FORM 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

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

For the quarterly period ended September 30, 2013

or

 

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

Commission File Number: 000-54305

 

 

COOPER-STANDARD HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   20-1945088

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

39550 Orchard Hill Place Drive

Novi, Michigan 48375

(Address of principal executive offices)

(Zip Code)

(248) 596-5900

(Registrant’s telephone number, including area code)

 

 

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  x    No  ¨

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

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

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨    Smaller reporting company   ¨

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 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  x    No  ¨

As of October 30, 2013 there were 13,148,169 shares of the registrant’s common stock, $0.001 par value, outstanding.

 

 

 


COOPER-STANDARD HOLDINGS INC.

Form 10-Q

For the period ended September 30, 2013

 

         Page  
  PART I. FINANCIAL INFORMATION   

Item 1.

  Financial Statements (unaudited)   
  Condensed Consolidated Statements of Comprehensive Income      3   
  Condensed Consolidated Balance Sheets      4   
  Condensed Consolidated Statements of Cash Flows      5   
  Notes to Condensed Consolidated Financial Statements      6   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      27   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      35   

Item 4.

  Controls and Procedures      35   
  PART II. OTHER INFORMATION   

Item 1.

  Legal Proceedings      36   

Item 1A.

  Risk Factors      36   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      36   

Item 6.

  Exhibits      37   

SIGNATURES

     38   

INDEX TO EXHIBITS AND EXHIBITS

     39   

 

2


PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollar amounts in thousands except per share amounts)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2013     2012     2013  

Sales

   $ 684,029      $ 764,057      $ 2,183,794      $ 2,296,341   

Cost of products sold

     580,956        649,028        1,844,616        1,928,735   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     103,073        115,029        339,178        367,606   

Selling, administration & engineering expenses

     65,421        72,968        206,432        220,807   

Amortization of intangibles

     3,866        3,785        11,590        11,534   

Restructuring

     10,171        1,907        15,758        7,755   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     23,615        36,369        105,398        127,510   

Interest expense, net of interest income

     (11,325     (15,171     (33,326     (39,953

Equity earnings

     2,342        2,595        5,891        8,693   

Other income (expense), net

     1,118        960        (449     (5,385
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     15,750        24,753        77,514        90,865   

Income tax expense (benefit)

     5,392        4,467        (32,772     24,560   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     10,358        20,286        110,286        66,305   

Net loss attributable to noncontrolling interests

     1,266        310        2,441        2,424   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Cooper-Standard Holdings Inc.

   $ 11,624      $ 20,596      $ 112,727      $ 68,729   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Cooper-Standard Holdings Inc. common stockholders

   $ 8,037      $ 15,144      $ 86,588      $ 51,059   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share

        

Basic

   $ 0.46      $ 1.16      $ 4.93      $ 3.49   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.44      $ 1.08      $ 4.63      $ 3.26   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 18,790      $ 33,913      $ 104,998      $ 57,714   

Comprehensive loss attributable to noncontrolling interests

     825        535        2,758        2,365   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Cooper-Standard Holdings Inc.

   $ 19,615      $ 34,448      $ 107,756      $ 60,079   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

 

3


COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands except share amounts)

 

     December 31,
2012
    September 30,
2013
 
           (unaudited)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 270,555      $ 119,232   

Accounts receivable, net

     350,013        429,658   

Tooling receivable

     116,947        149,906   

Inventories

     143,253        186,758   

Prepaid expenses

     21,902        32,505   

Other

     87,802        93,909   
  

 

 

   

 

 

 

Total current assets

     990,472        1,011,968   

Property, plant and equipment, net

     628,608        700,922   

Goodwill

     133,716        133,993   

Intangibles, net

     116,724        102,892   

Deferred tax assets

     72,718        53,025   

Other assets

     83,739        90,717   
  

 

 

   

 

 

 
   $ 2,025,977      $ 2,093,517   
  

 

 

   

 

 

 
    

Liabilities and Equity

    

Current liabilities:

    

Debt payable within one year

   $ 32,556      $ 30,264   

Accounts payable

     271,355        298,763   

Payroll liabilities

     102,857        115,843   

Accrued liabilities

     80,148        93,543   
  

 

 

   

 

 

 

Total current liabilities

     486,916        538,413   

Long-term debt

     450,809        648,968   

Pension benefits

     201,104        184,529   

Postretirement benefits other than pensions

     69,142        67,866   

Deferred tax liabilities

     10,801        5,994   

Other liabilities

     42,131        35,119   
  

 

 

   

 

 

 

Total liabilities

     1,260,903        1,480,889   

Redeemable noncontrolling interests

     14,194        12,511   

7% Cumulative participating convertible preferred stock, $0.001 par value, 10,000,000 shares authorized at December 31, 2012, and September 30, 2013; 964,247 shares issued and 958,333 outstanding at December 31, 2012 and 820,659 shares issued and 810,382 outstanding at September 30, 2013

     121,649        103,581   

Equity:

    

Common stock, $0.001 par value, 190,000,000 shares authorized at December 31, 2012 and September 30, 2013; 18,426,831 shares issued and 17,275,852 outstanding at December 31, 2012 and 14,696,592 shares issued and 13,146,908 outstanding at September 30, 2013

     16        13   

Additional paid-in capital

     471,851        382,844   

Retained earnings

     201,907        167,924   

Accumulated other comprehensive loss

     (45,448     (54,098
  

 

 

   

 

 

 

Total Cooper-Standard Holdings Inc. equity

     628,326        496,683   

Noncontrolling interests

     905        (147
  

 

 

   

 

 

 

Total equity

     629,231        496,536   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 2,025,977      $ 2,093,517   
  

 

 

   

 

 

 

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

 

4


COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollar amounts in thousands)

 

     Nine Months Ended September 30,  
     2012     2013  

Operating Activities:

    

Net income

   $ 110,286      $ 66,305   

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation

     79,640        71,741   

Amortization of intangibles

     11,590        11,534   

Stock-based compensation expense

     11,473        8,660   

Equity earnings, net of dividends related to earnings

     (5,009     (3,345

Deferred income taxes

     (47,763     14,604   

Other

     (334     584   

Changes in operating assets and liabilities

     (182,401     (152,510
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (22,518     17,573   

Investing activities:

    

Capital expenditures, including other intangible assets

     (91,537     (132,794

Acquisition of businesses, net of cash acquired

     (1,084     (13,504

Return on equity investments

     —          2,120   

Proceeds from sale of fixed assets and other

     8,997        3,584   
  

 

 

   

 

 

 

Net cash used in investing activities

     (83,624     (140,594

Financing activities:

    

Proceeds from issuance of Senior PIK Toggle Notes, net of debt issuance costs

     —          194,357   

Increase (decrease) in short term debt, net

     (2,833     1,648   

Principal payments on long-term debt

     (4,310     (3,825

Preferred stock cash dividends paid

     (5,135     (4,747

Purchase of noncontrolling interest

     —          (1,911

Repurchase of preferred stock

     (4,870     —     

Repurchase of common stock

     (20,636     (217,549

Proceeds from exercise of warrants

     —          11,252   

Other

     520        (5,302
  

 

 

   

 

 

 

Net cash used in financing activities

     (37,264     (26,077

Effects of exchange rate changes on cash and cash equivalents

     (501     (2,225
  

 

 

   

 

 

 

Changes in cash and cash equivalents

     (143,907     (151,323

Cash and cash equivalents at beginning of period

     361,745        270,555   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 217,838      $ 119,232   
  

 

 

   

 

 

 

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

 

5


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

1. Overview

Basis of presentation

Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company,” “Cooper-Standard,” “we,” “our,” or “us”) is a leading manufacturer of fluid handling, body sealing, and Anti-Vibration Systems (“AVS”) components, systems, subsystems, and modules. The Company’s products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (“OEMs”) and replacement markets. The Company conducts substantially all of its activities through its subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements include all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company. Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. The operating results for the interim period ended September 30, 2013 are not necessarily indicative of results for the full year. In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

Recent accounting pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU requires that a liability related to an unrecognized tax benefit be offset against a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if certain criteria are met. The guidance is effective for fiscal years beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on the condensed consolidated financial statements.

In July 2013, the FASB issued ASU 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits use of the Fed Funds Effective Swap Rate (OIS) as a U.S. benchmark interest rate for hedge accounting purposes and removes the restriction on using different benchmark rates for similar hedges. The guidance is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The initial adoption of this ASU had no impact on the condensed consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires companies to present the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income, but only if the item reclassified is required under U.S. generally accepted accounting principles (“U.S. GAAP”) to be reclassified to net income in its entirety in the same reporting period. The guidance is effective for fiscal years beginning after December 15, 2012. The Company adopted this guidance effective January 1, 2013. The effects of adoption were not significant and the additional required disclosures are included in Note 9. “Accumulated Other Comprehensive Income (Loss), Equity and Redeemable Noncontrolling Interests.”

In July 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-lived Intangible Assets for Impairment. This ASU permits companies to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before performing the quantitative impairment test. This ASU is effective for fiscal years beginning after September 15, 2012. The Company adopted this guidance effective January 1, 2013. The impact of the adoption of this ASU did not have a material impact on the condensed consolidated financial statements.

2. Acquisitions

On July 31, 2013, the Company completed the acquisition of Jyco Sealing Technologies (“Jyco”) for cash consideration of $14,382. The business acquired in the transaction is operated from Jyco’s manufacturing locations in Canada, Mexico and China. Jyco provides Thermoplastic Vulcanizate (“TPV”) sealing technology and has primarily supplied sealing systems and components to the automotive industry. This directly aligns with the Company’s growth strategy by strengthening important customer relationships in the automotive sealing systems. This acquisition was accounted for under ASC 805, “Business Combinations,” and the results of operations are included in the Company’s condensed consolidated financial statements from the date of acquisition.

 

6


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The following table summarizes the estimated fair value of Jyco assets acquired and liabilities assumed at the date of acquisition:

 

Cash and cash equivalents

   $ 878   

Accounts receivable

     9,407   

Tooling receivable

     2,036   

Inventories

     6,593   

Property, plant, and equipment

     14,055   

Other assets

     886   
  

 

 

 

Total assets acquired

     33,855   
  

 

 

 

Accounts payable

     10,418   

Other current liabilities

     7,021   

Other long-term liabilities

     2,034   
  

 

 

 

Total liabilities assumed

     19,473   
  

 

 

 

Net assets acquired

   $ 14,382   
  

 

 

 

The estimated fair value of certain current assets, current liabilities, property, plant, and equipment, tooling and intangible assets, are preliminary and may change in the future as information becomes available from third party and other valuations.

3. Goodwill and Intangibles

Effective April 1, 2013, the Company changed its basis of presentation from two to four segments. The changes in the carrying amount of goodwill by reportable operating segment for the nine months ended September 30, 2013 are summarized as follows:

 

     North America     Europe      South America      Asia Pacific      Total  

Balance at January 1, 2013

   $ 115,420      $ 13,836       $ —         $ 4,460       $ 133,716   

Foreign exchange translation

     (155     354         —           78         277   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Balance at September 30, 2013

   $ 115,265      $ 14,190       $ —         $ 4,538       $ 133,993   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Goodwill is not amortized but is tested for impairment, either annually or when events or circumstances indicate that impairment may exist, by reporting units determined in accordance with ASC 350, “Goodwill and Other Intangible Assets.”

