ACCURIDE CORP - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - ACCURIDE CORP	Financial_Report.xls
EX-31.2 - EX-31.2 - ACCURIDE CORP	acw12-1ex31d2.htm
EX-32.1 - EX-32.1 - ACCURIDE CORP	acw12-1ex32d1.htm
EX-31.1 - EX-31.1 - ACCURIDE CORP	acw12-1ex31d1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2012.

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to ___________.

Commission file number 001-32483

ACCURIDE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	61-1109077
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

7140 Office Circle, Evansville, IN	47715
(Address of Principal Executive Offices)	(Zip Code)

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

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

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

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

Large Accelerated Filer o

Accelerated Filer ý

Non-Accelerated Filero

Smaller Reporting Company o

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

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

As of May 2, 2012, 47,326,312 shares of Accuride Corporation common stock, par value $.01 per share, were outstanding

ACCURIDE CORPORATION

Table of Contents

PART I – FINANCIAL INFORMATION		Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 6.	Exhibits	24
Signatures		25

-2-

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

ACCURIDE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	March 31,			December 31,
(In thousands, except for share and per share data)	2012			2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	36,638		$	56,915
Customer receivables, net of allowance for doubtful accounts of $707 and $676 in 2012 and 2011, respectively		110,082			90,001
Other receivables		9,676			8,074
Inventories		82,677			72,827
Deferred income taxes		7,675			7,675
Prepaid expenses and other current assets		5,053			4,657
Total current assets		251,801			240,149
PROPERTY, PLANT AND EQUIPMENT, net		283,294			271,562
OTHER ASSETS:
Goodwill		163,536			163,536
Other intangible assets, net		178,653			181,349
Deferred financing costs, net of accumulated amortization of $2,846 and $2,419 in 2012 and 2011, respectively		8,022			8,449
Other		2,638			3,817
TOTAL	$	887,944		$	868,862
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	88,644		$	80,261
Accrued payroll and compensation		20,078			16,466
Accrued interest payable		5,080			12,503
Accrued workers compensation		4,902			4,936
Accrued and other liabilities		16,573			14,323
Total current liabilities		135,277			128,489
LONG-TERM DEBT		323,344			323,082
DEFERRED INCOME TAXES		22,229			21,001
NON-CURRENT INCOME TAXES PAYABLE		7,898			7,898
OTHER POSTRETIREMENT BENEFIT PLAN LIABILITY		76,964			76,563
PENSION BENEFIT PLAN LIABILITY		48,909			50,863
OTHER LIABILITIES		18,440			3,583
COMMITMENTS AND CONTINGENCIES (Note 6)		—			—
STOCKHOLDERS’ EQUITY:
Preferred Stock, $0.01 par value; 10,000,000 shares authorized		—			—
Common Stock, $0.01 par value; 80,000,000 shares authorized, 47,326,312 and 47,286,768 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively, and additional paid-in-capital		436,035			435,368
Accumulated other comprehensive loss		(34,640	)		(34,422	)
Accumulated deficiency		(146,512	)		(143,563	)
Total stockholders’ equity		254,883			257,383
TOTAL	$	887,944		$	868,862

See notes to unaudited condensed consolidated financial statements.

-3-

Table of Contents

ACCURIDE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Three Months Ended March 31,
(In thousands except per share data)	2012			2011

NET SALES	$	269,518		$	210,895
COST OF GOODS SOLD		247,418			193,605
GROSS PROFIT		22,100			17,290
OPERATING EXPENSES:
Selling, general and administrative		14,864			15,849
INCOME FROM OPERATIONS		7,236			1,441
OTHER INCOME (EXPENSE):
Interest income		16			39
Interest expense		(8,761	)		(8,379	)
Other income, net		157			2,163
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS		(1,352	)		(4,736	)
INCOME TAX PROVISION		1,597			499
LOSS FROM CONTINUING OPERATIONS		(2,949	)		(5,235	)
DISCONTINUED OPERATIONS, NET OF TAX		—			74
NET LOSS	$	(2,949	)	$	(5,161	)
Weighted average common shares outstanding—basic		47,319			47,237
Basic loss per share – continuing operations	$	(0.06	)	$	(0.11	)
Basic loss per share – discontinued operations		—			0.00
Basic loss per share	$	(0.06	)	$	(0.11	)
Weighted average common shares outstanding—diluted		47,319			47,237
Diluted loss per share – continuing operations	$	(0.06	)	$	(0.11	)
Diluted loss per share – discontinued operations		—			0.00
Diluted loss per share	$	(0.06	)	$	(0.11	)
OTHER COMPREHENSIVE LOSS, NET OF TAX:
Foreign currency translation adjustments		(218	)		(119	)
COMPREHENSIVE LOSS	$	(3,167	)	$	(5,280	)

See notes to unaudited condensed consolidated financial statements.

-4-

Table of Contents

ACCURIDE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In thousands)	Comprehensive Loss			Common Stock and Additional Paid-in- Capital			Accumulated Other Comprehensive Loss			Accumulated Deficiency			Total Stockholders’ Equity
BALANCE at January 1, 2011				$	433,192		$	(8,561	)	$	(126,532	)	$	298,099
Net loss	$	(17,031	)		—			—			(17,031	)		(17,031	)
Share-based compensation expense		—			2,397			—			—			2,397
Tax impact of forfeited vested shares		—			(221	)		—			—			(221	)
Other comprehensive loss:
Pension liability adjustment (net of tax)		(25,861	)		—			(25,861	)		—			(25,861	)
Comprehensive loss	$	(42,892	)
BALANCE—January 1, 2012					435,368			(34,422	)		(143,563	)		257,383
Net loss	$	(2,949	)		—			—			(2,949	)		(2,949	)
Share-based compensation expense		—			748			—			—			748
Tax impact of forfeited vested shares		—			(81	)		—			—			(81	)
Other comprehensive loss:
Pension liability adjustment (net of tax)		(218	)		—			(218	)		—			(218	)
Comprehensive loss	$	(3,167	)
BALANCE—March 31, 2012				$	436,035		$	(34,640	)	$	(146,512	)	$	254,883

-5-

Table of Contents

ACCURIDE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended March 31,
(In thousands)	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,949	)	$	(5,161	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment		9,834			10,262
Amortization – deferred financing costs		689			690
Amortization – other intangible assets		2,696			3,921
Loss on disposal of assets		76			28
Provision for deferred income taxes		1,322			—
Non-cash stock-based compensation		748			582
Non-cash change in warrant liability		—			(1,985	)
Changes in certain assets and liabilities:
Receivables		(21,683	)		(40,862	)
Inventories		(9,850	)		(11,174	)
Prepaid expenses and other assets		(651	)		(3,703	)
Accounts payable		12,355			17,244
Accrued and other liabilities		(3,430	)		(10,533	)
Net cash used in operating activities		(10,843	)		(40,691	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(10,434	)		(13,820	)
Proceeds from sale of discontinued operations		1,000			7,785
Net cash used in investing activities		(9,434	)		(6,035	)
DECREASE IN CASH AND CASH EQUIVALENTS		(20,277	)		(46,726	)
CASH AND CASH EQUIVALENTS—Beginning of period		56,915			78,466
CASH AND CASH EQUIVALENTS—End of period	$	36,638		$	31,740

Supplemental cash flow information:
Cash paid for interest	$	15,380		$	15,243
Cash paid for income taxes		216			434
Non-cash transactions:
Purchases of property, plant and equipment in accounts payable	$	4,471		$	1,246

See notes to unaudited condensed consolidated financial statements.

