40-F

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 40-F

[ ]             REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                                       OR

          [X] ANNUAL REPORT PURSUANT TO SECTION 13(a) or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002      Commission  File Number 0-13942
                          -----------------


                            MAGNA INTERNATIONAL INC.
- --------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                                 NOT APPLICABLE
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         (Translation of Registrant's name into English (if applicable))

                           PROVINCE OF ONTARIO, CANADA
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        (Province or other jurisdiction of incorporation or organization)

                                      3714
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    (Primary Standard Industrial Classification Code number (if applicable))

                                 NOT APPLICABLE
- --------------------------------------------------------------------------------
            (I.R.S. Employer Identification Number (if applicable))

         337 MAGNA DRIVE, AURORA, ONTARIO, CANADA L4G 7K1 (905) 726-2462
- --------------------------------------------------------------------------------
   (Address and telephone number of Registrant's principal executive offices)

  CT CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK, NEW YORK 10019 (212) 664-1666
- --------------------------------------------------------------------------------
 (Name, address (including zip code) and telephone number (including area code)
                   of agent for service in the United States


Securities registered or to be registered pursuant to Section 12(b) of the Act.

                                                  
Title of each class                                  Name of each exchange on which registered

CLASS A SUBORDINATE VOTING SHARES                             NEW YORK STOCK EXCHANGE
8.875% SERIES B PREFERRED SECURITIES                          NEW YORK STOCK EXCHANGE

Securities registered or to be registered pursuant to Section 12(g) of the Act: NONE

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE





                                      - 2 -




For annual reports, indicate by check mark the information filed with this Form:

[X] ANNUAL INFORMATION FORM         [ ] AUDITED ANNUAL FINANCIAL STATEMENTS

         Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report.

94,477,224 CLASS A SUBORDINATE VOTING SHARES
1,096,509 CLASS B SHARES
6,800,000 8.875% SERIES B PREFERRED SECURITIES

         Indicate by check mark whether the Registrant by filing the information
contained in this Form is also hereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities and Exchange Act of
1934 (the "Exchange Act"). If "Yes" is marked, indicate the filing number
assigned to the Registrant in connection with such Rule.

                          YES___    NO X
                                      ---

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.

                          YES X      NO___
                             ---







ANNUAL INFORMATION FORM

The Registrant's Annual Information Form for the year ended December 31, 2002
required under Canadian law is attached hereto as Exhibit 1 (the "Annual
Information Form").


AUDITED ANNUAL FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS

A.       Consolidated Audited Annual Financial Statements

For the Registrant's consolidated audited annual financial statements, including
the report of independent chartered accountants with respect thereto, please see
pages 53 to 90 and page 52, respectively, of the Registrant's 2002 Annual Report
to Shareholders previously filed with the Securities Exchange Commission as
Exhibit 19 to the Registrant's Report on Form 6-K dated April 2, 2003 (the
"Annual Shareholders' Report"). See note 28 to the Registrant's consolidated
audited annual financial statements on pages 83 to 88 of the Annual
Shareholders' Report, reconciling the important differences between Canadian and
United States generally accepted accounting principles.

B.       Management's Discussion and Analysis

For management's discussion and analysis of results of operations and financial
position, see pages 37 to 51 of the Annual Shareholders' Report.


WEBSITE INFORMATION

Notwithstanding any reference to the Registrant's website on the World Wide Web
in the Annual Information Form or in the documents attached or incorporated as
exhibits hereto, the information contained in the Registrant's site or any other
site on the World Wide Web referred to in the Registrant's site is not a part of
this Annual Report on Form 40-F and, therefore is not filed with the Securities
Exchange Commission.


STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The Registrant has made in the documents filed as part of this Annual Report on
Form 40-F, and from time to time may otherwise make, "forward-looking
statements" within the meaning of Section 21E of the Exchange Act and Section
27A of the Securities Act and related assumptions concerning its operations,
economic performance and financial matters. The Registrant is under no duty to
update any of these forward-looking statements or related assumptions. Actual
results or events could differ materially from those set forth in, or implied
by, the forward-looking statements and the related assumptions due to a variety
of factors. Reference is made to the section entitled "Forward-Looking
Statements" on page 2 of the Annual Information Form for the year ended December
31, 2002 for a discussion of such factors.


DISCLOSURE CONTROLS AND PROCEDURES

The Registrant's President and Chief Executive Officer and its Executive
Vice-President and Chief Financial Officer are responsible for establishing
and maintaining the Registrant's system of disclosure controls and
procedures, as such term is defined under applicable rules of the U.S.
Securities and Exchange Commission. These executive officers have designed
the Registrant's disclosure controls and procedures to ensure that material
information is made known to them, particularly during the period in which
this Annual Report on Form 40-F was being prepared. As required by the SEC,
the Registrant's President and Chief Executive Officer and its Executive
Vice-President and Chief Financial Officer have evaluated the effectiveness
of the Registrant's disclosure controls and procedures as of a date within 90
days prior to the filing date of this Annual Report on Form 40-F. Based on
this evaluation, the Registrant's President and Chief Executive Officer and
its Executive Vice-President and Chief Financial Officer are satisfied as to
the effectiveness of the Registrant's disclosure controls and procedures in
ensuring that material information is made known to them in a timely manner.

There have been no significant changes to the Registrant's internal controls or
other factors that could significantly affect these controls subsequent to the
date of their evaluation.






                  UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.       UNDERTAKING

         Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F; the securities in
relation to which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.

B.       CONSENT TO SERVICE OF PROCESS

         A Form F-X signed by the Registrant and its agent for service of
process was previously filed with the Commission.



                                   SIGNATURES

         Pursuant to the requirements of the Exchange Act, the Registrant
certifies that it meets all of the requirements for filing on Form 40-F and has
duly caused this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                            MAGNA INTERNATIONAL INC.
Registrant______________________________________________________________________




                                       /s/ J. BRIAN COLBURN
By (Signature and Title)________________________________________________________
                                       J. Brian Colburn
                                       Executive Vice-President, Special
                                       Projects and Secretary


                                May 15, 2003
Date____________________________________________________________________________











                                 CERTIFICATIONS

I, Belinda Stronach, the President and Chief Executive Officer of Magna
International Inc. ("Magna"), certify that:

1.       I have reviewed this Annual Report on Form 40-F of Magna;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c)       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (and persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

         Date: May 15, 2003                /s/ BELINDA STRONACH
                                           -------------------------------------
                                           Belinda Stronach
                                           President and Chief Executive Officer




                                 CERTIFICATIONS

I, Vincent J. Galifi, the Executive Vice-President and Chief Financial
Officer of Magna International Inc. ("Magna"), certify that:

1.       I have reviewed this Annual Report on Form 40-F of Magna;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c)       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (and persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

         Date: May 15, 2003                /s/ VINCENT J. GALIFI
                                           -------------------------------------
                                           Vincent J. Galifi
                                           Executive Vice-President and
                                           Chief Financial Officer







                                  EXHIBIT INDEX


                 
Exhibit 1           Annual Information Form of the Registrant dated May 15, 2003

Exhibit 2           Registrant's Annual Report to Shareholders for the Year
                    Ended December 31, 2002, which contains the Registrant's
                    audited financial statements as at and for the three-year
                    period ended December 31, 2002 and Management's Discussion
                    and Analysis of Results of Operations and Financial
                    Condition (incorporated by reference to Exhibit 19 to
                    Registrant's Report on Form 6-K dated April 2, 2003).

Exhibit 3           Consent of Ernst & Young LLP.

Exhibit 99.1        Certificate of Principal Executive Officer Pursuant to 18
                    U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002.

Exhibit 99.2        Certificate of Principal Financial Officer Pursuant to 18
                    U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002.

EX-1

                                                                       Exhibit 1







                                     [LOGO]
                            MAGNA INTERNATIONAL INC.












                             ANNUAL INFORMATION FORM




















                                  MAY 15, 2003







                             ANNUAL INFORMATION FORM

                                TABLE OF CONTENTS



                                                                                                                       PAGE
                                                                                                                 
ITEM 1.  CORPORATE STRUCTURE............................................................................................. 3
ITEM 2.  GENERAL DEVELOPMENT OF THE BUSINESS............................................................................. 3
ITEM 3.  DESCRIPTION OF THE BUSINESS.....................................................................................14
ITEM 4.  SELECTED CONSOLIDATED FINANCIAL DATA............................................................................33
ITEM 5.  MANAGEMENT'S DISCUSSION AND ANALYSIS............................................................................35
ITEM 6.  MARKET FOR SECURITIES...........................................................................................35
ITEM 7.  DIRECTORS AND OFFICERS..........................................................................................35
ITEM 8.  CORPORATE CONSTITUTION..........................................................................................38
ITEM 9.  ADDITIONAL INFORMATION..........................................................................................40



IN THIS ANNUAL INFORMATION FORM, WHEN WE USE THE TERMS "WE", "US", "OUR",
"COMPANY" AND "MAGNA", WE ARE REFERRING TO MAGNA INTERNATIONAL INC. AND ITS
SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIES, UNLESS THE CONTEXT OTHERWISE
REQUIRES. ALL REFERENCES IN THIS ANNUAL INFORMATION FORM TO CALENDAR YEARS ARE
REFERENCES TO OUR FINANCIAL OR FISCAL YEARS ENDING AFTER DECEMBER 31, 1998 AND
ALL REFERENCES TO FISCAL YEARS ARE REFERENCES TO FINANCIAL OR FISCAL YEARS
ENDING ON JULY 31 OF THE YEAR NAMED. ALL REFERENCES TO "$" OR "DOLLARS" ARE
REFERENCES TO U.S. DOLLARS UNLESS OTHERWISE SPECIFIED.


FORWARD-LOOKING STATEMENTS

    The contents of this Annual Information Form contain statements which, to
the extent that they are not recitations of historical fact, constitute
"forward-looking statements" within the meaning of Section 21E of the United
States Securities Exchange Act of 1934 and Section 27A of the United States
Securities Act of 1933. Forward-looking statements may include financial and
other projections, as well as statements regarding our future plans, objectives
or economic performance, or the assumptions underlying any of the foregoing. In
this Annual Information Form, we use words such as "may", "would", "could",
"will", "likely", "expect", "anticipate", "believe", "intend", "plan",
"forecast", "project" , "estimate" and similar expressions to identify
forward-looking statements. Any such forward-looking statements are based on
assumptions and analyses made by us in light of our experience and our
perception of historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments will conform
with our expectations and predictions is subject to a number of risks,
assumptions and uncertainties. These risks, assumptions and uncertainties
include, but are not limited to:

                                                            
o global economic conditions;                                  o increases in raw materials prices;
o pressure from customers to reduce our prices;                o fluctuations in relative currency values;
o pressure from customers to absorb certain fixed costs;       o unionization activity;
o increased product warranty and product liability risk;       o threat of work stoppages;
o impact of financially distressed sub-suppliers;              o competitive auto parts supply market;
o dependence on outsourcing by automobile manufacturers;       o delays in launching new programs;
o rapid technological and regulatory changes;                  o delays in constructing new facilities;
o increased crude oil and energy prices;                       o changes in governmental regulations; and
o dependence on certain customers and vehicle programs;        o impact of environmental regulations.



     In evaluating any forward-looking statements in this Annual Information
Form, you should specifically consider the various factors, including those
contained under the heading "ITEM 3. DESCRIPTION OF THE BUSINESS -- RISK
FACTORS", which could cause actual events or results to differ materially
from those indicated by our forward-looking statements. We do not intend, nor
do we undertake any obligation, to update or revise any forward-looking
statements contained in this Annual Information Form to reflect subsequent
information, events or circumstances or otherwise.

                                       2



ITEM 1.  CORPORATE STRUCTURE

                                     ISSUER

    We were incorporated under the laws of the Province of Ontario, Canada on
November 16, 1961. Our charter documents currently consist of restated articles
of incorporation dated July 25, 2001, which were issued pursuant to the BUSINESS
CORPORATIONS ACT (Ontario).

                                  SUBSIDIARIES

    A list of our principal subsidiaries as at December 28, 2002 and their
respective jurisdictions of incorporation is set forth on Schedule A. Our legal
structure (including that of our subsidiaries) is not necessarily indicative of
our operational structure.

ITEM 2.  GENERAL DEVELOPMENT OF THE BUSINESS

                                    OVERVIEW

    Our operations consist of:

    o    automotive operations conducted through six automotive systems groups,
         further segmented between public and wholly-owned automotive systems
         groups, as well as corporate and other operations; and

    o    non-automotive operations conducted through Magna Entertainment Corp.

AUTOMOTIVE OPERATIONS

    We are the most diversified automotive supplier in the world. We design,
engineer and manufacture a complete range of automotive components, assemblies,
modules and systems, and engineer and assemble complete vehicles. Our products
and services are sold primarily to manufacturers of cars and light trucks in
North America, Europe, South America and Asia. As at December 31, 2002, we
employed approximately 70,800 automotive employees and operated 199 automotive
manufacturing facilities (including 8 cross-group joint venture facilities), of
which 117 are in North America, 70 are in Europe, eight are in Asia and four are
in South America, as well as 46 product development/engineering facilities, in
22 countries. Our manufacturing, product development and engineering facilities
are organized as autonomous operating divisions under one of six automotive
systems groups, three of which are public companies in which we retain a
controlling equity stake and three of which are wholly-owned.

    PUBLIC AUTOMOTIVE SYSTEMS GROUPS

    o    DECOMA INTERNATIONAL INC. - Decoma designs, engineers and manufactures
         a variety of automotive exterior components and systems, including
         fascias (bumpers), front and rear end modules, plastic body panels,
         exterior trim components and systems, greenhouse and sealing systems,
         roof modules, and lighting components. Decoma operates 42
         manufacturing, engineering and product development facilities in North
         America, Europe and Asia.

    o    INTIER AUTOMOTIVE INC. - Intier is a global full service supplier and
         integrator of automotive interior components, systems and modules,
         including cockpit, sidewall, overhead and complete seating systems,
         seat hardware and mechanisms, floor and trunk room carpet and
         acoustics, latching and glass moving systems, system module
         technologies and electro-mechanical systems. Intier directly supplies
         most of the major automobile manufacturers in the world through 65
         manufacturing facilities (including one joint venture facility with
         Magna Steyr) and 17 product development, engineering and testing
         centers (including one joint venture facility with Magna Steyr) in
         North America, Europe, South America and Asia.

    o    TESMA INTERNATIONAL INC. - Tesma is a global supplier of
         highly-engineered engine, transmission and fuel delivery components,
         assemblies, modules and systems for cars and light trucks. Tesma
         operates 23 manufacturing facilities in North America, South America,
         Europe and Asia, as well as three research centres.



                                       3


    WHOLLY-OWNED AUTOMOTIVE SYSTEMS GROUPS

   o     MAGNA STEYR - Magna Steyr is the automotive industry's leading
         assembler of low volume derivative and specialty vehicles for
         automobile manufacturers and one of the world's most advanced
         developers and suppliers of complete drivetrain technologies, including
         four-wheel/all-wheel drive systems as well as axle and suspension
         modules. Magna Steyr also provides complete vehicle design,
         engineering, validation, testing and assembly services. Magna Steyr
         operates eight manufacturing and assembly facilities (including one
         joint venture facility with Intier) and eight engineering and testing
         facilities (including one joint venture facility with each of Intier
         and Cosma) in Europe, North America and Asia.

    o    MAGNA DONNELLY - Magna Donnelly is the world's leading producer of
         automotive mirror systems (by number of units produced) and also
         supplies modular window systems and handle products, all of which
         increasingly incorporate electronic capabilities. Magna Donnelly
         operates 31 manufacturing facilities and four engineering and testing
         facilities in North America, Europe and Asia. For financial reporting
         purposes, Magna Donnelly's results are aggregated with those of Cosma
         in our "Other Automotive Operations" financial reporting segment.

    o    COSMA INTERNATIONAl - Cosma manufactures a comprehensive range of metal
         body systems, components, assemblies and modules. Cosma operates 37
         manufacturing facilities and nine engineering and testing facilities in
         North America and Europe. Cosma's financial results are reported in our
         "Other Automotive Operations" financial reporting segment.

    In North America, our primary customers are General Motors Corporation,
DaimlerChrysler AG and Ford Motor Company, including their respective operating
divisions and subsidiaries, as well as certain North American subsidiaries of
foreign-based automobile manufacturers, such as BMW, Honda, Isuzu, Mazda,
Nissan, Suzuki, Toyota and Volkswagen. North American consolidated production
sales accounted for approximately 58% and 61% of our total automotive sales for
each of calendar 2002 and calendar 2001, respectively.

    In Europe, our customers include most significant automobile manufacturers,
such as DaimlerChrysler (including both Chrysler and Mercedes-Benz), Volkswagen
(including its affiliate Audi), BMW, Ford and its European affiliates (Jaguar,
Volvo and Land Rover), General Motors and its European affiliates (Opel and
SAAB), Honda, Fiat, Renault and Nissan. Total European consolidated production
and assembly sales accounted for approximately 30% and 28% of our total
automotive sales for calendar 2002 and 2001, respectively, and have increased,
principally through acquisitions and also through internal growth, from $79
million in fiscal 1993 to approximately $3.8 billion in calendar 2002.

    Worldwide sales to DaimlerChrysler, General Motors and Ford represented
approximately 29%, 22% and 20%, respectively, of our total consolidated
automotive sales in calendar 2002.

    CORPORATE AND OTHER

    Substantially all of our automotive or related real estate is owned through
MI Developments Inc., a wholly-owned subsidiary.

    See "ITEM 3. DESCRIPTION OF THE BUSINESS - AUTOMOTIVE OPERATIONS".

MAGNA ENTERTAINMENT CORP.

    In addition to our automotive operations, we conduct certain
non-automotive operations through MEC, which is North America's number one
owner and operator of thoroughbred racetracks, and one of the world's leading
suppliers, via simulcasting, of live racing content to the growing
inter-track, off-track and account wagering markets. MEC currently operates
or manages eleven thoroughbred racetracks, two standardbred racetracks, one
racetrack which runs both thoroughbred and standardbred meets and one
greyhound racetrack, as well as the simulcast wagering venues at these
tracks. In addition, MEC operates off-track betting facilities and a
national account wagering business known as XpressBet(TM) which permits
customers to place wagers by telephone and over the Internet on horse races
at up to 70 racetracks in North America. MEC also owns and operates
HorseRacing TV(TM), a new television network focused exclusively on horse
racing that was launched on the Racetrack Television Network in July
2002. As at December 31, 2002, MEC employed approximately 5,100 employees.
MEC's sales accounted for approximately 4% of our total sales in 2002. See
"-OPERATING STRUCTURE AND PRINCIPLES - Reorganization" and "ITEM 3.
DESCRIPTION OF THE BUSINESS - MAGNA ENTERTAINMENT CORP."

                                       4



                    RECENT TRENDS IN THE AUTOMOTIVE INDUSTRY

    A number of trends have had a significant impact on the global automotive
industry in recent years, including the:

    o   increasing pressure by automobile manufacturers on automotive suppliers
        to reduce their prices;

    o   globalization and consolidation of the automotive industry, including
        both automobile manufacturers and automotive components suppliers;

    o   evolving role of independent automotive components suppliers and their
        progression up the "value chain";

    o   increasing out-sourcing and modularization of vehicle production;

    o   increasing prevalence of lower volume "niche" vehicles built off high
        volume global vehicle platforms; and

    o   growth of North American subsidiaries of foreign-based automobile
        manufacturers.

    INCREASING PRESSURE ON AUTOMOTIVE SUPPLIERS TO REDUCE THEIR PRICES

    Automobile manufacturers have sought ways in which to reduce their cost of
producing vehicles as competition for market share among these automobile
manufacturers has become more intense. In addition to seeking cost efficiencies
in their own production, marketing and administrative structures, automobile
manufacturers have placed enormous pressure on automotive suppliers to reduce
the price of the components, assemblies and modules they supply. This price
pressure has come in different forms, including through: long-term agreements
containing pre-determined price reductions for each year of a vehicle production
program; one-time price reduction demands in addition to those contained in any
long-term agreement; pressure to absorb more design and engineering costs
previously paid for by the automobile manufacturer and to recover these costs
through amortization in the piece price of the particular components designed or
engineered by the supplier; and pressure to own and/or capitalize tooling and
recover these costs through amortization in the price of the components produced
by this tooling. In many cases, suppliers bear the risk of not being able to
fully recover the design, engineering and tooling costs if vehicle production
volumes are lower than anticipated. Automotive suppliers also face additional
pricing pressures as a result of various electronic commerce initiatives which
facilitate electronic quoting, sourcing and transaction processing.

