Edgar Filing: Cooper-Standard Holdings Inc.

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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, 2011

¨	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):

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 Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

As of November 4, 2011 there were 18,319,278 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, 2011


		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations		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		28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37

Item 4.	Controls and Procedures		37

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		38

Item 1A.	Risk Factors		38

Item 6.	Exhibits		39

SIGNATURES			40

EXHIBITS INDEX AND EXHIBITS			41

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollar amounts in thousands except per share amounts)


	Successor						Predecessor			Successor
	Three Months Ended			Three Months Ended			Five Months Ended			Four Months Ended			Nine Months Ended
	September 30, 2010			September 30, 2011			May 31, 2010			September 30, 2010			September 30, 2011
Sales	$	585,650		$	708,544		$	1,009,128		$	801,292		$	2,157,776
Cost of products sold		483,559			599,985			832,201			665,434			1,804,743

Gross profit		102,091			108,559			176,927			135,858			353,033
Selling, administration & engineering expenses		68,584			64,403			92,166			91,629			190,856
Amortization of intangibles		3,842			3,911			319			5,106			11,745
Restructuring		818			6,539			5,893			1,200			48,124

Operating profit		28,847			33,706			78,549			37,923			102,308
Interest expense, net of interest income		(10,664	)		(9,603	)		(44,505	)		(14,195	)		(30,158	)
Equity earnings		1,815			843			3,613			2,549			3,480
Reorganization items, net		—			—			303,453			—			—
Other income (expense), net		5,454			(8,884	)		(21,156	)		5,024			6,191

Income before income taxes		25,452			16,062			319,954			31,301			81,821
Provision for income tax expense		4,443			7,963			39,940			5,352			26,782

Consolidated net income		21,009			8,099			280,014			25,949			55,039
Net (income) loss attributable to noncontrolling interests		(176	)		7,559			(322	)		(186	)		24,576

Net income attributable to Cooper-Standard Holdings Inc.	$	20,833		$	15,658		$	279,692		$	25,763		$	79,615

Net income available to Cooper-Standard Holdings Inc. common stockholders	$	15,116		$	11,080					$	18,328		$	59,315

Basic net income per share attributable to Cooper-Standard Holdings Inc.	$	0.86		$	0.63					$	1.05		$	3.37

Diluted net income per share attributable to Cooper-Standard Holdings Inc.	$	0.83		$	0.58					$	1.00		$	3.08

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands except share amounts)


	Successor
	December 31,		September 30,
	2010		2011
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	294,450	$	286,300
Accounts receivable, net		380,915		499,082
Inventories, net		122,043		160,471
Prepaid expenses		20,056		28,271
Other		40,857		44,211

Total current assets		858,321		1,018,335
Property, plant and equipment, net		589,504		613,419
Goodwill		137,000		136,694
Intangibles, net		149,642		134,171
Other assets		119,309		117,438

	$	1,853,776	$	2,020,057

Liabilities and Equity
Current liabilities:
Debt payable within one year	$	19,965	$	35,470
Accounts payable		176,001		224,804
Payroll liabilities		98,722		98,527
Accrued liabilities		113,831		145,589

Total current liabilities		408,519		504,390
Long-term debt		456,758		456,576
Pension benefits		164,595		156,959
Postretirement benefits other than pensions		80,053		80,794
Deferred tax liabilities		18,337		19,698
Other liabilities		25,907		35,947

Total liabilities		1,154,169		1,254,364

Redeemable noncontrolling interest		6,215		14,687

7% Cumulative participating convertible preferred stock, $0.001 par value, 10,000,000 shares authorized at December 31, 2010, and September 30, 2011; 1,052,444 and 1,048,108 shares issued and outstanding at December 31, 2010 and September 30, 2011, respectively		130,339		131,234

Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized at December 31, 2010 and September 30, 2011; 18,376,112 and 18,319,278 shares issued and outstanding at December 31, 2010 and September 30, 2011, respectively		17		17
Additional paid-in capital		478,706		483,149
Retained earnings		35,842		107,290
Accumulated other comprehensive income		45,881		26,149

Total Cooper-Standard Holdings Inc. equity		560,446		616,605
Noncontrolling interests		2,607		3,167

Total equity		563,053		619,772

Total liabilities and equity	$	1,853,776	$	2,020,057

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollar amounts in thousands)


	Predecessor			Successor
	Five Months Ended May 31, 2010			Four Months Ended September 30, 2010			Nine Months Ended September 30, 2011
Operating Activities:
Consolidated net income	$	280,014		$	25,949		$	55,039
Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities:
Depreciation		35,333			31,843			80,298
Amortization		319			5,106			11,745
Non-cash restructuring		46			—			383
Reorganization items		(303,453	)		—			—
Amortization of debt issuance cost		11,505			408			938
Stock-based compensation expense		244			3,587			9,164
Gain on partial sale of joint venture		—			—			(11,423	)
Changes in operating assets and liabilities		(99,403	)		13,389			(100,392	)

Net cash provided by (used in) operating activities		(75,395	)		80,282			45,752
Investing activities:
Property, plant and equipment		(22,935	)		(23,517	)		(70,253	)
Acquisition of businesses, plus cash acquired		—			—			30,878
Investment in affiliate		—			—			(10,500	)
Proceeds from partial sale of joint venture		—			—			16,000
Proceeds from the sale of assets		3,851			104			377

Net cash used in investing activities		(19,084	)		(23,413	)		(33,498	)
Financing activities:
Proceeds from issuance of long-term debt		450,000			—			—
Payments on debtor-in-possession financing		(175,000	)		—			—
Increase (decrease) in short-term debt		(2,069	)		3,138			(4,336	)
Payments on long-term debt		(709,574	)		(1,484	)		(3,189	)
Debt issuance cost and back stop fees		(30,991	)		—			—
Issuance of preferred and common stock		355,000			—			—
Cash dividends paid		—			(1,395	)		(5,406	)
Other		—			22			(154	)

Net cash provided by (used in) financing activities		(112,634	)		281			(13,085	)
Effects of exchange rate changes on cash		5,528			(3,470	)		(7,319	)

Changes in cash and cash equivalents		(201,585	)		53,680			(8,150	)
Cash and cash equivalents at beginning of period		380,254			178,669			294,450

Cash and cash equivalents at end of period	$	178,669		$	232,349		$	286,300

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

1. Overview

Basis of presentation

Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company,” “Cooper-Standard,” “we” 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 their subsidiaries.

