10-Q 1 acw14-310q3.htm FORM 10-Q (THIRD QUARTER)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

FORM 10-Q

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

For the quarterly period ended September 30, 2014.

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 Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
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   No
 
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   No
 
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
Accelerated Filer
Non-Accelerated Filer 
Smaller Reporting Company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No
 
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  No
 
As of October 30, 2014, 47,718,818 shares of Accuride Corporation common stock, par value $.01 per share, were outstanding.


ACCURIDE CORPORATION

Table of Contents

Page
 
 
 
 
 
 
 

Part I.  FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

ACCURIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except for share and per share data)
 
September 30, 2014
   
December 31, 2013
 
ASSETS
 
   
 
CURRENT ASSETS:
 
   
 
Cash and cash equivalents
 
$
21,530
   
$
33,426
 
Customer receivables, net of allowance for doubtful accounts of $312 and $259 in 2014 and 2013, respectively
   
73,655
     
51,382
 
Other receivables
   
9,281
     
8,138
 
Inventories
   
45,826
     
39,329
 
Deferred income taxes
   
3,669
     
3,806
 
Prepaid expenses and other current assets
   
11,043
     
11,894
 
Assets held for sale
   
     
1,293
 
Total current assets
   
165,004
     
149,268
 
PROPERTY, PLANT AND EQUIPMENT, net
   
214,116
     
219,624
 
OTHER ASSETS:
               
Goodwill
   
100,697
     
100,697
 
Other intangible assets, net
   
120,004
     
125,430
 
Deferred financing costs, net of accumulated amortization of $4,719 and $3,649 in 2014 and 2013, respectively
   
5,370
     
6,440
 
Deferred income taxes
   
84
     
503
 
Pension asset
   
14,763
     
8,493
 
Other
   
1,848
     
1,322
 
TOTAL
 
$
621,886
   
$
611,777
 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
CURRENT LIABILITIES:
               
Accounts payable
 
$
66,527
   
$
47,527
 
Accrued payroll and compensation
   
11,405
     
8,763
 
Accrued interest payable
   
5,133
     
12,535
 
Accrued workers compensation
   
3,456
     
4,373
 
Accrued and other liabilities
   
15,427
     
16,801
 
Total current liabilities
   
101,948
     
89,999
 
LONG-TERM DEBT
   
330,972
     
330,183
 
DEFERRED INCOME TAXES
   
17,066
     
17,528
 
NON-CURRENT INCOME TAXES PAYABLE
   
6,816
     
8,367
 
OTHER POSTRETIREMENT BENEFIT PLAN LIABILITY
   
71,806
     
70,584
 
PENSION BENEFIT PLAN LIABILITY
   
16,392
     
20,687
 
OTHER LIABILITIES
   
9,709
     
12,545
 
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, 47,718,818 and 47,515,155 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively, and additional paid-in-capital
   
442,006
     
440,479
 
Accumulated other comprehensive loss
   
(17,767
)
   
(18,712
)
Accumulated deficiency
   
(357,062
)
   
(359,883
)
Total stockholders' equity
   
67,177
     
61,884
 
TOTAL
 
$
621,886
   
$
611,777
 

See notes to unaudited condensed consolidated financial statements.
ACCURIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

 
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
(In thousands except per share data)
 
2014
   
2013
   
2014
   
2013
 
 
 
   
   
   
 
NET SALES
 
$
184,007
   
$
155,264
   
$
532,366
   
$
498,192
 
COST OF GOODS SOLD
   
164,095
     
144,994
     
473,009
     
462,938
 
GROSS PROFIT
   
19,912
     
10,270
     
59,357
     
35,254
 
OPERATING EXPENSES:
                               
Selling, general and administrative
   
9,868
     
10,995
     
30,440
     
34,817
 
INCOME (LOSS) FROM OPERATIONS
   
10,044
     
(725
)
   
28,917
     
437
 
OTHER INCOME (EXPENSE):
                               
Interest expense, net
   
(8,444
)
   
(8,711
)
   
(25,351
)
   
(26,562
)
Other income (loss), net
   
(805
)
   
546
     
(1,504
)
   
250
 
INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS
   
795
     
(8,890
)
   
2,062
     
(25,875
)
INCOME TAX (BENEFIT) PROVISION
   
(410
)
   
