STONERIDGE INC, S-1/A, 1997-10-01

STONERIDGE INC
S-1/A, 1997-10-01
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1997

REGISTRATION NO. 333-33285
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------

AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------

STONERIDGE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
OHIO 3714 34-1598949
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION) CLASSIFICATION CODE NUMBER) NUMBER)
</TABLE>

9400 EAST MARKET STREET
WARREN, OHIO 44484
(330) 856-2443

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

CLOYD J. ABRUZZO
STONERIDGE, INC.
9400 EAST MARKET STREET
WARREN, OHIO 44484
(330) 856-2443

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------

Copies of all correspondence to:

<TABLE>
<S> <C>
AVERY S. COHEN, ESQ. HOWARD S. LANZNAR, ESQ.
BAKER & HOSTETLER LLP LAWRENCE D. LEVIN, ESQ.
3200 NATIONAL CITY CENTER KATTEN MUCHIN & ZAVIS
1900 EAST NINTH STREET 525 W. MONROE STREET, SUITE 1600
CLEVELAND, OHIO 44114 CHICAGO, ILLINOIS 60661-3693
(216) 621-0200 (312) 902-5200
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this Registration Statement becomes effective.

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, 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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement covers the registration of and contains a form
of prospectus relating to each of (i) an offering in the United States and
Canada (the "U.S. Offering") of 5,557,500 Common Shares of Stoneridge, Inc.
(which number includes 877,500 shares subject to the U.S. Underwriters'
overallotment option), and (ii) a concurrent international offering outside the
United States and Canada (the "International Offering" and together with the
U.S. Offering, the "Offering") of 1,170,000 Common Shares of Stoneridge, Inc.
The prospectuses will be identical in all respects except that each will contain
different front cover pages.

This Registration Statement also covers the registration of and contains a
form of prospectus (the "Company Prospectus") relating to the offering (the
"Company Offering") of Common Shares directly by the Company to certain
directors, executive officers and other management employees of the Company. The
amount of the Company Offering will not be less than $6.5 million. Based on an
assumed initial public offering price of $16.00 per share (less $1.08 per share
of assumed underwriting discounts and commissions), the minimum Company Offering
would be 435,657 Common Shares. The Company Prospectus is identical in all
respects to the other prospectuses except for (i) the front cover page of the
Company Prospectus and (ii) the fact that the information in "Underwriters" is
not applicable to purchases pursuant to the Company Prospectus. The alternative
pages for the prospectuses are included herein.

If required pursuant to Rule 424(b) of the General Rules and Regulations
under the Securities Act of 1933, the prospectuses in the forms in which they
are used after the Registration Statement becomes effective will be filed with
the Securities and Exchange Commission.
<PAGE> 3

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

PROSPECTUS (Subject to Completion)

Issued October 1, 1997

5,850,000 Shares

STONERIDGE, INC.
COMMON SHARES
------------------

All of the 5,850,000 Common Shares offered hereby are being offered by the
Company. Of the 5,850,000 Common Shares being offered, 4,680,000 shares are
being offered initially in the United States and Canada by the U.S. Underwriters
and 1,170,000 shares are being offered initially outside the United States and
Canada by the International Underwriters. Prior to the Offering there has been
no public market for the Common Shares of the Company. Between approximately
$81,000,000 and $85,000,000 of the net proceeds of the Offering will be used to
make a distribution of previously taxed but undistributed earnings to the
Company's pre-Offering shareholders. See "S Corporation Distribution and
Management Reinvestment." It is currently anticipated that the initial public
offering price per Common Share will be between $15 and $17. See "Underwriters"
for a discussion of the factors to be considered in determining the initial
public offering price.

In addition to the 5,850,000 Common Shares being offered hereby, 435,657 Common
Shares are being offered directly by the Company concurrently herewith to
certain directors, executive officers and other management employees of the
Company. See "S Corporation Distribution and Management Reinvestment."
Upon completion of the Offering, the Company's executive officers,
directors and their families will collectively own approximately 68%
of the outstanding Common Shares of the Company. Consequently, these
persons will be able to determine the outcome of any matter
subject to a vote of the Company's shareholders, including the
election of directors.
------------------------

THE COMMON SHARES HAVE BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK EXCHANGE,
SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, UNDER THE SYMBOL "SRI."
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------

PRICE $ A SHARE
------------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Share.......................... $ $ $
Total(3)........................... $ $ $
</TABLE>

- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."

(2) Before deducting expenses payable by the Company, estimated at
$1,200,000.

(3) The Company has granted the U.S. Underwriters an option exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
877,500 additional Common Shares at the price to public, less
underwriting discounts and commissions for the purpose of covering
overallotments, if any. If the U.S. Underwriters exercise such option in
full, the total price to public, underwriting discounts and commissions
and proceeds to Company will be $ , $ , and $ ,
respectively. See "Underwriters."
------------------

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Katten Muchin & Zavis, counsel for the Underwriters. It is expected that
delivery of the Common Shares will be made on or about October , 1997 at the
offices of Morgan Stanley & Co. Incorporated, New York, N.Y., against payment
therefor in immediately available funds.
------------------

MORGAN STANLEY DEAN WITTER DONALDSON, LUFKIN & JENRETTE
Securities Corporation
, 1997
<PAGE> 4

The Company's Prospectus contains a two page gate fold after the front
cover page. In the center of the gate fold there are pictures of a heavy duty
truck, just to the left of center, a four-by-four sports utility vehicle, just
to the right of center, and in between the two vehicles, the control panel of a
heavy duty truck. Surrounding these three pictures are twelve boxes (1 1/2" by
2") on the left, right and bottom outer edges of the gate fold which contain
pictures of the Company's principal products. On the top of the gate fold on the
left hand side in large type is the word "Stoneridge" and the sentence, in
smaller type, "Stoneridge is a leading independent supplier of highly engineered
electrical and electronic components, modules and systems for the automotive,
medium and heavy duty truck and agricultural vehicle markets." The twelve
picture boxes are indexed A through L. The pictures in the center of the boxes
are also indexed A through L to indicate the approximate location in the
particular vehicle (or control panel) where the Company's products are
incorporated. Box A is a picture of various power distribution products with the
caption, Power Distribution Systems (Wiring Systems, Circuit Protectors,
Connectors, Bussed Electrical Centers); Box B is a picture of various multiplex
modules with the captions Multiplex Modules (Vehicle Electronic Control Units,
Instrumentation, Door Multiplex systems); Box C is a picture of various modular
assemblies with the caption Modular Assemblies (Instrument Panels, Seat
Assemblies, Refrigeration Controls); Box D is a picture of various
instrumentation with the caption Instrumentation (Electronic Instrument Panels,
Clusters, Gauges, Integrated Digital Displays); Box E is a picture of various
customer activated switches with the caption Customer Activated Switches
(Ignition, Mirror, Headlamp); Box F is a picture of various information displays
with the caption Information Displays (Diagnostic Recorders, Maintenance Data
Storage, Operator Performance Monitoring); Box G is a picture of various
actuator products with the caption Actuators (Power Door Lock and Four Wheel
Drive); Box H is a picture of various hidden switches with the caption Hidden
Switches (Door Ajar, Dome Light, Anti-theft); Box I is a picture of various
electronic instrumentation and display modules with the caption Electronic
Instrumentation and Display Modules (Digital Displays, Power Converters,
Application Specific Modules); Box K is a picture of various power distribution
products with the caption Power Distribution (Wiring Systems, Custom Connectors,
Wiring Harnesses); Box J is a picture of various customer actuated switches with
the caption Customer Actuated Switches (Headlights, Rear Defroster, Heated Seat)
and Box L a picture of various power train switches and the caption Power Train
Switches (Clutch, Brake, Auto-Stick, Transmission).

<PAGE> 5

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------

UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------

For investors outside the United States: No action has been or will be
taken in any jurisdiction by the Company or any Underwriter that would permit a
public offering of the Common Shares or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus comes
are required by the Company and the Underwriters to inform themselves about and
to observe any restrictions as to the Offering of the Common Shares and the
distribution of this Prospectus.
------------------------

In this Prospectus, references to (i) the "Company" includes Stoneridge,
Inc. and its subsidiaries, unless the context otherwise requires and (ii)
"dollar" and "$" are to United States dollars, and the term "United States" or
"U.S." means the United States of America, its states, its territories, its
possessions and all areas subject to its jurisdiction.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................................................... 3
Risk Factors.......................................................................... 9
The Company........................................................................... 13
Use of Proceeds....................................................................... 14
S Corporation Distribution and Management Reinvestment................................ 15
Dividend Policy....................................................................... 15
Capitalization........................................................................ 16
Dilution.............................................................................. 17
Selected Financial Data............................................................... 18
Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 20
Business.............................................................................. 28
Management............................................................................ 40
Principal Shareholders................................................................ 45
Certain Transactions.................................................................. 47
Description of Capital Shares......................................................... 48
Shares Eligible for Future Sale....................................................... 50
Certain United States Federal Tax Consequences for Non-U.S. Holders of Common
Shares.............................................................................. 52
Underwriters.......................................................................... 54
Experts............................................................................... 57
Legal Matters......................................................................... 57
Additional Information................................................................ 57
Index to Financial Statements......................................................... F-1
</TABLE>

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

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON SHARES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, COMMON SHARES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."

2
<PAGE> 6

PROSPECTUS SUMMARY

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed in "Risk
Factors." The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial statements
(including the notes thereto) appearing elsewhere in this Prospectus. Unless
otherwise indicated, the information in this Prospectus assumes (i) no exercise
of the Underwriters' overallotment option, (ii) the issuance of 435,657 Common
Shares in the Company Offering (as defined herein), (iii) the recapitalization
of the Company's Class A and Class B Common Shares into a single class of Common
Shares to be effected prior to the Combined Offering as described under the
heading "Description of Capital Shares" and (iv) completion of the Berifors
acquisition and the issuance of 757,063 Common Shares in connection therewith as
described under the heading "The Company."

THE COMPANY

The Company is a leading independent designer and manufacturer of highly
engineered electrical and electronic components, modules and systems principally
for the automotive, medium and heavy duty truck and agricultural vehicle
markets. The Company's products interface with a vehicle's mechanical and
electrical systems to activate equipment and accessories, display and monitor
vehicle performance, and control and distribute electrical power and signals.
The Company has a leading market position in the design and manufacture of
electrical and electronic modules and systems for the medium and heavy duty
truck and agricultural vehicle markets. In the automotive market, the Company
produces specially designed and engineered electrical and electronic component
parts and modules, typically on a sole-source basis. The Company's engineers and
designers work closely with customers to design, develop and manufacture
components, modules and systems to address specific vehicle requirements. The
Company, together with its predecessors, has long-standing relationships with
its major customers, including General Motors Corporation (since 1931), Ford
Motor Company (since 1930), Deere & Company (since 1965), and Navistar
International Corporation (since 1941).

Approximately 72% of the Company's 1996 net sales and 66% of net sales for
the first six months of 1997 were derived from the automotive market, and
approximately 27% of the Company's 1996 net sales and 33% of net sales for the
first six months of 1997 were derived from the medium and heavy duty truck and
agricultural vehicle markets. As discussed under "Risk Factors -- Discontinuance
of Certain Contract Manufacturing Business" and "The Company," a division of
General Motors has notified the Company that it is discontinuing all outsourcing
of its wire harness requirements under contract manufacturing arrangements. As a
result, the Company expects to exit its contract manufacturing business by
approximately 1999, at which time the Company will generate substantially all of
its net sales and profits from the design and manufacture of highly engineered
electrical and electronic products. In 1996 and the first six months of 1997,
contract manufacturing of wire harnesses for the division of General Motors
accounted for 29% and 22% of the Company's sales, respectively.

The Company's four principal product categories are:

- Power Distribution Products. The Company designs and manufactures
electrical power and signal distribution components, modules and systems,
including fully integrated automotive and truck wiring systems and highly
engineered products, such as power distribution panels, for the
automotive, medium and heavy duty truck and agricultural vehicle markets.
Power distribution systems regulate, coordinate and direct the operation
of the entire electrical system within a vehicle or compartment. A
significant portion of the Company's current power distribution business
consists of contract manufacturing of wire harnesses for a division of
General Motors. See "Business -- Contract Manufacturing."

3
<PAGE> 7

are those switches which are not typically seen by vehicle passengers but
are utilized to activate or deactivate selected functions such as brake
lights, cruise control functions and electronic safety features related
to air bag and anti-lock braking systems. Customer-activated switches are
used by a vehicle's operator or passengers to manually activate
headlights, rear defrosters, heated seats and other accessories. The
Company sells these products principally to the automotive market.

- Instrumentation and Information Display Products. The Company designs
and manufactures electronic instrument clusters, driver message centers,
power conversion products, multiplexed modules and electrical systems and
electronic switch modules. These products collect, store and display
vehicle information, such as speed, pressure, maintenance data, trip
information, operator performance, temperature, distance traveled, and
driver messages related to vehicle performance. These products utilize
state-of-the-art hardware, software and multiplexing technology and are
sold principally to the medium and heavy duty truck and agricultural
vehicle markets.

- Actuator Products. The Company designs and manufactures
electromechanical actuator products that enable users to deploy power
functions in a vehicle and can be designed to integrate switching and
control functions. These products include power door lock and
four-wheel-drive actuators and are sold principally to the automotive
market.

These four product categories accounted for 52%, 29%, 11% and 8%, respectively,
of the Company's 1996 net sales, and 47%, 26%, 10% and 17% of the Company's net
sales for the first six months of 1997.

The Company believes that it is the leading North American manufacturer of
(i) power and signal distribution systems for the agricultural vehicle market
and (ii) driver instrumentation and information display systems for the medium
and heavy duty truck markets. In the automotive market, where the Company
focuses on component and module design and manufacturing, the Company believes
it is the largest manufacturer of pedal assembly, chassis and door mounted
hidden switches in North America and Europe. In addition to the Company's
leading market positions, it is typically the sole supplier of products
designed, developed and manufactured by the Company for specific vehicle
platforms.

Demand for the Company's products has grown as electrical and electronic
content in vehicles has increased. The Company has benefited as original
equipment manufacturers ("OEMs") added more electrical features and
sophisticated electronics, such as driver information displays, safety systems
and comfort features. Increased use of these features on vehicles causes greater
utilization of the products designed and manufactured by the Company. According
to a report by The Economist Intelligence Unit, average electrical and
electronic content per vehicle is expected to increase from $863 in 1995 to
$1,230 in 2000, a compound annual growth rate of 7.3%.

The Company seeks to grow primarily by leveraging its strong market
positions and technical and manufacturing capabilities to provide highly
engineered electrical and electronic components, modules and systems to selected
segments of the markets it serves. To achieve this goal the Company intends to:
(i) focus on higher value-added systems and modules; (ii) expand new product
development to increase vehicle and platform penetration; (iii) expand
penetration of international markets; and (iv) pursue strategic acquisitions and
alliances.

The Company was founded in 1965 and until 1987 conducted its business
primarily as a contract manufacturer of wire harnesses. In 1987, the Company
embarked on a strategy to design and manufacture highly engineered electrical
and electronic products and diversify its portfolio of products through
acquisitions. The Company's significant acquisitions include: (i) Joseph Pollak
Corporation ("Pollak"), a manufacturer of electronic and electromechanical
switch products in 1988; (ii) the Transportation Electronic Division ("TED") of
General Instruments, a manufacturer of power conversion modules and
sophisticated instrumentation components, modules and systems in 1992; and (iii)
the actuator business of Kelsey-Hayes Company ("Kelsey-Hayes") in 1995. In 1996,
seeking to leverage its capabilities and diversify its OEM customer base, the
Company acquired approximately 45% of Berifors AB ("Berifors"), a Sweden-based
manufacturer of electronic display panels and instrumentation for the European
truck and commercial vehicle markets. Effective upon the completion of the
Offering, the Company expects to acquire an additional 51% of

4
<PAGE> 8

the outstanding stock of Berifors and will have an option to acquire the
remaining 4% stake in 1998. As a result of this acquisition, the Company will be
a worldwide supplier of instrumentation displays for heavy duty trucks to
Mercedes Benz, Volvo and Scania.

The Company's principal executive offices are located at 9400 East Market
Street, Warren, Ohio 44484, and its telephone number is (330) 856-2443.

5
<PAGE> 9

THE OFFERING

<TABLE>
<S> <C>
Common Shares offered:
U.S. Offering............................... 4,680,000 shares
International Offering...................... 1,170,000 shares
Company Offering............................ 435,657 shares(1)
Common Shares to be outstanding
after the Offering.......................... 21,445,287 shares(2)
Use of proceeds............................... Between approximately $81.0 million and $85.0
million to pay the S Corporation Distribution
and the remainder to repay bank debt. See
"Use of Proceeds."
New York Stock Exchange symbol................ SRI
</TABLE>

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

(1) The Company is offering Common Shares directly to certain directors,
executive officers and other management employees of the Company at the
initial public offering price set forth on the cover page of this
Prospectus, less underwriting discounts and commissions (the "Company
Offering"). The amount of the Company Offering will not be less than $6.5
million. Based on an assumed initial public offering price of $16.00 per
share (less $1.08 per share of assumed underwriting discounts and
commissions), the minimum Company Offering would be 435,657 Common Shares.
As used herein, the term "Combined Offering" includes both the Company
Offering and the underwritten initial public offering. See "S Corporation
Distribution and Management Reinvestment."

(2) Includes 757,063 Common Shares expected to be issued in the Berifors
acquisition. See "The Company -- Acquisitions."

S CORPORATION DISTRIBUTION AND MANAGEMENT REINVESTMENT

The Company intends to pay to existing shareholders a distribution of
substantially all of its previously undistributed S corporation taxable income
as of the date of termination of its status as an S corporation (the "S
Corporation Distribution"). The previously undistributed S corporation taxable
income was taxed at the shareholder level in the year the income was earned. It
is not possible at this time to determine the exact amount of the S Corporation
Distribution. The Company currently estimates that undistributed S corporation
taxable income as of the termination of the Company's S corporation status will
be between approximately $81.0 million and $85.0 million. The Company
anticipates distributing substantially all of the S Corporation Distribution in
connection with the Offering. The remaining balance of the S Corporation
Distribution is anticipated to be paid with cash from operations after
completion of the Company's 1997 income tax returns.

Of the $81.0 million to $85.0 million S Corporation Distribution, certain
directors, executive officers and other management employees of the Company (the
"Management Investors"), who are pre-Offering shareholders, will receive
approximately $8.0 million of the S Corporation Distribution. Concurrent with
the Offering, the Management Investors will purchase Common Shares at the
initial public offering price, less underwriting discounts and commissions,
directly from the Company in the Company Offering (the "Management
Reinvestment"). The amount of the Company Offering will not be less than $6.5
million. Based on an assumed initial public offering price of $16.00 per share
(less $1.08 per share of assumed underwriting discounts and commissions), the
minimum Company Offering would be 435,657 Common Shares. After the Offering, the
Management Reinvestment and the Berifors acquisition, executive officers,
directors and their families collectively will own approximately 68% of the
Company's outstanding Common Shares and will collectively be able to control the
outcome of all matters requiring a vote of shareholders.

6
<PAGE> 10

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following table sets forth summary historical and pro forma financial
data for the Company and should be read in conjunction with the financial
statements and notes related thereto and other financial information included
elsewhere herein. The summary historical financial data for the years ended
December 31, 1994, 1995 and 1996 are derived from the Company's financial
statements, which were audited by Arthur Andersen LLP, the Company's independent
accountants. The summary historical financial data for the years ended December
31, 1992 and 1993 are derived from the unaudited combined financial statements
of the Company, which financial statements have been prepared by the Company on
a basis consistent with the Company's audited financial statements. The summary
historical and pro forma financial data for the six-month periods ended June 30,
1996 and 1997 are derived from unaudited financial statements. The unaudited
interim period financial statements for 1996 and 1997 have been prepared by the
Company on a basis consistent with the Company's audited financial statements
and, in the opinion of management, include all adjustments (consisting of only
normal recurring adjustments) necessary for a fair presentation of the Company's
results of operations for such periods and its financial condition as of the
dates presented.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------ ------------------
1992(1)(2) 1993(1)(2) 1994(2) 1995(3) 1996(3)(4) 1996 1997
---------- ---------- -------- -------- ---------- -------- --------
UNAUDITED UNAUDITED
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $175,586 $187,413 $225,531 $278,043 $363,748 $178,965 $218,787
Gross profit...................... 44,190 47,480 60,557 66,331 75,606 37,626 53,177
Operating income.................. 15,958 15,610 28,015 28,822 28,912 13,317 27,965
Interest expense, net............. 2,686 2,221 2,344 2,014 4,317 1,861 1,863
Income before income taxes........ 13,272 13,389 25,671 26,808 24,595 11,456 27,835
Net income........................ $ 9,755 $ 8,995 $ 26,666 $ 26,154 $ 24,071 $ 11,193 $ 27,510
======== ======== ======== ======== ======== ======= ========
PRO FORMA DATA:
Income before income taxes........ $ 24,595 $ 27,835
Provision for income taxes(5)..... 10,295 11,586
-------- --------
Pro forma net income.............. $ 14,300 $ 16,249
======== ========
OTHER DATA:
Product development expense....... $ 4,342 $ 5,096 $ 5,997 $ 6,664 $ 9,263 $ 5,499 $ 6,011
Capital expenditures.............. 12,369 5,669 9,046 14,767 14,083 10,159 6,373
Depreciation and amortization..... 6,251 6,696 6,870 7,979 9,966 5,118 6,138
EBITDA(6)......................... 22,209 22,306 34,885 36,801 38,878 18,435 35,836
Cash flows provided by (used in):
Operating activities............ 11,171 12,740 25,492 29,370 25,271 9,754 35,929
Investing activities............ (2,487) (3,069) (6,446) (33,567) (18,067) (18,535) (3,869)
Financing activities............ (9,567) 9,641 (18,226) 3,407 (7,129) 8,499 (32,410)
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(7) AS ADJUSTED(8)
-------- ------------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................................. $ 38,459 $(33,684) $ 48,343
Total assets..................................................... 183,829 188,186 209,905
Long-term debt, less current portion............................. 34,109 31,595 27,049
Shareholders' equity............................................. 99,743 23,646 121,841
</TABLE>

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

(Footnotes on following page)

7
<PAGE> 11

(Footnotes from prior page)

(1) The combined financial data presented for 1992 and 1993 includes the
combined results of operations and financial position of Stoneridge, Inc.,
Alphabet, Inc. ("Alphabet") and Alphastac, Inc. ("Alphastac/Pollak"). All
intercompany transactions and balances were eliminated from the combined
financial statements of these entities.

(2) Effective January 1, 1994, Alphabet and Alphastac/Pollak were merged into
Stoneridge, Inc. The merger was accounted for as a pooling of interest as
the merged entities were related through common ownership. Prior to the
merger, the Company and Alphabet were taxed as S corporations for federal
and, where qualified, state income tax purposes. Alphastac/Pollak was taxed
as a C corporation for federal and state income tax purposes prior to the
merger. Accordingly, the combined operating data includes Alphastac/Pollak's
recorded provisions for income taxes of $3.5 million and $4.4 million in
1992 and 1993, respectively. In conjunction with the merger on January 1,
1994, the Company recognized income of $1.4 million in the provision for
income taxes as a result of the elimination of Alphastac/Pollak deferred tax
liabilities.

(3) In 1995, the Company acquired the actuator business of Kelsey-Hayes. This
acquisition was accounted for as a purchase. The results of operations and
financial position reflect this acquisition as of November 1, 1995. In
connection with the acquisition, the Company entered into a transitional
services agreement with the seller for commercial and process engineering
support. The term of the transitional services agreement extended from
November 1995 through October 1996. In connection with the transitional
services agreement, the Company recognized expenses of $0.9 million and $4.3
million in 1995 and 1996, respectively, including $2.9 million during the
six-month period ended June 30, 1996. No additional expenses have been
incurred since the expiration of the transitional services agreement. In
addition, costs of approximately $1.0 million were incurred in 1995 in
connection with the closure and sale of a contract manufacturing facility.

(4) On April 30, 1996, the Company purchased approximately 45% of the
outstanding stock of Berifors. This investment was accounted for under the
equity method. The results of operations and financial position reflect the
investment in Berifors since April 30, 1996. In addition, 1996 operating
income was adversely impacted by (i) approximately $1.0 million of start-up
expenses associated with the relocation of switch production from the Boston
and Stoughton, Massachusetts, locations to a new facility in Canton,
Massachusetts, including costs associated with the reconfiguration and
relocation of the production lines, and (ii) approximately $0.6 million of
costs associated with the closure of a power distribution production
facility.

(5) Upon completion of the Offering, the Company will be taxed as a C
corporation for federal and state income tax purposes. Accordingly, pro
forma net income reflects federal and state income taxes as if the Company
had been a C corporation based on the tax rates that were in effect during
the periods reported. See "S Corporation Distribution and Management
Reinvestment."

(6) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
represents operating income plus depreciation and amortization. EBITDA
should not be considered as an alternative measure of net income, as an
indicator of cash flows from operating, investing, and financing activities
as determined in accordance with generally accepted accounting principles,
or as a measure of the Company's liquidity or ability to meet all cash
needs, but is presented to provide additional information related to the
Company's debt service capability. EBITDA should not be considered in
isolation or as a substitute for other measures of financial performance or
liquidity.

(7) Reflects an assumed $83.0 million S Corporation Distribution, an assumed
$6.5 million Management Reinvestment pursuant to the Company Offering, the
exercise of options to purchase 438,119 Common Shares prior to the Offering
and the reinstatement of $4.4 million and $6.5 million of current deferred
income tax assets and long-term deferred income tax liabilities,
respectively, as a result of the termination of the Company's status as an S
corporation.

(8) Gives effects to the issuance of the Common Shares in the Combined Offering
and the application of the net proceeds therefrom as described in "Use of
Proceeds," and the issuance of 757,063 Common Shares in connection with the
acquisition of the remaining 55% of the outstanding shares of Berifors. The
Pro Forma As Adjusted Balance Sheet Data reflects the Company's investment
in Berifors using the consolidation method.

8
<PAGE> 12

RISK FACTORS

Prospective investors should consider, in addition to the information set
forth elsewhere in this Prospectus, the following matters in evaluating the
Company and the Common Shares offered hereby.

DISCONTINUANCE OF CERTAIN CONTRACT MANUFACTURING BUSINESS

A division of General Motors has notified the Company that it is
discontinuing all outsourcing of its wire harness requirements under contract
manufacturing arrangements. The Company believes that by 1999 the General Motors
division will produce in-house substantially all of its wire harnesses
requirements previously supplied by the Company, although no assurance can be
given that such sales by the Company will not end at an earlier date. The
Company's net sales under this arrangement totaled approximately $105.6 million
and $48.8 million for 1996 and for the first six months of 1997, respectively,
or approximately 28.9% and 22.3% of total net sales for such periods. Sales
under this arrangement contributed approximately $7.2 million and $3.4 million
in operating income for 1996 and for the first six months of 1997, respectively,
or 24.9% and 12.1% of total operating income for such periods. There can be no
assurance that the Company will be able to offset reductions in its sales and
operating profits resulting from the reduction in sales to the General Motors
division. See "Business -- Contract Manufacturing."

RELIANCE ON MAJOR CUSTOMERS

The Company is dependent on a small number of principal customers for a
significant percentage of its net sales. In 1996, General Motors, Ford and Deere
accounted for 39%, 18% and 10%, respectively, of the Company's net sales. The
loss of any significant portion of its sales to these customers or any other
significant customers would have a material adverse impact on the financial
condition and results of operations of the Company. The contracts the Company
has entered into with many of its customers provide for supplying the customers'
requirements for a particular model, rather than for manufacturing a specific
quantity of products. Such contracts range from one year to the life of the
model, which is generally three to seven years. Therefore, the loss of a
contract for a major model or a significant decrease in demand for certain key
models or group of related models sold by any of the Company's major customers
could have a material adverse impact on the Company. The Company also competes
to supply products for successor models and is subject to the risk that the
customer will not select the Company to produce products on any such model,
which could have a material adverse impact on the financial condition and
results of operations of the Company.

INDUSTRY CYCLICALITY AND SEASONALITY

The markets for the Company's products have historically been cyclical.
Because the Company's products are used principally in the production of
vehicles for the automotive, heavy duty truck and agricultural vehicle markets,
its sales and therefore its results of operations are significantly dependent on
the general state of the economy and other factors which affect these markets. A
decline in automotive, heavy duty truck and agricultural vehicle production
could adversely impact the Company. In 1996, approximately 72% of the Company's
net sales were made to the automotive market and approximately 27% were derived
from medium and heavy duty truck and agricultural vehicle markets.

Demand for the Company's products has been seasonal. The Company typically
experiences decreased net sales during the third calendar quarter of each year
due to the impact of scheduled OEM plant shutdowns in July for vacations and new
model changeovers. The fourth quarter is also impacted by plant shutdowns for
the holidays. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Quarterly Information."

OEM SUPPLIER CONSOLIDATION

Since the early 1980s the OEM supply industry has undergone a significant
consolidation as OEMs sought to lower costs, improve quality and increasingly
purchase complete systems and modules rather than separate components. As a
result of these competitive pressures, there can be no assurance that the
Company will be able to increase or maintain gross margins on product sales to
OEMs.

9
<PAGE> 13

ACQUISITION STRATEGY

A portion of the Company's growth in sales and earnings has been generated
from acquisitions and subsequent improvements in the performance of the
businesses acquired. The Company expects to continue a strategy of identifying
and acquiring businesses with complementary products or services. There can be
no assurance that the Company will continue to identify suitable acquisition and
joint venture candidates, obtain financing necessary to complete and support
such acquisitions or acquire businesses on satisfactory terms, or that any
business acquired by the Company, including Berifors, will be successfully
integrated with the Company's operations or prove to be profitable. The Company
could incur substantial indebtedness in connection with its acquisition
strategy. Covenant restrictions relating to such indebtedness could restrict the
Company's ability to pay dividends, fund capital expenditures, consummate
additional acquisitions and could significantly increase the Company's interest
expense. The Company anticipates that acquisitions will occur in new geographic
markets. Any failure to achieve successful integration of such acquisitions
could have a material adverse impact on the financial condition and results of
operations of the Company. See "Business -- Growth Strategy."

