SEC Info - Cooper-Standard Holdings Inc.

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		Alternative Formats (Word, et al.) Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Changes in Equity Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Operations Controls and Procedures Exhibits Financial Statements (unaudited) Management's Discussion and Analysis of Financial Condition and Results of Operations Notes to Condensed Consolidated Financial Statements Part I. Financial Information Part Ii. Other Information Quantitative and Qualitative Disclosures About Market Risk Risk Factors Signatures Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Part I. Financial Information
"	Financial Statements (unaudited)
"	Condensed Consolidated Statements of Operations
"	Condensed Consolidated Statements of Comprehensive Income (Loss)
"	Condensed Consolidated Balance Sheets
"	Condensed Consolidated Statements of Changes in Equity
"	Condensed Consolidated Statements of Cash Flows
"	Notes to Condensed Consolidated Financial Statements
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Quantitative and Qualitative Disclosures About Market Risk
"	Controls and Procedures
"	Part Ii. Other Information
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Exhibits
"	Signatures

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM i 10-Q

___________________________________

(Mark One)



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

For the quarterly period ended i March 31, 2020



i ☐	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: i 001-36127

______________________________

i COOPER-STANDARD HOLDINGS INC.

(Exact name of registrant as specified in its charter)

______________________________



i Delaware		i 20-1945088
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

i 40300 Traditions Drive

i Northville, i Michigan i 48168

(Address of principal executive offices)

(Zip Code)

( i 248) i 596-5900

(Registrant’s telephone number, including area code)

______________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
i Common Stock, par value $0.001 per share	i CPS	i New York Stock Exchange

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. i Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). i Yes ☒ No ☐

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



i Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	i ☐
		Emerging growth company	i ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of May 5, 2020, there were i 16,884,542 shares of the registrant’s common stock, $0.001 par value, outstanding.

COOPER-STANDARD HOLDINGS INC.

Form 10-Q

For the period ended March 31, 2020

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollar amounts in thousands except per share amounts)



	Three Months Ended March 31,
	2020			2019
Sales	$	i 654,890		$	i 877,995
Cost of products sold	i 611,747			i 762,490
Gross profit	i 43,143			i 115,505
Selling, administration & engineering expenses	i 70,671			i 86,974
Amortization of intangibles	i 4,450			i 3,775
Restructuring charges	i 7,276			i 17,715
Impairment of assets held for sale	i 74,079			i —
Other impairment charges	i 977			i —
Operating (loss) profit	( i 114,310		)	i 7,041
Interest expense, net of interest income	( i 10,237		)	( i 11,932		)
Equity in earnings of affiliates	i 1,431			i 2,358
Other expense, net	( i 3,440		)	( i 796		)
Loss before income taxes	( i 126,556		)	( i 3,329		)
Income tax (benefit) expense	( i 14,117		)	i 2,034
Net loss	( i 112,439		)	( i 5,363		)
Net loss (income) attributable to noncontrolling interests	i 1,851			( i 52		)
Net loss attributable to Cooper-Standard Holdings Inc.	$	( i 110,588	)	$	( i 5,415	)

Loss per share:
Basic	$	( i 6.55	)	$	( i 0.31	)
Diluted	$	( i 6.55	)	$	( i 0.31	)

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollar amounts in thousands)



	Three Months Ended March 31,
	2020			2019
Net loss	$	( i 112,439	)	$	( i 5,363	)
Other comprehensive (loss) income:
Currency translation adjustment	( i 28,889		)	i 1,970
Benefit plan liabilities adjustment, net of tax	i 2,682			i 1,387
Fair value change of derivatives, net of tax	( i 10,076		)	i 1,253
Other comprehensive (loss) income, net of tax	( i 36,283		)	i 4,610
Comprehensive loss	( i 148,722		)	( i 753		)
Comprehensive loss (income) attributable to noncontrolling interests	i 2,358			( i 423		)
Comprehensive loss attributable to Cooper-Standard Holdings Inc.	$	( i 146,364	)	$	( i 1,176	)