(495
)
   
(967
)
   
2,378
 
INCOME (LOSS) FROM CONTINUING OPERATIONS
   
1,205
     
(8,395
)
   
3,029
     
(28,253
)
DISCONTINUED OPERATIONS, NET OF TAX
   
(106
)
   
(10,220
)
   
(208
)
   
(11,671
)
NET INCOME (LOSS)
 
$
1,099
   
$
(18,615
)
 
$
2,821
   
$
(39,924
)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
                               
Defined benefit plans
   
472
     
1,433
     
945
     
2,181
 
COMPREHENSIVE INCOME (LOSS)
 
$
1,571
   
$
(17,182
)
 
$
3,766
   
$
(37,743
)
Weighted average common shares outstanding—basic
   
47,749
     
47,588
     
47,694
     
47,535
 
Basic income (loss) per share-continuing operations
   
0.02
     
(0.18
)
   
0.06
     
(0.59
)
Basic loss per share-discontinued operations
   
     
(0.21
)
   
     
(0.25
)
Basic income (loss) per share
 
$
0.02
   
$
(0.39
)
 
$
0.06
   
$
(0.84
)
Weighted average common shares outstanding—diluted
   
49,042
     
47,588
     
48,531
     
47,535
 
Diluted income (loss) per share-continuing operations
   
0.02
     
(0.18
)
   
0.06
     
(0.59
)
Diluted loss per share-discontinued operations
   
     
(0.21
)
   
     
(0.25
)
Diluted income (loss) per share
 
$
0.02
   
$
(0.39
)
 
$
0.06
   
$
(0.84
)

See notes to unaudited condensed consolidated financial statements.

ACCURIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

(In thousands)
 
Common
Stock and
Additional
Paid-in-
Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Accumulated
Deficiency
   
Total
Stockholders'
Equity
 
                 
BALANCE— July 1, 2013
 
$
439,421
   
$
(51,086
)
 
$
(342,879
)
 
$
45,456
 
Net loss
   
     
     
(18,615
)
   
(18,615
)
Share-based compensation expense
   
597
     
     
     
597
 
Tax impact of forfeited vested shares
   
     
     
     
 
Other comprehensive income
   
     
1,433
     
     
1,433
 
BALANCE—September 30, 2013
 
$
440,018
   
$
(49,653
)
 
$
(361,494
)
 
$
28,871
 
 
                               
BALANCE—July 1, 2014
 
$
441,384
   
$
(18,239
)
 
$
(358,161
)
 
$
64,984
 
Net income
   
     
     
1,099
     
1,099
 
Share-based compensation expense
   
622
     
     
     
622
 
Tax impact of forfeited vested shares
   
     
     
     
 
Other comprehensive income
   
     
472
     
     
472
 
BALANCE—September 30, 2014
 
$
442,006
   
$
(17,767
)
 
$
(357,062
)
 
$
67,177
 

(In thousands)
 
Common
Stock and
Additional
Paid-in-
Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Accumulated
Deficiency
   
Total
Stockholders'
Equity
 
 
 
   
   
   
 
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 income
   
     
2,181
     
     
2,181
 
BALANCE—September 30, 2013
 
$
440,018
   
$
(49,653
)
 
$
(361,494
)
 
$
28,871
 
 
                               
BALANCE—January 1, 2014
 
$
440,479
   
$
(18,712
)
 
$
(359,883
)
 
$
61,884
 
Net income
   
     
     
2,821
     
2,821
 
Share-based compensation expense
   
1,831
     
     
     
1,831
 
Tax impact of forfeited vested shares
   
(304
)
   
     
     
(304
)
Other comprehensive income
   
     
945
     
     
945
 
BALANCE—September 30, 2014
 
$
442,006
   
$
(17,767
)
 
$
(357,062
)
 
$
67,177
 

See notes to unaudited condensed consolidated financial statements.

ACCURIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
 
Nine Months Ended September 30,
 
(In thousands)
 
2014
   
2013
 
 
 
   
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
 
Net income (loss)
 
$
2,821
   
$
(39,924
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
               
Depreciation of property, plant and equipment
   
24,907
     
26,822
 
Amortization – deferred financing costs and debt discount
   
1,859
     
2,064
 
Amortization – other intangible assets
   
6,097
     
6,717
 
Loss related to discontinued operations
   
     
11,985
 
Gain related to discontinued operations
   
     
(2,000
)
Loss on disposal of assets
   
669
     
677
 
(Benefit from) Provision for deferred income taxes
   
(592
)
   
278
 
Non-cash share-based compensation
   
1,831
     
1,950
 
Changes in certain assets and liabilities:
               
Receivables
   
(23,416
)
   
(17,443
)
Inventories
   
(6,497
)
   
1,677
 
Prepaid expenses and other assets
   
(4,999
)
   
(4,023
)
Accounts payable
   
19,723
     
10,712
 
Accrued and other liabilities
   
(14,129
)
   
(24,603
)
Net cash provided by (used in) operating activities
   
8,274
     
(25,111
)
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property, plant and equipment
   
(20,734
)
   
(32,258
)
Proceeds from sale leaseback transactions
   
     
14,944
 
Proceeds from sale of property, plant, and equipment
   
1,235
     
30,000
 
Purchase of intangible asset
   
(671
)
   
 
Net cash (used in) provided by in investing activities
   
(20,170
)
   
12,686
 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from revolver
   
10,000
     
25,000
 
Payments on revolver
   
(10,000
)
   
(10,000
)
Debt issuance costs
   
     
(1,333
)
Net cash provided by financing activities
   
     
13,667
 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
   
(11,896
)
   
1,242
 
CASH AND CASH EQUIVALENTS—Beginning of period
   
33,426
     
26,751
 
CASH AND CASH EQUIVALENTS—End of period
 
$
21,530
   
$
27,993
 
 
               
Supplemental cash flow information:
               
Cash paid for interest
 
$
30,815
   
$
31,497
 
Cash paid for income taxes
   
1,274
     
2,000
 
Non-cash transactions:
               
Purchases of property, plant and equipment in accounts payable
 
$
2,504
   
$
3,059
 
 
See notes to unaudited condensed consolidated financial statements.

ACCURIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(AMOUNTS IN THOUSANDS, UNLESS OTHERWISE NOTED, EXCEPT SHARE AND PER SHARE DATA)

Note 1 - 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, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014.  The unaudited condensed 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, 2013.

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 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 year ended December 31, 2013, which has been classified as Discontinued Operations.   See Note 2 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)
 
2014
   
2013
   
2014
   
2013
 
Numerator:
 
   
   
   
 
Net income (loss) from continuing operations
 
$
1,205
   
$
(8,395
)
 
$
3,029
   
$
(28,253
)
Net loss from discontinued operations
   
(106
)
   
(10,220
)
   
(208
)
   
(11,671
)
Net income (loss)
 
$
1,099
   
$
(18,615
)
 
$
2,821
   
$
(39,924
)
Denominator:
                               
Weighted average shares outstanding – Basic
   
47,749
     
47,588
     
47,694
     
47,535
 
Weighted average shares outstanding – Diluted
   
49,042
     
47,588
     
48,531
     
47,535
 
 
                               
Basic income (loss) per common share
                               
From continuing operations
 
$
0.02
   
$
(0.18
)
 
$
0.06
   
$
(0.59
)
From discontinued operations
   
     
(0.21
)
   
     
(0.25
)
Basic income (loss) per common share
 
$
0.02
   
$
(0.39
)
 
$
0.06
   
$
(0.84
)
 
                               
Diluted income (loss) per common share
                               
From continuing operations
 
$
0.02
   
$
(0.18
)
 
$
0.06
   
$
(0.59
)
From discontinued operations
   
     
(0.21
)
   
     
(0.25
)
Diluted income (loss) per common share
 
$
0.02
   
$
(0.39
)
 
$
0.06
   
$
(0.84
)


As of September 30, 2014, there were options exercisable for 147,420 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.  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.
 
Share-Based Compensation  Compensation expense for share-based compensation programs recognized as a component of operating expenses was $1.8 million and $2.0 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. Compensation expense for share-based compensation programs recognized as a component of operating expense was $0.6 million and $0.6 million for the three months ended September 30, 2014 and September 30, 2013, respectively.
 
As of September 30, 2014, there was approximately $2.8 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 1.4 years.
 
Income Tax – Under 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.
 
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 income, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.