On May 27, 2010 (the “Effective Date”), the Company and certain of its U.S. and Canadian subsidiaries emerged from bankruptcy proceedings under Chapter 11 (“Chapter 11”) of the United States Bankruptcy Code (the “Bankruptcy Code”). In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, “Reorganizations,” the Company adopted fresh-start accounting upon its emergence from Chapter 11 bankruptcy proceedings and became a new entity for financial reporting purposes as of June 1, 2010. Accordingly, the consolidated financial statements for the reporting entity subsequent to emergence from Chapter 11 bankruptcy proceedings (the “Successor”) are not comparable to the consolidated financial statements for the reporting entity prior to emergence from Chapter 11 bankruptcy proceedings (the “Predecessor”). The “Company,” when used in reference to the period subsequent to emergence from Chapter 11 bankruptcy proceedings, refers to the Successor, and when used in reference to periods prior to emergence from Chapter 11 bankruptcy proceedings, refers to the Predecessor. For further information, see Note 3, “Reorganization under Chapter 11 of the Bankruptcy Code,” and Note 4, “Fresh-Start Accounting,” to the consolidated financial statements included in the Company’s 2010 Annual Report on Form 10-K/A.

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 2010 Annual Report on Form 10-K/A, 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 (“U.S. GAAP”) 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, 2011 are not necessarily indicative of results for the full year.

The Predecessor financial statements have been restated to recognize the cancellation of Predecessor common stock of $356,595 resulting from the emergence from bankruptcy as a direct adjustment to equity as compared to including it in reorganization gain. The impact of this change on the consolidated statements of operations for the Predecessor periods is summarized below:


	Predecessor - Five Months Ended May 31, 2010
	As originally filed		As restated
Reorganization items, net	$	660,048	$	303,453
Income before income taxes		676,549		319,954
Consolidated net income		636,609		280,014
Net income attributable to Cooper-Standard Holdings, Inc.		636,287		279,692

The adjustment also impacted consolidated net income and reorganization items within the consolidated statement of cash flows for the Predecessor period. The adjustment did not impact net cash used in operating activities. The impact of the adjustment has been reflected within the notes to the condensed consolidated financial statements. The adjustment does not impact the Successor period financial statements or notes.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Recent accounting pronouncements

In September 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-08, “Intangibles-Goodwill and Other (Topic 350).” This ASU will allow companies to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two-step impairment review process. This ASU is effective for fiscal years and interim periods beginning after December 15, 2011 (early adoption is permitted). The impact of adoption is not expected to have a material impact on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220).” This ASU requires companies to present items of net income, items of other comprehensive income (“OCI”) and total comprehensive income in one continuous statement or two separate but consecutive statements. In addition, this update requires reclassification adjustments between OCI and net income to be presented separately on the face of the financial statements. This ASU is effective for fiscal years and interim periods within those years, beginning after December 15, 2011 (early adoption is permitted). The impact of adoption is not expected to have a material impact on the consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820).” This ASU amends the requirements for measuring fair value and disclosing information about fair value. This ASU is effective for fiscal years and interim periods beginning after December 15, 2011 (early adoption is prohibited). The impact of adoption is not expected to have a material impact on the consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangibles—Goodwill and Other (Topic 350).” This ASU modifies the first step of the goodwill impairment test to include reporting units with zero or negative carrying amounts. For these reporting units, the second step of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any; when it is more likely than not that a goodwill impairment exists. This ASU is effective for fiscal years and interim periods beginning after December 15, 2010. The Company has evaluated the ASU and does not believe it will have a material impact on the consolidated financial statements.

2. Acquisitions

On March 28, 2011, the Company completed the acquisition of USi, Inc. from Ikyuo Co. Ltd. of Japan, based in Rockford, Tennessee, for cash consideration of $6,500. USi Inc. provides an innovative hard coating process for use in automotive and industrial applications, which will allow the Company to expand its technology capabilities. 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. The estimated fair value of certain assets and liabilities are preliminary and may change in the future as information becomes available from third party valuations. This acquisition does not meet the thresholds for a significant acquisition and therefore no pro forma financial information is presented.

To broaden product lines across Europe, 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 is 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. The Company contributed its French body sealing assets and obligations, which had a fair value of approximately $33,000, to the joint venture to acquire 51 percent ownership and FMEA contributed the assets and obligations of SPBT for its 49 percent ownership. SPBT changed its name to CS France subsequent to the transaction.

The Company accounted for the transaction as a sale of a subsidiary while retaining control under ASC 810, “Consolidations” and an acquisition of 51 percent ownership interest of SPBT under ASC 805, “Business Combinations.” Accordingly, the subsidiary was transferred at historical cost and the assets acquired and the liabilities assumed of SPBT were recorded at fair value and are included in the Company’s condensed consolidated balance sheet as of September 30, 2011. The Company received net cash of $38,224 as part of the transaction. The operating results of CS France’s operations are included in the Company’s condensed consolidated financial statements from the date of acquisition.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

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


Cash and cash equivalents	$	38,224
Accounts receivable, net		35,670
Inventories, net		18,194
Property, plant, and equipment, net		38,172
Other assets		15,680

Total assets acquired		145,940

Accounts payable		28,043
Short-term notes payable		20,474
Other current liabilities		26,541
Pension benefits		30,499
Other long-term liabilities		8,365

Total liabilities assumed		113,922

Net assets acquired	$	32,018

The estimated fair value of certain assets and liabilities are preliminary and may change in the future as information becomes available from third party valuations. This joint venture does not meet the thresholds for a significant acquisition and therefore no pro forma financial information is presented.

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 put option becomes exercisable at the expiration of the four year period following the May 2, 2011 closing date of the transaction. The combination of a noncontrolling interest and a put option resulted in a redeemable noncontrolling interest.

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 $1,017 and $1,695 for the three and nine months ended September 30, 2011, respectively. Such accretion amounts are recorded as increases to redeemable noncontrolling interests. 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, 2011 the estimated redemption value of the put option is $31,850. 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.

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, 2011 there was no difference between redemption value and fair value.