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands except share amounts)



	March 31, 2020			December 31, 2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	i 301,841		$	i 359,536
Accounts receivable, net	i 335,827			i 423,155
Tooling receivable, net	i 139,049			i 148,175
Inventories	i 168,036			i 143,439
Prepaid expenses	i 27,859			i 34,452
Other current assets	i 94,191			i 93,513
Assets held for sale	i 25,735			i —
Total current assets	i 1,092,538			i 1,202,270
Property, plant and equipment, net	i 909,511			i 988,277
Operating lease right-of-use assets, net	i 113,090			i 83,376
Goodwill	i 141,870			i 142,187
Intangible assets, net	i 74,306			i 84,369
Other assets	i 152,948			i 135,103
Total assets	$	i 2,484,263		$	i 2,635,582

Liabilities and Equity
Current liabilities:
Debt payable within one year	$	i 62,530		$	i 61,449
Accounts payable	i 357,003			i 426,055
Payroll liabilities	i 82,980			i 88,486
Accrued liabilities	i 120,383			i 119,841
Current operating lease liabilities	i 21,314			i 24,094
Liabilities held for sale	i 55,452			i —
Total current liabilities	i 699,662			i 719,925
Long-term debt	i 744,745			i 746,179
Pension benefits	i 133,123			i 140,010
Postretirement benefits other than pensions	i 43,423			i 48,313
Long-term operating lease liabilities	i 90,947			i 60,234
Other liabilities	i 44,802			i 44,939
Total liabilities	i 1,756,702			i 1,759,600
7% Cumulative participating convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding	i —			i —
Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized; 18,950,351 shares issued and 16,884,542 shares outstanding as of March 31, 2020, and 18,908,566 shares issued and 16,842,757 outstanding as of December 31, 2019	i 17			i 17
Additional paid-in capital	i 492,325			i 490,451
Retained earnings	i 507,287			i 619,448
Accumulated other comprehensive loss	( i 289,517		)	( i 253,741		)
Total Cooper-Standard Holdings Inc. equity	i 710,112			i 856,175
Noncontrolling interests	i 17,449			i 19,807
Total equity	i 727,561			i 875,982
Total liabilities and equity	$	i 2,484,263		$	i 2,635,582

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(Dollar amounts in thousands except share amounts)

Total Equity

Common Shares

Common Stock

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Cooper-Standard Holdings Inc. Equity

Noncontrolling Interests

Total Equity

Balance as of December 31, 2019

i 16,842,757

i 17

i 490,451

i 619,448

( i 253,741

)

i 856,175

i 19,807

i 875,982

Cumulative effect of change in accounting principle

—

( i 1,573

)

—

( i 1,573

)

—

( i 1,573

)

Share-based compensation, net

i 41,785

—

i 1,874

i —

—

i 1,874

—

i 1,874

Net loss

—

( i 110,588

)

—

( i 110,588

)

( i 1,851

)

( i 112,439

)

Other comprehensive loss

—

( i 35,776

)

( i 35,776

)

( i 507

)

( i 36,283

)

Balance as of March 31, 2020

i 16,884,542

i 17

i 492,325

i 507,287

( i 289,517

)

i 710,112

i 17,449

i 727,561

Total Equity

Common Shares

Common Stock

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Cooper-Standard Holdings Inc. Equity

Noncontrolling Interests

Total Equity

Balance as of December 31, 2018

i 17,554,737

i 17

i 501,511

i 569,215

( i 245,937

)

i 824,806

i 26,669

i 851,475

Cumulative effect of change in accounting principle

—

( i 2,607

)

i —

( i 2,607

)

—

( i 2,607

)

Repurchase of common stock

( i 118,774

)

—

( i 2,057

)

( i 3,880

)

—

( i 5,937

)

—

( i 5,937

)

Share-based compensation, net

i 85,937

—

i 4

( i 214

)

—

( i 210

)

