dividend to Dana............................................ (43,600)
Change in accumulated other comprehensive loss.............. (362)
--------
BALANCE, DECEMBER 31, 2001.................................. 170,342
--------
Net loss for the year ended December 31, 2002............... (46,702)
Transactions with Dana Corporation, net..................... 22,531
Change in accumulated other comprehensive loss.............. (319)
--------
BALANCE, DECEMBER 31, 2002.................................. $145,852
--------
--------
</Table>

The accompanying notes are an integral part of the combined financial
statements.

F-46

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

These financial statements are being presented due to the potential sale of
substantially all of the US operations of the Dana Corporation (Dana) Engine
Management Business (EM). Engine Management is a component of Dana's Automotive
Aftermarket Group Strategic Business Unit. EM manufactures and distributes a
wide range of engine management products principally for the automotive
aftermarket.

These financial statements present the historical results of EM, adjusted to
exclude the operations of the Beck Arnley distribution business, the CUMSA
business in Mexico and Texas, and the Dana Canada distribution business, which
are distinct business units within EM but are not intended to be included in the
potential divestiture. Transactions between these business units and EM are
further described below. The adjusted EM amounts are intended to reflect the
financial position and results of operations of the business being sold,
hereinafter referred to as 'Engine Management' or 'the Company', as though
managed by Dana as a separate entity. As such, the Engine Management financial
statements include allocations for certain expenses, as well as assets and
liabilities historically maintained by Dana and not recorded in the accounts of
Engine Management. Significant allocations are discussed in the notes that
follow. Engine Management and Dana management believe such allocations have been
made on a reasonable basis. However, these financial statements may not
necessarily be indicative of the results that would have been obtained if Engine
Management had operated as a separate entity during the periods presented.

The combined equity section of the Engine Management financial statements
comprises the excess of Engine Management's assets over its liabilities.
Combined equity is affected by the Engine Management operating results, expense
allocations from Dana, and cash transfers between Engine Management and Dana,
including settlement of intracompany transactions, as Dana manages all of Engine
Management's treasury activities. Dana has not historically allocated any
interest expense to Engine Management with respect to Dana's net investment in
the business. Accordingly, no allocations of corporate debt or corporate
interest cost are reflected in these financial statements.

During the periods presented, Engine Management underwent significant
restructuring of its business. This involved the closing of numerous warehouses
and consolidation of inventory at national distribution centers as well as
closure of certain manufacturing locations. In anticipation of the warehouse
consolidation, Engine Management built significant inventory. Problems with the
warehouse consolidation and declines in business led to significant unfavorable
cost absorption and inventory loss provisions in 2001 and 2002. Additionally, as
a result of these consolidation efforts, Engine Management incurred
restructuring charges related to impairment of certain fixed assets, relocation
of assets, severance and similar costs and was unfavorably impacted by related
operational inefficiencies. Until the warehouse and distribution center
consolidation was completed in May 2002, Engine Management had not realized a
significant reduction in its distribution costs. The restructuring program also
included the reduction of headcount in the manufacturing and selling and
administrative areas of the business. As with the warehouse consolidation
initiative, the savings from these restructuring activities have yet to be fully
realized. The complexity of these restructuring and reorganization actions,
accompanied with general market softness, has resulted in significant operating
losses for Engine Management and the continued reliance upon Dana to fund EM
operations during 2000, 2001 and 2002. Dana has confirmed its intention to
continue to fund Engine Management's operations while it remains under Dana's
ownership. The restructuring is discussed further in Note 12.

F-47

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of these financial statements required management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying disclosures. Some of the more significant estimates
include depreciation and amortization of long-lived assets; inventory
valuations; sales returns and allowances; deferred taxes; environmental
remediation liabilities; restructuring accruals; postemployment and
postretirement benefits; corporate allocations; and allowances for doubtful
accounts. Actual results could differ from those estimates.

ALLOCATION OF CORPORATE COSTS

Certain expenses incurred by Dana Corporation on behalf of Engine Management
have been included in these financial statements. These expenses include
accounting, audit, legal, tax, treasury and certain other administrative
services. These expenses have been allocated to Engine Management generally
based upon its sales relative to the consolidated sales of Dana as this
methodology yields, in the opinion of management, a reasonable allocation.

CONCENTRATION OF CREDIT RISK

The financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable. The Company limits its
credit risk by performing ongoing credit evaluations and, when deemed necessary,
requiring letters of credit, guarantees, or collateral. The majority of the
Company's accounts receivable are with automotive parts wholesalers and
retailers serving the aftermarket.

For the year ended December 31, 2002, the Company's sales to its three
largest customers were 32% and 8% and 7% of total sales, respectively. Accounts
receivable at December 31, 2002 relating to these three customers were 38%, 11%
and 4% of the total accounts receivable, respectively.

INVENTORIES

Inventories are valued at the lower of cost or market. For the purposes of
these financial statements, cost is generally determined on the first-in,
first-out (FIFO) or average cost basis.

PROPERTIES AND DEPRECIATION

Property, plant and equipment are valued at historical costs. Depreciation
is recognized over the estimated useful lives of these assets using primarily
the straight-line method for financial reporting purposes and accelerated
depreciation methods for federal income tax purposes. For financial reporting
purposes, the estimated useful lives range from 25 to 45 years for buildings and
building fixtures, from 3 to 12 years for machinery and equipment and generally
5 years for ERP-related software. Land improvements are depreciated over 20
years and leasehold improvements are amortized over the shorter of the life of
the lease or the useful life of the asset. Long-lived assets are reviewed for
impairment and, if necessary, are adjusted to fair value.

As part of the restructuring discussed in Note 12, asset writedowns were
recorded in 2001 and 2002 principally related to closed facilities.

F-48

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

During 2001, EM sold its Nashville distribution center to a third party
commercial finance company for $22,550. Concurrent with the sale of the
facility, EM leased the facility from the third party for a period of twenty
years. Other than the leaseback, EM has no continuing involvement and,
therefore, the immaterial gain on sale is being recognized in earnings over the
lease term.

REVENUE RECOGNITION

Sales are recognized when products are shipped and risk of loss has
transferred to the customer. The Company estimates and records provisions for
warranty costs, sales returns and other allowances in the period the sale is
recorded, based upon its past experience and other relevant factors. The Company
assesses the adequacy of its recorded warranty and sales returns and allowances
liabilities on a regular basis and adjusts the recorded amounts as necessary and
while the Company believes that these estimates are reasonable and in accordance
with the revenue recognition policies, actual returns and allowances and
warranty costs may differ from estimates. Changes in the warranty liability for
the year ended December 31, 2002 are presented in Note 11 of the financial
statements. Shipping and handling fees billed to customers are included in sales
and the costs of shipping and handling are included in cost of sales. Intragroup
sales have been eliminated; sales to other Dana businesses, including those EM
businesses not included in these financial statements, are included in net
sales.

INCOME TAXES

Dana and its U.S. subsidiaries file a consolidated income tax return, which
includes Engine Management. The income tax provision included in these financial
statements was calculated on a method generally consistent with a separate
return basis, as if Engine Management was a separate taxpayer, and the resulting
current tax benefit (liability) is settled with Dana through the intercompany
accounts. Deferred tax balances reflect the impact of temporary differences
between the carrying amounts of Engine Management assets and liabilities in the
financial statements and their related tax bases.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At December 31, 2001 and 2002, Engine Management's financial instruments
included cash, cash equivalents, receivables, accounts payable, and short-term
borrowings. At December 31, 2001 and 2002, because of their short term nature,
the fair value of such instruments approximated their carrying values.