On July 1, 2011, the Company purchased from Nishikawa Rubber Co., Ltd. (“Nishikawa Rubber”) a 20% interest in Nishikawa Tachaplalert Rubber Company Limited for cash consideration of $10,500. Nishikawa Tachaplalert Rubber Company Limited is a joint venture majority owned by Nishikawa Rubber based in Thailand and supplies body sealing products. The new joint venture entity will be renamed Nishikawa Tachaplalert Cooper Limited. This joint venture will be owned 20% by Cooper Standard, 77.7% by Nishikawa Rubber and 2.3% owned by Original Tachaplalerts and Marubeni Thailand. This investment is accounted for under the equity method and is included in other assets in the accompanying condensed consolidated balance sheet.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

3. Goodwill and Intangibles

The changes in the carrying amount of goodwill by reportable operating segment for the nine months ended September 30, 2011 are summarized as follows:


	North America			International			Total
Balance at January 1, 2011	$	115,384		$	21,616		$	137,000
Foreign exchange translation		(185	)		(121	)		(306	)

Balance at September 30, 2011	$	115,199		$	21,495		$	136,694

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, 2010 and September 30, 2011, respectively:


	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (Years)
Customer relationships	$	140,124	$	(8,035	)	$	132,089		9.6
Developed technology		9,600		(938	)		8,662		5.7
Other		8,979		(88	)		8,891

Balance at December 31, 2010	$	158,703	$	(9,061	)	$	149,642		9.2

Customer relationships		136,031		(17,874	)		118,157		8.9
Developed technology		9,641		(2,153	)		7,488		5.0
Other		10,331		(1,805	)		8,526

Balance at September 30, 2011	$	156,003	$	(21,832	)	$	134,171		8.4

Amortization expense totaled $3,911and $3,842 for the three months ended September 30, 2011 and 2010, respectively. Amortization expense totaled $11,745 for the nine months ended September 30, 2011, $5,106 for the four months ended September 30, 2010 and $319 for the five months ended May 31, 2010. Estimated amortization expense will total approximately $15,200 for the year ending December 31, 2011.

4. Restructuring

The Company implemented several restructuring initiatives in prior years in connection with the closure or consolidation of facilities in North America, Europe, South America, Australia and Asia. The Company also implemented a restructuring initiative that involved the reorganization of the Company’s operating structure. The Company commenced these initiatives prior to December 31, 2010 and continued to execute these initiatives through September 30, 2011. 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 liquidation of the respective facilities. The total expense incurred related to these actions amounted to $(241) for the nine months ended September 30, 2011, $1,200 for the four months ended September 30, 2010 and $5,893 for the five months ended May 31, 2010. As of September 30, 2011 there is a liability of $859 associated with these initiatives recorded on the Company’s condensed consolidated balance sheet.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

In the first quarter of 2011, the Company initiated the closure of a facility in North America and announced the decision to establish a centralized shared services function in Europe. The estimated total costs of these initiatives amount to $9,600 and are expected to be completed in 2012. The following table summarizes the activity for these initiatives for the nine months ended September 30, 2011:


	Employee Separation Costs		Other Exit Costs			Asset Impairments		Total
Balance at January 1, 2011	$	—	$	—		$	—	$	—
Expense		2,278		4,721			—		6,999
Cash payments		—		(3,465	)		—		(3,465	)

Balance at September 30, 2011	$	2,278	$	1,256		$	—	$	3,534

In the second quarter of 2011, the Company initiated the reorganization of the Company’s French body sealing operations in relationship to the joint venture agreement with FMEA. The estimated total cost of this initiative is $43,500 and is expected to be completed in 2012. The following table summarizes the activity for this initiative for the nine months ended September 30, 2011:


	Employee Separation Costs			Other Exit Costs			Asset Impairments		Total
Balance at January 1, 2011	$	—		$	—		$	—	$	—
Expense		33,431			4,160			—		37,591
Reorganization iniative transfer		1,877			—			—		1,877
Cash payments and foreign exchange translation		(3,927	)		(4,160	)		—		(8,087	)

Balance at September 30, 2011	$	31,381		$	—		$	—	$	31,381

In the third quarter of 2011, the Company initiated the transfer of certain sealing business from one of its German facilities to other sealing operations in Eastern Europe. The estimated total cost of this initiative is $1,900 and is expected to be completed by year-end 2011. The total severance expense incurred related to this initiative amounted to $1,898 for the nine months ended September 30, 2011. As of September 30, 2011 there is a liability of $1,851 associated with this initiative recorded on the Company’s condensed consolidated balance sheet.

5. Inventories

Inventories are comprised of the following at December 31, 2010 and September 30, 2011:


	Successor
	December 31, 2010		September 30, 2011
Finished goods	$	32,690	$	40,236
Work in process		27,223		38,957
Raw materials and supplies		62,130		81,278

	$	122,043	$	160,471

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

6. Debt

Outstanding debt consisted of the following at December 31, 2010 and September 30, 2011:


	Successor
	December 31, 2010			September 30, 2011
Senior Notes	$	450,000		$	450,000
Other borrowings		26,723			42,046

Total debt	$	476,723		$	492,046
Less: Current portion of long-term debt		(19,965	)		(35,470	)

Total long-term debt	$	456,758		$	456,576

Senior ABL Facility

The Senior ABL Facility provides for an aggregate revolving loan availability of up to $125,000, subject to borrowing base availability, including a $45,000 letter of credit sub-facility and a $20,000 swing line sub-facility. The Senior ABL Facility also provides for an uncommitted $25,000 incremental loan facility, for a potential total Senior ABL Facility of $150,000 (if requested by the Borrowers and any existing lenders or new 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, 2011, no amounts were drawn under the Senior ABL Facility, but there were approximately $31,247 of letters of credit outstanding.

