UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

FORM 10-Q

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

For the quarterly period ended June 30, 2014.

OR
 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from __________ to ___________.

Commission file number 001-32483



ACCURIDE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
61-1109077
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
7140 Office Circle, Evansville, IN
 
47715
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant's Telephone Number, Including Area Code: (812) 962-5000
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes    No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer 
Smaller Reporting Company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes  No
 
As of July 24, 2014, 47,718,818 shares of Accuride Corporation common stock, par value $.01 per share, were outstanding.


ACCURIDE CORPORATION

Table of Contents

Page
 
 
 
 
 
 
 

Part I.  FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

ACCURIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except for share and per share data)
 
June 30, 2014
   
December 31, 2013
 
ASSETS
 
   
 
CURRENT ASSETS:
 
   
 
Cash and cash equivalents
 
$
31,903
   
$
33,426
 
Customer receivables, net of allowance for doubtful accounts of $347 and $259 in 2014 and 2013, respectively
   
71,312
     
51,382
 
Other receivables
   
9,859
     
8,138
 
Inventories
   
46,216
     
39,329
 
Deferred income taxes
   
3,932
     
3,806
 
Prepaid expenses and other current assets
   
11,841
     
11,894
 
Assets held for sale
   
     
1,293
 
Total current assets
   
175,063
     
149,268
 
PROPERTY, PLANT AND EQUIPMENT, net
   
217,741
     
219,624
 
OTHER ASSETS:
               
Goodwill
   
100,697
     
100,697
 
Other intangible assets, net
   
122,042
     
125,430
 
Deferred financing costs, net of accumulated amortization of $4,363 and $3,649 in 2014 and 2013, respectively
   
5,727
     
6,440
 
Deferred income taxes
   
567
     
503
 
Other
   
14,731
     
9,815
 
TOTAL
 
$
636,568
   
$
611,777
 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
CURRENT LIABILITIES:
               
Accounts payable
 
$
63,786
   
$
47,527
 
Accrued payroll and compensation
   
9,898
     
8,763
 
Accrued interest payable
   
12,479
     
12,535
 
Accrued workers compensation
   
4,331
     
4,373
 
Accrued and other liabilities
   
15,187
     
16,801
 
Total current liabilities
   
105,681
     
89,999
 
LONG-TERM DEBT
   
340,709
     
330,183
 
DEFERRED INCOME TAXES
   
18,295
     
17,528
 
NON-CURRENT INCOME TAXES PAYABLE
   
6,816
     
8,367
 
OTHER POSTRETIREMENT BENEFIT PLAN LIABILITY
   
70,984
     
70,584
 
PENSION BENEFIT PLAN LIABILITY
   
18,306
     
20,687
 
OTHER LIABILITIES
   
10,793
     
12,545
 
COMMITMENTS AND CONTINGENCIES (Note 7)
   
     
 
STOCKHOLDERS' EQUITY:
               
Preferred Stock, $0.01 par value; 10,000,000 shares authorized
   
     
 
Common Stock, $0.01 par value; 80,000,000 shares authorized, 47,718,818 and 47,515,155 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively, and additional paid-in-capital
   
441,384
     
440,479
 
Accumulated other comprehensive loss
   
(18,239
)
   
(18,712
)
Accumulated deficiency
   
(358,161
)
   
(359,883
)
Total stockholders' equity
   
64,984
     
61,884
 
TOTAL
 
$
636,568
   
$
611,777
 

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

 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
(In thousands except per share data)
 
2014
   
2013
   
2014
   
2013
 
 
 
   
   
   
 
NET SALES
 
$
181,575
   
$
179,941
   
$
348,359
   
$
342,928
 
COST OF GOODS SOLD
   
159,153
     
161,235
     
308,914
     
317,944
 
GROSS PROFIT
   
22,422
     
18,706
     
39,445
     
24,984
 
OPERATING EXPENSES:
                               
Selling, general and administrative
   
10,118
     
12,747
     
20,572
     
23,822
 
INCOME FROM OPERATIONS
   
12,304
     
5,959
     
18,873
     
1,162
 
OTHER EXPENSE:
                               
Interest expense, net
   
(8,487
)
   
(9,157
)
   
(16,907
)
   
(17,851
)
Other loss, net
   
(169
)
   
(441
)
   
(699
)
   
(296
)
INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS
   
3,648
     
(3,639
)
   
1,267
     
(16,985
)
INCOME TAX (BENEFIT) PROVISION
   
(1,461
)
   
1,464
     
(557
)
   
2,873
 
INCOME (LOSS) FROM CONTINUING OPERATIONS
   
5,109
     
(5,103
)
   
1,824
     
(19,858
)
DISCONTINUED OPERATIONS, NET OF TAX
   
186
     
(259
)
   
(102
)
   
(1,451
)
NET INCOME (LOSS)
 
$
5,295
   
$
(5,362
)
 
$
1,722
   
$
(21,309
)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
                               
Defined benefit plans
   
140
     
417
     
473
     
748
 
COMPREHENSIVE INCOME (LOSS)
 
$
5,435
   
$
(4,945
)
 
$
2,195
   
$
(20,561
)
Weighted average common shares outstanding—basic
   
47,737
     
47,563
     
47,667
     
47,508
 
Basic income (loss) per share-continuing operations
   
0.11
     
(0.11
)
   
0.04
     
(0.42
)
Basic loss per share-discontinued operations
   
     
     
     
(0.03
)
Basic income (loss) per share
 
$
0.11
   
$
(0.11
)
 
$
0.04
   
$
(0.45
)
Weighted average common shares outstanding—diluted
   
49,003
     
47,563
     
48,299
     
47,508
 
Diluted income (loss) per share-continuing operations
   
0.11
     
(0.11
)
   
0.04
     
(0.42
)
Diluted loss per share-discontinued operations
   
     
     
     
(0.03
)
Diluted income (loss) per share
 
$
0.11
   
$
(0.11
)
 
$
0.04
   
$
(0.45
)

See notes to unaudited condensed consolidated financial statements.

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

(In thousands)
 
Common
Stock and
Additional
Paid-in-
Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Accumulated
Deficiency
   
Total
Stockholders'
Equity
 
BALANCE— April 1, 2013
 
$
438,868
   
$
(51,503
)
 
$
(337,517
)
 
$
49,848
 
Net loss
   
     
     
(5,362
)
   
(5,362
)
Share-based compensation expense
   
659
     
     
     
659
 
Tax impact of forfeited vested shares
   
(106
)
   
     
     
(106
)
Other comprehensive income
   
     
417
     
     
417
 
BALANCE—June 30, 2013
 
$
439,421
   
$
(51,086
)
 
$
(342,879
)
 
$
45,456
 
 
                               
BALANCE—April 1, 2014
 
$
440,725
   
$
(18,379
)
 
$
(363,456
)
 
$
58,890
 
Net income
   
     
     
5,295
     
5,295
 
Share-based compensation expense
   
710
     
     
     
710
 
Tax impact of forfeited vested shares
   
(51
)
   
     
     
(51
)
Other comprehensive income
   
     
140
     
     
140
 
BALANCE—June 30, 2014
 
$
441,384
   
$
(18,239
)
 
$
(358,161
)
 
$
64,984
 

(In thousands)
 
Common
Stock and
Additional
Paid-in-
Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Accumulated
Deficiency
   
Total
Stockholders'
Equity
 
BALANCE— January 1, 2013
 
$
438,277
   
$
(51,834
)
 
$
(321,570
)
 
$
64,873
 
Net loss
   
     
     
(21,309
)
   
(21,309
)
Share-based compensation expense
   
1,353
     
     
     
1,353
 
Tax impact of forfeited vested shares
   
(209
)
   
     
     
(209
)
Other comprehensive income
   
     
748
     
     
748
 
BALANCE—June 30, 2013
 
$
439,421
   
$
(51,086
)
 
$
(342,879
)
 
$
45,456
 
 
                               
BALANCE—January 1, 2014
 
$
440,479
   
$
(18,712
)
 
$
(359,883
)
 
$
61,884
 
Net income
   
     
     
1,722
     
1,722
 
Share-based compensation expense
   
1,209
     
     
     
1,209
 
Tax impact of forfeited vested shares
   
(304
)
   
     
     
(304
)
Other comprehensive income
   
     
473
     
     
473
 
BALANCE—June 30, 2014
 
$
441,384
   
$
(18,239
)
 
$
(358,161
)
 
$
64,984
 

See notes to unaudited condensed consolidated financial statements.

ACCURIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
 
Six Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
 
 
   
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
 
Net income (loss)
 
$
1,722
   
$
(21,309
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
               
Depreciation of property, plant and equipment
   
16,443
     
17,848
 
Amortization – deferred financing costs and debt discount
   
1,239
     
1,380
 
Amortization – other intangible assets
   
4,059
     
4,535
 
Gain on disposal of assets
   
406
     
942
 
Provision for deferred income taxes
   
(15
)
   
1,356
 
Non-cash share-based compensation
   
1,209
     
1,353
 
Changes in certain assets and liabilities:
               
Receivables
   
(21,651
)
   
(27,388
)
Inventories
   
(6,887
)
   
2,667
 
Prepaid expenses and other assets
   
(4,389
)
   
(5,648
)
Accounts payable
   
16,098
     
20,370
 
Accrued and other liabilities
   
(5,573
)
   
(8,461
)
Net cash provided by (used in) operating activities
   
2,661
     
(12,355
)
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property, plant and equipment
   
(14,748
)
   
(21,460
)
Proceeds from sale leaseback transactions
   
     
14,944
 
Proceeds from sale of property, plant, and equipment
   
1,235
     
 
Purchase of intangible asset
   
(671
)
   
 
Net cash used in investing activities
   
(14,184
)
   
(6,516
)
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from revolver
   
10,000
     
25,000
 
Net cash provided by financing activities
   
10,000
     
25,000
 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
   
(1,523
)
   
6,129
 
CASH AND CASH EQUIVALENTS—Beginning of period
   
33,426
     
26,751
 
CASH AND CASH EQUIVALENTS—End of period
 
$
31,903
   
$
32,880
 
 
               
Supplemental cash flow information:
               
Cash paid for interest
 
$
15,683
   
$
16,069
 
Cash paid for income taxes
   
1,137
     
1,658
 
Non-cash transactions:
               
Purchases of property, plant and equipment in accounts payable
 
$
3,388
   
$
5,697
 
 
See notes to unaudited condensed consolidated financial statements.