    GLOBALIZATION AND CONSOLIDATION OF THE AUTOMOTIVE INDUSTRY

    In recent years, the automotive industry has undergone a wave of global
consolidation of automobile manufacturers. This globalization can be attributed
to several factors, including increasing pressure on automobile manufacturers to
reduce costs and achieve greater economies of scale, the expansion of free trade
zones between major trading partners in North America, Europe and elsewhere, the
accelerated growth of emerging markets, primarily in Asia, and the development
of free market economies in Eastern Europe. Some examples of the globalization
and consolidation of automobile manufacturers include:

    o   the merger of Daimler-Benz and Chrysler and the acquisition by
        DaimlerChrysler of a significant equity interest in Mitsubishi;

    o   the acquisition by Ford of a significant equity interest in Mazda and
        Ford's acquisition of Jaguar, Volvo, Land Rover and Aston Martin;

    o   the acquisition by General Motors of all of the equity of SAAB, the
        acquisition of equity interests in Fuji Heavy Industries Inc. (the maker
        of Subaru vehicles), Isuzu and Fiat, the acquisition of an equity
        interest in a company which owns and operates certain assets of the
        former Daewoo Motor Company and the development of a relationship with
        Suzuki;

    o   the acquisition by Renault of a significant equity interest in Nissan
        and the acquisition by Nissan of an equity interest in Renault;

    o   the acquisition by Volkswagen of SEAT, Skoda, Bentley, Lamborghini and
        Bugatti; and

    o   the acquisition by BMW of the "MINI" and the "Rolls Royce" brands.



                                       5



    The cost pressures which have resulted in the consolidation of automobile
manufacturers have also stimulated the development by automobile manufacturers
of global vehicle platforms. In order to achieve economies of scale on a global
basis, automobile manufacturers together with their global affiliates and
partners have increasingly developed vehicles based on common manufacturing
platforms which share many components, including engine and powertrain
variations, but have distinct styling, different branding and are produced in
different parts of the world. The development of these "world cars" results in
significantly reduced design, development and engineering costs and maximizes
automobile manufacturers' purchasing power with respect to raw materials and
components required in vehicle production.

    The foregoing trends, together with the adoption of just-in-time
manufacturing processes and delivery techniques, have fostered the globalization
of automotive suppliers. In order to be responsive to the needs of automobile
manufacturers, primary or "Tier 1" suppliers are required to have the financial
strength, technical capabilities and geographic reach required to support the
design, engineering, manufacturing, sales and program support needs of
automobile manufacturers in many of the countries in which these manufacturers
operate. In addition, as automobile manufacturers have adopted "just in time"
manufacturing processes and delivery techniques, Tier 1 suppliers have been
required to locate their facilities close to their customers' manufacturing
plants in various parts of the world.

    EVOLVING ROLE OF INDEPENDENT AUTOMOTIVE COMPONENTS SUPPLIERS AND THEIR
    PROGRESSION UP THE "VALUE CHAIN"

    Historically, automotive components suppliers had a relatively limited role
in the vehicle development process. Development of a vehicle from concept to
production often took seven to eight years, with automobile manufacturers
designing and engineering the vehicle as a whole, as well as many of the
specific components required to make the vehicle. Automobile manufacturers also
performed a significant portion of the quality control testing and component
sub-assembly required. The role of their suppliers was limited to manufacturing
components in accordance with the design and engineering specifications supplied
by automobile manufacturers, which often purchased the same parts from different
suppliers, including affiliated component suppliers. The components delivered to
the automobile manufacturers often formed part of significant inventories stored
by the automobile manufacturers.

    Currently, Tier 1 suppliers are engaged in higher value-added activities
which more closely resemble the activities which were traditionally performed by
automobile manufacturers. Tier 1 suppliers are increasingly involved at early
stages in the design, development and engineering of components and systems and
have assumed increased responsibility for sub-assembly work and quality control
testing. In some cases, suppliers have assumed responsibility for designing,
engineering, developing and assembling complete vehicles.

    INCREASING OUT-SOURCING AND MODULARIZATION OF VEHICLE PRODUCTION

    In recent years, automobile manufacturers have increasingly "out-sourced"
their requirements for components, assemblies, modules and systems. The primary
factors driving this out-sourcing have been the need by automobile manufacturers
to reduce costs, minimize the time required to bring a new vehicle to market,
capitalize on the technical and engineering expertise of Tier 1 suppliers and
minimize capital expenditures. Additional factors affecting the decision to
out-source include the degree of unutilized capacity in automobile
manufacturers' manufacturing facilities, restrictions in collective bargaining
agreements and the impact of out-sourcing on labour relations.

    The significant cost and competitive pressures faced by automobile
manufacturers combined with the expansion in the capabilities of their suppliers
and the trend toward out-sourcing has increasingly resulted in automobile
manufacturers out-sourcing production of larger assemblies and portions or
"modules" of vehicles to their Tier 1 suppliers. This modularization of
production enables automobile manufacturers to achieve significant cost savings
by taking advantage of their suppliers' lower variable costs, and has had the
effect of simplifying the vehicle assembly process as well as reducing the
automobile manufacturers' fixed cost investments.

    In order to properly manage the production of out-sourced modules, Tier 1
suppliers have had to expand their capabilities and expertise. For example,
module suppliers require program management expertise in order to manage large
numbers of sub-suppliers which had previously been managed by automobile
manufacturers, as well as extensive logistics capabilities to coordinate just in
time deliveries from these sub-suppliers and just in time deliveries to
automobile manufacturers. Tier 1 suppliers have also had to develop a broader
technical understanding of systems beyond their own products, as well as an
understanding of the process of integrating various automotive systems, in order
to ensure the proper fit, finish and functioning of the modules supplied by
them. As Tier 1 suppliers have successfully managed the challenges posed by
modularization, automobile



                                       6


manufacturers have begun sourcing increasingly larger, more complex modules
(with increased content and features) as well as management or integration of
complete automotive interiors to their most capable suppliers.

    INCREASING PREVALENCE OF LOWER VOLUME "NICHE" VEHICLES BUILT OFF HIGH VOLUME
    GLOBAL PLATFORMS

    As automobile manufacturers attempt to broaden the range of vehicles they
offer, differentiate their products from those of their competitors, expand the
number of market segments in which they compete, extend the life of their
existing vehicle platforms, respond to lifestyle trends and meet the tastes of
consumers, they are increasingly introducing lower volume derivative or niche
vehicles. Niche vehicles are new vehicle models which are built off existing
vehicle platforms, and usually consist of convertibles, sports cars and/or
all-wheel/four-wheel drive sports utility or cross utility vehicles. Automobile
manufacturers are also increasingly "refreshing" existing models during the
program life and developing model variants with factory-installed performance
and styling packages. This trend towards niche vehicles provides certain Tier 1
suppliers who have capabilities which resemble the capabilities of automobile
manufacturers with increased opportunities to provide complete vehicle design,
engineering and/or assembly services.

    GROWTH OF NORTH AMERICAN SUBSIDIARIES OF FOREIGN-BASED AUTOMOBILE
    MANUFACTURERS

    North American subsidiaries of foreign-based (primarily Japanese and
European) automobile manufacturers have increased their production to
approximately 26% of aggregate North American car and light truck production in
calendar 2002. Over the next five years these automobile manufacturers are
expected to increase their North American production volumes by an additional 6%
or 900,000 units per year through the expansion of existing assembly facilities,
including a BMW facility in South Carolina and Honda and Mercedes-Benz
facilities in Alabama, and the construction of new assembly facilities,
including a Hyundai facility in Alabama, a Nissan facility in Mississippi and a
Toyota facility in Texas. A number of factors, including the improving quality
and cost effectiveness of North American automotive suppliers, currency
fluctuations, loosening of the traditional Japanese "keiretsu" supplier
relationships and the North American Free Trade Agreement are expected to result
in these automobile manufacturers relying on increased out-sourcing to increase
the North American content of their vehicles. Accordingly, these automobile
manufacturers represent significant growth potential for North American
automotive suppliers.

                        OUR AUTOMOTIVE BUSINESS STRATEGY

    In order to capitalize on the previously described trends in the automotive
industry, our automotive business strategy is to achieve and maintain a leading
global position with all major automobile manufacturers in North America, Europe
and Asia as a full service supplier of metal body and structural systems,
interior, exterior, mirror and electronics and engine and powertrain modules,
with vehicle engineering and assembly, program management and systems
integration capabilities. Some of the specific elements to achieve this general
strategy are described below.

    o   WE SEEK TO CAPITALIZE ON OUR EXISTING CUSTOMER RELATIONSHIPS AND EXPAND
        RELATIONSHIPS WITH OUR CUSTOMERS, IN ORDER TO INCREASE THE DOLLAR VALUE
        OF OUR CONTENT PER VEHICLE. We currently possess a major market share in
        each product area in which we compete and maintain strong relationships
        with most major automobile manufacturers in North America and Europe
        and, to a lesser extent, Korea and Japan. As a result of these
        relationships, we have increased the dollar value of our content per
        vehicle in North America from approximately $126 in fiscal 1993 to
        approximately $441 in calendar 2002, and in Europe from approximately $6
        in fiscal 1993 to approximately $231 in calendar 2002. We are pursuing
        new programs and take-over business from our customers, including
        foreign-based automobile manufacturers with facilities in North America,
        Europe and Asia, to further increase our market penetration and content
        per vehicle in these markets.

    o   WE INTEND TO LEVERAGE OUR PROVEN EXPERTISE IN COORDINATING THE DESIGN,
        ENGINEERING, MANUFACTURE, INTEGRATION AND ASSEMBLY OF MODULES IN ORDER
        TO FURTHER BENEFIT FROM THE TREND TOWARDS INCREASED OUTSOURCING OF
        LARGER MODULES. Our automotive systems groups are industry leaders in
        the engineering, development and production of a number of different
        types of modules, including front and rear end modules, door modules,
        complete integrated interiors, mirror modules, engine cover modules,
        all-wheel drive powertrain modules and complete body in white. We intend
        to continue coordinating our product design, engineering, manufacturing
        and testing resources, and further refining our logistics, supply chain
        management, program management and systems integration skills, in order
        to enable us to supply a larger number of increasingly complex modules.
        We also plan to continue fostering cross-group cooperation on modules in
        order to maximize our content in each module we supply.


    o   WE PLAN ON MAINTAINING A CONSERVATIVE BALANCE SHEET AND EXPLOITING OUR
        RELATIVE FINANCIAL STRENGTH TO ACQUIRE NEW TECHNOLOGIES AND STRATEGIC
        ASSETS, AS WELL AS TO PURSUE NEW PROGRAMS. We maintain a strong balance
        sheet, with little



                                       7


        debt and significant cash reserves, as well as strong cash flow. We
        intend to take advantage of these financial resources to acquire new
        technologies and strategic assets that complement our current portfolio
        of automotive technologies or expand our product breadth or assets,
        provided that any such acquisition furthers our overall business
        strategy and enhances our long-term earnings growth. In addition, our
        financial strength provides us with the ability to pursue new programs
        from automobile manufacturers as well as takeover business from
        competitors.

    o   WE INTEND TO MAINTAIN A STRONG FOCUS ON TECHNOLOGY-DRIVEN GROWTH. We
        believe that one of the cornerstones of our past success has been our
        commitment to research, development and technological innovation. This
        commitment is enshrined in our Corporate Constitution, which requires us
        to allocate a minimum of 7% of our pre-tax profits (as defined in the
        Corporate Constitution) to research and development annually. Our focus
        on utilizing new technologies and processes in the development of a wide
        range of proprietary products has accounted for much of our strong
        financial performance over the past number of years. Our focus on
        technology has also assisted us in withstanding some of the intense
        pricing pressures faced by automotive suppliers since innovative
        products often merit a price premium. We intend to maintain our focus on
        technology-driven growth and our commitment to research, development and
        technological innovation in order to maintain our leading position in a
        number of product categories and remain in a position to offer our
        customers a competitive advantage through our technology.

    o   WE PLAN TO CONTINUE TO INVEST IN TECHNICAL SKILLS TRAINING AS WELL AS
        TRAINING FOR OUR MANAGERS AND EMPLOYEES. We believe that the most
        successful companies are those which are most successful at attracting,
        retaining and motivating skilled and entrepreneurial employees and
        management. We believe that we have one of the most skilled labour pools
        in the industry, particularly tool and die makers, as well as automotive
        technicians and engineers. We intend to continue expanding this pool of
        skilled employees and managers as a source of significant competitive
        advantage, and providing extensive training through apprenticeships,
        technical training centres and management training centres.

    o   WE INTEND TO CONTINUE PROMOTING OUR ENTREPRENEURIAL CULTURE. We have
        developed an entrepreneurial culture based on key principles such as
        functional decentralization, which we believe increases flexibility,
        customer responsiveness and productivity, as well as profit-based
        compensation programs, which more directly align the interests of our
        employees and shareholders. We believe that our operating principles and
        culture have formed one of the cornerstones of our past success and we
        intend to continue promoting them to help achieve continued success in
        the future.

                      OVERVIEW OF THE HORSE RACING INDUSTRY

    RECENT HISTORY

    The horse racing industry is a highly fragmented industry with relatively
few high-quality racetracks and relatively few operators owning more than two
facilities. Over the past 20 years, live attendance at horse racetracks in the
United States has declined substantially due to a number of factors, including
the growth in off-track wagering; increased competition from other forms of
gaming and leisure entertainment; the attrition of the racing industry's
traditional customer base; the lack of, or deterioration in, the quality of live
racing events at many racetracks; and the inability of racetrack operators to
broaden the appeal of wagering on horse racing. Declines in live attendance have
resulted in an overall decline in the amount of money wagered on live horse
racing, which has exacerbated the problem of producing high-quality live
wagering events and in developing entertaining racetrack facilities. In the
early 1990s, the introduction of off-track and inter-track wagering became more
prevalent and reversed the decline in the total amount of dollars wagered on
horse racing. The rise of off-track and inter-track wagering has resulted in a
significant increase in total industry revenues, and the creation of larger
pools of wagers on horse races at certain racetracks. This has more than offset
the decline in live on-track wagering due to declining live attendance. The
larger pools of wagers have produced larger purses, which have resulted in
higher-quality racing events and an increased interest in horse racing and
pari-mutuel wagering. Subsequently, the financial performance of many of the
premier racetracks in the United States has improved.

    THE GROWTH IN OFF-TRACK AND INTER-TRACK WAGERING

    Pari-mutuel wagering on thoroughbred horse racing in the United States
increased from approximately $9.4 billion in 1990 to approximately $15.1 billion
in 2002, according to The Jockey Club. This increase resulted primarily from the
growth of off-track and inter-track wagering, which has grown by approximately
50.1% from approximately $8.7 billion in 1996 to approximately $13.0 billion in
2002. Simulcasting live racing events to off-track and inter-track venues has
been facilitated by technological advances and the introduction of legislative
changes.




                                       8



                      OUR NON-AUTOMOTIVE BUSINESS STRATEGY

    All of our non-automotive operations are conducted through MEC. MEC intends
to grow and develop its racetrack and pari-mutuel wagering business further by:

    o   CONTINUING TO INTEGRATE ITS ACQUISITIONS BY EMPLOYING "BEST PRACTICE"
        IMPROVEMENTS AT ITS RACETRACKS. Through its acquisitions, MEC owns what
        it believes are some of the highest quality thoroughbred racetracks in
        North America, as measured in terms of total handle, average daily
        attendance and average daily wagering both on and off-track. MEC
        believes that the increased scale and integration of its racetrack
        operations and related wagering operations will afford it the
        opportunity to both grow MEC's revenues and achieve significant scale
        and increased synergies. MEC intends to improve the quality of the live
        racing experience by upgrading and expanding the infrastructure of its
        properties in order to attract the best available horses, trainers and
        jockeys.

    o   EXPANDING THE DISTRIBUTION OF MEC'S LIVE RACING. MEC currently
        distributes its live racing to inter-track and off-track venues in the
        United States, Canada, Mexico, the Caribbean and the United Kingdom. MEC
        believes that, subject to applicable regulation, significant
        opportunities exist to expand the distribution of its content through
        the further development of MEC's simulcasting operations and its
        XpressBet(TM) internet and telephone account wagering business, as well
        as the development of new forms of account wagering, including
        interactive television in the United States. Since MEC's HorseRacing
        TV(TM) is currently shown only on cable in the Western Pennsylvania
        and San Diego, California areas and on Racetrack Television Network
        (RTN), a subscription-based, direct to home satellite channel
        part-owned by MEC which is focused exclusively on horse racing, MEC is
        in discussions with U.S. cable and satellite operators with the goal
        of achieving broader distribution.

    o   FURTHER DEVELOPING AN INTEGRATED BRANDING AND MARKETING STRATEGY. MEC
        intends to combine the racing content owned by it, and possibly the
        racing content from racetracks not owned by it, and market this content
        under MEC's brand name. MEC believes that aggregating this content would
        offer pari-mutuel wagering venues that import MEC's content greater
        convenience and lower operating costs, while offering customers at their
        facilities access to more racing content, including signals that the
        venue operators may not have purchased as stand-alone products. MEC
        believes that packaging its product this way will increase the exposure
        of its smaller racetracks.

    o   IMPROVING THE QUALITY OF THE ENTERTAINMENT EXPERIENCE AT MEC'S
        RACETRACKS AND OFF-TRACK BETTING FACILITIES. MEC believes that the horse
        racing industry does not currently reach a large portion of its
        potential customer base. MEC is attempting to increase attendance at its
        racetracks and broaden the appeal of horse racing by developing
        higher-quality racetrack facilities with a wider variety of amenities.
        MEC will seek to enter into joint venture arrangements with strategic
        partners to develop leisure and entertainment-based real estate projects
        on land surrounding, or adjacent to, certain of its premier racetracks.
        Such developments could include retail shopping facilities, restaurants,
        hotels and entertainment projects. Subject to regulatory approval, these
        developments may also involve the integration of other gaming
        operations, such as video lottery terminals or similar gaming devices.

    o   OBTAINING BROADER DISTRIBUTION OF HORSERACING TV(TM). MEC believes that
        broad television distribution will help increase future interest in
        horse racing and attract additional wagering customers. At present,

        HorseRacing TV(TM) is carried on cable in the Western Pennsylvania
        and San Diego, California areas, as well as on RTN. In the effort to
        broaden the audience, reach and appeal of horse racing and wagering
        thereon, MEC is pursuing carriage agreements with other cable and
        satellite operators which could package the network with other digital
        sports programming sold to their subscribers.

    o   SELECTIVELY ACQUIRING AND DEVELOPING ADDITIONAL STRATEGIC RACETRACKS AND
        RELATED ASSETS. MEC will selectively pursue the acquisition and
        development of strategically important, geographically diverse
        racetracks and related operations in order to increase its ownership of
        live racing content. MEC intends to simulcast this content to other
        pari-mutuel wagering venues and to increase both the number of days in
        the year and hours in the day that it offers wagering on live and
        simulcast races.

                       OPERATING STRUCTURE AND PRINCIPLES

    DECENTRALIZATION

    We follow a corporate policy of functional and operational decentralization,
which we believe increases flexibility, customer responsiveness and
productivity. Our operating structure contains three levels of management -
divisional management, automotive



                                       9


systems group management and our executive management. Our manufacturing and
assembly operations are conducted through divisions, each of which is an
autonomous operating unit and profit centre under the authority of a general
manager. The general manager of each division has the discretion to determine
rates of pay, hours of work, sources of supply and contracts to be performed,
within the framework of our Corporate Constitution and our Employee Charter. All
of our divisions are organized along global product lines under one of the six
global automotive systems groups discussed above under "ITEM 2. GENERAL
DEVELOPMENT OF THE BUSINESS - OVERVIEW - Automotive Operations". The management
of each of our automotive systems groups is responsible for coordinating product
development, finance and marketing as well as maximizing manufacturing
efficiencies in the divisions comprising the group. Each group interfaces with
customers and provides assistance and advice to its respective divisions. Our
executive management coordinates advanced systems development and manufacturing,
ensures customer satisfaction and interfaces with the investment community. Our
executive management is also responsible for our long-term strategic planning
and future growth, as well as monitoring the performance of group management.