The following table presents intangible assets and accumulated amortization balances of the Company as of December 31, 2012 and September 30, 2013, respectively:

 

     Gross            Net  
     Carrying      Accumulated     Carrying  
     Amount      Amortization     Amount  

Customer relationships

   $ 135,741       $ (34,184   $ 101,557   

Developed technology

     9,574         (4,143     5,431   

Other

     10,337         (601     9,736   
  

 

 

    

 

 

   

 

 

 

Balance at December 31, 2012

   $ 155,652       $ (38,928   $ 116,724   
  

 

 

    

 

 

   

 

 

 

Customer relationships

   $ 133,661       $ (43,586   $ 90,075   

Developed technology

     9,678         (5,381     4,297   

Other

     9,445         (925     8,520   
  

 

 

    

 

 

   

 

 

 

Balance at September 30, 2013

   $ 152,784       $ (49,892   $ 102,892   
  

 

 

    

 

 

   

 

 

 

 

7


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

Amortization expense totaled $3,866 and $3,785 for the three months ended September 30, 2012 and 2013, respectively, and $11,590 and $11,534 for the nine months ended September 30, 2012 and 2013, respectively. Amortization expense is estimated to be approximately $15,300 for the year ending December 31, 2013.

4. Restructuring

Restructuring activities initiated prior to 2012

The Company implemented several restructuring initiatives in prior years including the closure or consolidation of facilities throughout the world, the establishment of a centralized shared services function in Europe and the reorganization of the Company’s operating structure. The Company commenced these initiatives prior to January 1, 2012 and continued to execute these initiatives during 2013. The majority of the costs associated with these initiatives were incurred shortly after the original implementation. However, the Company continues to incur costs on some of the initiatives related principally to the disposal of the respective facilities.

The following table summarizes the restructuring expense for these initiatives for the three and nine months ended September 30, 2012 and 2013:

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2012      2013      2012     2013  

Employee separation costs

   $ 295       $ 54       $ (1,516   $ 299   

Other exit costs

     869         167         4,242        1,309   

Asset Impairments

     —           1,023         147        1,110   

Postretirement benefit curtailment gain

     —           —           (1,539     —     
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 1,164       $ 1,244       $ 1,334      $ 2,718   
  

 

 

    

 

 

    

 

 

   

 

 

 

The following table summarizes the activity in the restructuring liability for these initiatives for the nine months ended September 30, 2013:

 

     Employee     Other              
     Separation     Exit     Asset        
     Costs     Costs     Impairments     Total  

Balance at January 1, 2013

   $ 2,054      $ 61      $ —        $ 2,115   

Expense

     299        1,309        1,110        2,718   

Cash payments and foreign exchange translation

     (903     (1,306     —          (2,209

Utilization of reserve

     —          —          (1,110     (1,110
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 1,450      $ 64      $ —        $ 1,514   
  

 

 

   

 

 

   

 

 

   

 

 

 

Restructuring activities initiated in 2012

During 2012, the Company initiated the restructuring of certain facilities in Europe to change the Company’s European footprint to improve operating performance. The majority of the costs have been recognized, however, additional costs may be incurred. The Company has recognized $23,854 of costs related to these initiatives.

 

8


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The following table summarizes the restructuring expense for these initiatives for the three and nine months ended September 30, 2012 and 2013:

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2012      2013      2012      2013  

Employee separation costs

   $ 8,797       $ 108       $ 14,053       $ 2,724   

Other exit costs

     210         241         210         378   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 9,007       $ 349       $ 14,263       $ 3,102   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table summarizes the activity in the restructuring liability for these initiatives for the nine months ended September 30, 2013:

 

     Employee     Other               
     Separation     Exit     Asset         
     Costs     Costs     Impairments      Total  

Balance at January 1, 2013

   $ 13,507      $ —        $ —         $ 13,507   

Expense

     2,724        378        —           3,102   

Cash payments and foreign exchange translation

     (14,295     (378     —           (14,673
  

 

 

   

 

 

   

 

 

    

 

 

 

Balance at September 30, 2013

   $ 1,936      $ —        $ —         $ 1,936   
  

 

 

   

 

 

   

 

 

    

 

 

 

In the first quarter of 2012, the Company initiated the closure of a facility in North America and a restructuring liability of $4,886 was recorded. During the second quarter of 2012, the Company was able to negotiate a new contract with the union, therefore enabling the facility to remain open. As a result, $4,725 of restructuring expense was reversed during June, 2012.

Restructuring activities initiated in 2013

In the first quarter of 2013, the Company eliminated certain positions within the organization that resulted in restructuring expense of $1,621, all of which is paid. No additional expense is expected to be incurred related to this initiative.

In the third quarter of 2013, the Company initiated the closure of a facility in Korea and the transfer of equipment to another facility in Korea. The estimated cost of this initiative is $1,000 and is expected to be completed in 2014. For the three and nine months ended September 30, 2013, the Company recorded $314 of expense related to this initiative. As of September 30, 2013, the liability associated with this initiative is $316.

5. Inventories

Inventories were comprised of the following at December 31, 2012 and September 30, 2013:

 

     December 31,      September 30,  
     2012      2013  

Finished goods

   $ 37,415       $ 43,361   

Work in process

     32,383         41,027   

Raw materials and supplies

     73,455         102,370   
  

 

 

    

 

 

 
   $ 143,253       $ 186,758   
  

 

 

    

 

 

 

 

9


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

6. Debt

Outstanding debt consisted of the following at December 31, 2012 and September 30, 2013:

 

     December 31,     September 30,  
     2012     2013  

Senior notes

   $ 450,000      $ 450,000   

Senior PIK toggle notes

     —          196,281   

Other borrowings

     33,365        32,951   
  

 

 

   

 

 

 

Total debt

   $ 483,365      $ 679,232   

Less current portion

     (32,556     (30,264
  

 

 

   

 

 

 

Total long-term debt

   $ 450,809      $ 648,968   
  

 

 

   

 

 

 

Senior ABL Facility

On April 8, 2013 the Company and certain of its subsidiaries entered into the Amended and Restated Senior Loan and Security Agreement (“the Senior ABL Facility”), with certain lenders, which amended and restated the existing of its senior secured asset-based revolving credit facility. The Senior ABL Facility provides for an aggregate revolving loan availability of up to $150,000, subject to borrowing base availability, including a $50,000 letter of credit sub-facility and a $25,000 swing line sub-facility. The Senior ABL Facility also provides for an uncommitted $75,000 incremental loan facility, for a potential total Senior ABL Facility of $225,000 (if requested by the Company and the lenders agree to fund such increase). No consent of any lender (other than those participating in the increase) is required to effect any such increase. As of September 30, 2013, no amounts were drawn under the Senior ABL Facility, but there was approximately $26,422 of letters of credit outstanding under the facility.

Senior PIK Toggle Notes

On April 3, 2013, the Company issued $175,000 aggregate principal amount of its Senior PIK Toggle Notes (the “Senior PIK Toggle Notes”). The Senior PIK Toggle Notes bear an interest rate of 7.375% and mature on April 1, 2018. The Senior PIK Toggle Notes were issued pursuant to an indenture dated April 3, 2013. The Senior PIK Toggle Notes were issued at a discount of $3,938. On May 20, 2013, the Company issued an additional $25,000 Senior PIK Toggle Notes pursuant to the indenture dated April 3, 2013. The Senior PIK Toggle Notes were issued at a discount of $188. The Company used the proceeds from the issuance of the Senior PIK Toggle Notes, together with cash on hand, to finance the purchase of shares pursuant to the Equity Tender Offer. For additional information on the Equity Tender Offer, see Note 9. “Accumulated Other Comprehensive Income (Loss), Equity and Redeemable Noncontrolling Interests.”

The Company will pay the first interest payment on the Senior PIK Toggle Notes in cash (“Cash Interest”). For each interest period thereafter (other than for the final interest period ending at stated maturity, which will be made in cash), the Company will be required to pay Cash Interest, unless the conditions described in the indenture are satisfied, in which case the Company will be entitled to pay, to the extent described in the indenture, interest by increasing the principal amount of the outstanding Senior PIK Toggle Notes or issuing new Senior PIK Toggle Notes (such increase or issuance, “PIK Interest”). Cash Interest will accrue on the Senior PIK Toggle Notes at a rate equal to 7.375% per annum. PIK Interest will accrue on the Senior PIK Toggle Notes at a rate equal to 8.125% per annum.

The Senior PIK Toggle Notes were not guaranteed as of the date of issuance. If any of the Company’s wholly-owned domestic restricted subsidiaries guarantees certain debt of the Company, such subsidiary will also be required to guarantee the Senior PIK Toggle Notes.

The Senior PIK Toggle Notes constitute senior debt of the Company and (1) rank equally in right of payment with all of the Company’s existing and future senior debt, (2) rank senior in right of payment to any future subordinated debt of the Company, (3) are effectively subordinated in right of payment to all of the Company’s existing and future secured indebtedness and secured obligations to the extent of the value of the collateral securing such indebtedness and obligations and (4) are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries (other than indebtedness and liabilities owed to the Company).

 

10


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The Company has the right to redeem the Senior PIK Toggle Notes at the redemption prices under certain circumstances. If a change of control occurs with respect to the Company, unless the Company has exercised its right to redeem all of the outstanding Senior PIK Toggle Notes, each noteholder shall have the right to require the Company to repurchase such noteholder’s Senior PIK Toggle Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase.

The Senior PIK Toggle Notes indenture contains covenants and events of default customary for an issuer of non-investment grade debt and substantially similar to the covenants and events of default in the indenture governing the 8  12% Senior Notes due 2018 issued by Cooper-Standard Automotive Inc., a wholly-owned subsidiary of the Company.

7. Pension and Postretirement Benefits other than Pensions

The following tables disclose the amount of net periodic benefit cost for the three and nine months ended September 30, 2012 and 2013 for the Company’s defined benefit plans and other postretirement benefit plans:

 

     Pension Benefits  
     Three Months Ended September 30,  
     2012     2013  
     U.S.     Non-U.S.     U.S.     Non-U.S.  

Service cost

   $ 287      $ 778      $ 305      $ 881   

Interest cost

     3,476        1,919        3,052        1,694   

Expected return on plan assets

     (3,868     (1,010     (4,342     (927

Amortization of prior service cost and recognized actuarial loss

     124        96        344        325   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost (gain)

   $ 19      $ 1,783      $ (641   $ 1,973   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Pension Benefits  
     Nine Months Ended September 30,  
     2012     2013  
     U.S.     Non-U.S.     U.S.     Non-U.S.  

Service cost

   $ 861      $ 2,366      $ 915      $ 2,646   

Interest cost

     10,428        5,830        9,156        5,095   

Expected return on plan assets

     (11,604     (3,010     (13,026     (2,812

Amortization of prior service cost and recognized actuarial loss

     372        284        1,032        981   

Settlement

     —          —          783        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost (gain)

   $ 57      $ 5,470      $ (1,140   $ 5,910   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

11


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

     Other Postretirement Benefits  
     Three Months Ended September 30,  
     2012     2013  
     U.S.     Non-U.S.     U.S.     Non-U.S.  

Service cost

   $ 136      $ 163      $ 147      $ 163   

Interest cost

     449        206        407        183   

Amortization of prior service credit and recognized actuarial gain

     (444     (14     (281     (35

Other

     19        —          6        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 160      $ 355      $ 279      $ 311   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Other Postretirement Benefits  
     Nine Months Ended September 30,  
     2012     2013  
     U.S.     Non-U.S.     U.S.     Non-U.S.  

Service cost

   $ 408      $ 486      $ 441      $ 497   

Interest cost

     1,347        614        1,221        557   

Amortization of prior service credit and recognized actuarial gain

     (1,332     (41     (843     (106

Other

     57        —          18        —     

Curtailment gain

     (1,539     —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost (gain)

   $ (1,059   $ 1,059      $ 837      $ 948   
  

 

 

   

 

 

   

 

 

   

 

 

 

The curtailment gain for the nine months ended September 30, 2012 in the table above resulted from the closure of a U.S. facility and was recorded as a reduction to restructuring expense.

