UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-34365

COMMERCIAL VEHICLE GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		41-1990662 (I.R.S. Employer Identification No.)
7800 Walton Parkway New Albany, Ohio (Address of principal executive offices)		43054 (Zip Code)

(614) 289-5360
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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, and (2) has been subject to such filing requirements for the past 90 days.

Yes þ            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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ            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 the 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 þ		Non-accelerated filer o (Do not check if a smaller reporting company)		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 þ

The number of shares outstanding of the Registrant’s common stock, par value $.01 per share, at June 30, 2011 was 28,769,799 shares.

 

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q

PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS			1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (UNAUDITED)			1
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010 (UNAUDITED)			2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (UNAUDITED)			3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)			4
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			23
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			31
ITEM 4 CONTROLS AND PROCEDURES			31
PART II OTHER INFORMATION			32
SIGNATURES			34
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

 i

ITEM 1 — FINANCIAL STATEMENTS

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
		(In thousands, except per share								(In thousands, except per share
		amounts)								amounts)
REVENUES		$	206,776			$	142,349			$	389,285			$	288,756
COST OF REVENUES			179,100				124,593				336,893				254,108
Gross Profit			27,676				17,756				52,392				34,648
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			16,023				13,668				32,217				26,879
AMORTIZATION EXPENSE			94				60				190				120
RESTRUCTURING COSTS			232				1,410				542				1,410
Operating Income			11,327				2,618				19,443				6,239
OTHER (INCOME) EXPENSE			(3	)			(1,281	)			3				(2,740	)
INTEREST EXPENSE			5,065				3,907				9,046				8,421
LOSS ON EARLY EXTINGUISHMENT OF DEBT			7,448				—				7,448				—
(Loss) Income Before Provision (Benefit) for Income Taxes			(1,183	)			(8	)			2,946				558
PROVISION (BENEFIT) FOR INCOME TAXES			986				(701	)			1,838				(811	)
NET (LOSS) INCOME		$	(2,169	)		$	693			$	1,108			$	1,369
(LOSS) INCOME PER COMMON SHARE:
Basic		$	(0.08	)		$	0.03			$	0.04			$	0.05
Diluted		$	(0.08	)		$	0.02			$	0.04			$	0.05
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic			27,767				27,214				27,766				24,973
Diluted			27,767				27,973				28,205				25,820

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

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

		June 30,				December 31,
		2011				2010
		(Unaudited)				(Unaudited)
		(In thousands, except share and per
		share amounts)
ASSETS
CURRENT ASSETS:
Cash		$	84,174			$	42,591
Accounts receivable, net of reserve for doubtful accounts of $4,281 and $2,717, respectfully			131,955				91,101
Inventories			70,670				66,622
Prepaid expenses and other, net			10,435				11,109
Total current assets			297,234				211,423
PROPERTY, PLANT AND EQUIPMENT, net			71,269				59,321
INTANGIBLE ASSETS, net of accumulated amortization of $2,435 and $2,245, respectfully			6,779				3,848
OTHER ASSETS, net			16,927				11,615
TOTAL ASSETS		$	392,209			$	286,207
LIABILITIES AND STOCKHOLDERS’ INVESTMENT (DEFICIT)
CURRENT LIABILITIES:
Accounts payable		$	78,167			$	61,216
Accrued liabilities			34,101				34,130
Total current liabilities			112,268				95,346
LONG-TERM DEBT			250,000				164,987
PENSION AND OTHER POST-RETIREMENT BENEFITS			22,157				23,343
OTHER LONG-TERM LIABILITIES			2,672				2,643
Total liabilities			387,097				286,319
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ INVESTMENT (DEFICIT):
Preferred stock $.01 par value; 5,000,000 shares authorized; no shares issued and outstanding; common stock $.01 par value; 60,000,000 shares authorized; 27,767,657 and 27,756,759 shares issued and outstanding, respectively			280				280
Treasury stock purchased from employees; 285,208 shares, respectively			(2,851	)			(2,851	)
Additional paid-in capital			217,189				215,491
Retained loss			(192,251	)			(193,359	)
Accumulated other comprehensive loss			(17,255	)			(19,673	)
Total stockholders’ investment (deficit)			5,112				(112	)
TOTAL LIABILITIES AND STOCKHOLDERS’ INVESTMENT (DEFICIT)		$	392,209			$	286,207

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

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

		Six Months Ended June 30,
		2011				2010
		(Unaudited)				(Unaudited)
		(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	1,108			$	1,369
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			6,139				6,177
Provision for doubtful accounts			2,154				2,349
Noncash amortization of debt financing costs			689				757
Loss on early extinguishment of debt			7,448				—
Amortization of bond discount/premium, net			(345	)			(632	)
Paid-in-kind interest			—				2,753
Pension plan contributions			(1,423	)			(1,136	)
Shared-based compensation expense			1,699				1,345
Loss (gain) on sale of assets			324				(51	)
Noncash gain on forward exchange contracts			—				(2,355	)
Change in other operating items			(29,788	)			9,469
Net cash (used in) provided by operating activities			(11,995	)			20,045
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(10,605	)			(2,770	)
Proceeds from disposal/sale of property plant and equipment			21				65
Post-acquisition and acquisitions payments, net of cash received			(8,699	)			—
Long-term supply contracts, other			—				196
Net cash used in investing activities			(19,283	)			(2,509	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net			—				25,359
Proceeds from issuance of common stock under equity incentive plans			—				1,126
Excess tax benefit from equity incentive plans			—				(52	)
Repayment of long-term debt			(170,929	)			—
Borrowing of long-term debt			250,000				—
Debt issuance costs and other			(6,852	)			—
Net cash provided by financing activities			72,219				26,433
EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH			642				(1,122	)
NET INCREASE IN CASH			41,583				42,847
CASH:
Beginning of period			42,591				9,524
End of period		$	84,174			$	52,371
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		$	11,128			$	5,406
Cash paid (received) for income taxes, net		$	641			$	(21,565	)

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

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Description of Business and Basis of Presentation

Commercial Vehicle Group, Inc. and its subsidiaries (“CVG”, “Company” or “we”) design and manufacture seat systems, interior trim systems (including instrument and door panels, headliners, cabinetry, molded products and floor systems), cab structures and components, mirrors, wiper systems, electronic wiring harness assemblies and controls and switches for the global commercial vehicle market, including the heavy-duty truck market, the construction, military, bus, agriculture and specialty transportation markets. We have facilities located in the United States in Alabama, Arizona, Indiana, Illinois, Iowa, North Carolina, Ohio, Oregon, Tennessee, Virginia and Washington and outside of the United States in Australia, Belgium, China, Czech Republic, Mexico, Ukraine and the United Kingdom.

