10-Q 1 acw13-310q3.htm FORM 10-Q acw13-310q3.htm




UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

FORM 10-Q

(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2013.

OR
 
[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from __________ to ___________.

Commission file number 001-32483




ACCURIDE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
61-1109077
(State or Other Jurisdiction of
(I.R.S. Employer Identification No.)
Incorporation or Organization)
 
   
7140 Office Circle, Evansville, IN
47715
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s Telephone Number, Including Area Code: (812) 962-5000

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o
 
         Accelerated Filer ý
 
Non-Accelerated Filero
 
Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ý No o

As of November 7, 2013, 47,515,155 shares of Accuride Corporation common stock, par value $.01 per share, were outstanding.
 
 
 


 
ACCURIDE CORPORATION






 
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Table of Contents
 

Item 1.  Condensed Consolidated Financial Statements (Unaudited)

ACCURIDE CORPORATION AND SUBSIDIARIES

             
   
September 30,
   
December 31,
 
(In thousands, except for share and per share data)
 
2013
   
2012
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 27,993     $ 26,751  
Customer receivables, net of allowance for doubtful accounts of $287 and $549 in 2013 and 2012, respectively
    60,432       56,888  
Other receivables
    11,129       7,708  
Inventories
    48,823       61,192  
Deferred income taxes
    4,592       4,591  
Prepaid expenses and other current assets
    11,323       5,584  
Assets held for sale
    1,293        
Total current assets
    165,585       162,714  
PROPERTY, PLANT AND EQUIPMENT, net
    221,618       267,377  
OTHER ASSETS:
               
Goodwill
    100,697       100,697  
Other intangible assets, net
    127,463       134,180  
Deferred financing costs, net of accumulated amortization of $3,292 and $4,127 in 2013 and 2012, respectively
    6,798       6,741  
Deferred income tax
    4,543       5,052  
Other
    1,317       1,055  
TOTAL
  $ 628,021     $ 677,816  
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
               
Accounts payable
  $ 51,206     $ 59,181  
Accrued payroll and compensation
    8,834       10,726  
Accrued interest payable
    5,218       12,543  
Accrued workers compensation
    3,860       5,868  
Accrued and other liabilities
    18,040       18,443  
Total current liabilities
    87,158       106,761  
LONG-TERM DEBT
    339,921       324,133  
DEFERRED INCOME TAXES
    19,299       19,021  
NON-CURRENT INCOME TAXES PAYABLE
    8,211       8,211  
OTHER POSTRETIREMENT BENEFIT PLAN LIABILITY
    83,422       82,689  
PENSION BENEFIT PLAN LIABILITY
    47,666       56,438  
OTHER LIABILITIES
    13,473       15,690  
COMMITMENTS AND CONTINGENCIES (Note 7)
           
STOCKHOLDERS’ EQUITY:
               
Preferred Stock, $0.01 par value; 10,000,000 shares authorized
           
Common Stock, $0.01 par value; 80,000,000 shares authorized, 47,515,155 and 47,385,314 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively, and additional paid-in-capital
    440,018       438,277  
Accumulated other comprehensive loss
    (49,653 )     (51,834 )
Accumulated deficiency
    (361,494 )     (321,570 )
Total stockholders’ equity
    28,871       64,873  
TOTAL
  $ 628,021     $ 677,816  
 
See notes to unaudited condensed consolidated financial statements.
 
 
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Table of Contents
 
ACCURIDE CORPORATION AND SUBSIDIARIES


   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
(In thousands except per share data)
 
2013
   
2012
   
2013
   
2012
 
                         
NET SALES
  $ 155,264     $ 187,255     $ 498,192     $ 646,059  
COST OF GOODS SOLD
    144,994       181,259       462,938       592,316  
GROSS PROFIT
    10,270       5,996       35,254       53,743  
OPERATING EXPENSES:
                               
Selling, general and administrative
    10,995       13,809       34,817       43,957  
INCOME (LOSS) FROM OPERATIONS
    (725 )     (7,813 )     437       9,786  
OTHER INCOME (EXPENSE):
                               
Interest expense, net
    (8,711 )     (8,921 )     (26,562 )     (26,324 )
Other income, net
    546       815       250       536  
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS
    (8,890 )     (15,919 )     (25,875 )     (16,002 )
INCOME TAX PROVISION (BENEFIT)
    (495 )     (106 )     2,378       2,830  
LOSS FROM CONTINUING OPERATIONS
    (8,395 )     (15,813 )     (28,253 )     (18,832 )
DISCONTINUED OPERATIONS, NET OF TAX
    (10,220 )     (1,866 )     (11,671 )     (2,637 )
NET LOSS
  $ (18,615 )   $ (17,679 )   $ (39,924 )   $ (21,469 )
Weighted average common shares outstanding—basic
    47,588       47,408       47,535       47,368  
Basic loss per share – continuing operations
  $ (0.18 )   $ (0.33 )   $ (0.59 )   $ (0.40 )
Basic loss per share – discontinued operations
    (0.21 )     (0.04 )     (0.25 )     (0.05 )
Basic loss per share
  $ (0.39 )   $ (0.37 )   $ (0.84 )   $ (0.45 )
Weighted average common shares outstanding—diluted
    47,588       47,408       47,535       47,368  
Diluted loss per share – continuing operations
  $ (0.18 )   $ (0.33 )   $ (0.59 )   $ (0.40 )
Diluted loss per share – discontinued operations
    (0.21 )     (0.04 )     (0.25 )     (0.05 )
Diluted loss per share
  $ (0.39 )   $ (0.37 )   $ (0.84 )   $ (0.45 )
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
                               
Defined Benefit Plans
    1,433       (317 )     2,181       (356 )
COMPREHENSIVE LOSS
  $ (17,182 )   $ (17,996 )   $ (37,743 )   $ (21,825 )

See notes to unaudited condensed consolidated financial statements.