—

( i 210

)

Contribution from noncontrolling interests

—

i —

—

i —

i 2,112

Net (loss) income

—

( i 5,415

)

—

( i 5,415

)

i 52

( i 5,363

)

Other comprehensive income

—

i 4,239

i 371

i 4,610

Balance as of March 31, 2019

i 17,521,900

i 17

i 499,458

i 557,099

( i 241,698

)

i 814,876

i 29,204

i 844,080

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollar amounts in thousands)



	Three Months Ended March 31,
	2020			2019
Operating Activities:
Net loss	$	( i 112,439	)	$	( i 5,363	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	i 33,313			i 32,830
Amortization of intangibles	i 4,450			i 3,775
Impairment of assets held for sale	i 74,079			i —
Other impairment charges	i 977			i —
Share-based compensation expense	i 2,374			i 3,186
Equity in earnings of affiliates, net of dividends related to earnings	i 3,814			i 2,559
Deferred income taxes	( i 20,191		)	( i 964		)
Other	i 1,138			i 1,495
Changes in operating assets and liabilities	i 10,455			( i 39,366		)
Net cash used in operating activities	( i 2,030		)	( i 1,848		)
Investing activities:
Capital expenditures	( i 50,591		)	( i 59,633		)
Acquisition of businesses, net of cash acquired	i —			( i 452		)
Proceeds from sale of fixed assets and other	i 482			i 102
Net cash used in investing activities	( i 50,109		)	( i 59,983		)
Financing activities:
Principal payments on long-term debt	( i 1,498		)	( i 1,012		)
Increase in short-term debt, net	i 3,021			i 65,791
Repurchase of common stock	i —			( i 6,550		)
Taxes withheld and paid on employees' share-based payment awards	( i 512		)	( i 2,706		)
Other	( i 625		)	i 1,827
Net cash provided by financing activities	i 386			i 57,350
Effects of exchange rate changes on cash, cash equivalents and restricted cash	( i 6,200		)	i 1,477
Changes in cash, cash equivalents and restricted cash	( i 57,953		)	( i 3,004		)
Cash, cash equivalents and restricted cash at beginning of period	i 361,742			i 267,399
Cash, cash equivalents and restricted cash at end of period	$	i 303,789		$	i 264,395

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
	Balance as of
	March 31, 2020			December 31, 2019
Cash and cash equivalents	$	i 301,841		$	i 359,536
Restricted cash included in other current assets	i 13			i 12
Restricted cash included in other assets	i 1,935			i 2,194
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	i 303,789		$	i 361,742

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

1. i Overview

Basis of Presentation

Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company” or “Cooper Standard”), through its wholly-owned subsidiary, Cooper-Standard Automotive Inc. (“CSA U.S.”), is a leading manufacturer of sealing, fuel and brake delivery, and fluid transfer systems. The Company’s products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (“OEMs”) and replacement markets. The Company conducts substantially all of its activities through its subsidiaries.

During the first quarter of 2019 and in prior periods, the Company also operated an anti-vibration systems (“AVS”) product line. On April 1, 2019, the Company completed the divestiture of its AVS product line.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”), as filed with the SEC. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These financial statements include all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company. The operating results for the interim period ended March 31, 2020 are not necessarily indicative of results for the full year. In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

Immaterial Correction of Errors

During the year ended December 31, 2019, the Company identified errors primarily related to periods prior to fiscal year 2019. The Company concluded these errors were not material individually or in the aggregate to any of the previously reported periods and, therefore, amendments of previously filed reports were not required. Corrections were made to the applicable prior periods reflected in the financial information herein.