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

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation   – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U. S. GAAP"), except that the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S.GAAP for complete financial statements.  However, in the opinion of Accuride Corporation ("Accuride" or the "Company"), all adjustments (consisting primarily of normal recurring accruals) considered necessary to present fairly the condensed consolidated financial statements have been included.  Certain operating results from prior periods have been reclassified to discontinued operations to conform to the current year presentation.

The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014.  The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto disclosed in Accuride's Annual Report on Form 10-K for the year ended December 31, 2013.

On August 1, 2013, the Company announced the sale of substantially all of the assets, liabilities and business of its Imperial Group business to Wynnchurch Capital, Ltd. in partnership with Imperial Manufacturing, Inc. for $30.0 million, plus a contingent earn-out opportunity of up to $2.25 million. The sale resulted in the recognition of a $12.0 million loss, including a $2.5 million impairment charge, on our consolidated statement of operations for the year ended December 31, 2013, which has been classified as Discontinued Operations.   See Note 2 for further discussion.

Management's Estimates and Assumptions   – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Earnings Per Common Share – Basic and diluted earnings per common share were computed as follows:

 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
(In thousands except per share data)
 
2014
   
2013
   
2014
   
2013
 
Numerator:
 
   
   
   
 
Net income (loss) from continuing operations
 
$
5,109
   
$
(5,103
)
 
$
1,824
   
$
(19,858
)
Net income (loss) from discontinued operations
   
186
     
(259
)
   
(102
)
   
(1,451
)
Net income (loss)
 
$
5,295
   
$
(5,362
)
 
$
1,722
   
$
(21,309
)
Denominator:
                               
Weighted average shares outstanding – Basic
   
47,737
     
47,563
     
47,667
     
47,508
 
Weighted average shares outstanding – Diluted
   
49,003
     
47,563
     
48,299
     
47,508
 
 
                               
Basic income (loss) per common share
                               
From continuing operations
 
$
0.11
   
$
(0.11
)
 
$
0.04
   
$
(0.42
)
From discontinued operations
   
     
     
     
(0.03
)
Basic income (loss) per common share
 
$
0.11
   
$
(0.11
)
 
$
0.04
   
$
(0.45
)
 
                               
Diluted income (loss) per common share
                               
From continuing operations
 
$
0.11
   
$
(0.11
)
 
$
0.04
   
$
(0.42
)
From discontinued operations
   
     
     
     
(0.03
)
Diluted income (loss) per common share
 
$
0.11
   
$
(0.11
)
 
$
0.04
   
$
(0.45
)


As of June 30, 2014, there were options exercisable for 149,094 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.  As of June 30, 2013, there were options exercisable for 176,927 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.


Share-Based Compensation   Compensation expense for share-based compensation programs recognized as a component of operating expenses was $1.2 million and $1.4 million for the six months ended June 30, 2014 and June 30, 2013, respectively.  Compensation expense for share based compensation programs recognized as a component of operating expense was $0.7 million and $0.7 million for the three months ended June 30, 2014 and June 30, 2013, respectively.
 
As of June 30, 2014, there was approximately $3.5 million of unrecognized pre-tax compensation expense related to share-based awards not yet vested that will be recognized over a weighted-average period of 1.5 years.

Income Tax – Under Interim Financial Reporting , we compute on a quarterly basis an estimated annual effective tax rate considering ordinary income and related income tax expense. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual, or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs. Other items included in income tax expense in the periods in which they occur include the cumulative effect of changes in tax laws or rates, foreign exchange gains and losses, adjustments to uncertain tax positions, and adjustments to our valuation allowance due to changes in judgment in the realizability of deferred tax assets in future years.
 
We have assessed the need to maintain a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Due to our recent history of U.S. operating and taxable losses, the inconsistency of these profits, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.

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

Recent Accounting Adoptions – In February 2013, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.   The objective of the amendments in this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for those obligations addressed within existing guidance in U.S. GAAP.  The amendment requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and an additional amount the reporting entity expects to pay on behalf of its co-obligors.  The entity is required to disclose the nature and amount of the obligation as well as other information about those obligations.  The Company adopted this ASU as of January 1, 2014.  This adoption did not have an effect on our financial statements.

On July 18, 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.   Topic 740 does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists.  The objective of the amendments in this update is to eliminate that diversity in practice.  The Company adopted this ASU as of January 1, 2014.  This ASU did not have an effect on our financial statements.

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

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


Note 2 – Discontinued Operations

On August 1, 2013, the Company announced that it completed the sale of substantially all of the assets of its Imperial Group ("Imperial") business to Imperial Group Manufacturing, Inc., a new company formed and capitalized by Wynnchurch Capital for total cash consideration of $30.0 million at closing, plus a contingent earn-out opportunity of up to $2.25 million.  The sale resulted in recognition of a $12.0 million loss for the year ended December 31, 2013, which was classified as discontinued operations.

Pursuant to the provisions of the purchase agreement, subject to certain limited exceptions, the purchaser purchased from Imperial all equipment, inventories, accounts receivable, deposits, prepaid expenses, intellectual property, contracts, real property interests, transferable permits and other intangibles related to the business and assumed Imperial's trade and vendor accounts payable and performance obligations under those contracts included in the purchased assets.  The real property interests acquired by the purchaser include ownership of three plants located in Decatur, Texas, Dublin, Virginia and Chehalis, Washington and a leasehold interest in a plant located in Denton, Texas.  Imperial retained ownership of its real property located in Portland, Tennessee and included a $2.5 million impairment charge for this property in the loss on sale.   The Company leased such property to the purchaser under a two-year lease, with the option to renew the lease for one additional year and the right to terminate this lease upon six-months advance notice.  Rent under the lease is fixed at $75,000 per year.  Imperial Group Manufacturing has provided a lease termination notice, and the Portland, Tennessee lease will end on November 1, 2014.

The Company has reclassified certain operating results and the loss on sale transactions for Imperial Group L.P. to discontinued operations.

The following table presents sales and income attributable to discontinued operations.

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
(In thousands)
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
Net sales
 
$
   
$
31,377
   
$
   
$
60,850
 
 
                               
Loss from operations
   
(10
)
   
(259
)
   
(21
)
   
(1,451
)
Other income (expense)
   
196
     
     
(81
)
   
 
Discontinued operations
 
$
186
   
$
(259
)
 
$
(102
)
 
$
(1,451
)

Note 3 - Inventories

Inventories at June 30, 2014 and December 31, 2013, on a FIFO basis, were as follows:

(In thousands)
 
June 30, 2014
   
December 31, 2013
 
Raw materials
 
$
8,900
   
$
7,483
 
Work in process
   
13,790
     
12,996
 
Finished manufactured goods
   
23,526
     
18,850
 
Total inventories
 
$
46,216
   
$
39,329
 



Note 4 - Goodwill and Other Intangible Assets

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

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

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

(In thousands)
 
Wheels
   
Brillion Iron
Works
   
Total
 
Balance as of December 31, 2013
 
$
122,764
   
$
2,666
   
$
125,430
 
Additions
   
671
     
     
671
 
Amortization
   
(3,975
)
   
(84
)
   
(4,059
)
Balance as of June 30, 2014
 
$
119,460
   
$
2,582
   
$
122,042
 

The changes in the carrying amount of other intangible assets for the period December 31, 2012 to June 30, 2013, by reportable segment, are as follows:

(In thousands)
 
Wheels
   
Brillion Iron Works
   
Corporate
   
Total
 
Balance as of December 31, 2012
 
$
130,668
   
$
2,833
   
$
679
   
$
134,180
 
Amortization
   
(3,952
)
   
(83
)
   
(500
)
   
(4,535
)
Balance as of June 30, 2013
 
$
126,716
   
$
2,750
   
$
179
   
$
129,645
 

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

 
 
   
As of June 30, 2014
   
As of December 31, 2013
 
(In thousands)
 
Weighted
Average
Useful
Lives
   
Gross Amount
   
Accumulated
Amortization
   
Carrying
Amount
   
Gross Amount
   
Accumulated
Amortization
   
Carrying
Amount
 
Goodwill
   
   
$
100,697
   
$
   
$
100,697
   
$
100,697
   
$
   
$
100,697
 
Other intangible assets:
                                                       
Trade names
   
   
$
25,200
   
$
   
$
25,200
   
$
25,200
   
$
   
$
25,200
 
Technology
   
10.0
     
39,520
     
21,993
     
17,527
     
38,849
     
20,497
     
18,352
 
Customer relationships
   
19.9
     
129,093
     
49,778
     
79,315
     
129,093
     
47,215
     
81,878
 
Other intangible assets:
         
$
193,813
   
$
71,771
   
$
122,042
   
$
193,142
   
$
67,712
   
$
125,430
 

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

Note 5 – Assets Held for Sale

At December 31, 2013, assets totaling $1.3 million were classified as held for sale.  The assets consisted of a building and land related to the Elkhart, Indiana facility that our Gunite business exited in November, 2012.  The sale of these assets was completed on February 24, 2014, and the net proceeds totaled $1.2 million.
 
Note 6 - Pension and Other Postretirement Benefit Plans

Components of net periodic benefit cost for the three and six months ended June 30:

 
 
For the three months ended June 30
   
For the six months ended June 30
 
 
 
Pension Benefits
   
Other Benefits
   
Pension Benefits
   
Other Benefits
 
(In thousands)
 
2014
   
2013
   
2014
   
2013
   
2014
   
2013
   
2014
   
2013
 
Service cost-benefits earned during the period
 
$
270
   
$
281
   
$
87
   
$
139
   
$
534
   
$
567
   
$
172
   
$
281
 
Interest cost on projected benefit obligation
   
2,697
     
2,583
     
883
     
883
     
5,351
     
5,207
     
1,759
     
1,773
 
Expected return on plan assets
   
(3,213
)
   
(2,936
)
   
     
     
(6,368
)
   
(5,924
)
   
     
 
Amortization of prior service (credit) cost
   
11
     
11
     
(9
)
   
     
22
     
22
     
(18
)
   
 
Amortization of loss
   
51
     
649
     
80
     
24
     
101
     
1,312
     
157
     
50
 
Total benefit cost charged (credited) to income
 
$
(184
)
 
$
588
   
$
1,041
   
$
1,046
   
$
(360
)
 
$
1,184
   
$
2,070
   
$
2,104
 

As of June 30, 2014, $5.9 million has been contributed to our sponsored pension plans.  We presently anticipate contributing an additional $4.9 million to fund our pension plans during 2014 for a total of $10.8 million.  Not included in the anticipated contributions for the year are any potential payments related to the plan associated with our Elkhart, Indiana facility that was recently closed.  The amounts of those contributions have not been determined as of the date of this filing.