8. Income Taxes

Under ASC Topic 270, “Interim Reporting,” the Company is required to determine its effective tax rate each quarter based upon its estimated annual effective tax rate. The Company is also required to record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

The effective tax rate for the three and nine months ended September 30, 2013 was 18% and 27%, respectively. The effective tax rate for the three and nine months ended September 30, 2012 was 34% and (42%), respectively, which included a benefit of ($19,500) included in the estimated annual effective tax rate resulting from forecasted net income in the U.S. with no corresponding tax expense due to utilization of valuation allowances and a benefit of ($48,300) resulting from changes in determinations relating to the potential realization of deferred tax assets and the resulting reversal of a valuation allowance on net deferred tax assets in the United States. Excluding the impact of releasing the US valuation allowance in 2012, the effective tax rate for the three and nine months ended September 30, 2012 was 34% and 20%, respectively. The income tax rate for the three and nine months ended September 30, 2013 varies from statutory rates due to a discrete benefit for the effect of the American Taxpayer Relief Act of 2012 which retroactively reinstated the Federal Research and Development Tax Credit (as signed into law in early 2013), as well as the exclusion from U.S. federal taxable income of certain interest, dividends, rents, and royalty income of foreign affiliates, and the benefits of the credits with that income. Additionally, the income tax rate varies from statutory rates due to income taxes on foreign earnings taxed at rates lower than the U.S. statutory rate, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions to the extent not offset by other categories of income, tax credits, income tax incentives, withholding taxes, and other permanent items. Further, the Company’s current and future provision for income taxes may be impacted by the recognition of valuation allowances in certain countries. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized.

 

12


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

9. Accumulated Other Comprehensive Income (Loss), Equity and Redeemable Noncontrolling Interests

The changes in accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2013, net of related tax, are as follows:

 

     Three Months ended September 30, 2013  
     Cumulative currency
translation
adjustment
    Benefit plan
liability
    Fair value
change of
derivatives
    Accumulated other
comprehensive loss
 

Balance at July 1, 2013

   $ (5,111   $ (62,673   $ (166   $ (67,950

Other comprehensive income (loss) before reclassifications

     14,501        (979     130        13,652   

Amounts reclassified from accumulated other comprehensive income (loss)

     —          239        (39     200   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net current period other comprehensive income (loss)(1)

     14,501        (740     91        13,852   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 9,390      $ (63,413   $ (75   $ (54,098
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts in parentheses indicate debits.

        

(1)    Other comprehensive income (loss) related to the benefit plan liability is net of a tax effect of $24. Other comprehensive income (loss) related to the fair value change of derivatives is net of a tax effect of $3.

        

     Nine Months ended September 30, 2013  
     Cumulative currency
translation
adjustment
    Benefit plan
liability
    Fair value
change of
derivatives
    Accumulated other
comprehensive loss
 

Balance at January 1, 2013

   $ 18,320      $ (64,018   $ 250      $ (45,448

Other comprehensive loss before reclassifications

     (8,930     (74     (53     (9,057

Amounts reclassified from accumulated other comprehensive income (loss)

     —          679        (272     407   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net current period other comprehensive income (loss)(1)

     (8,930     605        (325     (8,650
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2013

   $ 9,390      $ (63,413   $ (75   $ (54,098
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts in parentheses indicate debits.

        

(1)    Other comprehensive income (loss) related to the benefit plan liability is net of a tax effect of ($376). Other comprehensive income (loss) related to the fair value change of derivatives is net of a tax effect of $128.

        

 

13


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2013 are as follows:

 

     Gain (loss) reclassified    

Location of gain (loss) reclassified into

income

Details about accumulated other    Three months ended     Nine months ended    

comprehensive loss components

   September 30, 2013     September 30, 2013    

Fair value change of derivatives

      

Interest rate contracts

   $ (21   $ 209      Interest expense, net of interest income

Foreign exchange contracts

     68        181      Cost of products sold
  

 

 

   

 

 

   
     47        390      Income before income taxes
     (8     (118   Income tax expense
  

 

 

   

 

 

   
   $ 39      $ 272      Consolidated net income
  

 

 

   

 

 

   

Amortization of defined benefit and other postretirement benefit plans

      

Prior service credits

   $ 161      $ 472 (1)   

Actuarial losses

     (495     (1,427 )(1)   
  

 

 

   

 

 

   
     (334     (955   Income before income taxes
     95        276      Income tax benefit
  

 

 

   

 

 

   
   $ (239   $ (679   Consolidated net income
  

 

 

   

 

 

   

Total reclassifications for the period

   $ (200   $ (407  
  

 

 

   

 

 

   

 

(1)  These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 7. “Pension and Postretirement Benefits other than Pensions” for additional details.)

The following table summarizes the Company’s equity and redeemable noncontrolling interest activity for the nine months ended September 30, 2013:

 

     Cooper-
Standard
Holdings Inc.
    Noncontrolling
Interest
    Total
Equity
    Redeemable
Noncontrolling
Interests
 

Equity at January 1, 2013

   $ 628,326      $ 905      $ 629,231      $ 14,194   

Net income (loss)

     68,729        (25     68,704        (2,399

Preferred stock dividends

     (4,569     —          (4,569     —     

Repurchase of common stock

     (217,549     —          (217,549     —     

Conversion of preferred shares

     18,252        —          18,252     

Warrant exercise

     11,252        —          11,252        —     

Other comprehensive income (loss)

     (8,650     (1     (8,651     60   

Stock-based compensation

     3,026        —          3,026        —     

Shares issued under stock option plans

     (593     —          (593     —     

Accretion of redeemable noncontrolling interests

     (656     —          (656     656   

Purchase of noncontrolling interest

     (885     (1,026     (1,911     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity at September 30, 2013

   $ 496,683      $ (147   $ 496,536      $ 12,511   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity Tender Offer

On April 5, 2013, the Company commenced an Equity Tender Offer. On May 2, 2013, the Company purchased 4,651,162 shares pursuant to the Equity Tender Offer at a purchase price of $43.00 per share for an aggregate purchase price of approximately $200,000. The Company used the proceeds from the issuance of the Senior PIK Toggle Notes (see Note 6. “Debt”), together with cash on hand, to finance the purchase of shares of common stock pursuant to the Equity Tender Offer.

 

14


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

10. Net Income Per Share Attributable to Cooper-Standard Holdings Inc.

Basic net income per share attributable to Cooper-Standard Holdings Inc. was computed using the two-class method by dividing net income attributable to Cooper-Standard Holdings Inc., after deducting dividends on the Company’s 7% cumulative participating convertible preferred stock (“7% preferred stock”), premium paid for redemption of 7% preferred stock and undistributed earnings allocated to participating securities, by the weighted average number of shares of common stock outstanding during the period excluding unvested restricted shares. The Company’s shares of 7% preferred stock outstanding are considered participating securities. Diluted net income per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method by dividing diluted net income available to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding, including the dilutive effect of common stock equivalents, using the average share price during the period. Diluted net income per share attributable to Cooper-Standard Holdings Inc. computed using the two-class method was antidilutive. A summary of information used to compute basic and diluted net income per share attributable to Cooper-Standard Holdings Inc. is shown below:

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2013     2012     2013  

Net income attributable to Cooper-Standard Holdings Inc.

   $ 11,624      $ 20,596      $ 112,727      $ 68,729   

Less: 7% Preferred stock dividends (paid or unpaid)

     (1,699     (1,419     (5,087     (4,569

Less: Premium paid for redemption of 7% preferred stock

     —          —          (974     —     

Less: Undistributed earnings allocated to participating securities

     (1,888     (4,033     (20,078     (13,101
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income available to Cooper-Standard Holdings Inc. common stockholders

   $ 8,037      $ 15,144      $ 86,588      $ 51,059   

Increase in fair value of share-based awards

   $ —        $ 212      $ —        $ 466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income available to Cooper-Standard Holdings Inc. common stockholders

   $ 8,037      $ 15,356      $ 86,588      $ 51,525   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average shares of common stock outstanding

     17,454,226        13,045,575        17,578,580        14,621,535   

Dilutive effect of:

        

Restricted common stock

     172,586        144,086        270,230        206,588   

Restricted 7% preferred stock

     19,181        —          47,833        19,949   

Warrants

     570,067        899,420        699,533        800,116   

Options

     77,707        162,878        111,023        139,655   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average shares of common stock outstanding

     18,293,767        14,251,959        18,707,199        15,787,843   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income per share attributable to Cooper-Standard Holdings Inc.

   $ 0.46      $ 1.16      $ 4.93      $ 3.49   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share attributable to Cooper-Standard Holdings Inc.

   $ 0.44      $ 1.08      $ 4.63      $ 3.26   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

15


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The effect of certain common stock equivalents, including the 7% preferred stock and options, were excluded from the computation of weighted average diluted shares outstanding for the three and nine months ended September 30, 2012 and 2013, as inclusion would have been antidilutive. A summary of these shares of 7% preferred stock (as if converted) and options are shown below:

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2012      2013      2012      2013  

Number of options

     272,800         131,000         272,800         131,000   

Exercise price

   $ 43.50-46.75       $ 52.25-52.50       $ 43.50-46.75       $ 52.25-52.50   

7% Preferred stock, as if converted

     4,099,692         3,479,719         4,076,150         3,751,800   

7% Preferred stock dividends, undistributed earnings and premium allocated to participating securities that would be added back in the diluted calculation

   $ 3,587       $ 5,460       $ 26,139       $ 17,670   

11. Redeemable Preferred Stock

The following table reconciles the Company’s 7% preferred stock activity for the nine months ended September 30, 2013:

 

     Preferred Shares     Preferred Stock  

Balance at January 1, 2013

     958,333      $ 121,649   

Stock-based compensation

     —          745   

Converted preferred stock shares

     (142,590     (18,252

Repurchased preferred stock shares

     (4,363     (561

Forfeited shares

     (998     —     
  

 

 

   

 

 

 

Balance at September 30, 2013

     810,382      $ 103,581   
  

 

 

   

 

 

 

On October 18, 2013, the Company gave notice to the holders of its 7% preferred stock that the Company had elected to cause the mandatory conversion of all 810,382 shares of issued and outstanding shares of 7% preferred stock on November 15, 2013. The 7% preferred stock will be converted at the rate of 4.34164 shares of the Company’s common stock for each share of 7% preferred stock, or into an aggregate of 3,518,386 shares of common stock. On the conversion date, the shares of 7% preferred stock will be cancelled and all rights of holders of 7% preferred stock will terminate (other than the right to receive shares of common stock issuable upon conversion). Shares of 7% preferred stock that are converted and cancelled will be restored to the status of authorized but unissued preferred stock of the Company.

12. Stock-Based Compensation

On May 27, 2010, the Company adopted the 2010 Cooper-Standard Holdings Inc. Management Incentive Plan. In 2011, the Company adopted the 2011 Omnibus Incentive Plan, which amended, restated and replaced the 2010 Cooper-Standard Holdings Inc. Management Incentive Plan. Under these plans, stock options, restricted common stock, restricted 7% preferred stock, unrestricted common stock and restricted stock units have been granted to key employees and directors. Total compensation expense recognized was $3,436 and $3,026 for the three months ended September 30, 2012 and 2013, respectively, and $11,473 and $8,660 for the nine months ended September 30, 2012 and 2013, respectively.

 

16


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

13. Other Income (Expense), Net

The components of other income (expense), net are as follows:

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2013     2012     2013  

Foreign currency gains (losses)

   $ (193   $ 813      $ (4,516   $ (6,351

Unrealized gains (losses) related to forward contracts

     1,476        401        3,836        (92

Loss on sale of receivables

     (165     (437     (689     (1,235

Miscellaneous income

     —          183        920        2,293   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

   $ 1,118      $ 960      $ (449   $ (5,385
  

 

 

   

 

 

   

 

 

   

 

 

 

14. Related Party Transactions

Sales to NISCO, a 40% owned joint venture, totaled $7,472 and $11,694 for the three months ended September 30, 2012 and 2013, respectively, and $31,491 and $35,528 for the nine months ended September 30, 2012 and 2013, respectively. In March 2012, the Company received from NISCO a dividend of $800, all of which was related to earnings. In March 2013, the Company received from NISCO a dividend of $4,000, consisting of $1,880 related to earnings and a $2,120 return of capital.