The following table presents the impact of these corrections on the Company’s condensed consolidated statements of operations:



	Three Months Ended March 31, 2019
	As previously reported			Adjustment			As corrected
Sales	$	i 880,038		$	( i 2,043	)	$	i 877,995
Income tax expense	i 2,331			( i 297		)	i 2,034
Net income (loss) attributable to noncontrolling interests	i 157			( i 209		)	( i 52		)
Net loss attributable to Cooper-Standard Holdings Inc.	( i 3,460		)	( i 1,955		)	( i 5,415		)

Earnings (loss) per share:
Basic	$	( i 0.20	)	$	( i 0.11	)	$	( i 0.31	)
Diluted	$	( i 0.20	)	$	( i 0.11	)	$	( i 0.31	)

The following table presents the impact of these corrections on the Company’s condensed consolidated statements of comprehensive income (loss):



	Three Months Ended March 31, 2019
	As previously reported			Adjustment			As corrected
Currency translation adjustment	$	i 2,219		$	( i 249	)	$	i 1,970
Comprehensive loss (income) attributable to noncontrolling interests	( i 247		)	( i 176		)	( i 423		)
Comprehensive income (loss) attributable to Cooper-Standard Holdings Inc.	i 995			( i 2,171		)	( i 1,176		)

The impact of these corrections on the balance as of March 31, 2019 in the Company’s condensed consolidated statements of changes in equity includes a decrease to total equity of $ i 10,022, which consists of a decrease to retained earnings of $ i 8,765, increase to accumulated other comprehensive loss of $ i 65, and decrease to noncontrolling interests of $ i 1,192.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

For the three months ended March 31, 2019, the impact of these corrections on the condensed consolidated statement of cash flow included a $ i 1,746 decrease in net income offset by an increase of $ i 1,746 in changes in operating assets and liabilities, resulting in no impact to net cash provided by operating activities.

2. i New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2016-13, Financial Instruments — Credit Losses (Topic 326)

On January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, and all related amendments using the modified retrospective method whereby the cumulative effect of adopting the standard was recognized in equity at the date of initial application. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The most prominent among the changes in the standard is the consideration of losses not yet incurred, but expected, based on current conditions and future forecasts. Adoption of the new standard resulted in an immaterial increase in the allowance for credit losses, which decreased the tooling receivable on the Company’s condensed consolidated balance sheet in 2020. The increase in credit loss expense was recorded as an adjustment to the opening balance of retained earnings. Adoption of the new standard had no impact on the Company’s condensed consolidated statement of operations or on cash provided by (used in) operating, financing or investing activities on its condensed consolidated cash flow statements.

The cumulative effects of the changes made to the Company’s condensed consolidated balance sheet as of January 1, 2020 were as follows:



	Balance as of December 31, 2019		Adjustments due to adoption of ASC 326			Balance as of January 1, 2020

Tooling receivable, net	$	i 148,175	$	( i 1,573	)	$	i 146,602
Retained earnings	i 619,448		( i 1,573		)	i 617,875

The Company adopted the following Accounting Standard Updates (“ASU”) during the three months ended March 31, 2020, which did not have a material impact on its condensed consolidated financial statements:



Standard	Description	Effective Date
ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract	Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	January 1, 2020
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	Provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.	January 1, 2020

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

3. i Assets Held for Sale and Divestiture

Assets Held for Sale

In the fourth quarter of 2019, management approved a plan to sell certain manufacturing facilities within its Europe and Asia Pacific segments. The Company expects to sell the manufacturing facilities in the second quarter of 2020. The manufacturing facilities and the associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 2020, and as such, the assets and liabilities associated with the transaction are separately classified as held for sale in the condensed consolidated balance sheet and depreciation of long-lived assets ceased. The planned divestiture did not meet the criteria for presentation as a discontinued operation.