    SPINCOS

    In furtherance of our commitment to decentralization, in 1982 our
shareholders approved our "spinco" policy of developing our operating groups
into self-sufficient public companies. The objective of this spinco policy was
to establish one or more of our operating groups as separate public corporations
or "spincos" over a period of time, while we remained as a major shareholder.
Guidelines to implement our spinco policy were approved by our shareholders at
our Annual and Special Meeting of Shareholders held on December 10, 1987. Under
these guidelines, each spinco must have a corporate constitution and share
structure similar to ours and be comprised of independent operating units which
are supported by the spinco's operations, marketing and financial management
resources and executive management. Our role is to provide operations,
technical, marketing and financial management and other services from time to
time to each spinco for an agreed upon affiliation fee. Management and employees
of each spinco are to be provided an opportunity and encouraged to invest in the
equity of such spinco through compensation and profit incentive programs similar
to ours. In addition, to the extent practicable, our shareholders and employees
of each spinco will be provided an opportunity to invest in the initial public
offering of each spinco. We created our first spinco when Tesma completed an
initial public offering on July 31, 1995. Decoma subsequently completed its
initial public offering on March 2,1998 and Intier completed its initial public
offering on August 9, 2001. We continue to evaluate the possibility and
potential timing of the spin-off of additional operations, including our Magna
Steyr and Magna Donnelly automotive systems groups.

    Our management believes that the establishment of Tesma, Decoma and Intier
as separate companies has facilitated, and for future spincos will facilitate,
access to external capital markets, which may be required to enable Tesma,
Decoma, Intier and other future spincos to take advantage of the anticipated
increased outsourcing by automobile manufacturers and to allow each of these
groups to take full advantage of the corporate policies and principles which
have been the cornerstone of our past growth and success.

    REORGANIZATIONS

    In recent years, we have completed a series of corporate reorganizations
intended to organize our automotive business along global product lines,
align our non-automotive operations under MEC and align substantially all of
our automotive real estate under MI Developments. For example, between 1998
and 2002, we transferred substantially all of our directly and indirectly
owned real estate and non-automotive assets to MI Developments. Further to a
commitment made to our shareholders in calendar 1998, we established the
company now known as MEC in order to hold all of our non-automotive assets
(including non-automotive real estate). We subsequently established MEC as a
separate public company in March 2000 by distributing approximately 20% of
its Class A Subordinate Voting Stock by way of special stock dividend to
holders of our Class A Subordinate Voting Shares and Class B Shares. In
January 2001, we sold the assets of our Magna Exterior Systems group and the
shares of Decoma Exterior Trim Inc. to Decoma in order to align all of our
automotive exterior operations under Decoma. In February 2001 we reorganized
our automotive operations into five global automotive systems groups and we
completed the spin-off of Intier shortly thereafter in July 2001 (see "-
RECENT DEVELOPMENTS IN OUR BUSINESS - Creation of Global Automotive Systems
Groups"). Following the completion of the acquisition of Donnelly Corporation
in October 2002 (see "- RECENT DEVELOPMENTS IN OUR BUSINESS - Strategic
Acquisitions and Divestitures"), we completed a reorganization of our
existing and acquired mirrors operations in order to create a sixth
automotive systems group, Magna Donnelly.

    OPERATING PRINCIPLES

    We are committed to a number of operating principles, including employee
equity participation and profit sharing, incentive-based management compensation
and an employee charter. See "ITEM 3. DESCRIPTION OF THE BUSINESS - HUMAN
RESOURCES".


                                       10



                       RECENT DEVELOPMENTS IN OUR BUSINESS

    CREATION OF GLOBAL AUTOMOTIVE SYSTEMS GROUPS

    In order to respond to the globalization of the automotive industry and
diversify our customer and product base, we developed and implemented a European
expansion strategy beginning in fiscal 1994. To assist in implementing this
strategy, Frank Stronach, our Chairman, moved to Europe during fiscal 1994 and
agreed through Stronach & Co., a Swiss partnership in which Mr. Stronach is the
general partner, to provide business development and consulting services to our
European and other affiliates and to develop and coordinate global strategies,
identify and evaluate potential acquisitions, business alliances and
technologies, develop and recruit technical management for deployment throughout
our worldwide operations, implement our successful operating principles outside
North America, enhance our good relations with foreign automobile manufacturers
and governments and further develop our international presence. Stronach & Co.
and Mr. Stronach continue to provide business development and consulting
services to our European and other affiliates pursuant to agreements which
expire on December 31, 2003. As a result of these initiatives, we significantly
expanded our operations outside of North America between fiscal 1994 and
calendar 1999 by acquiring 51 manufacturing facilities in Europe. This European
expansion strategy has enabled us to replicate our North American product
offering in Europe and has resulted in the increase of our European consolidated
production and assembly sales from $79 million in fiscal 1993 to approximately
$3.8 billion in calendar 2002.

    In February 2001, we initiated a reorganization with the aim of
consolidating our operations and aligning our automotive products under one of
five global automotive systems groups focussed on providing large vehicle
modules and systems in each key vehicle area. At the same time, our Board of
Directors, acting on the basis of a report and recommendations of a special
committee of members of our Board of Directors, approved the creation and
spin-off of our interior systems group as well as the spin-off of our previously
formed Magna Steyr group, subject to market conditions. Our interior systems
group was created by reorganizing our former Atoma Closure and Electronic
Systems, Magna Seating Systems and Magna Interior Systems groups into a single
group which is now known as Intier Automotive Inc. Our Magna Steyr group had
been formed in November 2000 through the combination of the vehicle engineering
and assembly operations conducted through our Steyr-Daimler-Puch group of
subsidiaries with the powertrain operations conducted through our Steyr
Powertrain subsidiaries.

    On August 9, 2001, we completed the spin-off of Intier by way of an initial
public offering of 5,476,191 of its Class A Subordinate Voting Shares. These
shares were offered for sale in both Canada and the United States, at a price
per share of Cdn.$21.00 and U.S.$13.72 (the approximate U.S. dollar equivalent
of Cdn.$21.00 on July 30, 2001), respectively. Intier's Class A Subordinate
Voting Shares are listed and posted for trading on The Toronto Stock Exchange
under the trading symbol "IAI.A" and quoted on the NASDAQ National Market under
the trading symbol "IAIA". The gross proceeds of the initial public offering of
Intier Automotive's Class A Subordinate Voting Shares were approximately
Cdn.$115,000,000.

    In October 2002, we added a sixth automotive systems group, Magna Donnelly,
by combining our existing mirrors operations with those acquired through the
acquisition of Donnelly Corporation. For financial reporting purposes, Magna
Donnelly's results are aggregated with those of Cosma in our "Other Automotive
Operations" financial reporting segment. See " - Strategic Acquisitions and
Divestitures".



                                       11




    NEW PRODUCTS AND TECHNOLOGIES

    We believe that a significant portion of our internally generated product
growth in recent years has been due to our design and engineering capabilities
and product innovation, which generally results in complex and highly engineered
products which generate better returns than commodity-type products. This
product innovation has resulted in the introduction of a number of significant
automotive products and technologies in recent years, including:



Automotive Systems Group                      Recent Product and Technology Innovations
- -------------------------------------------------------------------------------------------------------------------------
                                           
Decoma International Inc.                     o  new window surround module that incorporates a sealing system and
                                                 exterior trim pieces in a single, easy-to-assemble module
                                              o  lightweight and technologically advanced running boards

Intier Automotive Inc.                        o  new membrane seat technology which is thinner and more comfortable than
                                                 traditional seating products
                                              o  integrated bulkhead module which integrates a number of different
                                                 components into one major sub-assembly

Tesma International Inc.                      o  engine front cover module
                                              o  complete clutch pack assemblies
                                              o  cap-to-tank refuelling system

Cosma International                           o  rear axle assembly incorporating shock tower within the frame and using
                                                 hydroformed and stamped components
                                              o  aluminum chassis system

Magna Donnelly                                o  exterior and interior electrochromic mirrors with solid SPM-TM- technology
                                              o  mirrors capable of simultaneously displaying compass direction and exterior
                                                 temperature
                                              o  PanoramicVision-TM-, BabyVue-TM-, ReversAid-TM- and ChatBack-TM- camera
                                                 vision systems

Magna Steyr                                   o  Dynamic Compound Axle suited for SUVs, vans and luxury pick-up trucks
                                              o  liquid hydrogen fuel storage system, being developed in conjunction with BMW
                                              o  highly-engineered and precision-manufactured transfer cases and power take-off
                                                 units


    See "ITEM 3. DESCRIPTION OF THE BUSINESS - AUTOMOTIVE OPERATIONS" below.

    STRATEGIC ACQUISITIONS AND DIVESTITURES

    In July 2002, Magna Steyr completed the purchase from DaimlerChrysler of the
Eurostar vehicle assembly facility, located in Graz, Austria. This acquisition
doubled Magna Steyr's vehicle assembly capacity to approximately 200,000
vehicles per year. The purchase price for the Eurostar facility was satisfied by
payment of Euros 90 million in cash on closing, with an additional Euros 20
million in cash in September 2002.

    In October 2002, we completed the acquisition of Donnelly Corporation, which
was the second largest global supplier of exterior and interior mirrors to the
automotive industry, for total consideration of $287 million (net of cash
acquired) plus the assumption of approximately $102 million of
interest-bearing debt. As a result of the transaction, each outstanding share
of Donnelly was exchanged into 0.459 of one of our Class A Subordinate Voting
Shares. An aggregate of approximately 5.3 million of our Class A Subordinate
Voting Shares were issued in connection with this transaction. Upon the
completion of the acquisition, our combined mirrors operations began
operating under the name Magna Donnelly.

    In April 2003, Decoma completed the purchase of the automotive lighting
operations of Federal-Mogul Corporation for a purchase price of $2.25 million
plus an amount in respect of inventory. The operations purchased consist of a
plant in Matamoros, Mexico, a distribution centre in Brownsville, Texas, an
assembly plant in Toledo, Ohio and certain contracts and equipment at a plant in
Hampton, Virginia.

    In the future, we will increasingly focus on developing and acquiring new
technologies and strategic assets that complement our current portfolio of
automotive technologies or expand on product breadth or assets, provided that
any such acquisition furthers our overall automotive business strategy and
enhances our long-term earnings growth. Although expansion will primarily be
through greenfield operations designed to support customer programs in North
America and Europe, we will continue to examine opportunities to acquire
strategic businesses which have leading-edge automotive technologies that
complement, enhance or add to our expanding technological base and to enter into
joint ventures to achieve this objective. We analyse all potential



                                       12


acquisitions and other capital investments using strict return on funds employed
criteria in order to maximize shareholder returns and generate strong earnings
growth.

    MEC made a number of strategic acquisitions in calendar 2002. In October
2002, MEC acquired the operations and related assets of Lone Star Park at Grand
Prairie, a thoroughbred and quarter horse racetrack near Dallas, Texas. The
consideration included a cash purchase price of $79 million (net of cash
acquired). In November 2002, MEC completed the acquisition of a controlling
interest in Pimlico Race Course and Laurel Park, which operate under the name
The Maryland Jockey Club for total consideration including transaction costs
of $85 million (net of cash acquired). In addition, in June 2002, MEC entered
into an agreement to acquire the shares of Flamboro Downs Holdings Limited,
the owner and operator of the Flamboro Downs standardbred racetrack in
Hamilton, Ontario for a purchase price, net of cash, of $56 million. MEC
subsequently completed its acquisition of Flamboro Downs on April 16, 2003.
In addition to its standardbred racetrack, Flamboro Downs also has a gaming
floor with 750 slot machines.

    FINANCING AND SECURITIES TRANSACTIONS

    On April 10, 2002, MEC completed the public offering of 23 million shares of
its Class A Subordinate Voting Stock at a price per share of $6.65 in the United
States, or Cdn.$10.60 in Canada, for gross proceeds of approximately $153
million. On May 1, 2002, MEC entered into an agreement with respect to a $75.0
million senior, unsecured revolving credit facility. On October 11, 2002, MEC
entered into an amending agreement to increase this facility from $75.0 million
to $100.0 million. The credit facility has a term of one year, which expires on
October 10, 2003, and may be extended, with the consent of both parties. Under
the terms of the agreement, the amount available under the credit facility was
reduced to $50.0 million on April 30, 2003. On December 2, 2002, MEC issued
$75.0 million of 7.25% convertible subordinated notes, which are convertible at
any time at the option of the holders into shares of MEC Class A Subordinate
Voting Stock at a conversion price of $8.50 per share, subject to adjustments
under certain circumstances, and mature on December 15, 2009. The notes are
redeemable at the principal amount together with accrued and unpaid interest, at
MEC's option, under certain conditions on or after December 21, 2005.

    In April 2002, we extended until April 2003 a revolving credit facility with
a syndicate of Canadian, U.S. and European banks. We also reduced the facility
from Cdn.$900 million to Cdn.$500 million due in part to the spin-off of Intier
and the corresponding establishment by Intier in September 2001 of a $385
million three-year unsecured credit facility with a syndicate of nine lenders.
Our credit facility is unsecured, except for certain internal cross-guarantees.
We recently further extended this credit facility until April 2004.

    On June 6, 2002 we redeemed all of our outstanding 4.875% Convertible
Subordinated Debentures due 2005. The redemption price, inclusive of accrued and
unpaid interest was $1,015.0313 per $1,000 principal amount of debentures, which
was paid by the issuance of 13.6477 of our Class A Subordinate Voting Shares per
$1,000 principal amount of debentures. An aggregate of $451 million principal
amount of debentures were redeemed on the redemption date and an aggregate of
6,155,863 of our Class A Subordinate Voting Shares were issued in satisfaction
of the redemption price. Holders of an aggregate $29 million principal amount of
debentures had converted their debentures at various times prior to the
redemption date into an aggregate 389,719 of our Class A Subordinate Voting
Shares.

    On July 18, 2002, Tesma completed the sale of 2,850,000 of its Class A
Subordinate Voting Shares from treasury at a price of Cdn.$35.15 per share for
gross proceeds of approximately Cdn.$100 million. The proceeds of Tesma's
offering were used for general corporate purposes.

    On March 27, 2003, Decoma completed an offering of Cdn.$100 million
aggregate principal amount of 6.5% convertible unsecured subordinated debentures
due March 31, 2010 to a syndicate of underwriters led by CIBC World Markets Inc.
and including RBC Capital Markets, BMO Nesbitt Burns Inc., Griffiths McBurney &
Partners, National Bank Financial Inc. and Scotia Capital. The debentures bear
interest at 6.5% per annum and will be convertible, at the option of the holder,
at any time prior to maturity or redemption into Class A Subordinate Voting
Shares of Decoma at a conversion price of Cdn.$13.25 per share, which is equal
to a conversion rate of 75.4717 Class A Subordinate Voting Shares per Cdn.$1,000
principal amount of debentures. Decoma may not redeem the debentures prior to
March 31, 2007. From March 31, 2007 to March 31, 2008 the debentures will be
redeemable provided that Decoma's Class A Subordinate Voting Shares are then
trading at not less than 125% of the conversion price, and thereafter will be
redeemable at par (plus accrued and unpaid interest).




                                       13



ITEM 3.  DESCRIPTION OF THE BUSINESS

   Our operations are segmented into our Automotive Operations segment, which is
further subdivided into publicly traded and wholly-owned automotive systems
groups as well as corporate and other operations; and our Non-Automotive
Operations segment, conducted through MEC.

                              AUTOMOTIVE OPERATIONS

    Our automotive operations are conducted through manufacturing, engineering
and product development facilities which are organized as autonomous operating
divisions under one of six automotive systems groups. Three of our automotive
systems groups are publicly traded companies in which we retain a controlling
equity interest and three of our automotive systems groups are currently
wholly-owned. Our automotive operations also consist of corporate and other
operations, which include substantially all of our wholly-owned automotive real
estate as part of our "Corporate and Other Operations" financial reporting
segment.

    PUBLIC AUTOMOTIVE SYSTEMS GROUPS

    Our public automotive operations consist of three publicly traded
subsidiaries, as follows:

    o     Decoma International Inc.;

    o     Intier Automotive Inc.; and

    o     Tesma International Inc.

    DECOMA INTERNATIONAL INC.

    Decoma is a leading global manufacturer and Tier 1 supplier of automotive
exterior components and systems for cars and light trucks. Decoma employs
approximately 14,000 employees in 42 manufacturing, engineering and product
development facilities in Canada, the United States, Mexico, Germany, Belgium,
England, Japan, France and the Czech Republic. Decoma's Class A Subordinate
Voting Shares are listed and posted for trading on The Toronto Stock Exchange
under the trading symbol "DEC.A" and are listed and quoted on the Nasdaq
National Market under the trading symbol "DECA". In calendar 2002, Decoma's
sales were approximately $2.125 billion, representing approximately 17% of our
consolidated automotive sales in that year.

    Decoma's main product segments are:

    o     fascias (bumpers);

    o     front and rear end modules;

    o     plastic body panels;

    o     exterior trim components and systems;

    o     greenhouse and sealing systems;

    o     roof modules; and

    o     lighting components.

    Within these product segments, Decoma possesses a full range of
manufacturing capabilities to produce tools, dies and molds to support parts
production and for sale to third parties. Decoma uses molding technologies such
as structural reaction injection, reaction injection, injection, compression and
thermoset molding. Decoma's metal forming processes include metal stamping, roll
forming, tube forming and stretch bending, while its extrusion processes include
co-extrusion as well as thermoset and thermoplastic extrusion. Decoma also
employs a number of finishing processes, including painting, hardcoating, chrome
plating and anodizing.




                                       14



    In addition to its principal manufacturing operations, Decoma designs,
engineers, manufactures, assembles and installs spoilers, rocker panels, splash
guards and air dams. In this product area, Decoma also performs in-line vehicle
system assembly work (consisting of installation of cladding, rocker panels,
spoilers, wheel flares, running boards, exhaust tips, striping decals, light
bars, tonneau covers, fascias, body side moldings, bed liners, hood deflectors
and grilles) primarily for General Motors and DaimlerChrysler specialty vehicle
production programs.

    Decoma has a diversified customer base that spans the major automotive
markets of North America and Europe. In North America, Decoma's primary
customers are the various North American operating divisions and subsidiaries of
Ford, General Motors, DaimlerChrysler, Honda, Nissan and Toyota. In Europe,
Decoma's customers include the European operating divisions and subsidiaries of
DaimlerChrysler, the Volkswagen group, Ford, Rover, General Motors, BMW, Volvo
Truck, Renault, MAN Truck, PSA Peugeot-Citroen, Toyota and Honda. Decoma's
largest production programs in 2002 include the Ford Explorer program and the
DaimlerChrysler Intrepid/300M/Concorde and the Sebring/Stratus programs in North
America and the Mercedes Benz C Class, Ford Mondeo and Opel Vectra programs in
Europe.

    Decoma owns minority interests in two joint ventures - Bestop, Inc. and
Modular Automotive Systems, L.L.C. Bestop is a leading North American Tier 1
supplier of fabric tops, related framing systems and accessories for automobile
manufacturers and aftermarket applications (principally sport utility vehicles).
Decoma owns a 40% equity interest in Bestop and manages its operations, while we
own the remaining 60% equity interest. Bestop supplies the aftermarket and also
supplies automobile manufacturers, which include DaimlerChrysler, CAMI, Suzuki,
Isuzu, Toyota and Ford, from manufacturing facilities located in the State of
Colorado. Modular Automotive Systems is a Michigan-based minority controlled
sequencing and sub-assembly operation which is certified as a minority business
enterprise under the certification guidelines of the Michigan Minority Business
Development Council. Decoma owns a 40% equity interest in Modular Automotive
Systems, while Hollingsworth Logistics Group, L.L.C. owns the remaining 60%
equity interest in Modular Automotive Systems and maintains management control
of it. Modular Automotive Systems provides sequencing and sub-assembly services
to a number of automobile manufacturers on a minority credit basis.

    Decoma's operations have grown significantly in recent years through several
strategic acquisitions. In January 2001, we sold the assets of our Magna
Exterior Systems group and the shares of Decoma Exterior Trim, Inc. not already
owned by Decoma to Decoma as part of the creation of our automotive systems
groups. As well, in September of 2001, Decoma purchased the automotive lighting
business of Autosystems Manufacturing, thereby adding an important new product
group to Decoma's overall exterior product mix and enhancing Decoma's overall
module capability. Decoma's automotive lighting business was further enhanced by
the acquisition of Federal-Mogul Corporation's automotive lighting business in
April 2003. See "RECENT DEVELOPMENTS IN OUR BUSINESS - Strategic Acquisitions
and Divestitures" above.

    INTIER AUTOMOTIVE INC.