Purchases of materials from Guyoung Technology Co. Ltd, a Korean corporation of which the Company owns approximately 20% of the common stock, totaled $743 and $672 for the three months ended September 30, 2012 and 2013, respectively, and $2,340 and $2,032 for the nine months ended September 30, 2012 and 2013, respectively.

15. Business Segments

ASC 280, “Segment Reporting,” establishes the standards for reporting information about operating segments in financial statements. The Company organized, managed and reported its global business operations through two geographic segments in the first quarter of 2013. In April 2013, the Company implemented organizational and management changes of its global business operations resulting in four reportable segments associated with geographic regions. In applying the criteria set forth in ASC 280, the Company revised its segment disclosures beginning with the second quarter of 2013 from the two segments, North America and International, to four reportable segments, North America, Europe, South America and Asia Pacific. The Company’s principal product lines within each of these segments are body and chassis products and fluid handling products. The Company evaluates segment performance based on segment profit before tax. The results of each segment include certain allocations for general, administrative, interest, and other shared costs. Prior periods have been revised to conform to the current period presentation. Due to this segment revision, the Company has also revised the previously reported amounts in Note 3. “Goodwill and Intangibles” to conform to the new segment presentation.

 

17


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The following table details information on the Company’s business segments:

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2013     2012     2013  

Sales to external customers

        

North America

   $ 363,859      $ 408,615      $ 1,139,273      $ 1,191,521   

Europe

     227,556        258,028        780,780        806,182   

South America

     39,208        43,069        107,282        138,746   

Asia Pacific

     53,406        54,345        156,459        159,892   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

   $ 684,029      $ 764,057      $ 2,183,794      $ 2,296,341   
  

 

 

   

 

 

   

 

 

   

 

 

 

Intersegment sales

        

North America

   $ 1,646        2,121      $ 5,979        8,959   

Europe

     2,107        2,440        6,489        6,837   

South America

     37        —          159        —     

Asia Pacific

     2,091        3,013        6,105        7,434   

Eliminations and other

     (5,881     (7,574     (18,732     (23,230
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

   $ —        $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

        

North America

   $ 32,790      $ 31,726      $ 113,922      $ 103,158   

Europe

     (19,319     (7,500     (33,442     (14,784

South America

     (1,028     (1,838     (6,413     (5,760

Asia Pacific

     3,307        2,365        3,447        8,251   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 15,750      $ 24,753      $ 77,514      $ 90,865   
  

 

 

   

 

 

   

 

 

   

 

 

 

Restructuring cost included in segment profit (loss)

        

North America

   $ 276      $ 73      $ 755      $ 1,961   

Europe

     9,802        1,517        14,715        5,476   

South America

     —          —          —          —     

Asia Pacific

     93        317        288        318   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

   $ 10,171      $ 1,907      $ 15,758      $ 7,755   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     December 31,
2012
     September 30,
2013
 

Segment assets

     

North America

   $ 772,269       $ 878,213   

Europe

     593,340         613,907   

South America

     145,257         161,792   

Asia Pacific

     223,801         249,829   

Eliminations and other

     291,310         189,776   
  

 

 

    

 

 

 

Consolidated

   $ 2,025,977       $ 2,093,517   
  

 

 

    

 

 

 

16. Guarantor and Non-Guarantor Subsidiaries

On May 27, 2010, Cooper-Standard Automotive Inc. (the “Issuer”), a wholly-owned subsidiary of Cooper-Standard Holdings Inc., issued 8 1/2% senior notes due 2018 (“the Senior Notes”) with a total principal amount of $450,000. Cooper-Standard Holdings Inc. and all wholly-owned domestic subsidiaries of Cooper-Standard Automotive Inc. (the “Guarantors”) unconditionally guarantee the Senior Notes. The following condensed consolidated financial data provides information regarding the financial position, results of operations, and cash flows of the Guarantors. The Guarantors account for their investments in the non-guarantor subsidiaries on the equity method. The principal elimination entries are to eliminate the investments in subsidiaries and intercompany balances and transactions.

 

18


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Three Months Ended September 30, 2012

 

     Parent      Issuer     Guarantors     Non-Guarantors     Eliminations     Consolidated
Totals
 
     (dollars in millions)  

Sales

   $ —         $ 135.1      $ 150.7      $ 441.4      $ (43.2   $ 684.0   

Cost of products sold

     —           113.0        129.1        382.0        (43.2     580.9   

Selling, administration, & engineering expenses

     —           30.8        —          34.6        —          65.4   

Amortization of intangibles

     —           2.8        —          1.1        —          3.9   

Restructuring

     —           0.1        0.2        9.9        —          10.2   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     —           (11.6     21.4        13.8        —          23.6   

Interest expense, net of interest income

     —           (8.3     —          (3.0     —          (11.3

Equity earnings

     —           1.0        0.5        0.9        —          2.4   

Other income (expense), net

     —           8.7        (0.1     (7.5     —          1.1   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     —           (10.2     21.8        4.2        —          15.8   

Income tax expense

     —           0.3        4.6        0.5        —          5.4   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before equity in income of subsidiaries

     —           (10.5     17.2        3.7        —          10.4   

Equity in net income of subsidiaries

     11.6         22.1        —          —          (33.7     —     
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     11.6         11.6        17.2        3.7        (33.7     10.4   

Net income attributable to noncontrolling interests

     —           —          —          1.2        —          1.2   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Cooper-Standard Holdings Inc.

   $ 11.6       $ 11.6      $ 17.2      $ 4.9      $ (33.7   $ 11.6   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 19.6       $ 19.6      $ 17.2      $ 11.5      $ (49.1   $ 18.8   

Add: comprehensive loss attributable to noncontrolling interests

     —           —          —          0.8        —          0.8   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Cooper-Standard Holdings Inc.

   $ 19.6       $ 19.6      $ 17.2      $ 12.3      $ (49.1   $ 19.6   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Three Months Ended September 30, 2013

 

                                   Consolidated  
     Parent     Issuer     Guarantors     Non-Guarantors     Eliminations     Totals  
     (dollar amounts in millions)  

Sales

   $ —        $ 145.5      $ 167.8      $ 499.8      $ (49.1   $ 764.0   

Cost of products sold

     —          126.1        135.4        436.6        (49.1     649.0   

Selling, administration, & engineering expenses

     —          33.7        (0.1     39.4        —          73.0   

Amortization of intangibles

     —          2.9        —          0.9        —          3.8   

Restructuring

     —          —          —          1.9        —          1.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     —          (17.2     32.5        21.0        —          36.3   

Interest expense, net of interest income

     (4.0     (7.4     —          (3.7     —          (15.1

Equity earnings

     —          0.6        1.0        1.1        —          2.7   

Other income (expense), net

     —          4.8        0.1        (4.0     —          0.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (4.0     (19.2     33.6        14.4        —          24.8   

Income tax expense (benefit)

     (2.0     (3.3     7.7        2.1        —          4.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before equity in income (loss) subsidiaries

     (2.0     (15.9     25.9        12.3        —          20.3   

Equity in net income of subsidiaries

     22.6        38.5        —          —          (61.1     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     20.6        22.6        25.9        12.3        (61.1     20.3   

Net loss attributable to noncontrolling interest

     —          —          —          0.3        —          0.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Cooper-Standard Holdings Inc.

   $ 20.6      $ 22.6      $ 25.9      $ 12.6      $ (61.1   $ 20.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 34.5      $ 38.4      $ 25.9      $ 21.9      $ (86.8   $ 33.9   

Add: Comprehensive loss attributable to noncontrolling interests

     —          —          —          0.6        —          0.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Cooper-Standard Holdings Inc.

   $ 34.5      $ 38.4      $ 25.9      $ 22.5      $ (86.8   $ 34.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

19


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2012

 

                                    Consolidated  
     Parent      Issuer     Guarantors     Non-Guarantors     Eliminations     Totals  
     (dollars in millions)  

Sales

   $ —         $ 429.7      $ 475.5      $ 1,420.2      $ (141.6   $ 2,183.8   

Cost of products sold

     —           356.5        401.9        1,227.8        (141.6     1,844.6   

Selling, administration, & engineering expenses

     —           96.2        0.9        109.3        —          206.4   

Amortization of intangibles

     —           8.5        —          3.1        —          11.6   

Restructuring

     —           0.3        0.3        15.2        —          15.8   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     —           (31.8     72.4        64.8        —          105.4   

Interest expense, net of interest income

     —           (24.9     —          (8.4     —          (33.3

Equity earnings

     —           0.5        2.7        2.7        —          5.9   

Other income (expense), net

     —           26.6        1.0        (28.1     —          (0.5
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     —           (29.6     76.1        31.0        —          77.5   

Income tax expense (benefit)

     —           18.4        (48.5     (2.7     —          (32.8
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before equity in income (loss) of subsidiaries

     —           (48.0     124.6        33.7        —          110.3   

Equity in net income of subsidiaries

     112.7         160.7        —          —          (273.4     —     
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     112.7         112.7        124.6        33.7        (273.4     110.3   

Net loss attributable to noncontrolling interest

     —           —          —          2.4        —          2.4   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Cooper-Standard Holdings Inc.

   $ 112.7       $ 112.7      $ 124.6      $ 36.1      $ (273.4   $ 112.7   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 107.8       $ 107.8      $ 124.6      $ 29.0      $ (264.2   $ 105.0   

Add: comprehensive loss attributable to noncontrolling interests

     —           —          —          2.8        —          2.8   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Cooper-Standard Holdings Inc.

   $ 107.8       $ 107.8      $ 124.6      $ 31.8      $ (264.2   $ 107.8   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2013

 

                                    Consolidated  
     Parent     Issuer     Guarantors      Non-Guarantors     Eliminations     Totals  
     (dollar amounts in millions)  

Sales

   $ —        $ 437.7      $ 505.5       $ 1,501.5      $ (148.4   $ 2,296.3   

Cost of products sold

     —          368.5        402.8         1,305.8        (148.4     1,928.7   

Selling, administration, & engineering expenses

     —          99.1        2.7         119.0        —          220.8   

Amortization of intangibles

     —          8.6        —           2.9        —          11.5   

Restructuring

     —          1.7        0.2         5.8        —          7.7   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     —          (40.2     99.8         68.0        —          127.6   

Interest expense, net of interest income

     (7.6     (23.5     —           (8.9     —          (40.0

Equity earnings

     —          2.5        3.2         3.0        —          8.7   

Other income (expense), net

     —          18.3        0.3         (24.0     —          (5.4
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (7.6     (42.9     103.3         38.1        —          90.9   

Income tax expense (benefit)

     (2.0     (11.3     27.2         10.7        —          24.6   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) before equity in income (loss) subsidiaries

     (5.6     (31.6     76.1         27.4        —          66.3   

Equity in net income of subsidiaries

     74.3        105.9        —           —          (180.2     —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     68.7        74.3        76.1         27.4        (180.2     66.3   

Net loss attributable to noncontrolling interest

     —          —          —           2.4        —          2.4   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Cooper-Standard Holdings Inc.

   $ 68.7      $ 74.3      $ 76.1       $ 29.8      $ (180.2   $ 68.7   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 60.1      $ 67.6      $ 76.1       $ 16.1      $ (162.2   $ 57.7   

Add: Comprehensive loss attributable to noncontrolling interests

     —          —          —           2.4        —          2.4   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Cooper-Standard Holdings Inc.