COMPETITION

Markets for the Company's products are highly competitive. Quality,
service, price, timely delivery, and technological innovation are the primary
elements of competition. Many of the Company's competitors are more diversified
and have greater financial and other resources than the Company. In addition,
with respect to certain of its products, some of the Company's competitors are
divisions of its OEM customers. There can be no assurance that the Company's
business will not be adversely affected by competition or that the Company will
be able to maintain its profitability if the competitive environment changes.
See "Business -- Markets and Competition."

TECHNOLOGICAL CHANGE

The Company's products are subject to changing technology, which could
place the Company at a competitive disadvantage relative to alternative products
introduced by competitors. The Company's success will depend on its ability to
continue to meet customers' changing specifications with respect to performance,
cost, quality and service by implementing and sustaining competitive
technological advances. The Company's business may therefore require, from time
to time, significant additional capital expenditures and investment in research
and development and manufacturing and management information systems. There can
be no assurance that the Company will be able to achieve the technological
advances or introduce new products that may be necessary to remain competitive.
The inability of the Company to continuously improve existing products and to
develop new products and to achieve technological advances could have a material
adverse impact on the financial condition and results of operations of the
Company. See "Business -- Design and Engineering."

LABOR RELATIONS

As of June 30, 1997, the Company, including Berifors, had approximately
4,000 employees, approximately 1,100 of whom were salaried and the balance of
whom were paid on an hourly basis. Except for certain employees located in
Chihuahua, Mexico, and Orebro and Stockholm, Sweden, the Company's employees are
not represented by a union. There can be no assurance that additional employees
of the Company will not be covered by collective bargaining agreements in the
future or that any of the Company's facilities will not experience a work
stoppage or other labor disruption. Any prolonged labor disruption involving the
Company's employees or employees of the Company's customers, most of whom are
covered by collective bargaining agreements, could have a material adverse
impact on the financial condition and results of operations of the Company. See
"Business -- Employees."

10
<PAGE> 14

ENVIRONMENTAL AND OTHER REGULATIONS

The Company's operations are subject to various federal, state, local and
foreign laws and regulations governing, among other things, emissions to air,
discharge to waters and the generation, handling, storage, transportation,
treatment and disposal of waste and other materials. The Company believes that
its business, operations and facilities have been and are being operated in
compliance in all material respects with applicable environmental and health and
safety laws and regulations, many of which provide for substantial fines and
criminal sanctions for violations. The operation of the Company's manufacturing
facilities entails risks and there can be no assurance that the Company will not
incur material costs or liabilities in connection with these operations. In
addition, potentially significant expenditures could be required in order to
comply with evolving environmental and health and safety laws, regulations or
requirements that may be adopted or imposed in the future.

In addition, although the Company intends to conduct "Phase I"
environmental testing in connection with acquisitions in the United States of
acquired businesses and additional testing (if deemed appropriate under the
circumstances) in order to minimize the risks of encountering material
environmental problems resulting from such acquisitions, there can be no
assurance that the Company will not discover material unanticipated
environmental problems requiring significant expenditures for corrective action
or remediation following such acquisitions. See "Business -- Environmental
Matters."

DEPENDENCE ON KEY PERSONNEL

The Company's success will depend, in part, on the efforts of its executive
officers and other key employees, including Cloyd J. Abruzzo, Kevin P. Bagby,
Sten Forseke, Gerald V. Pisani and David L. Thomas. In addition, the future
success of the Company will depend on, among other factors, the Company's
ability to continue to attract and retain qualified personnel, particularly
engineering personnel. The Company does not have employment agreements with, or
"key man" life insurance on, any of its employees. The loss of the services of
any of its key employees or the failure to attract or retain employees could
have a material adverse effect on the financial condition and results of
operations of the Company. See "Management."

PRODUCT LIABILITY

The Company is subject to the risk of exposure to product liability claims
in the event that the failure of any of its products results in personal injury
or death, and there can be no assurance that the Company will not experience
material product liability losses in the future. In addition, if any of the
Company's products prove to be defective, the Company may be required to
participate in a government-imposed or OEM-instituted recall involving such
products. The Company maintains insurance against such product liability claims,
but there can be no assurance that such coverage will be adequate for
liabilities ultimately incurred or that it will continue to be available on
terms acceptable to the Company. A successful claim brought against the Company
that exceeds available insurance coverage or a requirement to participate in any
product recall could have a material adverse impact on the financial condition
and results of operations of the Company. See "Business -- Litigation."

RISKS ASSOCIATED WITH FOREIGN OPERATIONS

Giving pro forma effect to the Berifors acquisition, international sales
accounted for approximately 9% of the Company's 1996 net sales and international
assets accounted for approximately 16% of the Company's assets as of December
31, 1996. International sales and operations are subject to significant risks,
including political and economic instability, restrictive trade policies,
economic conditions in local markets, the imposition of product tariffs and the
burden of complying with a wide variety of international and U.S. export laws.
Additionally, to the extent any portion of the Company's net sales and expenses
are denominated in currencies other than U.S. dollars, changes in exchange rates
could have a material adverse impact on the financial condition and results of
operations of the Company. Less than one percent of the Company's net sales and
expenses for 1996 and the first six months of 1997 are denominated in currencies
other than U.S. dollars. The Company does not currently engage in currency
hedging programs.

11
<PAGE> 15

CONTROL BY PRINCIPAL SHAREHOLDERS

Following the completion of the Combined Offering and assuming completion
of the Berifors acquisition, D.M. Draime, Draime family members and family
trusts (collectively, the "Draime Family") are expected to own approximately 61%
of the outstanding Common Shares (or approximately 58% if the Underwriters'
overallotment option is exercised in full). As a result of such ownership, the
Draime Family will be able to elect all of the directors of the Company and to
control the Company's affairs. See "Principal Shareholders."

DILUTION

The initial public offering price is substantially higher than the net pro
forma as adjusted tangible book value per share of the Common Shares.
Accordingly, purchasers of the Common Shares offered hereby will incur immediate
and substantial dilution in tangible book value per share of the Common Shares
of $12.54, assuming an initial public offering price of $16.00 per Common Share.
See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE

Immediately upon consummation of the Combined Offering, the Company will
have outstanding 21,445,287 Common Shares (22,322,787 if the Underwriters
exercise in full their overallotment option). Of such Common Shares 6,285,657
(7,163,157 if the Underwriters exercise in full their overallotment option) will
have been sold in the Combined Offering and will be freely transferable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except for any of those Common Shares owned at any time
by an "affiliate" of the Company within the meaning of Rule 144 under the
Securities Act, which sales will be subject to the volume limitations and
certain other restrictions set forth in Rule 144. The sale of any substantial
number of Common Shares following the Combined Offering could have a material
adverse impact on the market price of the Common Shares. The Company and its
directors, officers and current shareholders have agreed not to sell, offer for
sale, or otherwise dispose of any Common Shares, subject to certain exceptions,
for a period of 180 days from the date of this Prospectus without the prior
written consent of Morgan Stanley & Co. Incorporated. Upon expiration of the 180
days, an aggregate of approximately 14 million Common Shares will be eligible
for sale by existing shareholders, subject in the case of affiliates to the
volume and manner of sale limitations imposed by Rule 144. See "Shares Eligible
for Future Sale" and "Underwriters."

DETERMINATION OF OFFERING PRICE AND ABSENCE OF PUBLIC MARKET

Prior to the Combined Offering, there has been no public market for the
Common Shares. Consequently, the initial public offering price has been
determined by negotiation among the Company and the Representatives of the
Underwriters based upon factors described under the caption "Underwriters." The
stock market has experienced, and is likely to experience in the future,
significant price and volume fluctuations which could adversely affect the
market price of the Common Shares without regard to the operating performance of
the Company. In addition, the Company believes that factors such as changes in
earnings estimates by analysts, quarterly fluctuations in the financial results
of the Company or its competitors, general conditions in the industry, the
overall economy and the financial markets could cause the price of the Common
Shares to fluctuate substantially. There can be no assurance that an active
trading market in the Common Shares will develop subsequent to the Combined
Offering or, if developed, that it will be sustained. See "Underwriters."

ANTI-TAKEOVER PROVISIONS

Certain provisions in the Company's Second Amended and Restated Articles of
Incorporation and its Amended and Restated Code of Regulations could have the
effect of making more difficult or discouraging an acquisition of the Company
deemed undesirable by its Board of Directors. These include the existence of
authorized but unissued preferred shares containing such terms as the Board of
Directors may approve, which could be issued by the Company's Board of Directors
without shareholder approval. In addition, certain provisions of Ohio law could
have the effect of deterring hostile takeovers or delaying, deterring or
preventing

12
<PAGE> 16

a change in control of the Company, including transactions in which shareholders
might otherwise receive a premium for their shares over current market prices.
See "Description of Capital Shares -- Certain Provisions of Ohio Law."

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. Such forward-looking
statements are based on the beliefs of the Company's management as well as on
assumptions made by and information currently available to the Company at the
time such statements were made. When used in this Prospectus, the words
"anticipate," "believe," "estimate," "expect," "intend" and similar expressions,
as they relate to the Company, are intended to identify forward-looking
statements. Prospective investors are cautioned that any such forward-looking
statement is not a guarantee of future performance and involves risks and
uncertainties, and that actual results may differ materially from those in the
forward-looking statement as a result of various factors. Actual results could
differ materially from those expressed or implied in the forward-looking
statements.

THE COMPANY

The Company was formed in 1965 as a manufacturer of wire harnesses for the
agricultural vehicle market. Following expansion in 1977 into the automotive
market, sales increased from approximately $1.6 million in 1976 to $105.4
million in 1987, with approximately 90% of the Company's 1987 sales being
derived from the Company's contract manufacturing arrangement with a division of
General Motors. In 1987, the Company began to transition away from contract
manufacturing into a value-added designer and manufacturer of highly engineered
products by developing internal engineering capabilities and pursuing an
acquisition program to expand product offerings. See "Business -- Contract
Manufacturing."

ACQUISITIONS

In October 1988, the Company acquired Pollak, a leading manufacturer of
electronic and electromechanical switch products. In February 1992, the Company
acquired TED, a manufacturer of electronic instrumentation components, modules
and systems. In November 1995, the Company acquired the business, machinery and
equipment, intellectual property rights and purchase contracts of the actuator
business of Kelsey-Hayes. In April 1996, seeking to leverage its capabilities
and diversify its OEM customer base, the Company acquired approximately 45% of
Berifors, a Sweden-based manufacturer of electronic display panels and
instrumentation for the European truck and commercial vehicle markets. These
acquisitions were financed through credit facilities existing at the time of
acquisition. As a result, interest expense increased accordingly. See Note 5 of
the Notes to the Company's Financial Statements included herein, for a
discussion of the covenants in the current credit facility.

The Company expects to acquire, through a share exchange, the remaining 55%
of the outstanding stock of Berifors which it does not own for an aggregate of
757,063 Common Shares, which Common Shares will represent approximately 3.5% of
the Company's outstanding Common Shares after the Offering. The Company expects
to issue 704,563 Common Shares in exchange for 51% of the outstanding stock of
Berifors concurrent with and contingent upon completion of the Offering. The
Company will have an option to acquire the remaining 4% of the outstanding
Berifors stock by the issuance of 52,500 Common Shares which it expects to
exercise in April 1998. As a result of this acquisition, the Company will be a
worldwide supplier of instrumentation displays for heavy duty trucks to Mercedes
Benz, Volvo and Scania. Berifors had net sales of $26.1 million and $36.1
million and a net loss of $1.0 million and net income of $0.3 million for 1995
and 1996, respectively, and total assets of $11.4 million and $15.2 million and
long-term debt of $3.7 million and $5.6 million, as of December 31, 1995 and
1996, respectively.

PROPOSED ACQUISITION

The Company periodically evaluates acquisition opportunities in both
domestic and international markets and expects to continue to do so in the
future. The Company has entered into a non-binding letter of intent to

13
<PAGE> 17

acquire 50% of the stock of a Brazilian electronic components business which
specializes in vehicle security devices. The letter of intent provides for a
purchase price of approximately $17.0 million, subject to certain adjustments
and contingencies, including the Company's satisfactory completion of business,
legal, accounting and environmental due diligence reviews, negotiation of a
definitive acquisition agreement, and approval of the transaction by the
Company's Board of Directors. There can be no assurance that the Company will
enter into a definitive acquisition agreement or consummate such acquisition.
The Company expects to use borrowings under its credit facility to fund the
acquisition. As of August 30, 1997, the aggregate debt outstanding under the
Company's credit facility was approximately $23.2 million. Giving pro forma
effect on August 30, 1997 to the Offering, the outstanding amount under the
credit facility would have been approximately $11.1 million. The Company intends
to continue to pursue strategic acquisitions and alliances in both domestic and
international markets. See "Use of Proceeds," "Business -- Competitive
Advantages -- International Presence" and "Business -- Growth Strategy -- Expand
Penetration of International Markets" and "-- Pursue Strategic Acquisitions and
Alliances."

RECENT JOINT VENTURES

On August 25, 1997, the Company entered into two joint venture agreements
and a cooperation agreement with Connecto AB, a Swedish manufacturer of power
distribution systems. Pursuant to the terms of the agreements, during the fourth
quarter of 1997 the Company expects to pay approximately $2.4 million for a 60%
interest in a Brazilian joint venture and $1.1 million for a 40% interest in a
European joint venture. The joint ventures will establish production facilities
in Brazil and Europe for the purpose of manufacturing and selling power
distribution systems in South America and Europe, respectively. In addition, the
joint ventures will pursue sales and marketing efforts for other products and
services of the joint venture partners. The Company expects to finance its
investments in the joint ventures through borrowings under the Company's credit
facility. The cooperation agreement provides for the sharing of information and
technical know-how in product development.

USE OF PROCEEDS

The net proceeds to the Company from the Combined Offering are estimated to
be approximately $92.6 million (approximately $105.7 million if the
Underwriters' overallotment option is exercised in full), assuming an initial
public offering price of $16.00 per share and after deducting underwriting
discounts and commissions and estimated offering expenses.

The Company intends to use approximately $83.0 million of the net proceeds
to fund the S Corporation Distribution and approximately $9.6 million to repay
indebtedness under the Company's $125 million credit facility. The credit
facility expires on June 30, 2002 and requires interest to be paid quarterly at
the Company's option at either (i) the prime rate or (ii) LIBOR plus 0.75% to
2.0%, depending upon the Company's fixed charge coverage ratio. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 5 of Notes to the
Company's Financial Statements.

On September 15, 1997, approximately $94.3 million was available under the
Company's $125 million credit facility. It is anticipated that the Company will
use amounts available under its bank credit facility for working capital and
general corporate purposes, including possible acquisitions. See "Risk
Factors -- Acquisition Strategy," "The Company -- Proposed Acquisition" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

14
<PAGE> 18

S CORPORATION DISTRIBUTION AND MANAGEMENT REINVESTMENT

The Company has been treated as an S corporation for federal income tax
purposes. Similar elections were made in states providing for conforming laws.
As a result, the Company currently pays no federal income tax and virtually no
state income tax, and the earnings of the Company are subject to taxation
directly at the shareholder level. Effective with the Offering, the Company's S
corporation status will be terminated, and the Company will become subject to
corporate income taxation as a C corporation. Upon completion of the Offering,
current deferred tax assets of $4.4 million and noncurrent deferred tax
liabilities of $6.5 million (each estimated as of September 30, 1997) will be
recorded with an offsetting charge to net income. This one-time net charge of
$2.1 million is expected to reduce net income for the third quarter of 1997. No
additional adverse tax consequences to the Company are expected to result from
termination of its S corporation status.

The Company intends to pay to existing shareholders, on a pro rata basis
based on their pre-Offering ownership percentages, a distribution of
substantially all of its previously undistributed S corporation taxable income
as of the date of termination of its status as an S corporation (the "S
Corporation Distribution"). The previously undistributed S corporation taxable
income was taxed at the shareholder level in the year the income was earned. It
is not possible at this time to determine the exact amount of the S Corporation
Distribution. The Company currently estimates that undistributed S corporation
taxable income as of the termination of the Company's S corporation status will
be between approximately $81.0 million and $85.0 million. The Company
anticipates distributing substantially all the S Corporation Distribution in
connection with the Offering. The remaining balance of the S Corporation
Distribution is anticipated to be paid after completion of the Company's 1997
income tax returns.

Of the $81.0 million to $85.0 million S Corporation Distribution, the
Management Investors, who are pre-Offering shareholders, will receive
approximately $8.0 million of the S Corporation Distribution. Concurrent with
the Offering, the Management Investors will purchase Common Shares at the
initial offering price, less underwriting discounts and commissions, directly
from the Company in the Management Reinvestment pursuant to the Company
Offering. The amount of the Company Offering will not be less than $6.5 million.
Based on an assumed initial public offering price of $16.00 per share (less
$1.08 per share of assumed underwriting discounts and commissions), the minimum
Company Offering would be 435,657 Common Shares. The Management Investors
include Cloyd J. Abruzzo, Kevin P. Bagby, Richard E. Cheney, Avery S. Cohen,
Sheldon J. Epstein, Earl L. Linehan, Gerald V. Pisani, David L. Thomas and
thirteen other pre-Offering shareholders.

The Company may also make a distribution to its existing shareholders
following the Offering in the event that S corporation taxable income is
thereafter increased due to any Internal Revenue Service audit. The Company
expects to enter into an indemnification agreement with existing shareholders
with respect to any income tax attributable to periods prior to the termination
of the Company's S corporation status. Purchasers of Common Shares in the
Offering will not participate in the S Corporation Distribution or any future S
Corporation Distributions.

DIVIDEND POLICY

After payment of the S Corporation Distribution, all future earnings of the
Company are expected to be retained for use in its business. The Company does
not anticipate paying any cash dividends on its Common Shares in the foreseeable
future. The payment of future dividends will be at the sole discretion of the
Company's Board of Directors and will depend on, among other things, future
earnings, capital requirements, contractual restrictions, the general financial
condition of the Company, and general business conditions. The Company's credit
facility imposes limitations on the amounts of dividends that can be paid. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 5 of the Notes to the
Company's Financial Statements.

15
<PAGE> 19

CAPITALIZATION

The following table sets forth as of June 30, 1997 the Company's (i) actual
capitalization, (ii) pro forma capitalization giving effect to the
recapitalization of the Common Shares to be effected prior to the Offering, the
exercise of options to purchase 438,119 Common Shares prior to the Offering, an
assumed $83.0 million S Corporation Distribution, an assumed $6.5 million
Management Reinvestment pursuant to the Company Offering, and the reinstatement
of approximately $2.1 million of net deferred income tax liabilities resulting
from the termination of the Company's S corporation status, and (iii) pro forma
capitalization as adjusted to reflect the sale of Common Shares in the Combined
Offering at an assumed initial public offering price of $16.00 per share (after
deduction of underwriting discounts and estimated expenses of the Combined
Offering), the application of the estimated net proceeds therefrom and the
issuance of 757,063 Common Shares for the acquisition of the remaining 55% of
the outstanding stock of Berifors. This table should be read in conjunction with
the historical financial statements of the Company and the notes thereto which
are included elsewhere in the Prospectus. See "Use of Proceeds," "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Description of Capital Shares."

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(UNAUDITED, DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Current portion of long-term debt....................... $ 200 $ 200 $ 200
-------- --------- ---------
Total short-term debt.............................. $ 200 $ 200 $ 200
======== ========= =========
Long-term debt:
Term loans.............................................. $ 3,928 $ 3,928 $ 8,964
Revolving credit facility............................... 30,181 27,667 18,085
-------- --------- ---------
Total long-term debt............................... 34,109 31,595 27,049
-------- --------- ---------
Shareholders' equity:
Preferred shares, without par value; to be authorized:
5,000,000 shares; issued and outstanding: none....... -- -- --
Class A common shares, without par value; authorized:
32,724 shares (actual); issued and outstanding:
15,465 shares (actual)............................... -- -- --
Class B common shares, without par value; authorized:
87,276 shares (actual); issued and outstanding:
84,937 shares (actual)............................... -- -- --
Common shares, without par value; authorized: 60,000,000
shares pro forma and pro forma as adjusted; issued
and outstanding: 14,838,224 shares pro forma and
21,445,287 shares pro forma as adjusted.............. -- -- --
Additional paid-in capital.............................. 9,370 23,646 121,841
Retained earnings....................................... 90,373 -- --
-------- --------- ---------
Total shareholders' equity......................... 99,743 23,646 121,841
-------- --------- ---------
Total capitalization............................ $133,852 $ 55,241 $ 148,890
======== ========= =========
</TABLE>

16
<PAGE> 20

DILUTION

The aggregate net tangible book value of the Company as of June 30, 1997
was $62.6 million, or $2.92 per Common Share.

Assuming the sale of 6,285,657 Common Shares in the Combined Offering at an
assumed initial public offering price of $16.00 per share and the application of
the net proceeds therefrom to fund the S Corporation Distribution and repay
debt, the issuance of 757,063 Common Shares to acquire the remaining 55% of
Berifors, the issuance of 438,119 Common Shares in connection with the exercise
of stock options prior to the Offering and assuming the change in the Company's
tax status, the pro forma aggregate net tangible book value of the Company at
June 30, 1997 would have been $74.1 million, or $3.46 per Common Share. This
represents an immediate increase in net tangible book value of $.54 per Common
Share to existing shareholders and an immediate dilution of $12.54 per share to
investors purchasing Common Shares in the Combined Offering. "Dilution per
share" represents the difference between the price per share to be paid by new
investors and the pro forma net tangible book value per share after the Combined
Offering. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $16.00
Net tangible book value per share at June 30, 1997(1).......... $ 2.92
Increase attributable to price paid by investors in the
Combined Offering........................................... 4.32
Decrease attributable to S Corporation Distribution............ (3.87)
Increase attributable to the Berifors acquisition.............. .07
Increase attributable to the exercise of stock options......... .12
Decrease attributable to change in tax status, net............. (.10)
------
Pro forma as adjusted net tangible book value per share after
the Combined Offering....................................... 3.46
------
Dilution in net tangible book value per share to new
investors(2)................................................... $12.54
======
Assuming the Underwriters' overallotment option is exercised in full, pro forma
as adjusted net tangible book value upon completion of the Combined Offering would
be $3.91 per share, the immediate increase in pro forma as adjusted net tangible
book value of shares owned by existing stockholders would be $.99 per share, and the
immediate dilution to new investors in the Combined Offering would be $12.09 per
share.
</TABLE>

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

(1) Net tangible book value (deficit) per share is determined by dividing the
net tangible book value of the Company by the number of outstanding Common
Shares. Net tangible book value is calculated as total assets, less
goodwill, patents, trademarks and other intangible assets (net of
amortization) and total liabilities.

(2) Dilution is determined by subtracting pro forma net tangible book value per
share from the assumed initial public offering price per share paid by
investors in the Combined Offering.

The following table summarizes as of June 30, 1997 (based on the
assumptions set forth above regarding the Offering), the number of Common Shares
purchased from the Company, the total consideration paid to the Company (equal,
in the case of the existing shareholders, to the original consideration for the
Common Shares held by them plus additional contributions made by them in respect
of the Common Shares), and the average price per share paid by the existing
shareholders and by the investors purchasing Common Shares in the Combined
Offering (based on an assumed initial public offering price of $16.00 per
share). The Management Investors will purchase Common Shares at the initial
public offering price, less underwriting discounts and commissions, directly
from the Company in the Company Offering. See "Principal Shareholders."

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ------------------------ AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders............. 14,402,567 67.2% $ 17,146,000 13.2% $ 1.19
New investors..................... 5,850,000 27.3% 93,600,000 72.4% 16.00
Management Investors.............. 435,657 2.0% 6,500,000 5.0% 14.92
Berifors acquisition.............. 757,063 3.5% 12,113,000 9.4% 16.00
---------- --- ------------ ---
Total........................... 21,445,287 100% $129,359,000 100%
========== === ============ ===
</TABLE>

17
<PAGE> 21

SELECTED FINANCIAL DATA

The following table sets forth selected historical and pro forma data for
the Company and should be read in conjunction with the financial statements and
notes related thereto and other financial information included elsewhere herein.
The selected historical data for the years ended December 31, 1994, 1995 and
1996 are derived from the Company's financial statements, which were audited by
Arthur Andersen LLP, the Company's independent accountants. The selected
historical data for the years ended December 31, 1992 and 1993 are derived from
the combined financial statements of the Company. The combined financial
statements of the Company have been prepared by the Company on a basis
consistent with the Company's audited financial statements. The selected
financial data for the six-month periods ended June 30, 1996 and 1997 are
derived from unaudited interim period financial statements. The unaudited
interim period financial statements for 1996 and 1997 have been prepared by the
Company on a basis consistent with the Company's audited financial statements
and, in the opinion of management, include all adjustments (consisting of only
normal recurring adjustments) necessary for a fair presentation of the Company's
results of operations for such period and financial condition for such date.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
-------------------------------------------------------- --------------------
1992(1)(2) 1993(1)(2) 1994(2) 1995(3) 1996(3)(4) 1996 1997
---------- ---------- --------- -------- ----------- -------- ----------
UNAUDITED UNAUDITED
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $175,586 $187,413 $ 225,531 $278,043 $ 363,748 $178,965 $ 218,787
Gross profit....................... 44,190 47,480 60,557 66,331 75,606 37,626 53,177
Operating income................... 15,958 15,610 28,015 28,822 28,912 13,317 27,965
Interest expense, net.............. 2,686 2,221 2,344 2,014 4,317 1,861 1,863
Income before income taxes......... 13,272 13,389 25,671 26,808 24,595 11,456 27,835
Net income......................... $ 9,755 $ 8,995 $ 26,666 $ 26,154 $ 24,071 $ 11,193 $ 27,510
======== ======== ========= ======== ======== ======== ========
PRO FORMA DATA:
Income before income taxes......... $ 24,595 $ 27,835
Provision for income taxes(5)...... 10,295 11,586
-------- --------
Pro forma net income............... $ 14,300 $ 16,249
======== ========
Pro forma net income per
share(6)......................... $ .56 $ .64
======== ========
Weighted average number of shares
outstanding(6)................... 25,469,474 25,469,474
OTHER DATA:
Product development expense........ $ 4,342 $ 5,096 $ 5,997 $ 6,664 $ 9,263 $ 5,499 $ 6,011
Capital expenditures............... 12,369 5,669 9,046 14,767 14,083 10,159 6,373
Depreciation and amortization...... 6,251 6,696 6,870 7,979 9,966 5,118 6,138
EBITDA(7).......................... 22,209 22,306 34,885 36,801 38,878 18,435 35,836
Cash flows provided by (used in):
Operating activities............. 11,171 12,740 25,492 29,370 25,271 9,754 35,929
Investing activities............. (2,487) (3,069) (6,446) (33,567) (18,067) (18,535) (3,869)
Financing activities............. (9,567) 9,641 (18,226) 3,407 (7,129) 8,499 (32,410)
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------------------
DECEMBER 31, PRO FORMA
---------------------------------------------------- AS
1992 1993 1994 1995 1996 ACTUAL PRO FORMA(8) ADJUSTED(9)
-------- -------- -------- -------- -------- -------- ------------ -----------
UNAUDITED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...... $ 16,887 $ 21,246 $ 30,654 $ 34,851 $ 39,957 $ 38,459 $(33,684) $ 48,343
Total assets......... 122,447 130,162 119,915 172,298 178,487 183,829 188,186 209,905
Long-term debt, less
current portion.... 35,459 29,784 28,845 47,999 51,156 34,109 31,595 27,049
Shareholders'
equity............. 46,283 49,946 63,112 73,720 84,633 99,743 23,646 121,841
</TABLE>

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

(Footnotes on following page)

18
<PAGE> 22

(Footnotes from prior page)

(1) The combined financial data presented for 1992 and 1993 includes the
combined results of operations and financial position of Stoneridge, Inc.,
Alphabet and Alphastac/Pollak. All intercompany transactions and balances
were eliminated from the combined financial statements of these entities.

(2) Effective January 1, 1994, Alphabet and Alphastac/Pollak were merged into
the Company. The merger was accounted for as a pooling of interests as the
merged entities were related through common ownership. Prior to the merger,
the Company and Alphabet were taxed as S corporations for federal and, where
qualified, state income tax purposes. Alphastac/Pollak was taxed as a C
corporation for federal and state income tax purposes prior to the merger.
Accordingly, the combined operating data includes Alphastac/Pollak's
recorded provisions for income taxes of $3.5 million and $4.4 million in
1992 and 1993, respectively. In conjunction with the merger on January 1,
1994, the Company recognized income of $1.4 million in the provision for
income taxes as a result of the elimination of Alphastac/Pollak deferred tax
liabilities.

(3) In 1995, the Company acquired the actuator business of Kelsey-Hayes. This
acquisition was accounted for as a purchase. The results of operations and
financial position reflect this acquisition as of November 1, 1995. In
connection with the acquisition, the Company entered into a transitional
services agreement with the seller for commercial and process engineering
support. The term of the transitional services agreement extended from
November 1995 through October 1996. In connection with the transitional
services agreement, the Company recognized expenses of $0.9 million and $4.3
million in 1995 and 1996, respectively, including $2.6 million during the
six-month period ended June 30, 1996. No additional expenses have been
incurred since the expiration of the transitional services agreement. In
addition, costs of approximately $1.0 million were charged against 1995
operating income in connection with the closure and sale of a contract
manufacturing facility.