7. Pension and Postretirement Benefits other than Pensions

The following tables disclose the amount of net periodic benefit cost for the three months ended September 30, 2011 and 2010, five months ended May 31, 2010, four months ended September 30, 2010 and the nine months ended September 30, 2011 for the Company’s defined benefit plans and other postretirement benefit plans:


	Pension Benefits
	Successor												Predecessor						Successor
	Three Months Ended September 30, 2010						Three Months Ended September 30, 2011						Five Months Ended May 31, 2010						Four Months Ended September 30, 2010						Nine Months Ended September 30, 2011
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	560		$	599		$	526		$	633		$	1,002		$	893		$	747		$	791		$	1,578		$	1,898
Interest cost		3,846			1,706			3,687			1,791			6,278			2,871			5,128			2,256			11,061			5,373
Expected return on plan assets		(3,694	)		(871	)		(4,052	)		(1,017	)		(6,050	)		(1,460	)		(4,925	)		(1,159	)		(12,156	)		(3,059	)
Amortization of prior service cost and recognized actuarial loss		—			—			5			10			1,467			70			—			—			15			32

Net periodic benefit cost	$	712		$	1,434		$	166		$	1,417		$	2,697		$	2,374		$	950		$	1,888		$	498		$	4,244


	Other Postretirement Benefits
	Successor				Predecessor			Successor
	Three Months Ended September 30, 2010		Three Months Ended September 30, 2011		Five Months Ended May 31, 2010			Four Months Ended September 30, 2010		Nine Months Ended September 30, 2011
Service cost	$	433	$	459	$	638		$	577	$	1,378
Interest cost		1,025		982		1,701			1,367		2,948
Amortization of prior service credit and recognized actuarial gain		—		1		(1,395	)		—		3
Other		21		21		35			28		63

Net periodic benefit cost	$	1,479	$	1,463	$	979		$	1,972	$	4,392

8. Income Taxes

Under ASC 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

The effective tax rate for the three and nine months ended September 30, 2011 was 50% and 33%, respectively. The effective tax rate for the three months ended September 30, 2010 was 18%. The effective tax rate for the five months ended May 31, 2010 and four months ended September 30, 2010 was 13% and 17%, respectively. The income tax rate for the three and nine months ended September 30, 2011 varies from statutory rates due to income taxes on foreign earnings taxed at rates lower than the U.S. statutory rate, income in jurisdictions with no tax expense due to valuation allowance release, 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 will be significantly impacted by the recognition of valuation allowances in certain countries, particularly the United States. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. Accordingly, income taxes are impacted by the U.S. valuation allowance and the mix of earnings among jurisdictions.

In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company reassesses the possibility of releasing the valuation allowance currently in place on its U.S. deferred tax assets. Based upon this assessment, the Company has concluded that a release of the valuation allowance could possibly occur during the next 12 months. The required accounting for the release will involve significant tax amounts and will impact earnings in the quarter in which it is deemed appropriate to release the reserve.

9. Comprehensive Income and Equity

On an annual basis, disclosure of comprehensive income is incorporated into the statement of stockholders’ equity, which is not presented on a quarterly basis. The components of comprehensive income, net of related tax, are as follows:


	Successor
	Three Months Ended September 30,
	2010						2011
	Total		Cooper-Standard Holdings Inc.		Noncontrolling Interest (1)		Total			Cooper-Standard Holdings Inc.			Noncontrolling Interest
Net income (loss)	$	20,845	$	20,833	$	12	$	8,099		$	15,658		$	(7,559	)
Currency translation adjustment		45,989		45,968		21		(61,159	)		(59,688	)		(1,471	)
Pension and other postretirement benefits, net of tax		—		—		—		17			17			—
Fair value change of derivatives, net of tax		151		151		—		(94	)		(94	)		—

Comprehensive income (loss):	$	66,985	$	66,952	$	33	$	(53,137	)	$	(44,107	)	$	(9,030	)


	Predecessor								Successor
	Five Months Ended May 31, 2010								Four Months Ended September 30, 2010						Nine Months Ended September 30, 2011
	Total			Cooper-Standard Holdings Inc.			Noncontrolling Interest		Total		Cooper-Standard Holdings Inc.		Noncontrolling Interest (1)		Total			Cooper-Standard Holdings Inc.			Noncontrolling Interest
Net income (loss)	$	280,014		$	279,692		$	322	$	25,785	$	25,763	$	22	$	55,039		$	79,615		$	(24,576	)
Currency translation adjustment		(31,074	)		(31,091	)		17		42,953		42,937		16		(23,402	)		(21,017	)		(2,385	)
Pension and other postretirement benefits, net of tax		126			126			—		—		—		—		1,655			1,655			—
Fair value change of derivatives, net of tax		(81	)		(81	)		—		206		206		—		(370	)		(370	)		—

Comprehensive income (loss):	$	248,985		$	248,646		$	339	$	68,944	$	68,906	$	38	$	32,922		$	59,883		$	(26,961	)

(1)	Net income attributable to redeemable noncontrolling interest recorded in other long-term amounted to $164 for the three and four months ended September 30, 2010.

The following table summarizes the Company’s equity and redeemable noncontrolling interest activity for the nine months ended September 30, 2011:


	Successor
	Cooper-Standard Holdings Inc.			Noncontrolling Interest		Total Equity			Redeemable Noncontrolling Interest
Equity at January 1, 2011	$	560,446		$	2,607	$	563,053		$	6,215
Net income (loss)		79,615			533		80,148			(25,109	)
Preferred stock dividends		(5,519	)		—		(5,519	)		—
Repurchase of stock		(1,921	)		—		(1,921	)		—
Other comprehensive gain (loss)		(19,732	)		27		(19,705	)		(2,412	)
Stock-based compensation		7,067			—		7,067			—
FMEA joint venture transaction		(1,656	)		—		(1,656	)		34,298
Accretion of redeemable noncontrolling interest		(1,695	)		—		(1,695	)		1,695

Equity at September 30, 2011	$	616,605		$	3,167	$	619,772		$	14,687

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except 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% preferred stock and undistributed earnings allocated to participating securities, by the average number of common shares outstanding during the period excluding unvested restricted shares. The Company’s shares of 7% preferred stock outstanding are considered participating securities.