   $ 60.1      $ 67.6      $ 76.1       $ 18.5      $ (162.2   $ 60.1   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

20


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

 

     Parent      Issuer      Guarantors     Non-Guarantors     Eliminations     Consolidated
Totals
 
     (dollar amounts in millions)  

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ —         $ 177.5       $ 4.4      $ 88.7      $ —        $ 270.6   

Accounts receivable, net

     —           54.8         72.6        222.7        —          350.1   

Tooling receivable

     —           13.4         12.1        91.4        —          116.9   

Inventories

     —           18.8         28.5        96.0        —          143.3   

Prepaid expenses

     —           5.9         0.3        15.7        —          21.9   

Other

     —           35.5         0.6        51.7        —          87.8   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     —           305.9         118.5        566.2        —          990.6   

Investments in affiliates and intercompany accounts, net

     628.3         339.7         998.7        (52.9     (1,851.6     62.2   

Property, plant, and equipment, net

     —           88.2         56.5        483.9        —          628.6   

Goodwill

     —           111.1         —          22.6        —          133.7   

Other assets

     —           80.9         48.2        81.8        —          210.9   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   $ 628.3       $ 925.8       $ 1,221.9      $ 1,101.6      $ (1,851.6   $ 2,026.0   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES & EQUITY

              

Current liabilities:

              

Debt payable within one year

   $ —         $ —         $ —        $ 32.6      $ —        $ 32.6   

Accounts payable

     —           45.4         41.3        184.7        —          271.4   

Accrued liabilities

     —           59.1         5.4        118.5        —          183.0   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     —           104.5         46.7        335.8        —          487.0   

Long-term debt

     —           450.0         —          0.8        —          450.8   

Other liabilities

     —           167.4         (0.2     156.0        —          323.2   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     —           721.9         46.5        492.6        —          1,261.0   

Redeemable noncontrolling interests

     —           —           —          14.2        —          14.2   

Preferred stock

     —           121.6         —          —          —          121.6   

Total Cooper-Standard Holdings Inc. equity

     628.3         82.3         1,175.4        593.9        (1,851.6     628.3   

Noncontrolling interests

     —           —           —          0.9        —          0.9   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     628.3         82.3         1,175.4        594.8        (1,851.6     629.2   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 628.3       $ 925.8       $ 1,221.9      $ 1,101.6      $ (1,851.6   $ 2,026.0   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

21


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2013

 

     Parent      Issuer      Guarantors     Non-Guarantors     Eliminations     Consolidated
Totals
 
     (dollar amounts in millions)  

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ 20.4       $ 67.7       $ —        $ 31.1      $ —        $ 119.2   

Accounts receivable, net

     —           73.1         86.4        270.2        —          429.7   

Tooling receivable

     —           21.8         14.1        114.0        —          149.9   

Inventories

     —           22.0         33.1        131.7        —          186.8   

Prepaid expenses

     —           6.0         0.4        26.1        —          32.5   

Other

     —           35.2         0.4        58.3        —          93.9   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     20.4         225.8         134.4        631.4        —          1,012.0   

Investments in affiliates and intercompany accounts, net

     678.5         295.6         1,112.9        (111.0     (1,912.2     63.8   

Property, plant, and equipment, net

     —           95.1         58.0        547.8        —          700.9   

Goodwill

     —           111.1         —          22.9        —          134.0   

Other assets

     1.4         111.2         0.1        70.1        —          182.8   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   $ 700.3       $ 838.8       $ 1,305.4      $ 1,161.2      $ (1,912.2   $ 2,093.5   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES & EQUITY

              

Current liabilities:

              

Debt payable within one year

   $ —         $ —         $ —        $ 30.3      $ —        $ 30.3   

Accounts payable

     —           47.7         48.6        202.5        —          298.8   

Accrued liabilities

     7.3         58.1         5.3        138.6        —          209.3   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     7.3         105.8         53.9        371.4        —          538.4   

Long-term debt

     196.3         450.0         —          2.7        —          649.0   

Other liabilities

     —           141.2         (0.1     152.3        —          293.4   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     203.6         697.0         53.8        526.4        —          1,480.8   

Redeemable noncontrolling interests

     —           —           —          12.5        —          12.5   

Preferred stock

     —           103.6         —          —          —          103.6   

Total Cooper-Standard Holdings Inc. equity

     496.7         38.2         1,251.6        622.4        (1,912.2     496.7   

Noncontrolling interests

     —           —           —          (0.1     —          (0.1
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     496.7         38.2         1,251.6        622.3        (1,912.2     496.6   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 700.3       $ 838.8       $ 1,305.4      $ 1,161.2      $ (1,912.2   $ 2,093.5   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

22


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2012

 

     Parent     Issuer     Guarantors     Non-Guarantors     Eliminations      Consolidated
Totals
 
     (dollars in millions)  

OPERATING ACTIVITIES

             

Net cash provided by (used in) operating activities

   $ 5.1      $ (7.6   $ 8.0      $ (28.0   $ —         $ (22.5

INVESTING ACTIVITIES

             

Capital expenditures, including other intangible assets

     —          (19.9     (12.1     (59.5     —           (91.5

Acquisition of businesses, net of cash acquired

     —          —          —          (1.1     —           (1.1

Proceeds from the sale of fixed assets

     —          —          4.1        4.9        —           9.0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash used in investing activities

     —          (19.9     (8.0     (55.7     —           (83.6

FINANCING ACTIVITIES

             

Decrease in short-term debt

     —          —          —          (2.8     —           (2.8

Principal payments on long-term debt

     —          —          —          (4.3     —           (4.3

Repurchase of preferred and common stock

     —          (25.5     —          —          —           (25.5

Other

     (5.1     (9.9     —          10.3        —           (4.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     (5.1     (35.4     —          3.2        —           (37.3

Effects of exchange rate changes on cash and cash equivalents

     —          —          —          (0.5     —           (0.5

Changes in cash and cash equivalents

     —          (62.9     —          (81.0     —           (143.9

Cash and cash equivalents at beginning of period

     —          189.6        —          172.1        —           361.7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ —        $ 126.7      $ —        $ 91.1      $ —         $ 217.8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Depreciation and amortization

   $ —        $ 21.3      $ 11.0      $ 58.9      $ —         $ 91.2   

 

 

23


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2013

 

     Parent     Issuer     Guarantors     Non-Guarantors     Eliminations      Consolidated
Totals
 
     (dollar amounts in millions)  

OPERATING ACTIVITIES

             

Net cash provided by (used in) operating activities

   $ 5.2      $ (11.4   $ 7.1      $ 16.6      $ —         $ 17.5   

INVESTING ACTIVITIES

             

Capital expenditures, including other intangible assets

     —          (20.0     (13.6     (99.2     —           (132.8

Acquisition of businesses, net of cash acquired

     —          4.0        —          (17.5     —           (13.5

Return on equity investments

     —          —          2.1        —          —           2.1   

Proceeds from the sale of fixed assets and other

     —          —          —          3.6        —           3.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash used in investing activities

     —          (16.0     (11.5     (113.1     —           (140.6

FINANCING ACTIVITIES

             

Proceeds from issuance of senior PIK toggle notes, net of debt issuance costs

     194.4        —          —          —          —           194.4   

Increase in short-term debt, net

     —          —          —          1.6        —           1.6   

Principal payments on long-term debt

     —          —          —          (3.8     —           (3.8

Purchase of noncontrolling interest

     —          —          —          (1.9     —           (1.9

Repurchase of common stock

     (174.4     (43.1     —          —          —           (217.5

Proceeds from exercise of warrants

     —          11.3        —          —          —           11.3   

Other

     (4.8     (50.6     —          45.2        —           (10.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     15.2        (82.4     —          41.1        —           (26.1

Effects of exchange rate changes on cash and cash equivalents

     —          —          —          (2.2     —           (2.2

Changes in cash and cash equivalents

     20.4        (109.8     (4.4     (57.6     —           (151.4

Cash and cash equivalents at beginning of period

     —          177.5        4.4        88.7        —           270.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Cash and cash equivalents at end of period

   $ 20.4      $ 67.7      $ —        $ 31.1      $ —         $ 119.2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Depreciation and amortization

   $ —        $ 21.2      $ 9.3      $ 52.8      $ —         $ 83.3   

 

24


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

17. Financial Instruments

Fair values of the Senior Notes approximated $480,938 at December 31, 2012 and September 30, 2013 based on quoted market prices, compared to the recorded value of $450,000. This fair value measurement is classified within Level 1 of the fair value hierarchy.

Fair values of the Senior PIK Toggle Notes approximated $199,471 at September 30, 2013 based on quoted market prices, compared to the recorded value of $196,281. This fair value measurement is classified within Level 1 of the fair value hierarchy.

Fair values of the 7% preferred stock approximated $169,193 and $188,253 at December 31, 2012 and September 30, 2013, respectively, compared to the recorded values of $121,649 and $103,581 at December 31, 2012 and September 30, 2013, respectively. The fair values were determined based on the contingent claims valuation methodology utilizing the principles of option pricing theory. This fair value measurement is classified within Level 3 of the fair value hierarchy.

The Company completed an agreement with Fonds de Modernisation des Equipementiers Automobiles (“FMEA”) on May 2, 2011, to establish a joint venture that combined the Company’s French body sealing operations and the operations of Société des Polymères Barre-Thomas (“SPBT”). SPBT was a French supplier of anti-vibration systems and low pressure hoses, as well as body sealing products, which FMEA acquired as a preliminary step to the joint venture transaction. SPBT changed its name to Cooper Standard France SAS (“CS France”) subsequent to the transaction. The Company has 51 percent ownership and FMEA has 49 percent ownership. In connection with the investment in CS France, the noncontrolling shareholders have the option, which is embedded in the noncontrolling interest, to require the Company to purchase the remaining 49 percent noncontrolling share at a formula price designed to approximate fair value based on operating results of the entity.

The noncontrolling interest is redeemable at other than fair value as the put value is determined based on a formula described above. The Company records the noncontrolling interests in CS France at the greater of 1) the initial carrying amount, increased or decreased for the noncontrolling shareholders’ share of net income or loss and its share of other comprehensive income or loss and dividends (“carrying amount”) or 2) the cumulative amount required to accrete the initial carrying amount to the redemption value, which resulted in accretion of $656 for the nine months ended September 30, 2013. Such accretion amounts are recorded as increases to redeemable noncontrolling interests with offsets to equity. According to authoritative accounting guidance, the redeemable noncontrolling interest is classified outside of permanent equity, in mezzanine equity, on the Company’s condensed consolidated balance sheets. As of September 30, 2013 the estimated redemption value of the put option is $10,290. The redemption amount related to the put option is guaranteed by the Company and secured with the CS France shares held by a subsidiary of the Company. The Company has determined that the non-recurring fair value measurement related to this calculation relies primarily on Company-specific inputs and the Company’s assumptions, as observable inputs are not available. As such, the Company has determined that this fair value measurement resides within Level 3 of the fair value hierarchy. To determine the fair value of the put option, the Company utilizes the projected cash flows expected to be generated by the joint venture, then discounts the future cash flows by using a risk-adjusted rate for the Company.

According to authoritative accounting guidance for redeemable noncontrolling shareholders’ interests, to the extent the noncontrolling shareholders have a contractual right to receive an amount upon exercise of a put option that is other than fair value, and such amount is greater than carrying value, then the noncontrolling shareholder has, in substance, received a dividend distribution that is different than other common stockholders. Therefore the redemption amount in excess of fair value should be reflected in the computation of earnings per share available to the Company’s common stockholders. At September 30, 2013 there was no difference between redemption value and fair value.

Derivative Instruments and Hedging Activities

The Company uses derivative financial instruments, including forward and swap contracts, to manage its exposures to fluctuations in foreign exchange and interest rates. For a fair value hedge, both the effective and ineffective, if significant, portions are recorded in earnings and reflected in the condensed consolidated statement of comprehensive income. For a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in accumulated other comprehensive income (“AOCI”) in the condensed consolidated balance sheet. The ineffective portion, if significant, is recorded in other income or expense. When the underlying hedged transaction is realized or the hedged transaction is no longer probable, the gain or loss included in AOCI is recorded in earnings and reflected in the condensed consolidated statement of comprehensive income on the same line as the gain or loss on the hedged item attributable to the hedged risk.