-6-

Table of Contents

ACCURIDE CORPORATION

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, except that the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America 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 months ended March 31, 2012 are not necessarily indicative of the results to be expected for the year ending December 31, 2012. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited condensed consolidated financial statements and notes thereto disclosed in Accuride’s Annual Report on Form 10-K for the year ended December 31, 2011.

On January 31, 2011, substantially all of the assets, liabilities and business of our Bostrom Seating subsidiary were sold to a subsidiary of Commercial Vehicle Group, Inc. for approximately $8.8 million and resulted in recognition of a $0.2 million loss on our consolidated statement of operations in the three months ended March 31, 2011, which have been reclassified to discontinued operations. Of the purchase price, $1.0 million was placed into a one year escrow securing the indemnification obligations of Bostrom to Commercial Vehicle Group, Inc. During the three months ended March 31, 2012, the escrow was terminated and the Company received the full balance of $1.0 million from the escrow. See Note 2 “Discontinued Operations” for further discussion.

On September 26, 2011, the Company announced the sale of its wholly-owned subsidiary, Fabco Automotive Corporation (“Fabco”) to Fabco Holdings, Inc., a new company formed and capitalized by Wynnchurch Capital, Ltd. in partnership with Stone River Capital Partners, LLC. The sale concluded for a purchase price of $35.0 million, subject to a working capital adjustment, plus a contingent payment of up to $2.0 million depending on Fabco’s financial performance during calendar year 2012. See Note 2 “Discontinued Operations” for further discussion.

Management’s Estimates and Assumptions – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 March 31,
(In thousands except per share data)	2012			2011

Numerator:
Net loss	$	(2,949	)	$	(5,161	)
Denominator:
Weighted average shares outstanding – Basic		47,319			47,237
Effect of dilutive share-based awards		—			—
Weighted average shares outstanding - Diluted		47,319			47,237

Basic loss per common share	$	(0.06	)	$	(0.11	)
Diluted loss per common share	$	(0.06	)	$	(0.11	)

-7-

Table of Contents

As of March 31, 2012, there were options exercisable for 225,922 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive. As of March 31, 2011, there were warrants exercisable for 2,205,882 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive. The warrants were exercisable at an exercise price of $21.00 per share and expired on February 26, 2012 unexercised.

Stock-Based Compensation –Compensation expense for share-based compensation programs was recognized as follows as a component of operating expenses:

	Three Months Ended March 31,
(In thousands)	2012		2011

Share-based compensation expense recognized	$	748	$	582

As of March 31, 2012, there was approximately $5.7 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 1.3 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 these profits, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.

Recent Accounting Adoptions

In June 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-05, Presentation of Comprehensive Income. The objective of this update is to facilitate convergence of U.S. GAAP and IFRS. This update revises the manner in which entities present comprehensive income in their financial statements. Entities have the option to present total comprehensive income, the components of net income, and the components of other comprehensive income as either a single, continuous statement of comprehensive income or as two separate but consecutive statements. The amendments of this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this update are to be applied retrospectively for all periods presented in the financial statements and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This guidance amends U.S. GAAP to conform with measurement and disclosure requirements in International Financial Reporting Standards (“IFRS”). The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements, and they include those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements and those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. In addition, to improve consistency in application across jurisdictions, some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. This amended guidance is to be applied prospectively and is effective for fiscal years beginning after December 15, 2011. The Company adopted ASU No. 2011-04 effective January 1, 2012 and it did not have a material impact on our consolidated financial statements.

-8-

Table of Contents

Note 2 – Discontinued Operations

The Company has reclassified certain operating results and the loss on sale transactions for Fabco Automotive and Bostrom Seating to discontinued operations. The following table presents sales and income from operations attributable to Fabco and Bostrom Seating.


	Three Months Ended March 31,
	2011

Net sales	$	7,944

Income from operations	234
Income tax provision	1
Loss on sale	(159		)
Discontinued operations	$	74

Note 3 - Inventories

Inventories at March 31, 2012 and December 31, 2011, on a FIFO basis, were as follows:

	March 31, 2012		December 31, 2011
Raw materials	$	20,684	$	18,727
Work in process		19,078		18,425
Finished manufactured goods		42,915		35,675
Total inventories	$	82,677	$	72,827

Note 4 - Goodwill and Other Intangible Assets

The following represents the carrying amount of goodwill, on a reportable segment basis, as of January 1, 2012 and March 31, 2012:

	Wheels		Gunite		Brillion Iron Works		Total
Balance as of January 1, 2012	$	96,283	$	62,839	$	4,414	$	163,536
Balance as of March 31, 2012	$	96,283	$	62,839	$	4,414	$	163,536

The changes in the carrying amount of other intangible assets for the period January 1, 2012 to March 31, 2012, by reportable segment, are as follows:

	Wheels			Gunite			Brillion Iron Works			Corporate			Total
Balance as of January 1, 2012	$	138,575		$	38,968		$	2,997		$	809		$	181,349
Amortization		(1,977	)		(551	)		(40	)		(128	)		(2,696	)
Balance as of March 31, 2012	$	136,598		$	38,417		$	2,957		$	681		$	178,653

-9-

Table of Contents

The summary of goodwill and other intangible assets is as follows:


			As of March 31, 2012						As of December 31, 2011
	Weighted Average Useful Lives		Gross Amount		Accumulated Amortization		Carrying Amount		Gross Amount		Accumulated Amortization		Carrying Amount
Goodwill		—	$	163,536	$	—	$	163,536	$	163,536	$	—	$	163,536
Other intangible assets:
Non-compete agreements		2.0	$	1,023	$	342	$	681	$	1,023	$	214	$	809
Trade names		—		33,200		—		33,200		33,200		—		33,200
Technology		10.0		38,849		8,211		30,638		38,849		7,248		31,601
Customer relationships		19.9		129,093		14,959		114,134		129,093		13,354		115,739
Other intangible assets:			$	202,165	$	23,512	$	178,653	$	202,165	$	20,816	$	181,349

We estimate that our amortization expense for our other intangible assets for 2012 through 2016 will be approximately $10.8 million for 2012, $10.6 million for 2013 and $10.3 million for each year from 2014 through 2016.