A summary of information used to compute basic net income per share attributable to Cooper-Standard Holdings Inc. is shown below:


	Successor
	Three Months Ended			Three Months Ended			Four Months Ended			Nine Months Ended
	September 30, 2010			September 30, 2011			September 30, 2010			September 30, 2011
Net income attributable to Cooper-Standard Holdings Inc.	$	20,833		$	15,658		$	25,763		$	79,615
Less: Preferred stock dividends (paid or unpaid)		(1,970	)		(1,835	)		(2,892	)		(5,519	)
Less: Undistributed earnings allocated to participating securities		(3,747	)		(2,743	)		(4,543	)		(14,781	)

Net income available to Cooper-Standard Holdings Inc. common stockholders	$	15,116		$	11,080		$	18,328		$	59,315

Average shares of common stock outstanding		17,489,693			17,693,458			17,489,693			17,580,474

Basic net income per share attributable to Cooper-Standard Holdings Inc.	$	0.86		$	0.63		$	1.05		$	3.37

Diluted net income per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method and dividing net income attributable to Cooper-Standard Holdings Inc. by the 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 anti-dilutive. A summary of information used to compute diluted net income per share attributable to Cooper-Standard Holdings Inc. is shown below:


	Successor
	Three Months Ended September 30, 2010		Three Months Ended September 30, 2011		Four Months Ended September 30, 2010		Nine Months Ended September 30, 2011
Net income available to Cooper-Standard Holdings Inc. common stockholders	$	15,116	$	11,080	$	18,328	$	59,315

Average common shares outstanding		17,489,693		17,693,458		17,489,693		17,580,474
Dilutive effect of:
Common restricted stock		263,527		278,700		251,820		408,964
Preferred restricted stock		66,537		62,095		64,397		91,263
Warrants		478,677		946,478		467,665		992,627
Options		—		183,034		—		210,660

Average dilutive shares of common stock outstanding		18,298,434		19,163,765		18,273,575		19,283,988

Diluted net income per share attributable to Cooper-Standard Holdings Inc.	$	0.83	$	0.58	$	1.00	$	3.08

The effect of certain common stock equivalents, including convertible preferred stock and options, were excluded from the computation of weighted average diluted shares outstanding for the three months ended September 30, 2010 and 2011, the four months ended September 30, 2010 and the nine months ended September 30, 2011, as inclusion would have resulted in antidilution. A summary of these preferred shares (as if converted) and options are shown below:


	Successor
	Three Months Ended		Three Months Ended		Four Months Ended		Nine Months Ended
	September 30, 2010		September 30, 2011		September 30, 2010		September 30, 2011
Number of options		838,952		33,700		838,952		33,700
Exercise price	$	25.52	$	43.50	$	25.52	$	43.50
Preferred shares, as if converted		4,335,188		4,381,005		4,335,188		4,381,005
Preferred dividends and undistributed earnings allocated to participating securities that would be added back in the diluted calculation	$	5,717	$	4,578	$	7,435	$	20,300

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

11. Redeemable Preferred Stock

The following table reconciles the Company’s 7% preferred stock activity for the nine months ended September 30, 2011:


	Successor
	Preferred Shares			Preferred Stock
Preferred Stock at January 1, 2011		1,052,444		$	130,339
Stock-based compensation		—			1,107
Repurchased preferred stock shares		(1,658	)		(212	)
Forfeited shares		(2,678	)		—

Preferred Stock at September 30, 2011		1,048,108		$	131,234

12. Stock-Based Compensation

The Company measures stock-based compensation expense at fair value in accordance with the provisions of U.S. GAAP and recognizes such expense over the vesting period of the stock-based employee awards.

Predecessor

Prior to the Effective Date, the Company established the 2004 Cooper-Standard Holdings Inc. Stock Incentive Plan (“Stock Incentive Plan”), which permitted the granting of nonqualified and incentive stock options, stock appreciation rights, restricted stock and other stock-based awards to employees and directors. In addition, in December 2006 the Company established the Management Stock Purchase Plan, which provided participants the opportunity to “purchase” Company stock units. On the Effective Date, outstanding awards under the Stock Incentive Plan and Management Stock Purchase Plan were cancelled in accordance with the terms of the Plan of Reorganization. Total compensation expense recognized under these plans amounted to $244 for the five months ended May 31, 2010.

Successor

On the Effective Date, the Company adopted the 2010 Cooper-Standard Holdings, Inc. Management Incentive Plan. In addition, 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 preferred stock and unrestricted common stock have been granted to key employees and directors. Total compensation expense recognized for the three months ended September 30, 2010 and 2011 totaled $2,743 and $3,350, respectively. Total compensation expense recognized for the four months ended September 30, 2010 and the nine months ended September 30, 2011 totaled $3,587 and $9,164, respectively.

13. Other Income (Expense)

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


	Successor						Predecessor			Successor
	Three Months Ended			Three Months Ended			Five Months Ended			Four Months Ended			Nine Months Ended
	September 30, 2010			September 30, 2011			May 31, 2010			September 30, 2010			September 30, 2011
Foreign currency gains (losses)	$	5,380		$	(2,848	)	$	(20,779	)	$	5,031		$	1,455
Unrealized losses related to forward contracts		—			(5,487	)		—			—			(5,487	)
Loss on sale of receivables		(239	)		(357	)		(377	)		(320	)		(974	)
Gain on partial sale of joint venture		—			—			—			—			11,423
Miscellaneous income (expense)		313			(192	)		—			313			(226	)

Other income (expense)	$	5,454		$	(8,884	)	$	(21,156	)	$	5,024		$	6,191

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

14. Related Party Transactions

Sales to NISCO, a 40% owned joint venture, totaled $6,983 and $7,129 for the three months ended September 30, 2011 and 2010, respectively. Sales to NISCO totaled $21,016 for the nine months ended September 30, 2011, $9,530 for the four months ended September 30, 2010 and $12,273 for the five months ended May 31, 2010. In March 2011, the Company received from NISCO a dividend of $4,750, all of which was related to earnings. In March 2011, the Company sold a 10% ownership interest in NISCO for $16,000. As a result of this transaction, the Company’s ownership percentage in NISCO has decreased from 50% to 40%, and a gain of $11,423 was recognized in other income in the condensed consolidated financial statements for the nine months ended September 30, 2011.

Purchases of materials from Guyoung Technology Co. Ltd, a Korean corporation of which the Company owns approximately 20% of the common stock, totaled $643 and $1,394 for the three months ended September 30, 2011 and 2010, respectively. Purchases of material from Guyoung Technology Co. Ltd totaled $2,236 for the nine months ended September 30, 2011, $2,291 for the four months ended September 30, 2010 and $4,052 for the five months ended May 31, 2010.