We have prepared the condensed consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with our fiscal 2010 consolidated financial statements and the notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K as filed with the SEC on March 15, 2011. Unless otherwise indicated, all amounts are in thousands except per share amounts.

Revenues and operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results to be expected in future operating quarters.

2. Recently Issued Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement.” This ASU clarifies the concepts related to highest and best use and valuation premise, blockage factors and other premiums and discounts, the fair value measurement of financial instruments held in a portfolio and of those instruments classified as a component of stockholders’ equity. The guidance includes enhanced disclosure requirements about recurring Level 3 fair value measurements, the use of nonfinancial assets, and the level in the fair value hierarchy of assets and liabilities not recorded at fair value. The provisions of this ASU are effective prospectively for interim and annual periods beginning on or after December 15, 2011. Early application is prohibited. We are currently evaluating the impact of this new ASU.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income.” This ASU intends to enhance comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the statement of changes in stockholders’ equity. The provisions of this ASU will be applied retrospectively for interim and annual periods beginning after December 15, 2011. Early application is permitted. We are currently evaluating the impact of this new ASU.

3. Business Combinations

On January 28, 2011, we acquired all of the assets and certain liabilities related to Bostrom Seating, Inc. (“Bostrom”) for cash consideration of approximately $8.8 million (the “Bostrom acquisition”). Bostrom is a seat supplier to the North American heavy truck, aftermarket, bus and specialty vehicle markets. Bostrom has one owned manufacturing facility in Piedmont, Alabama. The acquisition of Bostrom further expands our North American presence in certain key end markets and enhances our overall aftermarket position. The operating results of Bostrom have been included in our consolidated financial statements since the date of acquisition. From the date of acquisition through June 30, 2011, we recorded revenues of approximately $15.0 million and an operating loss of $0.1 million relating to Bostrom. Acquisition related expenses of approximately $0.4 million were incurred for the six months ended June 30, 2011 and have been recorded as selling, general and administrative expenses on our consolidated statements of operations.

The Bostrom acquisition was accounted for by the acquisition method of accounting. Under acquisition accounting, the total purchase price has been allocated to the tangible and intangible assets and liabilities of Bostrom based upon their respective fair values. The purchase price and costs associated with the Bostrom acquisition exceeded the preliminary fair value of the net assets acquired by approximately $3.2 million. During the three-month period ended June 30, 2011, the purchase price was adjusted by approximately $0.1 million. In connection with the allocation of the purchase price, we recorded definite-lived intangible assets of approximately $3.1 million as shown in the following table (in thousands):

Purchase price, net of post-acquisition adjustment		$	8,699
Net assets at fair value			5,578
Excess of purchase price over net assets acquired		$	3,121

The purchase price allocation as of June 30, 2011 was as follows (in thousands):

Accounts receivable		$	3,898
Inventories			2,274
Other current assets			4
Property, plant and equipment			4,960
Definite-lived intangible assets			3,121
Current liabilities			(5,558	)
Contract purchase price		$	8,699

The following pro forma information for the three and six months ended June 30, 2011 and 2010 presents the result of operations as if the acquisition of Bostrom had taken place at the beginning of the periods. The pro forma results are not necessarily indicative of the financial position or result of operations had the acquisition taken place at the beginning of the periods. In addition, the pro forma results are not necessarily indicative of the future financial or operating results (in thousands, except per share data):

		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Revenue		$	216,137			$	148,628			$	400,956			$	301,066
Operating income		$	11,318			$	1,956			$	19,319			$	5,127
Net (loss) income		$	(2,156	)		$	39			$	1,007			$	255
(Loss) Earnings Per Share:
Basic		$	(0.08	)		$	—			$	0.04			$	0.01
Diluted		$	(0.08	)		$	—			$	0.04			$	0.01

4. Fair Value Measurement

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 — Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 — Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 — Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and revolving credit facility. The carrying value of these instruments approximates fair value as a result of the short duration of such instruments or due to the variability of interest cost associated with such instruments.

The carrying amounts and fair values of our long-term debt obligations are as follows (in thousands):

		June 30, 2011								December 31, 2010
		Carrying								Carrying
		Amount				Fair Value				Amount				Fair Value
Long-term debt		$	250,000			$	250,000			$	164,987			$	159,376

The fair value of long-term debt obligations is based on quoted market prices or on rates available on debt with similar terms and maturities. Based on these inputs, our long-term debt is classified as Level 2.

5. Stockholders’ Investment

Common Stock — Our authorized capital stock consists of 60,000,000 shares of common stock with a par value of $0.01 per share, with 28,769,799 shares outstanding as of June 30, 2011.

Preferred Stock — Our authorized capital stock consists of 5,000,000 shares of preferred stock with a par value of $0.01 per share, with no preferred shares outstanding as of June 30, 2011.