    Intier is a global full-service supplier of automotive interior and closure
components, systems and modules for cars and trucks. Intier employs
approximately 22,500 employees at 65 manufacturing facilities (including one
joint venture facility with Magna Steyr) and 17 product development, engineering
and testing centres (including one joint venture facility with Magna Steyr and
one multi-group facility), in Canada, the United States, Mexico, Brazil,
Germany, Austria, the United Kingdom, France, Spain, Italy, Belgium, Poland, the
Czech Republic and China. Intier's Class A Subordinate Voting Shares are listed
and posted for trading on The Toronto Stock Exchange under the trading symbol
"IAI.A" and are listed and quoted for trading on the Nasdaq National Market
under the trading symbol "IAIA". In calendar 2002, Intier's sales were
approximately $3.862 billion, representing approximately 31% of our consolidated
automotive sales in that year.

    Intier's main product segments are:

                                                       
    o     complete cockpit systems;                            o    seat hardware and mechanisms;

    o     sidewall systems;                                    o    latching systems;

    o     overhead systems;                                    o    glass moving systems;

    o     complete seat systems;                               o    system module technologies; and

    o     floor and trunk room carpet and acoustics;           o    electro-mechanical systems.

    




                                       15



    Intier employs a number of different technologies in its operations. For
example, seating and seating components are manufactured using both traditional
"cut & sew" technology and Intier's patented Mold-In-Place(TM) technology.
Manufacturing methods for cockpit and sidewall systems include low pressure and
injection molding, compression of wood fibre, vacuum forming, slush molding and
spray urethane.

    Intier's primary customers include DaimlerChrysler, Ford and General Motors
and their respective operating divisions and subsidiaries, however it also
supplies products to a number of other automobile manufacturers, including BMW,
Volkswagen, Fiat, Nissan, Honda and Toyota. Examples of some of Intier's current
programs include the complete seating system and power sliding door and liftgate
for the DaimlerChrysler minivan; the complete seating system, door panels,
overhead system and other interior trim for the Ford Escape/Mazda Tribute sport
utility vehicles; the cockpit module, door panels and interior trim for the BMW
MINI; and the instrument panel and overhead system for the Cadillac CTS.

    As a result of the wide range of interior components, modules and systems
that Intier produces, combined with its engineering and program management
capabilities, Intier was selected by General Motors to manage, design and
produce the complete seats, instrument panels and overhead system for the
Chevrolet Equinox and has been named as the interior integrator for the next
generation GM small car platform (which includes production contracts), each of
which is anticipated to commence production in 2004. Intier was also named as
the complete interiors integrator for the next generation of General Motors'
full size line of sport utility vehicles, excluding seats. In addition, Intier
will produce complete interiors for the BMW 6-series and will be supplying the
complete seats and other trim for the new Ford Freestar/Mercury Monterrey
minivan. As previously announced, Intier was named as the interiors integrator
and program manager for the General Motors future full size line of sport
utility vehicles. As part of this award, Intier anticipates that it will be
awarded a significant amount of interiors business, including overhead system
and other interior trim, on both the full-size line of pick-up trucks and sport
utility vehicles in addition to its integration responsibilities for the sport
utility vehicles. Intier will not be supplying the up-level door panels for this
program.

    Intier participates in a number of joint ventures created to facilitate its
entry into new markets and the exchange of technical know-how and other
intellectual property and to expand its product and engineering expertise as
well as its customer base. Intier owns a 50% interest in each of the following
joint ventures:

    o    the Bloomington-Normal Seating Company joint venture with Namba Press
         Works Co., Ltd., which manufactures complete seating systems in
         Illinois for Mitsubishi/DaimlerChrysler joint venture;

    o    the Shanghai Lomason Automotive Seating Company joint venture with
         Shanghai Jiao Yun Co. Ltd., which manufactures seat frames, metal
         stampings and complete aftermarket seats in China;

    o    GRA-MAG Truck Interior Systems, L.L.C., a joint venture with Grammar
         AG, which supplies seating systems to the North American medium and
         heavy-duty truck market;

    o    the Magna Kansei joint venture with Calsonic-Kansei Corporation in the
         United Kingdom, which supplies Nissan U.K. with instrument panels,
         consoles and glove boxes using injection molding technology;

    o    the Advanced Car Technology Systems (ACTS) joint venture with Magna
         Steyr in Germany, which provides full vehicle testing and simulation
         services to Intier, Magna Steyr and third parties; and

    o    the Uniport joint venture in France with Magna Steyr, which supplies
         complete door and tailgate modules for the DaimlerChrysler Smart Car.

    In addition to the joint ventures referred to above, Intier has a 24.5%
equity interest in a manufacturing facility in Texas, which laminates seating
and other fabrics for Intier and other customers. Intier also has an agreement
with Magna in which Intier has the option to purchase and Magna has the right to
require Intier to purchase Magna's 32% equity interest in Camaco L.L.C., for a
purchase price of $1.00. Camaco L.L.C. is a registered minority supplier of seat
frames with operations located in Columbus, Nebraska and Marianna, Arkansas and
a sales and engineering office in Novi, Michigan. Camaco L.L.C. supplies seat
frames to Intier as well as several of its competitors. Intier also has a 45%
interest in Dakkota L.L.C., a joint venture with Rush Group L.L.C. (a certified
minority supplier). Dakkota is responsible for providing sequencing, logistics
management and assembly services with respect to several programs (including the
Cadillac CTS) under which Intier is manufacturing and supplying certain interior
products.




                                       16



    TESMA INTERNATIONAL INC.

    Tesma is a global manufacturer and Tier 1 supplier of engine, transmission
and fuel delivery components, assemblies, modules and systems for cars and light
trucks. Tesma employs over 4,900 employees in 23 manufacturing facilities
located in Canada, the United States, Germany, Austria, South Korea and Brazil,
and three research and development centers located in each of Tesma's Engine,
Transmission and Fuel Technologies groups. Tesma's Class A Subordinate Voting
Shares are listed and posted for trading on The Toronto Stock Exchange under the
trading symbol "TSM.A" and are listed and quoted on the NASDAQ National Market
under the trading symbol "TSMA". In calendar 2002, Tesma's sales were
approximately $926 million, representing approximately 7.5% of our consolidated
automotive sales in that year.

    On a product basis, Tesma operates in three technologies groups as follows

    o    Engine Technologies - including: accessory and timing belt drive
         tensioner products and systems, overrunning alternator decoupler
         assemblies; steel, phenolic (plastic) and aluminum pulleys for
         virtually all engine applications (crankshafts, alternators, power
         steering pumps, air conditioning compressors and water pumps);
         torsional vibration dampers and other vibration attenuation devices;
         aluminum die cast and precision machined oil pans, cam covers and
         engine front cover plates; cooling system cross-over tubes, injection
         molded water outlet assemblies and thermostat housings; engine oil and
         water pump systems; and, most recently, engine balance shaft
         assemblies;

    o    Transmission Technologies - including: flexplates (both one- and
         two-piece designs); die-formed/flow-formed/cast and machined
         transmission clutch housings; stamped and assembled transmission oil
         pans; aluminum die cast and machined case extensions; fineblanked
         products; clutch hubs, pistons, damper plates, reaction shells, shift
         detent plates and other transmission components; torque converter
         damper plate assemblies; transmission oil pumps; servo piston and
         accumulator assemblies; and, most recently, various components for
         continuously variable transmission applications; and

    o    Fuel Technologies - including: traditional automotive caps (fuel,
         radiator, coolant reservoir and oil); fuel filler inlet assemblies;
         vapour recovery valves/systems; filler and vent tubes; thin-walled,
         stainless steel "cap-to-tank" fuel filler modules; and, most recently,
         stainless steel fuel tank assemblies.

    Tesma employs a wide variety of different manufacturing capabilities and
processing technologies in its operations, many of which are used across
multiple product groups. Tesma's current capabilities include metal die-forming,
flow-forming, stamping and spinning, synchronous roll-forming, die-spline
rolling, precision-heavy stamping, fineblanking, steel tube bending and
end-forming, hydro-forming, stainless steel plasma welding, aluminum die
casting, gravity casting and precision machining, plastic injection molding,
including plastic welding, and automated assembly. Using these metal, aluminum
and plastic processing technologies, Tesma is able to engineer and supply unique
components, assemblies and modules that offer performance, weight, cost and
packaging advantages in each of its engine, transmission and fuel technologies
product areas.

    Although Tesma is principally a supplier to automobile manufacturers in
North America and Europe, it has a diversified worldwide customer base that
spans each of the four major automotive markets - North America, Europe, Asia
Pacific and South America. Tesma's primary customers in North America are
General Motors, Ford and DaimlerChrysler, including their respective operating
divisions and subsidiaries, while its European customer base is quite
diversified and includes virtually all significant automobile manufacturers with
vehicle assembly operations in Europe. Tesma also delivers products to customers
in Japan, South Korea, Taiwan, Singapore, Indonesia, Thailand, Philippines,
Australia, Brazil, Argentina, Venezuela and South Africa.

    The substantial majority of Tesma's products are engine or transmission
specific, and therefore may be installed or available as options over a variety
of vehicle platforms. Nevertheless, examples of some of Tesma's current "high
content" North American engine and transmission programs (including their
respective vehicle applications) include: the General Motors L850 engine program
(Saturn Ion and Vue, Chevrolet Cavalier and Pontiac Sunfire and Grand Am), the
General Motors Gen III / IV engine program (Cadillac Escalade, Chevrolet
Silverado, Suburban and Tahoe, GMC Sierra and Yukon), the General Motors Line 6
engine program (Chevrolet Trailblazer and GMC Envoy), the Ford Modular V8 engine
program (Ford Mustang, Crown Victoria, F-series pickup trucks, Explorer,
Expedition and Lincoln Navigator and Aviator), the Ford 5R110 transmission
program (diesel engine application for Ford's heavier duty F-series trucks), the
General Motors 4L60 transmission program (GM's full-sized pickup and sport
utility vehicle families) and the Allison LT1000 transmission program (General
Motors' heavier duty pickups and medium duty trucks).




                                       17



    WHOLLY-OWNED AUTOMOTIVE SYSTEMS GROUPS

    Our wholly-owned automotive systems groups consist of three automotive
systems groups:

    o     Magna Steyr;

    o     Magna Donnelly; and

    o     Cosma International.

    MAGNA STEYR

    Magna Steyr is the automotive industry's leading assembler of low volume
derivative and specialty vehicles for automobile manufacturers and one of the
world's most advanced developers and suppliers of complete drivetrain
technologies, including four-wheel/all-wheel drive systems and axle modules.
Magna Steyr also provides complete vehicle design, engineering, validation,
testing and assembly services. Magna Steyr employs approximately 8,600 employees
at eight manufacturing and assembly facilities (including one joint venture with
Intier and one multi-group facility) and eight engineering and testing
facilities (including one joint venture with Intier and one multi-group
facility), located in Austria, Germany, France, Hungary, India, the United
States and Mexico. In calendar 2002, Magna Steyr's sales were approximately
$1.906 billion, representing approximately 15% of our consolidated automotive
sales in that year.

    Magna Steyr's product and service segments are:

    o     complete vehicle manufacturing;

    o     complete vehicle and systems engineering; and

    o     powertrain systems and components.

   Magna Steyr's complete vehicle and systems engineering as well as its testing
capabilities enable it to participate in the vehicle and systems concept and
design process through involvement in advance development and the preparation of
feasibility studies; the development phase in which technical calculations and
simulations are performed and full vehicle prototypes are built; and the vehicle
testing and production planning stage.

    Magna Steyr's primary customers are automobile manufacturers located in
Europe, although Magna Steyr supplies to certain automobile manufacturers in
North America. Magna Steyr currently assembles four vehicles for DaimlerChrysler
(Mercedes-Benz G-Class, E-Class 4MATIC and 4x2, the Jeep Grand Cherokee and the
Chrysler Voyager) at its facility in Graz, Austria, with a combined volume of
over 80,000 vehicles in calendar 2002. In addition, Magna Steyr assembled the
Mercedes-Benz M-Class sport-utility vehicle for the European market until the
planned end of its production in July 2002. Beginning in calendar 2003, Magna
Steyr will assemble the 2003 Saab 9-3 convertible and commencing in 2004, will
assemble the 2004 BMW X-3 sport activity vehicle, in both cases for sale to the
global market. Magna Steyr's powertrain operations supply to a number of
customers, including General Motors, Volkswagen, DaimlerChrysler, BMW, Land
Rover, Fiat and Renault. Some of Magna Steyr's current powertrain programs
include the four-wheel drive transmission module for the Mercedes-Benz S-Class,
E-Class and C-Class cars, as well as the rear suspension module for the Buick
Rendezvous.

    Magna Steyr operates a joint venture with Intier in Hambach, France which
produces complete door systems for the DaimlerChrysler Smart car, as well as the
Advanced Car Technology Systems (ACTS) joint venture which focusses on total
vehicle safety systems integration and supports Magna Steyr, Intier and third
party suppliers in the development and testing of their respective systems and
components. Magna Steyr and Cosma operate a joint venture in Europe which is
developing hydroforming modules and independent rear suspension modules.

    In calendar 2002, Magna Steyr completed its acquisition from DaimlerChrysler
of the Eurostar assembly facility, located adjacent to Magna Steyr's assembly
facility in Graz, Austria. See "RECENT DEVELOPMENTS IN OUR BUSINESS - Strategic
Acquisitions and Divestitures" above. This acquisition helped boost Magna
Steyr's assembly capacity to 200,000 vehicles per year, making it the largest
automobile manufacturer in the world without its own brand.




                                       18



    MAGNA DONNELLY

    Magna Donnelly is a global supplier to the automotive industry and the
world's leading producer of automotive mirror systems. It primarily supplies
automotive customers around the world with rear vision systems (mirrors and
cameras), modular window systems (engineered glass), and handle products, all of
which increasingly incorporate electronic capabilities. Magna Donnelly employs
approximately 8,000 people at 31 manufacturing facilities and four engineering
and testing facilities with locations in the United States, Austria, China,
France, Germany, Ireland, Malaysia, Mexico, Spain and Slovakia. As mentioned
above, Magna Donnelly's financial results are aggregated with those of Cosma in
our "Other Automotive Operations" financial reporting segment.

    Magna Donnelly's main product segments are:

                                                            
    o     interior rearview mirror systems;                        o     door closure systems;

    o     exterior rearview mirror systems;                        o     glass fabrication and coating; and

    o     advanced vision systems;                                 o     automotive electronics.

    o     modular windows;


    

    The growth strategy of Magna Donnelly focuses on developing value-added
features around core products including complete exterior mirrors, modular
encapsulated windows, electrochromic mirrors and bonded hardware window systems.

    Magna Donnelly has a diverse customer base, which includes Ford,
DaimlerChrysler, General Motors, Honda, Volkswagen, BMW, Toyota, PSA, Renault,
Saab and Volvo. Some recently examples of Magna Donnelly's production programs
include the DaimlerChrysler Caravan/Voyager/Town & Country minivans, Chrysler
Pacifica and Jeep Grand Cherokee; Ford Expedition/Navigator, F-Series trucks and
the Taurus/Sable cars; General Motors Trailblazer/Bravada/Envoy; Honda Accord
and Civic; BMW 3, 5 and 7 series and the Z4; Mercedes C and E-Class cars;
Porsche Cayenne; Renault Laguna; Saab 9-5; Volkswagen Golf/Polo, Passat/B6 and
Audi A4; and the Volvo S80.

    Magna Donnelly participates in three joint ventures in China for the
manufacture and sale of automotive products in the Asian markets and one joint
venture in Malaysia.

    COSMA INTERNATIONAL

    Cosma manufactures a comprehensive range of metal body systems, components,
assemblies and modules and employs approximately 14,000 people in 37
manufacturing facilities and nine engineering and testing facilities located in
Canada, the United States, Mexico, Germany, Austria, France and the Czech
Republic. For financial reporting purposes, the results of our Magna Donnelly
operating group are aggregated with Cosma's results under our "Other Automotive
Operations" financial reporting segment. In calendar 2002, the sales
attributable to our Other Automotive Operations segment were approximately
$3.678 billion and its operating income was approximately $382 million,
representing approximately 30% of our consolidated automotive sales in that
year.

    Cosma's main product and service segments are:

                                                       
    o     chassis systems;                                     o    stampings;

    o     body systems;                                        o    finishing; and

    o     metalforming technologies;                           o    design and engineering.


    


    Cosma has extensive engineering capabilities with respect to computer aided
design and computer aided manufacturing, complete body engineering, failure
effects analysis, prototyping, concept vehicles and testing. Cosma's product
engineering team creates original engineering drawings, feasibility studies,
working prototypes and full-scale testing programs to meet or establish customer
specifications. Manufacturing and engineering personnel design and build the
manufacturing systems, processes and equipment which link the designed product
to high quality, efficient production systems. The advance design engineering
and/or prototyping work performed by Cosma can often facilitate the award of
production business by automobile manufacturers to one



                                       19


or more of our other automotive systems groups. Tooling facilities within Cosma
are capable of designing and building the tools, dies and assembly equipment
needed for consistent production.

    Technologies employed by Cosma include a series of metal processing
technologies, including conventional stamping and extrusion, roll-forming,
hydroforming, hydropiercing, tube to tube welding and technically advanced laser
welding processes, as well as finishing technologies such as e-coating, powder
coating and aluminum heat treating.

    Cosma's primary customers include General Motors, DaimlerChrysler, BMW, Ford
and Toyota. For example, Cosma supplies the complete body-in-white for the
DaimlerChrysler SMART car, complete frames for the General Motors GMT 800 series
large pickup trucks and sport utility vehicles, all exterior Class A stamped
body panels for the BMW Z4, complete underbody sub-assemblies for the Ford
Escape/Mazda Tribute sport utility vehicles and the front and rear cradle
assemblies for the Volvo XC90 sport utility vehicle. In addition, Cosma was
recently awarded the contract to manufacture frames for the Ford Explorer sport
utility vehicle commencing in 2005.

    CORPORATE AND OTHER

    Substantially all of our automotive real estate is owned through MI
Developments Inc., a wholly-owned subsidiary. Long-term leases at fair market
value have been signed by MI Developments and the applicable groups or divisions
occupying our properties. MI Developments operates as a stand-alone profit
centre and will design, construct and/or manage substantially all of our current
and future automotive real estate.

                            MAGNA ENTERTAINMENT CORP.

    MEC is North America's number one owner and operator of thoroughbred
racetracks, and one of the world's leading suppliers, via simulcasting, of live
racing content to the growing inter-track, off-track and account wagering
markets. MEC currently operates or manages eleven thoroughbred racetracks, two
standardbred racetracks, one racetrack which runs both thoroughbred and
standardbred meets and one greyhound racetrack, as well as the simulcast
wagering venues at these tracks. In addition, MEC operates off-track betting
facilities and a national account wagering business known as XpressBet(TM) which
permits customers to place wagers by telephone and over the Internet on horse
races at up to 70 racetracks in North America. MEC also owns and operates
HorseRacing TV(TM), a new television network focused exclusively on horse racing
that was launched on the Racetrack Television Network (RTN) in July 2002.
HorseRacing TV(TM) is currently shown on cable only in the western Pennsylvania
and San Diego, California areas and on RTN, but MEC is in discussions with cable
and satellite operators with the goal of achieving broader distribution. RTN, in
which MEC has a one-third interest, was formed to telecast races from MEC's
racetracks and other racetracks, via private direct to home satellite, to paying
subscribers. MEC has also commenced development of a horse racetrack and gaming
facility near Vienna, Austria. For the year ended December 31, 2002, MEC's
operations generated revenues of $540.3 million.

    Shares of MEC's Class A Subordinate Voting Stock are listed and quoted on
the Nasdaq National Market under the trading symbol "MECA" and are listed and
posted for trading on The Toronto Stock Exchange under the trading symbol
"MEC.A". The shares of MEC Holdings (Canada) Inc. (a subsidiary of MEC), each of
which was exchangeable into one share of MEC Class A Subordinate Voting Stock,
were listed and posted for trading on The Toronto Stock Exchange under the
trading symbol "MEH" until December 31, 2002, on which date they were
automatically converted into MEC Class A Subordinate Voting Stock.

