Income Tax Related Disclosure

6 Months Ended

Jun. 30, 2011

12.

For the quarter ended June 30, 2011, the Company recorded an income tax expense for continuing operations of $1,621 compared to $1,247 for the comparable period in 2010. The provision includes a tax benefit for discrete items of $1,233 relating primarily to the favorable impact on deferred tax assets from a non-U.S. tax rate adjustment of $795 and other deferred tax asset adjustments and valuation allowance impacts of $438. For the six-month period ended June 30, 2011, the Company recorded income tax expense for continuing operations of $12,080 as compared to $8,990 for the comparable period in 2010. The provision includes a tax expense for discrete items of $1,434 relating primarily to increased deferred taxes resulting from consolidation of the increased investment in Mexico ($1,691) and other deferred tax asset adjustments and valuation allowance impacts of $257.

The effective tax rate for the three month and six month periods ended June 30, 2011, for continuing operations is 17.8 percent and 23.7 percent, respectively, exclusive of discrete items, using the applicable effective tax rate determined using forecasted multi-jurisdictional annual effective tax rates. For comparable periods in 2010, the effective tax rate for continuing operations, exclusive of discrete items, was 24.0 percent and 21.4 percent, respectively.

The $374 increase in tax expense for the quarter relates primarily to the impact from decreased earnings at the U.S. statutory rate of $(3,575); the impact from changes to the U.S. valuation allowances of $1,414; differences in the effective tax rates of international operations and the impact of the changes in the mix of earnings or loss by jurisdiction of $(1,291); and changes in discrete items of $3,826.

The $3,090 increase in tax expense for the six-month period relates primarily to the impact from decreased earnings at the U.S. statutory rate of $(2,434); the impact from changes to the U.S. valuation allowances of $1,631; differences in the effective tax rates of international operations and the impact of the changes in the mix of earnings or loss by jurisdiction of $302; and changes in discrete items of $3,591.

The Company maintains a valuation allowance on its net U.S. deferred tax asset position. A valuation allowance is required pursuant to ASC 740, “Accounting for Income Taxes,” when, based upon an assessment which is largely dependent upon objectively verifiable evidence including recent operating loss history, expected reversal of existing deferred tax liabilities and tax loss carry back capacity, it is more likely than not that some portion of the deferred tax assets will not be realized. The valuation allowance will be maintained as long as it is more likely than not that some portion of the deferred tax asset may not be realized. Deferred tax assets and liabilities are determined separately for each taxing jurisdiction in which the Company conducts its operations or otherwise generates taxable income or losses. In the U.S., the Company has recorded significant deferred tax assets, the largest of which relate to products liability, pension and other postretirement benefit obligations. These deferred tax assets are partially offset by deferred tax liabilities, the most significant of which relates to accelerated depreciation. Based upon this assessment, the Company maintains a $170,589 valuation allowance for the portion of U.S. deferred tax assets exceeding its U.S. deferred tax liabilities. In addition, the Company has recorded valuation allowances of $7,013 for deferred tax assets associated with the portion of non-U.S. deferred tax assets exceeding the non-U.S. deferred tax liabilities for a total valuation allowance of $177,602.

In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company reassesses the possibility of releasing the valuation allowance currently in place on its U.S. deferred tax assets. Based upon this assessment, the release of a significant portion the valuation allowance will likely occur during 2011. The required accounting for the release will involve significant tax amounts and it will impact earnings in the quarter in which it is deemed appropriate to release the reserve.

The Company maintains an ASC 740-10, “Accounting for Uncertainty in Income Taxes” liability for unrecognized tax benefits for permanent and temporary book/tax differences for continuing operations. At June 30, 2011, the Company’s liability, exclusive of interest, totals $9,123. The Company accrued $20 and $35 of interest expense for the three and six-month periods ending June 30, 2011 which has been recorded as a discrete item in its tax provision.

At June 30, 2011, the Company has a receivable for $25,078 of cash tax refunds, including interest. It is anticipated that the Company will collect or apply $11,028 of these receivables in 2011 with the balance to be collected upon the completion of the IRS audit currently in process.

In 2003 the Company initiated bilateral Advance Pricing Agreement (“APA”) negotiations with the Canadian and U.S. governments to change its intercompany transfer pricing process between a formerly owned subsidiary, Cooper-Standard Automotive, Inc., (“CSA”) and its Canadian affiliate. The governments settled the APA in 2009 and on August 3, 2009, Cooper-Standard Holdings Inc. filed a Bankruptcy petition. On August 19, 2009, the Company filed an action in the United States Bankruptcy Court, District of Delaware, in response to the tax refunds owed to the Company pursuant to the September 16, 2004 sale agreement of CSA for pre-disposition periods ending December 23, 2004. On March 17, 2010, the Company entered into a settlement agreement to resolve the subject proceedings, which became non- appealable on April 29, 2010. Pursuant to the settlement agreement, CSA paid the Company approximately $17,639, in addition to the resolution of other contingent liabilities between the parties. Based upon the settlement, the Company released liabilities recorded on its books relating to the disposition of CSA in the amount of $7,400 through Discontinued Operations, net of the tax impact, in the quarter ended June 30, 2010.

The Company and its subsidiaries are subject to income taxes in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and foreign tax examinations by tax authorities for years prior to 2005.