Earnings Per Share — Basic earnings per share is determined by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share, and all other diluted per share amounts presented, is determined by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period as determined by the Treasury Stock Method. Potential common shares are included in the diluted earnings per share calculation when dilutive. Diluted earnings per share for the three and six months ended June 30, 2011 and 2010 includes the effects of potential common shares consisting of common stock issuable upon exercise of outstanding stock options when dilutive (in thousands, except per share amounts):

		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
Net (loss) income applicable to common stockholders — basic and diluted		$	(2,169	)		$	693			$	1,108			$	1,369
Weighted average number of common shares outstanding			27,767				27,214				27,766				24,973
Dilutive effect of outstanding stock options and restricted stock grants after application of the Treasury Stock Method			—				759				439				847
Dilutive shares outstanding			27,767				27,973				28,205				25,820
Basic (loss) income per share		$	(0.08	)		$	0.03			$	0.04			$	0.05
Diluted (loss) income per share		$	(0.08	)		$	0.02			$	0.04			$	0.05

For the three months ended June 30, 2011, diluted earnings per share did not include approximately 0.5 million of our non-vested restricted stock and 0.5 million outstanding stock options as the effect would have been antidilutive. For the three months ended June 30, 2010, diluted earnings per share did not include approximately 0.5 million outstanding stock options as the effect would have been antidilutive. For the six months ended June 30, 2011 and 2010, diluted earnings per share did not include approximately 0.5 million outstanding stock options, respectively, as the effect would have been antidilutive.

Dividends — We have not declared or paid any cash dividends in the past. The terms of our Loan and Security Agreement restrict the payment or distribution of our cash or other assets, including cash dividend payments.

6. Share-Based Compensation

Restricted Stock Awards — Restricted stock is a grant of shares of common stock that may not be sold, encumbered or disposed of, and that may be forfeited in the event of certain terminations of employment, prior to the end of a restricted period set by the compensation committee. A participant granted restricted stock generally has all of the rights of a stockholder, unless the compensation committee determines otherwise. The following table summarizes information about restricted stock grants as of June 30, 2011:

						Estimated
						Forfeiture
Grant		Shares				Rate				Vesting Schedule
November 2008			798,450				9.2	%		3 equal annual installments commencing on October 20, 2009
November 2009			638,150				8.2	%		3 equal annual installments commencing on October 20, 2010
November 2010			404,000				8.2	%		3 equal annual installments commencing on October 20, 2011

As of June 30, 2011, there was approximately $5.8 million of unearned compensation expense related to non-vested share-based compensation arrangements granted under our equity incentive plans. This expense is subject to future adjustments for vesting and forfeitures and will be recognized on a straight-line basis over the remaining period of four months for the November 2008 awards, 16 months for the November 2009 awards and 28 months for the November 2010 awards, respectively.

The following table summarizes information about the non-vested restricted stock grants as of June 30, 2011:

						Weighted-Average
		Shares				Grant-Date Fair
		(in thousands)				Value
Nonvested at December 31, 2010			1,023			$	9.02
Granted			—				—
Vested			(11	)			2.47
Forfeited			(10	)			7.85
Nonvested at June 30, 2011			1,002			$	9.02

As of June 30, 2011, 1,703,883 shares of the 4.6 million shares authorized for issuance were available for issuance under the Fourth Amended and Restated Equity Incentive Plan, including cumulative forfeitures.

7. Accounts Receivable

Trade accounts receivable are stated at current value less an allowance for doubtful accounts, which approximates fair value. This estimated allowance is based primarily on management’s evaluation of specific balances as the balances become past due, the financial condition of our customers and our historical experience of write-offs. If not reserved through specific identification procedures, our general policy for uncollectible accounts is to reserve at a certain percentage threshold, based upon the aging categories of accounts receivable and our historical experience with write-offs. Past due status is based upon the due date of the original amounts outstanding. When items are ultimately deemed uncollectible, they are charged off against the reserve previously established in the allowance for doubtful accounts.

8. Inventories

Inventories are valued at the lower of first-in, first-out (“FIFO”) cost or market. Cost includes applicable material, labor and overhead. Inventories consisted of the following (in thousands):

		June 30,				December 31,
		2011				2010
Raw materials		$	48,388			$	46,194
Work in process			14,015				12,477
Finished goods			14,710				13,727
Less excess and obsolete			(6,443	)			(5,776	)
		$	70,670			$	66,622

Inventory quantities on-hand are regularly reviewed and, where necessary, provisions for excess and obsolete inventory are recorded based primarily on our estimated production requirements driven by expected market volumes. Excess and obsolete provisions may vary by product depending upon future potential use of the product.

9. Intangible Assets

We review definite-lived intangible assets for recoverability whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If the estimated undiscounted cash flows are less than the carrying amount of such assets, we recognize an impairment loss in an amount necessary to write down the assets to fair value as estimated from expected future discounted cash flows. Estimating the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. We base our fair value estimates on assumptions we believe to be reasonable, but that are inherently uncertain.

Our intangible assets were comprised of the following (in thousands):

June 30, 2011

December 31, 2010

Amortization

Gross Carrying

Accumulated

Net Carrying

Amortization

Gross Carrying

Accumulated

Net Carrying

Period

Amount

Amortization

Amount

Period

Amount

Amortization

Amount

Definite-lived intangible assets:

Trademarks/Tradenames

22 years

$

8,776

$

(1,997

)

$

6,779

20 years

$

5,655

$

(1,807

)

$

3,848

We recorded approximately $3.1 million in definite-lived intangible assets (tradenames) with a useful life of 30 years in connection with the Bostrom acquisition.

The aggregate intangible asset amortization expense was approximately $94 thousand and $60 thousand for the three months ended June 30, 2011 and 2010, respectively, and approximately $190 thousand and $120 thousand for the six months ended June 30, 2011 and 2010, respectively.