(6) Pro forma net income per share has been calculated by dividing pro forma net
income by the weighted average Common Shares outstanding (13,964,448), the
number of Common Shares to be issued in connection with the Offering
(5,850,000), the number of Common Shares issued in connection with the
exercise of stock options prior to the Offering (438,119) and the number of
Common Shares to be issued in connection with the Management Reinvestment
(435,657). Also included in pro forma weighted average Common Shares
outstanding are 4,781,250 Common Shares which the Company is assumed to have
issued to pay the S Corporation Distribution. Although such shares will not
actually be issued, due to the S Corporation Distribution being paid from
proceeds from the Offering, Securities and Exchange Commission rules require
the inclusion of the shares in determining pro forma earnings per share.

(7) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
represents operating income plus depreciation and amortization. EBITDA
should not be considered as an alternative measure of net income, as an
indicator of cash flows from operating, investing, and financing activities
as determined in accordance with generally accepted accounting principles,
or as a measure of the Company's liquidity or ability to meet all cash
needs, but is presented to provide additional information related to the
Company's debt service capability. EBITDA should not be considered in
isolation or as a substitute for other measures of financial performance or
liquidity.

(8) Reflects an assumed $83.0 million S Corporation Distribution, an assumed
$6.5 million Management Reinvestment pursuant to the Company Offering, the
exercise of options to purchase 438,119 Common Shares prior to the Offering
and the reinstatement of $4.4 million and $6.5 million of current deferred
income tax assets and long-term deferred income tax liabilities,
respectively, as a result of the termination of the Company's status as an S
corporation.

(9) Gives effect to the issuance of the Common Shares in the Combined Offering
and the application of the net proceeds therefrom as described in "Use of
Proceeds" and the issuance of 757,063 Common Shares in connection with the
acquisition of the remaining 55% of the outstanding stock of Berifors. The
Pro Forma As Adjusted Balance Sheet Data reflects the Company's investment
in Berifors using the consolidation method.

19
<PAGE> 23

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

GENERAL

The Company is a leading independent designer and manufacturer of highly
engineered electrical and electronic components, modules and systems principally
for the automotive, medium and heavy duty truck and agricultural vehicle
markets. The Company's products interface with a vehicle's mechanical and
electrical systems to activate, regulate, display and monitor vehicle
performance, and control and distribute electrical power and signals. The
Company's four principal product categories are power distribution products,
switch products, instrumentation and information display products, and actuator
products. Such product categories accounted for 52%, 29%, 11% and 8%,
respectively, of 1996 net sales and 47%, 26%, 10% and 17%, respectively, of net
sales for the first six months of 1997. Approximately 72% of the Company's 1996
net sales and 66% of net sales for the first six months of 1997 were derived
from the automotive market, and approximately 27% of the Company's 1996 net
sales and 33% of net sales for the first six months of 1997 were derived from
the medium and heavy duty truck and agricultural vehicle markets. The Company
operates only in the transportation products industry.

The Company has completed several acquisitions, each of which was financed
by borrowings. The Company acquired Pollak, a manufacturer of electronic and
electromechanical switch products in 1988. In addition, the Company acquired
TED, a manufacturer of power conversion modules and sophisticated
instrumentation components, modules and systems in 1992. The Company acquired
the actuator business (including all related machinery and equipment,
intellectual property rights and purchase contracts) of Kelsey-Hayes in November
1995 for $18.8 million. The acquisition was accounted for as a purchase and was
financed through the Company's revolving credit facility. In addition, the
Company entered into a transitional services agreement with Kelsey-Hayes related
to commercial and process engineering support provided by Kelsey-Hayes in
connection with the purchase of the actuator business. A total of $5.2 million
in transitional services expenses was incurred, of which $0.9 million was
recognized in 1995 and $4.3 million in 1996. No such expenses were incurred in
1997, nor does the Company anticipate incurring any such expenses in the future.
In April 1996, the Company purchased approximately 45% of the outstanding common
stock of Berifors for $8.8 million in cash. The initial investment has been
accounted for under the equity method of accounting. Effective upon the
completion of the Offering, the Company expects to acquire the remaining 55% of
the outstanding common stock by issuing Common Shares and will use the
consolidation method of accounting for the acquisition.

The Company supplies a division of General Motors with wire harnesses
pursuant to a contract manufacturing arrangement. The volume of wire harnesses
produced by the Company under this contract manufacturing arrangement has
declined each year since 1987 principally as a result of decreased sales volume
for certain of the customer's vehicle models. The Company was notified in 1995
that as General Motors' vehicle electrical systems are redesigned, the General
Motors division intended to in-source all of its wire harness needs. The Company
believes that by 1999 this General Motors division will in-source substantially
all wire harness requirements previously supplied by the Company. No assurance
can be given that these sales by the Company will not end at an earlier date.
Prior to 1995, the Company assembled wire harnesses with material provided by
the customer with the Company recording sales revenue on shipments based on the
value added in the manufacturing and assembly process. In October 1994, the
General Motors division requested that the Company begin to purchase certain
materials for the assembly of the wire harness product. As a result of this
change, and despite the continued decline in the volume of wire harnesses
provided, net sales under the contract manufacturing arrangement increased by
$28.0 million in 1995 and $40.0 million in 1996. Included in the 1995 and 1996
net sales increases were an $11.1 million and $13.3 million decline in the
production volume of contract manufactured wire harnesses, respectively.

The Company generally begins working on products awarded for new or
redesigned vehicle models two to five years prior to the OEM marketing of such
vehicle models to the public. During such period, the Company incurs (i) costs
related to the design and engineering of such product, (ii) costs related to the
production of the tools used to manufacture the new product, and (iii) start-up
costs associated with the initial production of such product. In general, design
and engineering costs are expensed in the period incurred unless they are

20
<PAGE> 24

reimbursed by the customer, in which case they are capitalized and amortized
over the expected life of such product. Costs incurred in the production of the
tools are generally capitalized and reimbursed by the customer prior to
production or, to the extent not reimbursed, amortized over the life of the
program. Start-up costs, which are generally incurred 30 to 60 days immediately
prior to and immediately after initial production, are expensed as incurred.

The most significant component of cost of goods sold is material cost.
Excluding the increased material cost associated with the change in the contract
manufacturing relationship with a division of General Motors, the cost of
materials has been, and is expected to remain, relatively stable as a percent of
cost of goods sold as most materials are generally available from multiple
suppliers and are not subject to significant price fluctuations. Direct labor
costs represent a relatively small percentage of cost of goods sold and have
remained relatively consistent due to the Company's practice of automating the
production of high volume products and using manufacturing locations which have
lower labor costs to produce labor-intensive products. Indirect production
support labor costs in contrast tend to vary with the level of production.

The Company's selling, general and administrative ("SG&A") expenses consist
of compensation and benefits, marketing costs, product development costs,
administrative costs, overhead, and depreciation and amortization. Marketing
costs include advertising, promotion, certain occupancy costs and other routine
costs (travel, office supplies and telecommunications). Administrative costs
consist principally of information technology, accounting, human resources,
professional fees, certain occupancy costs, and other routine costs. Product
development costs include advanced design, product analysis, computer-aided
design ("CAD"), testing, modeling and process technology expenses.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of net sales represented by the items reflected in the Company's Statement of
Operations.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
------------------------ ---------------
1994 1995 1996 1996 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold............................... 73.1 76.1 79.2 79.0 75.7
----- ----- ----- ----- -----
Gross profit..................................... 26.9 23.9 20.8 21.0 24.3
SG&A expenses.................................... 14.5 13.5 12.8 13.6 11.5
----- ----- ----- ----- -----
Operating income................................. 12.4 10.4 8.0 7.4 12.8
Interest expense, net............................ 1.0 0.7 1.2 1.0 0.9
Other expense (income)........................... 0.0 0.0 0.0 0.0 (0.8)
----- ----- ----- ----- -----
Income before income taxes....................... 11.4 9.7 6.8 6.4 12.7
Provision (credit) for income taxes.............. (0.4) 0.2 0.2 0.1 0.1
----- ----- ----- ----- -----
Net income....................................... 11.8% 9.5% 6.6% 6.3% 12.6%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Net Sales. Net sales for the first six months of 1997 increased by $39.8
million, or 22.3%, to $218.8 million from $179.0 million for the same period in
1996. Sales of actuator products increased by $31.8 million to $36.8 million
from $5.0 million due to the introduction of a new four wheel drive actuator
product and increased sales of door lock actuator products. Full production of
door lock actuator products was not reached until approximately November 1996.
Sales of power distribution products increased by $10.4 million, or 24.1%, due
to increased market penetration in the medium and heavy duty truck and
agricultural vehicle markets, resulting in increased sales of $6.1 million and
$3.9 million, respectively. Sales of instrumentation and information displays
increased by $3.7 million, or 19.1%, due to the introduction of new information
clusters for the medium and heavy duty truck market. Sales of switch products
increased by $3.1 million, or 5.7%, reflecting higher production levels in the
light truck market and new product

21
<PAGE> 25

introductions. These increases were partially offset by a sales decrease of $9.1
million under contract manufacturing arrangements.

Cost of Goods Sold. Cost of goods sold for the first six months of 1997
increased by $24.3 million, or 17.2%, to $165.6 million from $141.3 million for
the same period in 1996. As a percentage of net sales, cost of goods sold
decreased to 75.7% in 1997 from 79.0% in 1996 while the corresponding gross
profit margin increased to 24.3% from 21.0% in 1996. The improvement in gross
profit margin resulted primarily from improved operating leveraging of certain
fixed costs associated with increased actuator product sales. In addition,
increased efficiencies resulting from higher production of power distribution
and instrumentation and information display products and reduced fixed costs
resulting from the consolidation of two power distribution/contract
manufacturing facilities also contributed to the increase in gross margin.

Selling, General and Administrative Expenses. SG&A expenses for the first
six months of 1997 increased by $0.9 million, or 3.7%, to $25.2 million from
$24.3 million for the same period in 1996. As a percentage of net sales, SG&A
expenses decreased to 11.5% for the first six months of 1997 from 13.6% for the
same period in 1996. SG&A expenses increased $1.6 million due to the launch of
the actuator product line which included certain development, marketing and
administration costs. Other marketing support and administrative overhead costs
increased an additional $1.6 million due to higher sales levels. In addition,
development and design costs of medium and heavy duty truck instrumentation and
information display products increased $0.5 million. These increases were offset
by a $2.9 million decrease in expenses due to the expiration of the transition
services agreement in October 1996.

Interest Expense. Interest expense was nearly identical for the first six
months of 1997 and 1996. Average outstanding indebtedness was $48.2 million and
$51.2 million for the first six months of 1997 and 1996, respectively. During
these periods the Company's indebtedness was related to prior acquisitions. The
decrease in average outstanding indebtedness was due to cash generated from
operations exceeding net capital expenditures and shareholder distributions. The
weighted average interest rate in effect for the six months ended June 30, 1997
and 1996, was 7.7% and 7.3%, respectively.

Other Income. Other income of $1.7 million for the first six months of
1997 represents a gain on the sale of certain transportation equipment. The
Company received cash proceeds of $2.3 million from the sale that was used to
retire a note payable collateralized by such transportation equipment.

Income Before Income Taxes. As a result of the foregoing, income before
income taxes increased by $16.4 million for the first six months in 1997 to
$27.8 million from $11.4 million for the same period in 1996.

Provision for Income Taxes. Prior to the Offering, the Company was an S
corporation for federal and, where qualified, state income tax purposes.
Accordingly, the Company recognized income taxes of $0.3 million and $0.2
million for foreign income and state franchise taxes for the first six months of
1997 and 1996, respectively. Had the Company been subject to federal and state
income taxes at the corporate level, the Company would have recorded provisions
for income taxes of $11.6 million and $4.8 million for the first six months of
1997 and 1996, respectively.

Net Income. As a result of the foregoing, net income increased by $16.3
million, or 145.8%, to $27.5 million of the first six months in 1997 from $11.2
million for the same period in 1996. Had the Company been subject to federal and
state income taxes at the corporate level, the Company's net income would have
been $16.2 million and $6.7 million for the first six months of 1997 and 1996,
respectively.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net Sales. Net sales for 1996 increased by $85.7 million, or 30.8%, to
$363.7 million from $278.0 million in 1995. Of this increase, $53.4 million was
due to materials purchased for contract manufacturing (previously supplied by
the customer) with a division of General Motors. Such increase was partially
offset by a 20.3% decline in unit volume, or $13.3 million of net sales. The
acquisition of the actuator business in 1995 increased 1996 net sales by
approximately $29.5 million. In addition, increased market penetration related
to switch products and power distribution products resulted in increased sales
of

22
<PAGE> 26

$12.4 million and $8.7 million, respectively. Partially offsetting these
increases, net sales of power distribution, instrumentation and information
displays product lines decreased by $15.9 million as a result of lower OEM
production volumes of medium and heavy duty trucks and a decline in the market
share of an automotive OEM customer. Net sales of power distribution products to
the agricultural vehicle market increased by $5.6 million.

Cost of Goods Sold. Cost of goods sold for 1996 increased by $76.4
million, or 36.1%, to $288.1 million from $211.7 million in 1995. As a
percentage of net sales, cost of goods sold increased to 79.2% in 1996 from
76.1% in 1995, while the corresponding gross profit margin decreased to 20.8% in
1996 from 23.9% in 1995. The change in the contract manufacturing arrangement
with the division of General Motors caused a reduction in gross profit margin of
1.7%. Gross profit was adversely impacted by start-up inefficiencies and $1.0
million of expenses associated with the relocation of switch production to the
Company's new Canton, Massachusetts facility. The remaining decrease was related
to the decline in volume of instrumentation and information displays and power
distribution product lines.

Selling, General and Administrative Expenses. SG&A expenses for 1996
increased by $9.2 million, or 24.5%, to $46.7 million from $37.5 million in
1995. As a percentage of net sales, SG&A expenses decreased to 12.8% in 1996
from 13.5% in 1995 because the change in the contract manufacturing arrangement
with a division of General Motors had minimal effect on SG&A expenses. The
transitional services agreement expense related to the commercial and process
engineering support for the relocation of the actuator business increased SG&A
expenses by $4.3 million in 1996 compared to $0.9 million in 1995. These costs
were incurred from November 1995 to October 1996. Product development and
engineering costs increased by $2.6 million, or 39.0%, as a result of costs
associated with the launch of power distribution systems and instrument displays
for a medium duty vehicle, the launch of the four-wheel-drive and new doorlock
actuator products and development costs associated with products to be launched
in 1998. Costs associated with marketing and technical resource enhancements to
provide improved customer support accounted for $1.4 million of the increase in
SG&A expenses.

Interest Expense. Interest expense for 1996 increased by $2.3 million, to
$4.3 million from $2.0 million in 1995. The increase was due to additional
borrowings to finance the acquisition of the actuator products business in
November 1995 and the initial investment in Berifors in April 1996. In addition,
the average borrowing rate increased to 7.4% in 1996 from 7.0% in 1995.

Income Before Income Taxes. As a result of the foregoing, income before
income taxes decreased by $2.2 million, or 8.2%, to $24.6 million in 1996 from
$26.8 million in 1995.

Provision for Income Taxes. Prior to the Offering, the Company was an S
corporation for federal and, where qualified, state income tax purposes.
Accordingly, the Company recognized provisions for income taxes of $0.5 million
and $0.7 million for foreign income and state franchise taxes in 1996 and 1995,
respectively. Had the Company been subject to federal and state income taxes at
the corporate level, the Company would have recognized provisions for income
taxes of approximately $10.3 million in 1996.

Net Income. As a result of the foregoing, net income decreased by $2.1
million, or 8.0%, to $24.1 million in 1996 from $26.2 million in 1995. Had the
Company been subject to federal and state income taxes at the corporate level,
the Company's net income for 1996 would have been $14.3 million.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Net Sales. Net sales for 1995 increased by $52.5 million, or 23.3%, to
$278.0 million from $225.5 million in 1994. Of this increase, $39.1 million was
due to the previously discussed changes in the contract manufacturing
relationship, which was partially offset by a 30% decline in unit volume, or
$11.1 million in net sales, in product shipped under the arrangement. Switch and
power distribution product sales increased $28.9 million as a result of new
product sales and increased market share of existing products in the automotive
and agricultural markets. A reduction in net sales of $0.5 million was due to
the phaseout of certain non-core instrumentation and information display
products.

23
<PAGE> 27

Cost of Goods Sold. Cost of goods sold for 1995 increased by $46.7
million, or 28.3%, to $211.7 million from $165.0 million in 1994. As a
percentage of net sales, cost of goods sold increased to 76.1% in 1995 from
73.1% in 1994, causing the gross profit margin to decrease to 23.9% in 1995 from
26.9% in 1994. The change in the contract manufacturing arrangement with the
division of General Motors caused a decrease in gross profit margin of 3.4%.
Other items impacting gross profit margin were an unfavorable shift in the sales
mix of switch products, a favorable shift in the sales mix of power distribution
products, and the decline in volume of certain instrumentation and information
display products.

Selling, General and Administrative Expenses. SG&A expenses for 1995
increased by $5.0 million, or 15.3%, to $37.5 million from $32.5 million in
1994. As a percentage of net sales, SG&A expenses decreased to 13.5% in 1995
from 14.5% in 1994 because the change in the contract manufacturing arrangement
previously discussed had minimal effect on SG&A expenses. The overall increase
resulted from the expansion of product engineering and design capabilities
related to instrumentation and information display products, $0.9 million of
transitional services expenses associated with the acquisition of the actuator
business in November 1995, and one-time costs associated with quality and
engineering initiatives, and higher support costs resulting from the expansion
of the Chihuahua, Mexico facility. The closure and sale of a contract
manufacturing facility in 1995 increased SG&A expenses by $1.0 million.

Interest Expense. Interest expense for 1995 decreased by $0.3 million, or
14.1%, to $2.0 million from $2.3 million in 1994. The decrease was due to a
lower average outstanding indebtedness.

Income Before Income Taxes. As a result of the foregoing, income before
income taxes increased by $1.1 million, or 4.4%, to $26.8 million in 1995 from
$25.7 million in 1994.

Provision for Income Taxes. Prior to the Offering, the Company was an S
corporation for federal and, where qualified, state income tax purposes.
Accordingly, the Company recognized income tax provisions of $0.7 million and
$0.5 million for foreign income and state franchise taxes in 1995 and 1994,
respectively. In addition, the Company recognized income of $1.5 million in 1994
related to the elimination of deferred income taxes for a subsidiary that was
previously taxed at the corporate level.

Net Income. As a result of the foregoing, net income decreased by $0.5
million, or 1.9%, to $26.2 million in 1995 from $26.7 million in 1994.

QUARTERLY INFORMATION

The following table presents selected unaudited quarterly results for each
quarter of 1995 and 1996 and the first two quarters of 1997. The financial data
is derived from the unaudited financial statements of the Company which have
been prepared by the Company on a basis consistent with the Company's audited
financial statements included elsewhere in this Prospectus and, in the opinion
of management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the Company's results of
operations for such periods. These operating results are not necessarily
indicative of future performance.

24
<PAGE> 28

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------------------------------
1995 1996 1997
------------------------------------------ ------------------------------------------ -------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales........ $ 71.1 $67.8 $ 57.0 $82.1 $ 83.5 $94.4 $ 89.8 $96.1 $108.0 $110.8
Cost of goods
sold........... 51.4 51.1 43.9 65.2 64.9 75.6 71.7 75.9 82.1 83.5
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit..... 19.7 16.7 13.1 16.9 18.6 18.8 18.1 20.2 25.9 27.3
SG&A expenses.... 8.3 8.9 8.3 12.0 12.0 12.1 11.8 10.9 12.2 13.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating
income......... 11.4 7.8 4.8 4.9 6.6 6.7 6.3 9.3 13.7 14.3
Interest expense,
net............ 0.5 0.5 0.5 0.5 1.1 0.8 1.0 1.4 0.9 1.0
Other expense
(income)....... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (1.7) 0.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income before
income taxes... 10.9 7.3 4.3 4.4 5.5 5.9 5.3 7.9 14.5 13.3
Provision for
income taxes... 0.0 0.0 0.0 0.7 0.1 0.1 0.2 0.1 0.1 0.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Net income....... $ 10.9 $ 7.3 $ 4.3 $ 3.7 $ 5.4 $ 5.8 $ 5.1 $ 7.8 $ 14.4 $ 13.1
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
STATEMENT OF OPERATIONS DATA
AS A PERCENTAGE OF NET SALES:
Net sales........ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods
sold........... 72.3 75.4 77.0 79.4 77.8 80.1 79.8 79.0 76.0 75.4
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross margin..... 27.7 24.6 23.0 20.6 22.2 19.9 20.2 21.0 24.0 24.6
SG&A expenses.... 11.7 13.1 14.6 14.6 14.3 12.8 13.2 11.3 11.3 11.7
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating
income......... 16.0 11.5 8.4 6.0 7.9 7.1 7.0 9.7 12.7 12.9
Interest expense,
net............ 0.7 0.7 0.9 0.6 1.3 0.9 1.1 1.5 0.9 0.9
Other expense
(income)....... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (1.6) 0.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income before
income taxes... 15.3 10.8 7.5 5.4 6.6 6.2 5.9 8.2 13.4 12.0
Provision for
income taxes... 0.0 0.0 0.0 0.9 0.1 0.1 0.2 0.1 0.1 0.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Net income....... 15.3% 10.8% 7.5% 4.5% 6.5% 6.1% 5.7% 8.1% 13.3% 11.8%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Substantially all of the Company's sales and earnings are derived from the
automotive, medium and heavy duty truck and agricultural vehicle markets. As a
result, the Company's financial performance is typically the weakest in the
third quarter and, to a lesser extent, the fourth quarter due to the impact of
scheduled OEM plant shutdowns and holidays.

After the three-month period ending March 31, 1995, gross margin began to
decline due to lower sales volume and higher costs related to product launches
and the relocation of certain manufacturing operations. Beginning in 1995, the
Company's net sales and gross margin were impacted as the Company began to
purchase materials used in its contract manufacturing operations. Of the
Company's net sales increase in the three months ended December 31, 1995 and the
full years 1995 and 1996, $23.6 million, $39.1 million and $53.4 million,
respectively, were associated with the cost of these additional materials
purchased by the Company.

Certain one time items have also impacted the Company's quarterly results
of operations. During the three-month period ended December 31, 1995, the
Company incurred approximately $1.0 million in expenses in connection with the
closing and sale of a contract manufacturing facility. In November 1995, the
Company acquired the actuator business of Kelsey-Hayes, which increased SG&A
expenses as a result of a transitional services agreement related to the
acquisition of Kelsey-Hayes. The Company recognized expenses of $0.9 million and
$4.3 million in 1995 and 1996, respectively, in connection with such agreement.
Such expenses were incurred from November 1995 to October 1996. Throughout 1996,
the Company incurred a total of approximately $1.0 million of expenses in
connection with the relocation of switch product manufacturing to Canton,
Massachusetts. In the period ended March 31, 1997, the Company recognized a $1.7
million gain on the sale of certain transportation equipment.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of funds have been, and are anticipated to
continue to be, cash flow from operations and borrowings under the Company's
credit facility.

25
<PAGE> 29

Net cash provided by operating activities was $25.3 million, $29.4 million
and $25.5 million, in 1996, 1995, and 1994, respectively. The decrease in cash
provided by operating activities in 1996 of $4.1 million compared to 1995 was
caused by an increase in working capital and other operating assets of $4.4
million and lower net income of $2.1 million, offset by an increase in
depreciation and amortization of $2.0 million and a non-cash charge for
compensation expense under the Company's stock option plan of $0.4 million. The
increase in working capital was primarily due to increased sales levels of power
distribution systems and switch products. In addition, the purchase of the
actuator product line did not include working capital associated with the
business. As a result, the Company generated working capital to support the sale
of these products. The increase in depreciation and amortization in 1996 was the
result of a full year of depreciation on the actuator business machinery and
equipment. The increase in cash provided by operating activities in 1995 of $3.9
million compared to 1994 was caused by a $1.8 million reduction in working
capital and other operating asset requirements, and increases in non-cash
operating charges of $2.6 million, partially offset by a decline in net income
of $0.5 million. The reduction in working capital requirements was the result of
programs designed to reduce inventory levels and correspondingly improve
through-put. Increases in non-cash operating expenses were due to two months of
depreciation for the actuator business machinery and equipment, increases in
depreciation expense associated with switch products, and the elimination in
1994 of deferred income taxes for Alphastac/Pollak.

Net cash used by investing activities was $18.1 million, $33.6 million and
$6.4 million in 1996, 1995 and 1994, respectively. In 1996, investing activities
included capital expenditures of $14.1 million and the investment of $8.8
million in Berifors, partially offset by cash proceeds of $4.8 million from the
dispositions of two of the Company's facilities. In 1996, the Company's capital
expenditures were primarily related to machinery and equipment for process
improvement, the expansion of actuator production, and other capacity expansion.
Investing activities in 1995 were comprised of the $18.8 million acquisition of
the actuator business and capital expenditures of $14.8 million. In 1995, the
Company's capital expenditures included approximately $7.6 million for the new
Canton, Massachusetts, facility and the expansion of the Chihuahua, Mexico,
facility. The Canton facility was built to support the growth of the Company's
switch product business, and the Chihuahua facility was constructed to support
growth in the power distribution business. Machinery and equipment purchases of
approximately $7.2 million were related to process improvement and, to a lesser
extent, new business requirements. In 1994, investing activities included
capital expenditures of $9.0 million for machinery and equipment to manufacture
new power distribution systems and switch products, offset by $2.6 million of
cash proceeds received from the disposition of a contract manufacturing
facility. The Company estimates that it will incur approximately $14.6 million
of capital expenditures in 1997. The Company intends to continue to finance its
capital expenditures from operating cash flow and funding under its credit
facility. These capital expenditures will be used primarily for the purchase of
machinery and equipment to support new business awards, enhance information
technology systems, finance continued cost reduction efforts through automation,
and finance Berifors' business expansion.

Net cash used by financing activities was $7.1 million and $18.2 million in
1996 and 1994, respectively, while net cash provided by financing activities was
$3.4 million in 1995. Cash distributions were $13.2 million, $15.5 million and
$13.6 million in 1996, 1995 and 1994, respectively, and were paid primarily to
shareholders to satisfy income tax liabilities resulting from the Company's S
corporation status.

As a result of the foregoing operating, investing and financing activities,
net borrowings increased $5.8 million and $19.0 million in 1996 and 1995,
respectively, while net borrowings decreased $4.6 million in 1994.

Net cash provided by operating activities was $35.9 million for the first
six months of 1997 and $9.8 million for the same period in 1996. The increase in
cash provided by operating activities for the six month period ended June 30,
1997 of $26.1 million as compared to the same period in 1996 was attributable to
$16.3 million of higher net income (including the effect of a gain on the sale
of fixed assets of $1.7 million in 1997), a $10.4 million decrease in working
capital and other operating assets, and an increase in depreciation and
amortization of $1.0 million. Net cash used by investing activities was $3.9
million and $18.5 million for the first six months of 1997 and 1996,
respectively. In the six month period ended June 30, 1997, investing activities
included capital expenditures of $6.4 million, partially offset by the proceeds
on the sale of certain

26
<PAGE> 30

transportation equipment of $2.5 million. For the same period of 1996 investing
activities included capital expenditures of $10.2 million and the investment in
Berifors of $8.8 million, partially offset by cash proceeds on the sale of fixed
assets of $0.5 million. Net cash used by financing activities was $32.4 million
for the first six months of 1997, while net cash provided by financing
activities was $8.5 million for the first six months of 1996. Cash distributions
were $12.6 million and $6.4 million for June 30, 1997 and 1996, respectively,
and were paid primarily to satisfy income tax liabilities resulting from the
Company's S corporation status. As a result of the foregoing operating,
investing and financing activities, net borrowings decreased $17.5 million in
the six months ended June 30, 1997, while net borrowings increased $15.0 million
for the six months ended June 30, 1996. The reduction in cash and cash
equivalents balance to $7, as of June 30, 1997, results from the application of
available funds to reduce the outstanding credit facility balance.

The Company has a $125.0 million unsecured credit facility (of which $30.7
million was outstanding as of September 15, 1997), which expires on June 30,
2002. The maximum amount of borrowings that may be made under the facility was
increased from $80.0 million to $125.0 million on September 15, 1997. Interest
on the credit facility is payable at the Company's option at either the prime
rate or LIBOR plus 0.75% to 2.0%. Currently the Company is borrowing at LIBOR
plus 1.0%. The Company intends to use approximately $9.6 million of the net
proceeds from the Combined Offering to repay debt outstanding under the credit
facility. The credit facility contains various covenants which require the
Company to maintain certain financial ratios, including minimum liquidity, net
worth and fixed charge coverage. The Company was in compliance with all
covenants as of December 31, 1996 and June 30, 1997. The Company has entered
into two interest rate swap agreements with notional amounts of $25.0 and $20.0
million. The interest rate swap agreements exchange the variable interest rate
on the credit facility for fixed rates. The Company does not use derivatives for
speculative or profit motivated purposes.

The Company believes the net proceeds from the sale of Common Shares in the
Combined Offering and funds generated by the Company's operations, together with
funds available under the proposed new credit agreement, will provide the
Company with sufficient liquidity and capital resources for working capital,
capital expenditures and other needs for at least the next 24 months. However,
any significant acquisitions for cash may require additional debt or equity
financing.

INFLATION

Management believes that the Company's operations have not been adversely
affected by inflation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Concurrent with the Offering, the Company will be treated as a C
corporation for federal and state income tax purposes. Following termination of
its status as an S corporation, the Company will be subject to federal and state
income taxation on United States income. All pro forma income tax data have been
calculated utilizing the provisions of Statement of Financial Accounting
Standards No. 109 (SFAS 109) "Accounting for Income Taxes." In accordance with
SFAS 109, estimated net deferred tax liabilities of $2.1 million will be
recorded with an offsetting charge to net income. This one-time charge will be
recorded as income tax expense in the third quarter of 1997.