15. Business Segments

ASC 280, “Segment Reporting,” establishes the standards for reporting information about operating segments in financial statements. In applying the criteria set forth in ASC 280, the Company has determined that it operates in two segments, North America and International. Within these segments the Company’s principal product lines 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

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


	Successor
	Three Months Ended September 30,
	2010			2011
Sales to external customers
North America	$	316,585		$	348,507
International		269,065			360,037

Consolidated	$	585,650		$	708,544

Intersegment sales
North America	$	1,156		$	2,171
International		2,064			2,271
Eliminations and other		(3,220	)		(4,442	)

Consolidated	$	—		$	—

Segment profit (loss)
North America	$	29,122		$	31,850
International		(3,670	)		(15,788	)

Income before income taxes	$	25,452		$	16,062

Restructuring cost included in segment profit (loss)
North America	$	197		$	1,838
International		621			4,701

Consolidated	$	818		$	6,539


	Predecessor			Successor
	Five Months Ended May 31, 2010			Four Months Ended September 30, 2010			Nine Months Ended September 30, 2011
Sales to external customers
North America	$	508,738		$	432,981		$	1,073,655
International		500,390			368,311			1,084,121

Consolidated	$	1,009,128		$	801,292		$	2,157,776

Intersegment sales
North America	$	1,757		$	1,665		$	5,372
International		3,206			2,560			6,322
Eliminations and other		(4,963	)		(4,225	)		(11,694	)

Consolidated	$	—		$	—		$	—

Segment profit (loss)
North America	$	233,526		$	37,255		$	131,880
International		86,428			(5,954	)		(50,059	)

Income before income taxes	$	319,954		$	31,301		$	81,821

Restructuring cost included in segment profit (loss)
North America	$	851		$	340		$	4,958
International		5,042			860			43,166

Consolidated	$	5,893		$	1,200		$	48,124


	Successor
	December 31, 2010		September 30, 2011
Segment assets
North America	$	763,401	$	799,300
International		878,161		1,017,443
Eliminations and other		212,214		203,314

Consolidated	$	1,853,776	$	2,020,057

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

16. Guarantor and Non-Guarantor Subsidiaries

In connection with the May 27, 2010 Reorganization of the Company, Cooper-Standard Automotive Inc. (the “Issuer”), a wholly-owned subsidiary of the Company, issued 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 notes. The following condensed consolidated financial data provides information regarding the financial position, results of operations, and cash flows of the Guarantors. Separate financial statements of the Guarantors are not presented because management has determined that those would not be material to the holders of the Senior Notes. 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.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended September 30, 2010

Successor


	Parent		Issuer			Guarantors		Non-Guarantors			Eliminations			Consolidated Totals
	(dollars in millions)
Sales	$	—	$	106.5		$	140.9	$	364.4		$	(26.1	)	$	585.7
Cost of products sold		—		89.0			116.1		304.6			(26.1	)		483.6
Selling, administration, & engineering expenses		—		38.1			1.0		29.5			—			68.6
Amortization of intangibles		—		2.8			—		1.0			—			3.8
Restructuring		—		0.1			0.2		0.5			—			0.8

Operating profit (loss)		—		(23.5	)		23.6		28.8			—			28.9
Interest expense, net of interest income		—		(9.1	)		—		(1.6	)		—			(10.7	)
Equity earnings		—		0.3			0.7		0.8			—			1.8
Other income (expense), net		—		13.8			0.8		(9.2	)		—			5.4

Income (loss) before income taxes		—		(18.5	)		25.1		18.8			—			25.4
Provision for income tax expense (benefit)		—		(5.5	)		7.5		2.4			—			4.4

Income (loss) before equity in income (loss) of subsidiaries		—		(13.0	)		17.6		16.4			—			21.0
Equity in net income of subsidiaries		21.0		34.0			—		—			(55.0	)		—

Consolidated net income		21.0		21.0			17.6		16.4			(55.0	)		21.0
Net income attributable to noncontrolling interest		—		—			—		(0.2	)		—			(0.2	)

Net income attributable to Cooper-Standard Holdings Inc.	$	21.0	$	21.0		$	17.6	$	16.2		$	(55.0	)	$	20.8

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended September 30, 2011

Successor


	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Consolidated Totals
	(dollars in millions)
Sales	$	—	$	123.1		$	150.6		$	471.0		$	(36.2	)	$	708.5
Cost of products sold		—		99.0			124.1			413.1			(36.2	)		600.0
Selling, administration, & engineering expenses		—		29.0			(0.1	)		35.5			—			64.4
Amortization of intangibles		—		2.7			—			1.2			—			3.9
Restructuring		—		0.1			1.7			4.7			—			6.5

Operating profit (loss)		—		(7.7	)		24.9			16.5			—			33.7
Interest expense, net of interest income		—		(9.0	)		—			(0.6	)		—			(9.6	)
Equity earnings		—		0.2			—			0.6			—			0.8
Other income (expense), net		—		12.5			0.2			(21.5	)		—			(8.8	)

Income (loss) before income taxes		—		(4.0	)		25.1			(5.0	)		—			16.1
Provision for income tax expense (benefit)		—		(1.7	)		8.9			0.8			—			8.0

Income (loss) before equity in income of subsidiaries		—		(2.3	)		16.2			(5.8	)		—			8.1
Equity in net income of subsidiaries		8.1		10.4			—			—			(18.5	)		—

Consolidated net income (loss)		8.1		8.1			16.2			(5.8	)		(18.5	)		8.1
Net loss attributable to noncontrolling interest		—		—			—			7.6			—			7.6

Net income attributable to Cooper-Standard Holdings Inc.	$	8.1	$	8.1		$	16.2		$	1.8		$	(18.5	)	$	15.7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Five Months Ended May 31, 2010

Predecessor


															Consolidated
	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Totals
	(dollars in millions)
Sales	$	—	$	179.5		$	223.1		$	650.8		$	(44.3	)	$	1,009.1
Cost of products sold		—		154.2			181.7			540.6			(44.3	)		832.2
Selling, administration, & engineering expenses		—		41.9			—			50.2			—			92.1
Amortization of intangibles		—		0.2			—			0.1			—			0.3
Restructuring		—		0.1			0.1			5.7			—			5.9

Operating profit (loss)		—		(16.9	)		41.3			54.2			—			78.6
Interest expense, net of interest income		—		(32.7	)		—			(11.8	)		—			(44.5	)
Equity earnings		—		—			2.6			1.0			—			3.6
Reorganization items, net		—		160.0			(2.7	)		146.1			—			303.4
Other income (expense)		—		4.2			0.4			(25.8	)		—			(21.2	)

Income (loss) before income taxes		—		114.6			41.6			163.7			—			319.9
Provision for income tax expense (benefit)		—		39.5			(35.2	)		35.6			—			39.9