 
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Table of Contents
 
ACCURIDE CORPORATION AND SUBSIDIARIES

(In thousands)
 
Common
Stock and
Additional
Paid-in-
Capital
   
Accumulated
Other
Comprehensive
Loss
   
Accumulated
Deficiency
   
Total
Stockholders’
Equity
 
BALANCE—July 1, 2012
  $ 436,873     $ (34,461 )   $ (147,353 )   $ 255,059  
Net loss
                (17,679 )     (17,679 )
Share-based compensation expense
    665                   665  
Other comprehensive loss
          (317 )           (317 )
BALANCE—September 30, 2012
  $ 437,538     $ (34,778 )   $ (165,032 )   $ 237,728  
                                 
BALANCE—July 1, 2013
    439,421       (51,086 )     (342,879 )     45,456  
Net loss
                (18,615 )     (18,615 )
Share-based compensation expense
    597                   597  
Other comprehensive loss
          1,433             1,433  
BALANCE—September 30, 2013
  $ 440,018     $ (49,653 )   $ (361,494 )   $ 28,871  


(In thousands)
 
Common
Stock and
Additional
Paid-in-
Capital
   
Accumulated
Other
Comprehensive
Loss
   
Accumulated
Deficiency
   
Total
Stockholders’
Equity
 
BALANCE—January 1, 2012
  $ 435,368     $ (34,422 )   $ (143,563 )   $ 257,383  
Net loss
                (21,469 )     (21,469 )
Share-based compensation expense
    2,380                   2,380  
Tax impact of forfeited vested shares
    (210 )                 (210 )
Other comprehensive loss
          (356 )           (356 )
BALANCE—September 30, 2012
  $ 437,538     $ (34,778 )   $ (165,032 )   $ 237,728  
                                 
BALANCE—January 1, 2013
    438,277       (51,834 )     (321,570 )     64,873  
Net loss
                (39,924 )     (39,924 )
Share-based compensation expense
    1,950                   1,950  
Tax impact of forfeited vested shares
    (209 )                 (209 )
Other comprehensive loss
          2,181             2,181  
BALANCE—September 30, 2013
  $ 440,018     $ (49,653 )   $ (361,494 )   $ 28,871  


 
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Table of Contents

ACCURIDE CORPORATION AND SUBSIDIARIES

       
   
Nine Months Ended September 30,
 
(In thousands)
 
2013
   
2012
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (39,924 )   $ (21,469 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
               
Depreciation of property, plant and equipment
    26,822       30,313  
Amortization – deferred financing costs
    2,064       2,069  
Amortization – other intangible assets
    6,717       8,152  
Loss related to discontinued operations
    11,985        
Gain related to discontinued operations
    (2,000 )      
Loss on disposal of assets
    677       378  
Provision for deferred income taxes
    278       1,111  
Non-cash stock-based compensation
    1,950       2,380  
Changes in certain assets and liabilities:
               
Receivables
    (17,443 )     8,548  
Inventories
    1,677       2,445  
Prepaid expenses and other assets
    (4,023 )     (1,675 )
Accounts payable
    10,712       (13,013 )
Accrued and other liabilities
    (24,603 )     (12,662 )
Net cash provided by (used in) operating activities
    (25,111 )     6,577  
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property, plant and equipment
    (32,258 )     (44,223 )
Proceeds from sale of discontinued operations
    30,000       1,000  
Proceeds from sale leaseback transactions
    14,944        
Net cash provided by (used in) investing activities
    12,686       (43,223 )
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Increase in revolving credit advance
    25,000        
Payment on revolving credit agreement
    (10,000 )      
Payments related to refinancing
    (1,333 )      
Net cash provided by financing activities
    13,667        
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    1,242       (36,646 )
CASH AND CASH EQUIVALENTS—Beginning of period
    26,751       56,915  
CASH AND CASH EQUIVALENTS—End of period
  $ 27,993     $ 20,269  
                 
Supplemental cash flow information:
               
Cash paid for interest
  $ 31,497     $ 31,127  
Cash paid for income taxes (net of refunds of $32 and $1,093 in 2013 and 2012, respectively)
    2,000       451  
Non-cash transactions:
               
Purchases of property, plant and equipment in accounts payable
  $ 3,059     $ 4,463  
Capital lease agreements
          14,964  

See notes to unaudited condensed consolidated financial statements.

 
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Table of Contents

ACCURIDE CORPORATION
(AMOUNTS IN THOUSANDS, UNLESS OTHERWISE NOTED, EXCEPT SHARE AND PER SHARE DATA)

Note 1 - Summary of Presentation and Summary of Significant Accounting Policies

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except that the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  However, in the opinion of Accuride Corporation (“Accuride” or the “Company”), all adjustments (consisting primarily of normal recurring accruals) considered necessary to present fairly the condensed consolidated financial statements have been included.  Certain operating results from prior periods have been reclassified to discontinued operations to conform to the current year presentation.

The results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013.  The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto disclosed in Accuride’s Annual Report on Form 10-K for the year ended December 31, 2012.