PENSION PLANS

Pension benefits are provided for certain employees of Engine Management
under plans administered by Dana. Annual cost for defined benefit plans is
determined on an actuarial basis and funded through deposits with trustees.
Generally, Engine Management employees participate in Dana plans and the assets
and liabilities are commingled with those related to other Dana businesses.
Accordingly, except for one stand-alone plan, no amounts are reflected on the
Engine Management balance sheet and pension expense for Engine Management has
been determined on a multi-employer plan basis.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Upon retirement, certain of the Engine Management employees will be eligible
to receive other postretirement benefits, including medical, dental and life
insurance, pursuant to two EM

F-49

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

plans that are sponsored by Dana. Benefit obligations of the postretirement
benefit plans are not funded. Annual net postretirement benefits liability and
expense under the defined benefit plans are determined on an actuarial basis for
each plan. Benefits are determined primarily based upon employees' length of
service and include employee cost sharing where applicable.

COMPREHENSIVE LOSS

The only component of other comprehensive loss was the minimum pension
liability adjustment of $0, $362 and $319 for the years ended December 31, 2000,
2001 and 2002, respectively, relating to the stand-alone pension plan.
Comprehensive loss totaled $52,121, $62,829, and $47,021 for the years ended
December 31, 2000, 2001 and 2002, respectively. Accumulated other comprehensive
loss totaled $0, $362 and $681 at December 31, 2000, 2001 and 2002,
respectively.

CASH AND MARKETABLE SECURITIES

Engine Management maintains its cash in depository accounts with high credit
quality financial institutions. As discussed in Note 1, treasury activities at
Dana are generally centralized such that Engine Management cash relates
principally to petty cash accounts and cash accounts of the operations located
in Puerto Rico.

NON-CASH INVESTING AND FINANCING ACTIVITIES

During 2001 and 2002, EM settled certain investing and financing activities
directly through intercompany transactions with Dana without exchanging cash.
Those transactions include a dividend from Ponce, an Engine Management legal
entity located in Puerto Rico, to Dana in 2001 of $43,600; short-term borrowings
of $13,949 in 2001; and repayments of short-term borrowings of $13,949 in 2002.

STOCK-BASED COMPENSATION

Certain Engine Management employees participate in Dana's stock based
compensation plans. Stock-based compensation under Dana's stock based plans is
accounted for using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, 'Accounting for Stock Issued to Employees,' and
related interpretations. No compensation expense is recorded for stock options
when granted as the option price is set at the market value of the underlying
Dana stock.

In accordance with its accounting policy for stock-based compensation,
Engine Management has not recognized any expense relating to these stock
options. If the fair value method of accounting for stock option grants, the
alternative policy set out in SFAS No. 123, 'Accounting for Stock-Based
Compensation,' had been used, the after-tax expense relating to the stock
options and net income would have been as follows:

<Table>
<Caption>
YEAR ENDED DECEMBER 31
---------------------------
2000 2001 2002
---- ---- ----

Stock compensation expense, reported................... $ -- $ -- $ --
Stock compensation expense, pro forma.................. 617 403 320
------- ------- -------
Net loss, reported..................................... $52,121 $62,467 $46,702
Net loss, pro forma.................................... $52,738 $62,870 $47,022
</Table>

F-50

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

The fair value of each option grant was estimated on the date of grant using
the Black-Scholes model with the following assumptions:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-------------------------------
2000 2001 2002
---- ---- ----

Risk-free interest rate............................ 6.16% 4.63% 3.53%
Dividend yield..................................... 5.38% 4.95% 0.30%
Expected life...................................... 5.4 years 5.4 years 5.4 years
Stock price volatility............................. 40.72% 44.67% 53.24%
</Table>

Based on the above assumptions, the weighted average fair value per share of
options granted under the plans was $6.51, $7.49 and $7.67 for the years ended
December 31, 2000, 2001 and 2002, respectively.

PER SHARE DATA

Per share data is not relevant as Engine Management is not a separate legal
entity and has no stand alone equity structure.

NEW ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation (FIN) No. 45, 'Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others.' FIN No. 45 clarifies disclosures that are required to be made for
certain guarantees and establishes a requirement to record a liability at fair
value for certain guarantees at the time of the guarantee's issuance. The
requirement to record a liability applies to guarantees issued or modified after
December 31, 2002. This interpretation is not expected to have a material effect
on Engine Management's financial condition or results of operations.

In January 2003, the FASB issued FIN No. 46, 'Consolidation of Variable
Interest Entities, an Interpretation of ARB 51.' FIN No. 46 requires that the
primary beneficiary in a variable interest entity consolidate the entity even if
the primary beneficiary does not have a majority voting interest. The
consolidation requirements of this Interpretation are required to be implemented
for any variable interest entity created on or after January 31, 2003. In
addition, FIN No. 46 requires disclosure of information regarding guarantees or
exposures to loss relating to any variable interest entity existing prior to
January 31, 2003 in financial statements issued after January 31, 2003. The
adoption of this interpretation is not expected to have a material effect on
Engine Management's financial condition or results of operations. The Company
does not have any guarantees or loss exposures relating to unconsolidated
entities.

In January 2003, the FASB issued SFAS No. 148, 'Accounting for Stock-Based
Compensation -- Transition and Disclosure.' SFAS No. 148, provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based compensation expense. The implementation of this
Statement is not expected to have a material effect on Engine Management's
financial position or results of operations because Dana Corporation has not
elected to adopt the fair value based method of accounting for stock-based
compensation expense.

F-51

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

NOTE 3. INVENTORIES

The components of inventory are as follows:

<Table>
<Caption>
DECEMBER 31,
-----------------
2001 2002
---- ----

Raw materials............................................... $16,845 $21,444
Work in process and finished goods.......................... 81,333 71,748
------- -------
$98,178 $93,192
------- -------
------- -------
</Table>

NOTE 4. SHORT-TERM BORROWINGS

Beginning in March 2001, Engine Management has participated in Dana's
accounts receivable securitization program. Under the program, Engine Management
contributed accounts receivable to Dana Asset Funding LLC (DAF), a special
purpose entity. DAF funds its accounts receivable purchases in part by pledging
a portion of the receivables as collateral for short-term loans from
participating banks and uses the amounts borrowed under the program to fund the
purchase of accounts receivable. The securitized accounts receivable are owned
in their entirety by DAF and are not available under this arrangement to satisfy
claims of Dana's or Engine Management's creditors. DAF's Engine Management
related receivables are included in the Engine Management financial statements
because DAF does not meet certain technical accounting requirements for
treatment as a 'qualifying special purpose entity' under generally accepted
accounting principles. Accordingly, the sales and contributions of the Engine
Management accounts receivable to DAF were eliminated and DAF's related loans
were reflected as short-term borrowings in Engine Management's financial
statements. Engine Management ceased participating in this arrangement during
2002, consequently no amounts were outstanding at December 31, 2002. Interest
expense relating to this arrangement totaled $0, $669, and $354 in 2000, 2001
and 2002, respectively.