The estimated intangible asset amortization expense for the fiscal year ending December 31, 2011, and for the five succeeding years is as follows (in thousands):

Fiscal Year Ended						Estimated
December 31,						Amortization Expense
2011						$	335
2012						$	344
2013						$	344
2014						$	344
2015						$	344
2016						$	344

10. Restructuring Activities

In 2009, we announced the following restructuring plans:

•		A reduction in workforce and the closure of certain manufacturing, warehousing and assembly facilities. The facilities closed included an assembly and sequencing facility in Kent, Washington; seat sequencing and assembly facility in Statesville, North Carolina; manufacturing facility in Lake Oswego, Oregon; inventory and product warehouse in Concord, North Carolina; and seat assembly and distribution facility in Seneffs, Belgium. The decision to reduce our workforce was the result of the extended downturn of the global economy and, in particular, the commercial vehicle markets. We substantially completed these activities as of December 31, 2009.
•		The closure of our Vancouver, Washington manufacturing facility. The decision to close the facility was the result of the extended downturn of the global economy and, in particular, the commercial vehicle markets. We substantially completed this closure as of December 31, 2009.
•		The closure and consolidation of one of our facilities located in Liberec, Czech Republic and the closing of our Norwalk, Ohio truck cab assembly facility. The closure and consolidation of our Liberec, Czech Republic facility was a result of management’s continued focus on reducing fixed costs and eliminating excess capacity. The closure of this facility was substantially completed as of December 31, 2009. The closure of our Norwalk, Ohio facility was a result of Navistar’s decision to insource the cab assembly operations into its existing assembly facility in Escobedo, Mexico. We substantially completed the Norwalk closure as of September 30, 2010.

We estimate that we will record total cash expenditures for all of these restructurings of approximately $6.7 million, consisting of approximately $2.5 million of severance costs and $4.2 million of facility closure costs. For the three months ended June 30, 2011, we incurred charges of approximately $0.2 million in facility closure costs. We have incurred cumulative restructuring charges of $5.9 million consisting of approximately $2.5 million of severance costs and $3.4 million of facility closure costs as of June 30, 2011.

A summary of the restructuring liability for the six months ended June 30, 2011 is as follows (in thousands):

						Facility Exit
						and Other
		Employee				Contractual
		Costs				Costs				Total
Balance — December 31, 2010		$	101			$	1,362			$	1,463
Provisions			71				471				542
Utilizations			(165	)			(967	)			(1,132	)
Currency			—				80				80
Balance — June 30, 2011		$	7			$	946			$	953

During the three-month period ended June 30, 2011, we reclassified our held-for-sale assets pertaining to our Norwalk, Ohio facility consisting of $1.4 million in land and buildings and approximately $0.7 million in machinery and equipment to property, plant and equipment within our condensed consolidated balance sheet. This reclassification resulted from management’s decision to no longer actively market the sale of the assets.

11. Commitments and Contingencies

Warranty — We are subject to warranty claims for products that fail to perform as expected due to design or manufacturing deficiencies. Customers continue to require their outside suppliers to guarantee or warrant their products and bear the cost of repair or replacement of such products. Depending on the terms under which we supply products to our customers, a customer may hold us responsible for some or all of the repair or replacement costs of defective products when the product supplied did not perform as represented. Our policy is to reserve for estimated future customer warranty costs based on historical trends and current economic factors. The following represents a summary of the warranty provision for the six months ended June 30, 2011 (in thousands):

Balance — December 31, 2010		$	2,653
Increase due to acquisitions			297
Additional provisions recorded			803
Deduction for payments made			(858	)
Currency translation adjustment			8
Balance — June 30, 2011		$	2,903

Leases — We lease office and manufacturing space and certain equipment under non-cancelable operating lease agreements that require us to pay maintenance, insurance, taxes and other expenses in addition to annual rents. As of June 30, 2011, our equipment leases did not provide for any material guarantee of a specified portion of residual values.

Guarantees — We accrue for costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with accounting guidance for guarantees issued after December 31, 2002, we record a liability for the fair value of such guarantees in the balance sheet. As of June 30, 2011, we had no such guarantees.

Litigation — We are subject to various legal actions and claims incidental to our business, including those arising out of alleged defects, product warranties, employment-related matters and environmental matters. Management believes that we maintain adequate insurance to cover these claims. We have established reserves for issues that are probable and estimable in amounts management believes are adequate to cover reasonable adverse judgments not covered by insurance.

Based upon the information available to management and discussions with legal counsel, it is the opinion of management that the ultimate outcome of the various legal actions and claims that are incidental to our business will not have a material adverse impact on our consolidated financial position, results of operations or cash flows; however, such matters are subject to many uncertainties, and the outcomes of individual matters are not predictable with assurance.

12. Debt

Debt consisted of the following (in thousands):

		June 30,				December 31,
		2011				2010
8% senior notes due July 1, 2013		$	—			$	97,810
15% second lien term loan due November 1, 2012 ($16,800 principal amount, net of $3,042 of original issue discount)			—				13,758
11%/13% third lien senior secured notes due February 15, 2013 ($42,124 principal amount and $5,463 of issuance premium)			—				47,587
Paid-in-kind interest on 11%/13% third lien senior secured notes due February 15, 2013			—				5,832
7.875% senior notes due April 15, 2019			250,000				—
		$	250,000			$	164,987

Revolving Credit Facility — On January 7, 2009, we and certain of our direct and indirect U.S. subsidiaries, as borrowers (the “borrowers”), entered into a Loan and Security Agreement with Bank of America, N.A., as agent and lender, which provided for a three-year asset-based revolving credit facility (the “revolving credit facility”) with an aggregate principal amount of up to $37.5 million (after giving effect to a second amendment to our Loan and Security Agreement entered into on August 4, 2009), which was subject to an availability block. On April 26, 2011, we entered into an amendment and restatement to the loan and security agreement governing the revolving credit facility (as so amended and restated, the “Loan and Security Agreement”) which, among other things, extended the maturity of the revolving credit facility to April 26, 2014, increased the revolving commitment to $40.0 million and revised the availability block to equal the amount of debt Bank of America, N.A. or its affiliates makes available to the Company’s foreign subsidiaries. Up to an aggregate of $10.0 million is available to the borrowers for the issuance of letters of credit, which reduces availability under the revolving credit facility.