On August 1, 2013, the company announced the sale of substantially all of the assets, liabilities and business of its Imperial Group business to Wynnchurch Capital, Ltd. in partnership with Imperial Manufacturing, Inc. for $30.0 million, plus a contingent earn-out opportunity of up to $2.25 million.  The sale was effective as of 11:59 p.m. on July 31, 2013.  The sale resulted in the recognition of a 12.0 million loss, including a $2.5 million impairment charge, on our consolidated statement of operations for the nine months ended September 30, 2013, which has been reclassified as Discontinued Operations.  The sale included a working capital adjustment, plus a contingent payment of up to $2.25 million depending on Imperial’s financial performance during calendar years 2013-2015.  See Note 2 “Discontinued Operations” for further discussion.

Management’s Estimates and Assumptions – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Earnings Per Common Share – Basic and diluted earnings per common share were computed as follows:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
(In thousands except per share data)
 
2013
 
2012
 
2013
 
2012
 
                   
Numerator:
                 
     Net loss from continuing operations
 
$
(8,395
)
$
(15,919
)
$
(28,253
)
$
(18,832
)
     Net loss from discontinued operations
 
$
(10,220
)
$
(1,866
)
$
(11,671
)
$
(2,637
)
     Net loss
 
$
(18,615
)
$
(17,679
)
$
(39,924
)
$
(21,469
)
Denominator:
                 
     Weighted average shares outstanding – Basic
 
47,588
 
47,408
 
47,535
 
47,368
 
     Weighted average shares outstanding - Diluted
 
47,588
 
47,408
 
47,535
 
47,368
 
                   
Basic loss per common share:
                         
     From continuing operations
 
$
(0.18
)
$
(0.33
)
$
(0.59
)
$
(0.40
)
     From discontinued operations
   
(0.21
)
 
(0.04
)
 
(0.25
)
 
(0.05
)
     Basic loss per common share
 
$
(0.39
)
$
(0.37
)
$
(0.84
)
$
(0.45
)
                           
Diluted loss per common share
                         
     From continuing operations
 
$
(0.18
)
$
(0.33
)
$
(0.59
)
$
(0.40
)
     From discontinued operations
   
(0.21
)
 
(0.04
)
 
(0.25
)
 
(0.05
)
     Basic loss per common share
 
$
(0.39
)
$
(0.37
)
$
(0.84
)
$
(0.45
)
 
 
 
 
As of September 30, 2013, there were options exercisable for 167,334 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.  As of September 30, 2012, there were options exercisable for 195,475 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.

Stock-Based Compensation – Compensation expense for share-based compensation programs recognized as a component of operating expenses was $1,950 and $2,380 for the nine months ended September 30, 2013 and September 30, 2012, respectively.  Compensation expense for share based compensation programs recognized as a component of operating expenses was $597 and $665 for the three months ended September 30, 2013 and September 30, 2012, respectively.
 
As of September 30, 2013, there was approximately $2.6 million of unrecognized pre-tax compensation expense related to share-based awards not yet vested that will be recognized over a weighted-average period of 1.2 years.
 
Income Tax – Under ASC 270, Interim Financial Reporting, we compute on a quarterly basis an estimated annual effective tax rate considering ordinary income and related income tax expense. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual, or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs. Other items included in income tax expense in the periods in which they occur include the cumulative effect of changes in tax laws or rates, foreign exchange gains and losses, adjustments to uncertain tax positions, and adjustments to our valuation allowance due to changes in judgment in the realizability of deferred tax assets in future years.
 
Our effective tax rate is 5.6% and 0.1% for the three months ended September 30, 2013 and September 30, 2012, respectively.  Our effective tax rate is (9.2)% and (17.7)% for the nine months ended September 30, 2013 and September 30, 2012, respectively
   
We have assessed the need to maintain a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Due to our recent history of U.S. operating and taxable losses, the inconsistency of these profits, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.
 
New Accounting Pronouncements

In February 2013, FASB issued ASU 2013-4, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.  The objective of the amendments in this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for those obligations addressed within existing guidance in U.S. GAAP.  The amendment requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and an additional amount the reporting entity expects to pay on behalf of its co-obligors.  The entity is required to disclose the nature and amount of the obligation as well as other information about those obligations.  The update is effective for fiscal years and interim periods within those years beginning after December 15, 2013.  We are currently evaluating the impact of adopting ASU 2013-04 on the consolidated financial statements.

On July 18, 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, Income Taxes (Topic 740):Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.  Topic 740, does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists.  The objective of the amendments in this update is to eliminate that diversity in practice.  The update is effective for fiscal years and interim periods within those years beginning after December 15, 2013.  We are currently evaluating the impact of adopting ASU 2013-11 on the consolidated financial statements.

 
 
Recent Accounting Adoptions

In December 2011, FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This update will enhance disclosures required by U.S. GAAP by requiring improved information about financial instruments and derivative instruments. The requirements of this update are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Entities should provide the disclosures required retrospectively for all comparative periods presented. The Company adopted ASU 2011-11 as of January 1, 2013.  The adoption did not have a material impact on our consolidated financial statements.
 
In July 2012, FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment.  The objective of the amendments in this update is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories.  The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test.  The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company adopted ASU 2012-02 as of January 1, 2013.  The adoption did not have a material impact on our consolidated financial statements.

In January 2013, FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”). ASU 2013-01 contains no amendments to disclosure requirements. The amendments clarify that the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, which introduced new disclosure requirements, applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013 and interim periods within those annual periods. Adoption of this new guidance did not have a material impact on the Company’s financial statements as these updates have an impact on presentation only.

In February 2013, FASB issued ASU 2013-02, Comprehensive Income.  The objective of the amendments in this update is to improve the reporting of reclassifications out of accumulated other comprehensive income.  The amendment requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income.  For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts.  The amendments are effective prospectively for reporting periods beginning after December 15, 2012.  The Company adopted ASU 2013-02 on January 1, 2013.  The adoption did not have a material impact on our consolidated financial statements.