Note 7 – Commitments and Contingencies

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

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

As of June 30, 2014, we had an environmental reserve of approximately $1.5 million, related primarily to our foundry operations. This reserve is based on management's review of potential liabilities as well as cost estimates related thereto. Any expenditure required for us to comply with applicable environmental laws and/or pay for any remediation efforts will not be reduced or otherwise affected by the existence of the environmental reserve. Our environmental reserve may not be adequate to cover our future costs related to the sites associated with the environmental reserve, and any additional costs may have a material adverse effect on our business, results of operations or financial condition. The discovery of additional environmental issues, the modification of existing laws or regulations or the promulgation of new ones, more vigorous enforcement by regulators, the imposition of joint and several liability under CERCLA or analogous state laws, or other unanticipated events could also result in a material adverse effect on our consolidated financial statements.

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

At the Erie, Pennsylvania, facility, we have obtained an environmental insurance policy to provide coverage with respect to certain environmental liabilities.

Management does not believe that the outcome of any currently pending environmental proceeding will have a material adverse effect on our consolidated financial statements.

As of June 30, 2014, we had approximately 2,269 employees, of which 498 were salaried employees with the remainder paid hourly. Unions represent approximately 1,543 of our employees, which is approximately 68 percent of our total employees. Each of our unionized facilities has a separate contract with the union that represents the workers employed at such facility. The union contracts expire at various times over the next few years with the exception of our union contract that covers the hourly employees at our Monterrey, Mexico, facility, which expires on an annual basis in January unless otherwise renewed. The 2014 negotiations in Monterrey were completed prior to the expiration of our union contract. The collective bargaining agreement ("CBA") at our Erie, Pennsylvania facility was set to expire on September 3, 2014; however, the negotiation of a new CBA was completed on May 20, 2014. The new CBA at our Erie facility will commence on September 4, 2014 and expire on September 3, 2018.

The CBA at our Rockford, Illinois facility expires in November, 2014. This agreement covers 315 employees.  We do not anticipate that the 2014 negotiation of this agreement will have a material adverse effect on our consolidated financial statements.


Note 8 – Financial Instruments

We have determined the estimated fair value amounts of financial instruments using available market information and other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value.  A fair value hierarchy accounting standard exists for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs).  Determining which category an asset or liability falls within the hierarchy requires significant judgment.  We evaluate our hierarchy disclosures each quarter.

The hierarchy consists of three levels:

Level 1 Quoted market prices in active markets for identical assets or liabilities;
Level 2 Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 Unobservable inputs developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The carrying amounts of cash and cash equivalents, trade receivables, and accounts payable approximate fair value because of the relatively short maturity of these instruments.  The fair value of our 9.5% senior secured notes based on market quotes, which we determined to be Level 1 inputs, at June 30, 2014 was approximately $319.6 million compared to the carrying amount of $305.7 million.  The fair value of our 9.5% senior secured notes based on market quotes, which we determined to be Level 1 inputs, at December 31, 2013 was approximately $306.9 million compared to the carrying amount of $305.2 million.  The Company believes the fair value of our variable interest rate Asset Based Loan ("ABL") facility at June 30, 2014 and December 31, 2013 equals the carrying value of $35.0 million and $25.0 million, respectively.  As of June 30, 2014 and December 31, 2013 we had no other remaining financial instruments.



Note 9 – Segment Reporting

Based on our continual monitoring of the long-term economic characteristics, products and production processes, class of customer, and distribution methods of our operating segments, we have identified each of our operating segments below as reportable segments.  We believe this segmentation is appropriate based upon operating decisions and performance assessments by our President and Chief Executive Officer.  The accounting policies of the reportable segments are the same as described in Note 1, Summary of Significant Accounting Policies of our Annual Report on Form 10-K for the year ended December 31, 2013.

 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
(In thousands)
 
2014
   
2013
   
2014
   
2013
 
Net sales:
 
   
   
   
 
Wheels
 
$
101,155
   
$
99,468
   
$
193,373
   
$
192,630
 
Gunite
   
48,304
     
51,207
     
92,277
     
90,603
 
Brillion Iron Works
   
32,116
     
29,266
     
62,709
     
59,695
 
Consolidated total
 
$
181,575
   
$
179,941
   
$
348,359
   
$
342,928
 
 
                               
Operating income (loss):
                               
Wheels
 
$
11,857
   
$
11,751
   
$
21,599
   
$
17,494
 
Gunite
   
7,243
     
3,323
     
10,521
     
1,546
 
Brillion Iron Works
   
489
     
1,855
     
1,764
     
2,430
 
Corporate / Other
   
(7,285
)
   
(10,970
)
   
(15,011
)
   
(20,308
)
Consolidated total
 
$
12,304
   
$
5,959
   
$
18,873
   
$
1,162
 

Excluded from net sales above, are inter-segment sales from Brillion Iron Works to Gunite, as shown in the table below:

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
(In thousands)
2014
 
2013
 
2014
 
2013
 
Inter-segment sales
 
$
3,929
   
$
6,187
   
$
7,770
   
$
8,635
 


 
As of
 
(In thousands)
June 30, 2014
 
December 31, 2013
 
Total assets:
 
 
Wheels
 
$
468,559
   
$
452,271
 
Gunite
   
65,660
     
55,016
 
Brillion Iron Works
   
56,514
     
52,547
 
Corporate / Other
   
45,835
     
51,943
 
Consolidated total
 
$
636,568
   
$
611,777
 

Note 10 - Debt

As of June 30, 2014, total debt was $340.7 million consisting of $305.7 million of our outstanding 9.5% senior secured notes, net of discount, and a $35.0 million draw on our ABL facility. As of December 31, 2013, total debt was $330.2 million consisting of $305.2 million of our outstanding 9.5% senior secured notes, net of discount, and a $25.0 million draw on our ABL facility.
 
Our credit documents   (the New ABL Facility and the indenture governing the senior secured notes) contain operating covenants that limit the discretion of management with respect to certain business matters.  These covenants place significant restrictions on, among other things, the ability to incur additional debt, to pay dividends, to create liens, to make certain payments and investments and to sell or otherwise dispose of assets and merge or consolidate with other entities.  In addition, the New ABL Facility contains a fixed charge coverage ratio covenant which will be applicable if the availability under the ABL Facility is less than 10.0% of the amount of the New ABL Facility.  If applicable, that covenant requires us to maintain a minimum ratio of adjusted EBITDA less capital expenditures made during such period (other than capital expenditures financed with the net cash proceeds of asset sales, recovery events, incurrence of indebtedness and the sale or issuance of equity interests) to fixed charges of 1.00 to 1.00.  We are currently and expect to remain in compliance with our covenants through the next twelve months.  However, we continue to operate in a challenging economic and commercial environment and our ability to maintain liquidity and comply with our debt covenants may be affected by economic or other conditions that are beyond our control and which are difficult to predict.

On July 29, 2010, we entered into our Prior ABL Facility, which was a senior secured asset based revolving credit facility, in an aggregate principal amount of up to $75.0 million, with the right to increase the availability under the facility by up to $25.0 million in the aggregate.  On February 7, 2012, we exercised our option to increase the loan commitments under the Prior ABL Facility by $25.0 million (for a total aggregate availability of $100.0 million) by entering into an ABL incremental agreement.  The Prior ABL Facility would have matured on July 29, 2014 and provided for loans and letters of credit in an aggregate amount up to the amount of the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $25.0 million to be available for the issuance of letters of credit.   Loans under the Prior ABL Facility bore interest at an annual rate equal to, at our option, either LIBOR plus 3.50% or Base Rate plus 2.75%, subject to changes based on our leverage ratio as defined in the Prior ABL Facility.   We were also required to pay a commitment fee equal to 0.50% per annum to the lenders under the Prior ABL Facility if utilization under the facility exceeded 50.0% of the total commitments under the facility and a commitment fee equal to 0.75% per annum if utilization under the facility was less than or equal to 50.0% of the total commitments under the facility. Customary letter of credit fees were also payable as applicable.  The obligations under the Prior ABL Facility are secured by (i) first priority liens on substantially all of the Company's accounts receivable and inventories, subject to certain exceptions and permitted liens (the "ABL Priority Collateral") and (ii) second priority liens on substantially all of the Company's owned real property and tangible and intangible assets other than the ABL Priority Collateral, including all of the outstanding capital stock of our domestic subsidiaries, subject to certain exceptions and permitted liens (the "Notes Priority Collateral").

On July 11, 2013, we entered into the New ABL Facility and used $45.3 million of borrowings under the New ABL Facility and cash on hand to repay all amounts outstanding under the Prior ABL Facility and to pay related fees and expenses.

The New ABL Facility is a senior secured asset based credit facility in an aggregate principal amount of up to $100.0 million, consisting of a $90.0 million revolving credit facility and a $10.0 million first-in last-out term facility, with the right, subject to certain conditions, to increase the availability under the facility by up to $50.0 million in the aggregate. The New ABL Facility currently matures on July 11, 2018, but may be extended pursuant under certain circumstances pursuant to the terms of the New ABL Facility.

The New ABL Facility provides for loans and letters of credit in an amount up to the aggregate availability under the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $20.0 million for letters of credit.  Borrowings under the New ABL Facility bear interest through maturity at a variable rate based upon, at our option, either LIBOR or the base rate (which is the greatest of one-half of 1.00% in excess of the federal funds rate, 1.00% in excess of the one-month LIBOR rate and the Agent's prime rate), plus, in each case, an applicable margin.  The applicable margin for loans under the first-in last-out term facility that are (i) LIBOR loans ranges, based on the our average excess availability, from 2.75% to 3.25% per annum and (ii) base rate loans ranges, based on our average excess availability, from 1.00% to 1.50%.  The applicable margin for other advances under the New ABL Facility that are (i) LIBOR loans ranges, based on our average excess availability, from 1.75% to 2.25% and (ii) base rate loans ranges, based on our average excess availability, from 0.00% to 0.50%.