Note 5 - Pension and Other Postretirement Benefit Plans

Components of net periodic benefit cost for the three months ended March 31:

	Pension Benefits						Other Benefits
	2012			2011			2012			2011
Service cost-benefits earned during the period	$	517		$	384		$	115		$	129
Interest cost on projected benefit obligation		2,831			3,005			974			1,078
Expected return on plan assets		(2,988	)		(3,235	)		—			—
Amortization of net transition (asset) obligation		—			—			—			—
Amortization of prior service (credit) cost		11			11			—			—
Amortization of (gain)/loss		270			—			(8	)		—
Total benefits cost charged to income	$	641		$	165		$	1,081		$	1,207

As of March 31, 2012, $2.7 million has been contributed to our sponsored pension plans. We presently anticipate contributing an additional $11.9 million to fund our pension plans during 2012 for a total of $14.6 million.

Note 6 – Commitments and Contingencies

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

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

-10-

Table of Contents

As of March 31, 2012, we had an environmental reserve of approximately $1.5 million, related primarily to our foundry operations. This reserve is based on management’s review of potential liabilities as well as cost estimates related thereto. The reserve takes into account the benefit of a contractual indemnity given to us by a prior owner of our wheel-end subsidiary. The failure of the indemnitor to fulfill its obligations could result in future costs that may be material. Any expenditures required for us to comply with applicable environmental laws and/or pay for any remediation efforts will not be reduced or otherwise affected by the existence of the environmental reserve. Our environmental reserve may not be adequate to cover our future costs related to the sites associated with the environmental reserve, and any additional costs may have a material adverse effect on our business, results of operations or financial condition. The discovery of additional environmental issues, the modification of existing laws or regulations or the promulgation of new ones, more vigorous enforcement by regulators, the imposition of joint and several liability under CERCLA or analogous state laws, or other unanticipated events could also result in a material adverse effect.

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

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

As of March 31, 2012, we had approximately 3,461 employees, of which 665 were salaried employees with the remainder paid hourly. Unions represent approximately 1,993 of our employees, which is approximately 58% 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 2012 negotiations in Monterrey were successfully completed prior to the expiration of our union contract. In 2012, we extended the labor contract at our London, Ontario facility through March 15, 2013.

Note 7 – 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 March 31, 2012 was approximately $322.4 million compared to the carrying amount of $303.3 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, 2011 was approximately $300.5 million compared to the carrying amount of $303.1 million. The Company believes the fair value of our ABL facility at March 31, 2012 and December 31, 2012 equals the carrying value of $20.0 million. As of March 31, 2012 and December 31, 2011 we had no other remaining financial instruments.

-11-

Table of Contents

Note 8 – Segment Reporting

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


	Three Months Ended March 31,
	2012			2011
Net sales:
Wheels	$	116,944		$	91,509
Gunite		68,563			59,231
Brillion Iron Works		43,810			35,260
Imperial Group		40,201			24,895
Consolidated total	$	269,518		$	210,895

Operating Income (loss):
Wheels	$	18,442		$	11,488
Gunite		(2,168	)		(1,717	)
Brillion Iron Works		3,173			733
Imperial Group		(519	)		1,129
Corporate / Other		(11,692	)		(10,192	)
Consolidated total	$	7,236		$	1,441

Current and prior period operating results from Bostrom Seating and Fabco Automotive were reclassified to discontinued operations during the three months ended March 31, 2012. Excluded from net sales above, are inter-segment sales from Brillion Iron Works to Gunite, as shown in the table below:

	Three Months Ended March 31,
(In thousands)	2012		2011
Inter-segment sales	$	8,856	$	8,476

	As of
	March 31, 2012		December 31, 2011
Total assets:
Wheels	$	515,419	$	509,829
Gunite		209,400		188,053
Brillion Iron Works		64,998		63,216
Imperial Group		49,523		43,581
Corporate / Other		48,604		64,183
Consolidated total	$	887,944	$	868,862

Note 9 - Debt

As of March 31, 2012, total debt was $323.3 million consisting of $303.3 million of our outstanding 9.5% senior secured notes, net of discount and a $20.0 million draw on our ABL facility. As of December 31, 2011, total debt was $323.1 million consisting of $303.1 million of our outstanding 9.5% senior secured notes, net of discount and a $20.0 million draw on our ABL facility.

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

-12-

Table of Contents

Note 10 – Guarantor and Non-guarantor Financial Statements

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

CONDENSED CONSOLIDATED BALANCE SHEET

	March 31, 2012
(in thousands)	Parent		Guarantor Subsidiaries			Non-guarantor Subsidiaries		Eliminations			Total
ASSETS
Cash and cash equivalents	$	32,344	$	(4,973	)	$	9,267		—		$	36,638
Accounts and other receivables, net		46,680		111,567			16,023	$	(54,512	)		119,758
Inventories		29,410		46,668			6,599		—			82,677
Other current assets		4,885		5,818			2,025		—			12,728
Total current assets		113,319		159,080			33,914		(54,512	)		251,801
Property, plant, and equipment, net		80,188		156,970			46,136		—			283,294
Goodwill		96,283		67,253			—		—			163,536
Intangible assets, net		137,279		41,374			—		—			178,653
Investments in and advances to subsidiaries and affiliates		281,237		—			—		(281,237	)		—
Deferred income taxes		—		7,781			459		(8,240	)		—
Other non-current assets		9,399		995			266		—			10,660
TOTAL	$	717,705	$	433,453		$	80,775	$	(343,989	)	$	887,944
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	16,821	$	58,554		$	13,269		—		$	88,644
Accrued payroll and compensation		4,791		10,740			4,547		—			20,078
Accrued interest payable		5,080		—			—		—			5,080
Accrued and other liabilities		57,093		15,031			3,863	$	(54,512	)		21,475
Total current liabilities		83,785		84,325			21,679		(54,512	)		135,277
Long term debt		323,344		—			—		—			323,344
Deferred and non-current income taxes		38,367		—			—		(8,240	)		30,127
Other non-current liabilities		17,326		105,012			21,975		—			144,313
Stockholders’ equity		254,883		244,116			37,121		(281,237	)		254,883
TOTAL	$	717,705	$	433,453		$	80,775	$	(343,989	)	$	887,944

	December 31, 2011
(in thousands)	Parent		Guarantor Subsidiaries			Non-guarantor Subsidiaries		Eliminations			Total
ASSETS
Cash and cash equivalents	$	51,578	$	(2,770	)	$	8,107		—		$	56,915
Accounts and other receivables, net		36,736		100,097			12,099	$	(50,857	)		98,075
Inventories		26,655		39,555			6,617		—			72,827
Other current assets		4,441		5,771			2,120		—			12,332
Total current assets		119,410		142,653			28,943		(50,857	)		240,149
Property, plant, and equipment, net		73,765		150,900			46,897		—			271,562
Goodwill		96,283		67,253			—		—			163,536
Intangible assets, net		139,384		41,965			—		—			181,349
Investments in and advances to subsidiaries and affiliates		281,552		—			—		(281,552	)		—
Other non-current assets		9,880		8,883			1,649		(8,146	)		12,266
TOTAL	$	720,274	$	411,654		$	77,489	$	(340,555	)	$	868,862
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	17,615	$	52,938		$	9,708		—		$	80,261
Accrued payroll and compensation		3,079		9,167			4,220		—			16,466
Accrued interest payable		12,503		—			—		—			12,503
Accrued and other liabilities		52,932		13,542			3,642	$	(50,857	)		19,259
Total current liabilities		86,129		75,647			17,570		(50,857	)		128,489
Long term debt		323,082		—			—		—			323,082
Deferred and non-current income taxes		37,045		—			—		(8,146	)		28,899
Other non-current liabilities		16,635		91,447			22,927		—			131,009
Stockholders’ equity		257,383		244,560			36,992		(281,552	)		257,383
TOTAL	$	720,274	$	411,654		$	77,489	$	(340,555	)	$	868,862