As of June 30, 2011, we did not have borrowings under the Loan and Security Agreement. In addition, as of June 30, 2011, we had outstanding letters of credit of approximately $3.2 million and borrowing availability of $36.8 million under the Loan and Security Agreement.

Our Loan and Security Agreement contains financial covenants, including a minimum fixed charge coverage ratio, if we do not maintain certain availability requirements. Because we had borrowing availability in excess of $10.0 million from March 31, 2011 through June 30, 2011, we were not required to comply with the minimum fixed charge coverage ratio covenant during the quarter ended June 30, 2011.

Under the revolving credit facility, borrowings bear interest at various rates plus a margin based on certain financial ratios. The borrowers’ obligations under the revolving credit facility are secured by a first-priority lien (subject to certain permitted liens) on substantially all of the tangible and intangible assets of the borrowers, as well as 100% of the capital stock of the direct domestic subsidiaries of each borrower and 65% of the capital stock of each foreign subsidiary directly owned by a borrower. Each of CVG and each other borrower is jointly and severally liable for the obligations under the revolving credit facility and unconditionally guarantees the prompt payment and performance thereof.

The applicable margin for borrowings under the revolving credit facility is based upon the fixed charge coverage ratio for the most recently ended fiscal quarter, as follows:

				Domestic Base				LIBOR
Level		Ratio		Rate Loans				Revolver Loans
III		≤ 1.25 to 1.00			1.50	%			2.50	%
II		≥ 1.25 to 1.00 but < 1.75 to 1.00			1.25	%			2.25	%
I		≥ 1.75 to 1.00			1.00	%			2.00	%

Until receipt by the agent of the financial statements and corresponding compliance certificate for the fiscal quarter ending March 31, 2011, the applicable margin was set at Level II. Thereafter, the applicable margin shall be subject to increase or decrease following receipt by the agent of the financial statements and corresponding compliance certificate for each fiscal quarter. If the financial statements or corresponding compliance certificate are not timely delivered, then the highest rate shall be applicable until the first day of the calendar month following actual receipt.

We pay a commitment fee to the lenders, which is calculated at a rate per annum based on a percentage of the difference between committed amounts and amounts actually borrowed under the revolving credit facility multiplied by an applicable margin. The commitment fee is payable quarterly in arrears. Currently, the unused commitment fees is (i) .500% per annum times the unused commitment during any fiscal quarter in which the aggregate average daily unused commitment is equal to or greater than 50% of the revolver commitments or (ii) .375% per annum times the unused commitment during any fiscal quarter in which the aggregate average daily unused commitment is less than 50% of the revolver commitments.

Terms, Covenants and Compliance Status — The revolving credit facility requires the maintenance of a minimum fixed charge coverage ratio calculated based upon consolidated EBITDA (as defined in the revolving credit facility) as of the last day of each of our fiscal quarters. We are not required to comply with the fixed charge coverage ratio requirement for as long as we maintain at least $10.0 million of borrowing availability under the revolving credit facility. If borrowing availability is less than $10.0 million at any time, we would be required to comply with a fixed charge coverage ratio of 1.1:1.0 as of the end of any fiscal quarter, and would be required to continue to comply with these requirements until we have borrowing availability of $10.0 million or greater for 60 consecutive days.

The revolving credit facility, as amended, contains customary restrictive covenants, including, without limitation, limitations on the ability of the borrowers and their subsidiaries to incur additional debt and guarantees; grant liens on assets; pay dividends or make other distributions; make investments or acquisitions; dispose of assets; make payments on certain indebtedness; merge, combine with any other person or liquidate; amend organizational documents; file consolidated tax returns with entities other than other borrowers or their subsidiaries; make material changes in accounting treatment or reporting practices; enter into restrictive agreements; enter into hedging agreements; engage in transactions with affiliates; enter into certain employee benefit plans; amend subordinated debt or the indenture governing the notes; and other matters customarily restricted in loan agreements. The revolving credit facility also contains customary reporting and other affirmative covenants. We were in compliance with these covenants as of June 30, 2011.

The revolving credit facility contains customary events of default, including, without limitation, nonpayment of obligations under the revolving credit facility when due; material inaccuracy of representations and warranties; violation of covenants in the revolving credit facility and certain other documents executed in connection therewith; breach or default of agreements related to debt in excess of $5.0 million that could result in acceleration of that debt; revocation or attempted revocation of guarantees; denial of the validity or enforceability of the loan documents or failure of the loan documents to be in full force and effect; certain judgments in excess of $2.0 million; the inability of an obligor to conduct any material part of its business due to governmental intervention, loss of any material license, permit, lease or agreement necessary to the business; cessation of an obligor’s business for a material period of time; impairment of collateral through condemnation proceedings; certain events of bankruptcy or insolvency; certain Employee Retirement Income Securities Act (“ERISA”) events; and a change in control of CVG. Certain of the defaults are subject to exceptions, materiality qualifiers, grace periods and baskets customary for credit facilities of this type.

Voluntary prepayments of amounts outstanding under the revolving credit facility are permitted at any time, without premium or penalty.

The revolving credit facility requires us to make mandatory prepayments with the proceeds of certain asset dispositions and upon the receipt of insurance or condemnation proceeds to the extent we do not use the proceeds for the purchase of assets useful in our business.