NOTE 5. LONG-TERM DEBT

During 2001, Dana repaid, on Engine Management's behalf, the outstanding
principal balance of $3,700 of long-term industrial bonds originally issued for
the construction of a former Engine Management facility. During 2000 and 2001,
Engine Management incurred interest expense on these bonds of $91 and $65,
respectively.

NOTE 6. STOCK OPTION PLANS

The Compensation Committee of Dana's Board of Directors grants stock options
to Dana employees, including selected Engine Management employees, under Dana's
Stock Option Plan. The option price is equal to the market price of the Dana
stock at the date of grant. One-fourth of the options granted become exercisable
at each of the first four anniversary dates of the grant; options generally
expire ten years from the date of grant. Stock appreciation rights may be
granted separately or in conjunction with the options.

F-52

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

The following table is a summary of transactions involving Engine Management
employees under the Dana stock option plan during the years ended December 31,
2000, 2001 and 2002:

<Table>
<Caption>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
------ -----

Outstanding at December 31, 1999............................ 436,539 $39.56
Transactions during the year ended December 31, 2000:
Granted................................................. 155,450 23.06
Exercised............................................... (2,546) 14.25
Cancelled............................................... (26,476) 39.64
-------- ------
Outstanding at December 31, 2000............................ 562,967 $35.11
-------- ------
-------- ------
Transactions during the year ended December 31, 2001:
Granted................................................. 88,100 $25.05
Exercised............................................... (8,086) 13.79
Cancelled............................................... (107,179) 35.70
-------- ------
Outstanding at December 31, 2001............................ 535,802 $33.67
-------- ------
-------- ------
Transactions during the year ended December 31, 2002:
Granted................................................. 68,500 $15.33
Cancelled............................................... (108,650) 32.60
-------- ------
Outstanding at December 31, 2002............................ 495,652 $31.38
-------- ------
-------- ------
</Table>

The following table summarizes information about stock options under this
plan at December 31, 2002:

<Table>
<Caption>
OUTSTANDING OPTIONS EXERCISABLE OPTIONS
------------------------------------ --------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER OF CONTRACTUAL EXERCISE NUMBER OF EXERCISE
PRICES OPTIONS LIFE IN YEARS PRICE OPTIONS PRICE
------ ------- ------------- ----- ------- -----

$15.33 - $23.06................ 165,600 8.8 $19.98 49,800 $23.06
$25.05 - $37.52................ 166,400 6.3 31.45 113,150 34.46
$40.08 - $52.56................ 163,652 6.3 42.83 145,096 42.49
------- --- ------ ------- ------
495,652 7.1 $31.38 308,046 $36.40
------- --- ------ ------- ------
------- --- ------ ------- ------
</Table>

NOTE 7. EMPLOYEES' STOCK PURCHASE PLAN

The majority of Engine Management's full-time employees are eligible to
participate in Dana's stock purchase plan. Plan participants can elect to have
up to 15% of their earnings withheld and deposited with an independent
custodian. The custodian uses the funds to purchase Dana's common stock at
current market prices. The purchased shares are allocated to the participants,
and are distributed to the participants on request.

Participants' contributions are matched in cash up to 50% over a five-year
period beginning with the year the amounts are withheld. If a participant
withdraws any shares before the end of five years, the amount of the match will
depend on how long the shares were in the account. On behalf of the Engine
Management participants, the custodian purchased 29,222 shares in 2000, 34,581
shares in 2001 and 33,646 shares in 2002. The charges to expense for the
matching contributions were $37 in 2000, $68 in 2001 and $97 in 2002.

F-53

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

NOTE 8. PENSION AND OTHER POSTRETIREMENT BENEFITS

The employees of Engine Management are participants in various defined
benefit pension plans sponsored by Dana. Expenses incurred by Engine Management
with respect to multi-division, defined benefit pension plans during the years
ended December 31, 2000, 2001 and 2002, were approximately $440, $552 and
$1,258, respectively.

The former employees of Engine Management's closed facility in Ottawa,
Illinois were covered by a separate, defined benefit pension plan (the Ottawa
Plan). As the facility was closed in 1999, no additional benefits were
accumulated after that time.

The following tables provide a reconciliation of the changes in the Ottawa
Plan's benefit obligations and fair value of assets for the year ended
December 31, 2001 and 2002, as well as statements of the funded status and
schedules of the net amounts recognized in the balance sheet at December 31,
2001 and 2002.

<Table>
<Caption>
PENSION BENEFITS
-----------------
YEAR ENDED
DECEMBER 31,
2001 2002
---- ----

Reconciliation of benefit obligation:
Obligation at January 1................................. $1,903 $2,010
Service cost............................................ -- --
Interest cost........................................... 144 151
Actuarial loss.......................................... 73 278
Benefit payments........................................ (110) (115)
------ ------
Obligation at period end.................................... $2,010 $2,324
------ ------
------ ------
Reconciliation of fair value of plan assets:
Fair value at January 1................................. $2,242 $1,950
Actual return on plan assets............................ (182) (22)
Benefit payments........................................ (110) (115)
------ ------
Fair value at December 31................................... $1,950 $1,813
------ ------
------ ------
Funded status:
Balance at period end................................... $ (60) $ (511)
Unrecognized transition obligation...................... (3)
Unrecognized prior service cost......................... 157 137
Unrecognized loss....................................... 596 1,116
------ ------
Prepaid cost................................................ $ 690 $ 742
------ ------
------ ------
Amounts recognized in the balance sheet consist of:
Prepaid benefit cost.................................... $ 690 $ 742
Accrued benefit liability............................... (750) (1,253)
Intangible assets....................................... 157 137
Accumulated other comprehensive income.................. 593 1,116
------ ------
Net asset recognized........................................ $ 690 $ 742
------ ------
------ ------
</Table>

Components of the net periodic benefit cost of the Ottawa Plan for the years
ended December 31, 2000, 2001 and 2002, are as follows:

F-54

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

PENSION BENEFITS COST

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
---------------------
2000 2001 2002
---- ---- ----

Interest cost............................................... $ 139 $ 144 $ 151
Expected return on plan assets.............................. (206) (220) (220)
Amortization of transition obligation....................... (10) (10) (3)
Amortization of prior service cost.......................... 20 20 20
----- ----- -----
Net periodic benefit cost (credit).......................... $ (57) $ (66) $ (52)
----- ----- -----
----- ----- -----
</Table>

The assumptions used are as follows:

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
---------------------
2000 2001 2002
---- ---- ----

Pension benefit obligation:
Discount rate.......................................... 7.75% 7.50% 6.75%
Expected return on plan assets......................... 9.25% 9.50% 8.75%
Pension cost:
Discount rate.......................................... 7.25% 7.75% 7.50%
Expected return on plan assets......................... 9.25% 9.25% 9.50%
</Table>

The employees of Engine Management are also eligible to participate in
defined contribution benefit plans sponsored by Dana. Under the terms of the
defined contribution benefit plans, participant and sponsor contributions may be
directed into a number of investment options. During the years ended
December 31, 2000, 2001 and 2002, respectively, Engine Management incurred
expenses of approximately $628, $526 and $453 for matching contributions to the
defined contribution benefit plans.

Upon retirement, certain of the Engine Management employees will be eligible
to receive other postretirement benefits, including medical, dental and life
insurance, pursuant to plans sponsored by Dana. Benefit obligations of the
postretirement benefit plans are not funded.