Income before equity in income of subsidiaries		—		75.1			76.8			128.1			—			280.0
Equity in net income of subsidiaries		280.0		204.9			—			—			(484.9	)		—

Consolidated net income		280.0		280.0			76.8			128.1			(484.9	)		280.0
Net income loss attributable to noncontrolling interest		—		—			—			(0.3	)		—			(0.3	)

Net income attributable to Cooper-Standard Holdings Inc.	$	280.0	$	280.0		$	76.8		$	127.8		$	(484.9	)	$	279.7

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Four Months Ended September 30, 2010

Successor


														Consolidated
	Parent		Issuer			Guarantors		Non-Guarantors			Eliminations			Totals
	(dollars in millions)
Sales	$	—	$	146.5		$	192.1	$	498.6		$	(35.9	)	$	801.3
Cost of products sold		—		125.3			154.1		421.9			(35.9	)		665.4
Selling, administration, & engineering expenses		—		51.4			1.1		39.1			—			91.6
Amortization of intangibles		—		3.7			—		1.4			—			5.1
Restructuring		—		0.1			0.2		0.9			—			1.2

Operating profit (loss)		—		(34.0	)		36.7		35.3			—			38.0
Interest expense, net of interest income		—		(12.1	)		—		(2.1	)		—			(14.2	)
Equity earnings		—		0.3			1.2		1.0			—			2.5
Other income (expense)		—		14.3			0.8		(10.1	)		—			5.0

Income (loss) before income taxes		—		(31.5	)		38.7		24.1			—			31.3
Provision for income tax expense (benefit)		—		(9.0	)		11.2		3.2			—			5.4

Income (loss) before equity in income (loss) of subsidiaries		—		(22.5	)		27.5		20.9			—			25.9
Equity in net income of subsidiaries		25.9		48.4			—		—			(74.3	)		—

Consolidated net income		25.9		25.9			27.5		20.9			(74.3	)		25.9
Net income attributable to noncontrolling interest		—		—			—		(0.2	)		—			(0.2	)

Net income attributable to Cooper-Standard Holdings Inc.	$	25.9	$	25.9		$	27.5	$	20.7		$	(74.3	)	$	25.7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2011

Successor


															Consolidated
	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations			Totals
	(dollars in millions)
Sales	$	—	$	373.6		$	462.3		$	1,426.7		$	(104.8	)	$	2,157.8
Cost of products sold		—		304.2			381.5			1,223.9			(104.8	)		1,804.8
Selling, administration, & engineering expenses		—		86.9			(5.2	)		109.2			—			190.9
Amortization of intangibles		—		8.3			—			3.4			—			11.7
Restructuring		—		0.3			4.7			43.1			—			48.1

Operating profit (loss)		—		(26.1	)		81.3			47.1			—			102.3
Interest expense, net of interest income		—		(26.6	)		—			(3.6	)		—			(30.2	)
Equity earnings		—		0.3			0.5			2.7			—			3.5
Other income (expense), net		—		38.0			12.8			(44.6	)		—			6.2

Income (loss) before income taxes		—		(14.4	)		94.6			1.6			—			81.8
Provision for income tax expense (benefit)		—		(2.7	)		15.2			14.3			—			26.8

Income (loss) before equity in income (loss) of subsidiaries		—		(11.7	)		79.4			(12.7	)		—			55.0
Equity in net income of subsidiaries		55.0		66.7			—			—			(121.7	)		—

Consolidated net income (loss)		55.0		55.0			79.4			(12.7	)		(121.7	)		55.0
Net loss attributable to noncontrolling interest		—		—			—			24.6			—			24.6

Net income attributable to Cooper-Standard Holdings Inc.	$	55.0	$	55.0		$	79.4		$	11.9		$	(121.7	)	$	79.6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2010

Successor


														Consolidated
	Parent		Issuer		Guarantors			Non-Guarantors			Eliminations			Totals
	(dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	163.0	$	—		$	131.5		$	—		$	294.5
Accounts receivable, net		—		54.3		72.6			254.0			—			380.9
Inventories		—		17.4		28.3			76.3			—			122.0
Prepaid Expenses		—		4.3		0.6			15.2			—			20.1
Other		—		16.4		(5.2	)		29.6			—			40.8

Total current assets		—		255.4		96.3			506.6			—			858.3
Investments in affiliates and intercompany accounts, net		560.5		384.5		934.5			(206.6	)		(1,623.8	)		49.1
Property, plant, and equipment, net		—		68.1		71.5			449.9			—			589.5
Goodwill		—		111.1		—			25.9			—			137.0
Other assets		—		105.7		(8.5	)		122.7			—			219.9

	$	560.5	$	924.8	$	1,093.8		$	898.5		$	(1,623.8	)	$	1,853.8

LIABILITIES & EQUITY
Current liabilities:
Debt payable within one year	$	—	$	—	$	—		$	19.9		$	—		$	19.9
Accounts payable		—		34.2		25.5			116.3			—			176.0
Accrued liabilities		—		79.8		11.2			121.6			—			212.6

Total current liabilities		—		114.0		36.7			257.8			—			408.5
Long-term debt		—		450.0		—			6.8			—			456.8
Other liabilities		—		153.7		5.9			129.3			—			288.9

Total liabilities		—		717.7		42.6			393.9			—			1,154.2
Redeemable noncontrolling interest		—		—		—			6.2			—			6.2
Preferred Stock		—		130.3		—			—			—			130.3
Total Cooper-Standard Holdings Inc. stockholders’ equity		560.5		76.8		1,051.2			495.8			(1,623.8	)		560.5
Noncontrolling interest		—		—		—			2.6			—			2.6

Total equity		560.5		76.8		1,051.2			498.4			(1,623.8	)		563.1

Total liabilities and equity	$	560.5	$	924.8	$	1,093.8		$	898.5		$	(1,623.8	)	$	1,853.8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2011

Successor


														Consolidated
	Parent		Issuer		Guarantors			Non-Guarantors			Eliminations			Totals
	(dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	171.3	$	—		$	115.0		$	—		$	286.3
Accounts receivable, net		—		78.3		87.8			333.0			—			499.1
Inventories		—		20.5		27.6			112.4			—			160.5
Prepaid expenses		—		4.7		0.4			23.2			—			28.3
Other		—		19.4		1.9			22.9			—			44.2