 

25


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

The Company formally documents its hedge relationships, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the cash flow hedges. The Company also formally assesses whether a cash flow hedge is highly effective in offsetting changes in the cash flows of the hedged item. Derivatives are recorded at fair value in other current assets, accrued liabilities and other long-term liabilities.

Cash Flow Hedges

Forward foreign exchange contracts—The Company enters into forward contracts to hedge currency risk of the U.S. Dollar against the Mexican Peso, the Romanian Leu against the Euro and the Euro against the Polish Zloty and the U.S. Dollar. The forward contracts are used to mitigate the potential volatility to earnings and cash flow arising from changes in currency exchange rates that impact the Company’s foreign currency transactions. As of September 30, 2013, the notional amount of these contracts was $10,247. The fair values of these contracts at September 30, 2013 were $10 in the asset position recorded in other current assets and $112 in the liability position recorded in accrued liabilities in the condensed consolidated balance sheet. The gains or losses on the forward contracts are reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The amount reclassified from AOCI into cost of products sold was ($68) and ($181) for the three and nine months ended September 30, 2013, respectively. These foreign currency derivative contracts consist of hedges of transactions up to December 2013.

Interest rate swaps—The Company has an interest rate swap contract to manage cash flow fluctuations of variable rate debt due to changes in market interest rates. This contract which fixes the interest payment of a certain variable rate debt instrument is accounted for as a cash flow hedge. The amount reclassified from AOCI into interest expense for this swap was $24 and $21 for the three months ended September 30, 2012 and 2013, respectively, and $77 and ($209) for the nine months ended September 30, 2012 and 2013, respectively. The interest rate swap contract was settled as of September 30, 2013.

Undesignated Derivatives

As part of the FMEA joint venture, SPBT had undesignated derivative forward contracts to hedge currency risk of the Euro against the Polish Zloty which are included in the Company’s condensed consolidated financial statements. The forward contracts are used to mitigate the potential volatility of cash flows arising from changes in currency exchange rates that impact the Company’s foreign currency transactions. These foreign currency derivative contracts relate to hedge transactions through April 2014. As of September 30, 2013, the notional amount of these contracts was $11,161. At September 30, 2013, the fair value of the Company’s undesignated derivative forward contracts was a liability of $134 and is recorded in accrued liabilities in the Company’s condensed consolidated balance sheet. The unrealized gain or loss on the forward contracts is reported as a component of other income (expense), net. The unrealized gain (loss) amounted to $1,476 and $401 for the three months ended September 30, 2012 and 2013, respectively, and $3,836 and ($92) for the nine months ended September 30, 2012 and 2013, respectively.

Fair Value Measurements

ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1:    Observable inputs such as quoted prices in active markets;
Level 2:    Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:    Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

26


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except Note 16, per share and share amounts)

 

Estimates of the fair value of foreign currency and interest rate derivative instruments are determined using exchange traded prices and rates. The Company also considers the risk of non-performance in the estimation of fair value, and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. In certain instances where market data is not available, the Company uses management judgment to develop assumptions that are used to determine fair value. Fair value measurements and the fair value hierarchy level for the Company’s liabilities measured or disclosed at fair value on a recurring basis as of December 31, 2012 and September 30, 2013, are shown below:

 

     December 31, 2012  

Contract

   Asset
(Liability)
    Level 1      Level 2     Level 3  

Interest rate swap

   $ (68   $ —         $ (68   $ —     

Forward foreign exchange contracts

     (29     —           (29     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ (97   $ —         $ (97   $ —     
  

 

 

   

 

 

    

 

 

   

 

 

 
     September 30, 2013  

Contract

   Asset
(Liability)
    Level 1      Level 2     Level 3  

Interest rate swap

   $ —        $ —         $ —        $ —     

Forward foreign exchange contracts

     (236     —           (236     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ (236   $ —         $ (236   $ —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Items measured at fair value on a non-recurring basis

In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a non-recurring basis, which are not included in the table above. As these non-recurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For further information on assets and liabilities measured at fair value on a non-recurring basis, see Note 4. “Restructuring.”

18. Accounts Receivable Factoring

As a part of its working capital management, the Company sells certain receivables through third party financial institutions with and without recourse. The amount sold varies each month based on the amount of underlying receivables and cash flow needs of the Company. The Company continues to service the receivables. These are permitted transactions under the Company’s credit agreement and the indentures governing the Senior Notes and the Senior PIK Toggle Notes.

At September 30, 2012 and 2013, the Company had $68,564 and $95,642, respectively, outstanding under receivable transfer agreements without recourse entered into by various locations. The total amount of accounts receivable factored were $256,033 and $347,473 for the nine months ended September 30, 2012 and 2013, respectively. Costs incurred on the sale of receivables were $421 and $720 for the three months ended September 30, 2012 and 2013, respectively, and $1,722 and $2,049 for the nine months ended September 30, 2012 and 2013, respectively. These amounts are recorded in other income (expense), net and interest expense, net of interest income in the condensed consolidated statements of comprehensive income.

At September 30, 2012 and 2013, the Company had $11,296 and $13,727, respectively outstanding under receivable transfer agreements with recourse. The secured borrowings are recorded in debt payable within one year and receivables are pledged equal to the balance of the borrowings. The total amount of accounts receivable factored was $61,631 and $69,809 for the nine months ended September 30, 2012 and 2013, respectively. Costs incurred on the sale of receivables were $68 and $106 for the three months ended September 30, 2012 and 2013, respectively, and $275 and $327 for the nine months ended September 30, 2012 and 2013, respectively. These amounts are recorded in other income (expense), net and interest expense, net of interest income in the condensed consolidated statements of comprehensive income.

 

27


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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) presents information related to the condensed consolidated results of operations of the Company, including the impact of restructuring costs on the Company’s results, a discussion of the past results and future outlook of each of the Company’s segments, and information concerning both the liquidity and capital resources of the Company. The following discussion and analysis, which should be read in conjunction with our condensed consolidated financial statements and the notes included elsewhere in this report, contains certain forward-looking statements relating to anticipated future financial condition and operating results of the Company and its current business plans. In the future, the financial condition and operating results of the Company could differ materially from those discussed herein and its current business plans could be altered in response to market conditions and other factors beyond the Company’s control. Important factors that could cause or contribute to such differences or changes include those discussed elsewhere in this report (see “Forward-Looking Statements” below) and in our Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Annual Report”) (see Item 1A. Risk Factors).

Business Environment and Outlook

Our business is directly affected by the automotive build rates in North America and Europe. It is also becoming increasingly impacted by build rates in South America and Asia Pacific. New vehicle demand is driven by macro-economic and other factors, such as interest rates, fuel prices, consumer confidence, employment levels, income growth trends, as well as manufacturer and dealer sales incentives.

Details on light vehicle production in certain regions for the three and nine months ended September 30, 2013 are provided in the following table:

 

     Three months ended September 30,     Nine months ended September 30,  

(In millions of units)

   2012(1,2)      2013(1)      % Change     2012(1,2)      2013(1)      % Change  

North America

     3.7         3.9         6.9     11.6         12.2         4.9

Europe

     4.4         4.3         (0.9 )%      14.6         14.3         (2.4 )% 

South America

     1.2         1.2         1.3     3.2         3.5         9.7

Asia Pacific

     9.7         10.1         4.1     30.3         31.2         3.1

 

(1) Production data based on IHS Automotive, September 2013.
(2) Production data for 2012 has been updated to reflect actual production levels.

The expected annualized light vehicle production volumes for 2013, compared to the actual production volumes for 2012 are provided in the following table:

 

(In millions of units)

   2012(1,2)      2013(1)      % Change  

North America

     15.4         16.2         5.2

Europe

     19.3         19.0         (1.7 )% 

South America

     4.3         4.5         5.6

Asia Pacific

     40.8         42.0         3.0

 

(1) Production data based on IHS Automotive, September 2013.
(2) Production data for 2012 has been updated to reflect actual production levels.

 

28


The expected light vehicle production volume for the fourth quarter of 2013, compared to the actual production volumes for the fourth quarter of 2012 are provided in the following table:

 

(In millions of units)

   Q4 2012(1)      Q4 2013(1)      % Change  

North America

     3.8         4.1         6.0

Europe

     4.7         4.7         0.4

South America

     1.1         1.1         (5.9 )% 

Asia Pacific

     10.5         10.7         2.7

 

(1) Production data based on IHS Automotive, September 2013.

Competition in the automotive supplier industry is intense and has increased in recent years as OEMs have demonstrated a preference for stronger relationships with fewer suppliers. There are typically three or more significant competitors and numerous smaller competitors for most of the products we produce. Globalization and the importance of servicing customers around the world will continue to shape the success of suppliers going forward.

OEMs have shifted some research and development, design and testing responsibility to suppliers, while at the same time shortening new product cycle times. To remain competitive, suppliers must have state-of-the-art engineering and design capabilities and must be able to continuously improve their engineering, design and manufacturing processes to effectively service the customer. Suppliers are increasingly expected to collaborate on, or assume the product design and development of, key automotive components and to provide innovative solutions to meet evolving technologies aimed at improved fuel economy, emissions and safety.

Pricing pressure has continued as competition for market share has reduced the overall profitability of the industry and resulted in continued pressure on suppliers for price concessions. Consolidations and market share shifts among vehicle manufacturers continues to put additional pressures on the supply chain. These pricing and market pressures will continue to drive our focus on reducing our overall cost structure through lean initiatives, capital redeployment, restructuring and other cost management processes.

 

29


Results of Operations

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2013     2012     2013  
     (dollar amounts in thousands)  

Sales

   $ 684,029      $ 764,057      $ 2,183,794      $ 2,296,341   

Cost of products sold

     580,956        649,028        1,844,616        1,928,735   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     103,073        115,029        339,178        367,606   

Selling, administration & engineering expenses

     65,421        72,968        206,432        220,807   

Amortization of intangibles

     3,866        3,785        11,590        11,534   

Restructuring

     10,171        1,907        15,758        7,755   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     23,615        36,369        105,398        127,510   

Interest expense, net of interest income

     (11,325     (15,171     (33,326     (39,953

Equity earnings

     2,342        2,595        5,891        8,693   

Other income (expense), net

     1,118        960        (449     (5,385
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     15,750        24,753        77,514        90,865   

Income tax expense (benefit)

     5,392        4,467        (32,772     24,560   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     10,358        20,286        110,286        66,305   

Net loss attributable to noncontrolling interests

     1,266        310        2,441        2,424   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Cooper-Standard Holdings Inc.

   $ 11,624      $ 20,596      $ 112,727      $ 68,729   
  

 

 

   

 

 

   

 

 

   

 

 

 

Three Months Ended September 30, 2013 Compared with Three Months Ended September 30, 2012

Sales. Sales were $764.1 million for the three months ended September 30, 2013 compared to $684 million for the three months ended September 30, 2012, an increase of $80 million, or 11.7%. Sales were favorably impacted by increased volumes in all segments and favorable foreign exchange of $3.8 million. In addition, the Jyco acquisition provided $11.9 million of incremental sales. These items were partially offset by customer price concessions.

Cost of Products Sold. Cost of products sold is primarily comprised of material, labor, manufacturing overhead, depreciation and amortization and other direct operating expenses. Cost of products sold was $649 million for the three months ended September 30, 2013 compared to $581 million for the three months ended September 30, 2012, an increase of $68.1 million, or 11.7%. Raw materials comprise the largest component of our cost of products sold and represented approximately 50% and 48% of total cost of products sold for the three months ended September 30, 2012 and 2013, respectively. The period was impacted by increased volumes in all segments, higher staffing costs and other operating expenses. These items were partially offset by lean savings. In addition, cost of products sold for the three months ended September 30, 2013 was impacted by the Jyco acquisition, which was completed July 31, 2013.