The following tables provide a reconciliation of the changes in the
postretirement benefit plans' benefit obligations for the years ended
December 31, 2001 and 2002, as well as the funded status and the net amounts
recognized in the balance sheet at December 31, 2001 and 2002.

F-55

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

POSTRETIREMENT BENEFITS

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
------------------
2001 2002
---- ----

Reconciliation of benefit obligation:
Obligation at January 1................................. $ 7,392 $ 8,591
Service cost............................................ 139 187
Interest cost........................................... 554 810
Actuarial loss.......................................... 983 4,680
Benefit payments........................................ (477) (711)
------- --------
Obligation at period end.................................... $ 8,591 $ 13,557
------- --------
------- --------
Funded status:
Balance at period end................................... $(8,591) $(13,557)
Unrecognized prior service cost......................... 3,649 3,310
Unrecognized loss....................................... 3,738 8,105
------- --------
Accrued liability recorded.................................. $(1,204) $ (2,142)
------- --------
------- --------
</Table>

Components of the net periodic postretirement benefit costs for the years
ended December 31, 2000, 2001, and 2002, are as follows:

POSTRETIREMENT BENEFITS COST

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
----------------------
2000 2001 2002
---- ---- ----

Interest cost............................................ $390 $ 554 $ 810
Service cost............................................. 164 139 187
Amortization of prior service cost....................... -- 339 339
Recognized net actuarial loss............................ 225 108 285
---- ------ ------
Net periodic benefit cost................................ $779 $1,140 $1,621
---- ------ ------
---- ------ ------
</Table>

The assumptions used in the measurement of postretirement benefit
obligations are as follows. The end of year assumptions listed below are used to
determine the succeeding year's postretirement benefit expense:

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
----------------------
2000 2001 2002
---- ---- ----

Discount rate............................................. 7.75% 7.50% 6.75%
Initial weighted health care costs trend rate............. 6.80% 8.10% 12.30%
Ultimate health care costs trend rate..................... 5.00% 5.00% 5.00%
Years to ultimate......................................... 9 9 10
</Table>

Assumed health care costs trend rates have a significant effect on the
health care plan. A one-percentage-point change in assumed health care costs
trends rates would have the following effects for the year ended December 31,
2002:

F-56

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
1% POINT 1% POINT
INCREASE DECREASE
-------- --------

Effect on total of service and interest cost components..... 149 (147)
Effect on postretirement benefit obligations................ 1,946 (1,944)
</Table>

NOTE 9. ESTIMATED INCOME TAXES

Engine Management is included in Dana's consolidated U.S. tax return. The
income tax benefit has been calculated for each period on a method generally
consistent with a separate return basis as if Engine Management were a separate
taxpayer. The annual settlement of the current payable to (receivable from) Dana
is recorded through equity. A valuation allowance has not been established for
the recorded deferred tax assets because Dana has traditionally been a U.S.
taxpayer and Engine Management expects to be able to realize these assets
through Dana. The income tax benefit consists of the following components:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------
2000 2001 2002
---- ---- --------

U.S. federal
Current.......................................... $(45,572) $(31,979) $(34,054)
Deferred......................................... 13,866 (1,301) 7,222
U.S. state and local................................. (4,966) (5,737) (3,341)
Other................................................ 996 (47) 141
-------- -------- --------
Income tax benefit................................... $(35,676) $(39,064) $(30,032)
-------- -------- --------
-------- -------- --------
</Table>

Other taxes pertain to Ponce, Engine Management's operation in Puerto Rico,
which is part of a distinct legal entity that files a separate tax return.
During 2001, Ponce declared and paid a dividend to Dana of $43,600.

Deferred tax assets (liabilities) consist of the following:

<Table>
<Caption>
DECEMBER 31,
-----------------
2001 2002
---- ----

Expense accruals............................................ $17,810 $16,266
Inventory reserves.......................................... 18,667 15,180
Employee benefits and other................................. 2,103 3,543
------- -------
Deferred tax assets......................................... 38,580 34,989
------- -------
Depreciation................................................ (3,935) (8,160)
Other....................................................... (798) --
------- -------
Deferred tax liabilities.................................... (4,733) (8,160)
------- -------
Net deferred tax assets..................................... $33,847 $26,829
------- -------
------- -------
</Table>

The effective income tax rate differs from the U.S. federal income tax rate
for the following reasons:

F-57

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
------------------
2000 2001 2002
---- ---- ----

U.S. federal income tax rate................................ 35.0% 35.0% 35.0%
Increases (reductions) resulting from:
State and local income taxes, net of federal income tax
benefit............................................... 3.7 3.7 3.7
Puerto Rico income...................................... 2.0 (0.1) (0.2)
Miscellaneous items..................................... (0.1) (0.1) 0.6
---- ---- ----
Effective income tax benefit rate........................... 40.6% 38.5% 39.1%
---- ---- ----
</Table>

NOTE 10. COMPOSITION OF CERTAIN BALANCE SHEET AMOUNTS

The following items comprise the net amounts indicated in the respective
balance sheet captions:

<Table>
<Caption>
DECEMBER 31,
-------------------
2001 2002
---- ----

Property, plant and equipment, net
Land and improvements to land............................... $ 2,007 $ 2,546
Buildings and building fixtures............................. 34,312 35,972
Machinery and equipment..................................... 175,306 141,159
Construction in progress.................................... 3,152 1,349
-------- --------
214,777 181,026
Less: Accumulated depreciation.............................. 131,743 116,036
-------- --------
$ 83,034 $ 64,990
-------- --------
-------- --------
Other accrued liabilities -- current
Warranty.................................................... $ 11,682 $ 9,726
Restructuring............................................... 11,428 3,598
Environmental............................................... -- 5,000
Other....................................................... 16,739 12,725
-------- --------
$ 39,849 $ 31,049
-------- --------
-------- --------
</Table>

Depreciation expense for the years ended December 31, 2000, 2001 and 2002 was
$18,777, $19,191 and $17,109, respectively.

NOTE 11. COMMITMENTS AND CONTINGENCIES

At December 31, 2002, Engine Management had purchase commitments for
property, plant and equipment of approximately $608.

Future minimum rental commitments under operating leases were $91,659 at
December 31, 2002, with rental payments during the next five years of: 2003,
$10,423; 2004, $9,263; 2005, $7,953; 2006, $6,181; and 2007, $5,795. Net rental
expense was $17,026, $17,006 and $12,459, respectively, during the years ended
December 31, 2000, 2001 and 2002.

Future minimum rental payments to be received under an operating sublease
were $4,302 at December 31, 2002, with rental payments receivable for the next
three years of: 2003, $1,581; 2004, $1,622; 2005, $1,099. There are no rental
payments receivable beyond 2005.

F-58

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

Engine Management records liabilities for estimated warranty obligations at
the date products are sold. Adjustments are made as new information becomes
available. Changes in the warranty liability for the year ended December 31,
2002 follow:

<Table>

Balance at December 31, 2001................................ $ 11,682
Amounts accrued for current year sales...................... 14,664
Settlements of claims....................................... (16,620)
--------
Balance at December 31, 2002................................ $ 9,726
--------
--------
</Table>

During 2002, Engine Management conducted a study of potential on-site
environmental exposure at its facilities and recorded $5,000 of environmental
remediation liabilities for exposures at three of its facilities. Engine
Management estimated the liability based on the most probable method of
remediation, current laws and regulations and existing technology. Estimates are
made on an undiscounted basis and exclude the effects of inflation. Management
does not believe that any additional liabilities that may result from these
exposures are reasonably possible of having a material adverse effect on the
liquidity, financial condition or results of operations of Engine Management.