Note 2 – Discontinued Operations

On August 1, 2013, the Company announced that it completed the sale of substantially all of the assets of its Imperial Group business to Imperial Group Manufacturing, Inc., a new company formed and capitalized by Wynnchurch Capital for total cash consideration of $30.0 million at closing, plus a contingent earn-out opportunity of up to $2.25 million.  The sale was effective as of 11:59 p.m. on July 31, 2013.

Pursuant to the provisions of the purchase agreement, subject to certain limited exceptions, the purchaser purchased from Imperial all equipment, inventories, accounts receivable, deposits, prepaid expenses, intellectual property, contracts, real property interests, transferable permits and other intangibles related to the business and assumed Imperial’s trade and vendor accounts payable and performance obligations under those contracts included in the purchased assets.  The real property interests acquired by the purchaser include ownership of three plants located in Decatur, Texas, Dublin, Virginia and Chehalis, Washington and a leasehold interest in a plant located in Denton, Texas.  Imperial retained ownership of its real property located in Portland, Tennessee and included a $2.5 million impairment charge for this property in the loss.   The Company leased such property to the purchaser under a two-year lease, with the option to renew the lease for one additional year.  Rent under the lease is fixed at $75,000 per year.


 
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Table of Contents


The Company has reclassified certain operating results and the loss on sale transactions for Imperial Group L.P.  to discontinued operations.  The Company also recognized $2.0 million in earnout in connection with the sale of its Fabco operating unit in September, 2011, and an expense of $0.1 million in connection with the Brillion Farm business sold in November, 2010.  The following table presents sales and income from operations attributable to discontinued operations.


             
   
Three Months Ended September 30,
   
Three Months Ended September 30,
 
(In thousands)
 
2013
   
2012
 
             
Net sales
  $ 10,115     $ 27,956  
                 
Income from operations
    (235 )     (1,866 )
Other Income
    2,000        
Income tax
           
Loss on sale
    (11,985 )      
Discontinued operations
  $ (10,220 )   $ (1,866 )
                 
                 
   
Nine Months Ended September 30,
   
Nine Months Ended September 30,
 
(In thousands)
    2013       2012  
                 
Net sales
  $ 70,965     $ 107,453  
                 
Income from operations
    (1,686 )     (2,637 )
Other Income
    2,000       —   
Income tax
           
Loss on sale
    (11,985 )      
Discontinued operations
  $ (11,671 )   $ (2,637 )

The loss related to the sale of Imperial as of July 31, 2013 was as follows:
 
   
(In thousands)    
Proceeds from sale
$
30,000
 
     
Accounts receivable
 
12,478
 
Inventories
10,692
 
Prepaid expenses and other current assets
63
 
Property, plant, and equipment
21,868
 
Accounts payable
(8,672
)
Net assets sold
 
36,429
 
Impairment of real estate
 
2,540
 
Other accrued fees and expenses
 
3,016
 
       
Net loss from sale
$
(11,985
)

Note 3 - Inventories
 
Inventories at September 30, 2013 and December 31, 2012, on a FIFO basis, were as follows:

(In thousands)
 
September 30, 2013
   
December 31, 2012
 
Raw materials
  $ 9,536     $ 15,731  
Work in process
    13,557       13,168  
Finished manufactured goods
    25,730       32,293  
Total inventories
  $ 48,823     $ 61,192  
 
 
 
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Note 4 - Goodwill and Other Intangible Assets

The following represents the carrying amount of goodwill, on a reportable segment basis, as of December 31, 2012 and September 30, 2013:

(In thousands)
 
Wheels
   
Brillion Iron Works
   
Total
 
Balance as of December 31, 2012
  $ 96,283     $ 4,414     $ 100,697  
Balance as of September 30, 2013
  $ 96,283     $ 4,414     $ 100,697  


The changes in the carrying amount of other intangible assets for the period December 31, 2011 to September 30, 2012, by reportable segment, are as follows:

(In thousands)
 
Wheels
   
Gunite
   
Brillion Iron Works
   
Corporate
   
Total
 
Balance as of December 31, 2011
  $ 138,575     $ 38,968     $ 2,997     $ 809     $ 181,349  
Additions
                      529       529  
Amortization
    (5,930 )     (1,650 )     (123 )     (449 )     (8,152 )
Balance as of September 30, 2012
  $ 132,645     $ 37,318     $ 2,874     $ 889     $ 173,726  

The changes in the carrying amount of other intangible assets for the period December 31, 2012 to September 30, 2013, by reportable segment, are as follows:

(In thousands)
 
Wheels
   
Brillion Iron Works
   
Corporate
   
Total
 
Balance as of December 31, 2012
  $ 130,668     $ 2,833     $ 679     $ 134,180  
Amortization
    (5,929 )     (125 )     (663 )     (6,717 )
Balance as of September 30, 2013
  $ 124,739     $ 2,708     $ 16     $ 127,463  
 
 
The summary of goodwill and other intangible assets is as follows:

                   
(In thousands)
       
As of September 30, 2013
   
As of December 31, 2012
 
   
Weighted Average Useful Lives
   
Gross Amount
   
Accumulated Amortization
   
Carrying Amount
   
Gross Amount
   
Accumulated Amortization
   
Carrying Amount
 
Goodwill
        $ 100,697     $     $ 100,697     $ 100,697     $     $ 100,697  
Other intangible assets:
                                                       
Non-compete agreements
    1.7     $ 1,552     $ 1,536     $ 16     $ 1,552     $ 873     $ 679  
Trade names
          25,200             25,200       25,200             25,200  
Technology
    10.0       38,849       19,762       19,087       38,849       17,547       21,302  
Customer relationships
    19.9       129,093       45,933       83,160       129,093       42,094       86,999  
Other intangible assets:
          $ 194,694     $ 67,231     $ 127,463     $ 194,694     $ 60,514     $ 134,180  

We estimate that our amortization expense for our other intangible assets for 2013 through 2017 will be approximately $8.7 million for 2013 and $8.1 million annually for 2014 through 2017.