The Company adopted SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" in 1996. SFAS 121 requires
long-lived assets and certain identifiable intangible assets to be reviewed for
impairment whenever circumstances indicate that the carrying amount of an asset
may not be recoverable. The adoption of this standard did not have a significant
impact on the financial condition and operating results of the Company.

SFAS No. 123, "Accounting for Stock-Based Compensation" encourages, but
does not require, a fair value-based method of accounting for employee stock
options, the sale of stock under employee stock purchase plans or similar equity
instruments. The Company has elected to continue to measure compensation cost
under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" as was previously required, and to comply, to the extent
applicable, with pro forma disclosure of net income and earnings per share as if
the fair value-based method of accounting had been applied.

27
<PAGE> 31

BUSINESS
OVERVIEW

Stoneridge is a leading independent designer and manufacturer of highly
engineered electrical and electronic components, modules and systems for the
automotive, medium and heavy duty truck and agricultural vehicle markets. The
Company's products interface with a vehicle's mechanical and electrical systems
to activate equipment and accessories, display and monitor vehicle performance,
and control and distribute electrical power and signals. The Company has a
leading market position in the design and manufacture of electrical and
electronic modules and systems for the medium and heavy duty truck and
agricultural vehicle markets. In the automotive market, the Company designs and
manufactures specially designed and engineered electrical and electronic
components and modules, typically on a sole-source basis. The Company's
engineers and designers work closely with customers to design, develop and
manufacture components, modules and systems to address specific vehicle
requirements. The Company has long-standing relationships with its major
customers, including General Motors (since 1931), Ford (since 1930), Deere
(since 1965) and Navistar (since 1941). Approximately 72% of the Company's 1996
net sales and 66% of net sales for the first six months of 1997 were derived
from the automotive market, and approximately 27% of the Company's 1996 net
sales and 33% of net sales for the first six months of 1997 were derived from
the medium and heavy duty truck and agricultural vehicle markets.

The Company's four principal product categories are:

- Switch Products. The Company designs and manufactures integrated
electronic and electromechanical switch products which include hidden
switches and customer-activated switches. These switches transmit a
signal to a control device which activates specific functions. Hidden
switches are those switches which are not typically seen by vehicle
passengers but are utilized to activate or deactivate selected functions
such as brake lights, cruise control functions and electronic safety
features related to air bag and anti-lock braking systems.
Customer-activated switches are used by a vehicle's operator or
passengers to manually activate headlights, rear defrosters, heated seats
and other accessories. The Company sells these products principally to
the automotive market.

- Instrumentation and Information Display Products. The Company designs
and manufactures electronic instrument clusters, driver message centers,
power conversion products, multiplexed modules and electrical systems and
electronic switch modules. These products collect, store and display
vehicle information such as speed, pressure, maintenance data, trip
information, operator performance, temperature, distance traveled, and
driver messages related to vehicle performance. These products utilize
state-of-the-art hardware, software and multiplexing technology and are
sold principally to the medium and heavy duty truck and agricultural
vehicle markets.

These four product categories accounted for 52%, 29%, 11% and 8%, respectively,
of the Company's 1996 net sales, and 47%, 26%, 10% and 17% of the Company's net
sales for the first six months of 1997.

28
<PAGE> 32

manufacturer of pedal assembly, chassis and door-mounted hidden switches in
North America and Europe. In addition to the Company's leading market positions,
it is typically the sole supplier of products designed, developed and
manufactured by the Company for specific vehicle platforms.

CONTRACT MANUFACTURING

The Company was formed in 1965 as a manufacturer of wire harnesses for the
agricultural vehicle market. Following an expansion in 1977 into the automotive
market, sales increased from approximately $1.6 million in 1976 to $105.4
million in 1987, with approximately 90% of the Company's 1987 sales being
derived from the Company's contract manufacturing arrangement with a division of
General Motors. Initially under the contract manufacturing arrangement, the
Company supplied facilities and labor required to assemble wire harnesses to the
specifications of, and from raw materials supplied by, the division of General
Motors. In mid-1994, the division of General Motors requested that the Company
begin purchasing the materials used in the production of wire harnesses. Of the
Company's net sales for 1995, 1996 and the six months ended June 30, 1997, $39.1
million, $83.9 million and $38.8 million, respectively, were associated with the
cost of these additional materials purchased by the Company. Contract
manufacturing accounted for approximately 17%, 23%, 29% and 22% of the Company's
net sales for 1994, 1995, 1996 and the six months ended June 30, 1997,
respectively. The increase in 1994 to 1996 was primarily attributable to the
Company's purchases of raw materials described above. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

The Company was notified in 1995 that as General Motors' vehicle electrical
systems are redesigned, the General Motors division intended to in-source all of
its wire harness needs. The Company believes that by 1999 this General Motors
division will in-source substantially all wire harness requirements previously
supplied by the Company. However, no assurance can be given that net sales to
the General Motors division will not end at an earlier date. The volume of wire
harnesses produced by the Company for the General Motors division has declined
each year since 1987. Three Company facilities previously utilized solely for
contract manufacturing have been closed and the properties sold. In addition,
one of the Company's facilities in Mexico has been transitioned from a contract
manufacturing to a full-service facility. Currently, only one of the Company's
facilities remains dedicated to contract manufacturing. See "The Company."

INDUSTRY TRENDS

The Company's performance and growth are related to certain trends within
the automotive and medium and heavy duty truck markets, including the
consolidation of the component supply industry, the increase in global sourcing
and the increase in vehicle electronic content.

Supplier Consolidation and Focus on System and Module Sourcing. The OEM
supply industry has been experiencing significant consolidation as OEMs, in
seeking to lower costs and improve quality, are increasingly purchasing complete
systems and modules rather than separate component parts. As a result, OEMs have
been actively reducing their supplier base and are more frequently awarding
long-term, sole-source supply arrangements to suppliers which offer broad
product lines, higher value-added products, system and module product
capability, low costs and reliable service. The Company believes this trend will
continue for the foreseeable future and should provide the Company with
opportunities, based on its competitive strengths, to further expand its
customer base and increase its market penetration with current customers.

Global Sourcing. Regions such as Asia, Latin America, and Eastern Europe
are expected to experience significant growth in vehicle demand over the next
several years. Many OEMs are planning to increase their sales in emerging
markets in a cost-effective manner by developing vehicles which can be designed
in one vehicle center to a single global standard but produced and sold in
several geographic markets, thereby allowing OEMs to reduce design costs, take
advantage of low-cost manufacturing locations and improve product quality and
consistency. As a result, OEMs increasingly are requiring their key suppliers to
have the capability to manufacture in multiple geographic markets.

Increasing Vehicle Electronic Content. OEMs of automobiles, medium and
heavy duty trucks, and agricultural vehicles, are increasingly incorporating
more electronic components, such as driver information

29
<PAGE> 33

displays, instrumentation, safety systems and comfort features, into their
products. Increased utilization of systems and features on vehicles causes
greater utilization of the products designed and manufactured by the Company.

According to a report by The Economist Intelligence Unit, average
electrical and electronic content per vehicle is expected to increase from $863
in 1995 to $1,230 in 2000.

COMPETITIVE ADVANTAGES

Management believes that the Company's growth and financial performance are
the result of certain competitive advantages the Company has attained in the
markets it serves. These competitive advantages are derived from a bundling of
several technical and commercial capabilities including the following.

PRODUCT AND PROCESS DESIGN CAPABILITY

The Company's wide range of products and its engineering expertise in
electrical and electronic architecture enable the Company to create integrated
engineered solutions to satisfy OEMs' specific application needs. To deliver
cost-effective solutions for OEMs, the Company deploys multifunctional teams
which include design and process engineers, program management specialists and
quality, procurement and marketing personnel. Such teams ensure that products
meet customer needs and can be manufactured cost-effectively in a just-in-time
environment. Combined product and process designs enable the Company to maintain
a lean manufacturing environment which minimizes cost and optimizes reliability
while reducing warranty and service costs over the intended product life. The
Company has recently upgraded its CAD/CAM systems, including three-dimensional
color graphics, and the ability to interface with customer CAD systems. Using
computer-aided design, and flexible manufacturing and multifunctional teams, the
Company can cost-effectively manufacture products in both high and low volume
environments depending on a given customer's specific needs. To ensure quality,
all products are fully tested both electronically and functionally. The Company
emphasizes Total Quality Management to continuously reduce costs, improve
quality and eliminate non-value-added elements of the manufacturing process.

ALIGNMENT WITH CUSTOMERS AND SUPPLIERS

The Company works with OEMs and provides full-service support capabilities
to its customers throughout the product development process from concept design
through the design and implementation of the manufacturing processes. All
facilities utilize electronic data interchange (EDI) of commercial and
engineering data. In addition, Company applications engineers work on-site at
major customers' design centers. The Company also works closely with its major
suppliers to ensure compatible component design, quality, low-cost production,
and simultaneous exchange of production data. These alignments and the Company's
dedication to customer service have resulted in long-term relationships with the
Company's primary customers and suppliers.

INTERNATIONAL PRESENCE

In April 1996, the Company acquired approximately 45% of Berifors, a
Sweden-based manufacturer of electronic display panels and instrumentation for
the European truck and commercial vehicle markets. With the investment in
Berifors, the Company has increased its international presence. The Company
operates manufacturing facilities in the United States, Mexico and Sweden and
maintains sales engineering offices in the United States, United Kingdom,
Germany and Brazil. These facilities and the Berifors acquisition allow the
Company to increasingly provide a global sourcing capability to its customers.
For example, the Company was recently chosen to supply instrument panel systems
for Volvo in Europe, the United States and Brazil. The Company believes that it
would not have been selected had it not been for the Company's presence in each
of these markets. The Company continues to pursue strategic alliances, joint
ventures and acquisitions throughout the world. See "-- Growth
Strategy -- Expand Penetration of International Markets."

30
<PAGE> 34

LEAN MANUFACTURING

To enhance manufacturing effectiveness, the Company has adopted lean
manufacturing initiatives, including cost-effective automation, semiautomated
cell manufacturing where appropriate, Total Quality Management and continuous
improvement. These efforts throughout the Company have resulted in enhanced
productivity and product quality and reduced inventory costs. Manufacturing
flexibility enables the Company's facilities to produce high or low volume
components, modules and systems in a cost-effective manner and strengthens the
Company's ability to meet the just-in-time and in-line sequence delivery
schedules of many of its customers.

GROWTH STRATEGY

The Company seeks to grow primarily by leveraging its strong market
positions and technical and manufacturing capabilities to provide highly
engineered electrical and electronic components, modules and systems to the
selected segments of the markets it serves. To achieve this goal the Company
intends to: (i) focus on higher value-added systems and modules, (ii) expand new
product development to increase vehicle platform penetration, (iii) expand
penetration of international markets, and (iv) pursue strategic acquisitions and
alliances.

FOCUS ON HIGHER VALUE-ADDED SYSTEMS AND MODULES

OEMs are increasingly seeking suppliers capable of manufacturing complete
modules and systems for a vehicle rather than suppliers that produce only the
component parts which comprise a module or system. Systems manufacturing offers
OEMs the opportunity for significant cost savings and improved product quality
and consistency. By capitalizing on the Company's existing product portfolio and
through the combination of multifunctional electrical and electronic products,
the Company intends to continue to expand its capabilities to provide additional
integrated modules and systems.

EXPAND NEW PRODUCT DEVELOPMENT TO INCREASE VEHICLE PLATFORM PENETRATION

In order to increase its vehicle platform penetration, the Company has
invested, and intends to continue to invest, significant amounts in its
technology and design capabilities. The Company's product development
expenditures were $9.3 million, or 3.6%, of non-contract manufacturing sales in
1996. These development efforts have strengthened the Company's ability to
provide higher value-added products and systems, and have resulted in the
introduction of new products such as the four-wheel-drive actuator (shift on
demand) and the auto-stick (which enables a driver to manually shift an
automatic transmission using a unique electronic switch). The Company's
technical centers in Massachusetts, Michigan, Ohio, Mexico and Sweden develop
and test both new and existing products and concepts. In addition, through its
advanced technologies group comprised of dedicated engineers, the Company
concentrates on the development of its next generation of products. To further
increase vehicle platform penetration, the Company has developed collaborative
relationships with the design and engineering departments of its key OEM
customers. These collaborative efforts have resulted both in the development of
new and complementary products and the enhancement of existing products.

EXPAND PENETRATION OF INTERNATIONAL MARKETS

In 1996, approximately two-thirds of total worldwide passenger vehicle
production occurred outside North America. To meet OEMs' increasing preference
for suppliers with global capabilities, the Company expects to expand its
manufacturing operations into new geographic markets and pursue strategic
acquisitions and alliances. Consistent with this strategy, the Company believes
the Berifors acquisition will expand its ability to serve its customers in
Europe. The Company has a preferred partner agreement with the switch division
of Labinal, a leading European automotive supplier, which provides for
cooperation and exchange of expertise with respect to the design, development,
manufacture and marketing of electrical switches. Pursuant to the agreement, the
parties agree to offer each other a right of first refusal to participate in any
proposed joint projects involving switches in Europe and North America. In
addition, Berifors has a technology agreement

31
<PAGE> 35

with Kansei Corporation, a leading Japanese automotive instrumentation company.
The Company believes that increased international sales will allow the Company
to mitigate the effects of cyclical downturns in a given geographic region and
further diversify the Company's OEM customer base.

PURSUE STRATEGIC ACQUISITIONS AND ALLIANCES

Strategic acquisitions and alliances have been, and the Company believes
will continue to be, an important element in the Company's growth worldwide and
in its efforts to capitalize on trends in the Company's markets. The Company has
demonstrated the ability to successfully integrate and operate acquired
companies through structured business planning, focused product development,
improved operating efficiency and the implementation of merit-based reward
systems. Many of the markets in which the Company competes are highly
fragmented, and the Company believes that numerous potential acquisitions and
alliance opportunities are available and may permit the Company to (i)
complement its range of product offerings, (ii) enhance its ability to supply
existing products internationally, and (iii) broaden its ability to offer
integrated systems to its customers in the heavy duty truck and agricultural
vehicle markets. The Company also seeks to align itself with regional and
international suppliers who offer complementary product lines in order to
achieve efficiencies in research and development and capital investment, as well
as enhanced systems capabilities.

PRODUCTS

The Company's products include vehicle electrical power and distribution
systems, electronic and electrical switch products, electronic instrumentation
and information display products, including European instrumentation and
information display products manufactured by Berifors, and actuator products.

The following table sets forth the approximate composition by product group
represented by a percentage of the Company's net sales for the three fiscal
years ended December 31, 1994, 1995, and 1996 and the six months ended June 30,
1996 and 1997:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- ----------------------------
ACTUAL PRO FORMA(1) ACTUAL PRO FORMA(1)
-------------------------- ------------ ------------- ------------
PRODUCT CATEGORY 1994 1995 1996 1996 1996 1997 1997
- -------------------------------- ---- ---- -------- ------------ ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Power Distribution Systems:
Contract Manufacturing (GM)... 17% 23% 29% 26% 32% 22% 20%
Other Power Distribution
Systems.................... 29 28 23 21 24 25 23
Switch Products................. 33 33 29 27 30 26 24
Instrumentation and Information
Display Products:
North America and other.... 21 16 11 10 11 10 10
Europe..................... -- -- -- 9 -- -- 7
Actuator Products............... -- -- 8 7 3 17 16
--- --- ------- --------- --- --- ---------
Total......................... 100% 100% 100% 100% 100% 100% 100%
=== === ======= ========= === === =========
</TABLE>

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

(1) Gives pro forma effect to the Berifors acquisition as if it had occurred on
January 1, 1996. See "The Company -- Acquisitions."

POWER DISTRIBUTION SYSTEMS

Power distribution systems coordinate and direct the operations of the
entire electrical system within a vehicle or compartment. The Company designs
and manufactures integrated power distribution systems and modular assemblies.
The Company has the ability to design the entire electrical system within a
vehicle and to manufacture the system using a wide range of component parts
purchased from qualified suppliers. Power distribution systems incorporate
wiring, circuit protectors, connection components and terminals for a wide
variety of vehicles and applications. Such systems are highly complex and are
essential to the regulation, distribution, and delivery of appropriate amounts
of power to perform all electrical and electronic functions within a vehicle,
including audio, power train (including engine and transmission systems),
lighting, navigational, safety and instrumentation systems.

32
<PAGE> 36

Power distribution systems contain fuses, circuit breakers and relays and
are responsible for the regulation and distribution of electrical power
throughout a vehicle. Specifically, power is channeled from the vehicle's
electrical power source and routed in appropriate amounts to all vehicle
electrical activities such as ignition, lighting, information displays, and
brakes, power windows and locks, and refrigeration systems.

The Company's modular assemblies combine numerous electrical components
integrated into cost-effective modular designs that can be readily installed
into a vehicle. For example, the Company manufactures integrated armrest control
centers that incorporate a power distribution system, switches to operate power
accessories, wiring between the power source and the switches, connectors and
the associated plastic cabinetry. Other fully integrated power distribution
modules produced by the Company include instrument panels, seat assemblies and
refrigeration control centers.

SWITCH PRODUCTS

The Company designs and manufactures integrated electronic and
electromechanical switch products which include hidden switches and
customer-activated switches. These switches transmit a signal to a control
device which activates or deactivates specific functions. The Company believes
it is the largest supplier of pedal assembly, chassis and door mounted hidden
switches used in vehicle production in North America and Europe. Hidden switches
are those switches which are not typically seen by vehicle passengers but are
utilized to activate or deactivate selected functions such as activating brake
lights, cruise control functions, electronic safety features related to air bag
and anti-lock braking systems, and power train functions. Customer-activated
switches are used by a vehicle's passenger to manually activate headlights, rear
defrosters, heated seats and other accessories. Such switches require a high
level of engineering and durability, given their frequent and consistent use.
Customer-activated switches are manually controlled by a vehicle operator or
passenger and are typically located in the passenger compartment of the vehicle.

The Company produces switches that activate headlights, rear defrosters,
heated seats, and other accessories. The Company's switches are frequently
combined with other electrical and electronic products of the Company to create
integrated modules or systems.

INSTRUMENTATION AND INFORMATION DISPLAY PRODUCTS

Utilizing state-of-the-art hardware, software and multiplexing technology,
the Company designs and manufactures electronic instrument clusters, driver
message centers, power conversion products, multiplexed modules and electrical
systems and electronic switch modules. These products collect, store and display
vehicle information, such as speed, pressure, maintenance data, trip
information, operator performance, temperature, distance traveled, and driver
messages related to vehicle performance. Electronic instrument clusters collect
diagnostic information from sensors and electronic control units (engine,
transmission and ABS) located throughout a vehicle. This information is
processed by microprocessors and displayed with analog pointers, liquid crystal,
vacuum fluorescent and electroluminescent displays. Driver message centers
obtain and manipulate data from various sensors and controllers within a vehicle
and display information in multilingual text format using liquid crystal, vacuum
fluorescent and electroluminescent technology. Power conversion products for
instrumentation and lighting convert 12-volt DC battery power to the DC and AC
voltages needed to power displays effectively and with consistent brightness.
Multiplexed modules are designed to be used in vehicle doors, engine brake
control systems, vehicle instrumentation modules and systems and other
electronic products within a vehicle. Multiplexing is a method of transmitting
several sets of data in sequence along the same wire or cable to an electronic
switch module which processes and distributes multiple pieces of information to
appropriate destinations within a vehicle. The multiplexing process reduces the
amount of wiring and sensors a vehicle must have thereby reducing overall
vehicle cost.

ACTUATOR PRODUCTS

The Company designs and manufactures electromechanical actuator products.
These products enable users to deploy power functions in a vehicle and can be
designed to integrate switching and control functions. These products include
power doorlock and four-wheel-drive actuators. Often operating in harsh

33
<PAGE> 37

environments, these components must be waterproof and temperature tolerant.
Actuators are often designed to incorporate switching and electronic control
functions, thereby increasing the value to the customer and, in most cases,
reducing function cost and increasing reliability. The primary product designs
couple power motors with custom-engineered mechanical gears to generate specific
levels of torque, mechanical motion, response time and sound. Electromechanical
actuators can be designed to incorporate logic switching and electronic
functions within the actuator itself, thereby minimizing the number of discrete
components necessary to meet a customer's specific application requirements.

A power doorlock actuator utilizes a fractional horsepower-motor, a compact
gear train and an inertial clutch device to lock or unlock a vehicle's doors.
The Company's four-wheel-drive actuator, when activated by a switch signal from
the driver, enables "on-the-fly" shifting into and out of four-wheel-drive.

CUSTOMERS AND SALES

The Company sells its products principally to OEMs in the automotive,
medium and heavy duty truck, agricultural vehicle and other vehicle markets. The
Company's largest customers are General Motors, Ford and Deere. The following is
a summary of the Company's customers that accounted for at least 2% of the
Company's net sales in any of the past three years, during the six months ended
June 30, 1997, or pro forma for 1996 or the six months ended June 30, 1997,
assuming Berifors was acquired by the Company on January 1, 1996.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
SIX MONTHS
ACTUAL PRO FORMA ENDED JUNE 30, 1997
----------------------- --------- --------------------
CUSTOMER 1994 1995 1996 1996(1) ACTUAL PRO FORMA
- ------------------------------------------- ----- ----- ----- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
General Motors (contract manufacturing).... 16.6% 23.4% 28.9% 26.4% 22.3% 20.4%
General Motors............................. 13.4 12.1 10.2 9.3 11.2 10.3
Ford....................................... 13.3 12.6 18.4 16.8 22.3 20.6
Deere...................................... 10.3 10.6 9.6 8.8 10.5 9.7
Navistar................................... 8.7 7.5 5.4 4.9 7.9 7.3
Volvo...................................... 6.8 6.1 3.0 5.2 3.4 5.3
Chrysler................................... 2.6 3.4 4.1 3.8 4.0 3.7
Bosch...................................... 1.6 1.6 2.6 2.4 2.9 2.6
Carrier.................................... 3.7 3.0 2.4 2.2 2.2 2.0
Freightliner............................... 1.2 1.0 2.0 1.8 2.5 2.3
ITT Automotive............................. 1.9 2.6 1.6 1.4 0.8 0.7
Ericsson................................... 0.0 0.0 0.0 3.0 0.0 1.5
Other...................................... 19.9 16.1 11.8 14.0 10.0 13.6
----- ----- ----- ----- ----- -----
Total.................................... 100.0% 100.0% 100.0% 100.0% 100% 100%
===== ===== ===== ===== ===== =====
</TABLE>

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

(1) Gives pro forma effect to the completion of the Berifors acquisition as if
it had occurred on January 1, 1996 as described in "The Company --
Acquisitions."

The Company is typically awarded contracts for particular vehicle models
and model renewals with terms ranging from one to seven years. On platforms
served, the Company believes it supplies significantly all of its products on a
sole-sourced basis. Contracts do not generally require minimum purchases and
certain contracts are subject to annual renewal. The Company sells to its
customers principally through integrated customer-focused teams that typically
consist of an account manager and several applications engineers. Account
managers have overall responsibility for specific client relationships and work
with applications engineers to provide customers with highly specialized
technical service during the design and product development stages, as well as
subsequent program management during the life of particular vehicle models.
Applications engineers have specialized expertise in one or more of the
Company's major product groups and work directly with customers to address
specific customer product needs through component, module or system
customization or the design of entirely new products. The Company operates six
dedicated sales offices near major customers in Chicago, Detroit, Portland,
Oregon, Frankfurt, Sao Paulo and Stockholm. The Company believes that by
locating sales and technical offices close to its customers' operations, it is
better able to

34
<PAGE> 38

develop collaborative relationships with its customers. As of June 30, 1997, the
Company (excluding Berifors) employed 57 persons in its sales and marketing
departments.

The following table presents an overview of the major vehicle models for
which the Company (excluding Berifors) is producing components, modules or
systems in 1997:

<TABLE>
<CAPTION>
AUTOMOTIVE MEDIUM AND HEAVY DUTY TRUCK & AGRICULTURAL
- ---------------------------------- ------------------------------------------
<S> <C> <C>
CHRYSLER: Taurus DEERE:
Breeze Thunderbird Combine (Models -- 93-96)
Caravan Town Car Four-Wheel Drive (Series
Cherokee Tracer 9000)
Concorde Villager MR Tractor (Series 7000)
Dakota Windstar Scimitar (Series 8000)
Dodge N-Truck
Intrepid GM: FREIGHTLINER:
Neon Astro Class 5, 6, 7 (medium duty)
Ram Aurora Class 8 (heavy duty)
Sebring Bonneville
Stratus C/K Pickup MACK TRUCK:
T-300 Utility Camaro Class 8 (heavy duty)
Viper Cavalier
Vision Delta 88 MERCEDES BENZ
Voyager Firebird BRAZIL & MEXICO:
Wrangler Grand Am Class 5, 6 (medium duty)
Grand Prix
FORD: LeSabre NAVISTAR:
Bronco Park Avenue Class 5, 6, 7 (bus/medium
Continental S-10 duty)
Cougar Safari Class 8 (heavy duty)
Crown Victoria Seville STS/SLS
Econoline Skylark PACCAR:
Escort Sportvan Class 8 (heavy duty)
Expedition Suburban
Explorer Sunfire VOLVO TRUCK CORPORATION:
F-Series Tahoe Class 7, 8 (heavy duty)
Pickup Yukon
Grand Marquis
Mark VIII MAZDA:
Mountaineer B2000
Mustang Quest
Navigator
Ranger
Sable
</TABLE>

DESIGN AND ENGINEERING

The Company believes that engineering expertise and new product development
are key factors in successfully obtaining new business and in maintaining strong
relationships with existing customers. The Company's formal program management
activities utilize customer-dedicated teams, which have full design,
development, test and commercial responsibilities under the operational control
of a single manager. Each new product program is monitored for cost, timing, and
quality until it is successfully launched and in production. The Company's
advanced technology group explores and develops next-generation technology.

The Company operates technical centers in Boston and Canton, Massachusetts,
Warren, Ohio, Ciudad Juarez, Mexico, and Stockholm, Sweden. These technical
centers are responsible for the product design and

35
<PAGE> 39

manufacturing process. The Company's CAD systems are capable of sharing data
with the Company's customers' systems and allow the Company to improve the
function, fit and performance of its products within vehicles. The Company also
utilizes CAD links with its manufacturing facilities to maintain and enhance a
cost-effective synchronous design and manufacturing capability.

MANUFACTURING

The Company seeks to design, implement and operate manufacturing processes
and techniques that allow the Company to produce high quality products in a
cost-effective and timely manner. Utilizing computer-aided design and flexible
manufacturing techniques, the Company cost effectively produces high quality
products in both high and low volume manufacturing environments depending on a
given customer's needs. In addition, the Company has the capability to
manufacture a broad range of products from relatively simple components to
highly engineered complete modules and systems. A majority of the Company's
manufacturing facilities are ISO 9000 and QS 9000 certified and the Company
expects the remainder of its facilities will be certified by December 31, 1997.
ISO 9000 is a quality assurance certification issued by an independent
organization accredited by the International Standards Organization. QS-9000 is
a system of fundamental quality expectations established by Chrysler, Ford,
General Motors and certain truck manufacturers. These programs emphasize
increasing quality through continuous improvement, defect prevention and the
reduction in variation and waste in the supply chain. These certifications are
becoming increasingly important in obtaining contracts from OEMs.

Power distribution systems are manufactured using a several-step process.
Initially, different diameters of wire are processed and cut to a specified
length using an automated system, and components such as terminals, connectors
and seals are attached as appropriate. The second stage of the manufacturing
process entails sonic welding, molding and the sub-assembly of complex circuits.
Depending on the nature of the power distribution system being produced, the
third stage of manufacturing entails attaching components such as clips, clamps,
coverings, fuses, relays, circuit breakers, diodes, capacitors and other
devices, including subassemblies, as required by the customer to complete the
power distribution system. Final assembly takes place either on a stationary
board or a paced conveyor system, depending on the volume of a given product
being produced and its complexity. Where cost-effective, the Company
incorporates automated manufacturing techniques. All final products are fully
tested, both electronically and functionally, to ensure quality of all
components. The Company manufactures power distribution systems in approximately
12 vehicle compartment families such as audio, power train (including engine and
transmission systems), lighting, navigational systems and instrumentation
systems and other categories. Once completed, the power distribution system
coordinates and directs the operation of the entire electrical system within a
vehicle or compartment.

The Company produces switches and actuators utilizing various manufacturing
processes depending on the product volume and design complexity needed by a
customer. For high volume products, the Company typically utilizes synchronous
palletized conveyors with pick-and-place assembly automation which eliminates
direct assembly labor and improves quality. This automated assembly process
includes 100% computer-controlled quality and consistency verification gates
that check each step of the manufacturing process and test the finished product
to assure conformance with customer specifications. Lower volume switch and
actuator products use semiautomated assembly cells supplemented with manual
labor when automation of such manufacturing processes is less cost-effective.
Both semi and fully automated assembly processes utilize various fastening
techniques such as ultrasonic welding, riveting, staking or brackening to
complete the product assembly process. The Company's switch and actuator
products incorporate approximately 6 to 50 separate components, depending on the
complexity of the product being produced. Such components are typically
purchased from outside vendors. The Company currently manufactures approximately
2,000 switch and 50 actuator products.

The manufacturing of instrumentation and information displays entails using
through-hole and surface mount technology to mount electronic components into
printed circuit boards. These boards are scanned with infrared light to adhere
such components to the board in a desired configuration. Connectors,
transformers and other larger components are subsequently incorporated into the
printed circuit boards manually. Once all

36
<PAGE> 40

additional components have been added, each board is wave-soldered to provide
the necessary electrical connections. The final printed circuit board is
attached to an instrument cluster or display housing. Additional components such
as pointers, light pipes, movements and stepped motors are assembled onto a
gauge and then calibrated for accuracy. Gauge lenses, rear shields and labels
are added, in line sequence as appropriate, to the instrument cluster and
information displays and the completed module or system is tested using
computer-based automatic vision testing to ensure performance to customer
specifications. The Company's flexible manufacturing capabilities facilitates
just-in-time and in-line-sequences delivery schedules for many of its customers.
The Company manufactures approximately 150 different instrumentation and
information display modules and systems or variations of such systems.