Engine Management is a party to various pending judicial and administrative
proceedings arising in the ordinary course of business. These include, among
others, proceedings based on product liability claims. Management does not
believe that any liabilities that may result from these proceedings are
reasonably likely to have a material adverse effect on the liquidity, financial
condition and results of operations of Engine Management.

NOTE 12. RESTRUCTURING OF OPERATIONS

As discussed in Note 1, Engine Management underwent a significant
restructuring of its business during the periods presented. The restructuring
program began in 1999 when Dana announced its plans to consolidate numerous
warehouses within Engine Management which took place through 2000. Further
consolidation activities and headcount reductions were announced in 2001 which
extended into 2002. These actions were taken to rationalize Engine Management's
cost structure in response to market and related factors.

F-59

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

The following summarizes the restructuring charges and activity recorded
during the periods presented:

<Table>
<Caption>
EMPLOYEE LONG-LIVED
TERMINATION ASSET
BENEFITS IMPAIRMENT EXIT COSTS TOTAL
-------- ---------- ---------- -----

Balance at December 31, 1999............ $ 5,374 $ -- $ 1,377 $ 6,751
Activity during the year
Cash payments....................... (4,461) (1,328) (5,789)
------- ------- ------- --------
Balance at December 31, 2000............ 913 -- 49 962
------- ------- ------- --------
Activity during the year
Charges to expense.................. 10,675 24,509 9,092 44,276
Cash payments....................... (5,247) -- (419) (5,666)
Write-off of assets................. -- (24,509) -- (24,509)
------- ------- ------- --------
Balance at December 31, 2001............ 6,341 -- 8,722 15,063
------- ------- ------- --------
Activity during the year
Charges to expense.................. 1,821 2,546 5,033 9,400
Cash payments....................... (6,848) -- (9,768) (16,616)
Write-off of assets................. -- (2,546) -- (2,546)
------- ------- ------- --------
Balance at December 31, 2002............ $ 1,314 $ -- $ 3,987 $ 5,301
------- ------- ------- --------
------- ------- ------- --------
</Table>

Employee terminations relating to the plans were as follows:

<Table>
<Caption>
YEAR ENDED
DECEMBER 31,
-------------
2001 2002
---- ----

Total estimated............................................. 952 149
Less terminated:
Year ended December 31, 2001............................ (322) --
Year ended December 31, 2002............................ (624) (143)
---- ----
Balance at December 31, 2002................................ 6 6
---- ----
---- ----
</Table>

At December 31, 2002, $5,301 of restructuring charges remained in other
accrued liabilities and other non-current liabilities. This balance was
comprised of $1,314 for remaining payments to be made to previously terminated
employees and for the reduction of approximately 12 employees to be completed in
2003 and $3,987 for lease terminations and other exit costs. The estimated
annual cash expenditures will be approximately $3,598 in 2003 and $524 in 2004
and $1,179 thereafter.

NOTE 13. RELATED PARTY TRANSACTIONS

For purposes of these financial statements, sales between Engine Management
and other Dana units have not been eliminated. These transactions between Engine
Management and other Dana locations are currently on a cost-plus basis with a
15% mark up on most transactions. Engine Management's sales to other Dana
operations were $27,620, $13,707 and $8,489, respectively, for the years ended
December 31, 2000, 2001 and 2002.

Direct expenses incurred by Dana on behalf of Engine Management have been
charged to Engine Management based on estimated or actual cost. Such services
include insurance risk

F-60

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

management, employee benefits and payroll administration, and legal and
divestiture support services.

Corporate allocations for administrative services provided by Dana
aggregated $2,691, $1,784 and $2,337 during 2000, 2001 and 2002, respectively,
and are included in selling, general and administrative expenses.

No allocation of Dana interest expense has been included in these financial
statements.

Engine Management provides sales and distribution support to Beck Arnley.
Charges for these services in 2002 aggregated $18,767 and were principally
determined on a percentage of sales basis which management believes to be
reasonable.

Engine Management leases certain office and warehouse space, vehicles and
equipment under operating leases entered into with Dana Credit Corporation
(DCC). Lease payments to DCC were $7,561, $9,729 and $7,431, respectively, for
the years ended December 31, 2000, 2001 and 2002. The majority of these lease
payments relate to a land and building lease between DCC and Engine Management
for the Salt Lake City distribution center and other equipment leases.

NOTE 14. SUBSEQUENT EVENT

On February 7, 2003, Dana entered into an agreement to sell a substantial
portion of Engine Management to Standard Motor Products. The completion of the
transaction is subject to, among other things, regulatory approvals and the
buyer's completion of financing related to the transaction.

Transaction costs of approximately $6,000 incurred during 2002 by Dana
Corporation relating to the potential sale have been included in selling,
general and administrative expenses, with a corresponding adjustment to the
intercompany account with Dana.

F-61

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
CONDENSED COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
------------------
2002 2003
---- ----

NET SALES................................................... $ 71,647 $77,747
COST AND EXPENSES
Cost of sales........................................... 70,765 65,565
Selling, general and administrative expenses............ 15,842 14,682
Restructuring charges................................... 2,217 --
Interest (income) expense, net.......................... 36 (79)
Other expense........................................... 122 92
-------- -------
88,982 80,260
-------- -------
LOSS BEFORE INCOME TAXES.................................... (17,335) (2,513)
ESTIMATED INCOME TAX BENEFIT................................ 6,778 982
-------- -------
NET LOSS.................................................... $(10,557) $(1,531)
-------- -------
-------- -------
</Table>

The accompanying notes are an integral part of the condensed financial
statements.

F-62

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
CONDENSED COMBINED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS)

<Table>
<Caption>
DECEMBER 31, MARCH 31,
2002 2003
---- ----

ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... $ 1,126 $ 1,002
Accounts receivable......................................... 34,020 43,764
Inventories
Raw materials........................................... 21,444 22,981
Work in process and finished goods...................... 71,748 70,054
Deferred tax assets......................................... 32,389 32,389
Other current assets........................................ 737 1,346
-------- --------
Total current assets................................ 161,464 171,536
Property, plant and equipment, net.......................... 64,990 60,264
Other non-current assets.................................... 925 921
-------- --------
Total assets........................................ $227,379 $232,721
-------- --------
-------- --------

LIABILITIES AND COMBINED EQUITY
CURRENT LIABILITIES
Accounts payable............................................ $ 32,501 $ 31,369
Other current liabilities................................... 40,510 32,535
-------- --------
Total current liabilities........................... 73,011 63,904
Other noncurrent liabilities................................ 8,516 13,122
Combined equity............................................. 145,852 155,695
-------- --------
Total liabilities and combined equity............... $227,379 $232,721
-------- --------
-------- --------
</Table>

The accompanying notes are an integral part of the condensed financial
statements.