Sale Leaseback transactions  We have accounted for sale-leaseback transactions in accordance with Accounting Standards Codification ("ASC") 840-40, Sale-Leaseback Transactions.  The Company entered into two sale-leaseback transactions, which were classified as operating leases, during the first quarter of 2013, and as a result had net cash inflow of $14.9 million.  As part of the sale-leaseback transactions, the Company recognized a loss on the aluminum wheel equipment of $0.9 million that was recognized during the three months ended March 31, 2013.

Recent Accounting Adoptions – In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-04, 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 Company adopted this ASU as of January 1, 2014.  This adoption did not have an effect on our financial statements.

On July 18, 2013, the FASB issued 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 Company adopted this ASU as of January 1, 2014.  This adoption did not have an effect on our financial statements.

Recent Accounting Pronouncements – On April 10, 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers.  The amendments in this update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605. The objective of the amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards ("IFRS"). The amendment is effective for annual reporting periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is evaluating the effect, if any, on its financial statements.

On June 19, 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could Be Achieved after the Requisite Service Period.  This Update is intended to resolve the diverse accounting treatment of those awards in practice.  The amendment is effective for annual and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The Company is evaluating the effect, if any, on its financial statements.

On August 27, 2014, the FASB issued ASU 2014-15-Presentation of Financial Statements-Going Concern. The amendments in this Update provide guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect, if any, on its 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 ("Imperial") 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 resulted in recognition of a $12.0 million loss for the year ended December 31, 2013, which was classified as discontinued operations.

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 on sale.   The Company leased such property to the purchaser under a two-year lease, with the option to renew the lease for one additional year and the right to terminate this lease upon six-months advance notice.  Rent under the lease is fixed at $75,000 per year.  Imperial Group Manufacturing has provided a lease termination notice, and the Portland, Tennessee lease ended on November 1, 2014.

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 the 3 months ended September 30, 2013 in connection with the sale of its Fabco operating unit in September, 2011

The following table presents sales and income attributable to Discontinued Operations.
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
(In thousands)
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
Net sales
 
$
   
$
10,115
   
$
   
$
70,965
 
 
                               
Loss from operations
   
(10
)
   
(235
)
   
(31
)
   
(1,686
)
Other income (expense)
   
(96
)
   
(9,985
)
   
(177
)
   
(9,985
)
Discontinued Operations
 
$
(106
)
 
$
(10,220
)
 
$
(208
)
 
$
(11,671
)

Note 3 - Inventories

Inventories at September 30, 2014 and December 31, 2013, on a first-in, first-out ("FIFO") basis, were as follows:

(In thousands)
 
September 30, 2014
   
December 31, 2013
 
Raw materials
 
$
9,658
   
$
7,483
 
Work in process
   
14,579
     
12,996
 
Finished manufactured goods
   
21,589
     
18,850
 
Total inventories
 
$
45,826
   
$
39,329
 
 

Note 4 - Goodwill and Other Intangible Assets

The following represents the carrying amount of goodwill, on a reportable segment basis:

(In thousands)
 
Wheels
   
Brillion Iron
Works
   
Total
 
Balance as of December 31, 2013
 
$
96,283
   
$
4,414
   
$
100,697
 
Balance as of September 30, 2014
 
$
96,283
   
$
4,414
   
$
100,697
 

The changes in the carrying amount of other intangible assets for the period December 31, 2013 to September 30, 2014, by reportable segment, are as follows:

(In thousands)
 
Wheels
   
Brillion Iron
Works
   
Total
 
Balance as of December 31, 2013
 
$
122,764
   
$
2,666
   
$
125,430
 
Additions
   
671
     
     
671
 
Amortization
   
(5,971
)
   
(126
)
   
(6,097
)
Balance as of September 30, 2014
 
$
117,464
   
$
2,540
   
$
120,004
 

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:

 
 
   
As of September 30, 2014
   
As of December 31, 2013
 
(In thousands)
 
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:
                                                       
Trade names
   
   
$
25,200
   
$
   
$
25,200
   
$
25,200
   
$
   
$
25,200
 
Technology
   
10.6
     
39,169
     
22,400
     
16,769
     
38,849
     
20,497
     
18,352
 
Customer relationships
   
16.8
     
127,304
     
49,269
     
78,035
     
129,093
     
47,215
     
81,878
 
Other intangible assets
         
$
191,673
   
$
71,669
   
$
120,004
   
$
193,142
   
$
67,712
   
$
125,430
 

We estimate that our annual amortization expense for our other intangible assets for 2014 through 2018 will be approximately $8.1 million.