MARKETS AND COMPETITION

Markets in which the Company competes are highly competitive. The Company
competes primarily based on quality, service, price, timely delivery and
technological innovation. The Company's competitors include divisions of certain
OEM customers and independent manufacturers of wire harnesses, actuators,
switches and other products. The Company competes in North America in each of
its four principal product categories (i) power distribution systems, (ii)
switch products, (iii) instrumentation and information display products, and
(iv) actuator products. In the market for power distribution systems the Company
estimates that it competes with approximately 10 manufacturers, including such
major competitors as AFL (Alcoa-Fujikura Limited), Fargo Assembly Company,
Delphi Automotive Systems (GM's component group) and Monona Wire Corporation. In
the market for switch products the Company estimates that it competes with
approximately 40 manufacturers, including such major competitors as, The Cherry
Corporation, Eaton Corporation, ITT Automotive, Methode Electronics and TRW. In
the market for instrumentation and information display products the Company
estimates that it competes with approximately 10 manufacturers, including such
major competitors as Ametek, Delphi Automotive Systems and VDO (a division of
Mannesmann). In the market for actuator products the Company estimates that it
competes with approximately 10 manufacturers, including such major competitors
as, ITT Automotive, Kiekert, and Rockwell International Corporation. The Company
believes that it is the leading North American manufacturer of (i) power and
signal distribution systems for the agricultural vehicle market and (ii) driver
instrumentation and information display systems for the medium and heavy duty
truck markets. In the automotive market, where the Company focuses on component
and module design and manufacturing, the Company believes it is the largest
manufacturer of pedal assembly, chassis and door mounted hidden switches in
North America and Europe. Many of the Company's principal competitors are larger
and have greater financial and other resources than the Company. There can be no
assurance that competitors will not be able to take actions, including
developing new technology or products or offering prolonged reduced pricing,
which could adversely affect the Company.

The Company competes for new business both at the beginning of the
development of new models and upon the redesign of existing models. New model
development generally begins two to five years before the marketing of such
models to the public. Once a supplier has been selected to provide parts for a
new program, an OEM usually will continue to purchase those parts from the
selected supplier for the life of the program, although not necessarily for any
model redesigns.

PRODUCTION MATERIALS

The principal production materials used in the Company's manufacturing
processes include wire, cable, plastic housings, and certain electrical
components such as fuses, relays, and connectors. The Company generally
purchases such materials subject to annual contracts. Such materials are readily
available from multiple sources, but the Company generally establishes
collaborative relationships with a qualified supplier for each of its key
production materials in order to lower costs and enhance service and quality.

PATENTS AND INTELLECTUAL PROPERTY

The Company maintains and has pending various U.S. and foreign patents and
other rights to intellectual property relating to its business, which it
believes are appropriate to protect the Company's interests in existing

37
<PAGE> 41

products, new inventions, manufacturing processes and product developments. The
Company does not believe any single patent is material to its business, nor
would the expiration or invalidity of any patent have a material adverse effect
on its business or its ability to compete. The Company is not currently engaged
in any infringement litigation, nor are there any claims pending by or against
the Company.

PROPERTIES

The Company (excluding Berifors properties) currently owns or leases nine
manufacturing facilities, which together contain approximately one million
square feet of manufacturing space. The following table provides information
regarding the Company's facilities:

<TABLE>
<CAPTION>
OWNED/ SQUARE
LOCATION USE LEASED STATUS FOOTAGE
- ------------------------------ -------------------------------------- ------------- -------
<S> <C> <C> <C>
Arlington Heights, Illinois Sales/Engineering Office Leased 1,000
Boston, Massachusetts Division Office & Manufacturing;
Actuator Products Owned 166,100
Canton, Massachusetts Division Office & Manufacturing;
Switch Products Owned 126,500
Cortland, Ohio Engineering Office Leased 11,400
El Paso, Texas Office/Warehouse; Instrument and
Information Display Products and Power
Distribution Products Leased 22,400
Greenwood, South Carolina(1) Manufacturing; Power Distribution
Products Leased 56,000
Kent, Ohio Manufacturing; Power Distribution
Products Owned 70,000
Mebane, North Carolina Manufacturing; Power Distribution
Products Leased 51,000
Northhampton, Massachusetts Sales/Engineering Office Leased 200
Orwell, Ohio Manufacturing; Power Distribution
Products Owned 72,000
Portland, Indiana Manufacturing; Power Distribution
Products Owned 196,000
Southfield, Michigan Sales/Engineering Office Leased 4,200
Warren, Ohio Corporate Office Owned 7,500
Warren, Ohio Division Office Leased 15,300
Chihuahua, Mexico Manufacturing; Power Distribution
Products Owned 133,000
Eschborn, Germany Sales/Engineering Office Leased 100
Juarez, Mexico Manufacturing; Instrument and
Information Display Products Owned 178,000
Sao Paulo, Brazil Sales/Engineering Office Leased 200
</TABLE>

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

(1) Plant idled in first quarter of 1997.

Berifors leases a production facility in Orebro, Sweden, a technical center
in Bromma, Sweden, and sales offices in Munich, Germany and Stuttgart, Germany.

EMPLOYEES

ENVIRONMENTAL MATTERS

Under various federal, state and local laws, ordinances, and regulations,
an owner or operator of real estate may be liable for the costs of removal or
remediation of certain hazardous or toxic substances on, under

38
<PAGE> 42

or in the property. This liability may be imposed without regard to whether the
owner or operator knew of, or was responsible for, the presence of the hazardous
or toxic substances. Furthermore, a person that arranges for the disposal of a
hazardous substance at another property or transports a hazardous substance for
disposal or treatment at another property may be liable for the costs of removal
or remediation of hazardous substances at that property, regardless of whether
the person owns or operates that property. The costs of any such remediation or
removal may be substantial, and the presence of any such substance, or the
failure promptly to remediate any such substance, may adversely affect the
property owner's ability to sell or lease the property or to borrow using it as
collateral. Other federal, state and local laws, ordinances and regulations
require abatement or removal of certain asbestos-containing materials, impose
certain worker protection and notification requirements, and govern emissions of
and exposure to asbestos fibers in the air. Other federal, state and local laws,
ordinances, and regulations and the common law impose on owners and operators
certain requirements regarding conditions and activities that may affect human
health or the environment. These conditions and activities include, for example,
the presence of lead in drinking water, the presence of lead-containing paint in
occupied structures, and the ownership or operation of underground storage
tanks. Failure to comply with applicable requirements could result in difficulty
in the lease or sale of any affected property or the imposition of monetary
penalties, in addition to the costs required to achieve compliance and potential
liability to third parties. The Company may be potentially liable for such costs
or claims in connection with the ownership or operation of its properties.

The Company believes it conducts all its operations in compliance in all
material respects with the applicable environmental and occupational health and
safety laws. As is the case with manufacturers in general, if a release of
hazardous substances occurs on or from the Company's properties or at any
associated off-site disposal location, if contamination from prior activities is
discovered at any of the Company's properties, or if noncompliance with
environmental regulations or permits is discovered, the Company may be held
liable and the amount of such liability could be material.

The Company regularly conducts an environmental assessment consistent with
recognized standards of due diligence on properties and businesses which it
acquires. To date, these assessments have not identified contamination in
respect to acquired properties that would be reasonably likely to result in a
material adverse effect on the Company's business, results of operations, or
financial condition. As a general rule, the Company intends to use such
assessments as part of the evaluation of proposed acquisitions. However, there
can be no assurance that environmental assessments have identified, or will in
the future identify, all material liabilities relating to the Company's
properties and businesses, that any indemnification agreements that can be
negotiated will cover all potential liabilities, or that changes in cleanup
requirements or subsequent events at the Company's properties or at off-site
locations will not result in significant costs to the Company.

None of the Company's properties are the subject of any local, state or
federal inquiry or investigation involving compliance with any environmental
regulations.

LITIGATION

The Company has no pending litigation which it believes will have a
material adverse impact upon the Company. The Company is subject to the risk of
exposure to product liability claims in the event that the failure of any of its
products causes personal injury or death to users of the Company's products, and
there can be no assurance that the Company will not experience any material
product liability losses in the future. In addition, if any of the Company's
products prove to be defective, the Company may be required to participate in a
government-imposed or OEM-instituted recall involving such products. The Company
maintains insurance against such liability claims.

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<PAGE> 43

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the directors
and executive officers of the Company. The directors named below have been
elected to serve until the next annual meeting of shareholders or until their
successors are duly elected and qualified. Executive officers of the Company
serve at the pleasure of the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ------------------------------------------------------
<S> <C> <C>
D.M. Draime 64 Chairman of the Board of Directors, Assistant
Secretary and Director
Cloyd J. Abruzzo 47 President, Chief Executive Officer, Assistant
Treasurer and Director
Kevin P. Bagby 46 Chief Financial Officer and Treasurer
Sten Forseke 38 Vice President of the Company(1) and Managing Director
of Berifors
Gerald V. Pisani 57 Vice President of the Company and President of Pollak
Engineered Products Group
David L. Thomas 48 Vice President of the Company and President of
Alphabet Group
Avery S. Cohen 60 Secretary and Director
Richard E. Cheney 76 Director
Sheldon J. Epstein 59 Director
Earl L. Linehan 56 Director
</TABLE>

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

(1) Effective upon the acquisition of Berifors as described under "The
Company -- Acquisitions."

D.M. Draime, founder of the Company, has served as Chairman of the Board of
Directors of the Company and its predecessors since 1965 and as a director of
the Company since 1988.

Cloyd J. Abruzzo has served as President and Chief Executive Officer of the
Company or its predecessors since June 1993 and as a director of the Company
since 1993. From 1984 to June 1993, Mr. Abruzzo was the Vice President and Chief
Financial Officer of the Company or its predecessor. Mr. Abruzzo serves as a
director of Second National Bank of Warren.

Kevin P. Bagby has served as Vice President and Chief Financial Officer
since joining the Company in July 1995. Mr. Bagby was employed by Kelsey-Hayes
as Director of Business Analysis from June 1994 to July 1995 and as Director of
Finance for the Foundation Brakes Business Unit from January 1991 to June 1994.

Sten Forseke has served as the co-founder and Managing Director of Berifors
since 1988.

Gerald V. Pisani has served as Vice President of the Company since 1989 and
President of the Pollak Engineered Products Group since 1985.

David L. Thomas has served as Vice President of the Company and President
of the Company's Alphabet Group since 1989.

Avery S. Cohen has served as Secretary and a director of the Company since
1988. He has been a partner in the law firm of Baker & Hostetler LLP since 1993.
From 1989 to 1993, Mr. Cohen was a partner with the law firm of Benesch,
Friedlander, Coplan & Aronoff.

Richard E. Cheney has served as a director of the Company since 1988. From
1992 to 1993, he was Chairman Emeritus of Hill & Knowlton, Inc. and from 1987 to
1990 was Chairman of the Board of Directors of Hill & Knowlton, Inc., a public
relations firm. Mr. Cheney serves as a director of Rowe Furniture, Inc.,
Chattem, Inc., and Alpine Lace Brands, Inc.

40
<PAGE> 44

Sheldon J. Epstein has served as a director of the Company since 1988. He
has been the managing member of Epstein, Woods & Dwyer, P.L.C., an independent
public accounting firm, since 1995. From 1992 to 1994, Mr. Epstein was the
managing partner of Epstein, Rehbock & Applebaum, an independent public
accounting firm.

Earl L. Linehan has served as a director of the Company since 1988. Since
1983, he has been the President of Woodbrook Capital Inc., a venture capital and
investment firm. Since 1988, he has served as Chairman of Strescon Industries,
Inc., a concrete manufacturer.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company's Board of Directors has Audit, Compensation and Stock Option
Committees. Each of these committees is comprised of the Company's three outside
directors, Messrs. Cheney, Epstein and Linehan. Members of each committee serve
at the pleasure of the Board.

Audit Committee. The Company's Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and nonaudit fees, reviews the independent public accountants'
management letters and the Company's responses, reviews the adequacy of the
Company's internal accounting controls, and reviews major accounting or
reporting changes.

Compensation Committee. The Company's Compensation Committee reviews
employment, development, reassignment and compensation matters involving
corporate officers and other executive level employees, including issues
relating to salary, bonus and incentive arrangements.

Stock Option Committee. The Company's Stock Option Committee administers
the Company's Long-Term Incentive Plan.

INDEMNIFICATION

The Company's Code of Regulations provides for the indemnification of
directors and officers of the Company to the maximum extent permitted by Ohio
law and for the advancement of expenses incurred in connection with the defense
of any action, suit or proceeding that he was a party to by reason of the fact
that he is or was a director of the Company upon the receipt of an undertaking
to repay such amount unless it is ultimately determined that the director is
entitled to indemnification. The Company maintains a directors' and officers'
insurance policy which insures the officers and directors of the Company from
any claim arising out of an alleged wrongful act by such persons in their
respective capacities as officers and directors of the Company.

COMPENSATION OF DIRECTORS

Each member of the Company's Board of Directors who is not an employee of
the Company receives an annual fee of $16,000 for serving as a director of the
Company and receives a fee of $1,000 for each Board meeting attended. There is
no additional fee received for attending committee meetings. Directors who are
also employees of the Company do not receive any additional compensation for
their services as directors. The Company reimburses out-of-pocket expenses
incurred by all directors in connection with attending Board and committee
meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.

During the fiscal year ended December 31, 1996, Avery S. Cohen, a partner
in Baker & Hostetler LLP, which provides legal services to the Company, and D.M.
Draime served as members of the Company's compensation committee. Following the
Offering, the Compensation Committee will not include Messrs. Cohen or Draime or
any person who has been an executive officer of the Company.

41
<PAGE> 45

LONG-TERM INCENTIVE PLAN

The Company's Board of Directors adopted the Company's Long-Term Incentive
Plan (the "Plan") on August 5, 1997. The Plan will be submitted for the approval
of the Company's shareholders prior to consummation of the Offering. The purpose
of the Plan is to enable the Company to attract, retain and reward key employees
of the Company and its affiliates and to strengthen the mutuality of interest
between such key employees and the Company's shareholders. Grants of incentive
or nonqualified share options, restricted shares, deferred shares, share
purchase rights, share appreciation rights in tandem with options ("SARs"),
other share-based awards, or any combination thereof, may be issued under the
Plan to officers and key employees who are responsible for or contribute to the
management, growth or profitability of the business of the Company and its
affiliates. The Stock Option Committee administers the Plan and is responsible
for determining the type, amount and timing of grants and awards. The members of
the Stock Option Committee are not eligible to participate in the Plan. The
Company has reserved 1,000,000 Common Shares for issuance under the Plan. No
participant in the Plan may be granted stock options or other share awards in
any calendar year for more than 300,000 Common Shares. In connection with the
Offering, the Company expects to grant options to purchase an aggregate of
500,000 Common Shares to officers and other management employees with an
exercise price equal to the initial public offering price. The options will vest
two years after the date of grant. Options are expected to be granted to the
Named Executive Officers as follows: Mr. Abruzzo -- 200,000; Mr.
Pisani -- 100,000; Mr. Bagby -- 50,000; and Mr. Thomas -- 25,000.

The term of each option granted under the Plan may not exceed ten years
from the date of grant, and the exercise price of share options may not be less
than 100% of the fair market value (as defined in the Plan) of the shares on the
date the option is granted. The Stock Option Committee may grant tandem SARs to
any person granted an option under the Plan. Each tandem SAR will represent the
right to receive, in cash or shares as the Stock Option Committee determines, a
distribution in an amount equal to the excess of the fair market value of the
option shares (to which the SAR corresponds) on the date of exercise over the
exercise price for those shares. Each tandem SAR expires at the same time as its
corresponding option. The exercise of an option will result in an immediate
forfeiture of its corresponding SAR, and the exercise of an SAR will cause an
immediate forfeiture of its corresponding option. The Plan provides that all
options and tandem SARs will become exercisable on a change in control (as
defined in the Plan) of the Company.

The Stock Option Committee may award Common Shares under the Long-Term
Incentive Plan and may place restrictions on the transfer or defer the date of
receipt of those shares. Each award will specify any applicable restrictions or
deferral date, the duration of those restrictions, and the time at which the
restrictions lapse. Participants may be required to deposit shares with the
Company during the period of any restrictions. The Stock Option Committee may
also grant share purchase rights for which the purchase price may not be less
than 100% of the fair market value (as defined in the Plan) on the date of
grant.

The Stock Option Committee may grant other awards of shares and other
awards that are valued or otherwise based on the Company's Common Shares. The
Plan provides for vesting, exercise or forfeiture of rights granted under the
Plan on death, disability, termination of employment or a change of control. The
Board of Directors may modify, suspend or terminate the Plan as long as it does
not impair the rights of any participant.

42
<PAGE> 46

EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation. The following table sets
forth information with respect to all compensation earned by the chief executive
officer and the other four most highly compensated executive officers of the
Company (each a "Named Executive Officer") for services rendered during the year
ended December 31, 1996. The Company does not have employment agreements with
any of its employees.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING
SALARY BONUS COMPENSATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) COMPENSATION(1)
- ---------------------------- ---- -------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Cloyd J. Abruzzo, 1996 $204,000 $250,000 $ 10,142 -- --
President and Chief
Executive Officer 1995 192,000 200,000 9,624 -- --
1994 180,000 180,000 9,274 -- --
D.M. Draime, 1996 $189,600 $250,000 $ 9,359 -- $ 174,157
Chairman of the Board of
Directors 1995 189,600 700,000 6,324 -- 174,990
1994 189,600 750,000 8,449 -- 177,263
Gerald V. Pisani, 1996 $159,000 $140,000 $ 7,589 -- --
President of Pollak Group 1995 159,000 130,000 6,324 -- --
1994 150,000 115,000 5,974 -- --
David L. Thomas, 1996 $144,000 $110,000 $ 4,712 -- --
President of Alphabet
Group 1995 132,000 108,000 3,300 -- --
1994 132,000 100,000 3,300 -- --
Kevin P. Bagby, 1996 $120,000 $ 65,000 $ 945 34,771 --
Chief Financial Officer(2) 1995 55,000 40,000 445 -- --
</TABLE>

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

(1) Represents the aggregate amount of life insurance premiums paid by the
Company on a split-dollar life insurance policy. See "Certain Transactions."

(2) Mr. Bagby's employment with the Company commenced in July 1995.

Option Grants. The following table sets forth information regarding grants
of share options made to the Named Executive Officers during 1996:

OPTION GRANTS IN 1996

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENTAGE OF
UNDERLYING TOTAL OPTIONS
OPTIONS GRANTED TO
GRANTED EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME (#) FISCAL YEAR PER SHARE DATE
- ----------------------------------------------------- --------- ------------- -------------- ----------
<S> <C> <C> <C> <C>
Cloyd J. Abruzzo..................................... -- -- -- --
D.M. Draime.......................................... -- -- -- --
Gerald V. Pisani..................................... -- -- -- --
David L. Thomas...................................... -- -- -- --
Kevin P. Bagby....................................... 34,771(1) 7.9% $ 5.74 (1)
</TABLE>

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

(1) On June 30, 1996, the Company granted an option (the "Option") to Kevin P.
Bagby to purchase 34,771 Class B Common Shares of the Company (the "Option
Shares"). The Option, which had no expiration date, gave Mr. Bagby the right
to purchase the Option Shares at a purchase price of $5.74 per share. Mr.
Bagby exercised the Option on August 7, 1997.

43
<PAGE> 47

Option Holdings. The following table sets forth information with respect
to the options exercised by executive officers of the Company during 1996 and
the aggregate number and value of shares underlying unexercised options held by
each Named Executive Officer as of December 31, 1996:

AGGREGATED OPTION EXERCISES IN 1996
AND 1996 YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AS OF AS OF
ACQUIRED DECEMBER 31, 1996 DECEMBER 31, 1996($)
ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- -------------------------------- ----------- ----------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Cloyd J. Abruzzo................ -- -- -- -- -- --
D.M. Draime..................... -- -- -- -- -- --
Gerald V. Pisani................ -- -- -- -- -- --
David L. Thomas................. 69,547 $ 90,065(1) -- -- -- --
Kevin P. Bagby.................. -- -- -- 34,771 -- $30,950(1)
</TABLE>

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

(1) These values are based on the deemed fair market value of the option shares
at December 31, 1996 (based on the price at which the Company had the right
to acquire the shares under certain circumstances), less the exercise prices
payable for such shares.

44
<PAGE> 48

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Shares as of September 15, 1997 (assuming the
recapitalization described in Description of Capital Shares) by (i) each of the
Company's directors and Named Executive Officers, (ii) each person who is known
by the Company to beneficially own five percent or more of the outstanding
Common Shares, and (iii) all of the directors and executive officers of the
Company as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE OWNED AFTER THE
COMBINED OFFERING COMBINED OFFERING
--------------------- ---------------------
NAME(1) NUMBER PERCENT NUMBER PERCENT
- ----------------------------------------------------- ---------- ------- ----------- -------
<S> <C> <C> <C> <C>
D.M. Draime(2)....................................... 7,004,628 48.6% 7,004,628 32.7%
Scott N. Draime(3)................................... 2,312,989 16.0 2,312,989 10.8
Jeffrey P. Draime(4)................................. 1,903,521 13.2 1,903,521 8.9
Cloyd J. Abruzzo(5).................................. 1,840,656 12.8 2,014,393 9.4
Rebecca M. Gang(6)................................... 1,290,435 9.0 1,290,435 6.0
Avery S. Cohen(7)(8)................................. 532,694 3.7 546,125 2.5
Sheldon J. Epstein(8)................................ 408,214 2.8 421,645 1.9
Gerald V. Pisani(9).................................. 336,447 2.3 466,400 2.2
David L. Thomas...................................... 69,542 * 96,403 *
Kevin P. Bagby....................................... 34,771 * 48,202 *
Richard E. Cheney.................................... 34,771 * 48,202 *
Earl L. Linehan...................................... 34,771 * 48,202 *
Sten Forseke......................................... -- -- 352,031 1.6
All directors and executive officers of the Company
as a group (10 persons)............................ 10,296,494 71.5% 11,046,231 51.5%
</TABLE>

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

* Less than one percent.

(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over such shares. The information regarding the beneficial
ownership of Common Shares owned after the Combined Offering includes Common
Shares acquired pursuant to the Management Reinvestment. See "S Corporation
Distribution and Management Reinvestment."

(2) Includes 1,363,456 Common Shares held by Mr. Draime as executor of the
Estate of Steven A. Draime and 5,641,172 Common Shares held in trust for the
benefit of Mr. Draime of which Mr. Draime is trustee. The address of Mr.
Draime is 9400 East Market Street, Warren, Ohio 44484.

(3) Includes 818,240 Common Shares held in trust for the benefit of Scott N.
Draime of which Scott N. Draime is trustee, 124,481 Common Shares held in
trust for the benefit of Scott N. Draime, of which Avery S. Cohen and
Sheldon J. Epstein are co-trustees, 1,022,554 Common Shares held in trusts
for the benefit of Jeffrey P. Draime's and Rebecca M. Gang's children of
which Scott N. Draime is trustee, and 347,714 shares held in trust for the
benefit of Scott N. Draime of which Cloyd J. Abruzzo is trustee. The address
of Scott N. Draime is 9400 East Market Street, Warren, Ohio 44484.

(4) Includes 886,114 Common Shares held in trust for the benefit of Jeffrey P.
Draime of which Jeffrey P. Draime is trustee, 124,481 Common Shares held in
trust for the benefit of Jeffrey P. Draime, of which Avery S. Cohen and
Sheldon J. Epstein are co-trustees, 545,212 Common Shares held in trusts for
the benefit of Scott N. Draime's children, and 347,714 shares held in trust
for the benefit of Jeffrey P. Draime of which Cloyd J. Abruzzo is trustee.
The address of Jeffrey P. Draime is 9400 East Market Street, Warren, Ohio
44484.
(5) Includes 299,590 Common Shares held in trust for the benefit of Cloyd J.
Abruzzo of which Mr. Abruzzo is trustee, an aggregate of 1,390,856 Common
Shares held in trusts for the benefit of D.M. Draime's children and
grandchildren of which Mr. Abruzzo is trustee and an aggregate of 150,210
Common Shares held in trusts for the benefit of Cloyd J. Abruzzo's children
of which Arthur Abruzzo, Cloyd J. Abruzzo's brother, is trustee. The address
of Cloyd J. Abruzzo is 9400 East Market Street, Warren, Ohio 44484.

45
<PAGE> 49

(6) Includes 124,481 Common Shares held in trust for the benefit of Rebecca M.
Gang of which Avery S. Cohen and Sheldon J. Epstein are co-trustees and
347,714 shares shares held in trust for the benefit of Rebecca M. Gang of
which Cloyd J. Abruzzo is trustee. The address of Rebecca M. Gang is 9400
East Market Street, Warren, Ohio 44484.

(7) Includes 124,481 Common Shares held under the Ohio Transfer to Minors Act
for the benefit of William M. Draime and John A. Draime of which Mr. Cohen
is custodian.

(8) Includes 373,443 Common Shares held in separate trusts for the benefit of
Scott N. Draime, Jeffrey P. Draime and Rebecca M. Gang of which Mr. Cohen
and Mr. Epstein are co-trustees.

(9) Includes 166,902 Common Shares held in separate trusts for the benefit of
Gerald V. Pisani's children, of which Gerald V. Pisani's wife is the
trustee.

46
<PAGE> 50

CERTAIN TRANSACTIONS

TRANSACTIONS WITH DIRECTORS

The Company believes that all of its past and current transactions with
affiliates have been made and entered into on terms neither materially more nor
materially less favorable to the Company than those available from unaffiliated
third parties. The Company has adopted a policy that future transactions with
affiliates will be submitted for approval by a majority of the Company's
disinterested directors.

Chip Supply, Inc. D.M. Draime and certain of his family members own in the
aggregate 60.0%, and Cloyd J. Abruzzo owns 1.17%, of Chip Supply, Inc., a
Florida corporation ("Chip"). From January 1, 1996 to September 30, 1996, Chip
leased a building located in Orlando, Florida from the Company. During this
lease period, the Company received lease payments in the aggregate amount of
$235,200. On September 30, 1996, the Company sold the leased building to Chip
for $2.2 million. Chip borrowed funds to purchase the building. Prior to
September 15, 1997, the Company guaranteed the repayment of such loan to Chip.
On June 30, 1997 the outstanding principal amount of the loan was approximately
$2.1 million. Prior to September 15, 1997, the Company was also the guarantor
for a $500,000 standby letter of credit issued in connection with this loan. As
of July 31, 1997, there was no outstanding balance on the standby letter of
credit.

Alphabet Greenwood Facility. D.M. Draime is the sole owner of the Alphabet
Division facility located in Greenwood, South Carolina. The Company leases the
facility from Mr. Draime pursuant to a lease expiring on September 15, 2004. In
each of 1994, 1995 and 1996, the Company made lease payments to Mr. Draime in
the aggregate amount of $157,200. In February 1997, the Company restructured its
operations and terminated its use of the Greenwood facility. The Company
continues to make lease payments to Mr. Draime, and the Greenwood property is
for sale.

Hunters Square. D.M. Draime is a 25% owner of Hunters Square, Inc., an
Ohio corporation ("HSI"), which owns Hunters Square, a shopping mall located in
Warren, Ohio. The Company leases office space in Hunters Square for use as the
headquarters of the Alphabet Division. The Company pays all maintenance, tax and
insurance costs related to the operation of the office. Lease payments made by
the Company to HSI in 1994, 1995 and 1996 were $118,763, $153,576 and $189,547,
respectively. The Company continues to make lease payments as required under the
lease agreement which terminates in June 2002.

Technaflow, Inc. D.M. Draime, together with certain of his family members,
owns 97.46%, and Cloyd J. Abruzzo owns 2.54%, of Technaflow, Inc., an Ohio
corporation. The Company provides management services to Technaflow, Inc.,
including the review of operations and strategic initiatives, and has received a
management fee of $300,000 annually from Technaflow, Inc. The Company has also
paid the salary of the president of Technaflow, Inc., Wayne Reichard. Mr.
Reichard was paid a salary of $177,912, $181,900 and $180,459 by the Company in
1994, 1995 and 1996, respectively. Effective September 1, 1997, all salary and
benefits for Mr. Reichard are being paid by Technaflow, Inc. and the annual
management fee paid to the Company was reduced to $60,000.

Industrial Development Associates LP. Earl Linehan and D.M. Draime, as
limited partners, own 11.81% and 10.00%, respectively, of Industrial Development
Associates ("IDA"), a Maryland limited partnership real estate development
company in which the Company is a 30% general partner. Alphabet, a division of
the Company, has entered into a lease agreement with IDA pursuant to which the
Alphabet Division leases a facility located in Mebane, North Carolina, until
June 15, 2001. Alphabet is responsible for all maintenance, taxes and insurance.
Alphabet made lease payments to IDA of $107,606, $103,372, and $111,631 for
1994, 1995, and 1996, respectively. In addition, Alphabet subleases warehouse
space in the same industrial park as the Mebane facility from Baumgartner, Inc.
Baumgartner, Inc. leases the space from IDA. Alphabet made sub-lease payments to
Baumgartner, Inc. of $74,622, and $78,577 in 1995 and 1996, respectivley.

Relationship with Counsel. Avery S. Cohen, a Director of the Company, is a
partner in Baker & Hostetler LLP, a law firm which has served as general outside
counsel for the Company since 1993 and is expected to continue to do so in the
future.