F-63

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
CONDENSED COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2003
---- ----

Net loss.................................................... $(10,557) $ (1,531)
Depreciation................................................ 4,673 3,432
Gain on asset sales......................................... (27) --
Asset impairment............................................ 640 --
Working capital change...................................... (2,431) (14,693)
-------- --------
NET CASH FLOWS -- OPERATING ACTIVITIES.................. (7,702) (12,792)
-------- --------
Purchases of property, plant and equipment.................. (151) (624)
Proceeds from sales of assets............................... 28 --
Other....................................................... 405 --
-------- --------
NET CASH FLOWS -- INVESTING ACTIVITIES.................. 282 (624)
-------- --------
Net transactions with Dana.................................. 8,182 13,292
-------- --------
NET CASH FLOWS -- FINANCING ACTIVITIES.................. 8,182 13,292
-------- --------
Net change in cash and cash equivalents..................... 762 (124)
Cash and cash equivalents -- beginning of period............ 292 1,126
-------- --------
CASH AND CASH EQUIVALENTS -- END OF PERIOD.................. $ 1,054 $ 1,002
-------- --------
-------- --------
</Table>

The accompanying notes are an integral part of the condensed financial
statements.

F-64

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO CONDENSED COMBINED INTERIM FINANCIAL INFORMATION (UNAUDITED)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

This interim financial information is being presented due to the potential
sale of substantially all of the US operations of the Dana Corporation (Dana)
Engine Management Business (EM). Engine Management is a component of Dana's
Automotive Aftermarket Group Strategic Business Unit. EM manufactures and
distributes a wide range of engine management products principally for the
automotive aftermarket. This interim financial information presents the
historical results of EM, adjusted to exclude the operations of the Beck Arnley
distribution business, the CUMSA business in Mexico and Texas, and the Dana
Canada distribution business, which are distinct business units within EM but
are not intended to be included in the potential divestiture. The adjusted EM
amounts are intended to reflect the financial position and results of operations
of the business being sold, hereinafter referred to as 'Engine Management' or
'the Company', as though managed by Dana as a separate entity. As such, the
Engine Management interim financial information includes allocations for certain
expenses, as well as assets and liabilities historically maintained by Dana and
not recorded in the accounts of Engine Management. Corporate allocations for
administrative services provided by Dana aggregated $498 and $584 for the three
months ended March 31, 2002 and 2003, respectively. For a more complete
description of the business, basis of presentation and summary of significant
accounting policies refer to the December 31, 2002 Engine Management combined
financial statements.

The combined equity section of the Engine Management interim financial
information comprises the excess of the Company's assets over its liabilities.
Combined equity is affected by the Engine Management operating results, expense
allocations from Dana, and cash transfers between Engine Management and Dana
including settlement of intracompany transactions, as Dana manages all of Engine
Management's treasury activities.

In the opinion of the Company, the accompanying condensed combined interim
financial information includes all normal recurring adjustments necessary to a
fair presentation of financial condition, results of operations and cash flows
for the interim periods presented. Certain amounts have been reclassified in
2002 to conform to the 2003 presentation. This condensed combined interim
financial information should be read in conjunction with the audited financial
statements and notes thereto in the combined financial statements of the Company
for the year ended December 31, 2002.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In June 2002, the FASB issued SFAS No. 146, 'Accounting for Costs Associated
with Exit or Disposal Activities.' This Statement modifies the accounting for
exit or disposal costs required by Emerging Issues Task Force Issue No. 94-3.
Under Issue No. 94-3, a liability for exit costs was recognized at the date the
entity committed itself to an exit plan. Under SFAS No. 146, a liability for
exit costs is not recognized until the liability is incurred. The Company
adopted this Statement on January 1, 2003. The implementation of this Statement
will delay recognition of the liability for exit costs related to any
restructuring plans approved after December 31, 2002. The adoption of this
Standard did not have a material effect on the financial position of the Company
as of January 1, 2003 or the results of operations for the three months ended
March 31, 2003.

F-65

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO CONDENSED COMBINED INTERIM FINANCIAL INFORMATION (UNAUDITED)

NOTE 3.

The following summarizes the activity in accrued restructuring expenses
during the first quarter of 2003:

<Table>
<Caption>
EMPLOYEE
TERMINATION EXIT
BENEFITS COSTS TOTAL
-------- ----- -----

Balance at December 31, 2002........................... $1,314 $3,987 $5,301
Activity during the period:
Cash payments...................................... (638) (761) (1,399)
------ ------ ------
Balance at March 31, 2003.............................. $ 676 $3,226 $3,902
------ ------ ------
------ ------ ------
</Table>

At March 31, 2003, $3,902 of restructuring charges remained in accrued
liabilities. This balance was comprised of $676 for remaining payments to be
made to previously terminated employees and for the reduction of approximately
12 employees to be completed in 2003 and $3,226 for lease terminations and other
exit costs. The estimated annual cash expenditures will be approximately $2,592
in the remainder of 2003, $524 in 2004 and $786 thereafter.

NOTE 4.

Contingencies -- The Company is a party to various pending judicial and
administrative proceedings arising in the ordinary course of business. These
include, among others, proceedings based on product liability claims. Management
does not believe that it is reasonably possible that any losses from these
matters, to the extent that they exceed the recorded liabilities, will have a
material adverse effect on Engine Management's liquidity, financial condition or
results of operations.

NOTE 5.

Environmental Liabilities -- In the fourth quarter of 2002, the Company
conducted a study of potential on-site environmental exposure at its facilities
and recorded $5,000 of environmental remediation liabilities for exposures at
three of its facilities. The Company estimated the liability based on the most
probable method of remediation, current laws and regulations and existing
technology. Estimates are made on an undiscounted basis and exclude the effects
of inflation. Management does not believe that any additional liabilities that
may result from these exposures are reasonably possible of having a material
adverse effect on the liquidity, financial condition or results of operations of
the Company. At March 31, 2003, $5,000 remained in the accrual, which was
reclassified to long-term liabilities because it is expected that settlement
will occur after March 31, 2004.

NOTE 6.

Warranty -- A liability for estimated warranty obligations is recorded at
the date products are sold. Adjustments are made as new information becomes
available. Changes in the warranty liability for the three months ended
March 31, 2003 and 2002 follow:

<Table>
<Caption>
2002 2003
---- ----

Balance, beginning of period................................ $11,682 $ 9,726
Amounts accrued for current period sales.................... 5,005 3,111
Settlements of warranty claims.............................. (4,799) (4,406)
------- -------
Balance, end of period...................................... $11,888 $ 8,431
------- -------
------- -------
</Table>

F-66

ENGINE MANAGEMENT
(A BUSINESS OF DANA CORPORATION)
NOTES TO CONDENSED COMBINED INTERIM FINANCIAL INFORMATION (UNAUDITED)

NOTE 7.

Non Cash Investing and Financing Activities -- During 2003 and 2002 the
Company settled certain investing and financing activities directly through
intercompany transactions with Dana without exchanging cash. These transactions
include: a transfer of machinery and equipment of $2,229 to Dana in 2003; and
short-term borrowings of $9,377 in 2002.

NOTE 8.

Comprehensive Loss -- During the quarters ended March 31, 2003 and 2002,
comprehensive income equaled net income.