Note 5 – Assets Held for Sale

At December 31, 2013, assets totaling $1.3 million were classified as held for sale.  The assets consisted of a building and land related to the Elkhart, Indiana facility that our Gunite business exited in November, 2012.  The sale of these assets was completed on February 24, 2014, and the net proceeds totaled $1.2 million.

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)
 
2014
   
2013
   
2014
   
2013
   
2014
   
2013
   
2014
   
2013
 
Service cost-benefits earned during the period
 
$
270
   
$
301
   
$
80
   
$
127
   
$
804
   
$
868
   
$
252
   
$
408
 
Interest cost on projected benefit obligation
   
2,624
     
2,601
     
978
     
855
     
7,975
     
7,808
     
2,737
     
2,628
 
Expected return on plan assets
   
(3,112
)
   
(2,959
)
   
     
     
(9,480
)
   
(8,883
)
   
     
 
Amortization of prior service (credit) cost
   
11
     
11
     
(9
)
   
     
33
     
33
     
(27
)
   
 
Amortization of loss
   
57
     
663
     
59
     
33
     
158
     
1,975
     
216
     
83
 
Net periodic benefit cost
   
(150
)
   
617
     
1,108
     
1,015
     
(510
)
   
1,801
     
3,178
     
3,119
 
Other one-time charges
   
     
     
435
     
     
     
     
435
     
 
Total benefit cost charged (credited) to income
 
$
(150
)
 
$
617
   
$
1,543
   
$
1,015
   
$
(510
)
 
$
1,801
   
$
3,613
   
$
3,119
 

As of September 30, 2014, $9.5 million has been contributed in 2014 to our sponsored pension plans.  We presently anticipate contributing an additional $0.5 million to fund our pension plans during 2014 for a total of $10.0 million.  Not included in the anticipated contributions for the year are any potential payments related to the plan associated with our Elkhart, Indiana facility that was closed in 2012.  The amounts of those contributions, if any, have not been determined as of the date of this filing. A one-time charge of $0.4 million was recorded during the three months ended September 30, 2014 due to a participant settlement for the Accuride Erie hourly retirement plan.

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 adverse 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, 2014, 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. Any expenditure 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 on our consolidated financial statements.

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 NESHAP, we could incur a liability that could have a material adverse effect on our consolidated financial statements.

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 currently pending environmental proceeding will have a material adverse effect on our consolidated financial statements.

As of September 30, 2014, we had approximately 2,267 employees, of which 487 were salaried employees with the remainder paid hourly. Unions represent approximately 1,547 of our employees, which is approximately 68 percent 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 2014 negotiations in Monterrey were completed prior to the expiration of our union contract. The collective bargaining agreement ("CBA") at our Erie, Pennsylvania facility was set to expire on September 3, 2014; however, the negotiation of a new CBA was completed on May 20, 2014. The new CBA at our Erie facility commenced on September 4, 2014 and will expire on September 3, 2018.

The CBA at our Rockford, Illinois facility expires in November, 2014. This agreement covers approximately 295 employees.  We do not anticipate that the 2014 negotiation of this agreement will have a material adverse effect on our consolidated financial statements.


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, 2014 was approximately $323.2 million compared to the carrying amount of $306.0 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, 2013 was approximately $306.9 million compared to the carrying amount of $305.2 million.  The Company believes the fair value of our variable interest rate Asset Based Loan ("ABL") facility at September 30, 2014 and December 31, 2013 equals the carrying value of $25.0 million and $25.0 million, respectively.  As of September 30, 2014 and December 31, 2013 we had no other remaining 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 of our Annual Report on Form 10-K for the year ended December 31, 2013.