47
<PAGE> 51

Insurance on the Life of D.M. Draime. The Company paid the premiums on a
$12.0 million insurance policy on the life of D.M. Draime and C.M. Draime, D.M.
Draime's wife. From 1993 through 1996, the Company recorded a receivable of
$662,800 for premiums paid on this policy. Under the policy, upon the death of
Mr. Draime and Mrs. Draime, a family trust will receive the amount of the life
insurance policy less the aggregate amount of the premiums paid by the Company,
which amount will be paid to the Company. Upon or prior to the completion of the
Offering, the Company will be reimbursed $662,800 for the premiums paid on this
policy by or on behalf of Mr. and Mrs. Draime.

Shareholder Agreements. The Company, D.M. Draime and certain of the
shareholders and persons owning options to purchase shares of the Company have
entered into shareholder or share restriction agreements. Such agreements will
terminate upon the consummation of the Offering.

DESCRIPTION OF CAPITAL SHARES

As of September 1, 1997, the Company's authorized capital shares consisted
of 32,724 Class A Common Shares, without par value (Voting), and 87,276 Class B
Common Shares, without par value (Nonvoting) of which 15,465 and 87,837 shares,
respectively, were issued and outstanding. In addition, 250 Class B Common
Shares were reserved for issuance upon the exercise of options held by one
employee. In anticipation of the Combined Offering, the Board of Directors and
the current shareholders of the Company will adopt the Company's Second Amended
and Restated Articles of Incorporation (the "Articles of Incorporation") to
authorize a single class of 60 million Common Shares, without par value, and
five million preferred shares, without par value ("Preferred Shares"). Effective
upon the filing of such amendment, each of the then existing Class A Common
Shares and Class B Common Shares will be recapitalized into 139.0856 Common
Shares. Except as otherwise expressly stated, all references in this Prospectus
to the Company's Articles of Incorporation or its capital shares (including the
Common Shares) are to such after effectiveness of such amendment and
recapitalization. Immediately following completion of the Combined Offering,
there are expected to be 21,445,287 Common Shares outstanding (22,322,787 Common
Shares if the Underwriters' overallotment option is exercised in full),
1,000,000 Common Shares reserved for issuance pursuant to the Plan and no
preferred shares outstanding.

COMMON SHARES

Holders of Common Shares are entitled to one vote per share on all matters
submitted to a vote of the shareholders. Holders do not have the right to
cumulate their votes in the election of directors. Subject to the rights of
holders of Preferred Shares, holders of Common Shares are entitled to receive
dividends if, as and when dividends are declared from time to time by the
Company's Board of Directors out of assets legally available therefor. Upon
liquidation, dissolution or winding up of the Company, the holders of Common
Shares are entitled to share ratably in all assets of the Company after payment
of liabilities and accrued but unpaid dividends and liquidation preferences on
any outstanding Preferred Shares. The Common Shares have no preemptive or
conversion rights and are not subject to further calls or assessment by the
Company. There are no redemption or sinking fund provisions applicable to the
Common Shares. The Common Shares being sold by the Company in the Combined
Offering, when sold to the Underwriters and the Management Investors in the
manner described in this Prospectus will be, and all currently outstanding
Common Shares of the Company are, duly authorized, validly issued, fully paid
and nonassessable.

PREFERRED SHARES

The Articles of Incorporation authorize the Board of Directors of the
Company to fix the number of Preferred Shares and determine the designation of
any series of the authorized Preferred Shares and to determine or alter the
rights, preferences, privileges and restrictions granted or imposed upon any
unissued series of Preferred Shares. As of the date of this Prospectus, the
Company has not issued any Preferred Shares. The issuance of Preferred Shares
could have the effect of delaying or preventing a change in control of the
Company. The Company has no present intention to issue Preferred Shares.

48
<PAGE> 52

CERTAIN PROVISIONS OF OHIO LAW

Section 1701.59 of the Ohio Revised Code (the "Ohio Code") provides, with
certain limited exceptions, that a director shall be held liable in damages for
any action he takes or fails to take as a director only if it is proved by clear
and convincing evidence that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation or
with reckless disregard for its best interest. In addition, Section 1701.59 of
the Ohio Code provides that a director of an Ohio corporation, in determining
what he reasonably believes to be in the best interests of the corporation,
shall consider the interests of the corporation's shareholders and may consider,
in his discretion, any of the following: (1) the interests of the corporation's
employees, suppliers, creditors and customers; (2) the economy of the State of
Ohio and the nation; (3) community and societal considerations; and (4) the
long-term as well as short-term interests of the corporation and its
shareholders, including the possibility that these interests may be best served
by the continued independence of the corporation.

The Ohio Code also authorizes Ohio corporations to indemnify officers and
directors from liability if the officer or director acted in good faith and in a
manner reasonably believed by the officer or director to be in or not opposed to
the best interests of the corporation and, with respect to any criminal actions,
if the officer or director had no reason to believe his action was unlawful. In
the case of an action by or on behalf of a corporation, indemnification may not
be made (i) if the person seeking indemnification is adjudged liable for
negligence or misconduct, unless the court in which such action was brought
determines such person is fairly and reasonably entitled to indemnification or
(ii) if liability asserted against such person concerns certain unlawful
distributions. The indemnification provisions of the Ohio Code require
indemnification if a director or officer has been successful on the merits or
otherwise in defense of any action, suit or proceeding that he was a party to by
reason of the fact that he is or was a director or officer of the corporation.
The indemnification authorized under Ohio law is not exclusive and is in
addition to any other rights granted to officers and directors under the
articles of incorporation or code of regulations of the corporation or any
agreement between officers and director and the corporation. The Company's Code
of Regulations provides for the indemnification of directors and officers of the
Company to the maximum extent permitted by Ohio law as authorized by the Board
of Directors of the Company, and for the advancement of expenses incurred in
connection with the defense of any action, suit or proceeding that he was a
party to by reason of the fact that he is or was a director of the Company upon
the receipt of an undertaking to repay such amount unless it is ultimately
determined that the director is entitled to indemnification. A corporation may
purchase and maintain insurance or furnish similar protection on behalf of any
officer or director against any liability asserted against him and incurred by
him in his capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him against
such liability under the Ohio Code.

Chapter 1704 of the Ohio Code prohibits certain mergers, dispositions and
acquisitions of assets, issuances or purchases of securities, liquidations or
dissolutions, or reclassifications of the then outstanding shares of an Ohio
corporation with 50 or more shareholders (an issuing public corporation)
involving, or for the benefit of, certain holders of shares representing 10% or
more of the voting power (other than a current 10% shareholder that does not
increase its present proportional interest) (an "Interested Shareholder"),
unless (a) the applicable transaction is approved by the directors of the
Company prior to the shareholder becoming an Interested Shareholder, (b) the
acquisition of 10% of the voting power is approved by the directors prior to the
shareholder becoming an Interested Shareholder, or (c) the transaction involves
an Interested Shareholder who has been such for at least three years and the
transaction is approved by holders of two-thirds of the voting power of the
Company (or a lesser proportion provided in the articles of incorporation) and
the holders of a majority of the voting power not held by the Interested
Shareholder or certain minimum price and form of consideration requirements are
met.

Section 1701.041 of the Ohio Code regulates control bids for corporations
in Ohio having certain concentrations of Ohio shareholders and permits the Ohio
Division of Securities to suspend a control bid if certain information is not
provided to offerees. A control bid includes the purchase or offer to purchase
any equity security of the Company from a resident of Ohio if, after the
purchase of that security, the offeror would be directly or indirectly the
beneficial owner of more than 10% of any class of issued and outstanding equity

49
<PAGE> 53

securities of the Company. Section 1707.043 of the Ohio Code, the so-called
"green mail disgorgement" statute, provides an Ohio corporation, or in certain
circumstances the shareholders of an Ohio corporation, the right to recover
profits realized under certain circumstances by persons who dispose of
securities of a corporation within 18 months of proposing to acquire such
corporation.

Under Section 1701.831 of the Ohio Code, the acquisition of shares
entitling the holder to exercise certain levels of voting power of the Company
(one-fifth or more, one-third or more, or a majority) can be made only with the
prior authorization of (i) the holders of at least a majority of the total
voting power of the Company and (ii) the holders of at least a majority of the
total voting power held by shareholders other than the proposed acquiror,
officers of the Company elected or appointed by the directors, and directors of
the Company who are also employees of the Company and excluding certain shares
that are transferred after the announcement of the proposed acquisition and
prior to the vote with respect to the proposed acquisition.

It is possible that the foregoing provisions, as well as the ability of the
Board to issue Preferred Shares, will discourage other persons from making a
tender offer for or acquisition of substantial amounts of the Company's Common
Shares, or may delay changes in control or management of the Company.

REGISTRAR AND TRANSFER AGENT

The registrar and transfer agent for the Common Shares is National City
Bank.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of the Combined Offering, the Company will have
outstanding 21,445,287 Common Shares, assuming no exercise of the Underwriters'
overallotment option. The Common Shares sold in the Combined Offering will be
freely tradeable (other than by an "affiliate" of the Company as such term is
defined in the Securities Act) without restriction or further registration under
the Securities Act. All of the remaining 15,159,630 outstanding shares are
"restricted securities" as the term is defined in Rule 144 (the "Restricted
Shares"), and may not be sold in the public market except in compliance with the
registration requirements of the Securities Act or pursuant to an exemption from
registration under Rules 144 or 701 under the Securities Act, which are
summarized below.

Each of the Company and the directors, executive officers and the other
shareholders of the Company has agreed that, without the prior written consent
of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ended 180 days after the date hereof, subject to certain
exceptions, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchaser or otherwise transfer or dispose of, directly or
indirectly, any Common Shares or any securities convertible into or exchangeable
for Common Shares or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Shares, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Shares or such other
securities, or otherwise. The number of outstanding shares subject to the lockup
arrangements that will be available for sale in the public market, subject to
compliance with Rule 144 upon expiration of the 180-day lockup period, will be
approximately 14 million shares. See "Underwriters."

In general, under Rule 144 as currently in effect, a person who has (or
persons whose shares are aggregated who have) beneficially owned shares for at
least one year, including an "affiliate," as that term is defined below, would
be entitled to sell, within any three-month period, that number of shares that
does not exceed the greater of (i) 1% of the then outstanding number of shares
and (ii) the average weekly trading volume of the shares during the four
calendar weeks preceding that sale. Sales pursuant to Rule 144 are also subject
to certain manner-of-sale restrictions, notice requirements and the availability
of information about the Company. A person who is not deemed an "affiliate" of
the Company, and who has beneficially owned shares for at least two years, is
entitled to sell such shares under Rule 144 without regard to the limitations
described above. As defined in Rule 144, an "affiliate" of an issuer is a person
who directly, or indirectly through the use of one or more intermediaries,
controls, or is controlled by, or is under common control with, that issuer.
Upon

50
<PAGE> 54

completion of the Combined Offering, approximately 14 million of the Restricted
Shares will be eligible for sale under Rule 144, subject to the limitations
described above and subject to the 180-day lock-up period, and an additional
438,113 Common Shares and 757,063 Common Shares will be eligible for sale under
Rule 144, subject to the limitations described above, in August 1998 and October
1998, respectively.

In addition, any employee, officer or director of or consultant of the
Company who purchased his or her shares pursuant to a written compensatory plan
or contract may be entitled to rely on the resale provisions of Rule 701. Rule
701 permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144 without having to
comply with the public information, volume limitation or notice provisions of
Rule 144.

Prior to the date of this Prospectus, there has been no public market for
the Common Shares. Trading of the Common Shares is expected to commence
following the completion of the Combined Offering. No prediction can be made as
to the effect, if any, that future sales of shares or the availability of shares
for future sale will have on the market price prevailing from time to time.
Sales of substantial amounts of Common Shares (including shares issued on the
exercise of options), or the perception that such sales could occur, could
adversely affect the market price of the Common Shares.

51
<PAGE> 55

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-U.S. HOLDERS OF COMMON SHARES

The following discussion concerns certain United States federal income and
estate tax consequences of the ownership and disposition of Common Shares
applicable to Non-U.S. Holders of shares of the Common Shares. For purposes of
this discussion, a "Non-U.S. Holder" is any person or entity other than (i) a
citizen or resident of the United States, (ii) a corporation, partnership, or
other entity created or organized in the United States or under the laws of the
United States or of any State, or (iii) an estate or trust whose income is
includable in gross income for United States federal income tax purposes,
regardless of its source. This discussion (i) does not consider any specific
facts or circumstances that may apply to a particular Non-U.S. Holder in light
of his or her particular circumstances, (ii) is based on current law which is
subject to change (possibly on a retroactive basis), (iii) does not address all
aspects of federal income and estate taxation, and (iv) does not deal with
foreign, state, or local consequences that may be relevant to Non-U.S. Holders.
Accordingly, each prospective investor is urged to consult its own tax advisor
regarding the United States federal, state, local and non-U.S. income, estate,
and other tax consequences of holding and disposing of shares of Common Shares.

DIVIDENDS

If dividends are paid to a Non-U.S. Holder, such Holder will be subject,
except as described below, to United States withholding tax at a 30% rate or a
lower rate specified by an applicable tax treaty. To determine the applicability
of a tax treaty providing for a lower rate of withholding, dividends paid to an
address in a foreign country generally are presumed under current Treasury
Regulations to be paid to a resident of that country, absent knowledge that such
presumption is not warranted. However, under Proposed Treasury Regulations that
have not yet been put into effect, to claim the benefit of a lower rate of
withholding specified in a treaty, Non-U.S. Holders of Common Shares would be
required to file certain forms with the payor of the dividends. A Non-U.S.
Holder eligible for a rate of United States withholding tax pursuant to a tax
treaty may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund.

Dividends will not be subject to withholding if they are either (i)
effectively connected with a trade or business carried on by the Non-U.S Holder
within the United States, or (ii) attributable to a United States permanent
establishment maintained by the Non-U.S. Holder to which a tax treaty applies,
and the Non-U.S. Holder files certain forms with the payor of dividends.
Dividends effectively connected with such a trade or business or attributable to
such a permanent establishment will generally be subject to United States
federal income tax at regular rates and, in the case of a Non-U.S. Holder that
is a corporation, may be subject to the branch profits tax at a rate of 30% (or
lower rate specified by an applicable tax treaty).

GAIN ON DISPOSITION

A Non-U.S. Holder generally will not be subject to United States federal
income or withholding tax on any gain recognized on a sale or other disposition
of Common Shares unless (i) the Company is or has been a "U.S. real property
holding corporation," as defined in Section 897(c)(2) of the Code, for United
States federal income tax purposes (which the Company does not believe that it
is or is likely to become) and the Non-U.S. Holder disposing of the Common
Shares owned, directly or constructively, at any time during the five-year
period preceding the disposition, more than five percent of outstanding Common
Shares; (ii) the gain is effectively connected with the conduct of a trade or
business within the United States carried on by the Non-U.S. Holder or, if a tax
treaty applies, attributable to a permanent establishment maintained within the
United States by a Non-U.S. Holder; (iii) in the case of a Non-U.S. Holder who
is an individual, the holder holds the Common Shares as a capital asset and is
present in the United States for 183 days or more during the taxable year of the
disposition, and either (A) such Non-U.S. Holder has a "tax home," for U.S.
federal income tax purposes, in the United States, and the gain from the
disposition is not attributable to an office or other fixed place of business
maintained by such Non-U.S. Holder in a foreign country, or (B) the gain from
the disposition is attributable to an office or fixed place of business
maintained by such Non-U.S. Holder in the United States; or (iv) the Non-U.S.
Holder is subject to tax pursuant to provisions of the Code applicable to
certain United States expatriates.

52
<PAGE> 56

ESTATE TAX

Common Shares owned or treated as owned by an individual Non-U.S. Holder at
the date of death will be includable in the individual's gross estate for United
States federal estate tax purposes unless an applicable tax treaty provides
otherwise, and may be subject to United States federal estate tax.

BACKUP WITHHOLDING AND INFORMATION REPORTING

The Company must report annually to the Internal Revenue Service and to
each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. holder. These reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable tax treaty.
Copies of these information returns also may be made available under the
provisions of a specific treaty or agreement to the tax authorities in the
country in which the Non-U.S. Holder resides. Under current Treasury Regulations
United States backup withholding (which generally is a withholding requirement
imposed at the rate of 31% on certain payments to persons that fail to furnish
the information required under the United States information reporting
requirements) will generally not apply to dividends paid on Common Shares to a
Non-U.S. Holder at an address outside the United States. However, under Proposed
Treasury Regulations that have not yet been put into effect, dividends paid on
Common Shares to a Non-U.S. Holder would be subject to backup withholding unless
certain forms are filed with the payor of the dividends.

The payment of the proceeds from the disposition of Common Shares by a
Non-U.S. Holder to or through the United States office of a broker will be
subject to information reporting and backup withholding unless the owner
certifies, among other things, its name, address and status as a Non-U.S. Holder
under penalties of perjury or otherwise establishes an exemption. The payment of
the proceeds from the disposition of Common Shares to or through a non-U.S.
office of a non-U.S. broker will not be subject to backup withholding and will
generally not be subject to information reporting. However, unless the broker
has documentary evidence in its files that the owner is a Non-U.S. Holder,
information reporting (but not backup withholding) will apply to dispositions
through a non- U.S. office of a Non-U.S. broker that is a United States person,
a United States "controlled foreign corporation" for United States federal
income tax purposes, or a person 50% or more of whose gross income from all
sources for a certain three-year period was effectively connected with a United
States trade or business. Under Proposed Treasury Regulations, backup
withholding would also apply to proceeds from dispositions of Common Shares if
the broker has actual knowledge that the payee is a United States person.

The backup withholding and information reporting rules currently are under
review by the Treasury Department, and their application to Common Shares is
likely to change.

53
<PAGE> 57

UNDERWRITERS

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the U.S.
Underwriters named below for whom Morgan Stanley & Co. Incorporated, and
Donaldson, Lufkin & Jenrette Securities Corporation are acting as U.S.
Representatives, and the International Underwriters named below for whom Morgan
Stanley & Co. International Limited, and Donaldson, Lufkin & Jenrette Securities
Corporation are acting as International Representatives, have severally agreed
to purchase, and the Company has agreed to sell to them, severally, the
respective number of Common Shares set forth opposite the names of such
Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated.......................................
Donaldson, Lufkin & Jenrette Securities Corporation.....................

---------
Subtotal................................................................ 4,680,000
---------
International Underwriters:
Morgan Stanley & Co. International Limited..............................
Donaldson, Lufkin & Jenrette Securities Corporation.....................

---------
Subtotal................................................................ 1,170,000
---------
Total................................................................ 5,850,000
=========
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively referred
to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several Underwriters
to pay for and accept delivery of the Common Shares offered hereby are subject
to the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all of the Common
Shares offered hereby (other than those covered by the U.S. Underwriters'
overallotment option described below) if any such shares are taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter apply only to it in its capacity as an International
Underwriter. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the Agreement between
U.S. and International Underwriters. As used herein, "United States or Canadian
Person" means any national or resident of the United States or Canada, or any
corporation, pension, profit-sharing or other trust or other entity organized
under the laws of the United States or Canada or of any political subdivision
thereof (other than a branch located outside the United States and

54
<PAGE> 58

Canada of any United States or Canadian Person), and includes any United States
or Canadian branch of a person who is otherwise not a United States or Canadian
Person. All Common Shares to be purchased by the Underwriters under the
Underwriting Agreement are referred to herein as the "Shares."

Pursuant to the Agreement between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of Shares as may be mutually agreed. The per share price of any
Shares so sold shall be the public offering price set forth on the cover page
hereof, in United States dollars, less an amount not greater than the per share
amount of the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any Shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer or sale is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the date six months after the closing date for the sale of
the Shares to the International Underwriters, will not offer or sell, any Shares
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the offering of the Shares to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
to Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the Shares a notice stating in substance that, by purchasing such
Shares, such dealer represents and agrees that it has not offered or sold, and
will not offer or sell, any of such Shares, directly or indirectly, in Japan or
to or for the account of any resident thereof except for offers or sales to
Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law, and that
such dealer will send to any other dealer to whom it sells any of such Shares a
notice containing substantially the same statement as is contained in this
sentence.

55
<PAGE> 59

The Underwriters initially propose to offer part of the Common Shares
directly to the public at the public offering price set forth on the cover page
hereof and part to certain dealers at a price that represents a concession not
in excess of $ a share under the public offering price. Any Underwriter
may allow, and such dealers may reallow, a concession not in excess of
$ a share to other Underwriters or to certain dealers. After the
initial offering of the Common Shares, the offering price and other selling
terms may from time to time be varied by the Representatives.

The Company has granted to the U.S. Underwriters an option, exercisable for
30 days from the date of this Prospectus, to purchase up to an aggregate of
additional Common Shares at the public offering price set forth on the cover
page hereof, less underwriting discounts and commissions. The U.S. Underwriters
may exercise such option solely for the purpose of covering overallotments, if
any, made in connection with the offering of the Common Shares offered hereby.
To the extent such option is exercised, each U.S. Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional Common Shares as the number set forth next to such
U.S. Underwriter's name in the preceding table bears to the total number of
Common Shares set forth next to the names of all U.S. Underwriters in the
preceding table.

The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of Common
Shares offered by them.

The Common Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, under the symbol "SRI."

Each of the Company and the directors, executive officers and the other
shareholders of the Company has agreed that, without the prior written consent
of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, and subject
to certain exceptions it, will not, during the period ending 180 days after the
date of this Prospectus, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Shares, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Shares or such other securities, in cash or otherwise. The
restrictions described in this paragraph do not apply to (x) the sale of Shares
to the Underwriters, (y) the issuance by the Company of Common Shares upon the
exercise of an option or a warrant or the conversion of a security outstanding
on the date of this Prospectus of which the Underwriters have been advised in
writing or (z) transactions by any person other than the Company relating to
Common Shares or other securities acquired in open market transactions after the
completion of the offering of the Shares.

In order to facilitate the Offering of the Common Shares, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Shares. Specifically, the Underwriters may overallot in
connection with the Offering, creating a short position in the Common Shares for
their own account. In addition, to cover overallotments or to stabilize the
price of the Common Shares, the Underwriters may bid for, and purchase, Common
Shares in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer for distributing the
Common Shares in the offering, if the syndicate repurchases previously
distributed Common Shares in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Shares above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.

At the request of the Company, the Underwriters have reserved for sale up
to 300,000 of the Common Shares offered hereby for sale at the initial offering
price to certain officers and employees of the Company. The number of Common
Shares available for sale to the general public will be reduced to the extent
such

56
<PAGE> 60

persons purchase such reserved shares. Any reserved shares which are not so
purchased will be offered by the Underwriters to the general public on the same
basis as the other shares offered hereby. All purchasers of the Common Shares
reserved pursuant to this paragraph who are also directors or executive officers
of the Company will be required to enter into agreements identical to those
described above restricting the transferability of such shares for a period of
180 days after the date of this Prospectus.

Donaldson, Lufkin & Jenrette Securities Corporation has agreed to pay (out
of the fees it receives in the underwriting) an affiliate of Pershing Trading
Company, L.P., an NASD member and an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation, a nominal fee for introducing Donaldson, Lufkin &
Jenrette Securities Corporation to the Company.

PRICING OF THE OFFERING

Prior to the Offering, there has been no public market for the Common
Shares. The initial public offering price will be determined by negotiations
between the Company and the U.S. Representatives. Among the factors to be
considered in determining the initial public offering price will be the future
prospects of the Company and its industry in general, sales, earnings and
certain other financial operating information of the Company in recent periods,
and the price-earnings ratios, price-sales ratios, market prices of securities
and certain financial and operating information of companies engaged in
activities similar to those of the Company. The estimated initial public
offering price range set forth on the cover page of this Preliminary Prospectus
is subject to change as a result of market conditions and other factors.

EXPERTS

The audited financial statements and schedule of the Company, included in
this Prospectus and elsewhere in the Registration Statement, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

LEGAL MATTERS

The validity of the issuance of the Common Shares offered hereby will be
passed upon for the Company by Baker & Hostetler LLP, Cleveland, Ohio. Avery S.
Cohen, secretary and a director of the Company and the beneficial owner of
532,694 Common Shares, is a partner in Baker & Hostetler LLP and is expected to
purchase an additional 13,431 Common Shares in the Management Reinvestment.
Certain legal matters will be passed upon for the Underwriters by Katten Muchin
& Zavis, Chicago, Illinois.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (of which this Prospectus is a part) under the Securities Act with respect
to the Common Shares offered hereby. This Prospectus does not contain all of the
information contained in the Registration Statement (certain portions of which
have been omitted as permitted by the rules and regulations of the Commission),
and reference is made to the Registration Statement and the exhibits thereto for
further information with respect to the Company and the Common Shares to which
this Prospectus relates. Statements contained herein concerning the provisions
of any contract, agreement or other document are not necessarily complete
(although such statements constitute the information which is required to be
stated herein or which is material to investors), and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement for a more complete description of the matter involved,
and each such statement is qualified in its entirety by such reference. The
Registration Statement, including the exhibits and schedules filed therewith,
may be inspected at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission located at 7 World Trade Center, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60606. You can
request copies of these documents, upon payment of a duplication fee, by writing
to the Commission. Please

57
<PAGE> 61

STONERIDGE, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants............................................ F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997...... F-3
Consolidated Statements of Income for the Years Ended December 31, 1994, 1995 and
1996 and for the Six Months Ended June 30, 1996 and 1997.......................... F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31,
1994, 1995 and 1996 and for the Six Months Ended June 30, 1997.................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996 and for the Six Months Ended June 30, 1996 and 1997...................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
Schedule II -- Valuation and Qualifying Accounts.................................... F-18
</TABLE>

F-1
<PAGE> 62

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Stoneridge, Inc.:

We have audited the accompanying consolidated balance sheets of Stoneridge, Inc.
(an Ohio corporation) and Subsidiaries as of December 31, 1995 and 1996 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Stoneridge, Inc. and
Subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements and included on page F-17 of this Prospectus is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. The schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Cleveland, Ohio,
March 24, 1997 (except with respect to the
matters discussed in Notes 5, 9, 11 and 14
as to which the date is September 15, 1997).