-13-

Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended March 31, 2012
(in thousands)	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Total
Net sales	$	122,576		$	155,792		$	37,454		$	(46,304	)	$	269,518
Cost of goods sold		102,934			155,041			35,747			(46,304	)		247,418
Gross profit		19,642			751			1,707			—			22,100
Operating expenses		13,672			1,120			72			—			14,864
Income (loss) from operations		5,970			(369	)		1,635			—			7,236
Other income (expense):
Interest expense, net		(8,579	)		(75	)		(91	)		—			(8,745	)
Equity in earnings of subsidiaries		241			—			—			(241	)		—
Other income (expense), net		780			—			(623	)		—			157
Income (loss) before income taxes from continuing operations		(1,588	)		(444	)		921			(241	)		(1,352	)
Income tax provision		1,361			—			236			—			1,597
Income (loss) from continuing operations		(2,949	)		(444	)		685			(241	)		(2,949	)
Discontinued operations, net of tax		—			—			—			—			—
Net income (loss)	$	(2,949	)	$	(444	)	$	685		$	(241	)	$	(2,949	)

Comprehensive income (loss)	$	(2,949	)	$	(444	)	$	467		$	(241	)	$	(3,167	)

	Three Months Ended March 31, 2011
(in thousands)	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Total
Net sales	$	101,323		$	112,720		$	37,740		$	(40,888	)	$	210,895
Cost of goods sold		92,231			106,667			35,595			(40,888	)		193,605
Gross profit		9,092			6,053			2,145			—			17,290
Operating expenses		12,904			2,867			78			—			15,849
Income (loss) from operations		(3,812	)		3,186			2,067			—			1,441
Other income (expense):
Interest expense, net		(8,122	)		(299	)		81			—			(8,340	)
Equity in earnings of subsidiaries		4,228			—			—			(4,228	)		—
Other income (expense), net		2,463			(9	)		(291	)		—			2,163
Income (loss) before income taxes from continuing operations		(5,243	)		2,878			1,857			(4,228	)		(4,736	)
Income tax provision (benefit)		(82	)		—			581			—			499
Income (loss) from continuing operations		(5,161	)		2,878			1,276			(4,228	)		(5,235	)
Discontinued operations, net of tax		—			—			74			—			74
Net income (loss)	$	(5,161	)	$	2,878		$	1,350		$	(4,228	)	$	(5,161	)

Comprehensive income (loss)	$	(5,161	)	$	2,878		$	1,231		$	(4,228	)	$	(5,280	)

-14-

Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31, 2012
(in thousands)	Parent Company			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(2,949	)	$	(444	)	$	685		$	(241	)	$	(2,949	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		2,304			5,779			1,751			—			9,834
Amortization – deferred financing costs		689			—			—			—			689
Amortization – other intangible assets		2,105			591			—			—			2,696
(Gain) loss on disposal of assets		(2,118	)		2,161			33			—			76
Deferred income taxes		1,322			—			—			—			1,322
Non-cash stock-based compensation		748			—			—			—			748
Equity in earnings of subsidiaries and affiliates		(241	)		—			—			241			—
Non-cash change in warrant liability											—
Change in other operating items		(15,695	)		(5,903	)		(1,661	)		—			(23,259	)
Net cash provided by (used in) operating activities		(13,835	)		2,184			808			—			(10,843	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment		(5,399	)		(4,387	)		(648	)		—			(10,434	)
Other		—			—			1,000			—			1,000
Net cash provided by (used in) investing activities		(5,399	)		(4,387	)		352			—			(9,434	)

Increase (decrease) in cash and cash equivalents		(19,234	)		(2,203	)		1,160			—			(20,277	)
Cash and cash equivalents, beginning of period		51,578			(2,770	)		8,107			—			56,915
Cash and cash equivalents, end of period	$	32,344		$	(4,973	)	$	9,267		$	—		$	36,638

	Three Months Ended March 31, 2011
(in thousands)	Parent Company			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(5,161	)	$	2,878		$	1,350		$	(4,228	)	$	(5,161	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		2,328			5,461			2,473			—			10,262
Amortization – deferred financing costs		690			—			—			—			690
Amortization – other intangible assets		2,720			840			361			—			3,921
(Gain) loss on disposal of assets		—			(2,029	)		2,057			—			28
Deferred income taxes		(1	)		—			1			—			—
Non-cash stock-based compensation		582			—			—			—			582
Equity in earnings of subsidiaries and affiliates		(4,228	)		—			—			4,228			—
Non-cash change in warrant liability		(1,985	)		—			—			—			(1,985	)
Change in other operating items		(40,770	)		3,088			(11,346	)		—			(49,028	)
Net cash provided by (used in) operating activities		(45,825	)		10,238			(5,104	)		—			(40,691	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment		(2,288	)		(10,649	)		(883	)		—			(13,820	)
Other		—			—			7,785			—			7,785
Net cash provided by (used in) investing activities		(2,288	)		(10,649	)		6,902			—			(6,035	)

Increase (decrease) in cash and cash equivalents		(48,113	)		(411	)		1,798			—			(46,726	)
Cash and cash equivalents, beginning of period		75,114			(2,000	)		5,352			—			78,466
Cash and cash equivalents, end of period	$	27,001		$	(2,411	)	$	7,150		$	—		$	31,740

-15-

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and such principles are applied on a basis consistent with the information reflected in our Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC. In the opinion of management, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments, which are necessary for a fair presentation of results for the respective interim periods. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2012 or any interim period. Except for the historical information contained herein, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those indicated by such forward-looking statements.

Overview

We are one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. Our products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, and ductile and gray iron castings. We market our products under some of the most recognized brand names in the industry, including Accuride, Gunite, Imperial, and Brillion. We believe that we have number one or number two market positions in steel wheels, forged aluminum wheels, brake drums, disc wheel hubs, and metal bumpers for commercial vehicles. We serve the leading OEMs and their related aftermarket channels in most major segments of the commercial vehicle market, including heavy- and medium-duty trucks, commercial trailers, light trucks, buses, as well as specialty and military vehicles.