    Since December 1998, MEC has acquired seven large racetrack operations in
North America: Santa Anita Park near Los Angeles, Gulfstream Park near Miami,
Golden Gate Fields and Bay Meadows near San Francisco, Lone Star Park at Grand
Prairie near Dallas and The Maryland Jockey Club, which operates Laurel Park in
Maryland and Pimlico Race Course in Baltimore, home of the Preakness Stakes(R),
the middle jewel in thoroughbred racing's Triple Crown. MEC has also acquired
the racetrack operations of The Meadows near Pittsburgh, Thistledown near
Cleveland, Remington Park in Oklahoma City, Great Lakes Downs in Muskegon,
Michigan, Portland Meadows near Portland, Oregon, Multnomah Greyhound Park also
near Portland, Oregon and Flamboro Downs in Hamilton, Ontario. MEC owns all the
land on which these racetracks are located, with the exception of Bay Meadows,
Lone Star Park at Grand Prairie, Remington Park, Portland Meadows and Multnomah
Greyhound Park where MEC leases the land from third parties. These acquisitions
have enabled MEC to secure the ownership rights to what MEC believes is some of
the highest quality and most popular live horse racing content in North America,
based on standard industry measures, such as total handle, average daily
attendance and average daily wagering, both on and off-track. MEC believes that
the aggregation of this high-quality content, combined with a strong branding
strategy and the introduction of new media distribution technologies, will
enhance the distribution of its content and help it develop new sources of
revenues. MEC intends to continue to acquire strategic racetracks and other
related assets on a selective basis.



                                       20



    MEC distributes its live racing content to approximately 1,000 off-track and
inter-track venues, including other racetracks, off-track betting facilities and
casinos in the United States, Canada, Mexico, the Caribbean and the United
Kingdom. MEC intends to expand the distribution of this content in these markets
and, to the extent permitted by various regulatory regimes, in additional
markets, particularly emerging electronic media-based markets, such as wagering
via interactive television and the Internet.

    In conjunction with its racetrack operations, MEC owns and operates
thoroughbred training centres situated near San Diego, California, in Palm Beach
County, Florida and in the Baltimore, Maryland area. MEC believes that
facilities such as these will provide it with a competitive advantage by helping
it to attract additional high-quality horses to its racetracks and to expand its
field sizes. MEC believes that this will allow it to increase both its number of
live races and the total amount wagered on its races.
    Legislators in a number of the states in which MEC's racetracks operate are
considering the legalization of alternative gaming at racetracks. Following its
recent acquisition of Flamboro Downs, MEC will develop a relationship with the
Ontario Lottery and Gaming Corporation, which operates the gaming facility at
Flamboro Downs. MEC expects that the ownership of Flamboro Downs and this
relationship will enable it to develop additional expertise in the issues
surrounding the operation and management of alternative gaming facilities at
racetracks.

    In addition to its racetracks, MEC also has significant real estate holdings
in the United States, Canada and Austria. As of December 31, 2002, the aggregate
net book value of all MEC's real estate was $717.4 million. While MEC is
exploring the development of some of its real estate, it is actively marketing
its non-core real estate in order to generate additional capital to grow and
enhance its racing business. During the past three years, MEC sold non-core real
estate with an aggregate net book value of $64.9 million for gross proceeds of
$107.4 million. As of December 31, 2002, the aggregate net book value of its
remaining non-core real estate was approximately $10.8 million. MEC currently
has substantial real estate holdings in excess of that needed to support its
racetrack operations. This real estate consists of vacant industrial lands, golf
courses, residential housing developments, excess land around several of its
racetracks and other real estate. MEC is continually re-evaluating each of these
holdings in relation to its core racetrack business activities. MEC has stated
that it will, from time to time, sell or otherwise monetize some or all of these
real estate holdings in order to fund the growth of its core racetrack
operations and related businesses. The aggregate net book value of these excess
real estate assets, including MEC's remaining non-core real estate, was
approximately $179.6 million, as of December 31, 2002.

    MEC employed approximately 5,100 employees as of December 31, 2002, of whom
approximately 3,000 were represented by unions.

                            RESEARCH AND DEVELOPMENT

    We have historically emphasized technological development and have a policy,
embodied in our Corporate Constitution, to allocate a minimum of 7% of our
pre-tax profits (as defined in the Corporate Constitution) for each financial
year to research and development during that financial year or the next
succeeding financial year. See "ITEM 8. CORPORATE CONSTITUTION" below. During
calendar 2002 we spent approximately $366 million on research and development,
not including capital expenditures and research and development which was
funded by governments or customers, compared to $293 million in calendar 2001.

    Our past development activities have resulted in a number of new and
improved manufacturing processes and proprietary products, including those
discussed above under "ITEM 2. GENERAL DEVELOPMENT OF THE BUSINESS - RECENT
DEVELOPMENTS IN OUR BUSINESS - NEW PRODUCTS AND TECHNOLOGIES". We expect that
our involvement in the development of manufacturing and product technology in
cooperation with automobile manufacturers will increase as automobile
manufacturers further involve suppliers in the vehicle development process.

                          MANUFACTURING AND ENGINEERING

    As at December 31, 2002, we had 199 automotive manufacturing facilities
(including 8 cross-group joint venture facilities), of which 117 are in North
America, 70 are in Europe, two are in Korea, five are in China, four are in
Brazil and one is in Malaysia. These manufacturing facilities occupied over 33.1
million square feet, of which approximately 57% was owned through MI
Developments, 23% was owned by our automotive systems groups and the remaining
20% was leased from third parties, typically under leases having terms of five
years or more, with options to renew. As at December 31, 2002, our automotive
manufacturing facilities ranged in size from approximately 18,400 to
approximately 3.5 million square feet of floor space and most maintained an
in-house tooling capability with a staff of experienced tool and die makers. As
production has become more automated, the size and potential production capacity
of the typical facility has increased. We are currently operating many of our
manufacturing facilities on a multi-shift basis.



                                       21


    As at December 31, 2002, we also operated 46 automotive product
development/engineering facilities (including four cross-group joint venture
facilities), of which five are in Canada, 13 are in the United States, 25 are in
Europe, one is in Japan, one is in India and one is in China. Such facilities
occupy approximately 2.4 million square feet, of which approximately 34% was
owned through MI Developments, 45% was owned by our automotive systems groups
and the remaining 21% was leased from third parties typically under leases
having terms of five years, with options to renew.

    We purchase our raw materials to the extent possible from domestic suppliers
in the jurisdictions in which we do business. Factors such as price, quality,
transportation costs, warehousing costs, availability of supply and timeliness
of delivery have an impact on the decision to source from certain suppliers. In
the past, we have purchased raw materials offshore when shortages of materials
such as certain high quality grades of steel have occurred. However, to date, we
have not experienced any significant difficulty in obtaining supplies of parts,
components or raw materials for our manufacturing operations and we do not carry
inventories of either raw materials or finished products in excess of those
reasonably required to meet production and shipping schedules. In addition,
existing supply agreements with steel manufacturers should help to mitigate the
effects of any future shortages on us.

                                 HUMAN RESOURCES

    As at December 31, 2002, we employed approximately 70,800 automotive
employees, including approximately 19,600 in Canada, 27,100 in Europe, 13,800 in
the United States, 8,800 in Mexico, 1,200 in Asia and 300 in South America. As
at December 31, 2002, MEC employed approximately 5,100 employees. The following
description of our human resources principles and policies applies primarily to
our automotive employees.

    HUMAN RESOURCES PRINCIPLES

    EMPLOYEE EQUITY PARTICIPATION AND PROFIT SHARING PROGRAM

    Since 1975, we have maintained a deferred profit sharing plan to foster
participation in profits and share ownership by our eligible automotive
employees. Prior to 2001, our Corporate Constitution required that 10% of our
employee pre-tax profits before profit sharing (as defined in our Corporate
Constitution) for a fiscal period be allocated to an employee equity
participation and profit sharing plan, consisting of the Magna (including
Intier), Decoma and Tesma deferred profit sharing plans and a cash distribution
to eligible employees of the respective companies. Intier created its own plan
effective as of January 1, 2002. During 2001, we amended our Corporate
Constitution, as did Decoma and Intier, to allow for the introduction of defined
benefit pension plans in addition to the employee equity participation and
profit sharing plan. All employees that participate in the employee equity
participation and profit sharing plan were, and all new employees are, given the
option of continuing in the employee equity participation and profit sharing
plan, or receiving a reduced entitlement under such plan (6% rather than 10%)
plus a defined benefit pension. MEC employees do not participate in our employee
equity participation and profit sharing plan. See "ITEM 8. CORPORATE
CONSTITUTION - EMPLOYEE EQUITY PARTICIPATION AND PROFIT SHARING PROGRAMS".

    MANAGEMENT INCENTIVE COMPENSATION

    We believe that profit participation motivates members of management.
Accordingly, our automotive management compensation structure consists of a base
salary (which in most instances is relatively low compared to automotive
industry norms) and an incentive bonus. Our Corporate Constitution provides that
aggregate incentive bonuses for eligible members of our management in any
financial year will not exceed 6% of our pre-tax profits (as defined in the
Corporate Constitution) before profit sharing for that financial year. See "ITEM
8. CORPORATE CONSTITUTION - INCENTIVE BONUSES; MANAGEMENT BASE SALARIES".

    EMPLOYEE CHARTER

    We are committed to an operating philosophy based on fairness and concern
for people. This philosophy is embodied in the principles of The Magna
Employee's Charter, which consists of the following:

         JOB SECURITY - Being competitive by making a better product for a
         better price is the best way to enhance job security. We are committed
         to working together with our employees to help protect their job
         security. To assist our employees, we will provide job counselling,
         training and employee assistance programs to our employees.




                                       22



         A SAFE AND HEALTHFUL WORKPLACE - We strive to provide our employees
         with a working environment which is safe and healthful.

         FAIR TREATMENT - We offer equal opportunities based on an individual's
         qualifications and performance, free from discrimination or
         favouritism.

         COMPETITIVE WAGES AND BENEFITS - We will provide our employees with
         information which will enable them to compare their total compensation,
         including total wages and total benefits with those earned by employees
         of our competitors, as well as with other plants in the communities in
         which our plants are located.

         EMPLOYEE EQUITY AND PROFIT PARTICIPATION - We believe that every one of
         our employees should share in our financial success.

         COMMUNICATION AND INFORMATION - Through regular monthly meetings
         between management and employees and through publications, we will
         provide our employees with information so that they will know what is
         going on in Magna and in the industry.

         THE EMPLOYEE HOTLINE - Should any of our employees have a problem, or
         feel the foregoing principles are not being met, we encourage them to
         call the Hotline or use self-addressed Hotline envelopes to register
         their complaints. Employees do not have to give their names, but if
         they do, it will be held in strict confidence. Hotline Investigators
         will answer an employee's call. The Hotline is committed to
         investigating and resolving all concerns or complaints and must report
         the outcome to our Global Human Resources Department.

         EMPLOYEE RELATIONS ADVISORY BOARD - The Employee Relations Advisory
         Board is a group of people who have proven recognition and credibility
         relating to humanitarian and social issues. This Board will monitor,
         advise and ensure that Magna operates within the spirit of The Magna
         Employee's Charter and the principles of Magna's Corporate
         Constitution.

    HUMAN RESOURCES POLICIES

    In furtherance of our commitment to fairness, as demonstrated in our
Employee's Charter, we have established Fairness Committees in most of our North
American automotive manufacturing facilities which enable employees at such
facilities to have many of their concerns resolved by a committee comprised of
both management and employees, voting by secret ballot. In calendar 2001, we
established the position of Employee Advocate to work with our automotive
employees and management to ensure that any problems which arise in the
workplace are addressed quickly and in accordance with our Employee Charter,
Corporate Constitution and operating principles. Ultimately, each of our
divisions will have an Employee Advocate who can only be removed if more than
50% of the shop floor employees at the applicable division vote to remove him or
her through a periodic secret ballot.

    We have established many employee communication programs, such as monthly
divisional employee meetings, continuous improvement team meetings, an employee
hotline and employee opinion surveys to help ensure employee involvement and
feedback. In addition, we maintain a 100 acre recreational park within 20 miles
of most of our Toronto-area facilities for use by our employees and their
families.

    In addition to the employee equity participation and profit sharing programs
discussed above under "- Human Resources Principles", we maintain a group
retirement savings plan in Canada and a 401(k) plan in the United States whereby
we partially match employees' contributions through payroll deductions. These
plans complement the employee equity participation and profit sharing programs
and are designed to assist employees in providing replacement income for
retirement. Those employees who choose to participate in our defined benefit
pension plan are not eligible to receive our matching payment on their group
retirement savings plan or 401(k) contributions and will receive a reduced
allocation from the employee equity participation and profit sharing program.

    LABOUR RELATIONS

    We believe that we maintain positive relations with our employees and the
unions representing the employees at certain of our automotive divisions. In
2002, Intier concluded a collective bargaining agreement with the CAW covering
employees at Intier's Mississauga Seating division in Mississauga, Ontario.
Employees of Intier's Integram Windsor and Innovatech seating divisions



                                       23


in Windsor, Ontario are also covered by collective agreements with the CAW.
Employees of Intier's Integram St. Louis and Excelsior Springs seating divisions
and its Ontegra Brighton interiors division are represented in the U.S. by the
UAW. If Intier is successful in operating its Mississauga Seating, Integram
Windsor, Innovatech and Ontegra Brighton Interiors divisions with the forms of
collective agreements negotiated, we will examine whether to extend the same
form of agreements to some of our other plants in Ontario and Michigan if our
employees at these plants vote in favour of unionization in the future. The
forms of collective agreements negotiated with the CAW and the UAW recognize
our unique operating philosophy, including our Employee Charter and fundamental
principles. In particular, these agreements recognize the need for wages and
benefits to be competitive with our competitors rather than those paid by our
customers' vehicle assembly operations. One of the key features of these
agreements is the "no strike - no lock-out" language during the life of such
agreements.

    The employees at a Magna Donnelly division in Alto, Michigan, as well as
Intier divisions in Auburn Hills and Howell, Michigan are expected to vote, over
the next 18 months, on whether they wish to be represented by the UAW. These
votes are a result of the settlement of matters pending before the United States
National Labor Relations Board relating to challenges to certification votes
held at these divisions in 2000.

    Employees at a number of our divisions in Mexico are currently covered by
collective bargaining agreements with various unions. These divisions are
Cosma's Autotek (Puebla) and Formex/Pressmex (Saltillo) divisions, Intier's
Intier Automotive Interiors de Mexico (Saltillo) division, Magna Steyr's Steyr
de Mexico (Saltillo) division, Magna Donnelly's divisions in Queretaro and
Monterrey, as well as Decoma's Decoplas division in Mexico City.

    Employees at certain of Intier's interior systems and seating divisions as
well as certain of Decoma's divisions in the United Kingdom are represented by
various unions. Certain of our other European employees are covered by national
industry-wide agreements relating to compensation and employment conditions and
are members of in-house employees' associations or trade unions.

    Some racetrack and pari-mutuel employees working at racetracks owned by MEC
are members of various unions which customarily represent employees in the
racing industry. The collective bargaining arrangements of several tracks, most
notably those located in California, are governed by multi-employer collective
agreements.

    From time to time, various unions seek to represent groups of our employees
and, as a result, we may become party to additional collective bargaining
agreements in the future.

                                   COMPETITION

    We face numerous sources of competition in North America and Europe,
including from automobile manufacturers, other outside automotive suppliers and
numerous other suppliers in which one or more automobile manufacturers may have
direct or indirect investments. We believe that there are a number of suppliers
that can produce some or all of the components, assemblies, modules and systems
that our automotive systems groups currently produce. Some of our competitors
have greater financial, technical or marketing resources than we do and some of
them are dominant in markets in which we operate.

    The basis on which automobile manufacturers select automotive suppliers is
determined by a number of factors, including price, quality, service, historical
performance, timeliness of delivery, proprietary technologies, scope of in-house
capabilities, existing agreements, responsiveness to the customer, the
supplier's overall relationship with the automobile manufacturer, the degree of
available and unutilized capacity or resources in the manufacturing facilities
of the automobile manufacturer, collective bargaining agreement provisions,
labour relations issues and other factors. The number of competitors that are
solicited by automobile manufacturers to bid on any individual product has been
reduced in many cases and we expect further reductions as automobile
manufacturers follow through on their stated intentions of dealing with fewer
suppliers and awarding those suppliers longer-term contracts.

                               SALES AND MARKETING

    We sell our products to automobile manufacturers located in Canada through
sales offices located in southern Ontario, and to automobile manufacturers
located in Western Europe through sales offices located primarily in Austria,
Germany, the United Kingdom, France, Italy and Spain. Sales to North American
automobile manufacturers located in the United States and Mexico, including
foreign automobile manufacturers with manufacturing operations in the United
States, are coordinated through independent sales representatives in Michigan.
We also maintain sales offices in Japan to help coordinate sales to Japanese
automobile manufacturers and their North American operations, as well as in
South Korea and Brazil. The various internal



                                       24


operating divisions and subsidiaries of the automobile manufacturers normally
initiate many of their own purchasing decisions and, accordingly, each
automobile manufacturer effectively constitutes several different customers,
although this is changing as automobile manufacturers are increasingly sourcing
global platforms.

    Historically, our sales have been generated through customer requests to
quote on particular products, including tools and dies and production parts. We
typically receive a purchase order to produce tools and dies for a particular
part or a particular part for one or more model years. Such purchase orders
typically extend over the life of the model, which is generally four to seven
years, and do not require the purchase by the customer of any minimum number of
products. Releases under such a purchase order, authorizing us to produce and
deliver specific quantities of the product, are issued for planning, raw
material and production purposes over a three to four month period in advance of
anticipated delivery dates. The actual number of parts produced by us under a
purchase order in any given year is dependent upon the number of vehicles
produced by the automobile manufacturer of the specific model or model type in
which the part is incorporated. It has been our experience that once we have
received a contract to produce a part for a particular vehicle model or model
type, we will usually continue to produce the part throughout the time such part
is utilized by the automobile manufacturer for that vehicle. Nevertheless, we
have also obtained programs on a "takeover" basis. These programs are typically
already in production at automobile manufacturer's facilities or the facilities
of our competitors and, for various reasons, are re-sourced to us for production
at our facilities.

                              ENVIRONMENTAL MATTERS

    We are subject to a wide range of environmental laws and regulations imposed
by governmental authorities relating to air emissions, soil and ground water
quality, wastewater discharge, waste management and storage of hazardous
substances. We aim to be an industry leader in environmental compliance with the
intention to prevent pollution by reducing the impact of our operations on the
environment and through technological innovation and process efficiencies. In
furtherance of this aim, we have adopted a health, safety and environmental
policy, pursuant to which we are committed to:

    o   complying with, and exceeding where possible, all applicable health,
        safety and environmental laws, regulations and standards in all of our
        operations;

    o   regularly evaluating and monitoring our past and present business
        activities impacting upon health, safety and environmental matters;

    o   ensuring that a systematic health, safety and environmental review
        program is implemented and monitored at all times for each of our
        operations, with a goal of continued improvement in health, safety and
        environmental matters; and

    o   ensuring that adequate reports on health, safety and environmental
        matters are presented to our Board of Directors, at a minimum, on an
        annual basis.

    An environmental committee of our Board of Directors assists the Board in
overseeing our management's handling of health, safety and environmental issues
and annually reviews our health, safety and environmental policy.

   As part of our commitment to environmental compliance, we also intend to
achieve company-wide compliance with ISO 14001 standards. As of December 31,
2002, 89 of our divisions were ISO 14001 certified.

    We operate a number of manufacturing facilities which use environmentally
sensitive processes and hazardous materials. We believe that all of these
operations meet, in all material respects, applicable governmental standards for
waste handling and emissions. Notwithstanding this compliance, we have in the
past and may in the future experience complaints regarding some of our
manufacturing facilities from neighbouring parties. In the past, such complaints
have been addressed by open dialogue with relevant stakeholders and, where
appropriate, manufacturing process adjustments.

    We are also subject to environmental laws requiring investigation and
clean-up of environmental contamination. From time to time our operations and
properties become the subject of inquiries or investigations of environmental
regulators. We are in various stages of investigation or clean-up at our
manufacturing facilities where contamination has been alleged. These stages
include performing periodic soil and groundwater sampling, determining the most
appropriate corrective action approach for remediating the contamination and
obtaining regulatory approval of such approach, performing the remediation
itself and monitoring the status of our remediation. Estimating environmental
clean-up liabilities is complex and heavily dependent on the nature and extent
of historical information and physical data about the contaminated site, the
complexity of the contamination, the uncertainty of which remedy to apply and
the outcome of discussions with regulatory authorities relating to the
contamination.