F-67

[STANDARD MOTOR LOGO]

_______________________________________________________________________________

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell or to buy only the securities offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

-------------------
TABLE OF CONTENTS

<Table>
<Caption>
Page
----

Prospectus Summary.......................................... 1
Risk Factors................................................ 9
Special Notes Regarding Forward-Looking Statements.......... 18
The Acquisition and Related Transactions.................... 19
Use of Proceeds............................................. 21
Price Range of Common Stock and Dividend Policy............. 22
Capitalization.............................................. 23
Pro Forma Financial Information............................. 25
Selected Consolidated Financial Data........................ 30
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 34
The Automotive Aftermarket.................................. 47
Business.................................................... 52
Management.................................................. 66
Principal Shareholders...................................... 69
Description of Capital Stock................................ 73
Underwriting................................................ 77
Where You Can Find More Information......................... 78
Incorporation of Certain Documents by Reference............. 79
Validity of Common Stock.................................... 79
Experts..................................................... 80
Index to Financial Statements............................... F-1
</Table>

4,750,000 Shares

STANDARD MOTOR PRODUCTS, INC.

Common Stock

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

[STANDARD MOTOR LOGO]

-------------------
GOLDMAN, SACHS & CO.
MORGAN STANLEY

_______________________________________________________________________________

PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All the amounts shown are estimated,
except the SEC registration fee, the NYSE filing fee and the NASD filing fee.

<Table>

SEC registration fee........................................ $ 6,242
NASD fee.................................................... 7,285
NYSE fee.................................................... 51,300
Printing expenses........................................... 125,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 300,000
Transfer agent and registrar fees and expenses.............. 1,000
Miscellaneous............................................... 9,173
----------
Total................................................... $1,000,000
----------
----------
</Table>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

In 1986, various Sections of Article 7 of the Business Corporation Law of
New York (the 'BCL') were amended to broaden the indemnification rights of
directors, officers and employees. In 1987, BCL Section 402(b) was further
amended to permit a provision to be included in a certificate of incorporation
shielding directors from personal liability for breach of their duties as
directors. In order to protect our directors, officers and employees, as
applicable, to the fullest extent permitted by these statutory amendments, we
amended and restated our By-laws (the 'By-laws') and restated our Certificate of
Incorporation, as amended (the 'Certificate of Incorporation').

In general, the By-laws and Certificate of Incorporation provide that we
shall, to the fullest extent permitted by Article 7 of the BCL, indemnify each
person made or threatened to be made a party to, or called as a witness in, or
asked to submit information in, any action or proceeding by reason of the fact
that such person is or was a director or officer of us, or serves or served, at
our request, any other corporation in any capacity, against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses, including
attorneys' fees, incurred in connection with such action or proceeding, or any
appeal therein. This indemnification requirement covers any pending or
threatened action, proceeding, hearing or investigation, whether civil or
criminal, whether judicial, administrative or legislative in nature, and whether
or not in the nature of a direct or shareholders' derivative action brought by
us or on our behalf or any other corporation or enterprise which the director or
officer of us serves or has served at our request. The By-laws prohibit
indemnification if a judgment or other final adjudication adverse to such person
establishes that his or her acts were committed in bad faith or were the result
of active or deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled. The By-laws further
provide that no indemnification shall be required with respect to any settlement
or other non-adjudicated disposition of any threatened or pending action or
proceeding unless we have given our prior consent to such settlement or other
disposition. The By-laws require us to advance or promptly reimburse upon
request any person entitled to indemnification for all expenses, including
attorneys' fees, reasonably incurred in defending any action or proceeding in
advance of the final disposition thereof upon receipt of an undertaking by such
person to repay such amount if such person is ultimately not to be entitled to
indemnification; provided, however, that such person cooperates with any request
by us that counsel be utilized by the parties to an action or proceeding
similarly situated unless to do so would be inappropriate due to actual or
potential conflicts of interest.

II-1

The Certificate of Incorporation provides that the personal liability of our
directors be eliminated to the fullest extent permitted by the provisions of BCL
Section 402(b). It also provides that we shall, to the fullest extent permitted
by Article 7 of the BCL, indemnify under that statute from and against any and
all of the expenses, liabilities or other matters covered by the statute. The
By-laws, summarized above, contain the detailed terms and conditions under which
this indemnification requirement of the Certificate of Incorporation is to be
effected.

We maintain an officers' and directors' liability insurance policy insuring
our officers and directors against certain liabilities and expenses incurred by
them in their capacities as such. The policy does not reimburse us for
indemnification obligations to our officers and directors.

Additionally, the underwriting agreement provides that the underwriter(s)
shall indemnify each of our directors and each of our officers who signed the
registration statement and each person who controls us for certain liabilities,
including certain liabilities under the Securities Act of 1933.

ITEM 16. EXHIBITS

(a) Exhibits

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

1.1* -- Form of Underwriting Agreement between Standard Motor
Products, Inc., and Goldman, Sachs & Co. and Morgan
Stanley & Co. Incorporated as representatives of the
underwriters.

2.1 -- Asset Purchase Agreement, dated as of February 7, 2003,
by and among Dana Corporation, Automotive Controls Corp.,
BWD Automotive Corporation, Pacer Industries, Inc.,
Ristance Corporation, Engine Controls Distribution
Services, Inc., as Sellers, and Standard Motor Products,
Inc., as Buyer (incorporated by reference to Standard
Motor Products, Inc.'s Current Report on Form 8-K (File
No. 001-04743), filed on February 10, 2003).

4.1 -- Restated Certificate of Incorporation, dated July 31,
1990 (incorporated by reference to Exhibit 4.2 of Standard
Motor Products, Inc.'s Registration Statement on Form S-8
(Registration No. 333-51565), dated May 1, 1998).

4.2 -- Certificate of Amendment to the Restated Certificate of
Incorporation, dated July 31, 1990 (incorporated by
reference to Exhibit 4.3 of Standard Motor Products,
Inc.'s Registration Statement on Form S-8 (Registration
No. 333-51565), filed on May 1, 1998).

4.3 -- Restated By-Laws, dated May 23, 1996 (incorporated by
reference to Exhibit 3.4 of Standard Motor Products,
Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1996).

4.4 -- Form of Subordinated Debenture Indenture (including form
of convertible debenture) (incorporated by reference to
Exhibit 4.1 to Standard Motor Products, Inc.'s Amendment
No. 2 to its Registration Statement on Form S-3
(Registration No. 333-79177), filed on July 20, 1999).

4.5 -- Rights Agreement, dated as of February 15, 1996, between
Standard Motor Products, Inc. and Registrar & Transfer
Co., as rights agent (incorporated by reference to
Standard Motor Products, Inc.'s Registration Statement on
Form 8-A (File No. 001-04743), filed on April 11, 1996).

4.6 -- Form of Share Ownership Agreement by and between Standard
Motor Products, Inc. and Dana Corporation (incorporated by
reference to Standard Motor Products, Inc.'s Current
Report on Form 8-K (File No. 001-04743), filed on February
10, 2003).

5.1 -- Opinion of Kelley Drye & Warren LLP.

23.1 -- Consent of independent auditors KPMG LLP.

23.2 -- Consent of independent accountants PricewaterhouseCoopers
LLP.

23.3 -- Consent of Kelley Drye & Warren LLP (included in its
opinion filed as Exhibit 5.1).

24.1* -- Powers of Attorney (included on signature page).
</Table>

- ---------

* Previously filed.