Gross Profit. Gross profit for the three months ended September 30, 2013 was $115 million compared to $103.1 million for the three months ended September 30, 2012, an increase of $11.9 million, or 11.6%. As a percentage of sales, gross profit was 15.1% of sales for the three months ended September 30, 2012 and 2013. The increase in gross profit was driven primarily by the favorable impact of lean savings and increased volumes in all segments, partially offset by customer price concessions, higher staffing costs and other operating expenses.

Selling, Administration and Engineering. Selling, administration and engineering expense for the three months ended September 30, 2013 was $73 million, or 9.6% of sales, compared to $65.4 million, or 9.6% of sales, for the three months ended September 30, 2012. Selling, administration and engineering expense for the three months ended September 30, 2013 was impacted by increased staffing and compensation expenses as we increase our research and development and engineering resources to support our growth initiatives around the world.

Restructuring. Restructuring charges were $1.9 million for the three months ended September 30, 2013 compared to $10.2 million for the three months ended September 30, 2012, which were primarily for European initiatives announced during 2012.

Interest Expense, Net. Net interest expense of $15.2 million for the three months ended September 30, 2013 resulted primarily from interest and debt issue amortization recorded on the Senior Notes and Senior PIK Toggle Notes. Net interest expense of $11.3 million for the three months ended September 30, 2012 consisted primarily of interest and debt issue amortization recorded on the Senior Notes.

 

30


Other Income (Expense), Net. Other income for the three months ended September 30, 2013 was $1 million, which consisted primarily of foreign currency gains of $0.8 million, unrealized gains related to forward contracts of $0.4 million and loss on sale of receivables of $0.4 million. Other income for the three months ended September 30, 2012 was $1.1 million, which consisted of unrealized gains related to forward contracts of $1.5 million, foreign currency losses of $0.2 million and loss on sale of receivables of $0.2 million.

Income Tax Expense (Benefit). For the three months ended September 30, 2013, we recorded an income tax expense of $4.5 million on earnings before income taxes of $24.8 million. This compares to an income tax expense of $5.4 million on earnings before income taxes of $15.8 million for the same period of 2012. Income tax expense for the three months ended September 30, 2013 differs from statutory rates due to income taxes on foreign earnings taxed at rates lower than the U.S. statutory rate, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions to the extent not offset by other categories of income, tax credits, income tax incentives, withholding taxes, and other permanent items. Further, our current and future provision for income taxes may be impacted by the recognition of valuation allowances in certain countries. We intend to maintain these allowances until it is more likely than not that the deferred tax assets will be realized.

Nine Months Ended September 30, 2013 Compared with Nine Months Ended September 30, 2012

Sales. Sales were $2,296.3 million for the nine months ended September 30, 2013 compared to $2,183.8 million for the nine months ended September 30, 2012, an increase of $112.5 million, or 5.2%. Sales were favorably impacted by increased volumes in all segments and favorable foreign exchange of $2.2 million, partially offset by customer price concessions. In addition, the Jyco acquisition provided $11.9 million of incremental sales.

Cost of Products Sold. Cost of products sold is primarily comprised of material, labor, manufacturing overhead, depreciation and amortization and other direct operating expenses. Cost of products sold was $1,928.7 million for the nine months ended September 30, 2013 compared to $1,844.6 million for the nine months ended September 30, 2012, an increase of $84.1 million, or 4.6%. Raw materials comprise the largest component of our cost of products sold and represented approximately 51% and 49% of total cost of products sold for the nine months ended September 30, 2012 and 2013, respectively. The period was impacted by increased volumes in all segments, higher staffing costs and other operating expenses. These items were partially offset by lean savings. In addition, cost of products sold for the nine months ended September 30, 2013 was impacted by the Jyco acquisition, which was completed July 31, 2013.

Gross Profit. Gross profit for the nine months ended September 30, 2013 was $367.6 million compared to $339.2 million for the nine months ended September 30, 2012. As a percentage of sales, gross profit was 15.5% and 16% of sales for the nine months ended September 30, 2012 and 2013, respectively. The increase was driven by the favorable impact of lean savings and increased volumes in all segments, partially offset by customer price concessions, higher staffing costs and other operating expenses.

Selling, Administration and Engineering. Selling, administration and engineering expense for the nine months ended September 30, 2013 was $220.8 million, or 9.6% of sales, compared to $206.4 million, or 9.5% of sales, for the nine months ended September 30, 2012. Selling, administration and engineering expense for the nine months ended September 30, 2013 was impacted by increased staffing and compensation expenses as we increase our research and development and engineering resources to support our growth initiatives around the world.

Restructuring. Restructuring charges of $7.8 million for the nine months ended September 30, 2013 consisted primarily of $5.8 million of costs associated with initiatives announced prior to 2013 and $1.9 million of costs associated with initiatives announced in 2013. Restructuring charges of $15.8 million for the nine months ended September 30, 2012 consisted primarily of costs associated with European initiatives announced during 2012.

Interest Expense, Net. Net interest expense of $40 million for the nine months ended September 30, 2013 resulted primarily from interest and debt issue amortization recorded on the Senior Notes and Senior PIK Toggle Notes. Net interest expense of $33.3 million for the nine months ended September 30, 2012 resulted primarily from interest and debt issue amortization recorded on the Senior Notes.

Other Income (Expense), Net. Other expense for the nine months ended September 30, 2013 was $5.4 million, which consisted of $6.4 million of foreign currency losses, $1.2 million of loss on sale of receivables and $0.1 million of losses related to forward contracts, partially offset by $2.3 million of other miscellaneous income. Other expense for the nine months ended September 30, 2012 was $0.5 million, which consisted of $4.5 million of foreign currency losses and $0.7 million of loss on sale of receivables, partially offset by $3.8 million of gains related to forward contracts and $0.9 million of other miscellaneous income.

 

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Income Tax Expense (Benefit). For the nine months ended September 30, 2013, we recorded an income tax expense of $24.6 million on earnings before income taxes of $90.9 million. This compares to an income tax benefit of ($32.8) million on earnings before income taxes of $77.5 million for the same period of 2012, which included a benefit of ($19.5) million included in the estimated annual effective tax rate resulting from forecasted net income in the U.S. with no corresponding tax expense due to utilization of valuation allowances and a benefit of ($48.3) million resulting from changes in determinations relating to the potential realization of deferred tax assets and the resulting reversal of a valuation allowance on net deferred tax assets in the United States. Income tax expense for the nine months ended September 30, 2013 differs from statutory rates due to a discrete benefit for the effect of the American Taxpayer Relief Act of 2012 which retroactively reinstated the Federal Research and Development Tax Credit (as signed into law in early 2013), as well as the exclusion from U.S. federal taxable income of certain interest, dividends, rents, and royalty income of foreign affiliates, and the benefits of the credits with that income. Additionally, the income tax rate varies from statutory rates due to income taxes on foreign earnings taxed at rates lower than the U.S. statutory rate, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions to the extent not offset by other categories of income, tax credits, income tax incentives, withholding taxes, and other permanent items. Further, our current and future provision for income taxes may be impacted by the recognition of valuation allowances in certain countries. We intend to maintain these allowances until it is more likely than not that the deferred tax assets will be realized.

Segment Results of Operations

The following table presents sales and segment profit (loss) for each of the reportable segments for the three and nine months ended September 30, 2012 and 2013:

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2013     2012     2013  
     (dollar amounts in thousands)  

Sales to external customers

        

North America

   $ 363,859      $ 408,615      $ 1,139,273      $ 1,191,521   

Europe

     227,556        258,028        780,780        806,182   

South America

     39,208        43,069        107,282        138,746   

Asia Pacific

     53,406        54,345        156,459        159,892   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

   $ 684,029      $ 764,057      $ 2,183,794      $ 2,296,341   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment profit (loss)

        

North America

   $ 32,790      $ 31,726      $ 113,922      $ 103,158   

Europe

     (19,319     (7,500     (33,442     (14,784

South America

     (1,028     (1,838     (6,413     (5,760

Asia Pacific

     3,307        2,365        3,447        8,251   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 15,750      $ 24,753      $ 77,514      $ 90,865   
  

 

 

   

 

 

   

 

 

   

 

 

 

Three Months Ended September 30, 2013 Compared with Three Months Ended September 30, 2012

North America. Sales for the three months ended September 30, 2013 increased $44.8 million, or 12.3%, primarily due to an increase in sales volume, partially offset by customer price concessions and unfavorable foreign exchange of $3.2 million. In addition, sales were favorably impacted by the Jyco acquisition which was completed July 31, 2013. Segment profit for the three months ended September 30, 2013 decreased by $1.1 million, primarily due to customer price concessions, higher staffing costs and other operating expenses, partially offset by the favorable impact of lean savings, increased sales volume and the Jyco acquisition.

Europe. Sales for the three months ended September 30, 2013 increased $30.5 million, or 13.4%, primarily due to an increase in sales volume and favorable foreign exchange of $13.4 million, partially offset by customer price concessions. Segment loss improved by $11.8 million, primarily due to increased volumes, the favorable impact of lean and restructuring savings and favorable material prices, partially offset by customer price concessions, higher staffing costs and other operating expenses.

South America. Sales for the three months ended September 30, 2013 increased $3.9 million, or 9.8%, primarily due to an increase in sales volume, partially offset by unfavorable foreign exchange of $5.6 million. Segment loss for the three months ended September 30, 2013 increased by $0.8 million, primarily due to other operating expenses, partially offset by increased volumes and the favorable impact of lean savings.

Asia Pacific. Sales for the three months ended September 30, 2013 increased $0.9 million, or 1.8%, primarily due to the Jyco acquisition which was completed July 31, 2013 and an increase in sales volume, partially offset by unfavorable foreign exchange of $0.9 million. Segment profit for the three months ended September 30, 2013 decreased by $0.9 million, primarily due to higher staffing and material costs, partially offset by the favorable impact of lean savings.

 

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Nine Months Ended September 30, 2013 Compared with Nine Months Ended September 30, 2012

North America. Sales for the nine months ended September 30, 2013 increased $52.2 million, or 4.6%, primarily due to an increase in sales volume, partially offset by customer price concessions and unfavorable foreign exchange of $3.3 million. In addition, sales were favorably impacted by the Jyco acquisition which was completed July 31, 2013. Segment profit for the nine months ended September 30, 2013 decreased by $10.8 million, primarily due to customer price concessions, higher staffing costs and other operating expenses, partially offset by the favorable impact of lean savings, increased sales volume and the Jyco acquisition.

Europe. Sales for the nine months ended September 30, 2013 increased $25.4 million, or 3.3%, primarily due to an increase in sales volume and favorable foreign exchange of $20.6 million. Segment loss for the nine months ended September 30, 2013 improved by $18.7 million, primarily due to the favorable impact of lean and restructuring savings and favorable material prices, partially offset by customer price concessions, higher staffing costs and other operating expenses.

South America. Sales for the nine months ended September 30, 2013 increased $31.5 million, or 29.3%, primarily due to an increase in sales volume, partially offset by unfavorable foreign exchange of $14.1 million. Segment loss for the nine months ended September 30, 2013 improved by $0.7 million, primarily due to increased volumes and lean savings, partially offset by other operating expenses.

Asia Pacific. Sales for the nine months ended September 30, 2013 increased $3.4 million, or 2.2%, primarily due to an increase in sales volume, partially offset by unfavorable foreign exchange of $1 million. In addition, sales were favorably impacted by the Jyco acquisition which was completed July 31, 2013. Segment profit for the nine months ended September 30, 2013 increased by $4.8 million, primarily due to increased volumes and lean savings, partially offset by higher staffing costs.

Liquidity and Capital Resources

Short and Long-Term Liquidity Considerations and Risks

We intend to fund our ongoing capital and working capital requirements through a combination of cash flows from operations, cash on hand and borrowings under our Senior ABL Facility, in addition to certain receivable factoring. We anticipate that funds generated by operations, cash on hand and funds available under our Senior ABL Facility will be sufficient to meet working capital requirements for the next 12 months. For additional information, see Note 6. “Debt” to the condensed consolidated financial statements.