 
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
(In thousands)
 
2014
   
2013
   
2014
   
2013
 
Net sales:
 
   
   
   
 
Wheels
 
$
106,685
   
$
87,978
   
$
300,058
   
$
280,608
 
Gunite
   
42,357
     
40,751
     
134,634
     
131,354
 
Brillion Iron Works
   
34,965
     
26,535
     
97,674
     
86,230
 
Consolidated total
 
$
184,007
   
$
155,264
   
$
532,366
   
$
498,192
 
 
                               
Operating income (loss):
                               
Wheels
 
$
11,847
   
$
7,973
   
$
33,446
   
$
25,467
 
Gunite
   
4,149
     
(150
)
   
14,670
     
1,396
 
Brillion Iron Works
   
1,680
     
296
     
3,444
     
2,726
 
Corporate / Other
   
(7,632
)
   
(8,844
)
   
(22,643
)
   
(29,152
)
Consolidated total
 
$
10,044
   
$
(725
)
 
$
28,917
   
$
437
 

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)
2014
 
2013
 
2014
 
2013
 
Inter-segment sales
 
$
3,055
   
$
4,395
   
$
10,825
   
$
13,030
 


 
As of
 
(In thousands)
September 30, 2014
 
December 31, 2013
 
Total assets:
 
 
Wheels
 
$
466,620
   
$
452,271
 
Gunite
   
64,940
     
55,016
 
Brillion Iron Works
   
55,935
     
52,547
 
Corporate / Other
   
34,391
     
51,943
 
Consolidated total
 
$
621,886
   
$
611,777
 

Note 10 - Debt

As of September 30, 2014, total debt was $331.0 million consisting of $306.0 million of our outstanding 9.5% senior secured notes, net of discount, and a $25.0 million draw on our ABL facility. As of December 31, 2013, total debt was $330.2 million consisting of $305.2 million of our outstanding 9.5% senior secured notes, net of discount, and a $25.0 million draw on our ABL facility.
 
Our credit documents (the New 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 New ABL Facility contains a fixed charge coverage ratio covenant which will be applicable if the availability under the ABL Facility is less than 10.0% of the amount of the New ABL Facility.  If applicable, that covenant requires us to maintain a minimum ratio of adjusted EBITDA less capital expenditures made during such period (other than capital expenditures financed with the net cash proceeds of asset sales, recovery events, incurrence of indebtedness and the sale or issuance of equity interests) to fixed charges of 1.00 to 1.00.  We are currently and expect to remain in compliance with our covenants through the next twelve months.  However, we continue to operate in a challenging economic and commercial environment and our ability to maintain liquidity and comply with our debt covenants may be affected by economic or other conditions that are beyond our control and which are difficult to predict.

On July 11, 2013, we entered into a new asset-based revolving credit facility (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 a previous asset-based facility 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, but may be extended pursuant under certain circumstances pursuant to the terms of the New ABL Facility.

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.



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 CONSOLIDATING BALANCE SHEETS

 
 
September 30, 2014
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
ASSETS
 
   
   
   
   
 
Cash and cash equivalents
 
$
14,106
   
$
   
$
7,424
   
$
   
$
21,530
 
Customer and other receivables, net
   
49,485
     
23,940
     
9,100
     
411
     
82,936
 
Intercompany receivable
   
     
8,747
     
82,225
     
(90,972
)
   
 
Inventories
   
20,763
     
21,843
     
3,631
     
(411
)
   
45,826
 
Other current assets
   
6,457
     
3,184
     
5,071
     
     
14,712
 
Total current assets
   
90,811
     
57,714
     
107,451
     
(90,972
)
   
165,004
 
Property, plant and equipment, net
   
79,401
     
101,963
     
32,752
     
     
214,116
 
Goodwill
   
96,283
     
4,414
     
     
     
100,697
 
Other intangible assets, net
   
117,464
     
2,540
     
     
     
120,004
 
Investments in and advances to subsidiaries and affiliates
   
150,822
     
     
     
(150,822
)
   
 
Deferred income taxes
   
     
29,600
     
1,194
     
(30,710
)
   
84
 
Other non-current assets
   
6,827
     
391
     
14,763
     
     
21,981
 
TOTAL
 
$
541,608
   
$
196,622
   
$
156,160
   
$
(272,504
)
 
$
621,886
 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                       
Accounts payable
 
$
17,774
   
$
35,791
   
$
12,962
   
$
   
$
66,527
 
Intercompany payable
   
60,838
     
     
30,134
     
(90,972
)
   