Our primary product lines are standard equipment used by a majority of North American heavy- and medium-duty truck OEMs, which creates a significant barrier to entry. We believe that substantially all heavy-duty truck models manufactured in North America contain one or more Accuride components.

Our diversified customer base includes substantially all of the leading commercial vehicle OEMs, such as Daimler Truck North America, LLC, with its Freightliner and Western Star brand trucks, PACCAR, with its Peterbilt and Kenworth brand trucks, Navistar, with its International brand trucks, and Volvo/Mack, with its Volvo and Mack brand trucks. Our primary commercial trailer customers include leading commercial trailer OEMs, such as Great Dane Limited Partnership, Utility Trailer Manufacturing Company, and Wabash National, Inc. Our major light truck customer is General Motors Corporation. Our product portfolio is supported by strong sales, marketing and design engineering capabilities and is manufactured in 15 strategically located, technologically-advanced facilities across the United States, Mexico and Canada.

The heavy- and medium-duty truck and commercial trailer markets and the related aftermarket are the primary drivers of our sales. These markets are, in turn, directly influenced by conditions in the North American truck industry and generally by conditions in other industries which indirectly impact the truck industry, such as the home-building industry, and by overall economic growth and consumer spending. Although current industry forecasts predict continued improvement in commercial vehicle production in 2012 as compared to 2011, commercial vehicle industry production forecasts have recently abated somewhat for Class 8 commercial vehicles. Based upon the overall commercial vehicle industry production forecasts, we expect results from operations to improve in 2012 compared to 2011 due to increased demand for our product and improved operational efficiencies. We cannot, however, accurately predict the commercial vehicle cycle, and any deterioration of the economic recovery may lead to further reduced spending and deterioration in the North American truck and vehicle supply industries for the foreseeable future.

On March 30, 2011, we, along with one other United States domestic commercial vehicle steel wheel supplier, filed antidumping and countervailing duty petitions with the United States International Trade Commission and the United States Department of Commerce alleging that manufacturers of certain steel wheels in China are dumping their products in the United States and that these manufacturers have been subsidized by their government in violation of United States trade laws. In May 2011, the International Trade Commission issued a preliminary determination that there was a reasonable indication that the U.S. steel wheel industry is materially injured or threatened with material injury by reason of imports from China of certain steel wheels, and began the final phase of its investigation. In August 2011, the U.S. Department of Commerce issued a preliminary determination of countervailing duties on steel wheels imported from China ranging from 26.2 percent to 46.6 percent ad valorem, and in October 2011, the U.S. Department of Commerce issued a preliminary determination of antidumping duty margins ranging from 110.6 percent to 243.9 percent ad valorem. On March 19, 2012, the Department of

-16-

Table of Contents

Commerce made final determinations of dumping and subsidy margins which cumulatively were approximately 70 percent to 228 percent ad valorem. On April 17, 2012, the International Trade Commission determined that the domestic industry has not been injured and is not presently threatened with injury from subject imports, and consequently withdrew all import duties on the subject imports. Accuride Corporation will await the written decision from the International Trade Commission on its negative injury determination and evaluate whether an appeal is appropriate at that time.

Results of Operations

The following table sets forth certain income statement information of Accuride for the three months ended March 31, 2012 and March 31, 2011. Certain operating results from prior periods have been reclassified to discontinued operations to conform to the current year presentation.

	Three Months Ended March 31,
(Dollars in thousands)	2012			2011
Net sales	$	269,518		$	210,895
Cost of goods sold		247,418			193,605
Gross profit		22,100			17,290
Operating expenses		14,864			15,849
Income from operations		7,236			1,441
Interest (expense), net		(8,745	)		(8,340	)
Other income, net		157			2,163
Income tax provision		1,597			499
Loss from continuing operations		(2,949	)		(5,235	)
Discontinued operations, net of tax		—			74
Net loss	$	(2,949	)	$	(5,161	)

Net Sales

	Three Months Ended March 31,
(Dollars in thousands)	2012		2011
Wheels	$	116,944	$	91,509
Gunite		68,563		59,231
Brillion		43,810		35,260
Imperial		40,201		24,895
Total	$	269,518	$	210,895

Our net sales for the three months ended March 31, 2012, were $269.5 million, which was an increase of 27.8 percent, compared to net sales of $210.9 million for the three months ended March 31, 2011. Of the total increase, approximately $42.9 million was a result of higher volume demand due to increased production levels of the commercial vehicle market and its aftermarket segments in North America. The increased vehicle production is a result of continued increased maintenance and replacement demand of commercial vehicles. The remaining $15.7 million increase of net sales recognized was related to higher pricing, which mostly represented a pass-through of increased raw material and commodity costs.

Net sales for our Wheels segment increased nearly 27.8 percent during the three months ended March 31, 2012 compared to the same period in 2011 primarily due to increased volume for all three major OEM segments. Net sales for our Gunite segment rose 15.8 percent due to industry demand and approximately $7.9 million in increased pricing related to raw material costs. Our Gunite products have a higher concentration of aftermarket demand due to being items that require replacement more often than our other products. Our Brillion segment’s net sales increased by 24.2 percent due to higher demand in the industrial and agricultural markets and increased pricing of approximately $3.3 million related to raw material costs. Net sales for our Imperial segment increased by 61.5 percent due to increased volume in Class 8 OEM production.

-17-

Table of Contents

North American commercial vehicle industry production builds were, as follows:

	For the three months ended March 31,
	2012		2011
Class 8		77,724		51,417
Classes 5-7		46,415		39,681
Trailer		56,213		46,824

While we serve the commercial vehicle aftermarket segment, there is no industry data to compare our aftermarket sales to industry demand from period to period.

Cost of Goods Sold

The table below represents the significant components of our cost of goods sold.

	Three Months Ended March 31,
(Dollars in thousands)	2012		2011
Raw materials	$	130,982	$	96,005
Depreciation		9,822		9,953
Labor and other overhead		106,614		87,647
Total	$	247,418	$	193,605

Raw materials costs increased by $35.0 million, or 36.4 percent, during the three months ended March 31, 2012 due to increases in sales volume of approximately 26.4 percent and price of approximately 10.0 percent. The price increases were primarily related to steel and aluminum, which represent nearly all of our material costs.

Depreciation decreased slightly during the comparative periods.

Labor and overhead costs increased by 21.6 percent due to increased volume, which is lower than the overall net sales volume increase of approximately 27.8 percent due to the impact of certain of our costs (i.e. salaries, rent, etc.) being fixed in nature, as opposed to variable.

Operating Expenses

	Three Months Ended March 31,
(Dollars in thousands)	2012		2011
Selling, general, and administration	$	10,621	$	11,056
Research and development		1,535		1,225
Depreciation and amortization		2,708		3,568
Total	$	14,864	$	15,849

Selling, general, and administrative costs decreased by $0.4 million in 2012 primarily due to fees incurred in 2011 related to the sale of our discontinued operations. Research and development costs increased by $0.3 million due to increases in staff and travel expenses.