Refinancing Transactions — On April 26, 2011, we completed a private offering of $250.0 million aggregate principal amount of 7.875% Senior Secured Notes due 2019 (the “7.875% notes”). We used the net proceeds from the offering of the 7.875% notes (i) to repay all outstanding indebtedness under the second lien term loan, (ii) to fund the repurchase of approximately $94.0 million of the 8% senior notes due 2013 (the “8% senior notes”) (approximately 97.1% of the outstanding 8% senior notes) and approximately $48.0 million of the 11/13% third lien senior secured notes due 2013 (the “third lien notes”) (100% of the outstanding third lien notes) pursuant to tender offers and consent solicitations (the “Tender Offers and Consent Solicitations”) for the 8% senior notes and the third lien notes, and (iii) to pay related fees and expenses.

On April 26, 2011, in connection with the Tender Offers and Consent Solicitations, we entered into amendments to the indentures governing the 8% senior notes and the third lien notes to, among other things, (i) eliminate substantially all of the restrictive covenants contained in the indentures, (ii) eliminate or modify certain events of default contained in the indentures, (iii) eliminate or modify related provisions contained in the indentures, and (iv) with respect to the third lien notes, eliminate certain conditions to covenant defeasance contained in the indenture governing such notes and release the liens in respect of such notes.

On June 1, 2011, we redeemed the remainder of the outstanding 8% senior notes at a price of 102% of the principal amount thereof plus accrued and unpaid interest to June 1, 2011 by issuing a Notice of Redemption to holders of the 8% senior notes on May 2, 2011.

7.875% Senior Secured Notes due 2019 — The 7.875% notes were issued pursuant to an indenture, dated as of April 26, 2011 (the “7.875% Notes Indenture”), by and among CVG, certain of our subsidiaries party thereto, as guarantors (the “guarantors”) and U.S. Bank National Association, as trustee. Interest is payable on the 7.875% notes on April 15 and October 15 of each year until their maturity date of April 15, 2019.

The 7.875% notes are senior secured obligations of CVG. Our obligations under the 7.875% notes are guaranteed by the guarantors. The obligations of CVG and the guarantors under the 7.875% notes are secured by a second-priority lien (subject to certain permitted liens) on substantially all of the property and assets of CVG and the guarantors, and a pledge of 100% of the capital stock of CVG’s domestic subsidiaries and 65% of the voting capital stock of each foreign subsidiary directly owned by CVG and the guarantors. The liens, the security interests and all of the obligations of CVG and the guarantors and all provisions regarding remedies in an event of default are subject to an intercreditor agreement between the agent for the revolving credit facility and the collateral agent for the 7.875% notes.

The 7.875% Notes Indenture contains restrictive covenants, including, without limitation, limitations on our ability and the ability of our restricted subsidiaries to: incur additional debt; pay dividends on, redeem or repurchase capital stock; restrict dividends or other payments of subsidiaries; make investments; engage in transactions with affiliates; create liens on assets; engage in sale/leaseback transactions; and consolidate, merge or transfer all or substantially all of our assets and the assets of our restricted subsidiaries. These covenants are subject to important qualifications set forth in the 7.875% Notes Indenture. We were in compliance with these covenants as of June 30, 2011.

The 7.875% Notes Indenture provides for events of default (subject in certain cases to customary grace and cure periods) which include, among others, nonpayment of principal or interest when due, breach of covenants or other agreements in the indenture governing the 7.875% notes, defaults in payment of certain other indebtedness, certain events of bankruptcy or insolvency and certain defaults with respect to the security interests. Generally, if an event of default occurs, the trustee or the holders of at least 25% in principal amount of the then outstanding 7.875% notes may declare the principal of and accrued but unpaid interest on all of the 7.875% notes to be due and payable immediately. All provisions regarding remedies in an event of default are subject to the Intercreditor Agreement.

We may redeem the 7.875% notes, in whole or in part, at any time prior to April 15, 2014 at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the “make-whole” premium set forth in the 7.875% Notes Indenture. We may redeem the 7.875% notes, in whole or in part, at any time on or after April 15, 2014 at the redemption prices set forth in the 7.875% Notes Indenture, plus accrued and unpaid interest, if any, to the redemption date. Not more than once during each twelve-month period ending on April 15, 2012, April 15, 2013 and April 15, 2014, we may redeem up to $25.0 million of the aggregate principal amount of the 7.875% notes at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date. In addition, at any time on or prior to April 15, 2014, on one or more occasions, we may redeem up to 35% of the aggregate principal amount of the 7.875% notes with the net proceeds of certain equity offerings, as described in the 7.875% Notes Indenture, at a redemption price equal to 107.875% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date. If we experience certain change of control events, holders of the 7.875% notes may require us to repurchase all or part of their notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.

13. Income Taxes

We, or one of our subsidiaries, file federal income tax returns in the United States and income tax returns in various states and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examinations by any of the taxing authorities for years before 2006. There is currently one income tax examination in process.

As of June 30, 2011, we have provided a liability of approximately $0.8 million of unrecognized tax benefits related to various federal and state income tax positions, which would impact our effective tax rate if recognized.

We accrue penalties and interest related to unrecognized tax benefits through income tax expense, which is consistent with the recognition of these items in prior reporting periods. We had approximately $0.4 million accrued for the payment of interest and penalties at June 30, 2011, of which $0.2 million was accrued during the current year. Accrued interest and penalties are included in the $0.8 million of unrecognized tax benefits.

During the current quarter, we did not release any tax reserves associated with items falling outside the statute of limitations and the closure of certain tax years for examination purposes. Events could occur within the next 12 months that would have an impact on the amount of unrecognized tax benefits that would be required. Approximately $2 thousand of unrecognized tax benefits relate to items that are affected by expiring statutes of limitation within the next 12 months.

14. Foreign Currency Forward Exchange Contracts

We use forward exchange contracts to hedge certain of the foreign currency transaction exposures primarily related to our United Kingdom operations. We estimate our projected revenues and purchases in certain foreign currencies or locations and will hedge a portion or all of the anticipated long or short positions. As of June 30, 2011, we did not have any derivatives designated as hedging instruments. As of June 30, 2010, our forward foreign exchange contracts have been marked-to-market and the fair value of contracts recorded in the consolidated balance sheets with the offsetting non-cash gain or loss recorded in our consolidated statements of operations. We do not hold or issue foreign exchange options or forward contracts for trading purposes.