Total current assets		—		294.2		117.7			606.5			—			1,018.4
Investments in affiliates and intercompany accounts, net		616.6		311.3		1,012.2			(160.9	)		(1,727.0	)		52.2
Property, plant, and equipment, net		—		71.8		67.4			474.2			—			613.4
Goodwill		—		111.1		—			25.6			—			136.7
Other assets		—		105.5		(14.9	)		108.8			—			199.4

	$	616.6	$	893.9	$	1,182.4		$	1,054.2		$	(1,727.0	)	$	2,020.1

LIABILITIES & EQUITY
Current liabilities:
Debt payable within one year	$	—	$	—	$	—		$	35.5		$	—		$	35.5
Accounts payable		—		42.7		36.0			146.1			—			224.8
Accrued liabilities		—		70.5		9.9			163.7			—			244.1

Total current liabilities		—		113.2		45.9			345.3			—			504.4
Long-term debt		—		450.0		—			6.6			—			456.6
Other liabilities		—		128.9		5.9			158.6			—			293.4

Total liabilities		—		692.1		51.8			510.5			—			1,254.4
Redeemable noncontrolling interest		—		—		—			14.7			—			14.7
Preferred stock		—		131.2		—			—			—			131.2
Total Cooper-Standard Holdings Inc. stockholders’ equity		616.6		70.6		1,130.6			525.8			(1,727.0	)		616.6
Noncontrolling interest		—		—		—			3.2			—			3.2

Total equity		616.6		70.6		1,130.6			529.0			(1,727.0	)		619.8

Total liabilities and equity	$	616.6	$	893.9	$	1,182.4		$	1,054.2		$	(1,727.0	)	$	2,020.1

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Five Months Ended May 31, 2010

Predecessor


														Consolidated
	Parent		Issuer			Guarantors			Non-Guarantors			Eliminations		Totals
	(dollars in millions)
OPERATING ACTIVITIES
Net cash provided by (used in) operating activities	$	—	$	(122.8	)	$	(0.3	)	$	47.7		$	—	$	(75.4	)
INVESTING ACTIVITIES
Property, plant, and equipment		—		(3.0	)		(4.0	)		(15.9	)		—		(22.9	)
Fixed asset proceeds		—		—			3.6			0.2			—		3.8

Net cash used in investing activities		—		(3.0	)		(0.4	)		(15.7	)		—		(19.1	)
FINANCING ACTIVITIES
Decrease in short-term debt		—		(75.0	)		—			(102.1	)		—		(177.1	)
Principal payments on long-term debt		—		(595.5	)		—			(114.0	)		—		(709.5	)
Proceeds from issuance of stock		—		355.0			—			—			—		355.0
Debt issuance costs		—		(30.9	)		—			(0.1	)		—		(31.0	)
Proceeds from issuance of long-term debt		—		450.0			—			—			—		450.0

Net cash provided by (used in) financing activities		—		103.6			—			(216.2	)		—		(112.6	)
Effects of exchange rate changes on cash		—		(0.3	)		—			5.8			—		5.5
Changes in cash and cash equivalents		—		(22.5	)		(0.7	)		(178.4	)		—		(201.6	)
Cash and cash equivalents at beginning of period		—		91.5			0.7			288.1			—		380.3

Cash and cash equivalents at end of period	$	—	$	69.0		$	—		$	109.7		$	—	$	178.7

Depreciation and amortization	$	—	$	6.5		$	6.6		$	22.6		$	—	$	35.7

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Four Months Ended September 30, 2010

Successor


															Consolidated
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Totals
	(dollars in millions)
OPERATING ACTIVITIES
Net cash provided by operating activities	$	1.4		$	38.4		$	3.3		$	37.2		$	—	$	80.3
INVESTING ACTIVITIES
Property, plant, and equipment		—			(4.1	)		(3.3	)		(16.1	)		—		(23.5	)
Fixed asset proceeds		—			—			—			0.1			—		0.1

Net cash used in investing activities		—			(4.1	)		(3.3	)		(16.0	)		—		(23.4	)
FINANCING ACTIVITIES
Increase in short term debt		—			—			—			3.1			—		3.1
Principal payments on long-term debt		—			—			—			(1.5	)		—		(1.5	)
Other		(1.4	)		27.3			—			(27.3	)		—		(1.4	)

Net cash provided by (used in) financing activities		(1.4	)		27.3			—			(25.7	)		—		0.2
Effects of exchange rate changes on cash		—			(0.1	)		—			(3.4	)		—		(3.5	)
Changes in cash and cash equivalents		—			61.5			—			(7.9	)		—		53.6
Cash and cash equivalents at beginning of period		—			69.0			—			109.7			—		178.7

Cash and cash equivalents at end of period	$	—		$	130.5		$	—		$	101.8		$	—	$	232.3

Depreciation and amortization	$	—		$	9.7		$	5.7		$	21.5		$	—	$	36.9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2011

Successor


															Consolidated
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Totals
	(dollars in millions)
OPERATING ACTIVITIES
Net cash provided by (used in) operating activities	$	5.4		$	0.9		$	(6.2	)	$	45.7		$	—	$	45.8
INVESTING ACTIVITIES
Property, plant, and equipment		—			(15.6	)		(10.2	)		(44.5	)		—		(70.3	)
Acquisition of business., plus cash acquired		—			—			—			30.9			—		30.9
Investment in affiliates		—			(10.5	)		—			—			—		(10.5	)
Proceeds from partial sale of joint venture		—			—			16.0			—			—		16.0
Proceeds from the sale of assets		—			—			0.4			—			—		0.4

Net cash provided by (used in) investing activities		—			(26.1	)		6.2			(13.6	)		—		(33.5	)
FINANCING ACTIVITIES
Decrease in short-term debt		—			—			—			(4.3	)		—		(4.3	)
Principal payments on long-term debt		—			—			—			(3.2	)		—		(3.2	)
Other		(5.4	)		33.5			—			(33.7	)		—		(5.6	)

Net cash provided by (used in) financing activities		(5.4	)		33.5			—			(41.2	)		—		(13.1	)
Effects of exchange rate changes on cash		—			—			—			(7.4	)		—		(7.4	)
Changes in cash and cash equivalents		—			8.3			—			(16.5	)		—		(8.2	)
Cash and cash equivalents at beginning of period		—			163.0			—

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company