Depreciation and amortization expenses were impacted by divestiture and acquisition activities.

Operating Income (Loss)

	Three Months Ended March 31,
(Dollars in thousands)	2012			2011
Wheels	$	18,442		$	11,488
Gunite		(2,168	)		(1,717	)
Brillion		3,173			733
Imperial		(519	)		1,129
Corporate/Other		(11,692	)		(10,192	)
Total	$	7,236		$	1,441

-18-

Table of Contents

Operating income for the Wheels segment was 15.8 percent of its net sales for the three months ended March 31, 2012 compared to 12.6 percent for the three months ended March 31, 2011. In addition to higher year-over-year build rates, we continue to see strong demand for aluminum wheels being driven by the need for fleets to reduce fuel and maintenance costs, along with total vehicle weight.

Operating loss for the Gunite segment was 3.2 percent of its net sales for the three months ended March 31, 2012 compared to 2.9 percent for the three months ended March 31, 2011. During the three months ended March 31, 2012, Gunite benefited from steadily improving operational performance and higher pricing, as well as the elimination of customer-required on-site inspections stemming from Gunite’s quality management issues in 2011. These were offset by softening aftermarket demand for Gunite products and the impact of low-cost imports from competitors.

Operating income for the Brillion segment was 7.2 percent of its net sales for the three months ended March 31, 2012 compared to 2.1 percent for same period in 2011. Sales volume for our Brillion segment increased during 2012 as the industrial and agricultural markets continued to gain strength while increased pricing offset rising material costs. The increase in sales volume was the primary reason for improved operating income for Brillion.

The operating income (loss) for the Imperial segment was (1.3) percent of its net sales for the three months ended March 31, 2012 and 4.5 percent for the three months ended March 31, 2011. The Decatur, TX Imperial plant continued to experience operational inefficiencies stemming from its expanded production volume and product portfolio. A new leadership team is instituting changes to stabilize and improve Decatur’s operational and financial performance during the first half of 2012.

The operating losses for the Corporate segment were 4.3 percent of consolidated net sales for the three months ended March 31, 2012 as compared to 4.8 percent for the comparative period in 2011.

Interest Expense

Net interest expense increased $0.4 million to $8.7 million for the three months ended March 31, 2012 from $8.3 million for the three months ended March 31, 2011 due to increased debt in 2012 compared to 2011.

Discontinued Operations

Discontinued operations represent reclassification of operating results, including gain/loss on sale, for Fabco Automotive and Bostrom Seating, net of tax. The sales of Fabco and Bostrom occurred in 2011. We have reclassified prior period operating results, including the gain/loss on the sale transactions, to discontinued operations.

Changes in Financial Condition

At March 31, 2012, we had total assets of $887.9 million, as compared to total assets of $868.9 million at December 31, 2011. The $19.1 million, or 2.2%, increase in total assets primarily resulted from changes in working capital partially offset by a reduction in cash. We define working capital as current assets (excluding cash) less current liabilities.

We use working capital and cash flow measures to evaluate the performance of our operations and our ability to meet our financial obligations. We require working capital investment to maintain our position as a leading manufacturer and supplier of commercial vehicle components. We continue to strive for aligning our working capital investment with our customers’ purchase requirements and our production schedules.

-19-

Table of Contents

The following table summarizes the major components of our working capital as of the periods listed below:

	March 31,			December 31,
	2012			2011
Accounts receivable	$	119,758		$	98,075
Inventories		82,677			72,827
Deferred income taxes (current)		7,675			7,675
Other current assets		5,053			4,657
Accounts payable		(88,644	)		(80,261	)
Accrued payroll and compensation		(20,078	)		(16,466	)
Accrued interest payable		(5,080	)		(12,503	)
Accrued workers compensation		(4,902	)		(4,936	)
Other current liabilities		(16,573	)		(14,323	)
Working Capital	$	79,886		$	54,745

Significant changes in working capital included:

·	an increase in receivables of $21.7 million due to the comparative increase in revenue in the months leading up to the respective period-end dates;

·	an increase in inventory of $9.9 million due to increase in sales demand;

·	an increase of accounts payable of $8.4 million primarily due to the increase in raw material purchases in the months leading up to the respective period-end dates and obtaining better credit terms with our major raw material suppliers;

·	a decrease in accrued interest payable of $7.4 million primarily due to payment in February 2012 of our semi-annual interest payment for our senior secured notes.

Capital Resources and Liquidity

Our primary sources of liquidity during the three months ended March 31, 2012 were cash reserves. We believe that cash from operations, existing cash reserves, and our ABL facility will provide adequate funds for our working capital needs, planned capital expenditures and cash interest payments through 2012 and the foreseeable future.

As of March 31, 2012, we had $36.6 million of cash plus $67.2 million in availability under our ABL credit facility for total liquidity of $103.8 million.

Our ability to fund working capital needs, planned capital expenditures, scheduled semi-annual interest payments, and to comply with any financial covenants under our ABL credit facility depends on our future operating performance and cash flow, which in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

Operating Activities

Net cash used in operating activities during the three months ended March 31, 2012 amounted to $10.8 million compared to a use of $40.7 million for the period ended March 31, 2011. The use of cash in 2012 was a result of increased working capital requirements, primarily receivables and inventories, which are expected in an environment of increasing product demand. During a period of increasing sales demand, our working capital needs also rise.

Investing Activities

Net cash used in investing activities totaled $9.4 million for the three months ended March 31, 2012 compared to a use of $6.0 million for the period ended March 31, 2011. Our most significant cash outlays for investing activities are the purchases of property, plant and equipment. During the three months ended March 31, 2012, we entered into a capital lease agreement and, as a result, had cash inflows of $7.9 million for reimbursement of payments previously made to the manufacturer. Also, during the three months ended March 31, 2012, we had cash inflows of $1.0 million related to the expiration of an escrow account established for the sale of our Bostrom Seating subsidiary. During the three months ended March 31, 2011, we had cash inflows of $7.8 million related to the sale of Bostrom Seating. Capital expenditures for 2012 are currently expected to be approximately $70 million to $80 million, which we expect to fund through existing cash reserves or from our ABL facility.

-20-

Table of Contents

Financing Activities

No cash was provided by or used in financing activities for the three months ended March 31, 2012 or for the three months ended March 31, 2011.

Bank Borrowing

Refinancing

On July 29, 2010, we completed an offering of $310.0 million aggregate principal amount of senior secured notes and entered into the ABL Credit Agreement (the “ABL facility”). We used the net proceeds from the offering of the senior secured notes, $15.0 million of borrowings under the ABL facility and cash on hand to refinance our postpetition senior credit facility and to pay related fees and expenses (the “Refinancing”).