The following table summarizes the effect of derivative instruments on the consolidated statements of operations for derivatives not designated as hedging instruments (in thousands):

						Three Months Ended June 30,								Six Months Ended June 30,
		Location of Gain				2011				2010				2011				2010
		Recognized in Income on				Amount of Gain Recognized in Income								Amount of Gain Recognized in Income
		Derivatives				on Derivatives								on Derivatives
Foreign exchange contracts		Other income				$	—			$	1,287			$	—			$	2,355

15. Pension and Other Post-Retirement Benefit Plans

We sponsor pension and other post-retirement benefit plans that cover certain hourly and salaried employees in the United States and United Kingdom. Our policy is to make annual contributions to the plans to fund the normal cost as required by local regulations. In addition, we have a post-retirement benefit plan for certain U.S. operations, retirees and their dependents.

The components of net periodic benefit cost related to the pension and other post-retirement benefit plans was as follows (in thousands):

																		Other Post-Retirement
		U.S. Pension Plans								Non-U.S. Pension Plans								Benefit Plans
		Three Months Ended June 30,								Three Months Ended June 30,								Three Months Ended June 30,
		2011				2010				2011				2010				2011				2010
Service cost		$	18			$	66			$	—			$	—			$	—			$	1
Interest cost			489				492				541				519				16				29
Expected return on plan assets			(479	)			(423	)			(465	)			(395	)			—				—
Amortization of prior service cost			—				—				—				—				(32	)			(25	)
Recognized actuarial loss (gain)			26				23				74				89				(34	)			1
Net periodic benefit cost			54				158				150				213				(50	)			6
Special termination benefits			—				26				—				—				—				68
Net benefit cost		$	54			$	184			$	150			$	213			$	(50	)		$	74

																		Other Post-Retirement
		U.S. Pension Plans								Non-U.S. Pension Plans								Benefit Plans
		Six Months Ended June 30,								Six Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010				2011				2010
Service cost		$	38			$	112			$	—			$	—			$	—			$	2
Interest cost			977				996				1,102				1,047				32				59
Expected return on plan assets			(957	)			(847	)			(932	)			(795	)			—				—
Amortization of prior service cost			—				—				—				—				(64	)			(25	)
Recognized actuarial loss (gain)			51				55				149				182				(68	)			2
Net periodic benefit cost			109				316				319				434				(100	)			38
Special termination benefits			—				54				—				—				—				136
Net benefit cost		$	109			$	370			$	319			$	434			$	(100	)		$	174

We previously disclosed in our financial statements for the year ended December 31, 2010, that we expect to contribute approximately $2.8 million to our pension plans and $0.3 million to our other post-retirement benefit plans in 2011. As of June 30, 2011, approximately $1.4 million of contributions have been made to our pension plans. We anticipate contributing an additional $1.4 million to our pension plans in 2011 for total estimated contributions during 2011 of $2.8 million.

16. Comprehensive Loss

We follow the comprehensive income accounting guidance, which established standards for reporting and display of comprehensive loss and its components. Comprehensive loss reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. Comprehensive loss represents net income adjusted for foreign currency translation adjustments and minimum pension liability. In accordance with the accounting guidance, we have elected to disclose comprehensive loss in stockholders’ investment. The components of accumulated other comprehensive loss consisted of the following as of June 30, 2011 (in thousands):

Foreign currency translation adjustment		$	(5,428	)
Pension liability			(11,827	)
Accumulated other comprehensive loss		$	(17,255	)

Comprehensive income (loss) was as follows (in thousands):

		Six Months Ended June 30,
		2011				2010
Net income		$	1,108			$	1,369
Other comprehensive income (loss):
Foreign currency translation adjustment			2,418				(2,001	)
Pension liability			—				241
Comprehensive income (loss)		$	3,526			$	(391	)

17. Related Party Transactions

In May 2008, we entered into a freight services arrangement with Group Transportation Services Holdings, Inc. (“GTS”), a third party logistics and freight management company. Under this arrangement, which was approved by our Audit Committee on April 29, 2008, GTS manages a portion of our freight and logistics program as well as administers its payments to additional third party freight service providers. In May 2010, GTS merged with Roadrunner Transportation Systems, Inc. (“RRTS”) in connection with the initial public offering of RRTS. Chad M. Utrup, our Chief Financial Officer, was elected to the Board of Directors of RRTS in May 2010. For the six months ended June 30, 2011, we made payments (net of pass through payments to other third party freight service providers) to GTS/RRTS of approximately $0.2 million for these services.

18. Subsequent Events

On July 27, 2011, we announced the acquisition of certain assets of Stratos Seating (“Stratos”), a seat supplier to the Australian military, truck and specialty vehicle markets, for total cash consideration of approximately $2.3 million. Stratos is located in Wetherill Park, Sydney, Australia. This acquisition expands our Australian presence in the military and truck markets and enhances our overall product offering with the addition of the unique Stratos suspension system and military seating products.

19. Consolidating Guarantor and Non-Guarantor Financial Information

The following condensed consolidating financial information presents balance sheets, statements of operations and cash flow information related to our business. Each guarantor is a direct or indirect subsidiary of CVG and has fully and unconditionally guaranteed the 8% senior notes and the 7.875% notes issued by CVG, on a joint and several basis.

The following condensed consolidating financial information presents the financial information of CVG (the “parent company”), the guarantor companies and the non-guarantor companies in accordance with Rule 3-10 under the Securities and Exchange Commission’s Regulation S-X. The financial information may not necessarily be indicative of results of operations or financial position had the guarantor companies or non-guarantor companies operated as independent entities. The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly owned subsidiaries accounted for under the equity method. All applicable corporate expenses have been allocated appropriately among the guarantor and non-guarantor subsidiaries.