We must also pay an unused line fee equal to 0.25% per annum to the lenders under the New ABL Facility if utilization under the facility is greater than or equal to 50.0% of the total available commitments under the facility and a commitment fee equal to 0.375% per annum if utilization under the facility is less than 50.0% of the total available commitments under the facility. Customary letter of credit fees are also payable, as necessary.




Note 11 – Guarantor and Non-guarantor Financial Statements

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

CONDENSED CONSOLIDATING BALANCE SHEETS

 
 
June 30, 2014
 
(In thousands)
 
Parent
   
Guarantor Subsidiaries
   
Non-guarantor Subsidiaries
   
Eliminations
   
Total
 
ASSETS
 
   
   
   
   
 
Cash and cash equivalents
 
$
24,584
   
$
   
$
7,319
   
$
   
$
31,903
 
Customer and other receivables, net
   
47,123
     
24,525
     
9,523
     
     
81,171
 
Intercompany receivable
   
     
     
81,407
     
(81,407
)
   
 
Inventories
   
21,541
     
22,263
     
2,904
     
(492
)
   
46,216
 
Other current assets
   
7,803
     
2,374
     
5,596
     
     
15,773
 
Total current assets
   
101,051
     
49,162
     
106,749
     
(81,899
)
   
175,063
 
Property, plant and equipment, net
   
80,525
     
103,665
     
33,551
     
     
217,741
 
Goodwill
   
96,283
     
4,414
     
     
     
100,697
 
Other intangible assets, net
   
119,460
     
2,582
     
     
     
122,042
 
Investments in and advances to subsidiaries and affiliates
   
143,559
     
     
     
(143,559
)
   
 
Deferred income taxes
   
17,948
     
9,679
     
460
     
(22,360
)
   
5,727
 
Other non-current assets
   
2,023
     
391
     
12,884
     
     
15,298
 
TOTAL
 
$
560,849
   
$
169,893
   
$
153,644
   
$
(247,818
)
 
$
636,568
 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                       
Accounts payable
 
$
16,117
   
$
34,122
   
$
13,547
   
$
   
$
63,786
 
Intercompany payable
   
51,902
     
49
     
29,948
     
(81,899
)
   
 
Accrued payroll and compensation
   
2,203
     
6,365
     
1,330
     
     
9,898
 
Accrued interest payable
   
12,479
     
     
     
     
12,479
 
Accrued and other liabilities
   
3,810
     
11,768
     
3,940
     
     
19,518
 
Total current liabilities
   
86,511
     
52,304
     
48,765
     
(81,899
)
   
105,681
 
Long term debt
   
340,709
     
     
     
     
340,709
 
Deferred and non-current income taxes
   
59,060
     
(11,691
)
   
102
     
(22,360
)
   
25,111
 
Other non-current liabilities
   
9,585
     
72,266
     
18,232
     
     
100,083
 
Stockholders' equity
   
64,984
     
57,014
     
86,545
     
(143,559
)
   
64,984
 
TOTAL
 
$
560,849
   
$
169,893
   
$
153,644
   
$
(247,818
)
 
$
636,568
 

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


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 
 
Three Months Ended June 30, 2014
 
(In thousands)
 
Parent
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
123,044
   
$
76,532
   
$
33,669
   
$
(51,670
)
 
$
181,575
 
Cost of goods sold
   
108,284
     
69,982
     
32,065
     
(51,178
)
   
159,153
 
Gross profit
   
14,760
     
6,550
     
1,604
     
(492
)
   
22,422
 
Operating expenses
   
9,843
     
222
     
53
     
     
10,118
 
Income (loss) from operations
   
4,917
     
6,328
     
1,551
     
(492
)
   
12,304
 
Other income (expense):
                                       
Interest income (expense), net
   
(8,766
)
   
(59
)
   
338
     
     
(8,487
)
Equity in earnings of subsidiaries
   
8,388
     
     
     
(8,388
)
   
 
Other income (expense), net
   
(800
)
   
63
     
568
     
     
(169
)
Income (loss) before income taxes from continuing operations
   
3,739
     
6,332
     
2,457
     
(8,880
)
   
3,648
 
Income tax  (benefit) provision
   
(1,556
)
   
     
95
     
     
(1,461
)
Income (loss from continuing operations
   
5,295
     
6,332
     
2,362
     
(8,880
)
   
5,109
 
Discontinued operations, net of tax
   
     
     
186
     
     
186
 
Net income (loss)
 
$
5,295
   
$
6,332
   
$
2,548
   
$
(8,880
)
 
$
5,295
 
 
                                       
Comprehensive income (loss)
 
$
5,435
   
$
6,322
   
$
2,687
   
$
(9,009
)
 
$
5,435
 
 
 
 
Three Months Ended June 30, 2013
 
(In thousands)
 
Parent
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
121,949
   
$
77,522
   
$
38,176
   
$
(57,706
)
 
$
179,941
 
Cost of goods sold
   
113,258
     
70,169
     
35,514
     
(57,706
)
   
161,235
 
Gross profit
   
8,691
     
7,353
     
2,662
     
     
18,706
 
Operating expenses
   
12,301
     
374
     
72
     
     
12,747
 
Income (loss) from operations
   
(3,610
)
   
6,979
     
2,590
     
     
5,959
 
Other income (expense):
                                       
Interest income (expense), net
   
(9,297
)
   
(338
)
   
478
     
     
(9,157
)
Equity in earnings of subsidiaries
   
8,228
     
     
     
(8,228
)
   
 
Other income (expense), net
   
(13
)
   
     
(428
)
   
     
(441
)
Income (loss) before income taxes from continuing operations
   
(4,692
)
   
6,641
     
2,640
     
(8,228
)
   
(3,639
)
Income tax  provision
   
670
     
     
794
     
     
1,464
 
Income (loss) from continuing operations
   
(5,362
)
   
6,641
     
1,846
     
(8,228
)
   
(5,103
)
Discontinued operations, net of tax
   
     
     
(259
)
   
     
(259
)
Net income (loss)
 
$
(5,362
)
 
$
6,641
   
$
1,587
   
$
(8,228
)
 
$
(5,362
)
 
                                       
Comprehensive income (loss)
 
$
(4,945
)
 
$
6,641
   
$
2,004
   
$
(8,645
)
 
$
(4,945
)


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 
 
Six Months Ended June 30, 2014
 
(In thousands)
 
Parent
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
231,575
   
$
150,834
   
$
66,323
   
$
(100,373
)
 
$
348,359
 
Cost of goods sold
   
207,166
     
139,686
     
61,504
     
(99,442
)
   
308,914
 
Gross profit
   
24,409
     
11,148
     
4,819
     
(931
)
   
39,445
 
Operating expenses
   
19,965
     
502
     
105
     
     
20,572
 
Income (loss) from operations
   
4,444
     
10,646
     
4,714
     
(931
)
   
18,873
 
Other income (expense):
                                       
Interest income (expense), net
   
(17,423
)
   
(120
)
   
636
     
     
(16,907
)
Equity in earnings of subsidiaries
   
14,061
     
     
     
(14,061
)
   
 
Other income (expense), net
   
(877
)
   
126
     
52
     
     
(699
)
Income (loss) before income taxes from continuing operations
   
205
     
10,652
     
5,402
     
(14,992
)
   
1,267
 
Income tax  (benefit) provision
   
(1,517
)
   
143
     
817
     
     
(557
)
Income (loss) from continuing operations
   
1,722
     
10,509
     
4,585
     
(14,992
)
   
1,824
 
Discontinued operations, net of tax
   
     
     
(102
)
   
     
(102
)
Net income (loss)
 
$
1,722
   
$
10,509
   
$
4,483
   
$
(14,992
)
 
$
1,722
 
 
                                       
Comprehensive income (loss)
 
$
2,195
   
$
10,486
   
$
4,957
   
$
(15,443
)
 
$
2,195
 
 
 
 
Six Months Ended June 30, 2013
 
(In thousands)
 
Parent
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
227,107
   
$
151,722
   
$
74,027
   
$
(109,928
)
 
$
342,928
 
Cost of goods sold
   
214,382
     
144,648
     
68,842
     
(109,928
)
   
317,944
 
Gross profit
   
12,725
     
7,074
     
5,185
     
     
24,984
 
Operating expenses
   
22,825
     
844
     
153
     
     
23,822
 
Income (loss) from operations
   
(10,100
)
   
6,230
     
5,032
     
     
1,162
 
Other income (expense):
                                       
Interest income (expense), net
   
(18,145
)
   
(529
)
   
823
     
     
(17,851
)
Equity in earnings of subsidiaries
   
8,378
     
     
     
(8,378
)
   
 
Other income (expense), net
   
(86
)
   
12
     
(222
)
   
     
(296
)
Income (loss) before income taxes from continuing operations
   
(19,953
)
   
5,713
     
5,633
     
(8,378
)
   
(16,985
)
Income tax  provision
   
1,356
     
     
1,517
     
     
2,873
 
Income (loss) from continuing operations
   
(21,309
)
   
5,713
     
4,116
     
(8,378
)
   
(19,858
)
Discontinued operations, net of tax
   
     
     
(1,451
)
   
     
(1,451
)
Net income (loss)
 
$
(21,309
)
 
$
5,713
   
$
2,665
   
$
(8,378
)
 
$
(21,309
)
 
                                       
Comprehensive income (loss)
 
$
(20,561
)
 
$
5,713
   
$
3,413
   
$
(9,126
)
 
$
(20,561
)


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

 
 
Six Months Ended June 30, 2014
 
(In thousands)
 
Parent
Company
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
   
   
   
 
Net income (loss)
 
$
1,722
   
$
10,509
   
$
4,483
   
$
(14,992
)
 
$
1,722
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                                       
Depreciation
   
5,488
     
8,864
     
2,091
     
     
16,443
 
Amortization – deferred financing costs
   
1,239
     
     
     
     
1,239
 
Amortization – other intangible assets
   
3,975
     
84
     
     
     
4,059
 
Loss on disposal of assets
   
322
     
57
     
27
     
     
406
 
Deferred income taxes
   
(292
)
   