F-2
<PAGE> 63

STONERIDGE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
-------------------- JUNE 30, JUNE 30, 1997
1995 1996 1997 (NOTE 12)
-------- -------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................... $ 282 $ 357 $ 7 $ 7
Accounts receivable, less allowance for
doubtful accounts of $453, $265, and $287... 49,477 46,783 51,753 51,753
Inventories.................................... 26,428 30,158 31,135 31,135
Deferred income taxes.......................... -- -- -- 4,357
Prepaid expenses and other..................... 9,243 5,357 5,541 5,541
-------- -------- -------- --------
Total current assets........................ 85,430 82,655 88,436 92,793
-------- -------- -------- --------
Property, Plant and Equipment, net............... 54,767 55,200 55,721 55,721
Other Assets:
Goodwill and other intangibles, net............ 31,860 30,769 30,193 30,193
Investments and other.......................... 241 9,863 9,479 9,479
-------- -------- -------- --------
Total Assets..................................... $172,298 $178,487 $183,829 $188,186
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.............. $ 311 $ 3,001 $ 200 $ 200
Accounts payable............................... 34,219 21,365 26,251 26,251
Accrued expenses and other..................... 16,049 17,232 23,526 23,526
Accrued shareholder distributions.............. -- 1,100 -- 76,500
-------- -------- -------- --------
Total current liabilities................... 50,579 42,698 49,977 126,477
-------- -------- -------- --------
Long-Term Debt, net of current portion........... 47,999 51,156 34,109 31,595
Deferred Income Taxes............................ -- -- -- 6,468
-------- -------- -------- --------
Total long term liabilities................. 47,999 51,156 34,109 38,063
-------- -------- -------- --------
Shareholders' Equity:
Common shares, without par value, 60,000,000
authorized, 13,908,560 issued and
outstanding at December 31, 1995 and
13,964,448 outstanding at December 31, 1996
and June 30, 1997, stated at................ -- -- -- --
Additional paid-in capital..................... 7,958 9,195 9,370 23,646
Retained earnings.............................. 65,762 75,438 90,373 --
-------- -------- -------- --------
73,720 84,633 99,743 23,646
-------- -------- -------- --------
Total Liabilities and Shareholders' Equity $172,298 $178,487 $183,829 $188,186
======== ======== ======== ========
</TABLE>

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

F-3
<PAGE> 64

STONERIDGE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for per share data)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
-------------------------------- --------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Sales.............................. $225,531 $278,043 $363,748 $178,965 $218,787
Costs and Expenses:
Cost of goods sold................... 164,974 211,712 288,142 141,339 165,610
Selling, general and administrative
expenses.......................... 32,542 37,509 46,694 24,309 25,212
-------- -------- -------- -------- --------
Operating income................ 28,015 28,822 28,912 13,317 27,965
Gain on sale of fixed assets......... -- -- -- -- (1,733)
Interest expense, net................ 2,344 2,014 4,317 1,861 1,863
-------- -------- -------- -------- --------
Income Before Income Taxes............. 25,671 26,808 24,595 11,456 27,835
-------- -------- -------- -------- --------
Provision for Income Taxes:
State and local income taxes......... 460 654 524 263 325
Income tax benefit from the
elimination of deferred federal
income taxes...................... (1,455) -- -- -- --
-------- -------- -------- -------- --------
(995) 654 524 263 325
-------- -------- -------- -------- --------
Net Income............................. $ 26,666 $ 26,154 $ 24,071 $ 11,193 $ 27,510
======== ======== ======== ======== ========
PRO FORMA INCOME DATA (NOTE 12)
(UNAUDITED):
Income before income taxes............. $ 24,595 $ 27,835
Pro forma adjustment -- Income taxes... 10,295 11,586
-------- --------
Pro forma net income................... $ 14,300 $ 16,249
-------- --------
Pro forma net income per share......... $ .56 $ .64
======== ========
Pro forma weighted average shares
outstanding.......................... 25,469 25,469
======== ========
</TABLE>

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

F-4
<PAGE> 65

STONERIDGE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN RETAINED
CAPITAL EARNINGS TOTAL
---------- -------- --------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1993.................................. $7,958 $ 41,988 $ 49,946
Net income................................................ -- 26,666 26,666
Distributions declared.................................... -- (13,500) (13,500)
------ -------- --------
BALANCE, DECEMBER 31, 1994.................................. 7,958 55,154 63,112
Net income................................................ -- 26,154 26,154
Distributions declared.................................... -- (15,546) (15,546)
------ -------- --------
BALANCE, DECEMBER 31, 1995.................................. 7,958 65,762 73,720
Net income................................................ -- 24,071 24,071
Stock options exercised, net.............................. 225 -- 225
Compensation expense from stock option plans.............. 450 -- 450
Capital contribution...................................... 562 -- 562
Distributions declared.................................... -- (14,395) (14,395)
------ -------- --------
BALANCE, DECEMBER 31, 1996.................................. 9,195 75,438 84,633
Net income (unaudited).................................... -- 27,510 27,510
Compensation expense from stock option plans
(unaudited)............................................ 175 -- 175
Distributions declared (unaudited)........................ -- (12,575) (12,575)
------ -------- --------
BALANCE, JUNE 30, 1997 (UNAUDITED).......................... $9,370 $ 90,373 $ 99,743
====== ======== ========
</TABLE>

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

F-5
<PAGE> 66

STONERIDGE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
----------------------------- --------------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................... $26,666 $26,154 $24,071 $ 11,193 $ 27,510
Adjustments to reconcile net income to
net cash from operating activities --
Depreciation and amortization......... 6,870 7,979 9,966 5,118 6,138
Gain on sale of fixed assets.......... -- -- -- -- (1,733)
Compensation expense for stock option
plans............................... -- -- 450 -- 175
Income tax benefit from the
elimination of deferred federal
income taxes........................ (1,455) -- -- -- --
Changes in operating assets and
liabilities --
Accounts receivable, net............ (4,898) (18,504) 2,694 7,525 (4,195)
Inventories......................... (6,442) (4,495) (3,730) (3,414) (1,031)
Prepaid expenses and other assets... 1,796 (4,609) 4,599 706 (456)
Other assets, net................... (145) 23 (1,014) 3 (332)
Accounts payable.................... 1,650 19,560 (12,854) (12,325) 5,014
Accrued expenses and other
liabilities...................... 1,450 3,262 1,089 948 4,839
------- ------- ------- -------- --------
Net cash from operating
activities..................... 25,492 29,370 25,271 9,754 35,929
------- ------- ------- -------- --------
INVESTING ACTIVITIES:
Equity investment........................ -- -- (8,834) (8,834) --
Capital expenditures..................... (9,046) (14,767) (14,083) (10,159) (6,373)
Proceeds from sale of property, plant and
equipment............................. 2,600 -- 4,850 458 2,504
Assets purchased through acquisition..... -- (18,800) -- -- --
------- ------- ------- -------- --------
Net cash from investing
activities..................... (6,446) (33,567) (18,067) (18,535) (3,869)
------- ------- ------- -------- --------
FINANCING ACTIVITIES:
Cash distributions paid.................. (13,610) (15,546) (13,201) (6,355) (12,575)
Proceeds from long-term debt............. 25,368 -- 3,512 -- --
Repayments of long-term debt............. (20,984) (247) (410) (184) (2,369)
Net borrowings (repayments) under
revolving credit facility............. (9,000) 19,200 2,745 15,038 (17,466)
Stock options exercised, net............. -- -- 225 -- --
------- ------- ------- -------- --------
Net cash from financing
activities..................... (18,226) 3,407 (7,129) 8,499 (32,410)
------- ------- ------- -------- --------
NET CHANGE IN CASH......................... 820 (790) 75 (282) (350)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD................................... 252 1,072 282 282 357
------- ------- ------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................... $ 1,072 $ 282 $ 357 $ -- $ 7
======= ======= ======= ======== ========
</TABLE>

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

F-6
<PAGE> 67

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED. )

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

1. ORGANIZATION AND NATURE OF BUSINESS:

Effective January 1, 1994, Alphabet, Inc. (Alphabet) and Alphastac, Inc.
(Alphastac) were merged into Stoneridge, Inc. (Stoneridge). Stoneridge (an Ohio
corporation) was the surviving entity of the above merger transaction. Since
Alphabet, Alphastac and Stoneridge shared common ownership, the merger of these
entities was accounted for in a manner similar to a pooling of interest.

The Company is an independent designer and manufacturer of highly
engineered electrical and electronic components, modules and systems for the
automotive, medium and heavy duty truck, and agricultural vehicle markets and
operates in one business segment. The Company and its consolidated subsidiaries
sell products principally to customers located in North America.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Stoneridge and its majority-owned subsidiaries (collectively, the Company). All
significant intercompany balances have been eliminated in consolidation.

The accompanying consolidated balance sheet as of June 30, 1997, and the
consolidated statements of operations, shareholders' equity and cash flows for
the six month periods ended June 30, 1996 and 1997 are unaudited. In the opinion
of management , such consolidated financial statements include all adjustments,
consisting solely of normal recurring adjustments, necessary for a fair
presentation of results for these interim periods. The results of the six-month
period ended June 30, 1997 are not necessarily indicative of results to be
expected for the entire year.

Unaudited pro forma balances reflect the termination of S Corporation
status as discussed in Note 12.

CASH AND CASH EQUIVALENTS

The Company considers all short-term investments with original maturities
of three months or less to be cash equivalents. Cash equivalents are stated at
cost which approximates fair value.

ACCOUNTS RECEIVABLE

Revenues are principally generated from the automotive, medium and heavy
duty truck, and agricultural vehicle markets. Due to the nature of these
industries, a significant portion of sales and related accounts receivable are
concentrated in a relatively low number of customers. In 1995, three customers
accounted for approximately 36%, 13% and 11% of net sales, while the top 5
customers accounted for 72% of net sales. The same three customers accounted for
approximately 39%, 18% and 10% of the Company's 1996 net sales, and its top five
customers accounted for approximately 76% of its 1996 net sales. Accounts
receivable from the Company's five largest customers aggregated approximately
$39,713 and $38,383 at December 31, 1995 and 1996, respectively.

F-7
<PAGE> 68

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

contributed approximately $7.2 million in operating income. There can be no
assurance that the Company will be able to offset reductions in its sales and
operating profits resulting from the reduction in sales to the General Motors
division.

INVENTORIES

Inventories are valued at the lower of cost or market, determined by using
the last-in, first-out (LIFO) method of inventory accounting. Inventory cost
includes material, labor and overhead and consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Raw materials................ $17,738 $17,983 $ 19,529
Work in progress............. 4,107 6,063 4,670
Finished goods............... 6,684 8,224 9,196
Less-LIFO reserve............ (2,101) (2,112) (2,260)
------- ------- -------
Total...................... $26,428 $30,158 $ 31,135
======= ======= =======
</TABLE>

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and consist of the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Land and land improvements........................... $ 4,876 $ 3,724 $ 3,724
Buildings and improvements........................... 32,058 27,718 28,545
Machinery and equipment.............................. 29,987 32,947 37,115
Office furniture and fixtures........................ 6,717 8,270 7,853
Tooling.............................................. 11,123 13,630 14,577
Vehicles............................................. 3,109 3,911 3,950
Leasehold improvements............................... 743 1,416 1,015
------- ------- -------
88,613 91,616 96,779
Less-Accumulated depreciation and amortization....... 33,846 36,416 41,058
------- ------- -------
$54,767 $55,200 $ 55,721
======= ======= =======
</TABLE>

Depreciation is provided by both the straight-line and accelerated methods
over the estimated useful lives of the assets. Depreciation expense for the
years ended December 31, 1994, 1995 and 1996 was $6,338, $7,284 and $8,686, and
for the six months ended June 30, 1996 and 1997, $4,624 and $5,477,
respectively. Depreciable lives within each property classification are as
follows:

<TABLE>
<S> <C>
Buildings and improvements........... 10-40 years
Machinery and equipment.............. 5-10 years
Office furniture and fixtures........ 3-10 years
Tooling.............................. 2-5 years
Vehicles............................. 3-5 years
Leasehold improvements............... 8 years
</TABLE>

F-8
<PAGE> 69

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

Maintenance and repair expenditures which are not considered betterments
and do not extend the useful life of property are charged to expense as
incurred. Expenditures for improvements and major renewals are capitalized. When
assets are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts, and any gain or loss on the
disposition is credited or charged to income.

GOODWILL

The primary component of goodwill and other intangible assets, net of
accumulated amortization in the accompanying consolidated balance sheets
represents the excess of the purchase price paid over the fair market value of
acquired assets and assumed liabilities. Goodwill is being amortized over 40
years on a straight-line basis. Amortization expense totaled approximately $532,
$695 and $1,180 in 1994, 1995 and 1996, and $470 and $572 for the six-month
periods ended June 30, 1996 and 1997, respectively. Accumulated amortization as
of December 31, 1995 and 1996 was $4,294 and $5,474, respectively, and $6,046 as
of June 30, 1997. The Company regularly evaluates its accounting for goodwill.
Impairment of goodwill would be recognized when events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. Measurement of the amount of impairment will be based on appraisal,
market value of similar assets or estimated discounted future cash flows
resulting from the use and ultimate disposition of the asset.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Compensation related obligations............. $ 8,339 $ 9,402 $ 9,012
Insurance related obligations................ 1,785 2,329 3,275
Other........................................ 5,925 5,501 11,239
------- ------- -------
$16,049 $17,232 $ 23,526
======= ======= =======
</TABLE>

INCOME TAXES

The Company is an S Corporation for income tax purposes. Accordingly, the
Company's profits are taxed directly to its shareholders for federal income tax
and certain state income tax purposes. Certain state taxes, as well as local
income taxes, are paid directly by the Company. State and local income taxes
paid for the years ended December 31, 1994, 1995 and 1996 were approximately
$164, $922 and $383, respectively, and $418 and $399 for the six-month periods
ended June 30, 1996 and 1997, respectively.

Alphastac, which was merged into the Company on January 1, 1994, was
previously taxed as a C Corporation. As a result of the merger, Alphastac's
premerger deferred federal income tax liabilities of $1,455 were reversed to
income as a tax benefit from the elimination of deferred federal income taxes
and included in the Company's December 31, 1994 consolidated statement of
income.

As a result of the public offering discussed in Note 11, the Company will
terminate its S Corporation status. Accordingly, the Company will be subject to
federal and state income taxes as a C Corporation. On a pro forma basis as of
June 30, 1997, upon conversion to a C Corporation, deferred income tax assets
and deferred income tax liabilities of approximately $4,357 and $6,468,
respectively, will be recorded with an

F-9
<PAGE> 70

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

offsetting charge to net income. Such amounts have been determined in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS

Translation adjustments of the Company's foreign subsidiaries whose
functional currency is U.S. dollars and transaction gains and losses are
included in the accompanying consolidated statements of income for all periods
presented. All translation and transaction activity was insignificant in 1994,
1995, 1996 and through June 30, 1997.

REVENUE RECOGNITION

The Company recognizes revenues from the sale of products at the point of
passage of title, which is generally at the time of shipment.

PRODUCT DEVELOPMENT EXPENSES

Expenses associated with the development of new products and changes to
existing products are charged to expense as incurred. The costs amounted to
$5,997, $6,664 and $9,263 in 1994, 1995, and 1996 and $5,499 and $6,011 for the
six-month periods ended June 30, 1996 and 1997, respectively.

INCOME PER SHARE

Except for pro forma disclosures, income per share for all periods
presented has been omitted as the presentation of such information is not
meaningful.

RECLASSIFICATIONS

Certain amounts in the prior periods' consolidated financial statements
have been reclassified to conform to the current period's presentation.

FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS

Financial instruments held by the Company include cash and cash
equivalents, accounts receivable, accounts payable, revolving credit facility,
long-term debt, and interest rate swap agreements. The book value of cash and
cash equivalents, accounts receivable and payables are considered to be
representative of fair value because of the short maturity of these instruments.
The fair values of borrowings under the revolving credit facility and long-term
debt are based on rates available to the Company for debt with comparable terms
and maturities.

The interest rate swap agreements convert floating rate debt under the
Company's revolving credit facility to fixed rate debt. The difference between
the floating interest rate and the fixed interest rate which is to be paid or
received is recognized in interest expense as the floating interest rate changes
over the life of the agreement.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and

F-10
<PAGE> 71

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

liabilities, including certain self-insured risks and liabilities, and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Since actual results could differ from those estimates,
the Company revises its estimates and assumptions as new information becomes
available.

ACCOUNTING STANDARDS

The Company adopted Statement of Financial Accounting Standard No. 121
(SFAS 121) "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" in 1996. SFAS 121 requires long-lived
assets and certain identifiable intangible assets to be reviewed for impairment
whenever circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of this standard did not effect the Company's
financial statements. Management periodically reviews the realizability of
long-lived assets of the Company in accordance with SFAS 121.

3. ASSETS PURCHASED THROUGH ACQUISITION:

On November 1, 1995, the Company acquired the ongoing actuator business,
and the related machinery and equipment, intellectual property rights and
purchase contracts from Kelsey-Hayes. The Company also entered into a certain
transition services agreement with the seller in conjunction with this
acquisition. In connection with the transition services agreement, the seller
provided certain services during the period November 1995 through October 1996
for cash consideration of $5,200. The Company recorded $946 and $4,254 of
expense in 1995 and 1996, respectively, relative to the transition services
agreement. The acquisition was accounted for as a purchase and the excess of the
cost over the fair value of the assets acquired, totaling approximately $14,000,
was reflected as goodwill in the accompanying consolidated balance sheet. Total
consideration paid by the Company with respect to this acquisition including
payments under the transition services agreement was approximately $24,000.

4. INVESTMENT:

In 1996, the Company purchased 45% of the outstanding common stock of
Berifors AB (Berifors), a Sweden-based manufacturer of electronic display panels
and instrumentation for the European truck and commercial vehicle markets, for
approximately $8,834. The investment was accounted for under the equity method
of accounting. The excess of the amount paid over the book value of the assets
acquired, totaling $7,200, is being amortized over 40 years on a straight-line
basis. Amortization expense was $100 in 1996 and $24 and $89 for the six months
ended June 30, 1996 and 1997, respectively.

5. LONG-TERM DEBT:

The Company had an $80,000 credit facility with a bank group. The credit
facility was to expire on June 30, 2001 and required a commitment fee of 1/4%
on the unused balance. Interest was payable quarterly at the Company's option of
either (i) the prime rate or (ii) LIBOR plus a margin of 1% to 1.5%, depending
upon the Company's fixed charge coverage ratio, as defined. Credit facility
borrowings were supported by individual notes with maturities of three months or
less.

On September 15, 1997, the Company entered into a new credit agreement. The
new credit facility has a $125,000 borrowing limit. The credit facility expires
on June 30, 2002 and requires a commitment fee of 1/10% to 1/4% on the unused
balance. Interest is payable quarterly at the Company's option at either (i) the
prime

F-11
<PAGE> 72

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

rate or (ii) LIBOR plus a margin of 0.75% to 2.0%, depending upon the Company's
fixed charge coverage ratio, as defined.

The Company has entered into a $25,000 interest rate swap agreement with a
member of the bank group whereby its contractual interest rate was swapped
through February 1999 for a fixed rate of 5.795% plus a margin of 1% to 1.5%,
depending upon the Company's fixed charge coverage ratio, as defined. The
notional amount under the swap agreement remains at $25,000 through maturity.
Additionally, the Company has entered into a separate $20,000 interest rate swap
agreement with a member of the bank group whereby its contractual interest rate
was swapped through August 1999 for a fixed rate of 6.28% plus a margin of 1% to
1.5%, depending upon the Company's fixed charge coverage ratio, as defined,
provided the LIBOR rate is less than 7.50%. This swap agreement is ineffective
when the LIBOR rate is equal to or greater that 7.50%. The notional amount under
the swap agreement remains at $20,000 through maturity. The Company is exposed
to credit loss under the swap agreements in the event of nonperformance by the
bank. As of December 31, 1996, the Company would have paid approximately $257 to
the bank had it elected to terminate these interest rate swap agreements.

The weighted average interest rate in effect for the years ended December
31, 1994, 1995 and 1996 was approximately 7.2%, 7.0% and 7.4%, respectively,
including the effects of the interest rate swap agreements.

The credit facility is secured by the Company's accounts receivable,
inventories, equipment and real estate.

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE
------------------- 30,
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Borrowings under credit facility..................... $45,200 $47,945 $30,181
Note payable to financing company, repaid in full in
February 1997...................................... 2,781 2,580 --
Note payable to financing company, collateralized by
specific property, plant and equipment, due in
monthly installments of $37, including variable
rate interest based annually on the yield of
two-year Treasury securities, constant maturity of
United States Government plus 2.15% with a balloon
payment of $1,087, maturing in April 2006.......... -- 3,415 3,314
Other................................................ 329 217 814
------- ------- -------
48,310 54,157 34,309

Less-Current maturities.............................. 311 3,001 200
------- ------- -------
$47,999 $51,156 $34,109
======= ======= =======
</TABLE>

The credit facility contains various covenants which require, among other
things, the maintenance of several financial ratios and minimum net worth levels
while restricting capital expenditures and shareholder distributions. The
Company was in compliance with these covenants at December 31, 1996 and June 30,
1997.

F-12
<PAGE> 73

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

Future maturities of long-term debt as of December 31, 1996 are as follows:

<TABLE>
<S> <C>
1997.............................................. $ 3,001
1998.............................................. 287
1999.............................................. 208
2000.............................................. 225
2001.............................................. 121
Thereafter........................................ 50,315
-------
$ 54,157
=======
</TABLE>

Interest paid for the years ended December 31, 1994, 1995 and 1996 was
approximately $2,072, $1,892 and $3,844, respectively, and $1,865 and $1,808 for
the periods ending June 30, 1996 and 1997, respectively.

6. OPERATING LEASE COMMITMENTS:

The Company leases equipment, vehicles and a building from third parties
under operating lease agreements.

The Company also leases some of its facilities from certain related
parties. The leases are accounted for as operating leases and are for various
terms ranging from three to 20 years with additional renewal options. The
Company is generally responsible for repairs and maintenance, taxes and
insurance.

For the years ended December 31, 1994, 1995 and 1996, lease expense totaled
$1,562, $1,683 and $2,255, respectively, and $1,128 and $1,179 for the six
months ended June 30, 1996 and 1997, respectively, under these agreements.

Future minimum operating lease commitments at December 31, 1996, are as
follows:

<TABLE>
<CAPTION>
THIRD PARTY RELATED PARTY
----------- -------------
<S> <C> <C>
1997........................... $ 1,098 $ 571
1998........................... 562 577
1999........................... 164 584
2000........................... 90 590
2001........................... 6 486
Thereafter..................... -- 883
</TABLE>

7. STOCK OPTION PLANS AND STOCK RESTRICTIONS:

In March 1995, the Company granted 651 options to key executives to
purchase Class B nonvoting common shares at $671 per share. The options were
vested upon grant and all 651 options were exercised.

In June 1996, the Company granted an additional 1,000 options to directors
and 2,150 options to key executives to purchase Class B nonvoting common shares
at $798 per share. The options granted to directors were vested upon grant. The
options granted to key executives vest ratably over two years. The Company
recorded compensation expense of $450 for the year ended December 31, 1996, and
$175 for the six months

F-13
<PAGE> 74

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

ended June 30, 1997, in the accompanying consolidated financial statements
relative to these options. As of June 30, 1997, all 3,150 stock options were
outstanding. After considering the effect of the recapitalization discussed in
Note 11, the exercise of the stock options resulted in the option holders
acquiring 438,119 Common Shares.

Transfers of all options or shares issued under this agreement are
restricted and subject to rights of first refusal by the Company.

8. EMPLOYEE BENEFIT PLANS:

The Company has a defined contribution profit sharing plan covering
substantially all of the employees. Company contributions are discretionary;
however, a portion of these contributions are based upon a percentage of
employee compensation, as defined in the plan. The Company's policy is to fund
all profit sharing costs accrued. There are no unfunded prior service costs. For
the years ended December 31, 1994, 1995 and 1996 contributions amounted to
$1,512, $1,538 and $1,356, respectively. For the six months ended June 30, 1996
and 1997, contributions amounted to $678 and $486, respectively.

Additionally, the Company has a defined contribution profit sharing
retirement plan, which covers certain other employees. The plan includes the
provisions of a Section 401(k) plan and allows employees to contribute up to 14%
of their eligible compensation. Company contributions are determined by the
Board of Directors; however the Company must match 50% of the participating
employees' contributions up to a maximum of 3% of their eligible compensation.
For the years ended December 31, 1994, 1995 and 1996 the Company's contributions
amounted to $800, $950 and $1,125, respectively, and for the six-month periods
ended June 30, 1996 and 1997, amounted to $563 and $928, respectively.

The Company does not provide any material retirement, postretirement or
postemployment benefits to its employees.

9. RELATED PARTY TRANSACTIONS:

In 1996, the Company sold a building to an affiliated entity for $2,200.
The excess of the sales price over the carrying value of the building was $562
and was recorded as a capital contribution. During 1996, prior to the sale of
this building, the Company received approximately $235 in lease payments and
recognized related depreciation and interest expense totaling approximately
$108. In 1994 and 1995, the Company recognized lease revenue of $278 and
depreciation and interest expense of $207 and $194, respectively. Prior to
September 15, 1997, the Company was the guarantor of a $2,200 loan to this
affiliated entity which was used to fund the building purchase.

Prior to September 15, 1997, the Company was the guarantor on a $500
standby letter of credit for a related party loan; however, there were no
balances outstanding on this loan as of December 31, 1996 and June 30, 1997.

The Company provides management services to a related company in the amount
of $300 annually and also pays the salary of a certain key employee, amounting
to $178, $182 and $180 in 1994, 1995 and 1996, respectively. Beginning on
September 1, 1997, the salary payments were paid by the related company and the
management fee was reduced to $60 annually.

F-14
<PAGE> 75

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

In connection with a split dollar arrangement, the Company has an interest
in and pays the policy premiums on an insurance policy for D.M. Draime and C.M.
Draime, D.M. Draime's wife. As of December 31, 1996, the Company had recorded a
receivable of $663 for premiums paid on this policy. In the event of the death
of Mr. Draime and Mrs. Draime, a family trust, will receive the full amount of
the life insurance policy less the aggregate amount of premiums paid which will
be reimbursed to the Company. Upon or prior to the completion of the Offering,
the Company will be $663 reimbursed for the premiums paid on this policy by or
on behalf of Mr. Draime.

10. FAIR VALUE OF FINANCIAL INSTRUMENTS:

A financial instrument is cash or a contract that imposes an obligation to
deliver, or conveys a right to receive cash or another financial instrument. The
carrying values of cash and cash equivalents, accounts receivable and payables
are considered to be representative of fair value because of the short maturity
of these instruments. In management's opinion, the estimated fair value of the
Company's long-term debt approximates book value as under the terms of the
borrowings arrangements, a significant portion of the obligations are subject to
fluctuating market rates of interest.

Off-balance sheet derivative financial instruments as of December 31, 1995
and 1996, held for purposes other than trading, include two swap agreements
which mature during 1999. The notional amounts and fair values of the swap
agreements are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
------- ------- ---------
<S> <C> <C> <C>
Notional Amount.................... $25,000 $45,000 $45,000
Fair Value......................... (26) (257) 98
</TABLE>

11. PUBLIC OFFERING OF COMMON SHARES:

The Company intends to file a Registration Statement relating to the
initial public offering of its common shares (the Offering). The net proceeds
from the issuance and sale of common shares will be used to fund the payment to
the pre-offering shareholders of approximately $83,000 as an S Corporation
distribution (S Corporation Distribution) and for the partial repayment of debt.
Certain officers and employees will reinvest at least $6,500 of their
distribution (Management Reinvestment). As a result of the Offering, the S
Corporation status will terminate and the Company will be responsible for the
corporate income taxes on its earnings from that date forward.

In connection with the Company's proposed Offering, the Company intends to
amend its Articles of Incorporation to change the authorized share capital of
the Company from 37,724 shares of Class A Common, voting, without par value, and
87,276 shares of Class B Common, non-voting, without par value, to 60,000,000
Common Shares, without par value (the Common Shares), and 5,000,000 shares of
voting preferred shares, without par value. In addition, the amended Articles of
Incorporation will provide that each Class A Common Share and Class B Common
Share will automatically become 139.0856 Common Shares. All applicable share and
per share data have been adjusted accordingly.

Acquisition: The Company expects to acquire, through a share exchange, the
remaining 55% of the outstanding stock of Berifors which it does not own for an
aggregate of 757,063 Common Shares. The Company expects to issue 704,563 Common
Shares in exchange for 51% of the outstanding stock of Berifors

F-15
<PAGE> 76

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

concurrent with the completion of the Offering. The Company will have an option
to acquire the remaining 4% of the outstanding stock of Berifors through the
issuance of 52,500 Common Shares.

Tax Indemnification: The Company and its shareholders expect to enter into
a tax indemnification agreement relating to their respective tax liabilities.
The agreement is expected to provide, among other things, for (i) the
indemnification by the Company of the shareholders against all losses,
liabilities, interest, penalties, and attorneys' and accountants' fees resulting
from any additional federal or state income taxes imposed upon shareholders as a
result of the change in S Corporation income of the Company for any period in
which the Company was treated for federal and certain state income tax purposes
as an S Corporation (the S Corporation Periods); and (ii) indemnification of the
Company by the shareholders against certain liabilities and losses with respect
to federal and state income taxes, including interest, penalties and attorneys'
and accountants' fees resulting from any decrease in such shareholders' S
Corporation income from the Company during the S Corporation Periods.

Long-Term Incentive Plan: Grants of incentive or nonqualified share
options, restricted shares, deferred shares, share purchase rights, share
appreciation rights in tandem with options, other share-based awards, or any
combination thereof, may be made under the plan to officers and key employees
who are responsible for or contribute to the management, growth or profitability
of the business of the Company and its affiliates. The Stock Option Committee of
the Board of Directors will administer the plan and determine the type, amount
and timing of grants and awards. The Company has reserved 1,000,000 Common
Shares for issuance under the plan. No participant in the plan may be granted
stock options or other share awards in any calendar year for more than 300,000
shares. The share limitations, shares reserved and the terms of outstanding
awards will be adjusted, as the Stock Option Committee deems appropriate, in the
event of a share dividend, split or other change in the corporate structure of
the Company affecting the shares.

The plan provides for vesting, exercise or forfeiture of rights granted
under the plan on death, disability, termination of employment or a change of
control. The Board of Directors may modify, suspend or terminate the plan as
long as it does not impair the rights thereunder of any participant.

In connection with the Offering, the Company expects to grant options to
purchase 500,000 Common Shares with an exercise price equal to the initial
public offering price to officers and other management employees. The options
will vest two years after date of grant.

12. UNAUDITED PRO FORMA INFORMATION:

The unaudited pro forma balance sheet data presented assumes on June 30,
1997, (i) an $83,000 S Corporation Distribution, (ii) a $6,500 Management
Reinvestment, (iii) repayment of $2,514 of the credit facility with the proceeds
from the exercise of 438,119 stock options, and (iv) termination of the
Company's S Corporation status, and in connection therewith, reinstatement of
$6,468 of deferred income tax liabilities, and $4,357 of deferred income tax
assets.

The unaudited pro forma net income for the year ended December 31, 1996 and
for the six months ended June 30, 1997 assumes that the Company is subject to
income taxes as a C Corporation.

Unaudited pro forma net income per share has been calculated by dividing
pro forma net income by the weighted average number of Common Shares outstanding
(13,964,448), the number of Common Shares to be issued in connection with the
Offering (5,850,000), the number of Common Shares issued in connection with the
exercise of stock options (438,119), the number of Common Shares to be issued in
connection with

F-16
<PAGE> 77

STONERIDGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(AMOUNTS AND DISCLOSURES AS OF JUNE 30, 1996 AND 1997 AND FOR THE PERIODS
THEN ENDED ARE UNAUDITED.)

(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

the Management Reinvestment (435,657), and the number of Common Shares that the
Company would have had to issue 4,781,250 to pay the S Corporation Distribution.

13. COMMITMENTS AND CONTINGENCIES:

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

14. SUBSEQUENT EVENTS:

On July 25, 1997, the Company entered into a letter of intent to acquire
50% of the stock of a Brazilian electronic components business which specializes
in vehicle security devices. The aggregate purchase price in the letter of
intent is approximately $17,000. The acquisition is subject to certain
contingencies, including the Company's satisfactory completion of business,
legal, accounting and environmental due diligence reviews, negotiation of a
definitive agreement and approval of the transaction by the Company's Board of
Directors. The acquisition will be financed through borrowings under the credit
facility discussed in Note 5.

On August 25, 1997, the Company entered into two joint venture agreements
and a cooperation agreement with a Swedish manufacturer of power distribution
systems. Pursuant to the terms of the agreements, during the fourth quarter of
1997, the Company expects to pay approximately $2,400 for a 60% interest in a
Brazilian joint venture and $1,100 for a 40% interest in a European joint
venture. The joint ventures will establish production facilities in Brazil and
Europe for the purpose of manufacturing and selling power distribution systems
in South America and Europe, respectively. In addition, the joint ventures will
pursue sales and marketing efforts for other products and services of the joint
venture partners to the extent practicable. The Company will finance its
investments in the joint ventures through borrowings under the credit facility
discussed in Note 5.