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2011

		Parent				Guarantor				Non-Guarantor
		Company				Companies				Companies				Elimination				Consolidated
		(In thousands)
REVENUES		$	—			$	159,357			$	67,131			$	(19,712	)		$	206,776
COST OF REVENUES			—				139,038				59,774				(19,712	)			179,100
Gross Profit			—				20,319				7,357				—				27,676
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			—				11,960				4,063				—				16,023
AMORTIZATION EXPENSE			—				94				—				—				94
EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES			(4,369	)			(132	)			—				4,501				—
RESTRUCTURING COSTS			—				232				—				—				232
Operating Income			4,369				8,165				3,294				(4,501	)			11,327
OTHER INCOME			—				—				(3	)			—				(3	)
INTEREST EXPENSE			309				4,726				30				—				5,065
LOSS ON EARLY EXTINGUISHMENT OF DEBT			7,448				—				—				—				7,448
(Loss) Income Before (Benefit) Provision for Income Taxes			(3,388	)			3,439				3,267				(4,501	)			(1,183	)
(BENEFIT) PROVISION FOR INCOME TAXES			(1,219	)			1,429				776				—				986
NET (LOSS) INCOME		$	(2,169	)		$	2,010			$	2,491			$	(4,501	)		$	(2,169	)

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2011

		Parent				Guarantor				Non-Guarantor
		Company				Companies				Companies				Elimination				Consolidated
		(In thousands)
REVENUES		$	—			$	293,981			$	132,106			$	(36,802	)		$	389,285
COST OF REVENUES			—				256,801				116,894				(36,802	)			336,893
Gross Profit			—				37,180				15,212				—				52,392
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			—				23,571				8,646				—				32,217
AMORTIZATION EXPENSE			—				190				—				—				190
EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES			(7,234	)			(278	)			—				7,512				—
RESTRUCTURING COSTS			—				542				—				—				542
Operating Income			7,234				13,155				6,566				(7,512	)			19,443
OTHER EXPENSE			—				—				3				—				3
INTEREST EXPENSE			688				8,322				36				—				9,046
LOSS ON EARLY EXTINGUISHMENT OF DEBT			7,448				—				—				—				7,448
(Loss) Income Before (Benefit) Provision for Income Taxes			(902	)			4,833				6,527				(7,512	)			2,946
(BENEFIT) PROVISION FOR INCOME TAXES			(2,010	)			2,615				1,233				—				1,838
NET INCOME		$	1,108			$	2,218			$	5,294			$	(7,512	)		$	1,108

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2011

		Parent				Guarantor				Non-Guarantor
		Company				Companies				Companies				Elimination				Consolidated
		(In thousands)
ASSETS
CURRENT ASSETS:
Cash		$	67,911			$	33			$	16,230			$	—			$	84,174
Accounts receivable, net			26				97,197				34,732				—				131,955
Intercompany receivable			81,227				12,516				—				(93,743	)			—
Inventories			—				43,965				26,705				—				70,670
Prepaid expenses and other, net			—				4,880				5,555				—				10,435
Total current assets			149,164				158,591				83,222				(93,743	)			297,234
PROPERTY, PLANT AND EQUIPMENT, net			—				62,668				8,601				—				71,269
EQUITY INVESTMENT IN SUBSIDIARIES			102,588				18,663				309				(121,560	)			—
INTANGIBLE ASSETS, net			—				6,779				—				—				6,779
OTHER ASSETS, net			7,603				9,198				126				—				16,927
TOTAL ASSETS		$	259,355			$	255,899			$	92,258			$	(215,303	)		$	392,209
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Accounts payable		$	—			$	50,723			$	27,444			$	—			$	78,167
Intercompany payable			—				79,843				13,900				(93,743	)			—
Accrued liabilities			3,427				21,420				9,254				—				34,101
Total current liabilities			3,427				151,986				50,598				(93,743	)			112,268
LONG-TERM DEBT			250,000				—				—				—				250,000
PENSION AND OTHER POST-RETIREMENT BENEFITS			—				12,154				10,003				—				22,157
OTHER LONG-TERM LIABILITIES			816				947				909				—				2,672
Total liabilities			254,243				165,087				61,510				(93,743	)			387,097
STOCKHOLDERS’ INVESTMENT			5,112				90,812				30,748				(121,560	)			5,112
TOTAL LIABILITIES AND STOCKHOLDERS’ INVESTMENT		$	259,355			$	255,899			$	92,258			$	(215,303	)		$	392,209

 

COMMERCIAL VEHICLE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011

		Parent				Guarantor				Non-Guarantor
		Company				Companies				Companies				Elimination				Consolidation
		(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities		$	(656	)		$	(17,076	)		$	5,736			$	1			$	(11,995	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment			—				(8,130	)			(2,475	)			—				(10,605	)
Proceeds from disposal/sale of property plant and equipment			—				2				19				—				21
Post-acquisition and acquisition payments, net of cash received			—				(8,699	)			—				—				(8,699	)
Long-term supply contracts, other			—				—				—				—				—
Net cash used in investing activities			—				(16,827	)			(2,456	)			—				(19,283	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in intercompany receivables/payables			(35,125	)			33,911				1,215				(1	)			—
Repayment of long-term debt			(170,929	)			—				—				—				(170,929	)
Borrowing of long-term debt			250,000				—				—				—				250,000
Debt issuance costs and other			(6,852	)			—				—				—				(6,852	)
Net cash provided by financing activities			37,094				33,911				1,215				(1	)			72,219
EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH			—				(2	)			644				—				642
NET INCREASE IN CASH			36,438				6				5,139				—				41,583
CASH:
Beginning of period			31,473				27				11,091				—				42,591
End of period		$	67,911			$	33			$	16,230			$	—			$	84,174