Note 5 – Assets Held for Sale

At September 30, 2013, assets totaling $1.3 million were classified as held for sale.  The assets consisted of a building and land related to the Elkhart, IN facility that was exited in 2012.


 
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Table of Contents


Note 6 - Pension and Other Postretirement Benefit Plans

Components of net periodic benefit cost for the three and nine months ended September 30:

   
For The Three Months
Ended September 30,
   
For The Nine Months
Ended September 30,
 
   
Pension Benefits
   
Other Benefits
   
Pension Benefits
   
Other Benefits
 
(In thousands)
 
2013
   
2012
   
2013
   
2012
   
2013
   
2012
   
2013
   
2012
 
Service cost-benefits earned during the period
  $ 301     $ 468     $ 127     $ 128     $ 868     $ 1,496     $ 408     $ 356  
Interest cost on projected benefit obligation
    2,601       2,839       855       1,036       7,808       8,476       2,628       2,981  
Expected return on plan assets
    (2,959 )     (2,995 )                   (8,883 )     (8,940 )                
Amortization of net transition (asset) obligation
                                               
Amortization of prior service (credit) cost
    11       11                   33       33              
Amortization of (gain)/loss
    663       258       33       (8 )     1,975       794       83       (24 )
Total benefits cost charged to income
  $ 617     $ 581     $ 1,015     $ 1,156     $ 1,801     $ 1,859     $ 3,119     $ 3,313  

As of September 30, 2013, $8.0 million has been contributed to our sponsored pension plans.  We presently anticipate contributing an additional $2.1 million to fund our pension plans during 2013 for a total of $10.1 million.

Note 7 – Commitments and Contingencies

We are from time to time involved in various legal proceedings of a character normally incidental to our business. We do not believe that the outcome of these proceedings will have a material effect on our consolidated financial condition or results of our operations and cash flows.

In addition to environmental laws that regulate our ongoing operations, we are also subject to environmental remediation liability. Under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and analogous state laws, we may be liable as a result of the release or threatened release of hazardous materials into the environment regardless of when the release occurred. We are currently involved in several matters relating to the investigation and/or remediation of locations where we have arranged for the disposal of foundry wastes. Such matters include situations in which we have been named or are believed to be potentially responsible parties in connection with the contamination of these sites. Additionally, environmental remediation may be required to address soil and groundwater contamination identified at certain of our facilities.

As of September 30, 2013, we had an environmental reserve of approximately $1.5 million, related primarily to our foundry operations. This reserve is based on management’s review of potential liabilities as well as cost estimates related thereto. The reserve takes into account the benefit of a contractual indemnity given to us by a prior owner of our wheel-end subsidiary. The failure of the indemnitor to fulfill its obligations could result in future costs that may be material. Any expenditures required for us to comply with applicable environmental laws and/or pay for any remediation efforts will not be reduced or otherwise affected by the existence of the environmental reserve. Our environmental reserve may not be adequate to cover our future costs related to the sites associated with the environmental reserve, and any additional costs may have a material adverse effect on our business, results of operations or financial condition. The discovery of additional environmental issues, the modification of existing laws or regulations or the promulgation of new ones, more vigorous enforcement by regulators, the imposition of joint and several liability under CERCLA or analogous state laws, or other unanticipated events could also result in a material adverse effect.

The Iron and Steel Foundry National Emission Standard for Hazardous Air Pollutants (“NESHAP”) was developed pursuant to Section 112(d) of the Clean Air Act and requires major sources of hazardous air pollutants to install controls representative of maximum achievable control technology. Based on currently available information, we do not anticipate material costs regarding ongoing compliance with the NESHAP; however, if we are found to be out of compliance with the NESHAP, we could incur liability that could have a material adverse effect on our business, results of operations or financial condition.

At the Erie, Pennsylvania, facility, we have obtained an environmental insurance policy to provide coverage with respect to certain environmental liabilities.  Management does not believe that the outcome of any environmental proceedings will have a material adverse effect on our consolidated financial condition or results of operations.

 
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As of September 30, 2013, we had approximately 2,246 employees, of which 508 were salaried employees with the remainder paid hourly. Unions represent approximately 1,485 of our employees, which is approximately 66.1% of our total employees. Each of our unionized facilities has a separate contract with the union that represents the workers employed at such facility. The union contracts expire at various times over the next few years with the exception of our union contract that covers the hourly employees at our Monterrey, Mexico, facility, which expires on an annual basis in January unless otherwise renewed. The 2013 negotiations in Monterrey were successfully completed prior to the expiration of our union contract. In  2013, we have collective bargaining agreements expiring at our Brillion, Wisconsin facility.  We do not anticipate that the outcome of our 2013 negotiations will have a material adverse effect on our operating performance or cost.

Note 8 – Financial Instruments

We have determined the estimated fair value amounts of financial instruments using available market information and other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value.  A fair value hierarchy accounting standard exists for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs).  Determining which category an asset or liability falls within the hierarchy requires significant judgment.  We evaluate our hierarchy disclosures each quarter.