                                       25


To date, the costs incurred in complying with environmental laws
and regulations, including the costs of clean-up and remediation, have not had
an adverse effect on our operations or financial condition. However, changes in
these government laws and regulations are ongoing and may make environmental
compliance, such as emissions control and waste disposal, increasingly
expensive. We cannot predict future costs which may be incurred to meet
environmental obligations.

                                   LITIGATION

    In November 1997, KS Centoco Ltd., an Ontario-based steering wheel
manufacturer in which we have a 23% equity interest, and Centoco Holdings
Limited, the owner of the remaining 77% equity interest in KS Centoco Ltd.,
filed a statement of claim against us and two of our subsidiaries. On March 5,
1999, the plaintiffs were granted leave to make substantial amendments to the
original statement of claim, in order to add several new defendants and claim
additional remedies. The amended statement of claim alleges, among other things:

    o   breach of fiduciary duty by us and two of our subsidiaries;

    o   breach by us of our binding letter of intent with KS Centoco, including
        our covenant not to have any interest, directly or indirectly, in any
        entity that carries on the airbag business in North America, other than
        through MST Automotive Inc., a company to be 77% owned by Magna and 23%
        owned by Centoco Holdings;

    o   the plaintiff's exclusive entitlement to certain airbag technologies in
        North America pursuant to an exclusive licence agreement, together with
        an accounting of all revenues and profits resulting from the alleged use
        by us, TRW Inc. and other unrelated third party automotive supplier
        defendants of such technology in North America; and

    o   a conspiracy by us, TRW and others to deprive KS Centoco of the benefits
        of such airbag technology in North America and to cause Centoco Holdings
        to sell to TRW its interest in KS Centoco in conjunction with the sale
        by us to TRW of our interest in MST Automotive GmbH and TEMIC
        Bayern-Chemie Airbag GmbH.

     The plaintiffs are seeking, among other things, damages of approximately
Cdn.$3.5 billion. We have filed an amended statement of defence and
counterclaim. Document production is underway and examinations for discovery
have commenced. We intend to vigorously defend this case. At this time,
notwithstanding the early stages of these legal proceedings and the difficulty
in predicting final outcomes, our management believes that the ultimate
resolution of these claims will not have a material adverse effect on our
consolidated financial position.

    In February 2003, Intier Automotive Closures of America, Inc., was served,
in conjunction with Siemens Automotive Corp., a/k/a Siemens VDO Automotive
Corp., with a complaint issued in the Macomb County Circuit Court of the State
of Michigan by General Motors Corporation. The General Motors complaint alleges
that Intier and Siemens are in breach of express and implied warranties to
General Motors and as a result General Motors is seeking reimbursement for costs
and expenses incurred as a result of the replacement of tens of thousands of
rear door electric motors in respect of its model year 2000 full-size sport
utility vehicles, including the Tahoe, Suburban, GMC Silverado and Chevrolet
Avalanche. The rear door electric motors (which Intier was directed to use by
General Motors) are manufactured by Siemens and form part of a power rear
window regulator supplied by Intier to General Motors for those vehicles.
Although the damages in the complaint are unspecified, General Motors has
previously claimed that the warranty and future recall costs could be up to
$42 million. Based on Intier's investigations to date, Intier does not believe
that it has any liability for this claim and that any liability that it may
become subject to, if it is established that the rear door motor is defective,
will be recoverable from Siemens, although Intier cannot guarantee that this
will be the case.

    In the ordinary course of business activities, we may be contingently liable
for litigation and claims with customers, suppliers and former employees. Our
management believes that adequate provisions are recorded in the accounts where
required and when estimable. However, there can be no assurance that we will not
incur additional expense.

                              INTELLECTUAL PROPERTY

    We own and use numerous patents and patent applications in connection with
our automotive operations. We are also licensed to use patents or technology
owned by others. From time to time claims of patent infringement are made by or
against us. None of the claims against us has had, and we believe that none of
the current claims will have, a material adverse effect upon us. While in the
aggregate our patents and licenses are considered important in the operation of
our business, we do not consider them of such importance that their expiry would
materially affect our business.




                                       26



                                  RISK FACTORS

    The industry in which we compete and the business we conduct are subject to
a number of risk and uncertainties. These risks and uncertainties, together with
certain assumptions, also underlie the forward-looking statements made in this
Annual Information Form. In order to fully understand these risks, uncertainties
and assumptions, you should carefully consider the following risk factors in
addition to other information included in this Annual Information Form.

RISKS RELATING TO THE AUTOMOTIVE INDUSTRY

    AN ECONOMIC DOWNTURN COULD REDUCE OUR PROFITABILITY

    Our automotive operations are directly related to levels of global
automotive production. The global automotive industry is cyclical and is
sensitive to changes in certain economic conditions such as interest rates and
consumer demand. The rate of global economic growth, particularly in the United
States and parts of Europe, has slowed since 2001, partially due to the events
of September 11, 2001 and the ensuing war against terrorism, the U.S.-led
coalition's war against Iraq, the impact of a series of corporate accounting
scandals in the United States and a number of other geopolitical and economic
factors. A series of interest rate cuts by the Federal Reserve Bank in the
United States, the Bank of Canada, the European Central Bank and central banks
in various countries have led to relatively low interest rate levels in many of
these countries. Low interest rates, together with a variety of incentives
offered by automobile manufacturers led to strong levels of consumer demand for
such items as automobiles in some countries for part of 2002. However,
significant economic uncertainty remains in North America, Europe, Asia and the
rest of the world. A decline in consumer demand for automobiles as a result of a
loss of confidence in the economy, fears of war, political instability or terror
attacks, interest rate increases, a reduction in vehicle incentive programs by
automobile manufacturers or other geopolitical, economic or other factors could
prompt automobile manufacturers to cut production volumes. Any material decline
in production volumes in any of our principal North American, European or Asian
markets could significantly lower our profit margins.

    WE FACE INCREASING PRICE REDUCTION PRESSURES FROM OUR CUSTOMERS THAT COULD
    REDUCE OUR PROFIT MARGINS

    We have in the past entered into, and will continue to enter into, long-term
supply arrangements with automobile manufacturers which provide for, among other
things, price concessions over the supply term. To date, these concessions have
been largely offset by cost reductions arising principally from product and
process improvements and price reductions from our suppliers. However, the
competitive automotive industry environment in North America, Europe and Asia
has caused these pricing pressures to intensify. From time to time, some of our
largest customers have demanded additional price concessions and retroactive
price reductions which could have an adverse impact on our future profit
margins, although the net effect of these price concessions and reductions has
not been material to date. In addition, we expect that our customers will use
various electronic commerce initiatives such as Covisint, an electronic business
exchange, as well as Internet-based auctions, in order to further reduce their
costs. The full effect of electronic commerce initiatives on the prices of
products and services we sell to automobile manufacturers and on the costs of
products and services we obtain from our suppliers is uncertain. We may not
continue to be successful in offsetting price concessions and reductions agreed
to from time to time with automobile manufacturers. To the extent that these
price concessions and reductions are not offset through cost reductions, our
future profit margins would be adversely affected.

    OUR CUSTOMERS INCREASINGLY REQUIRE US TO ABSORB MORE FIXED COSTS IN OUR UNIT
    PRICING, WHICH COULD REDUCE OUR PROFITABILITY

    We are under increasing pressure to absorb more costs related to product
design, engineering and tooling as well as other items previously paid for
directly by automobile manufacturers. In particular, some automobile
manufacturers have requested that we pay for design, engineering and tooling
costs that are incurred up to the start of production and recover these costs
through amortization in the piece price of the applicable component. Contract
volumes for customer programs not yet in production are based on our customers'
estimates of their own future production levels by vehicle body type. However,
actual production volumes may vary significantly from these estimates due to
lower than expected consumer demand, new product launch delays and other
factors, often without any compensation to us by our customers. We do not
typically rely solely on our customers' estimates of production volumes, but
re-evaluate their estimates based on our own assessment of future production
levels by vehicle body type. For programs currently under production, we are
typically not in a position to request price changes when volumes differ
significantly from production estimates used during the quotation stage. If
estimated production volumes are not achieved, the design, engineering and
tooling costs incurred by us may not be fully recovered. Similarly, future
pricing pressure or volume reductions by our customers could also reduce the
amount of amortized costs otherwise recoverable in the unit price of our
products. Although these factors have not been material to date, either of these
factors could have an adverse effect on our profitability.



                                       27



    WE ARE INCREASINGLY REQUESTED TO ASSUME PRODUCT WARRANTY, RECALL AND PRODUCT
    LIABILITY COSTS, WHICH COULD HAVE A NEGATIVE EFFECT ON OUR OPERATIONS AND
    FINANCIAL CONDITION

    Automobile manufacturers are increasingly requesting that each of their
suppliers bear the costs of the repair and replacement of defective products
which are either covered under automobile manufacturer's warranty or are the
subject of a recall by the automobile manufacturer and which were improperly
designed, manufactured or assembled by their suppliers. The obligation to repair
or replace such parts, or a requirement to participate in a product recall,
could have an adverse effect on our operations and financial condition.

    We are also subject to the risk of exposure to product liability claims in
the event that the failure of our products results in bodily injury and/or
property damage. We may experience material product liability losses in the
future and may incur significant costs to defend such claims. We currently have
product liability coverage under our insurance policies. This coverage will
continue until August 2003, subject to renewal on an annual basis. In addition,
some of our European subsidiaries maintain product recall insurance, which is
required by law in certain jurisdictions. We cannot guarantee that our insurance
coverage will be adequate for any liabilities we may incur. Furthermore, we
cannot guarantee that our coverage will continue to be available at premiums and
on other terms acceptable to us. A successful claim brought against us in excess
of our available insurance coverage may have a material adverse effect on our
operations or financial condition.

    THE FINANCIAL DISTRESS OF A CRITICAL COMPONENT SUB-SUPPLIER COULD ADVERSELY
    AFFECT OUR OPERATIONS OR FINANCIAL CONDITION

    We rely on a number of sub-suppliers to supply us a wide range of components
required in connection with our business. Economic conditions, intense pricing
pressures on suppliers and a number of other factors have left many automotive
component suppliers in financial distress. The continued financial distress or
the insolvency or bankruptcy of a major component sub-supplier could disrupt the
supply of components to us by these suppliers, possibly resulting in a temporary
disruption in the supply of products by us to our automobile manufacturer
customers. Any prolonged disruption in the supply of critical components by our
sub-suppliers, the inability to re-source production of a critical component
from a financially distressed supplier, or any temporary shut-down of one of our
production lines or the production lines of our customers, could have a material
adverse effect on our operations or financial condition.

    In many cases where we act as a module supplier, integrator or vehicle
assembler, we are responsible for ensuring the quality of the components
supplied to us by sub-suppliers. While we take a number of steps to ensure that
sub-suppliers remain liable for any product warranty claims, product liability
claims or costs arising from product recalls relating to the components supplied
by such sub-suppliers, we may be liable to our automobile manufacturer customers
if our sub-suppliers become insolvent or are otherwise unable to assume full
responsibility for the product warranty claim, product liability claim or
product recall costs.

    WE ARE DEPENDENT ON OUTSOURCING BY AUTOMOBILE MANUFACTURERS

    We are dependent on outsourcing by our automobile manufacturer customers.
The extent of this outsourcing is dependent on a number of factors, including:

    o   the cost, quality and timeliness of external production relative to
        in-house production by automobile manufacturers;

    o   relative technological capability;

    o   the degree of unutilized capacity at automobile manufacturers'
        facilities;

    o   collective bargaining agreements between labour unions and automobile
        manufacturers; and

    o   relations between labour unions and automobile manufacturers.

    Any significant decrease in outsourcing by automobile manufacturers would
likely have an adverse effect on our profitability.

    TECHNOLOGICAL AND REGULATORY CHANGES MAY ADVERSELY AFFECT US

    Changes in competitive technologies or regulatory or industry requirements
may render some of our products obsolete. Our ability to anticipate changes in
technology and regulatory or industry requirements and to develop and introduce
new and enhanced products successfully on a timely basis will be a significant
factor in our ability to grow and remain competitive. We may not be



                                       28


able to anticipate or achieve the technological advances necessary for, or to
comply with regulatory or industry requirements in a manner which will allow, us
to remain competitive and prevent our products from becoming obsolete. We are
also subject to the risks generally associated with new product introductions
and applications, including lack of market acceptance, delays in product
development and failure of products to operate properly. Any of these changes
could have an adverse effect on our operations and financial condition.

    INCREASED ENERGY PRICES COULD REDUCE GLOBAL DEMAND FOR AUTOMOBILES AND
    INCREASE OUR COSTS, RESULTING IN LOWER PROFITS

    The price of crude oil has been unstable in recent months, increasing
significantly late in 2002 and early in 2003 in anticipation of the U.S.-led
coalition's war on Iraq, but subsequently decreasing following the cessation of
hostilities in Iraq. Material increases in the price of crude oil have,
historically, been a contributing factor to the overall reduction in the global
demand for automobiles. A significant future increase in the price of crude oil
could further reduce global demand for automobiles and shift customer demand
away from larger cars and light trucks (including sport utility vehicles) in
which we have relatively higher content. Oil-based products are also critical
elements in various components utilized by us and our suppliers, including
resins, colorants and polymers. Material increases in the price of crude oil,
natural gas or in energy would likely increase the cost of manufacturing or
supplying some of our products and we may not be able to pass these increased
costs along to our customers, thereby reducing our profits.

    SIGNIFICANT INCREASES IN RAW MATERIAL PRICES COULD INCREASE OUR COSTS AND
    RESULT IN LOWER PROFITS

    Raw material costs for materials such as steel and resins often comprise a
significant proportion of the total cost of components manufactured by us. Any
significant increase in the prices of raw materials required by us in our
operations could increase our costs and decrease our profits.

    We generally purchase our raw materials from suppliers located in the
jurisdictions in which we have manufacturing operations, however, we have
purchased raw materials offshore when there have been domestic shortages of
materials such as certain high quality grades of steel. We generally do not
carry inventories of raw materials in excess of those required to meet
production and shipping schedules. To date, we have not experienced any
significant difficulty in obtaining supplies of raw materials, however, the
inability to obtain raw materials in the quantities required by us in our
operations could disrupt the supply of our products to our customers and have an
adverse effect on our operations and financial condition.

RISKS RELATING TO OUR BUSINESS

    DECREASES IN PRODUCTION VOLUMES OF SPECIFIC VEHICLES OR PRODUCTS BY OUR
    CUSTOMERS COULD HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY

    Although we supply parts to most of the leading automobile manufacturers,
the majority of our sales are to three automobile manufacturers. Our worldwide
sales to DaimlerChrysler, General Motors and Ford represented approximately 29%,
22% and 20%, respectively, of our total consolidated automotive sales in
calendar 2002. Moreover, while we supply parts for a wide variety of vehicles
produced in North America and Europe, we do not supply parts for all vehicles
produced, nor is the number or value of parts evenly distributed among the
vehicles for which we do supply parts. In particular, in calendar 2002,
approximately 37% of our consolidated automotive sales were generated by
products supplied for inclusion in five vehicle platforms. Products supplied for
the DaimlerChrysler minivan and General Motor's GMT 800 full-size pick-up trucks
and sport utility vehicles constituted approximately 14% and 11%, respectively,
of our consolidated automotive sales for that period.

    There has been an industry trend toward more "brand hopping" among consumers
in recent years, with consumers' preferences changing relatively quickly and
dramatically in some instances. Shifts in market share among vehicles could have
an adverse effect on our sales and on our profit margins. The contracts we have
entered into with many of our customers are to supply a customer's requirements
for all the vehicles it produces in a particular model, rather than for
manufacturing a set quantity of products. These contracts range from one year to
the life of a model, usually several years, and do not require the purchase by
the customer of any minimum number of parts.

    In addition, the early termination, loss, renegotiation of the terms or
delay in the implementation of any significant production contract with any of
our customers could reduce our profitability. Any changes in the anticipated
production volume of our products, particularly those supplied for the
DaimlerChrysler minivan and General Motors GMT 800 line of vehicles, as a
result of any of the above factors could reduce our profitability.




                                       29



    FLUCTUATIONS IN RELATIVE CURRENCY VALUES COULD ADVERSELY AFFECT OUR
    PROFITABILITY

    Although our financial results are reported in U.S. dollars, a significant
portion of our sales and operating costs are realized in Canadian dollars,
Euros, the British Pound and other currencies. Significant long-term
fluctuations in relative currency values may adversely affect our profitability.
In particular, our profitability may be adversely affected by a significant
strengthening of the U.S. dollar against the Canadian dollar, the Euro, the
British Pound or other currencies in which we generate revenues.

    INCREASED UNIONIZATION ACTIVITY AT SOME OF OUR PLANTS MAY INCREASE OUR COSTS

    The CAW and UAW have in the past mounted a number of major organizing drives
at certain of our divisions, as a result of which we concluded collective
bargaining agreements covering employees of Intier's Mississauga Seating,
Integram Windsor and Innovatech seating divisions in Ontario and Intier's
Ontegra Brighton interiors division in Michigan. In addition, employees at three
of our divisions in the United States are expected to vote on union
representation over the next 18 months. We believe that the collective
agreements recently negotiated with the CAW and UAW recognize our operating
principles, including our Employee Charter. If we are successful in operating
these four divisions with these forms of collective agreements, we will examine
whether to extend these forms of agreements to some of our other plants in
Ontario and Michigan if our employees at these plants vote in favour of
unionization in the future. We are unable to predict whether we will
successfully conclude collective bargaining agreements with these unions for
employees at other divisions in the future, or what impact unionization will
have on our costs. In addition, the CAW and the UAW have in the past attempted
to pressure some of our automobile manufacturer customers to encourage their
suppliers to assume a neutral position with respect to unionization at their
plants. In North America, the employees of only three of our divisions in Canada
and three of our divisions in the United States are currently represented by
unions.

    OUR OPERATIONS MAY BE ADVERSELY IMPACTED BY WORK STOPPAGES AND OTHER LABOUR
    RELATIONS MATTERS

    If our hourly workforce becomes more unionized in the future, we may be
subject to work stoppages and may be affected by other labour disputes. To date,
we have not experienced any work stoppages, nor have we experienced any disputes
with unions that have had a material adverse effect on our operations. However,
future disputes with labour unions may not be resolved in our favour and we may
experience significant work stoppages in the future, causing us to incur
significant expenses related to work stoppages or other disputes.

    WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH SOME COMPETITORS THAT HAVE
    SUBSTANTIALLY GREATER MARKET SHARE THAN US

    The automotive parts supply market is highly competitive. We face
competition from a number of sources, including:

    o   our automobile manufacturer customers (and their related parts
        manufacturing organizations);

    o   existing and new suppliers to these manufacturers; and

    o   manufacturers of product alternatives.

    Some of our competitors have substantially greater market share than us and
are dominant in certain of the markets in which we operate. We may not be able
to compete successfully with our existing competitors or with any new
competitors.

    DELAYS IN PROGRAM LAUNCHES OR DELAYS IN THE CONSTRUCTION OF NEW FACILITIES
    REQUIRED FOR PROGRAM LAUNCHES COULD REDUCE OUR PROFITABILITY

    From time to time, we expand our production capacity through the
construction of new manufacturing facilities. New facilities are often required
to accommodate the award of new business from our customers or to facilitate the
introduction of new manufacturing processes or technologies. However, the
construction of new facilities involves a number of areas of operational and
financial risks. For example, construction delays associated with poor weather,
labour disruptions, cost overruns, shortages of construction materials and
delays associated with the installation, testing and start-up of new production
equipment or manufacturing processes could reduce our profitability. Since many
new facilities are constructed to accommodate the launch of new customer
production programs, a customer's ability to launch a new vehicle program could
negatively impact our customer relationships as well as expose us to
reimbursement claims by our customers for costs arising out of such delays and
could adversely affect our operations and future profitability.



                                       30



    CHANGES IN LAWS AND GOVERNMENTAL REGULATIONS COULD HAVE AN ADVERSE EFFECT ON
    OUR OPERATIONS

    A significant change in the current regulatory environment in which we carry
on business could adversely affect our operations. Our operations could be
adversely impacted by significant changes in tariffs and duties imposed on our
products, particularly significant changes to the North American Free Trade
Agreement.