F-17
<PAGE> 78

STONERIDGE, INC. AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS WRITE-OFFS PERIOD
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1994 173 7 -- 7 173
Year ended December 31, 1995 173 325 -- 45 453
Year ended December 31, 1996 453 43 -- 231 265
</TABLE>

F-18
<PAGE> 79

The inside back cover page of the Company's Prospectus contains a picture
in the center of the page of a globe (broken in two parts in order to illustrate
the entire planet). Above the picture is the Company's logo and the word
"Stoneridge." The map is marked with dots to indicate the approximate location
of the Company's facilities. Beneath the picture of the globe are the words
"Stoneridge Locations, Corporate Headquarters -- Warren, Ohio." Further beneath
is the listing of the Company's locations as follows -- North American
Locations -- Arlington Heights, IL, Portland, IN, Canton, MA, Boston, MA,
Southfield, MI, Mebane, NC, Cortland, OH, Kent, OH, Orwell, OH, Warren, OH, El
Paso, TX, Chihuahua, Mexico, Juarez, Mexico -- South American Locations -- Sao
Paulo, Brazil -- European Locations -- Eschborn, Germany and BERIFORS AB Bromma,
Sweden, Munich, Germany, Oreboro, Sweden and Stuttgart, Germany.

<PAGE> 80

Stoneridge
<PAGE> 81

[COMPANY OFFERING PROSPECTUS COVER PAGE]

PROSPECTUS (Subject to Completion)

Issued October 1, 1997

435,657 Shares

STONERIDGE, INC.
COMMON SHARES

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

OFFERING TO CERTAIN DIRECTORS, EXECUTIVE OFFICERS AND
MANAGEMENT EMPLOYEES OF THE COMPANY

The Shares are being offered directly by the Company. Common Shares sold
pursuant to this offering will be issued by the Company and will not be
underwritten or subject to the arrangements described herein under
"Underwriters." Accordingly, the information in the Prospectus relating to
the Company's initial public offering on the Cover Page is not
applicable. The price paid per share in this offering will be the
initial public offering price paid per share, less underwriting
discounts and commissions. This offering is conditioned upon the
completion of the Company's initial public offering and is expected
to be consummated concurrently with such initial public offering.

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

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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

PRICE $ A SHARE

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

, 1997
<PAGE> 82

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.

[INTERNATIONAL PROSPECTUS COVER PAGE]

PROSPECTUS (Subject to Completion)

Issued October 1, 1997

5,850,000 Shares

STONERIDGE, INC.
COMMON SHARES
------------------

All of the 5,850,000 Common Shares offered hereby are being offered by the
Company. Of the 5,850,000 Common Shares being offered, 1,170,000 shares are
being offered initially outside the United States and Canada by the
International Underwriters and 4,680,000 shares are being offered initially in
the United States and Canada by the U.S. Underwriters. Prior to the Offering
there has been no public market for the Common Shares of the Company. Between
approximately $81,000,000 and $85,000,000 of the net proceeds of the Offering
will be used to make a distribution of previously taxed but undistributed
earnings to the Company's pre-Offering shareholders. See "S Corporation
Distribution and Management Reinvestment." It is currently anticipated that the
initial public offering price per Common Share will be between $15 and $17. See
"Underwriters" for a discussion of the factors to be considered in determining
the initial public offering price.

THE COMMON SHARES HAVE BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK EXCHANGE,
SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, UNDER THE SYMBOL "SRI."
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------

PRICE $ A SHARE
------------------------

- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."

(2) Before deducting expenses payable by the Company, estimated at
$1,200,000.

MORGAN STANLEY DEAN WITTER DONALDSON, LUFKIN & JENRETTE
Securities Corporation
, 1997
<PAGE> 83

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the SEC registration fee, NASD filing fee and NYSE filing fee, all amounts
are estimates.

<TABLE>
<S> <C>
SEC registration fee................................................. $ 37,576
NASD filing fee...................................................... 12,900
NYSE filing fee...................................................... 151,000
Accounting fees and expenses......................................... 150,000
Legal fees and expenses.............................................. 400,000
Blue Sky fees and expenses (including counsel fees).................. 10,000
Printing and engraving expenses...................................... 350,000
Transfer agent's and registrar's fees and expenses................... 25,000
Miscellaneous expenses............................................... 63,524
-------
TOTAL...................................................... $1,200,000
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Ohio Revised Code (the "Code") authorizes Ohio corporations to
indemnify officers and directors from liability if the officer or director acted
in good faith and in a manner reasonably believed by the officer or director to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal actions, if the officer or director had no reason to believe his
action was unlawful. In the case of an action by or on behalf of a corporation,
indemnification may not be made (i) if the person seeking indemnification is
adjudged liable for negligence or misconduct, unless the court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnification or (ii) if liability asserted against such person concerns
certain unlawful distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding that he was a
party to by reason of the fact that he is or was a director or officer of the
corporation. The indemnification authorized under Ohio law is not exclusive and
is in addition to any other rights granted to officers and directors under the
articles of incorporation or code of regulations of the corporation or any
agreement between officers and directors and the corporation. A corporation may
purchase and maintain insurance or furnish similar protection on behalf of any
officer or director against any liability asserted against him and incurred by
him in his capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him against
such liability under the Ohio Code.

The Registrant's Code of Regulations provides for the indemnification of
directors and officers of the Registrant to the maximum extent permitted by Ohio
law as authorized by the Board of Directors of the Registrant, for the
advancement of expenses incurred in connection with the defense of any action,
suit or proceeding that he was a party to by reason of the fact that he is or
was a director of the Registrant upon the receipt of an undertaking to repay
such amount unless it is ultimately determined that the director is entitled to
indemnification. The Code of Regulations authorizes the Registrant to purchase
and maintain insurance on behalf of any director, officer, employee or agent of
the Registrant against any liability asserted against them in such capacity or
arising out of their status as such, whether or not the Registrant would have
power to indemnify such officer, employee or agent against such liability under
the provisions of the Code of Regulations of the Registrant.

The Registrant maintains a directors' and officers' insurance policy which
insures the officers and directors of the Registrant from any claim arising out
of an alleged wrongful act by such persons in their respective capacities as
officers and directors of the Registrant.

Reference is made to Section 8 of the Underwriting Agreement, a copy of
which is filed herewith as Exhibit 1.1, for information concerning
indemnification arrangements among the Registrant and the Underwriters.

II-1
<PAGE> 84

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Within the past three years, in connection with the exercise of options
granted to its senior officers and directors, the Registrant, relying on the
exemption from registration contained in Section 4(2) of the Securities Act of
1933, has issued Class B Common Shares (after giving effect to the
recapitalization described in "Description of Capital Shares") to the following
individuals on or about the following dates and for the following aggregate cash
exercise prices in connection with previously granted options:

<TABLE>
<CAPTION>
AGGREGATE
INDIVIDUAL DATE SHARES EXERCISE PRICE
-------------------------------------------------- --------------- ------ --------------
<S> <C> <C> <C>
Kevin P. Bagby.................................... August 7, 1997 34,771 $199,500
Michael Bagby..................................... August 7, 1997 13,908 79,800
Thomas Beaver..................................... August 7, 1997 34,771 199,500
Richard Cheney.................................... August 7, 1997 34,771 199,500
Avery Cohen....................................... August 7, 1997 34,771 199,500
Chia Day.......................................... August 7, 1997 34,771 199,500
Richard Emerine................................... August 7, 1997 13,908 79,800
Sheldon Epstein................................... August 7, 1997 34,771 199,500
David Gargas...................................... August 7, 1997 13,908 79,800
Howard Goldberg................................... August 7, 1997 34,771 199,500
William Haushalter................................ August 7, 1997 34,771 199,500
William Hull...................................... August 7, 1997 13,908 79,800
Earl Linehan...................................... August 7, 1997 34,771 199,500
Mark Oakes........................................ August 7, 1997 34,771 199,500
Edward F. Mosel................................... June 30, 1996 21,001 101,321
David Thomas...................................... June 30, 1996 69,542 335,500
</TABLE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS -- The following is a list of exhibits in this Registration
Statement.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------------------------------------------------------------------------------------
<S> <C>
1.1* Proposed Form of Underwriting Agreement.
3.1* Proposed Form of Second Amended and Restated Articles of Incorporation of the Company.
3.2* Proposed Form of Amended and Restated Code of Regulations of the Company.
4.1 Specimen Temporary Share Certificate.
5.1* Opinion of Baker & Hostetler LLP regarding the legality of the Common Shares being
registered.
10.1* Long-Term Incentive Plan.
10.2* Lease dated October 1, 1993 between D.M. Draime and Alphabet, Inc. (the Company's
predecessor) with respect to the Company's Greenwood, North Carolina facility.
10.3* Lease Agreement between Industrial Development Associates and the Alphabet Division, with
respect to the Company's Mebane, North Carolina facility.
10.4* Lease Agreement between Hunters Square, Inc. and Alphabet, Inc., with respect to the
Company's division headquarters for the Alphabet Division.
10.5* Contract Manufacturing Agreement dated January 3, 1993 with a division of General Motors.
10.6** Share Exchange Agreement relating to the Berifors Acquisition.
10.7* Joint Venture and Shareholders' Agreements and Cooperation Agreement with Connecto AB.
10.8* Credit Agreement, among Stoneridge, Inc. and PNC Bank, National Association, Star Bank,
National Association and National City Bank, and National City Bank, Agent, dated
September 15, 1997.
10.9* Agreement with DAV (Labinal) dated June 9, 1994.
10.10 Proposed Form of Tax Indemnification Agreement.
23.1* Consent of Baker & Hostetler LLP (contained in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1* Powers of Attorney (contained in the signature pages).
27.1* Financial Data Schedule for six-months ended June 30, 1997.
27.2* Financial Data Schedule for six-months ended June 30, 1996.
27.3* Financial Data Schedule for the year ended December 31, 1996.
27.4* Financial Data Schedule for the year ended December 31, 1995.
27.5* Financial Data Schedule for the year ended December 31, 1994.
</TABLE>

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

* Previously filed

** To be filed by Amendment

II-2
<PAGE> 85

(b) FINANCIAL STATEMENT SCHEDULE

Schedule II -- Valuation of Qualifying Accounts is located at page F-17.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

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 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 hereunder, 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 Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, 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, 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
<PAGE> 86

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Cleveland, State of Ohio,
on the 1st day of October, 1997.

STONERIDGE, INC.

By: /s/ KEVIN P. BAGBY
------------------------------------
Kevin P. Bagby,
Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed below by the following
persons in the capacities indicated on the 1st day of October, 1997.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------

<S> <C>

CLOYD J. ABRUZZO* President, Chief Executive Officer,
- --------------------------------------------- Assistant Secretary and Director
Cloyd J. Abruzzo (principal executive officer)

/s/ KEVIN P. BAGBY Chief Financial Officer and Treasurer
- --------------------------------------------- (principal financial officer and
Kevin P. Bagby principal accounting officer)

D.M. DRAIME* Director
- ---------------------------------------------
D.M. Draime

RICHARD E. CHENEY* Director
- ---------------------------------------------
Richard E. Cheney

AVERY S. COHEN* Director
- ---------------------------------------------
Avery S. Cohen

SHELDON J. EPSTEIN* Director
- ---------------------------------------------
Sheldon J. Epstein

EARL L. LINEHAN* Director
- ---------------------------------------------
Earl L. Linehan
</TABLE>

* By: /s/ KEVIN P. BAGBY
----------------------------------------------
Kevin P. Bagby, Attorney-in-fact

II-4

<PAGE> 1
Exhibit 4.1

NARRATIVE DESCRIPTION OF STONERIDGE, INC. TEMPORARY SHARE CERTIFICATE

Decorative engraving covers approximately 3" from the entire
left edge of the of the share certificate (the "Certificate"). Centered in the
top third of the engraved box is a smaller box with the word "NUMBER" on the top
edge of the smaller box.

Centered in the top of the Certificate is the text "TEMPORARY
CERTIFICATE-EXCHANGEABLE FOR DEFINITIVE CERTIFICATE WHEN AVAILABLE" and
approximately 1" below this text is the text "STONERIDGE, INC." (the "Company")
and "INCORPORATED UNDER THE LAWS OF THE STATE OF OHIO" and "Common Shares" To
the right of the text in the upper right corner of the Certificate is a
rectangular shaded box (approximately 3/4" x 1 1/2") which contains the text
inside the box: "COMMON SHARES"; directly beneath this box is the text "CUSIP
86183P 10 2" and in small capital letters "SEE REVERSE FOR CERTAIN DEFINITIONS."

Centered in the middle of the Certificate is a larger shaded
box (approximately 2" x 8 1/2") and the text "THIS IS TO CERTIFY THAT" in the
top right hand corner of the shaded box and the text "is the owner of" in the
bottom right hand corner of the shaded box.

Below the large shaded box is the following text:

fully paid and non-assessable common shares, without par value, of Stoneridge,
Inc. transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this certificate properly endorsed. This
Certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrant.

The facsimile signatures of its duly authorized officers.

Dated [blank]
/s/ Cloyd J. Abruzzo /s/ Kevin P. Bagby
PRESIDENT AND CHIEF CHIEF FINANCIAL
EXECUTIVE OFFICER OFFICER AND
TREASURER

Centered in the bottom of the Certificate (approximately
1 1/2" in diameter) is the circular corporate seal of Stoneridge, Inc.
containing the text: "Stoneridge, Inc." "Corporate Seal" "Ohio" and "1988."

On the lower left hand side of the Certificate in small
capital letters the following words appear: "Countersigned and Registered,"
"National City Bank (Cleveland, Ohio)" "Transfer Agent and Registrant" and
"Authorized Signature."

<PAGE> 2

The back of the Certificate contains the following text:

The Corporation will furnish without charge to each shareholder who so
requests a statement of the powers, designation, preferences and relative,
participating, optional or other special rights of each class of shares or
series thereof of the Corporation and the qualifications, limitations or
restrictions of such preferences and/or rights. Any such request should be made
to the Secretary of the Corporation at its principal place of business.

STONERIDGE, INC.

The Corporation will furnish to any shareholder without charge within
five days after receipt of written request therefor a copy of the express terms
of the shares represented by this certificate and of the other class or classes
and series of shares the Corporation is authorized to issue.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.

TEN COM: as tenants in common UNIF TRANS MIN ACT- ____ Custodian ___
TEN ENT: as tenants by the entireties (cust) (minor)
JT TEN: as joint tenants with right under Uniform Transfers to Minors
of survivorship and not as Act ______________________.
tenants in common (state)

Additional abbreviations may also be used though not in the
above list.

FOR VALUE RECEIVED, ___________________________ hereby sell, assign and
transfer unto
________________________________________________________________________________
(PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE)
________________________________________________________________________________

________________________________________________________________________________

Common Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint _______________________________________, Attorney to
transfer the said Common Shares on the books of the within named Corporation
with full power of substitution in the premises.

<PAGE> 3

Dated _______________________________

X
----------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:

By:
---------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE> 1
Exhibit 10.10

TAX INDEMNIFICATION AGREEMENT

THIS TAX INDEMNIFICATION AGREEMENT (this "Agreement"), made
and entered into between STONERIDGE, INC., an Ohio corporation (the "Company"),
and each of the other signatories hereto (collectively, the "Shareholders") (the
Company and the Shareholders are hereinafter referred to individually as a
"party" and collectively as the "parties"),

W I T N E S S E T H :
---------------------

WHEREAS, the Company intends to sell its Common Shares,
without par value, ("Common Shares") in an initial public offering (the
"Offering") pursuant to the Company's Registration Statement on Form S-1
(Registration No. 333-33285) first filed with the Securities and Exchange
Commission on August 8, 1997;

WHEREAS, the Company's election to be taxed as an S
Corporation pursuant to Section 1362 of the Internal Revenue Code of 1986, as
amended (the "Code") will be terminated effective prior to the closing of the
Offering (the "Termination Date"), and the Company thereafter will be taxed as a
C corporation for the tax period ending thereafter as defined in Section
1361(a)(2) of the Code; and

WHEREAS, in connection with the Offering, the Company and the
Shareholders wish to provide for indemnification with respect to income taxes
attributable to the Company which may be payable for periods both prior to and
after the Termination Date;

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

DEFINITIONS
-----------

1.1 DEFINITIONS. The following terms, as used herein, have the
following meanings.

"C Corporation Year" means any taxable period beginning on or after the
Termination Date during which the Company is, was or will be taxed as a C
corporation.

"Final S Year" means the Company's tax year ending on the Termination
Date.

"S Corporation Period" means the period commencing with the effective
date of the Company's election to be treated as an S corporation and ending on
the Termination Date.

"Subchapter S Item" means all items of income, loss, deduction, tax
preference, foreign taxes, or other items of the Company from all sources during
its S Corporation Period, within the meaning of Section 6245 of the Code,
specifically excluding the following: (i) items necessary to determine the
eligibility of the S corporation shareholders; (ii) items arising out of
invalidity of the S Corporation election; and (iii) items arising out of the
existence of any revocation or termination of the S corporation election.

<PAGE> 2

ARTICLE II

ELECTION TO TERMINATE; S TERMINATION YEAR
-----------------------------------------

2.1 TERMINATION OF S STATUS. The parties intend that the status of the
Company as an S corporation shall be terminated as of the Termination Date.

ARTICLE III

TAXES
-----

3.1 LIABILITY FOR TAXES INCURRED DURING S CORPORATION YEARS INCLUDING
FINAL S YEAR. Each Shareholder, severally and not jointly, covenants and agrees
to pay any and all taxes attributable to his allocable share of Subchapter S
Items.

3.2 LIABILITY FOR TAXES INCURRED DURING C CORPORATION YEARS OR WHICH
THE COMPANY WAS SUBJECTED TO. The Company covenants and agrees that the Company
shall pay any and all taxes attributable to or measured by taxable income of the
Company for all taxable periods (i) prior to the effective date of its election
of S corporation status of the Company and (ii) after the Termination Date. In
addition, the Company covenants and agrees to pay all taxes which the Company
was subjected to during the S Corporation Period.

3.3 COMPANY'S INDEMNIFICATION FOR TAX LIABILITIES. The Company hereby
agrees to indemnify, defend and hold harmless each Shareholder from and against
any and all taxes, losses, liabilities, obligations, damages, impositions,
assessments, fines, deficiencies, costs and expenses, including without
limitation reasonable attorneys' and accountants' fees and expenses, with
respect to all federal and state income taxes, including interest, penalties and
additions to taxes imposed upon such Shareholder, net of any tax benefits
realized, as a result of any final determination of Subchapter S Items (by
reason of an amended return, claim for refund, audit, litigation or otherwise)
resulting in (i) any increase in items of income or gain of any Shareholder or
(ii) any decrease in items of loss, deduction or credit of any Shareholder.

3.4 SHAREHOLDERS' INDEMNIFICATION FOR TAX LIABILITIES. Each Shareholder
(the "Indemnifying Shareholder"), severally (and jointly, but only to the extent
of the group of Shareholders consisting of the Indemnifying Shareholder and any
other Shareholder which is a trust that owns outstanding common shares of the
Company for the benefit of the Indemnifying Shareholder) (according to the
percentage of the outstanding Common Shares of the Company owned directly or
beneficially by such Shareholder on the date to which the calculation in
question applies), hereby agrees to indemnify, defend and hold harmless the
Company from and against all liability with respect to all federal and state
income taxes of any kind whatsoever, including interest and additions to taxes
net of any tax benefits realized (but exclusive of attorneys' and accountants'
fees and penalties) resulting from any final determination of Subchapter S Items
(by reason of an amended return, claim for refund, audit, litigation or
otherwise) resulting in (i) a decrease in items of income or gain of any
Shareholder or (ii) any increase in items of loss, deduction or credit or any
Shareholder, but only to the extent that the

- 2 -

<PAGE> 3

amount of the tax liability associated with such adjustment for each such
Shareholder does not exceed the cash distribution made by the Company to each of
the Shareholders with respect to and for payment of the tax liability of each
such Shareholder for Subchapter S Items for the S Corporation Period for which
such adjustment is made.

3.5 PAYMENTS. The Shareholders or the Company, as the case may be,
shall make any payment required under this Article III within fifteen (15) days
after receipt of notice from the other party that a payment is due by such party
to the appropriate taxing authority.

3.6 SUBROGATION. The party (or parties) providing the indemnity under
either Section 3.3 or Section 3.4 (defined solely for purposes of this Section
3.6 as the "Indemnifying Party") shall be subrogated to all rights of recovery
(the "Subrogation Claims") that the party (or parties) being indemnified under
Section 3.3 or Section 3.4, respectively (defined solely for purposes of this
Section 3.6 as the "Indemnified Party"), may have against any person or
organization in respect of the tax liabilities for which the Indemnifying Party
is providing indemnity. Such right of subrogation shall not exceed the amount
paid by the Indemnifying Party to the Indemnified Party. The Indemnified Party
shall execute and deliver instruments and papers and do whatever else is
reasonably necessary to secure such rights of subrogation for the Indemnifying
Party. The Indemnified Party shall provide all reasonable assistance as is
required by the Indemnifying Party to pursue the Subrogation Claims. The
Indemnified Party shall do nothing after any Subrogation Claim arises to
prejudice the rights of the Indemnifying Party.

3.7 NOTICES OF AUDITS AND ADJUSTMENTS.

(a) If any Shareholder receives notice from a taxing authority
of an intention to audit any return of the Shareholder that includes any
Subchapter S Item, such Shareholder shall inform the Company, in writing, of the
audit promptly after receipt of such notice. If any Shareholder receives notice
from a taxing authority of any proposed adjustment for which the Company may be
required to indemnify the Shareholder hereunder (a "Proposed Adjustment"), the
Shareholder shall give notice to the Company of the Proposed Adjustment promptly
after receipt of such notice from a taxing authority. Upon receipt of such
notice from a Shareholder, the Company may, by in turn giving prompt written
notice to each of the Shareholders, request that the Shareholders contest such
Proposed Adjustment. If the Company shall request that any Proposed Adjustment
be contested, then the Shareholders shall, at the Company's expense, contest the
Proposed Adjustment (including pursuing all administrative and judicial appeals
and processes). The Company shall pay to the Shareholders on demand, all costs
and expenses (including attorneys' and accountants' fees) that the Shareholders
may incur in contesting such Proposed Adjustments. No Shareholders shall make,
accept or enter into a settlement or other compromise with respect to any taxes
indemnified hereunder, or forgo or terminate any proceeding undertaken hereunder
without the consent of the Company, which consent shall not be unreasonably
withheld.

(b) If the Company or any Subsidiary receives notice from a
taxing authority of an intention to audit any return of the Company or any
Subsidiary that includes Subchapter S Items, the Company shall inform the
Shareholders, in writing, of the audit promptly after

- 3 -

<PAGE> 4

receipt of such notice. If the Company receives notice from a taxing authority
of any proposed adjustment for which any of the Shareholders may be required to
indemnify the Company hereunder (a "Company Proposed Adjustment"), the Company
shall give notice to each of the Shareholders of the Company Proposed Adjustment
promptly after receipt of such notice from a taxing authority. The Company shall
not make, accept or enter into a settlement or other compromise with respect to
any taxes indemnified hereunder, or forgo or terminate any proceeding undertaken
hereunder without the consent of the Shareholders, which consent shall not be
unreasonably withheld.

ARTICLE IV

MISCELLANEOUS
-------------

4.1 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together constitute one and the same instrument.

4.2 CONSTRUCTION OF TERMS. Nothing herein expressed or implied is
intended, or shall be construed, to confer upon or give any person, firm or
corporation, other than the parties hereto to their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.

4.3 COST OF ENFORCEMENT; INTEREST. If, within ten (10) days after
demand to comply with the obligations of one of the parties to this Agreement
served in writing on the other, compliance or reasonable assurance of compliance
is not forthcoming, and the other party engages the services of an attorney to
enforce rights under this Agreement, the prevailing party in any action shall be
entitled to recover all reasonable costs and expenses (including reasonable fees
of attorneys and legal assistants, whenever incurred, whether before trial or
appellate proceeding, at trial, on appeal or otherwise).

4.4 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Ohio, other than those
provisions relating to the conflict of laws of different jurisdictions if the
effect of the application of such provisions would be to cause the laws of a
jurisdiction other than Ohio to apply hereto.

4.5 JURISDICTION; VENUE. The parties agree that jurisdiction and venue
for any litigation arising out of this Agreement or any document delivered in
connection herewith shall be in a court with subject matter jurisdiction located
in Trumbull County, Ohio, and all parties hereby irrevocably consent and submit
to the personal jurisdiction of all such courts.

4.6 NOTICES. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given when received, if personally delivered; when transmitted, if transmitted
by electronic fax, telecopy or similar electronic transmission method; the day
after it is sent, if mailed, first-class mail, postage prepaid. In each case,
notice shall be sent to the Shareholders at the address last listed in the

- 4 -

<PAGE> 5

Company's stockholder records and to the Company at its principal executive
office, or to such other address as any party shall have specified by notice in
writing to the other parties.

4.7 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
or supplemented only by a written agreement executed by all of the parties
hereto.

4.8 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, nor is this Agreement intended to confer upon any other person except
the parties any rights or remedies hereunder.

4.9 INTERPRETATION. The title, article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.

4.10 SEVERABILITY. In the event that any one or more of the provisions
of this Agreement shall be held to be illegal, invalid or unenforceable in any
respect, the same shall not in any respect affect the validity, legality or
enforceability of the remainder of this Agreement, and the parties shall use
their best efforts to replace such illegal, invalid or unenforceable provisions
with an enforceable provision approximating, to the extent possible, the
original intent of the parties.

4.11 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no representations, promises, warranties, covenants or
undertakings other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.

IN WITNESS WHEREOF, this Agreement has been duly executed as of
____________ __, 1997.

STONERIDGE, INC.

By:
-------------------------------------
Cloyd J. Abbrzzo
President

- 5 -

<PAGE> 6

SHAREHOLDERS:

- ------------------------------ ------------------------------
David M. Draime, Trustee D.M. Draime, Executor of the
U/A/D 12/13/78 Estate of Steven A. Draime

- ------------------------------ ------------------------------
Scott N. Draime, Trustee Jeffrey P. Draime, Trustee
U/A/D 11/27/89 U/A/D 12/23/96 f/b/o Elizabeth Draime

- ------------------------------ ------------------------------
Jeffrey P. Draime, Trustee Jeffrey P. Draime, Trustee
U/A/D 12/23/96 f/b/o Jennifer U/A/D 12/23/96 f/b/o Stephanie Draime
Draime

- ------------------------------ ------------------------------
Jeffrey P. Draime, Trustee Jeffrey P. Draime, Trustee
U/A/D 12/23/96 f/b/o Alexandra U/A/D 12/28/90
Draime

- ------------------------------ ------------------------------
Scott N. Draime, Trustee Scott N. Draime, Trustee
U/A/D 12/23/96 f/b/o David U/A/D 12/23/96 f/b/o Lillia
Alexander Draime Christine Draime

- ------------------------------ ------------------------------
Scott N. Draime, Trustee Rebecca M. Draime
U/A/D 12/23/96 f/b/o Mary
Cecile Draime

- ------------------------------ ------------------------------
Scott N. Draime, Trustee Avery S. Cohen, Custodian
U/A/D 3/28/97 f/b/o Hanna under the Ohio Transfers to
Marie Gang Minors Act f/b/o William M. Draime

- ------------------------------ ------------------------------
Avery S. Cohen, Custodian
under the Ohio Transfers to ------------------------------
Minors Act f/b/o John Arol Avery S. Cohen and Sheldon J.
Draime Epstein, Trustees U/A/D 7/5/89
f/b/o Scott N. Draime

- 6 -

<PAGE> 7

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

- ------------------------------ ------------------------------
Avery S. Cohen and Sheldon J. Avery S. Cohen and Sheldon J.
Epstein, Trustees U/A/D 7/5/89 Epstein, Trustees U/A/D 7/5/89
f/b/o Jeffrey P. Draime f/b/o Rebecca M. Draime

- ------------------------------ ------------------------------
Cloyd Abruzzo, Trustee U/A/D Cloyd Abruzzo, Trustee U/A/D
4/10/95 f/b/o William Max 4/10/95 f/b/o John Arol Draime
Draime

- ------------------------------ ------------------------------
Cloyd Abruzzo, Trustee U/A/D Cloyd Abruzzo, Trustee U/A/D
4/10/95 f/b/o Scott N. Draime 4/10/95 f/b/o Jeffrey P. Draime

- ------------------------------ ------------------------------
Cloyd Abruzzo, Trustee U/A/D
4/10/95 f/b/o Rebecca M. Draime ------------------------------
Cloyd J. and Cathy A. Abruzzo,
Trustees U/A/D 6/12/95

- ------------------------------ ------------------------------
Arthur Abruzzo, Trustee U/A/D Arthur Abruzzo, Trustee U/A/D
12/26/96 f/b/o Kimberly Abruzzo 12/26/96 f/b/o Kelly Abruzzo

- ------------------------------ ------------------------------
Arthur Abruzzo, Trustee U/A/D J. Pisani
12/26/96 f/b/o Mark Abruzzo

- ------------------------------ ------------------------------
Linda M. Pisani, Trustee U/A/D Linda M. Pisani, Trustee U/A/D
12/31/96 f/b/o Julia Ann 12/31/96 f/b/o David J. Pisani
Liebhardt

- ------------------------------ ------------------------------
Edward F. Mosel Willi K. Beck

- ------------------------------ ------------------------------
Kenneth A. Lloyd David Thomas

- ------------------------------ ------------------------------
Kevin Bagby Michael Bagby

- 7 -

<PAGE> 8

- ------------------------------ ------------------------------
Thomas Beaver Richard Cheney

- ------------------------------ ------------------------------
Avery Cohen Chi Day

- ------------------------------ ------------------------------
Richard Emerine Sheldon Epstein

- ------------------------------ ------------------------------
David Gargas Howard Goldberg

- ------------------------------ ------------------------------
William Haushalter William Hull

- ------------------------------ ------------------------------
Earl Linehan Mark Oakes

- 8 -

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------

As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Cleveland, Ohio
October 1, 1997