     
277
     
     
(15
)
Non-cash stock-based compensation
   
1,209
     
     
     
     
1,209
 
Equity in earnings of subsidiaries and affiliates
   
(14,061
)
   
     
     
14,061
     
 
Change in other operating items
   
9,268
     
(30,790
)
   
(1,811
)
   
931
     
(22,402
)
Net cash provided by (used in) operating activities
   
8,870
     
(11,276
)
   
5,067
     
     
2,661
 
 
                                       
CASH FLOWS FROM INVESTING ACTIVITIES:
                                       
Purchases of property, plant, and equipment
   
(6,236
)
   
(8,356
)
   
(156
)
   
     
(14,748
)
Payments on notes receivable
   
(64,880
)
   
(66,615
)
   
(45
)
   
131,540
     
 
Proceeds from notes receivable
   
25,568
     
45,700
     
45
     
(71,313
)
   
 
Other
   
(671
)
   
1,235
     
     
     
564
 
Net cash provided by (used in) investing activities
   
(46,219
)
   
(28,036
)
   
(156
)
   
60,227
     
(14,184
)
 
                                       
CASH FLOWS FROM FINANCING ACTIVITIES
                                       
Proceeds from notes payable
   
76,615
     
64,925
     
     
(131,540
)
   
10,000
 
Payment on notes payable
   
(45,700
)
   
(25,613
)
   
     
71,313
     
 
Net cash provided by (used in) financing activities
   
30,915
     
39,312
     
     
(60,227
)
   
10,000
 
Net increase (decrease) in cash and cash equivalents
   
(6,434
)
   
     
4,911
     
     
(1,523
)
Cash and cash equivalents, beginning of period
   
31,018
     
     
2,408
     
     
33,426
 
Cash and cash equivalents, end of period
 
$
24,584
   
$
   
$
7,319
   
$
   
$
31,903
 
 
 
 
Six Months Ended June 30, 2013
 
(In thousands)
 
Parent
Company
   
Guarantor
Subsidiaries
   
Non-guarantor
Subsidiaries
   
Eliminations
   
Total
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
   
   
   
 
Net income (loss)
 
$
(21,309
)
 
$
5,713
   
$
2,665
   
$
(8,378
)
 
$
(21,309
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                                       
Depreciation
   
5,330
     
9,318
     
3,200
     
     
17,848
 
Amortization – deferred financing costs
   
1,380
     
     
     
     
1,380
 
Amortization – other intangible assets
   
4,452
     
83
     
     
     
4,535
 
(Gain) loss on disposal of assets
   
949
     
8
     
 (15
)    
     
942
 
Deferred income taxes
   
1,356
     
     
     
     
1,356
 
Non-cash stock-based compensation
   
1,353
     
     
     
     
1,353
 
Equity in earnings of subsidiaries and affiliates
   
(8,378
)
   
     
     
8,378
     
-
 
Change in other operating items
   
(12,882
)
   
(4,325
)
   
(1,253
)
   
     
(18,460
)
Net cash provided by (used in) operating activities
   
(27,749
)
   
10,797
     
4,597
     
     
(12,355
)
 
                                       
CASH FLOWS FROM INVESTING ACTIVITIES:
                                       
Purchases of property, plant, and equipment
   
(6,648
)
   
(11,575
)
   
(3,237
)
   
     
(21,460
)
Other
   
14,944
     
     
     
     
14,944
 
Net cash provided by (used in) investing activities
   
8,296
     
(11,575
)
   
(3,237
)
   
     
(6,516
)
 
                                       
CASH FLOWS FROM FINANCING ACTIVITIES
                                       
Proceeds from debt issuance
   
25,000
     
     
     
     
25,000
 
Net increase (decrease) in cash and cash equivalents
   
5,547
     
(778
)
   
1,360
     
     
6,129
 
Cash and cash equivalents, beginning of period
   
24,113
     
(29
)
   
2,667
     
     
26,751
 
Cash and cash equivalents, end of period
 
$
29,660
   
$
(807
)
 
$
4,027
   
$
   
$
32,880
 



Note 12 – Changes in Accumulated Other Comprehensive Income (Loss) by Component


 
Three Months Ended June 30, 2014
 
(In thousands)
Pension Plan
 
Post Retirement
Plan
 
Total
 
Accumulated other comprehensive income (loss) as of March 31, 2014
 
$
(20,433
)
 
$
2,054
   
$
(18,379
)
Amounts reclassified from accumulated other comprehensive income (loss)
   
121
     
19
     
140
 
Accumulated other comprehensive income (loss) as of June 30, 2014
 
$
(20,312
)
   
2,073
   
$
(18,239
)
 
 
Six Months Ended June 30, 2014
 
(In thousands)
Pension Plan
 
Post Retirement
Plan
 
Total
 
Accumulated other comprehensive income (loss) as of December 31, 2013
 
$
(20,429
)
 
$
1,717
   
$
(18,712
)
Amounts reclassified from accumulated other comprehensive income (loss)
   
117
     
356
     
473
 
Accumulated other comprehensive income (loss) as of June 30, 2014
 
$
(20,312
)
   
2,073
   
$
(18,239
)


Reclassifications out of Accumulated Other Comprehensive Income (loss):
 
 
 
Three and Six Months Ended June 30, 2014
 
(In thousands)
 
Pension Plan
   
Post Retirement
Plan
   
Total
 
Amortization of Pension and Postretirement Plan items
 
   
   
 
Prior Service Costs
 
$
22
   
$
(18
)
 
$
4
 
Actuarial (losses)
   
101
     
157
     
258
 
Foreign currency translation related to pension and postretirement plans
   
261
     
28
     
289
 
Total before tax
   
384
     
167
     
551
 
Tax expense
   
(78
)
   
     
(78
)
Total reclassified for the period
 
$
306
   
$
167
   
$
473
 


The total amount reclassified from Accumulated Other Comprehensive Income during the six months ended June 30, 2014 of $0.5 million included $0.3 million which relates to the period ended March 31, 2014.


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

The accompanying unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP and such principles are applied on a basis consistent with the information reflected in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission ("SEC").  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC.  In the opinion of management, the interim financial information includes all adjustments and accruals, consisting primarily of normal recurring adjustments, which are necessary for a fair presentation of results for the respective interim periods.  The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2014 or any interim period.  Except for the historical information contained herein, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties.  Our actual results may differ materially from those indicated by such forward-looking statements.

Overview

We are a leading North American manufacturer and supplier of commercial vehicle components. Our products include commercial vehicle wheels, wheel-end components and assemblies, and ductile and gray iron castings. We market our products under some of the most recognized brand names in the industry, including Accuride, Gunite, and Brillion. We serve the leading OEMs and their related aftermarket channels in most major segments of the commercial vehicle market, including heavy- and medium-duty trucks, commercial trailers, light trucks, buses, as well as specialty and military vehicles.

Our primary product lines are standard equipment used by many North American heavy- and medium-duty truck OEMs as well as commercial trailer OEMs.

Our diversified customer base includes substantially all of the leading commercial vehicle OEMs, such as Daimler Truck North America, LLC, with its Freightliner and Western Star brand trucks, PACCAR, with its Peterbilt and Kenworth brand trucks, Navistar, with its International brand trucks, and Volvo/Mack, with its Volvo and Mack brand trucks. Our primary commercial trailer customers include leading commercial trailer OEMs, such as Great Dane Limited Partnership, Utility Trailer Manufacturing Company, and Wabash National, Inc. Our major light truck customer is General Motors Corporation. Our product portfolio is supported by strong sales, marketing and design engineering capabilities and through June 30, 2014, is manufactured in eight strategically located, technologically-advanced facilities across the United States, Mexico and Canada.

The heavy- and medium-duty truck and commercial trailer markets, the related aftermarket, and the global industrial, construction, mining, and agricultural markets are the primary drivers of our sales. The commercial vehicle manufacturing and replacement part markets are, in turn, directly influenced by conditions in the North American truck industry and generally by conditions in other industries which indirectly impact the truck industry, such as the home-building industry, and by overall economic growth and consumer spending.  The global industrial, construction, and mining markets, that Brillion serve, are driven by more macro- and global economic conditions such as coal, oil, and gas exploration, demand for mined products that are converted into industrial raw materials, such as steel, iron, copper, and global construction trends.  The North American commercial vehicle market is currently experiencing a cyclical recovery, which is projected to continue into 2015. The global industrial and construction markets are forecasted to experience modest growth, or remain flat.  Based upon the overall commercial vehicle industry production forecasts and global industrial, construction and mining markets, we expect results from operations to show improvement in 2014 compared to 2013.  We cannot, however, accurately predict the North American commercial vehicle and global industrial and commercial markets and any deterioration of the economic recovery may lead to reduced spending and deterioration in our end markets and have an adverse effect on our results of operations.

Our markets and those of our customers are becoming increasingly competitive.   In the North American commercial vehicle market, OEMs are competing to maintain or increase market share in the face of evolving emissions regulations, increasing customer emphasis on light weight and fuel efficient platforms and an uncertain economic recovery.  Shifts in the market share held by each of our OEM customers impact our business to varying degrees depending on whether our products are designated as standard or optional equipment on the various platforms at each OEM.  Recently, a number of platforms on which our products are standard equipment have lost market share, which has impacted our business.  We are also continuing to see the impacts of low cost country sourced products in our markets, which has particularly impacted the aftermarket for steel wheels and brake drums.  Further, broader economic weakness in industrial manufacturing impacted our Brillion business through reduced customer orders in 2013 and the first half of 2014.

In response to these conditions, we are working to increase our market share and to control costs while positioning our businesses to compete at current demand levels and maintain capacity to meet the recoveries in our markets as they occur, which history has shown can be swift and steep.  For example, we have implemented lean manufacturing practices across our facilities, which have resulted in reduced working capital levels that free up cash for other priorities.  We have also completed most of our previously disclosed capital investment projects that have selectively increased our manufacturing capacity on core products, reduced labor and manufacturing costs and improved product quality.  Additionally, we have introduced and will continue to develop and introduce new products and technologies that we believe offer better value to customers.  Further, we have been pursuing new business opportunities at OEM customers and are working to increase our market share at OEMs by developing our relationships with large fleets in order to "pull through" our products when the fleets order new equipment.  We continue to monitor competition from products manufactured in low cost countries and will take steps to combat unfair trade practices, such as filing anti-dumping petitions with the United States government, as warranted.