    WE MAY BE ADVERSELY AFFECTED BY THE ENVIRONMENTAL AND SAFETY REGULATIONS TO
    WHICH WE ARE SUBJECT

    We are subject to a wide range of environmental laws and regulations
relating to air emissions, wastewater discharge, waste management and storage of
hazardous substances. We are also subject to environmental laws requiring
investigation and clean-up of environmental contamination and are in various
stages of investigation and clean-up at our manufacturing facilities where
contamination has been alleged. Estimating environmental clean-up liabilities is
complex and heavily dependent on the nature and extent of historical information
and physical data relating to the contaminated site, the complexity of the
contamination, the uncertainty of which remedy to apply and the outcome of
discussions with regulatory authorities relating to the contamination. In
addition, these environmental laws and regulations are complex, change
frequently and have tended to become more stringent and expensive over time.
Therefore, we may not have been, and in the future may not be, in complete
compliance with all such laws and regulations, and we may incur material costs
or liabilities as a result of such laws and regulations significantly in excess
of amounts we have reserved.

RISKS RELATING TO OUR NON-AUTOMOTIVE BUSINESS

    WE ARE SUBJECT TO RISKS RELATING TO THE GAMING INDUSTRY

    We are subject to risks relating to the gaming industry as a result of our
controlling equity stake in MEC. These risks include:

    o   a decline in popularity of horse racing;

    o   declining on-track attendance and increasing competition in
        simulcasting;

    o   dependence on government regulation and approvals and the consequences
        of amendments to, or the failure to obtain, such approvals;

    o   a decision to prohibit, delay or remove alternative gaming rights at
        racetracks in jurisdictions in which MEC owns or operates a racetrack;

    o   the inability to obtain additional governmental approvals or amendments
        to current laws required in order to enable MEC to expand its gaming
        operations;

    o   implementation of some of the recommendations of the National Gambling
        Impact Study Commission;

    o   competition from other racetrack operators, including those in states
        where more extensive gambling operations are authorized;

    o   a reduction in the amount wagered at MEC's facilities due to competition
        from non-racetrack gaming operators;

    o   competition from internet and other forms of gaming;

    o   expansion of gaming conducted by Native American groups;

    o   the vulnerability of gaming to additional or increased taxes or fees;

    o   seasonal fluctuations in operating results;

    o   unfavourable weather conditions;

    o   the size of the horse population in areas in which MEC's racetracks are
        located;



                                       31



    o   an interruption of operations at MEC's California racetracks due to an
        earthquake;

    o   a decline in general economic conditions; and

    o   other factors affecting the gaming industry.


                                       32



ITEM 4.  SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected income statement and financial position data have
been derived from, and should be read in conjunction with, our consolidated
financial statements for the calendar years ended December 31, 2002, 2001 and
2000, which are based on Canadian generally accepted accounting principles. Our
consolidated statements of income and retained earnings for the calendar years
ended December 31, 2002, 2001 and 2000, our consolidated balance sheets as at
December 31, 2002 and 2001 and the report of Ernst & Young LLP are contained in
our Annual Report to Shareholders for the Year Ended December 31, 2002.

                                      SELECTED CONSOLIDATED FINANCIAL DATA(1)



                                                                                                  CALENDAR
                                                                                          YEARS ENDED DECEMBER 31,
                                                                          -------------------------------------------------
                                                                                   2002             2001              2000
                                                                          -------------------------------------------------
                                                                           (in millions of U.S. dollars, except per share
                                                                                             figures)

                                                                                                           
INCOME STATEMENT DATA
Sales:
  Automotive..........................................................           $12,422           $10,507          $10,099
  Magna Entertainment Corp............................................               549               519              414
Net income............................................................               554               579              596
Net income from operations(2).........................................               550               521              495
Earnings per Class A Subordinate Voting or Class B Share:
     Basic............................................................              5.83              6.55             7.02
     Diluted..........................................................              5.82              6.20             6.44
     Diluted earnings per share from operations(2)....................              5.77              5.56             5.32
Cash dividends paid per Class A Subordinate Voting or Class B Share...              1.36              1.36             1.24

FINANCIAL POSITION DATA
Working capital.......................................................             1,433             1,313            1,054
Total assets..........................................................            10,142             7,901            7,405
Net cash (debt):
  Cash and cash equivalents...........................................             1,227               890              620
  Bank indebtedness...................................................               272               308              338
  Long-term debt (including portion due within one year)..............               417               298              314
  Debentures' interest obligation.....................................               106               114              191
Net cash (debt).......................................................               432               170            (223)
Minority interest.....................................................               710               441              356
Shareholders' equity..................................................             5,421             4,482            4,200


(1)     Certain figures have been restated. Please refer to the notes to our
        consolidated financial statements as at and for the three years ended
        December 31, 2002 contained in our Annual Report to Shareholders for the
        Year Ended December 31, 2002.

(2)     We measure and present net income from operations and diluted earnings
        per share from operations because they are measures that are widely used
        by analysts and investors in evaluating our operating performance.
        However, net income from operations and diluted earnings per share from
        operations do not have any standardized meaning under Canadian generally
        accepted accounting principles and are therefore unlikely to be
        comparable to similar measures presented by other companies.

        Net income from operations and diluted earnings per share from
        operations are based on net income and diluted earnings per share as
        prepared in accordance with Canadian generally accepted accounting
        principles, with the following adjustments:



                                                                                  2002              2001             2000
                                                                               --------------------------------------------
                                                                                                        
        Net income as reported........................................         $     554         $     579       $      596
        Exclude: Other income (net of related taxes)..................               (4)              (46)            (101)
                 Future income tax recovery...........................                 -              (12)                -
                                                                               --------------------------------------------
        Net income from operations....................................               550               521              495
                                                                               --------------------------------------------
                                                                               --------------------------------------------
        Diluted earnings per share as reported........................         $    5.82         $    6.20      $      6.44
        Exclude: Other income (net of related taxes)..................            (0.05)            (0.51)           (1.12)
                 Future income tax recovery...........................                 -            (0.13)                -
                                                                               --------------------------------------------
        Diluted earnings per share from operations....................         $    5.77         $    5.56      $      5.32
                                                                               --------------------------------------------
                                                                               --------------------------------------------






                                       33



                   SUPPLEMENTARY QUARTERLY DATA (UNAUDITED)(1)
             (IN MILLIONS OF U.S. DOLLARS, EXCEPT PER SHARE FIGURES)




YEAR ENDED DECEMBER 31, 2002                            MARCH 31       JUNE 30    SEPTEMBER 30    DECEMBER 31         TOTAL
- ----------------------------                            --------       -------    ------------    -----------         -----
                                                                                                  
Sales...........................................        $  3,121      $  3,273        $  3,027      $   3,550      $ 12,971
Net Income                                                   153           159             132            110           554
Earnings per Class A Subordinate Voting or
  Class B Share:
     Basic......................................         $  1.73       $  1.64        $   1.41       $   1.10       $  5.83
     Diluted....................................            1.65          1.63            1.40           1.10          5.82




YEAR ENDED DECEMBER 31, 2001                            MARCH 31       JUNE 30    SEPTEMBER 30    DECEMBER 31         TOTAL
- ----------------------------                            --------       -------    ------------    -----------         -----
                                                                                                  
Sales...........................................        $  2,863      $  2,817        $  2,517       $  2,829      $ 11,026
Net Income                                                   144           213             104            118           579
Earnings per Class A Subordinate Voting or
  Class B Share:
     Basic......................................         $  1.68       $  2.56        $   1.04       $   1.31       $  6.55
     Diluted....................................            1.54          2.24            1.02           1.28          6.20


(1)      Certain figures have been restated. Please refer to the notes to our
         consolidated financial statements as at and for the three years ended
         December 31, 2002 contained in our Annual Report to Shareholders for
         the Year Ended December 31, 2002.

                                    DIVIDENDS

    Holders of our Class A Subordinate Voting Shares and Class B Shares are
entitled to a pro rated amount of any cash dividends declared by our Board of
Directors on these shares. The following table sets forth the dividends per
share we have paid on our Class A Subordinate Voting Shares and Class B Shares
in respect of the fiscal periods indicated:



FISCAL PERIOD                                 PAYMENT DATE                 RECORD DATE                   AMOUNT PER SHARE
- -------------                                 ------------                 -----------                   ----------------
                                                                                                
Calendar 2003 (to date)...................    June 16, 2003                May 31, 2003                       $0.34
                                              March 18, 2003               March 7, 2003                      $0.34
Calendar 2002.............................    December 16, 2002            November 29, 2002                  $0.34
                                              September 16, 2002           August 30, 2002                    $0.34
                                              June 14, 2002                May 31, 2002                       $0.34
                                              March 15, 2002               March 1, 2002                      $0.34
Calendar 2001.............................    December 14, 2001            November 30, 2001                  $0.34
                                              September 17, 2001           August 31, 2001                    $0.34
                                              June 15, 2001                May 31, 2001                       $0.34
                                              March 16, 2001               March 5, 2001                      $0.34
Calendar 2000.............................    December 15, 2000            November 30, 2000                  $0.34
                                              September 15, 2000           August 31, 2000                    $0.30
                                              June 15, 2000                May 31, 2000                       $0.30
                                              March 10, 2000               February 25, 2000                  $0.30


    We started paying cash dividends on our Class A Subordinate Voting Shares
and Class B Shares (or their predecessors) on a quarterly basis in 1967. We have
declared dividends in respect of each of the last 46 fiscal quarters, up to and
including the first quarter of calendar 2003. The payment of future dividends
and the amount thereof will be determined by our Board of Directors in
accordance with our Corporate Constitution (see "ITEM 8. CORPORATE CONSTITUTION
- -- DIVIDENDS; MINIMUM PROFIT PERFORMANCE" below), taking into account earnings,
cash flow, capital requirements, our financial condition and other relevant
factors.

    In fiscal 1994, we established a dividend reinvestment plan in which
registered shareholders have the option to purchase additional Class A
Subordinate Voting Shares through the investment of cash dividends paid on their
shares.



                                       34



ITEM 5.  MANAGEMENT'S DISCUSSION AND ANALYSIS

    Reference is made to the "Management's Discussion and Analysis of Results of
Operations and Financial Condition" contained on pages 37 to 51 of our Annual
Report to Shareholders for the Year Ended December 31, 2002, which is
incorporated by reference into this Annual Information Form.

ITEM 6.  MARKET FOR SECURITIES

    Our Class A Subordinate Voting Shares are listed and posted for trading on
The Toronto Stock Exchange (MG.A) and The New York Stock Exchange (MGA). Our
Class B Shares are listed and posted for trading on The Toronto Stock Exchange
(MG.B).

    The holders of our Class A Subordinate Voting Shares are entitled to one
vote per share. The holders of our Class B Shares are entitled to 500 votes per
share. Under present law and the attributes of our Class A Subordinate Voting
Shares and Class B Shares, neither a tender offer to holders of our Class B
Shares nor a private contract to purchase Class B Shares (regardless of the
price paid for these shares) would necessarily result in an offer to purchase
our Class A Subordinate Voting Shares.

    Our 8.65% Series A Preferred Securities due September 30, 2048 are listed
and posted for trading on The Toronto Stock Exchange (MG.PR.A) and our 8.875%
Series B Preferred Securities are listed and posted for trading on The New York
Stock Exchange (MGPRB).

ITEM 7.  DIRECTORS AND OFFICERS

                                    DIRECTORS

    As at May 8, 2003, our Board of Directors consists of the following members:



NAME AND MUNICIPALITY OF RESIDENCE         DIRECTOR SINCE                       PRINCIPAL OCCUPATION
- ----------------------------------         --------------                       --------------------

                                                                          
WILLIAM H. FIKE ........................   June 5, 1995                         Corporate Director
Ft. Myers, Florida

MANFRED GINGL ..........................   January 14, 2002                     Executive Vice-Chairman of the
Kettleby, Ontario                                                               Company and Vice-Chairman and
                                                                                Chief Executive Officer of
                                                                                Tesma International Inc. (Manufacturing)

MICHAEL D. HARRIS(2) ...................   January 8, 2003                      Consultant and Senior Business
Toronto, Ontario                                                                Advisor, Goodmans LLP
                                                                                (Barristers and Solicitors)

EDWARD C. LUMLEY (2)(3) ................   December 7, 1989                     Vice-Chairman, BMO Nesbitt Burns
South Lancaster, Ontario                                                        (Investment and Corporate Banking)

KARLHEINZ MUHR(1) ......................   March 8, 1999                        Chairman and Chief Executive
Greenwich, Connecticut                                                          Officer, Volaris Advisors (Risk
                                                                                and Asset Management)

GERHARD RANDA ..........................   July 19, 1995                        Chairman, Supervisory Board, Bank
Vienna, Austria                                                                 Austria Creditanstalt AG
                                                                                (Investment and Corporate Banking)

DONALD RESNICK (1)(4) ..................   February 25, 1982                    Corporate Director
Toronto, Ontario

ROYDEN R. RICHARDSON (1)(2)(4) .........   October 31, 1990                     President, RBQ Limited (Investments)
Schomberg, Ontario

BELINDA STRONACH .......................   December 8, 1988                     President and Chief
Aurora, Ontario                                                                 Executive Officer of the Company

FRANK STRONACH .........................   December 10, 1968                    Partner, Stronach & Co
Oberwaltersdorf, Austria                                                        (Consultant)




                                       35




NAME AND MUNICIPALITY OF RESIDENCE         DIRECTOR SINCE                       PRINCIPAL OCCUPATION
- ----------------------------------         --------------                       --------------------

                                                                          
FRANZ VRANITZKY ........................   June 11, 1997                        Corporate Director
Vienna, Austria

SIEGFRIED WOLF .........................   March 8, 1999                        Executive Vice-Chairman of the
Weikersdorf, Austria                                                            Company and Chairman of the
                                                                                Supervisory Board of Magna
                                                                                Steyr (Manufacturing)


    (1)  Member of the Audit Committee.
    (2)  Member of the Corporate Governance and Compensation Committee.
    (3)  Lead Director of the Board of Directors.
    (4)  Member of the Environmental Committee.

    All of our directors were elected to their present terms of office by our
shareholders at our Annual Meeting of Shareholders held on May 8, 2003. The term
of office for each director expires at the conclusion of the next annual meeting
of our shareholders. At present, no executive committee of the Board of
Directors has been constituted.

    All of the directors held the principal occupations identified above (or
another position with the same employer) for not less than five years with the
exception of Messrs. Fike, Harris, Richardson, Vranitzky and Muhr. Mr. Fike
served as our Vice-Chairman or in other senior capacities with us between
October 19, 1994 and January 1999, after which he worked as a consultant for us
until January 2000. Prior to that time, Mr. Fike was employed by Ford Motor
Company for over 28 years in various engineering, manufacturing and management
positions, including as a Ford corporate vice-president, President, Ford Europe
and President, Ford Brazil. Mr. Harris was the Premier of Ontario from June 1995
until March 2002 and has acted as a business consultant since that date and as a
Senior Business Advisor to Goodmans LLP since October 2002. Mr. Richardson has
served as President, RBQ Limited (Investments) since its formation in 1983. Mr.
Richardson also served as a director of Gateway Telecom Canada Inc. between
March 1999 and December 2000 and as chairman between November 1999 and September
2000. Prior to that, Mr. Richardson served as a consultant for Royal Bank
Investment Management Inc. since November 1, 1996, prior to which time he was
Vice-Chairman and Director, Richardson Greenshields of Canada Limited. Dr.
Vranitzky, in addition to serving in certain advisory capacities, has held the
principal occupation above since January 1997, prior to which time he served as
the Federal Chancellor of Austria for approximately 11 years. Mr. Muhr has held
the principal occupation above since June, 2000, prior to which he was Managing
Director, Private Banking at UBS AG commencing February 1, 1999. Prior to that
time, he was Chief Operating Officer for Latin America Corporate Finance at
Warburg Dillon Read (a division of UBS) for approximately three years. Before
joining Warburg Dillon Read, Mr. Muhr worked for Credit Suisse First Boston in
several capacities, including serving as the head of its European fixed income
trading and sales operations.

    Mr. W. G. Davis resigned as a Director and as Lead Director effective
December 23, 2002, after having served as Lead Director since August 1, 1996 and
as a member of the Board since June 6, 1985.

                                    OFFICERS

     As at May 8, 2003, our officers consisted of the following persons:




NAME AND MUNICIPALITY OF RESIDENCE                  PRINCIPAL OCCUPATION
- ----------------------------------                  --------------------

                                                 
FRANK STRONACH..................................    Chairman of the Board (since November 1971)
Oberwaltersdorf, Austria


BELINDA STRONACH................................    President (since February 2002) and Chief Executive Officer (since
Aurora, Ontario                                     February 2001)


MANFRED GINGL...................................    Executive Vice-Chairman (since May 2002)
Kettleby, Ontario


SIEGFRIED WOLF..................................    Executive Vice-Chairman (since May 2002)
Weikersdorf, Austria


WILLIAM BIGGAR..................................    Executive Vice-President (since November 2001)
Toronto, Ontario



                                       36




NAME AND MUNICIPALITY OF RESIDENCE                  PRINCIPAL OCCUPATION
- ----------------------------------                  --------------------

                                                 
DAVID CARROLL...................................    Executive Vice-President, Marketing and Corporate Planning (since
Toronto, Ontario                                    August 2001)

J. BRIAN COLBURN................................    Executive Vice-President, Special Projects (since May 1992)  and
Toronto, Ontario                                    Secretary (since January 1994)

WERNER CZERNOHORSKY.............................    Executive Vice-President (since May 2002)
Richmond Hill, Ontario

VINCENT J. GALIFI...............................    Executive Vice-President (since September 1996) and Chief Financial
Woodbridge, Ontario                                 Officer (since December 1997)

PETER KOOB......................................    Executive Vice-President, Corporate Development (since May 2002)
Hausen, Germany

MARC NEEB.......................................    Executive Vice-President, Global Human Resources (since January 2003)
Aurora, Ontario

JEFFREY O. PALMER ..............................    Executive Vice-President (since January 2001)
Burlington, Ontario

TOM SKUDUTIS....................................    Executive Vice-President, Operations (since May 2001)
King City, Ontario

CAMERON HASTINGS................................    Vice-President, Core Projects (since January 2002)
Pefferlaw, Ontario

RICHARD C. KING.................................    Vice-President, Finance (since March 2003)
Mississauga, Ontario

ROLAND B. NIMMO.................................    Vice-President, Internal Audit (since September 2002)
Aurora, Ontario

JOHN SIMONETTI..................................    Vice-President, Taxation (since December 1998)
Toronto, Ontario

KEITH STEIN.....................................    Vice-President, Corporate Affairs (since March 1999)
Toronto, Ontario

PATRICK W.D.  McCANN............................    Controller (since May 2002)
Newmarket, Ontario



    All of the officers have held the offices identified above or another office
or occupation with us for not less than five years with the exception of Messrs.
Biggar, Carroll, Czernohorsky, Gingl, Hastings, King, McCann, Neeb, Nimmo and
Palmer. Prior to joining us, Mr. Biggar served as the Executive Vice-President
and Chief Financial Officer of Cambridge Shopping Centres Limited from August
1999 to March 2001 and the Senior Vice-President, Investments of Barrick Gold
Corporation from April 1996 to January 1999. Prior to August 2001, Mr. Carroll
served as the Vice-President, Planning and Corporate Development of Tesma since
February 1996. Mr. Czernohorsky served as a consultant to us from 1993 until
October 1998 and served in various capacities prior to 1993. Mr. Gingl has
served as the President and Chief Executive Officer of Tesma since 1995 and also
held various positions with us between January 1981 and November 1992. Mr.
Hastings previously served as Assistant General Manager of Cosma's Maple
Stamping division since August 1990. Prior to joining us, Mr. King was a partner
with the accounting firm Deloitte & Touche LLP from June 2002 to March 2003,
prior to which he held various positions with Arthur Andersen LLP from May,
1989, including partner from September, 2000. Prior to joining us in April 1999,
Mr. McCann served in various capacities with Ernst & Young LLP from September
1993. Mr. Neeb has held various positions with us since November 1998, prior to
which time he was employed as the Chief Administrative Officer (City Manager)
for the Town of Aurora since July 1995. Prior to joining us, Mr. Nimmo was a
partner at the accounting firm Deloitte & Touche L.L.P. from June 2002 to August
2002, a partner with the accounting firm Arthur Andersen L.L.P. from November
2000 to May 2002 and, prior to November 2000, President of Nimmo Financial
Corporation, a consulting firm. Mr. Palmer was employed by us in January 2001,
prior to which



                                       37


he was a partner at the law firm of Davies, Ward & Beck LLP since 1985.