The hierarchy consists of three levels:

Level 1
Quoted market prices in active markets for identical assets or liabilities;
Level 2
Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3
Unobservable inputs developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The carrying amounts of cash and cash equivalents, trade receivables, and accounts payable approximate fair value because of the relatively short maturity of these instruments.  The fair value of our 9.5% senior secured notes based on market quotes, which we determined to be Level 1 inputs, at September 30, 2013 was approximately $323.2 million compared to the carrying amount of $304.9 million.  The fair value of our 9.5% senior secured notes based on market quotes, which we determined to be Level 1 inputs, at December 31, 2012 was approximately $310.0 million compared to the carrying amount of $304.1 million.  The Company believes the fair value of our ABL facility at September 30, 2013 and December 31, 2012 equals the carrying value of $35.0 and $20.0 million, respectively.  As of September 30, 2013 and December 31, 2012 we had no other remaining significant financial instruments.

Note 9 – Segment Reporting

Based on our continual monitoring of the long-term economic characteristics, products and production processes, class of customer, and distribution methods of our operating segments, we have identified each of our operating segments below as reportable segments.  We believe this segmentation is appropriate based upon operating decisions and performance assessments by our President and Chief Executive Officer.  The accounting policies of the reportable segments are the same as described in Note 1, Summary of Significant Accounting Policies.


             
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
(In thousands)
 
2013
   
2012
   
2013
   
2012
 
Net sales:
                       
Wheels
  $ 87,978     $ 98,290     $ 280,608     $ 328,115  
Gunite
    40,751       49,592       131,354       185,435  
Brillion Iron Works
    26,535       39,373       86,230       132,509  
Consolidated total
  $ 155,264     $ 187,255     $ 498,192     $ 646,059  
                                 
Operating income (loss):
                               
Wheels
  $ 7,973     $ 9,302     $ 25,467     $ 43,850  
Gunite
    (150 )     (8,076 )     1,396       (12,119 )
Brillion Iron Works
    296       2,510       2,726       13,281  
Corporate / Other
    (8,844 )     (11,549 )     (29,152 )     (35,226 )
Consolidated total
  $ (725 )   $ (7,813 )   $ 437     $ 9,786  
 
 
 
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Current and prior period operating results from Imperial were reclassified to discontinued operations during the three and nine months ended September 30, 2013.  Excluded from net sales above, are inter-segment sales from Brillion Iron Works to Gunite, as shown in the table below: 

   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
(In thousands)
 
2013
   
2012
   
2013
   
2012
 
Inter-segment sales
  $ 4,395     $ 4,139     $ 13,030     $ 21,869  

   
As of
 
(In thousands)
 
September 30, 2013
   
December 31, 2012
 
Total assets:
           
Wheels
  $ 471,020     $ 486,118  
Gunite 
    59,270       54,707  
Brillion Iron Works
    55,337       51,435  
Imperial Group
          49,189  
Corporate / Other
    42,394       36,367  
Consolidated total
  $ 628,021     $ 677,816  

Note 10 - Debt

As of September 30, 2013, total debt was $339.9 million consisting of $304.9 million of our outstanding 9.5% senior secured notes, net of discount and a $35.0 million draw on our ABL facility. As of December 31, 2012, total debt was $324.1 million consisting of $304.1 million of our outstanding 9.5% senior secured notes, net of discount and a $20.0 million draw on our ABL facility.
 
Our credit documents (the ABL facility and the indenture governing the senior secured notes) contain operating covenants that limit the discretion of management with respect to certain business matters.  These covenants place significant restrictions on, among other things, the ability to incur additional debt, to pay dividends, to create liens, to make certain payments and investments and to sell or otherwise dispose of assets and merge or consolidate with other entities.  In addition, the ABL facility contains a financial covenant which requires us to maintain a fixed charge coverage ratio during any compliance period, which is anytime when the excess availability is less than or equal to the greater of $10.0 million or 15 percent of the total commitment under the ABL facility.  Due to the amount of our excess availability (as calculated under the ABL facility), the Company is not currently in a compliance period and, we do not have to maintain a fixed charge coverage ratio, although this is subject to change.

On July 29, 2010, we entered into our Prior ABL Facility, which was a senior secured asset based revolving credit facility, in an aggregate principal amount of up to $75.0million, with the right to increase the availability under the facility by up to $25.0 million in the aggregate.  On February 7, 2012, we exercised our option to increase the loan commitments under the Prior ABL Facility by $25.0 million (for a total aggregate availability of $100.0 million) by entering into an asset-backed loan (ABL) incremental agreement.  The Prior ABL Facility would have matured on July 29, 2014 and provided for loans and letters of credit in an aggregate amount up to the amount of the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $25.0 million to be available for the issuance of letters of credit.   Loans under the Prior ABL Facility bore interest at an annual rate equal to, at our option, either LIBOR plus 3.50% or Base Rate plus 2.75%, subject to changes based on our leverage ratio as defined in the Prior ABL Facility.  On July 11, 2013, the Company entered a new credit facility.  We were also required to pay a commitment fee equal to 0.50% per annum to the lenders under the Prior ABL Facility if utilization under the facility exceeded 50.0% of the total commitments under the facility and a commitment fee equal to 0.75% per annum if utilization under the facility was less than or equal to 50.0% of the total commitments under the facility. Customary letter of credit fees were also payable as necessary.  The obligations under the Prior ABL Facility are secured by (i) first priority liens on substantially all of the Company’s accounts receivable and inventories, subject to certain exceptions and permitted liens (the “ABL Priority Collateral”) and (ii) second priority liens on substantially all of the Company’s owned real property and tangible and intangible assets other than the ABL Priority Collateral, including all of the outstanding capital stock of our domestic subsidiaries, subject to certain exceptions and permitted liens (the “Notes Priority Collateral”).