The ABL Facility

In connection with the Refinancing, we entered into our ABL facility, which is a senior secured asset based revolving credit facility, in an aggregate principal amount of up to $75.0 million, with the right to increase the availability under the facility by up to $25.0 million in the aggregate. On February 7, 2012, we exercised our option to increase the loan commitments under the ABL facility by $25.0 million (for a total aggregate availability of $100.0 million) by entering into an asset-backed loan (ABL) incremental agreement. The ABL facility matures on July 29, 2014 and provides for loans and letters of credit in an aggregate amount up to the amount of the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $25.0 million to be available for the issuance of letters of credit. Loans under the ABL facility bear interest at an annual rate equal to, at our option, either LIBOR plus 3.50% or Base Rate plus 2.75%, subject to changes based on our leverage ratio as defined in the ABL facility.

We must also pay a commitment fee equal to 0.50% per annum to the lenders under the ABL facility if utilization under the facility exceeds 50.0% of the total commitments under the facility and a commitment fee equal to 0.75% per annum if utilization under the facility is less than or equal to 50.0% of the total commitments under the facility. Customary letter of credit fees are also payable as necessary.

The obligations under the ABL facility are secured by (i) first-priority liens on substantially all of the Company’s accounts receivable and inventories, subject to certain exceptions and permitted liens (the “ABL Priority Collateral”) and (ii) second-priority liens on substantially all of the Company’s owned real property and tangible and intangible assets other than the ABL Priority Collateral, including all of the outstanding capital stock of our domestic subsidiaries, subject to certain exceptions and permitted liens (the “Notes Priority Collateral”).

Senior Secured Notes

Also in connection with the Refinancing, we issued $310.0 million aggregate principal amount of senior secured notes. Under the terms of the indenture governing the senior secured notes, the senior secured notes bear interest at a rate of 9.5% per year, paid semi-annually in February and August, and mature on August 1, 2018. Prior to maturity we may redeem the senior secured notes on the terms set forth in the indenture governing the senior secured notes. The senior secured notes are guaranteed by the Guarantors, and the senior secured notes and the related guarantees are secured by first priority liens on the Notes Priority Collateral and second priority liens on the ABL Priority Collateral. On February 15, 2011, we completed an exchange offer pursuant to which all our outstanding senior secured notes were exchanged for registered securities with identical terms (other than terms related to registration rights) to the senior secured notes issued July 29, 2010.

Restrictive Debt Covenants. Our credit documents (the ABL facility and the indenture governing the senior secured notes) contain operating covenants that limit the discretion of management with respect to certain business matters. These covenants place significant restrictions on, among other things, the ability to incur additional debt, to pay dividends, to create liens, to make certain payments and investments and to sell or otherwise dispose of assets and merge or consolidate with other entities. In addition, the ABL facility contains a financial covenant which requires us to maintain a fixed charge coverage ratio during any compliance period, which is anytime when the excess availability is less than or equal to the greater of $10.0 million or 15 percent of the total commitment under the ABL facility. Due to the amount of our excess availability (as calculated under the ABL facility), the Company is not currently in a compliance period, and we do not have to maintain a fixed charge coverage ratio, although this is subject to change. We expect to be in compliance with all restrictive debt covenants through the next twelve months.

-21-

Table of Contents

We continue to operate in a challenging economic 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.

Off-Balance Sheet Arrangements. We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. From time to time we may enter into operating leases, letters of credit, or take-or-pay obligations related to the purchase of raw materials that would not be reflected in our balance sheet.

Critical Accounting Policies and Estimates. We have made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. We included in our Form 10-K for the year ended December 31, 2011 a discussion of our most critical accounting policies, which are those that have a material impact on our financial condition or operating performance and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Cautionary Statements Regarding Forward-Looking Statements

In this report, we have made various statements regarding current expectations or forecasts of future events, which speak only as of the date the statements, are made. These statements are “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are also made from time-to-time in press releases and in oral statements made by the officers of Accuride. Forward-looking statements are identified by the words “estimate,” “project,” “anticipate,” “will continue,” “will likely result,” “expect,” “intend,” “believe,” “plan,” “predict” and similar expressions. Forward looking statements also include, but are not limited to, statements regarding commercial vehicle market recovery, projections of revenue, income, loss, or working capital, capital expenditure levels, ability to mitigate rising raw material costs through increases in selling prices, plans for future operations, financing needs, the ultimate outcome and impact of any litigation involving Accuride, the sufficiency of our capital resources and plans and assumptions relating to the foregoing.

Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates and statements. We cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. You are advised to consult further disclosures we may make on related subjects in our filings with the SEC. In addition to other factors discussed in this report, some of the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, without limitation, the following:

·	a delayed or less robust than anticipated commercial vehicle industry recovery in 2012 could have a material adverse effect on our business;

·	the loss of a major customer could have a material adverse effect on our business;

·	the demands of original equipment manufacturers for price reductions may adversely affect profitability;

·	we use a substantial amount of raw steel and aluminum and are vulnerable to industry shortages, significant price increases, and surcharges, some of which we may not be able to pass through to our customers;

our credit documents contain significant financial and operating covenants that may limit the discretion of management with respect to certain business matters. We must also meet certain financial ratios and tests as described above. Failure to comply with the obligations contained in the debt agreements could result in an event of default, and possibly the acceleration of the related debt and the acceleration of debt under other instruments evidencing debt that may contain cross-acceleration or cross-default provisions;

·	a labor strike may disrupt our supply to our customer base;

·	we may encounter increased competition in the future from existing competitors or new competitors;

·	our significant indebtedness may have important consequences, including, but not limited to, impairment of our ability to obtain additional financing, reduction of funds available for operations and business opportunities or limitations on our ability to dispose of assets;

·	significant volatility in the foreign currency markets could have an adverse effect on us;

·	our ability to service our indebtedness is dependent upon operating cash flow;

·	an interruption of performance of our machinery and equipment could have an adverse effect on us;

·	an interruption in supply of metals could reduce our ability to obtain favorable sourcing of such raw materials;

·	we may be subject to liability under certain environmental laws and the cost of compliance with these regulations could have a material adverse effect on our financial condition and may adversely affect our ability to sell or rent such property or to borrow using such property as collateral; and

·	our success depends largely upon the abilities and experience of certain key management personnel and the loss of the services of one or more of these key personnel could have a negative impact on our business.

For further information, refer to the business description and additional risk factors sections included in our Form 10-K for the year ended December 31, 2011, as filed with the SEC.

-22-

Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of doing business, we are exposed to risks associated with changes in foreign exchange rates, raw material/commodity prices, and interest rates. We use derivative instruments to manage these exposures. The objectives for holding derivatives are to minimize the risks using the most effective methods to eliminate or reduce the impacts of these exposures.

Foreign Currency Risk

Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures to maximize the overall effectiveness of our foreign currency derivatives. The principal currencies of exposure are the Canadian Dollar and Mexican Peso. From time to time, we use foreign currency financial instruments to offset the impact of the variability in exchange rates on our operations, cash flows, assets and liabilities. At March 31, 2012, the notional amount of open foreign exchange forward contracts was $1,215.

Foreign currency derivative contracts provide only limited protection against currency risks. Factors that could impact the effectiveness of our currency risk management programs include accuracy of sales estimates, volatility of currency markets and the cost and availability of derivative instruments.