(b) Financial Statement Schedules

Schedule II -- Valuation and Qualifying Accounts

II-2

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Long Island City, New York, on the 4th day of June, 2003.

<Table>

STANDARD MOTOR PRODUCTS, INC.

By: /s/ LAWRENCE I. SILLS
........................................
Lawrence I. Sills
Chairman of the Board,
Chief Executive Officer and Director
</Table>

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on the 4th day of June, 2003.

<Table>
<Caption>
SIGNATURE TITLE
--------- -----

/s/ LAWRENCE I. SILLS Chairman of the Board, Chief Executive Officer and
......................................... Director (Principal Executive Officer)
Lawrence I. Sills

/s/ JAMES J. BURKE Vice President Finance, Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
James J. Burke

* Vice Chairman of the Board and Director
.........................................
Arthur D. Davis

* Director
.........................................
Marilyn Fife Cragin

* Director
.........................................
Susan F. Davis

* Director
.........................................
Robert M. Gerrity

* Director
.........................................
John L. Kelsey

* Director
.........................................
Kenneth A. Lehman

* Director
.........................................
Arthur S. Sills
</Table>

II-4

<Table>
<Caption>
SIGNATURE TITLE
--------- -----

* Director
.........................................
Peter J. Sills

* Director
.........................................
Frederick D. Sturdivant

* Director
.........................................
William H. Turner

* By: /s/ JAMES J. BURKE
...............................
James J. Burke, Attorney-in-fact
</Table>

II-5

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
Standard Motor Products, Inc.:

Under date of February 24, 2003, we reported on the consolidated balance sheets
of Standard Motor Products, Inc. and subsidiaries as of December 31, 2002 and
2001, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 2002, as contained in the registration statement
(no. 33-103194) on Amendment No. 1 to Form S-3. Our report contains an
explanatory paragraph that the Company adopted Emerging Issues Task Force Issue
No. 01-9, Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products) as of Janaury 1, 2002 and
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets as of January 1, 2002. Our report also indicates that these
consolidated financial statements have been revised to account for the loss on
early extinguishment of debt in accordance with Statement of Financial
Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections, which was adopted
by the Company as of January 1, 2003.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly
in all material respects, the information set forth therein.

/s/ KPMG LLP

New York, New York
February 24, 2003

STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002

<Table>
<Caption>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
----------- ------- -------- -------- ---------- -----------
(DOLLARS IN THOUSANDS)

YEAR ENDED DECEMBER 31, 2000:
Allowance for doubtful
accounts..................... $ 2,619 $ 699 $ -- $ 339 $ 2,979
Allowance for discounts........ 1,992 -- -- 394 1,598
------- -------- ---- -------- -------
$ 4,611 $ 699 $ -- $ 733 $ 4,577
------- -------- ---- -------- -------
------- -------- ---- -------- -------
Allowance for sales returns.... $22,698 $100,403 $ -- $105,408 $17,693
------- -------- ---- -------- -------
------- -------- ---- -------- -------
Allowance for inventory
valuation.................... $13,766 $ 3,165 $ -- $ 4,001 $12,930
------- -------- ---- -------- -------
------- -------- ---- -------- -------

YEAR ENDED DECEMBER 31, 2001:
Allowance for doubtful
accounts..................... $ 2,979 $ 598 $ -- $ 660 $ 2,917
Allowance for discounts........ 1,598 -- -- 153 1,445
------- -------- ---- -------- -------
$ 4,577 $ 598 $ -- $ 813 $ 4,362
------- -------- ---- -------- -------
------- -------- ---- -------- -------
Allowance for sales returns.... $17,693 $ 94,122 $ -- $ 93,648 $18,167
------- -------- ---- -------- -------
------- -------- ---- -------- -------
Allowance for inventory
valuation.................... $12,930 $ 4,387 $ -- $ 3,422 $13,895
------- -------- ---- -------- -------
------- -------- ---- -------- -------

YEAR ENDED DECEMBER 31, 2002:
Allowance for doubtful
accounts..................... $ 2,917 $ 489 $162 $ -- $ 3,568
Allowance for discounts........ 1,445 -- -- 131 1,314
------- -------- ---- -------- -------
$ 4,362 $ 489 $162 $ 131 $ 4,882
------- -------- ---- -------- -------
------- -------- ---- -------- -------
Allowance for sales returns.... $18,167 $ 73,030 $ -- $ 74,856 $16,341
------- -------- ---- -------- -------
------- -------- ---- -------- -------
Allowance for inventory
valuation.................... $13,895 $ 1,265 $ -- $ 869 $14,291
------- -------- ---- -------- -------
------- -------- ---- -------- -------
</Table>

INDEX OF EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

1.1* -- Form of Underwriting Agreement between Standard Motor
Products, Inc., and Goldman, Sachs & Co. and Morgan Stanley
& Co. Incorporated as representatives of the underwriters.

2.1 -- Asset Purchase Agreement, dated as of February 7, 2003, by
and among Dana Corporation, Automotive Controls Corp., BWD
Automotive Corporation, Pacer Industries, Inc., Ristance
Corporation, Engine Controls Distribution Services, Inc., as
Sellers, and Standard Motor Products, Inc., as Buyer
(incorporated by reference to Standard Motor Products,
Inc.'s Current Report on Form 8-K (File No. 001-04743),
filed on February 10, 2003).

4.1 -- Restated Certificate of Incorporation, dated July 31, 1990
(incorporated by reference to Exhibit 4.2 of Standard Motor
Products, Inc.'s Registration Statement on Form S-8
(Registration No. 333-51565), dated May 1, 1998).

4.2 -- Certificate of Amendment to the Restated Certificate of
Incorporation, dated July 31, 1990 (incorporated by
reference to Exhibit 4.3 of Standard Motor Products, Inc.'s
Registration Statement on Form S-8 (Registration
No. 333-51565), filed on May 1, 1998).

4.3 -- Restated By-Laws, dated May 23, 1996 (incorporated by
reference to Exhibit 3.4 of Standard Motor Products, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1996).

4.4 -- Form of Subordinated Debenture Indenture (including form of
convertible debenture) (incorporated by reference to
Exhibit 4.1 to Standard Motor Products, Inc.'s Amendment
No. 2 to its Registration Statement on Form S-3
(Registration No. 333-79177), filed on July 20, 1999).

4.5 -- Rights Agreement, dated as of February 15, 1996, between
Standard Motor Products, Inc. and Registrar & Transfer Co.,
as rights agent (incorporated by reference to Standard Motor
Products, Inc.'s Registration Statement on Form 8-A (File
No. 001-04743), filed on April 11, 1996).

4.6 -- Form of Share Ownership Agreement by and between Standard
Motor Products, Inc. and Dana Corporation (incorporated by
reference to Standard Motor Products, Inc.'s Current Report
on Form 8-K (File No. 001-04743), filed on February 10,
2003).

5.1 -- Opinion of Kelley Drye & Warren LLP.

23.1 -- Consent of independent auditors KPMG LLP.

23.2 -- Consent of independent accountants PricewaterhouseCoopers
LLP.

23.3 -- Consent of Kelley Drye & Warren LLP (included in its opinion
filed as Exhibit 5.1).

24.1* -- Powers of Attorney (included on signature page).
</Table>

- ---------

<Table>

* Previously filed.
</Table>