Based on our current and anticipated levels of operations and the condition in our markets and industry, we believe that our cash on hand, cash flow from operations and availability under our Senior ABL Facility will enable us to meet our working capital, capital expenditures, debt service and other funding requirements for the next 12 months. However, our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our Senior ABL Facility, as amended, depends on our future operating performance and cash flow and many factors outside of our control, including the costs of raw materials, the state of the overall automotive industry and financial and economic conditions and other factors. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.

Cash Flows

Operating Activities. Net cash provided by operations was $17.6 million for the nine months ended September 30, 2013, which included $152.5 million of cash used that related to changes in operating assets and liabilities. The use of cash related to operating assets and liabilities was primarily a result of increased accounts receivables and inventories, partially offset by increased accounts payables and accrued liabilities. Net cash used in operations was $22.5 million for the nine months ended September 30, 2012, which included $182.4 million of cash used that related to changes in operating assets and liabilities.

Investing Activities. Net cash used in investing activities was $140.6 million for the nine months ended September 30, 2013, which consisted primarily of $132.8 million of capital spending and $13.5 for the Jyco acquisition, offset by a $2.1 million return on equity investments and proceeds of $3.6 million for the sale of fixed assets and other. Net cash used by investing activities was $83.6 million for the nine months ended September 30, 2012, which consisted primarily of $91.5 million of capital spending, offset by proceeds of $9 million from the sale of fixed assets and other. We anticipate that we will spend approximately $180 million to $190 million on capital expenditures in 2013.

 

33


Financing Activities. Net cash used in financing activities totaled $26.1 million for the nine months ended September 30, 2013, which consisted primarily of repurchase of common stock of $217.5 million, payments on long-term debt of $3.8 million, purchase of noncontrolling interest of $1.9 million and payment of cash dividends on our 7% preferred stock of $4.7 million, partially offset by proceeds of $194.4 million from the issuance of Senior PIK Toggle Notes and $11.3 million related to the exercise of stock warrants. Net cash used in financing activities totaled $37.3 million for the nine months ended September 30, 2012, which consisted primarily of repurchase of 7% preferred stock of $4.9 million, repurchase of common stock of $20.6 million, a decrease in short-term debt and payments on long-term debt aggregating $7.1 million, and payment of cash dividends on our 7% preferred stock of $5.1 million.

On October 18, 2013, the Company gave notice to the holders of its 7% preferred stock that the Company had elected to cause the mandatory conversion of all 810,382 shares of issued and outstanding shares of 7% preferred stock on November 15, 2013. The 7% preferred stock will be converted at the rate of 4.34164 shares of the Company’s common stock for each share of 7% preferred stock, or into an aggregate of 3,518,386 shares of common stock. On the conversion date, the shares of 7% preferred stock will be cancelled and all rights of holders of 7% preferred stock will terminate (other than the right to receive shares of common stock issuable upon conversion). Shares of 7% preferred stock that are converted and cancelled will be restored to the status of authorized but unissued preferred stock of the Company.

Non-GAAP Financial Measures

In evaluating our business, management considers EBITDA and Adjusted EBITDA as key indicators of our operating performance. Our management also uses EBITDA and Adjusted EBITDA:

 

    because similar measures are utilized in the calculation of the financial covenants and ratios contained in our financing arrangements;

 

    in developing our internal budgets and forecasts;

 

    as a significant factor in evaluating our management for compensation purposes;

 

    in evaluating potential acquisitions;

 

    in comparing our current operating results with corresponding historical periods and with the operational performance of other companies in our industry; and

 

    in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in their assessments of performance and in forecasting and budgeting for our company.

In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts and other interested parties in evaluating our performance. We define Adjusted EBITDA as net income (loss) plus income tax expense (benefit), interest expense, net of interest income, depreciation and amortization or EBITDA, as adjusted for items that management does not consider to be reflective of our core operating performance. These adjustments include restructuring costs, impairment charges, non-cash fair value adjustments, acquisition related costs, non-cash stock based compensation and non-cash gains and losses from certain foreign currency transactions and translation.

We calculate EBITDA and Adjusted EBITDA by adjusting net income (loss) to eliminate the impact of a number of items we do not consider indicative of our ongoing operating performance. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. EBITDA and Adjusted EBITDA are not financial measurements recognized under U.S. GAAP, and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA in addition to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include:

 

    they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments;

 

    they do not reflect changes in, or cash requirements for, our working capital needs;

 

    they do not reflect interest expense or cash requirements necessary to service interest or principal payments under our Senior Notes, Senior PIK Toggle Notes and Senior ABL Facility;

 

    they do not reflect certain tax payments that may represent a reduction in cash available to us;

 

    although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and

 

34


    other companies, including companies in our industry, may calculate these measures differently and, as the number of differences in the way companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.

In addition, in evaluating Adjusted EBITDA, it should be noted that in the future we may incur expenses similar to the adjustments in the below presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net income, which is the most comparable financial measure in accordance with U.S. GAAP:

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2012     2013      2012     2013  
     (dollar amounts in millions)  

Net income attributable to Cooper-Standard Holdings Inc.

   $ 11.6      $ 20.6       $ 112.7      $ 68.7   

Income tax expense (benefit)

     5.4        4.5         (32.8     24.6   

Interest expense, net of interest income

     11.3        15.2         33.3        40.0   

Depreciation and amortization

     29.1        25.2         91.2        83.2   
  

 

 

   

 

 

    

 

 

   

 

 

 

EBITDA

   $ 57.4      $ 65.5       $ 204.4      $ 216.5   

Restructuring (1)

     10.2        1.9         15.8        7.7   

Noncontrolling interest restructuring (2)

     (0.2     —           (0.5     (0.8

Inventory write-up (3)

     —          0.3         —          0.3   

Acquistion costs (4)

     —          0.7         —          0.7   

Stock-based compensation (5)

     2.4        1.1         7.4        4.3   
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 69.8      $ 69.5       $ 227.1      $ 228.7   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) Includes non-cash restructuring.
(2) Proportionate share of restructuring costs related to FMEA joint venture.
(3) Write-up of inventory to fair value for the Jyco acquisition.
(4) Costs incurred in relation to the Jyco acquisition.
(5) Non-cash stock amortization expense and non-cash stock option expense for grants issued at emergence from bankruptcy.

Recent Accounting Pronouncements

See Note 1. “Overview” to the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. We make forward-looking statements in this Quarterly Report on Form 10-Q and may make such statements in future filings with the SEC. We may also make forward-looking statements in our press releases or other public or stockholder communications. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends, and other information that is not historical information and, in particular, appear under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and “Business Environment and Outlook.” When used in this report, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends and data are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, no assurances can be made that these expectations, beliefs, and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements.

 

35


The risks, uncertainties, and other important factors that could cause our actual results to differ materially from the forward-looking statements in this report include, among others: cyclicality of the automotive industry with the possibility of further material contractions in automotive sales and production effecting the viability of our customers and financial condition of our customers; global economic uncertainty, particularly in Europe; loss of large customers or significant platforms; supply shortages; escalating pricing pressures and decline of volume requirements from our customers; our ability to meet significant increases in demand; availability and increasing volatility in cost of raw materials or manufactured components; our ability to continue to compete successfully in the highly competitive automotive parts industry; risks associated with our non-U.S. operations; foreign currency exchange rate fluctuations; our ability to control the operations of joint ventures for our benefit; the effectiveness of our lean manufacturing and other cost savings plans; product liability and warranty and recall claims that may be brought against us; work stoppages or other labor conditions; natural disasters; our ability attract and retain key personnel; our ability to meet our customers’ needs for new and improved products in a timely manner or cost-effective basis; the possibility that our acquisition strategy may not be successful; our legal rights to our intellectual property portfolio; environmental and other regulations; legal proceedings or commercial and contractual disputes that we may be involved in; the possible volatility of our annual effective tax rate; our ability to generate sufficient cash to service our indebtedness, obtain future financing, and meet dividend obligations on our 7% preferred stock; our underfunded pension plans; significant changes in discount rates and the actual return on pension assets; the possibility of future impairment charges to our goodwill and long-lived assets; and operating and financial restrictions imposed on us by our indentures governing our outstanding Senior Notes and PIK Toggle Notes and our Senior ABL facility. See Item 1A. Risk Factors, in our 2012 Annual Report for additional information regarding these and other risks and uncertainties. There may be other factors that may cause our actual results to differ materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this report. We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the quantitative and qualitative information about the Company’s market risk from those previously disclosed in the Company’s 2012 Annual Report.

 

Item 4. Controls and Procedures

The Company has evaluated, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Based on that evaluation, the Company’s Chief Executive Officer along with the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Report.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

 

36


PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

We are periodically involved in claims, litigation and various legal matters that arise in the ordinary course of business. In addition, we conduct and monitor environmental investigations and remedial actions at certain locations. We accrue for litigation exposure when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified. As of September 30, 2013, management does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for our litigation claims and matters, if any, has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, our financial condition and results of operations could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

 

Item 1A. Risk Factors

In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our 2012 Annual Report which could materially impact our business, financial condition or future results. Risks disclosed in the 2012 Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact our business, financial condition or operating results.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Purchases of Equity Securities By the Issuer and Affiliated Purchasers

On May 24, 2013, the Company announced that its Board of Directors approved a securities repurchase program (the “Program”) authorizing the Company to repurchase, in the aggregate, up to $50 million of its outstanding common stock, 7% preferred stock or warrants to purchase common stock. Under the Program, repurchases may be made on the open market or through private transactions, as determined by the Company’s management and in accordance with prevailing market conditions and federal securities laws and regulations. The Company expects to fund all repurchases from cash on hand and future cash flows from operations. The Company is not obligated to acquire a particular amount of securities, and the program may be discontinued at any time at the Company’s discretion.

The following table presents repurchases of common stock during the period covered by this Report:

 

2013

   Total
Number of
Shares
Purchased
    Average
Price Paid
per Share
     Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
     Approximate Dollar
Value of Shares that
May Yet be
Purchased Under
the Program
(in millions)
 

July 1 - July 31

     —        $ —           —         $ 45.4   

August 1 - August 31

     3,788 (1)    $ 52.41         —         $ 45.4   

September 1 - September 30

     —        $ —           —         $ 45.4   
  

 

 

      

 

 

    

Total

     3,788      $ 52.41         —         $ 45.4   
  

 

 

      

 

 

    

 

(1) 3,788 shares of common stock were deemed surrendered to the Company by participants in various benefit plans of the Company to satisfy the paticipants’ taxes related to vesting or delivery of time vesting restricted share units under those plans.

 

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Item 6. Exhibits

 

Exhibit
No.
 

Description of Exhibit

31.1*   Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).
31.2*   Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).
32.1*   Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
32.2*   Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
101.INS**   XBRL Instance Document
101.SCH**   XBRL Taxonomy Extension Schema Document
101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**   XBRL Taxonomy Label Linkbase Document
101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.
** Submitted electronically with the Report.

 

38


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.

 

         COOPER-STANDARD HOLDINGS INC.    

November 6, 2013

    

/S/ JEFFREY S. EDWARDS

Date     

Jeffrey S. Edwards

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

November 6, 2013

    

/S/ ALLEN J. CAMPBELL

Date     

Allen J. Campbell

Chief Financial Officer

(Principal Financial Officer)

November 6, 2013

    

/S/ HELEN T. YANTZ

Date     

Helen T. Yantz

Controller

(Principal Accounting Officer)

 

39


INDEX TO EXHIBITS

 

Exhibit
No.
  

Description of Exhibit

31.1*    Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).
31.2*    Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).
32.1*    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
32.2*    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
101.INS**    XBRL Instance Document
101.SCH**    XBRL Taxonomy Extension Schema Document
101.CAL**    XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**    XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**    XBRL Taxonomy Label Linkbase Document
101.PRE**    XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.
** Submitted electronically with the Report.

 

40