In addition to improving our operations, we have taken steps to improve our liquidity to ensure access to the funds required to finance our business throughout the economic cycle and to focus our efforts on our core markets.  On July 11, 2013, we entered into a new senior secured asset-based lending facility (the "New ABL Facility") and used borrowing under that facility and cash on hand to repay all amounts outstanding under the our prior ABL Facility, and to pay related fees and expenses.  For additional information on our New ABL Facility, see "Capital Resources and Liquidity".  Further, on August 1, 2013, the Company announced that it completed the sale of substantially all of the assets of its non-core Imperial Group business to Imperial Group Manufacturing, Inc., a new company formed and capitalized by Wynnchurch Capital for total cash consideration of $30.0 million at closing, plus a contingent earn-out totaling up to $2.25 million. A portion of the proceeds from the sale were used to repay outstanding indebtedness under our New ABL Facility.

We believe that cash from operations, existing cash reserves, and our ABL revolving credit facility will provide adequate funds for our working capital needs, planned capital expenditures and cash interest payments through 2014 and the foreseeable future.

Results of Operations

The following tables set forth certain income statement information for Accuride for the three months ended June 30, 2014 and June 30, 2013
 
 
 
Three Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Net sales
 
$
181,575
   
$
179,941
 
Cost of goods sold
   
159,153
     
161,235
 
Gross profit
   
22,422
     
18,706
 
Operating expenses
   
10,118
     
12,747
 
Income from operations
   
12,304
     
5,959
 
Interest expense, net
   
(8,487
)
   
(9,157
)
Other loss, net
   
(169
)
   
(441
)
Income tax provision (benefit)
   
(1,461
)
   
1,464
 
Income (loss) from continuing operations
   
5,109
     
(5,103
)
Discontinued operations, net of tax
   
186
     
(259
)
Net income (loss)
 
$
5,295
   
$
(5,362
)
 
Net Sales
 
 
 
Three Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Wheels
 
$
101,155
   
$
99,468
 
Gunite
   
48,304
     
51,207
 
Brillion
   
32,116
     
29,266
 
Total
 
$
181,575
   
$
179,941
 

Our net sales for the three months ended June 30, 2014, were $181.6 million, which was an increase of 0.9 percent, compared to net sales of $179.9 million for the three months ended June 30, 2013.  Of the total increase, approximately $0.4 million was a result of an increase  in volume demand due to increased production levels of the commercial vehicle market and its aftermarket segments in North America, as well as reduced sales from our Gunite segment due to the loss of OEM business.  The increased vehicle production is a result of continued recovery of the commercial vehicle end market.  The remaining $1.3 million increase of net sales recognized was related to pricing, which primarily represented a pass-through of fluctuating raw material and commodity costs.

Net sales for our Wheels segment increased 1.7 percent during the three months ended June 30, 2014 compared to the same period in 2013 primarily due to increased volume from our OEM and aftermarket customers.  Net sales for our Gunite segment decreased 5.7 percent due to a lower demand in the aftermarket.  Our Gunite products have a higher concentration of aftermarket demand, primarily due to the brake drum products that Gunite produces, which are replaced more often than our other products.  Our Brillion segment's net sales increased by 9.7 percent due to a combination of higher demand in the industrial and agricultural markets and increased pricing.

North American commercial vehicle industry production builds as reported by ACT Publications were as follows:

 
For the three months ended June 30,
 
2014
 
2013
Class 8
73,566
 
67,064
Classes 5-7
59,381
 
53,747
Trailer
70,564
 
63,822

While we serve the commercial vehicle aftermarket segment, there is no industry data that enables a comparison of our aftermarket sales to industry demand from period to period.

Cost of Goods Sold

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

 
 
Three Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Raw materials
 
$
78,842
   
$
79,350
 
Depreciation
   
8,174
     
8,314
 
Labor and other overhead
   
72,137
     
73,571
 
Total
 
$
159,153
   
$
161,235
 

Raw materials costs decreased by $0.5 million, or 0.6 percent, during the three months ended June 30, 2014 due to more favorable pricing and operating efficiencies in the production process.  The price decreases were primarily related to steel and aluminum, which represent the majority of our raw material costs.

Depreciation decreased by $0.1 million, or 1.7 percent during the three months ended June 30, 2014 primarily due to the life of the existing equipment in comparison to new capital acquisitions.

Labor and overhead costs decreased by $1.4 million, or 1.9 percent, due to operational efficiencies.

Operating Expenses

 
 
Three Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Selling, general, and administrative
 
$
6,564
   
$
9,222
 
Research and development
   
1,508
     
1,263
 
Depreciation and amortization
   
2,046
     
2,262
 
Total
 
$
10,118
   
$
12,747
 

Selling, general, and administrative costs decreased by $2.7 million in 2014 compared to the same period in 2013 primarily due to reductions in spending and staffing related to our ongoing cost improvement initiatives.  Depreciation and amortization expenses were reduced due to reductions in depreciation expense.


Operating Income (Loss)

 
 
Three Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Wheels
 
$
11,857
   
$
11,751
 
Gunite
   
7,243
     
3,323
 
Brillion
   
489
     
1,855
 
Corporate/Other
   
(7,285
)
   
(10,970
)
Total
 
$
12,304
   
$
5,959
 
 
Operating income for the Wheels segment was 11.7 percent of its net sales for the three months ended June 30, 2014 compared to 11.8 percent for the three months ended June 30, 2013.  We continue to see stronger demand for aluminum wheels being driven by the commercial vehicle fleets' desire to reduce fuel and maintenance costs, along with total vehicle weight.

The operating income for the Gunite segment was 15.0 percent of its net sales for the three months ended June 30, 2014 and 6.5 percent for the three months ended June 30, 2013.  During the three months ended June 30, 2014, Gunite experienced increased efficiencies from the operational restructuring that began during 2013.

Operating income for the Brillion segment was 1.5 percent of its net sales for the three months ended June 30, 2014 compared to 6.3 percent for same period in 2013 due to $1.0 million in non-cash inventory adjustments and higher maintenance costs.

The operating losses for the Corporate segment were 4.0 percent of consolidated net sales for the three months ended June 30, 2014 as compared to 6.1 percent for the comparative period in 2013.  Overall, our Corporate costs have been curtailed through reduced staffing and other general expenses related to our ongoing cost improvement initiatives.

Interest Expense

Net interest expense decreased $0.7 million to $8.5 million for the three months ended June 30, 2014 from $9.2 million for the three months ended June 30, 2013 due to decreased debt from 2013 to 2014.

Income Tax Provision

We recognized an income tax benefit of $1.5 million in the three months ended June 30, 2014 as a result of of a tax benefit of $0.6 million due to changing tax legislation in Mexico and a $1.6 million reduction in our liability for uncertain tax positions, offset by a current provision of $0.7 million.  This was $3.0 million higher than our provision for the three months ended June 30, 2013.

Our effective tax rate is (40.0) percent and (40.2) percent for the three months ended June 30, 2014 and 2013, respectively.  The effective tax rate for the quarter is impacted by the relative impact of discrete items, which are accounted for as they occur, as well as the recognition of a full valuation against deferred tax assets for our U.S. operations.

We have assessed the need to maintain a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Due to our recent history of U.S. operating and taxable losses, the inconsistency of income, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.


Comparison of Financial Results for the Six Months Ended June 30, 2014 and 2013
 
 
 
Six Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Net sales
 
$
348,359
   
$
342,928
 
Cost of goods sold
   
308,914
     
317,944
 
Gross profit
   
39,445
     
24,984
 
Operating expenses
   
20,572
     
23,822
 
Income from operations
   
18,873
     
1,162
 
Interest expense, net
   
(16,907
)
   
(17,851
)
Other loss, net
   
(699
)
   
(296
)
Income tax (benefit) provision
   
(557
)
   
2,873
 
Income (loss) from continuing operations
   
1,824
     
(19,858
)
Discontinued operations, net of tax
   
(102
)
   
(1,451
)
Net income (loss)
 
$
1,722
   
$
(21,309
)

Net Sales

 
 
Six Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Wheels
 
$
193,373
   
$
192,630
 
Gunite
   
92,277
     
90,603
 
Brillion
   
62,709
     
59,695
 
Total
 
$
348,359
   
$
342,928
 

Our net sales for the six months ended June 30, 2014, were $348.4 million, which was an increase of 1.6 percent, compared to net sales of $342.9 million for the six months ended June 30, 2013.  Of the total increase, approximately $3.4 million was a result of increased demand by commercial vehicle OEM's and in their related aftermarkets.  The remaining $2.1 million increase of net sales recognized was related to higher pricing, which primarily represented a pass-through of fluctuating raw material and commodity costs.

Net sales for our Wheels segment increased nearly 0.4 percent during the six months ended June 30, 2014 compared to the same period in 2013 primarily due to increased demand from OEM and aftermarket customers.  Net sales for our Gunite segment increased 1.9 percent due to higher demand in the aftermarket.  Our Gunite products have a higher concentration of aftermarket demand, primarily due to the brake drum products, which are replaced more often than our other products.  Our Brillion segment's net sales increased by 5.0 percent due to increased demand in the global industrial and agricultural markets.

North American commercial vehicle industry production builds as reported by ACT Publications were as follows:

 
For the six months ended June 30,
 
2014
 
2013
Class 8
140,519
 
121,801
Classes 5-7
110,216
 
98,568
Trailer
129,625
 
122,866

While we serve the commercial vehicle aftermarket segment, there is no industry data that enables a comparison of our aftermarket sales to industry demand from period to period.


Cost of Goods Sold

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

 
 
Six Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Raw materials
 
$
152,821
   
$
156,066
 
Depreciation
   
16,411
     
17,098
 
Labor and other overhead
   
139,682
     
144,780
 
Total
 
$
308,914
   
$
317,944
 

Raw materials costs decreased by $3.3 million, or 2.1 percent, during the six months ended June 30, 2014 due to decreases in purchase volume of approximately $2.0 million and price reductions of approximately $1.3 million.  The price reductions were primarily related to steel and aluminum, which represent the majority of our raw material costs.

Depreciation decreased by $0.7 million, or 4.0, percent during the six months ended June 30, 2014, primarily due to the age of the fixed assets in relation to the amount of new capital spending.