The counterparty to the foreign exchange contracts is a financial institution with an investment grade credit rating. The use of forward contracts protects our cash flows against unfavorable movements in exchange rates, to the extent of the amount under contract.

Raw Material/Commodity Price Risk

We rely upon the supply of certain raw materials and commodities in our production processes, and we have entered into firm purchase commitments for certain metals and natural gas. Additionally, from time to time, we use commodity price swaps and futures contracts to manage the variability in certain commodity prices on our operations and cash flows. At March 31, 2012 we had no open commodity price swaps or futures contracts.

Interest Rate Risk

We use long-term debt as a primary source of capital. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for our long-term fixed-rate debt and other types of long-term debt at March 31, 2012:

(Dollars in thousands)	2012	2013	2014			2015	2016	Thereafter			Total			Fair Value
Long-term Debt:
Fixed Rate	—	—	—			—	—	$	310,000		$	310,000		$	322,400
Average Rate	—	—	—			—	—	9.50		%	9.50		%
Variable Rate	—	—	$	20,000		—	—		—		$	20,000		$	20,000
Average Rate	—	—	4.2		%	—	—	—			4.2		%

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

-23-

Table of Contents

Changes in Internal Control Over Financial Reporting. There have been no changes to our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting during our most recent quarter.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither Accuride nor any of our subsidiaries is a party to any legal proceeding which, in the opinion of management, would have a material adverse effect on our business or financial condition. However, we from time-to-time are involved in ordinary routine litigation incidental to our business, including actions related to product liability, contractual liability, intellectual property, workplace safety and environmental claims. We establish reserves for matters in which losses are probable and can be reasonably estimated. While we believe that we have established adequate accruals for our expected future liability with respect to our pending legal actions and proceedings, we cannot assure you that our liability with respect to any such action or proceeding would not exceed our established accruals. Further, we cannot assure that litigation having a material adverse affect on our financial condition will not arise in the future.

Item 6. Exhibits

Exhibit No. Description

2.1	—	Agreement and Plan of Merger, dated as of December 24, 2004, by and among Accuride Corporation, Amber Acquisition Corp., Transportation Technologies Industries, Inc., certain signing stockholders and the Company Stockholders Representatives. Previously filed as an exhibit to the Form 8-K filed on December 30, 2004 and incorporated herein by reference.
2.2	—	Amendment to Agreement and Plan of Merger, dated as of January 28, 2005, by and among Accuride Corporation, Amber Acquisition Corp., Transportation Technologies Industries, Inc. certain signing stockholders and the Company Stockholders Representatives. Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and incorporated herein by reference.
2.3	—	Third Amended Joint Plan of Reorganization for Accuride Corporation, et al. Previously filed as an exhibit to the Form 8-K filed on February 22, 2010, and incorporated herein by reference.
2.4	—	Confirmation Order for Third Amended Plan of Reorganization. Previously filed as an exhibit to the Form 8-K filed on February 22, 2010, and incorporated herein by reference.
2.5	—	Stock Purchase Agreement by and among Accuride Corporation, Truck Components, Inc., Fabco Automotive Corporation and Fabco Holdings Inc., dated September 26, 2011. Previously filed as an exhibit to the Form 8-K filed on September 30, 2011, and incorporated herein by reference.
3.1	—	Amended and Restated Certificate of Incorporation of Accuride Corporation. Previously filed as an exhibit to the Form 8-K (Acc. No. 0001104659-10-012168) filed on March 4, 2010, and incorporated herein by reference.
3.2	—	Certificate of Amendment to the Amended and Restated Certificate of Incorporation. Previously filed as an exhibit to the Form 8-K (ACC No. 0001104659-10-059191) filed on November 18, 2010, and incorporated herein by reference.
3.3	—	Amended and Restated Bylaws of Accuride Corporation. Previously filed as an exhibit to the Form 8-K (Acc. No. 0001104659-10-004054) filed on February 1, 2011, and incorporated herein by reference.
4.1	—	Registration Rights Agreement, dated February 26, 2010, by and between Accuride Corporation and each of the Holders party thereto. Previously filed as an exhibit to the Form 8-K (Acc. No. 0001104659-10-012168) filed on March 4, 2010 and incorporated herein by reference.
4.2	—	Indenture, dated as of July 29, 2010, by and among Accuride Corporation, the guarantors named therein, Wilmington Trust FSB, as trustee and Deutsche Bank Trust Company Americas, with respect to 9.5% First Priority Senior Secured Notes due 2018. Previously filed as an exhibit to the Form 8-K filed on August 2, 2010 (Acc. No. 0001104659-10-012168) and incorporated herein by reference.
4.3	—	Form of 9.5% First Priority Senior Secured Notes due 2018. Previously filed as an exhibit to Form 8-K filed on August 2, 2010 and incorporated herein by reference.
4.4	—	Intercreditor Agreement, dated as of July 29, 2010, among Deutsche Bank Trust Company Americas, as initial ABL Agent, and Deutsche Bank Trust Company Americas, as Senior Secured Notes Collateral Agent. Previously filed as an exhibit to the Form 8-K filed on August 2, 2010 (Acc. No. 0001104659-10-012168) and incorporated herein by reference.
4.5	—	Rights Agreement, dated November 9, 2011, between Accuride Corporation and American Stock Transfer & Trust Company, LLC. Previously filed as an exhibit to the Form 8-K filed on November 9, 2011 and incorporated by reference herein.
10.1	—	Capital Lease Agreements, dated February 10, 2012. Previously filed as an exhibit to the Form 8-K filed on February 16, 2012, and incorporated herein by reference.
10.2	—	Incremental Commitment Agreement, dated February 7, 2012. Previously filed as an exhibit to the Form 8-K filed on February 8, 2012 and incorporated herein by reference.
31.1†	—	Section 302 Certification of Richard F. Dauch in connection with the Quarterly Report of Form 10-Q on Accuride Corporation for the period ended March 31, 2012.
31.2†	—	Section 302 Certification of Gregory A. Risch in connection with the Quarterly Report on Form 10-Q of Accuride Corporation for the period ended March 31, 2012.
32.1††	—	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.INS†	—	XBRL Instance Document
101.SCH†	—	XBRL Taxonomy Extension Schema Document
101.CAL†	—	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB†	—	XBRL Taxonomy Extension Label Linkbase Document
101.PRE†	—	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF†	—	XBRL Taxonomy Extension Definition Linkbase Document

†	Filed herewith
††	Furnished herewith
*	Management contract or compensatory agreement

-24-

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ACCURIDE CORPORATION

/s/ RICHARD F. DAUCH	Dated:	May 4, 2012
Richard F. Dauch
President and Chief Executive Officer
(Principal Executive Officer)


/s/ GREGORY A. RISCH	Dated:	May 4, 2012
Gregory A. Risch
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

-25-

Attached files

Stock widget

Investing forum

ACCURIDE CORP Reports