The major classes of assets and liabilities held for sale were as follows:



	March 31, 2020
Accounts receivable, net	$	i 17,171
Tooling receivable, net	i 3,508
Inventories	i 18,157
Prepaid expenses	i 3,519
Other current assets	i 9,817
Property, plant and equipment, net	i 38,691
Operating lease right-of-use assets, net	i 2,782
Intangible assets, net	i 4,981
Other assets	i 1,188
Impairment of carrying value	( i 74,079		)
Total assets held for sale	$	i 25,735

Accounts payable	$	i 29,341
Payroll liabilities	i 5,642
Accrued liabilities	i 9,137
Current operating lease liabilities	i 955
Pension benefits	i 3,461
Postretirement benefits other than pensions	i 2,715
Long-term operating lease liabilities	i 2,363
Other liabilities	i 1,838
Total liabilities related to assets held for sale	$	i 55,452

Upon meeting the criteria for held for sale classification, the Company recorded a non-cash impairment charge of $74,079 to reduce the carrying value of the held for sale entities to fair value less costs to sell. Fair value, which is categorized within Level 3 of the fair value hierarchy, was determined using a market approach, estimated based on expected proceeds. The fair value less cost to sell must be assessed each reporting period that the asset group remains classified as held for sale.

The impairment charge, which is subject to adjustments as the transaction is finalized, includes the anticipated release of non-cash cumulative foreign currency translation losses, which were included as part of the carrying value of the held for sale entities. These losses will be reclassified from accumulated other comprehensive loss to net income (loss) upon closure of the transaction.

Divestiture

During the first quarter of 2019 and in prior periods, the Company also operated an AVS product line. On April 1, 2019, the Company completed its sale of the AVS product line to Continental AG.

Subsequent Event

Subsequent to the end of the Company's first quarter, on May 7, 2020, the Company entered into a definitive agreement to divest certain manufacturing facilities within its Europe and Asia Pacific segments. The planned divestiture of the facilities is expected to close in the second quarter of 2020 and is subject to customary closing conditions, including regulatory and third-party approvals.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

4. i Revenue

Revenue is recognized for manufactured parts at a point in time, generally when products are shipped or delivered. The Company usually enters into agreements with customers to produce products at the beginning of a vehicle’s life. Blanket purchase orders received from customers and related documents generally establish the annual terms, including pricing, related to a vehicle model. Customers typically pay for parts based on customary business practices with payment terms generally between 30 and 90 days.

Revenue by customer group for the three months ended March 31, 2020 was as follows:

North America

Europe

Asia Pacific

South America

Corporate, Eliminations and Other

Consolidated

Passenger and Light Duty

i 325,982

i 170,781

i 78,742

i 20,439

i —

i 595,944

Commercial

i 3,178

i 5,557

i 546

i 10

i 1,134

i 10,425

Other

i 5,641

i 8,904

i 56

i 22

i 33,898

i 48,521

Revenue

i 334,801

i 185,242

i 79,344

i 20,471

i 35,032

i 654,890

Revenue by customer group for the three months ended March 31, 2019 was as follows:

North America

Europe

Asia Pacific

South America

Corporate, Eliminations and Other

Consolidated

Passenger and Light Duty

i 436,866

i 225,451

i 125,355

i 23,192

i —

i 810,864

Commercial

i 5,792

i 8,425

i —

i 23

i 547

i 14,787

Other

i 5,060

i 8,524

i 97

i 22

i 38,641

i 52,344

Revenue

i 447,718

i 242,400

i 125,452

i 23,237

i 39,188

i 877,995

The passenger and light duty group consists of sales to automotive OEMs and automotive suppliers, while the commercial group represents sales to OEMs of on- and off-highway commercial equipment and vehicles. The other customer group includes sales related to specialty and adjacent markets.

Substantially all of the Company’s revenues were generated from sealing, fuel and brake delivery, fluid transfer and anti-vibration systems for use in passenger vehicles and light trucks manufactured by global OEMs. On April 1, 2019, the Company completed the divestiture of its AVS product line.