Labor and overhead costs decreased by $5.1 million, or 3.5 percent, due to operational efficiencies.

Operating Expenses

 
 
Six Months Ended June 30,
 
(In thousands)
 
2014
   
2013
 
Selling, general, and administrative
 
$
13,674
   
$
16,762
 
Research and development
   
2,828
     
2,522
 
Depreciation and amortization
   
4,070
     
4,538
 
Total
 
$
20,572
   
$
23,822
 
 
Selling, general, and administrative costs decreased by $3.1 million and research and development costs increased by $0.3 million due to reductions in staffing and general spending and increased research and development activities.
 
Depreciation and amortization expenses were impacted due to reduced capital spending.
 
Operating Income (Loss)
 
 
 
Six Months Ended June 30,
 
(In thousands)
 
2013
   
2012
 
Wheels
 
$
21,599
   
$
17,494
 
Gunite
   
10,521
     
1,546
 
Brillion
   
1,764
     
2,430
 
Corporate/Other
   
(15,011
)
   
(20,308
)
Total
 
$
18,873
   
$
1,162
 
 
Operating income for the Wheels segment was 11.2 percent of its net sales for the six months ended June 30, 2014 compared to 9.1 percent for the six months ended June 30, 2013 due to higher earnings contributions from higher sales demand.  We continue to experience strong aluminum wheel demand, driven by fleet requirements to reduce operating costs and vehicle weight.

The operating income for the Gunite segment was 11.4 percent of its net sales for the six months ended June 30, 2014 and 1.7 percent for the six months ended June 30, 2013.  We continue to see growth in the demand for Gunite product and benefit from operating efficiency initiatives that we have implemented with respect to our Gunite business.

Operating income for the Brillion segment was 2.8 percent of its net sales for the six months ended June 30, 2014 compared to 4.1 percent for same period in 2013.   Brillion's results were impacted by $1.0 million in non-cash inventory adjustments and higher maintenance costs.

The operating losses for the Corporate segment were 4.3 percent of  net sales from continuing operations for the six months ended June 30, 2014 as compared to 5.9 percent for the comparative period in 2013 resulting from decreased spending, as well as increased sales.  
Interest Expense

Net interest expense decreased $1.0 million to $16.9 million for the six months ended June 30, 2014 from $17.9 million for the six months ended June 30, 2013 due to decreased debt from 2013 to 2014.

Income Tax Provision

We recognized an income tax benefit of $0.6 million in the six months ended June 30, 2014 as a result of a $0.6 million benefit due to changing tax legislation in Mexico and a $1.6 million reduction in our liability for uncertain tax position, offset by a current provision of $1.6 million.  This was $3.5 million higher than our provision for the six months ended June 30, 2013.
 
Our effective tax rate is (44.0) percent and (16.9) percent for the six months ended June 30, 2014 and 2013, respectively.  The increase benefit was a primarily a result of changing tax legislation in Mexico and a reduction of our liability for uncertain tax positions.

We have assessed the need to maintain a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Due to our recent history of U.S. operating and taxable losses, the inconsistency of these profits, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.

Changes in Financial Condition

As of June 30, 2014, we had total assets of $636.6 million, compared to total assets of $611.8 million at December 31, 2013.  The $24.8 million, or 4.0%, increase in total assets primarily resulted from changes in working capital. We define working capital as current assets (excluding cash) less current liabilities.

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

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

(In thousands)
 
June 30,
2014
   
December 31,
2013
 
Accounts receivable
 
$
81,171
   
$
59,520
 
Inventories
   
46,216
     
39,329
 
Deferred income taxes (current)
   
3,932
     
3,806
 
Other current assets
   
11,841
     
13,187
 
Accounts payable
   
(63,786
)
   
(47,527
)
Accrued payroll and compensation
   
(9,898
)
   
(8,763
)
Accrued interest payable
   
(12,479
)
   
(12,535
)
Accrued workers compensation
   
(4,331
)
   
(4,373
)
Other current liabilities
   
(15,187
)
   
(16,801
)
Working capital
 
$
37,479
   
$
25,843
 

Significant changes in working capital included:

an increase in receivables of $21.7 million due to the comparative increase in revenue in the months leading up to the respective period-end dates;
an increase in inventory of $6.9 million due to increased demand and the building of inventory banks for the summer shut-down season; and
an increase in accounts payable of $16.3 million primarily due to and timing of purchases leading to the end of the respective periods.


Capital Resources and Liquidity

Our primary sources of liquidity during the six months ended June 30, 2014 were cash from operations, cash reserves and proceeds from a draw on our ABL Facility.  We believe that cash from operations, existing cash reserves, and our ABL facility will provide adequate funds for our working capital needs, planned capital expenditures and cash interest payments through 2014 and the foreseeable future.

As of June 30, 2014, we had $31.9 million of cash plus $40.1 million in availability under our ABL Facility for a total liquidity of $72.0 million.  As of December 31, 2013, we had $33.4 million in cash plus $30.2 million in availability under our ABL credit facility for total liquidity of $63.6 million.

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

Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2014 amounted to $2.7 million compared to a use of cash of $12.4 million for the period ended June 30, 2013.  The cash provided from the first six months of 2014 was a result of our positive net income offset by increased working capital requirements, primarily receivables, which are expected in an environment of increasing product demand.  During a period of increasing customer demand, our working capital needs also generally rise.

Investing Activities

Net cash used in investing activities totaled $14.2 million for the six months ended June 30, 2014 compared to a use of $6.5 million for the period ended June 30, 2013.  Our most significant cash outlays for investing activities are the purchases of property, plant and equipment.  During the six months ended June 30, 2014, the company spent $14.7 million for property, plant and equipment.  During the six months ended June 30, 2013, we entered into two sale/leaseback agreements for manufacturing equipment, and as a result, had cash inflows of $14.9 million from the gross proceeds of the sale of the equipment.  The leases are classified as operating leases.   Capital expenditures for 2014 are currently expected to be approximately $25 million, which we expect to fund through existing cash from operations, cash reserves, or from our ABL facility.  

Financing Activities

Cash provided by financing activities for the six months ended June 30, 2014 was $10.0 million draw from our new ABL compared to $25.0 for the six months ended June 30, 2013from a  draw on our Prior ABL facility.

Bank Borrowing

The Prior ABL Facility and the New ABL Facility

On July 29, 2010, we entered into our Prior ABL Facility, which was a senior secured asset based revolving credit facility, in an aggregate principal amount of up to $75.0 million, with the right to increase the availability under the facility by up to $25.0 million in the aggregate.  On February 7, 2012, we exercised our option to increase the loan commitments under the Prior ABL Facility by $25.0 million (for a total aggregate availability of $100.0 million) by entering into an ABL incremental agreement.  The Prior ABL Facility would have matured on July 29, 2014 and provided for loans and letters of credit in an aggregate amount up to the amount of the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $25.0 million to be available for the issuance of letters of credit.   Loans under the Prior ABL Facility bore interest at an annual rate equal to, at our option, either LIBOR plus 3.50% or Base Rate plus 2.75%, subject to changes based on our leverage ratio as defined in the Prior ABL Facility.

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

On July 11, 2013, we entered into the New ABL Facility and used $45.3 million of borrowings under the New ABL Facility and cash on hand to repay all amounts outstanding under the Prior ABL Facility and to pay related fees and expenses.

The New ABL Facility is a senior secured asset based credit facility in an aggregate principal amount of up to $100.0 million, consisting of a $90.0 revolving credit facility and a $10.0 million first-in last-out term facility, with the right, subject to certain conditions, to increase the availability under the facility by up to $50.0 million in the aggregate. The New ABL Facility currently matures on the earlier of (i) July 11, 2018 and (ii) 90 days prior to the maturity date of the Company's 9.5% first priority senior security notes due August 1, 2018, but may be extended under certain circumstances pursuant to the terms of the New ABL Facility.

The New ABL Facility provides for loans and letters of credit in an amount up to the aggregate availability under the facility, subject to meeting certain borrowing base conditions, with sub-limits of up to $10.0 million for swingline loans and $20.0 million for letters of credit.  Borrowings under the New ABL Facility bear interest through maturity at a variable rate based upon, at our option, either LIBOR or the base rate (which is the greatest of one-half of one percent in excess of the federal funds rate, 1.00% in excess of the one-month LIBOR rate and the Agent's prime rate), plus, in each case, an applicable margin.  The applicable margin for loans under the first-in last-out term facility that are (i) LIBOR loans ranges, based on the our average excess availability, from 2.75% to 3.25% per annum and (ii) base rate loans ranges, based on our average excess availability, from 1.00% to 1.50%.  The applicable margin for other advances under the New ABL Facility that are (i) LIBOR loans ranges, based on our average excess availability, from 1.75% to 2.25% and (ii) base rate loans ranges, based on our average excess availability, from 0.00% to 0.50%.

We must also pay an unused line fee equal to 0.25% per annum to the lenders under the New ABL Facility if utilization under the facility is greater than or equal to 50.0% of the total available commitments under the facility and a commitment fee equal to 0.375% per annum if utilization under the facility is less than 50.0% of the total available commitments under the facility. Customary letter of credit fees are also payable, as necessary.

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

Restrictive Debt Covenants.

Our credit documents   (the New ABL Facility and the indenture governing the senior secured notes) contain operating covenants that limit the discretion of management with respect to certain business matters.  These covenants place significant restrictions on, among other things, the ability to incur additional debt, to pay dividends, to create liens, to make certain payments and investments and to sell or otherwise dispose of assets and merge or consolidate with other entities.  In addition, the New ABL Facility contains a fixed charge coverage ratio covenant which will be applicable if the availability under the ABL Facility is less than 10.0% of the amount of the New ABL Facility.  If applicable, that covenant requires us to maintain a minimum ratio of adjusted EBITDA less capital expenditures made during such period (other than capital expenditures financed with the net cash proceeds of asset sales, recovery events, incurrence of indebtedness and the sale or issuance of equity interests) to fixed charges of 1.00 to 1.00.  We are not currently in a compliance period, and we expect to be in compliance with all debt covenants, to the extent applicable, through the next twelve months.

However, we continue to operate in challenging economic and commercial environments and our ability to maintain liquidity and comply with our debt covenants may be affected by economic or other conditions that are beyond our control and which are difficult to predict.