On July 11, 2013, we entered into the New ABL Facility and used $45.3 million of borrowings under the New ABL Facility and cash on hand to repay all amounts outstanding under the Prior ABL Facility and to pay related fees and expenses.

The New ABL Facility is a senior secured asset based credit facility in an aggregate principal amount of up to $100.0 million, consisting of a $90.0 million revolving credit facility and a $10.0 million first-in last-out term facility, with the right, subject to certain conditions, to increase the availability under the facility by up to $50.0 million in the aggregate. The New ABL Facility currently matures on July 11, 2018, which may be extended pursuant under certain circumstances pursuant to the terms of the New ABL Facility.
 
 
- 14 -

 
The New ABL Facility provides for loans and letters of credit in an amount up to the aggregate availability under the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $20.0 million for letters of credit.  Borrowings under the New ABL Facility bear interest through maturity at a variable rate based upon, at our option, either LIBOR or the base rate (which is the greatest of one-half of 1.00% in excess of the federal funds rate, 1.00% in excess of the one-month LIBOR rate and the Agent’s prime rate), plus, in each case, an applicable margin.  The applicable margin for loans under the first-in last-out term facility that are (i) LIBOR loans ranges, based on the our average excess availability, from 2.75% to 3.25% per annum and (ii) base rate loans ranges, based on our average excess availability, from 1.00% to 1.50%.  The applicable margin for other advances under the New ABL Facility that are (i) LIBOR loans ranges, based on our average excess availability, from 1.75% to 2.25% and (ii) base rate loans ranges, based on our average excess availability, from 0.00% to 0.50%.

We must also pay an unused line fee equal to 0.25% per annum to the lenders under the New ABL Facility if utilization under the facility is greater than or equal to 50.0% of the total available commitments under the facility and a commitment fee equal to 0.375% per annum if utilization under the facility is less than 50.0% of the total available commitments under the facility. Customary letter of credit fees are also payable, as necessary.

The obligations under the New ABL Facility are secured by (i) first-priority liens on the ABL Priority Collateral substantially and (ii) second-priority liens on the Notes Priority Collateral.  The New ABL Facility is a senior secured asset based credit facility in an aggregate principal amount of up to $100.0 million, consisting of a $90.0 million revolving credit facility and a $10.0 million first-in last-out term facility, with the right, subject to certain conditions, to increase the availability under the facility by up to $50.0 million in the aggregate. The New ABL Facility currently matures on July 11, 2018, which may be extended pursuant under certain circumstances pursuant to the terms of the New ABL Facility.
 


 
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Table of Contents

Note 11 – Guarantor and Non-guarantor Financial Statements

Our senior secured notes are, jointly and severally, fully and unconditionally guaranteed, on a senior basis, by all of our existing and future 100% owned domestic subsidiaries (“Guarantor Subsidiaries”). The non-guarantor subsidiaries are our foreign subsidiaries and discontinued operations.  The following condensed financial information illustrates the composition of the combined Guarantor Subsidiaries:

CONDENSED CONSOLIDATED BALANCE SHEETS

   
September 30, 2013
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
ASSETS
                             
Cash and cash equivalents
  $ 22,527     $     $ 5,466           $ 27,993  
Customer and other receivables, net
    60,314       21,794       11,193     $ (21,740 )     71,561  
Inventories
    20,974       24,851       3,417       (419 )     48,823  
Other current assets
    5,586       5,283       6,339             17,208  
Total current assets
    109,401       51,928       26,415       (22,159 )     165,585  
Property, plant, and equipment, net
    78,445       106,546       36,627             221,618  
Goodwill
    96,283       4,414                   100,697  
Intangible assets, net
    124,755       2,708                   127,463  
Investments in and advances to subsidiaries and affiliates
    100,213                   (100,213 )      
Deferred income taxes
    4,543       21,814       2,234       (24,048 )     4,543  
Other non-current assets
    7,671       444                   8,115  
TOTAL
  $ 521,311     $ 187,854     $ 65,276     $ (146,420 )   $ 628,021  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Accounts payable
  $ 14,227     $ 27,046     $ 9,933           $ 51,206  
Accrued payroll and compensation
    1,045       6,130       1,659             8,834  
Accrued interest payable
    5,218                         5,218  
Other current liabilities
    48,491       36,574       (41,006 )   $ (22,159 )     21,900  
Total current liabilities
    68,981       69,750       (29,414 )     (22,159 )     87,158  
Long-term debt
    339,921                         339,921  
Deferred and non-current income taxes
    64,914       (12,237 )     (1,119 )     (24,048 )     27,510  
Other non-current liabilities
    18,624       101,630       24,307             144,561  
Stockholders’ equity
    28,871       28,711       71,502       (100,213 )     28,871  
TOTAL
  $ 521,311     $ 187,854     $ 65,276     $ (146,420 )   $ 628,021  