A summary of the Company’s products is as follows:



Product Line		Description
Sealing Systems		Protect vehicle interiors from weather, dust and noise intrusion for improved driving experience; provide aesthetic and functional class-A exterior surface treatment
Fuel & Brake Delivery Systems		Sense, deliver and control fluids to fuel and brake systems
Fluid Transfer Systems		Sense, deliver and control fluids and vapors for optimal powertrain & HVAC operation
Anti-Vibration Systems (Divested on April 1, 2019)		Control and isolate vibration and noise in the vehicle to improve ride and handling

Revenue by product line for the three months ended March 31, 2020 was as follows:

North America

Europe

Asia Pacific

South America

Corporate, Eliminations and Other

Consolidated

Sealing systems

i 124,556

i 127,246

i 49,024

i 13,549

i —

i 314,375

Fuel and brake delivery systems

i 104,934

i 28,562

i 19,818

i 5,747

i —

i 159,061

Fluid transfer systems

i 105,311

i 21,945

i 10,502

i 1,175

i —

i 138,933

Other

i —

i 7,489

i —

i 35,032

i 42,521

Consolidated

i 334,801

i 185,242

i 79,344

i 20,471

i 35,032

i 654,890

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Revenue by product line for the three months ended March 31, 2019 was as follows:

North America

Europe

Asia Pacific

South America

Corporate, Eliminations and Other

Consolidated

Sealing systems

i 145,646

i 155,391

i 83,529

i 17,829

i —

i 402,395

Fuel and brake delivery systems

i 131,703

i 35,298

i 25,168

i 5,335

i —

i 197,504

Fluid transfer systems

i 113,448

i 22,798

i 15,302

i 73

i —

i 151,621

Anti-vibration systems

i 56,457

i 20,649

i 1,453

i —

i 78,559

Other

i 464

i 8,264

i —

i 39,188

i 47,916

Consolidated

i 447,718

i 242,400

i 125,452

i 23,237

i 39,188

i 877,995

Contract Estimates

The amount of revenue recognized is usually based on the purchase order price and adjusted for variable consideration, including pricing concessions. The Company accrues for pricing concessions by reducing revenue as products are shipped or delivered. The accruals are based on historical experience, anticipated performance and management’s best judgment. The Company also generally has ongoing adjustments to customer pricing arrangements based on the content and cost of its products. Such pricing accruals are adjusted as they are settled with customers. Customer returns are usually related to quality or shipment issues and are recorded as a reduction of revenue. The Company generally does not recognize significant return obligations due to their infrequent nature.

Contract Balances

The Company’s contract assets consist of unbilled amounts associated with variable pricing arrangements in its Asia Pacific region. Once pricing is finalized, contract assets are transferred to accounts receivable. As a result, the timing of revenue recognition and billings, as well as changes in foreign exchange rates, will impact contract assets on an ongoing basis. Contract assets were not materially impacted by any other factors during the three months ended March 31, 2020.

The Company’s contract liabilities consist of advance payments received and due from customers. i Net contract assets (liabilities) consisted of the following:

March 31, 2020

December 31, 2019

Change

Contract assets

i 9,130

i 1,100

i 8,030

Contract liabilities

( i 43

)

( i 61

)

i 18

Net contract assets

i 9,087

i 1,039

i 8,048

Other

The Company at times enters into agreements that provide for lump sum payments to customers. These payment agreements are recorded as a reduction of revenue during the period the commitment is made. Amounts related to commitments of future payments to customers on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 were current liabilities of $ i 11,954 and $ i 12,916, respectively, and long-term liabilities of $ i 7,360 and $ i 9,502, respectively.

The Company provides assurance-type warranties to its customers. Such warranties provide customers with assurance that the related product will function as intended and complies with any agreed-upon specifications, and are recognized in costs of products sold.

5. i Restructuring

On an ongoing basis, the Company evaluates its business and objectives to ensure that it is properly configured and sized based on changing market conditions. Accordingly, the Company has implemented several restructuring initiatives, including closure or consolidation of facilities throughout the world and the reorganization of its operating structure.