 
Accrued payroll and compensation
   
3,469
     
6,401
     
1,535
     
     
11,405
 
Accrued interest payable
   
5,133
     
     
     
     
5,133
 
Accrued and other liabilities
   
3,468
     
11,867
     
3,548
     
     
18,883
 
Total current liabilities
   
90,682
     
54,059
     
48,179
     
(90,972
)
   
101,948
 
Long term debt
   
330,972
     
     
     
     
330,972
 
Deferred and non-current income taxes
   
43,438
     
10,111
     
1,043
     
(30,710
)
   
23,882
 
Other non-current liabilities
   
9,339
     
70,261
     
18,307
     
     
97,907
 
Stockholders' equity
   
67,177
     
62,191
     
88,631
     
(150,822
)
   
67,177
 
TOTAL
 
$
541,608
   
$
196,622
   
$
156,160
   
$
(272,504
)
 
$
621,886
 

 
 
December 31, 2013
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
ASSETS
 
   
   
   
   
 
Cash and cash equivalents
 
$
31,018
   
$
   
$
2,408
   
$
   
$
33,426
 
Customer and other receivables, net
   
31,871
     
19,955
     
7,694
     
     
59,520
 
Intercompany receivables
   
     
164,940
     
79,722
     
(244,662
)
   
 
Inventories
   
16,858
     
20,759
     
2,022
     
(310
)
   
39,329
 
Other current assets
   
7,159
     
4,357
     
5,477
     
     
16,993
 
Total current assets
   
86,906
     
210,011
     
97,323
     
(244,972
)
   
149,268
 
Property, plant and equipment, net
   
80,286
     
103,800
     
35,538
     
     
219,624
 
Goodwill
   
96,283
     
4,414
     
     
     
100,697
 
Other intangible assets, net
   
122,764
     
2,666
     
     
     
125,430
 
Investments in and advances to subsidiaries and affiliates
   
128,059
     
     
     
(128,059
)
   
 
Other non-current assets
   
5,971
     
1,791
     
8,996
     
     
16,758
 
TOTAL
 
$
520,269
   
$
322,682
   
$
141,857
   
$
(373,031
)
 
$
611,777
 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                       
Accounts payable
 
$
12,092
   
$
28,215
   
$
7,220
   
$
   
$
$47,527
 
Intercompany payable
   
42,428
     
175,666
     
26,878
     
(244,972
)
   
 
Accrued payroll and compensation
   
1,604
     
5,776
     
1,383
     
     
8,763
 
Accrued interest payable
   
12,535
     
     
     
     
12,535
 
Accrued and other liabilities
   
4,225
     
11,979
     
4,970
     
     
21,174
 
Total current liabilities
   
72,884
     
221,636
     
40,451
     
(244,972
)
   
89,999
 
Long term debt
   
330,183
     
     
     
     
330,183
 
Deferred and non-current income taxes
   
45,337
     
(19,108
)
   
(334
)
   
     
25,895
 
Other non-current liabilities
   
9,981
     
75,769
     
18,066
     
     
103,816
 
Stockholders' equity
   
61,884
     
44,385
     
83,674
     
(128,059
)
   
61,884
 
TOTAL
 
$
520,269
   
$
322,682
   
$
141,857
   
$
(373,031
)
 
$
611,777
 


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 
 
Three Months Ended September 30, 2014
 
(In thousands)
 
Parent
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
124,025
   
$
82,505
   
$
33,589
   
$
(56,112
)
 
$
184,007
 
Cost of goods sold
   
111,184
     
77,396
     
31,216
     
(55,701
)
   
164,095
 
Gross profit
   
12,841
     
5,109
     
2,373
     
(411
)
   
19,912
 
Operating expenses
   
9,623
     
204
     
41
     
     
9,868
 
Income (loss) from operations
   
3,218
     
4,905
     
2,332
     
(411
)
   
10,044
 
Other income (expense):
                                       
Interest income (expense), net
   
(8,695
)
   
(53
)
   
304
     
     
(8,444
)
Equity in earnings of subsidiaries
   
5,385
     
     
     
(5,385
)
   
 
Other income (expense), net
   
(714
)
   
327
     
(418
)
   
     
(805
)
Income (loss) before income taxes from continuing operations
   
(806
)
   