   
December 31, 2012
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
ASSETS
                             
Cash and cash equivalents
  $ 24,113     $     $ 2,747       (109 )   $ 26,751  
Customer and other receivables, net
    62,719       29,285       3,219     $ (30,627 )     64,596  
Inventories
    19,563       39,443       2,766       (580 )     61,192  
Other current assets
    (1,348 )     10,737       786             10,175  
Total current assets
    105,047       79,465       9,518       (31,316 )     162,714  
Property, plant, and equipment, net
    93,990       135,215       38,172             267,377  
Goodwill
    96,283       4,414                   100,697  
Intangible assets, net
    131,347       2,833                   134,180  
Investments in and advances to subsidiaries and affiliates
    95,958                   (95,958 )      
Deferred income taxes
    (14,909 )     19,671       2,141       (6,903 )        
Other non-current assets
    12,215       590       43             12,848  
TOTAL
  $ 519,931     $ 242,188     $ 49,874     $ (134,177 )   $ 677,816  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Accounts payable
  $ 14,838     $ 36,811     $ 7,641       (109 )   $ 59,181  
Accrued payroll and compensation
    1,241       7,488       1,997             10,726  
Accrued interest payable
    12,543                         12,543  
Other current liabilities
    35,756       16,479       3,283     $ (31,207 )     24,311  
Total current liabilities
    64,378       60,778       12,921       (31,316 )     106,761  
Long-term debt
    324,133                         324,133  
Deferred and non-current income taxes
    48,071       (12,042 )     (1,894 )     (6,903 )     27,232  
Other non-current liabilities
    18,476       106,671       29,670             154,817  
Stockholders’ equity
    64,873       86,781       9,177       (95,958 )     64,873  
TOTAL
  $ 519,931     $ 242,188     $ 49,874     $ (134,177 )   $ 677,816  
 
 
 
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

   
Three Months Ended September 30, 2013
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
Net sales
  $ 103,235     $ 68,781     $ 31,928     $ (48,680 )   $ 155,264  
Cost of goods sold
    97,070       66,564       29,621       (48,261 )     144,994  
Gross profit (loss)
    6,165       2,217       2,307       (419 )     10,270  
Operating expenses
    10,528       372       95             10,995  
Income (loss) from operations
    (4,363 )     1,845       2,212       (419 )     (725 )
Other income (expense):
                                       
Interest expense, net
    (8,855 )     (207 )     351             (8,711 )
Equity in earnings of subsidiaries
    (7,392 )                 7,392        
Other income (loss), net
    (45 )     147       444             546  
Income (loss) before income taxes from continuing operations
    (20,655 )     1,785       3,007       6,973       (8,890 )
Income tax provision (benefit)
    (2,040 )     925       620             (495 )
Income (loss) from continuing operations
    (18,615 )     860       2,387       6,973       (8,395 )
Discontinued operations, net of tax
                (10,220 )           (10,220 )
Net income (loss)
  $ (18,615 )   $ 860     $ (7,833 )   $ 6,973     $ (18,615 )
                                         
Comprehensive loss
  $ (17,182 )   $ 1,263     $ (7,061 )   $ 5,798     $ (17,182 )


   
Three Months Ended September 30, 2012
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
Net sales
  $ 102,599     $ 96,319     $ 36,515     $ (48,178 )   $ 187,255  
Cost of goods sold
    91,854       102,620       34,963       (48,178 )     181,259  
Gross profit
    10,745       (6,301 )     1,552             5,996  
Operating expenses
    12,650       1,082       77             13,809  
Income (loss) from operations
    (1,905 )     (7,383 )     1,475             (7,813 )
Other income (expense):
                                       
Interest expense, net
    (8,872 )     (87 )     38             (8,921 )
Equity in earnings of subsidiaries
    (9,169 )                 9,169        
Other income (loss), net
    1,983       168       (1,336 )           815  
Income (loss) before income taxes from continuing operations
    (17,963 )     (7,302 )     177       9,169       (15,919 )
Income tax provision
    (284 )           178             (106 )
Income (loss) from continuing operations
    (17,679 )     (7,302 )     (1 )     9,169       (15,813 )
Discontinued operations, net of tax
                (1,866 )           (1,866 )
Net loss
  $ (17,679 )   $ (7,302 )   $ (1,867 )   $ 9,169     $ (17,679 )
                                         
Comprehensive loss
  $ (17, 996 )   $ (7,302 )   $ (2,184 )   $ 9,486     $ (17,996 )


 
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Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

   
Nine Months Ended September 30, 2013
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
Net sales
  $ 330,342     $ 220,503     $ 105,955     $ (158,608 )   $ 498,192  
Cost of goods sold
    311,452       211,212       98,463       (158,189 )     462,938  
Gross profit (loss)
    18,890       9,291       7,492       (419 )     35,254  
Operating expenses
    33,353       1,216       248             34,817  
Income (loss) from operations
    (14,463 )     8,075       7,244       (419 )     437  
Other income (expense):
                                       
Interest expense, net
    (27,000 )     (736 )     1,174             (26,562 )
Equity in earnings of subsidiaries
    986                   (986 )      
Other income (loss), net
    (131 )     159       222             250  
Income (loss) before income taxes from continuing operations
    (40,608 )     7,498       8,640       (1,405 )     (25,875 )
Income tax  provision
    (684 )     925       2,137             2,378  
Income (loss) from continuing operations
    (39,924 )     6,573       6,503       (1,405 )     (28,253 )
Discontinued operations, net of tax
                (11,671 )           (11,671 )
Net income (loss)
  $ (39,924 )   $ 6,573     $ (5,168 )   $ (1,405 )   $ (39,924 )
                                         
Comprehensive income (loss)
  $ (37,743 )   $ 6,976     $ (3,648 )   $ (3,328 )   $ (37,743 )


   
Nine Months Ended September 30, 2012
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
Net sales
  $ 344,540     $ 332,513     $ 115,474     $ (146,468 )   $ 646,059  
Cost of goods sold