    The number and percentage of securities of each class of our voting
securities beneficially owned, directly or indirectly, or over which control or
direction was exercised by all of our directors and officers as a group (26
persons), was 4,250,003 (approximately 4.5%) of the Class A Subordinate Voting
Shares and 930,063 (approximately 84.8%) of the Class B Shares, as at May 8,
2003.

ITEM 8.  CORPORATE CONSTITUTION

    Our Corporate Constitution forms part of our charter documents. The
Corporate Constitution defines the rights of our employees and investors to
participate in our profits and growth and imposes discipline on our management.
The brief description of the principal features of our Corporate Constitution
which follows is subject to the detailed provisions of the Corporate
Constitution as contained in our charter documents. The description which
follows does not purport to be complete and is qualified in its entirety by
reference to the detailed provisions of the Corporate Constitution as contained
in our charter documents.

    BOARD OF DIRECTORS

    Our Corporate Constitution requires that a majority of the members of our
Board of Directors be individuals who are not also our officers, employees or
persons related to our officers or employees.

    EMPLOYEE EQUITY PARTICIPATION AND PROFIT SHARING PROGRAMS

    Our Corporate Constitution requires that 10% of our employee pre-tax profits
before profit sharing (as defined in the Corporate Constitution) for each
financial year be allocated in that financial year or the immediately following
financial year to:

    o    the employee equity participation and profit sharing programs and any
         other profit sharing programs we have established for our employees;
         and

    o     our defined benefit pension plan (for participating employees).

    Employees of Tesma, Decoma and Intier participate in parallel employee
equity participation and profit sharing programs and thus are not eligible to
participate in our corporate level program. Members of divisional, automotive
systems group and executive management do not participate in these employee
equity participation and profit sharing programs. Employees of MEC do not
participate in our corporate level employee equity participation and profit
sharing program or a parallel program.

    DIVIDENDS; MINIMUM PROFIT PERFORMANCE

    Our Corporate Constitution provides that unless otherwise approved by
ordinary resolution of the holders of each of our Class A Subordinate Voting
Shares and our Class B Shares, voting as separate classes, the holders of our
Class A Subordinate Voting Shares and Class B Shares will be entitled to receive
and we will pay, if, as and when declared by our Board of Directors out of funds
properly applicable to the payment of dividends, non-cumulative dividends in
respect of each financial year so that the aggregate of the dividends paid or
payable in respect of such year is:

    o    equal to at least 10% of our after-tax profits (as defined in the
         Corporate Constitution) after providing for dividends on preference
         shares, if any, for such year; and

    o    on average, equal to at least 20% of our after-tax profits (as defined
         in the Corporate Constitution) after providing for dividends on
         preference shares, if any, for such financial year and the two
         immediately preceding financial years.


    If at any time our after-tax profits (as defined in the Corporate
Constitution) are less than 4% of the average stated capital attributable to our
Class A Subordinate Voting Shares and Class B Shares at the beginning and at the
end of the financial year in question, for two consecutive financial years or we
fail to pay the required dividends described above for a period of two
consecutive financial years, the holders of our Class A Subordinate Voting
Shares will, until the 4% return is achieved in a succeeding financial year and
all required dividends, if any, are paid, have the exclusive right, voting
separately as a class, to nominate and elect two directors at the next meeting
of our shareholders at which directors are to be elected, such right to increase
the number of directors which may be elected to continue for each consecutive
two year period. If the 4% return is not achieved



                                       38


or a required dividend is not paid for any two consecutive financial years
following the initial two consecutive financial years, then holders of our Class
A Subordinate Voting Shares will, until the 4% return is achieved for one
financial year and all required dividends are paid, have the exclusive right,
voting separately as a class, to nominate and elect two additional directors at
the next meeting of shareholders at which directors are to be elected. Once the
right of holders of our Class A Subordinate Voting Shares to elect such
directors terminates, the directors who had been so elected will nonetheless
serve until their successors are duly elected at the next meeting of our
shareholders.

    AUTHORIZED SHARE CAPITAL

    Except as otherwise approved by the holders of at least a majority of each
of our Class A Subordinate Voting Shares and Class B Shares, voting as separate
classes, our Corporate Constitution prohibits:

    o    an increase in the maximum number of authorized shares of any class of
         our capital stock (other than our Class A Subordinate Voting Shares
         which may be issued in an unlimited amount); and

    o    the creation of any new class or series of capital stock having voting
         rights (other than on default in the payment of dividends) or having
         rights to participate in our profits (other than securities convertible
         into existing classes of shares or a class or series of shares having
         fixed dividends or dividends determined without regard to profits).

    UNRELATED INVESTMENTS

    Unless approved by the holders of at least a majority of each of our Class A
Subordinate Voting Shares and Class B Shares, voting as separate classes, our
Corporate Constitution prohibits us from making an investment (whether direct or
indirect, by means of loan, guarantee, or otherwise) in any "unrelated business"
where such an investment, together with the aggregate of all other investments
in unrelated businesses on the date in question, exceeds 20% of our "available
equity" at the end of the financial quarter immediately preceding the date of
investment. For purposes of our Corporate Constitution, the term "unrelated
business" means any business that:

    o    does not relate to the design, manufacture, distribution or sale of
         motor vehicles or motor vehicle parts, components, assemblies or
         accessories;

    o    does not utilize technology, manufacturing processes, equipment or
         skilled personnel in a manner similar to that utilized or under
         development by us; or

    o    does not involve the provision of products or services to our suppliers
         and customers, or the provision of products or services similar to
         those provided by our suppliers and customers from time to time.

    A business will be deemed to cease to be an unrelated business for purposes
of our Corporate Constitution if the net profits after tax of such business
exceed on average 5% of our aggregate investment in such business for two out of
any three consecutive years after the date of such investment. For purposes of
our Corporate Constitution, the term "available equity" is defined to mean our
total shareholders' equity, less the stated capital of any non-participating
preference shares.

    RESEARCH AND DEVELOPMENT

    Our Corporate Constitution requires a minimum of 7% of our pre-tax profits
(as defined in the Corporate Constitution) for any financial year to be
allocated to research and development during that financial year or the
immediately following financial year.

    SOCIAL OBJECTIVES

    Pursuant to our Corporate Constitution, a maximum of 2% of our pre-tax
profits (as defined in the Corporate Constitution) for any financial year may be
allocated to the promotion of "social objectives" during that financial year or
the immediately following financial year. For purposes of our Corporate
Constitution, the term "social objectives" means objectives which, in the sole
opinion of our executive management, are of a political, patriotic,
philanthropic, charitable, educational, scientific, artistic, social or other
useful nature to the communities in which we operate.



                                       39



    INCENTIVE BONUSES; MANAGEMENT BASE SALARIES

    Our Corporate Constitution provides that aggregate incentive bonuses (which
may be paid in cash or in our shares) paid or payable to "corporate management"
in respect of any financial year will not exceed 6% of our pre-tax profits
before profit sharing (as defined in the Corporate Constitution) for that
financial year and that base salaries payable to such management will be
comparable to those in industry generally. For purposes of our Corporate
Constitution, "corporate management" means our chief executive officer, chief
operating officer, chief marketing officer and chief administrative officer and
any other employee designated by these persons from time to time to be included
within "corporate management".

ITEM 9.  ADDITIONAL INFORMATION

    Additional information, including directors' and executive officers'
compensation and indebtedness, principal holders of our securities, shareholder
performance review graph, report on corporate governance, the report on
executive compensation by our corporate governance, human resource and
compensation committee, interests of insiders in material transactions and other
matters, where applicable, is contained in our Management Information
Circular/Proxy Statement dated April 2, 2003 for our most recent annual meeting
of shareholders. Additional financial information is provided in our
consolidated financial statements as at and for the three-year period ended
December 31, 2002.

    Any person may obtain copies of the following documents upon request from
our Secretary, c/o Magna International Inc., 337 Magna Drive, Aurora, Ontario,
L4G 7K1:

    (a) when our securities are in the course of a distribution pursuant to a
        short form prospectus or a preliminary short form prospectus has been
        filed in respect of a distribution of our securities,

         (i)  one copy of this Annual Information Form;

        (ii)  one copy of our Annual Report to Shareholders for the Year Ended
              December 31, 2002, which contains the following items:

              -   the "Management's Discussion and Analysis of Results of
                  Operations and Financial Condition", which is the only item
                  incorporated by reference into this Annual Information Form;
                  and

              -   our financial statements as at and for the three-year period
                  ended December 31, 2002;

       (iii)  one copy of any of our interim financial statements subsequent to
              the financial statements for our most recently completed financial
              year;

        (iv)  one copy of our Management Information Circular/Proxy Statement
              dated April 2, 2003; and

         (v)  one copy of any other documents that are incorporated by reference
              into the preliminary short form prospectus or the short form
              prospectus and are not provided under (i) to (iv) above; or

    (b) at any other time, one copy of any of the documents referred to in
        (a)(i) to (iv) above, provided that we may require payment of a
        reasonable charge for such copy if the request is made by a person who
        is not one of our security holders.



                                       40




                                   SCHEDULE A
                                  SUBSIDIARIES

The following is a list of our principal subsidiaries as at December 28, 2002
and their respective jurisdictions of incorporation. The current corporate names
of these subsidiaries are identified below. Parent/subsidiary relationships are
identified by indentations. The percentages of the votes attached to all voting
securities, and of each class of non-voting securities, owned by us or over
which control or direction is exercised by us is indicated. Subsidiaries not
shown individually each represent less than 10% of our total consolidated
revenues and total consolidated assets and, if considered in the aggregate as a
single subsidiary, represent less than 20% of our total consolidated revenues
and total consolidated assets.




                                                                                     VOTING SECURITIES    JURISDICTION OF
                                                                                                           INCORPORATION
                                                                                     ------------------------------------
                                                                                                  
Cosma America Holdings Inc.                                                                100%         Delaware

     Cosma International of America, Inc.                                                  100%         Michigan

         Vehma International of America, Inc.                                              100%         Delaware

             Magna Steyr of America, Inc.                                                  100%         Delaware

             Magna Reflex of America, Inc.                                                 100%         Delaware

                  Magna Mirror Systems Inc.                                                100%         Michigan

Magna Structural Systems Inc.                                                              100%         Ontario

Formex Automotive Industries S.A. de C.V.                                                  100%         Mexico

Magna Steyr Investments S.A.                                                               100%         Belgium

     Magna Steyr Metalforming AG                                                           100%         Austria

         Magna Steyr AG & Co. KG                                                           100%         Austria

                  Magna Steyr Powertrain AG                                                100%         Austria

                  Magna Steyr Fahrzeugtechnik AG & Co. KG                                  100%         Austria

Donnelly Corporation                                                                       100%         Michigan

     Information Products, Inc.                                                            100%         Michigan

     Donnelly Electronics, Inc.                                                            100%         Michigan

     Donnelly de Mexico S.A. de C.V.                                                       100%         Michigan

     Donnelly EuroGlas Systems SARL                                                        100%         France

     Donnelly Mirrors Limited                                                              100%         Ireland

     Donnelly Holding GmbH                                                                 100%         Germany

     Donnelly Hohe GmbH & Co. KG                                                          66.67%        Germany

Bestop, Inc.                                                                              60%(1)        Delaware

New Magna Investments S.A.                                                                 100%         Belgium

     Magna International Stanztechnik GmbH                                                 100%         Germany

     Magna Cartech spol, s.r.o.                                                            100%         Czech Rep.

     Magna Auteca AG                                                                       100%         Austria

     Magna Reflex Holding GmbH                                                             100%         Germany



                                       41




                                                                                     VOTING SECURITIES    JURISDICTION OF
                                                                                                           INCORPORATION
                                                                                     ------------------------------------
                                                                                                  
1305272 Ontario Inc.                                                                       100%         Ontario

     1276703 Ontario Inc.                                                                  100%         Ontario

     1346457 Ontario Inc.                                                                  100%         Ontario

     MI Developments Inc.                                                                  100%         Ontario

     MI Developments (America) Inc.                                                        100%         Delaware

     MI Developments Austria AG                                                            100%         Austria

     Magna Europa Liegenschaftsverwaltungs GmbH                                            100%         Austria

         Magna Eybl Liegenschaftsverwaltungs AG                                            100%         Austria


DECOMA INTERNATIONAL INC.                                                            41.3% Class A(2)   Ontario
                                                                                      100% Class B(2)

     Decoma International Corp.                                                            100%         Ontario

     Decoma U.S. Holdings Inc.                                                             100%         Delaware

         Decoma International of America, Inc.                                             100%         Delaware

             Lexamar Corporation                                                           100%         Delaware

             Decoma America Holdings Inc.                                                  100%         Delaware

             Norplas Industries Inc.                                                       100%         Delaware

             Conix Corporation                                                             100%         Delaware

                  Nascote Industries, Inc.                                                 100%         Delaware

             Autosystems America Inc.                                                      100%         Delaware

             Decoma Systems Integration Group Inc.                                         100%         Delaware

             Modular Automotive Systems L.L.C.                                              40%         Michigan

     Decoplas S.A. de C.V.                                                                 100%         Mexico

     Decoma Automotive Holding N.V.                                                        100%         Belgium

         Decoma Exterior Systems Holding (Germany) GmbH                                    100%         Germany

             Decoma Exterior Systems GmbH                                                  100%         Germany

             Decoma Germany GmbH                                                           100%         Germany

                  Decoma U.K. Limited                                                      100%         United Kingdom

                  Decoma Exterior Systems U.K. Limited                                     100%         United Kingdom

                  Decotrim Industries S.A.                                                 100%         Belgium

                  Belplas Industries N.V.                                                  100%         Belgium

             Decoma Decotech GmbH                                                          100%         Germany

             Decoma Exterior Systems (Poland) Sp. z.o.o.                                   100%         Poland



                                       42




                                                                                     VOTING SECURITIES    JURISDICTION OF
                                                                                                           INCORPORATION
                                                                                     ------------------------------------
                                                                                                  
TESMA INTERNATIONAL INC.                                                              NIL Class A(2)    Ontario
                                                                                      100% Class B(2)

     Litens Automotive Partnership                                                         76.8%        Ontario

         836112 Ontario Inc.                                                               100%         Ontario

             LATCO AG                                                                      100%         Switzerland

                  Atech Vertriebs GmbH                                                     100%         Germany

             Litens Automotive of America, Inc.                                            100%         Delaware

             Litens Automotive do Brasil Ltda.                                             100%         Brazil

             Litens Automotive (Korea) Inc.                                                100%         South Korea

             Litens Holdings (Bermuda) Limited                                             100%         Bermuda

                  Litens Holdings Verwaltungs GmbH                                         100%         Germany

                  Litens Holdings GmbH & Co. KG                                            100%         Germany

                           Litens Automotive GmbH                                          100%         Germany

                           Litens Automotive s.r.l.                                        100%         Italy

     857531 Ontario Inc.                                                                   100%         Ontario

     Tesma International (Barbados) Inc.                                                   100%         Barbados

     Tesma International of America, Inc.                                                  100%         Delaware

     Tesma Europa GmbH                                                                     100%         Germany

     Tesma Motoren-und Getriebstechnik Ges.m.b.H.                                          100%         Austria

     HAC Corporation                                                                       100%         South Korea

     Eralmetall Verwaltungs GmbH                                                           100%         Germany

     Eralmetall GmbH & Co. KG                                                              100%         Germany
     STT Technologies Inc.                                                                  75%         Ontario

INTIER AUTOMOTIVE INC.                                                                NIL Class A(2)    Ontario
                                                                                      100% Class B(2)

     Intier Automotive Closures Inc.                                                       100%         Ontario

     Intier Automotive of America Holdings, Inc.                                           100%         Delaware

         Intier Automotive Seating of America, Inc.                                        100%         Delaware

     Intier Automotive Interiors of America, Inc.                                          100%         Delaware

     Intier Investments S.A.                                                               100%         Belgium

         Intier Automotive Holding (Austria) GmbH                                          100%         Austria

                  Intier Automotive Eybl GmbH                                              100%         Austria

                           Intier Automotive Eybl GmbH (Ebergassing) & Co. OHG

         Intier (Germany) Holding GmbH                                                     100%         Germany

                  Intier Automotive (Eybl) Interiors GmbH                                  100%         Germany

                  Intier Automotive (Eybl) Germany GmbH                                    100%         Germany

                  Intier Automotive Naher GmbH                                             100%         Germany

                  Intier Automotive Seating (Germany) GmbH                                 100%         Germany

         Intier Automotive Holding (U.K.) Limited                                          100%         United Kingdom

                  Intier Automotive Interiors Limited                                      100%         United Kingdom

                  Intier Automotive Seating Limited                                        100%         United Kingdom





                                       43





                                                                                                  
     Intier Automotive Closures S.p.A.                                                      99%         Italy




                                       44




                                                                                     VOTING SECURITIES    JURISDICTION OF
                                                                                                           INCORPORATION
                                                                                     ------------------------------------
                                                                                                  
MAGNA ENTERTAINMENT CORP.                                                              9% Class A(2)    Delaware
                                                                                      100% Class B(2)

     The Santa Anita Companies, Inc.                                                       100%         Delaware

         Los Angeles Turf Club, Inc.                                                       100%         California

     Gulfstream Park Racing Association, Inc.                                              100%         Florida

     Pacific Racing Association                                                            100%         California

     MEC Land Holdings (California) Inc.                                                   100%         California

     Remington Park, Inc.                                                                  100%         Oklahoma

     Thistledown, Inc.                                                                     100%         Ohio

     MEC Holdings (USA) Inc.                                                               100%         Delaware

     Bay Meadows Operating Company LLC                                                     100%         Delaware

     Racetrack Holdings, Inc.                                                              100%         Delaware

         MEC Lone Star, L.P.                                                               100%         Delaware

     XpressBet, Inc.                                                                       100%         Delaware

     MEC Media Distribution Corp.                                                          100%         Delaware

         HorseRacing TV, Inc.                                                              100%         Delaware

     MEC Holdings (Canada) Inc.                                                            100%         Ontario

     Fontana Beteiligungs AG                                                               100%         Austria

     MEC Projecktentwicklungs AG                                                           100%         Austria

         MEC Grundstucksentwicklungs GmbH                                                  100%         Austria



(1) The remaining voting securities are owned by Decoma International Inc.
(2) "Class A" means Class A Subordinate Voting Shares and "Class B" means Class
    B Shares, except in the case of Magna Entertainment Corp., with respect to
    which "Class A" means Class A Subordinate Voting Stock and "Class B" means
    Class B Stock. Figures represent the total equity interest, which is not
    necessarily indicative of voting control.


                                       45

EX-3

                                                                       EXHIBIT 3




                         CONSENT OF INDEPENDENT AUDITORS




We consent to the use of our report dated February 24, 2003 on the consolidated
financial statements of Magna International Inc. as at December 31, 2002 and
2001, and for each of the years in the three year period ended December 31,
2002, in connection with the Annual Report (Form 40-F) of Magna International
Inc. for the year ended December 31, 2002.




Toronto, Canada
May 15, 2003                                               Chartered Accountants

EX-99.1

                                                                    Exhibit 99.1



                   CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         I, Belinda Stronach, the President and Chief Executive Officer of Magna
International Inc. (the "Company"), pursuant to 18 U.S.C. section 1350, hereby
certify that:

1.       the Annual Report on Form 40-F of the Company dated May 15, 2002 for
         the fiscal year ending December 31, 2002 as filed with the Securities
         Exchange Commission on the date hereof (the "Report") fully complies
         with the requirements of section 13(a) of the Securities Exchange Act
         of 1934; and

2.       the information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Company.


         Dated: May 15, 2003.



                                /s/ BELINDA STRONACH
                                --------------------------------------
                                Belinda Stronach
                                President and Chief Executive Officer




A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.

EX-99.2

                                                                    Exhibit 99.2



                   CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         I, Vincent J. Galifi, the Executive Vice-President and Chief
Financial Officer of Magna International Inc. (the "Company"), pursuant to 18
U.S.C. section 1350, hereby certify that:

1.       the Annual Report on Form 40-F of the Company dated May 15, 2002 for
         the fiscal year ending December 31, 2002 as filed with the Securities
         Exchange Commission on the date hereof (the "Report") fully complies
         with the requirements of section 13(a) of the Securities Exchange Act
         of 1934; and

2.       the information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Company.


         Dated: May 15, 2003.



                                           /s/ VINCENT J. GALIFI
                                           -------------------------------------
                                           Vincent J. Galifi
                                           Executive Vice-President and
                                           Chief Financial Officer




A signed original of this written statement required by Section 906 has been
provided the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.