5,179
     
2,218
     
(5,796
)
   
795
 
Income tax  (benefit) provision
   
(1,905
)
   
925
     
570
     
     
(410
)
Income (loss from continuing operations
   
1,099
     
4,254
     
1,648
     
(5,796
)
   
1,205
 
Discontinued operations, net of tax
   
     
     
(106
)
   
     
(106
)
Net income (loss)
 
$
1,099
   
$
4,254
   
$
1,542
   
$
(5,796
)
 
$
1,099
 
 
                                       
Comprehensive income (loss)
 
$
1,571
   
$
4,252
   
$
1,999
   
$
(6,251
)
 
$
1,571
 
 
 
 
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
   
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 income (expense), net
   
(8,855
)
   
(207
)
   
351
     
     
(8,711
)
Equity in earnings of subsidiaries
   
(7,392
)
   
     
     
7,392
     
 
Other income (expense), 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
   
(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 income (loss)
 
$
(17,182
)
 
$
1,263
   
$
(7,061
)
 
$
5,798
   
$
(17,182
)


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 
 
Nine Months Ended September 30, 2014
 
(In thousands)
 
Parent
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
355,600
   
$
233,339
   
$
99,912
   
$
(156,485
)
 
$
532,366
 
Cost of goods sold
   
318,350
     
217,082
     
92,720
     
(155,143
)
   
473,009
 
Gross profit
   
37,250
     
16,257
     
7,192
     
(1,342
)
   
59,357
 
Operating expenses
   
29,588
     
706
     
146
     
     
30,440
 
Income (loss) from operations
   
7,662
     
15,551
     
7,046
     
(1,342
)
   
28,917
 
Other income (expense):
                                       
Interest income (expense), net
   
(26,118
)
   
(173
)
   
940
     
     
(25,351
)
Equity in earnings of subsidiaries
   
19,446
     
     
     
(19,446
)
   
 
Other income (expense), net
   
(1,591
)
   
453
     
(366
)
   
     
(1,504
)
Income (loss) before income taxes from continuing operations
   
(601
)
   
15,831
     
7,620
     
(20,788
)
   
2,062
 
Income tax  (benefit) provision
   
(3,422
)
   
1,068
     
1,387
     
     
(967
)
Income (loss) from continuing operations
   
2,821
     
14,763
     
6,233
     
(20,788
)
   
3,029
 
Discontinued operations, net of tax
   
     
     
(208
)
   
     
(208
)
Net income (loss)
 
$
2,821
   
$
14,763
   
$
6,025
   
$
(20,788
)
 
$
2,821
 
 
                                       
Comprehensive income (loss)
 
$
3,766
   
$
14,738
   
$
6,956
   
$
(21,694
)
 
$
3,766
 
 
 
 
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
   
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 income (expense), net
   
(27,000
)
   
(736
)
   
1,174
     
     
(26,562
)
Equity in earnings of subsidiaries
   
986
     
     
     
(986
)
   
 
Other income (expense), 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
)


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

 
 
Nine Months Ended September 30, 2014
 
(In thousands)
 
Parent
Company
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
   
   
   
 
Net income (loss)
 
$
2,821
   
$
14,763
   
$
6,025
   
$
(20,788
)
 
$
2,821
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                                       
Depreciation
   
8,335
     
13,446
     
3,126
     
     
24,907
 
Amortization – deferred financing costs
   
1,859
     
     
     
     
1,859
 
Amortization – other intangible assets
   
5,971
     
126
     
     
     
6,097
 
Loss on disposal of assets
   
580
     
62
     
27
     
     
669
 
Deferred income taxes
   
(2,195
)
   
925
     
678
     
     
(592
)
Non-cash stock-based compensation
   
1,831
     
     
     
     
1,831
 
Equity in earnings of subsidiaries and affiliates
   
(20,377
)
   
     
     
20,377
     
 
Change in other operating items
   
14,837
     
(41,354
)
   
(3,212
)
   
411
     
(29,318
)
Net cash provided by (used in) operating activities
   
13,662
     
(12,032
)
   
6,644
     
     
8,274
 
 
                                       
CASH FLOWS FROM INVESTING ACTIVITIES:
                                       
Purchases of property, plant, and equipment
   
(8,350
)
   
(11,977
)
   
(407
)