Off-Balance Sheet Arrangements.

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

Critical Accounting Policies and Estimates.

We have made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America.  Actual results could differ significantly from those estimates under different assumptions and conditions.  We included in our Form 10-K for the year ended December 31, 2013 a discussion of our most critical accounting policies, which are those that have a material impact on our financial condition or operating performance and require management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Cautionary Statements Regarding Forward-Looking Statements

In this report, we have made various statements regarding current expectations or forecasts of future events, which speak only as of the date the statements, are made.  These statements are "forward-looking statements" within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements are also made from time-to-time in press releases and in oral statements made by the officers of Accuride.  Forward-looking statements are identified by the words "estimate," "project," "anticipate," "will continue," "will likely result," "expect," "intend," "believe," "plan," "predict" and similar expressions.  Forward looking statements also include, but are not limited to, statements regarding commercial vehicle market recovery, projections of revenue, income, loss, or working capital, capital expenditure levels, ability to mitigate rising raw material costs through increases in selling prices, plans for future operations, financing needs, the ultimate outcome and impact of any litigation involving Accuride, the sufficiency of our capital resources and plans and assumptions relating to the foregoing.
 
Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect.  Therefore, undue reliance should not be placed upon these estimates and statements.  We cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these "forward-looking statements."  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.  You are advised to consult further disclosures we may make on related subjects in our filings with the SEC.  In addition to other factors discussed in this report, some of the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, without limitation, the following:

a reversal of recent improvements in, or less robust than anticipated commercial vehicle industry recovery in 2014 and 2015 could have a material adverse effect on our business;
a delayed or less robust than anticipated global industrial and agricultural industries recovery in 2014 and 2015 could have a material adverse effect on our business;
the loss of a major customer could have a material adverse effect on our business;
competition from products sourced in low cost countries could have an adverse effect on our business;
the demands of original equipment manufacturers for price reductions may adversely affect profitability;
we use a substantial amount of raw steel, aluminum, cast scrap, and foundry steel and are vulnerable to industry shortages, significant price increases, and surcharges, some of which we may not be able to pass through to our customers;
our credit documents contain significant financial and operating covenants that may limit the discretion of management with respect to certain business matters.  We must also meet certain financial ratios and tests as described above.  Failure to comply with the obligations contained in the debt agreements could result in an event of default, and possibly the acceleration of the related debt and the acceleration of debt under other instruments evidencing debt that may contain cross-acceleration or cross-default provisions;
a labor strike may disrupt our supply of products to our customer base;
we may encounter increased competition in the future from existing competitors or new competitors;
our significant indebtedness may have important consequences, including, but not limited to, impairment of our ability to obtain additional financing, reduction of funds available for operations and business opportunities or limitations on our ability to dispose of assets;
significant volatility in the foreign currency markets could have an adverse effect on us;
our ability to service our indebtedness is dependent upon operating cash flow;
an interruption of performance of our machinery and equipment could have an adverse effect on us;
an interruption in supply of metals could reduce our ability to obtain favorable sourcing of such raw materials;
an adverse judgment in legal proceedings could have an adverse effect on our business;
we may be subject to liability under certain environmental laws and the cost of compliance with these regulations could have a material adverse effect on our financial condition and may adversely affect our ability to sell or rent such property or to borrow using such property as collateral; and
our success depends largely upon the abilities and experience of certain key management personnel and the loss of the services of one or more of these key personnel could have a negative impact on our business.

For further information, refer to the business description and additional risk factors sections included in our Form 10-K for the year ended December 31, 2013, as filed with the SEC.


Item 3.                            Quantitative and Qualitative Disclosures about Market Risk

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

Foreign Currency Risk

Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures to maximize the overall effectiveness of our foreign currency derivatives. The principal currencies of exposure are the Canadian Dollar and Mexican Peso. From time to time, we use foreign currency financial instruments to offset the impact of the variability in exchange rates on our operations, cash flows, assets and liabilities.  At June 30, 2014, there were no foreign exchange forward contracts. The counterparty to the foreign exchange contracts is a financial institution with an investment grade credit rating. The use of forward contracts protects our cash flows against unfavorable movements in exchange rates, to the extent of the amount under contract.


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


Raw Material/Commodity Price Risk

We rely upon the supply of certain raw materials and commodities in our production processes, and we have entered into firm purchase commitments for certain metals and natural gas. Additionally, from time to time, we use commodity price swaps and futures contracts to manage the variability in certain commodity prices on our operations and cash flows. At June 30, 2014 we had no open commodity price swaps or futures contracts.

Interest Rate Risk

We use long-term debt as a primary source of capital. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for our long-term fixed-rate debt and other types of long-term debt at June 30, 2014:

(Dollars in thousands)
 
2014
   
2015
   
2016
   
2017
   
2018
   
Thereafter
   
Total
   
Fair
Value
 
Long-term Debt:
 
   
   
   
   
   
   
   
 
Fixed Rate
   
     
     
     
   
$
310,000
     
   
$
310,000
   
$
319,610
 
Average Rate
   
     
     
     
     
9.50
%
   
     
9.50
%
       
Variable Rate
   
     
     
     
   
$
35,000
     
   
$
35,000
   
$
35,000
 
Average Rate
   
     
     
     
     
2.5
%
   
     
2.5
%
       



Item 4. Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting

There have been no changes to our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting during our most recent quarter.



PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

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


Item 6. Exhibits
 
Exhibit No.   
 
 
Description
 
 
 
 
2.1
 
Agreement and Plan of Merger, dated as of December 24, 2004, by and among Accuride Corporation, Amber Acquisition Corp., Transportation Technologies Industries, Inc., certain signing stockholders and the Company Stockholders Representatives. Previously filed as an exhibit to the Form 8-K filed on December 30, 2004 and incorporated herein by reference.
2.2
 
Amendment to Agreement and Plan of Merger, dated as of January 28, 2005, by and among Accuride Corporation, Amber Acquisition Corp., Transportation Technologies Industries, Inc. certain signing stockholders and the Company Stockholders Representatives. Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and incorporated herein by reference.
2.3
 
Third   Amended Joint Plan of Reorganization for Accuride Corporation , et al. Previously filed as an exhibit to the Form 8-K filed on February 22, 2010, and incorporated herein by reference.
2.4
 
Confirmation Order for Third Amended Plan of Reorganization.  Previously filed as an exhibit to the Form 8-K filed on February 22, 2010, and incorporated herein by reference.
2.5
 
Stock Purchase Agreement by and among Accuride Corporation, Truck Components, Inc., Fabco Automotive Corporation and Fabco Holdings Inc., dated September 26, 2011.  Previously filed as an exhibit to the Form 8-K filed on September 30, 2011, and incorporated herein by reference.
3.1
 
Amended and Restated Certificate of Incorporation of Accuride Corporation. Previously filed as an exhibit to the Form 8-K (Acc. No. 0001104659-10-012168) filed on March 4, 2010, and incorporated herein by reference.
3.2
 
Certificate of Amendment to the Amended and Restated Certificate of Incorporation.  Previously filed as an exhibit to the Form 8-K (ACC No. 0001104659-10-059191) filed on November 18, 2010, and incorporated herein by reference.
3.3
 
Amended and Restated Bylaws of Accuride Corporation. Previously filed as an exhibit to the Form 8-K (Acc. No. 0001104659-10-004054) filed on February 1, 2011, and incorporated herein by reference.
4.1
 
Registration Rights Agreement, dated February 26, 2010, by and between Accuride Corporation and each of the Holders party thereto. Previously filed as an exhibit to the Form 8-K (Acc. No. 0001104659-10-012168) filed on March 4, 2010 and incorporated herein by reference.
4.2
 
Indenture, dated as of July 29, 2010, by and among Accuride Corporation, the guarantors named therein, Wilmington Trust FSB, as trustee and Deutsche Bank Trust Company Americas, with respect to 9.5% First Priority Senior Secured Notes due 2018. Previously filed as an exhibit to the Form 8-K filed on August 2, 2010 (Acc. No. 0001104659-10-012168) and incorporated herein by reference.
4.3
 
Form of 9.5% First Priority Senior Secured Notes due 2018. Previously filed as an exhibit to Form 8-K filed on August 2, 2010 and incorporated herein by reference.
4.4
 
Intercreditor Agreement, dated as of July 29, 2010, among Deutsche Bank Trust Company Americas, as initial ABL Agent, and Deutsche Bank Trust Company Americas, as Senior Secured Notes Collateral Agent. Previously filed as an exhibit to the Form 8-K filed on August 2, 2010 (Acc. No. 0001104659-10-012168) and incorporated herein by reference.
4.5
 
Joinder and Amendment to Intercreditor Agreement, dated July 11, 2013, by and among Wells Fargo, National Association, a national banking association, as the New ABL Agent and Deutsche Bank Trust Company Americas, as Senior Secured Notes Collateral Agent. Previously filed as an exhibit to the Form 8-K filed on July 12, 2013 and incorporated herein by reference.
10.1*
 
Amended and Restated Accuride Corporation Incentive Compensation Plan. Previously filed as an exhibit to the Form 8-K filed on April 29, 2014 and incorporated by reference herein.

10.2*
 
Accuride Corporation Second Amended and Restated 2010 Incentive Award Plan. Previously filed as an exhibit to the Form 8-K filed on April 29, 2014 and incorporated by reference herein.
31.1†
 
Section 302 Certification of Richard F. Dauch in connection with the Quarterly Report on Form 10-Q on Accuride Corporation for the period ended June 30, 2014.
31.2†
 
Section 302 Certification of Gregory A. Risch in connection with the Quarterly Report on Form 10-Q of Accuride Corporation for the period ended June 30, 2014.
32.1††
 
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.INS†
 
XBRL Instance Document
101.SCH†
 
XBRL Taxonomy Extension Schema Document
101.CAL†
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB†
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE†
 
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF†
 
XBRL Taxonomy Extension Definition Linkbase Document



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


SIGNATURES

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

ACCURIDE CORPORATION

/s/ RICHARD F. DAUCH
 
Dated:   July 28, 2014
Richard F. Dauch
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer)
 
 
 
 
 
/s/ GREGORY A. RISCH
 
Dated:   July 28, 2014
Gregory A. Risch
 
 
Vice President and Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)
 
 

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