The Company’s restructuring charges consist of severance, retention and outplacement services, and severance-related postemployment benefits (collectively, “employee separation costs”), other related exit costs and asset impairments related to restructuring activities. Employee separation costs are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Restructuring expense by segment for the three months ended March 31, 2020 and 2019 was as follows:



	Three Months Ended March 31,
	2020		2019
North America	$	i 3,703	$	i 5,208
Europe	i 2,193		i 6,103
Asia Pacific	i 133		i 2,513
South America	i 1,202		i 16
Total Automotive	i 7,231		i 13,840
Corporate and other	i 45		i 3,875
Total	$	i 7,276	$	i 17,715

/ i

Restructuring activity for the three months ended March 31, 2020 was as follows:



	Employee Separation Costs			Other Exit Costs			Total
Balance as of December 31, 2019	$	i 22,990		$	i 4,005		$	i 26,995
Expense	i 4,415			i 2,861			i 7,276
Cash payments	( i 6,362		)	( i 3,037		)	( i 9,399		)
Foreign exchange translation and other	( i 626		)	( i 38		)	( i 664		)
Balance as of March 31, 2020	$	i 20,417		$	i 3,791		$	i 24,208

6. i Inventories

Inventories consist of the following:



	March 31, 2020		December 31, 2019
Finished goods	$	i 54,135	$	i 57,070
Work in process	i 36,741		i 33,753
Raw materials and supplies	i 77,160		i 52,616
	$	i 168,036	$	i 143,439

7. i Leases

The Company primarily has operating and finance leases for certain manufacturing facilities, corporate offices and certain equipment. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities and long-term operating lease liabilities on the Company’s condensed consolidated balance sheet as of March 31, 2020. Finance leases are included in property, plant and equipment, net, debt payable within one year, and long-term debt on the Company’s condensed consolidated balance sheets.

The components of lease expense were as follows:



	Three Months Ended March 31,
	2020		2019
Operating lease expense	$	i 8,605	$	i 8,680
Short-term lease expense	i 1,010		i 679
Variable lease expense	i 250		i 215
Finance lease expense:
Amortization of right-of-use assets	i 681		i 443
Interest on lease liabilities	i 385		i 455
Total lease expense	$	i 10,931	$	i 10,472

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Other information related to leases was as follows:



	Three Months Ended March 31,
	2020			2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	i 7,933		$	i 8,656
Operating cash flows for finance leases	i 410			i 323
Financing cash flows for finance leases	i 648			i 267
Non-cash right-of-use assets obtained in exchange for lease obligations:
Operating leases	i 37,205			i 164
Finance leases	i 61			i 9,452

Weighted Average Remaining Lease Term (in years)
Operating leases	i 8.2			i 5.5
Finance leases	i 11.1			i 12.0

Weighted Average Discount Rate
Operating leases	i 5.3		%	i 4.7		%
Finance leases	i 6.1		%	i 9.6		%

/ i

Future minimum lease payments under non-cancellable leases as of March 31, 2020 were as follows:



Year	Operating Leases			Finance Leases
Remainder of 2020	$	i 21,117		$	i 2,696
2021	i 23,120			i 3,543
2022	i 18,019			i 3,301
2023	i 15,143			i 3,047
2024	i 12,385			i 3,190
Thereafter	i 56,959			i 23,988
Total future minimum lease payments	i 146,743			i 39,765
Less imputed interest	( i 31,164		)	( i 11,059		)
Total	$	i 115,579		$	i 28,706

Amounts recognized on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 were as follows:



	March 31, 2020		December 31, 2019
Operating Leases
Assets held for sale	$	i 2,782	$	i —
Operating lease right-of-use assets, net	i 113,090		i 83,376
Current operating lease liabilities	i 21,314		i 24,094
Liabilities held for sale	i 3,318		i —
Long-term operating lease liabilities	i 90,947		i 60,234

Finance Leases
Debt payable within one year	i 2,284		i 2,343
Long-term debt	i 26,422		i 27,430

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

As of March 31, 2020 and December 31, 2019, assets recorded under finance leases, net of accumulated depreciation were $ i 31,705 and $ i 32,571, respectively. As of March 31, 2020, the Company had additional operating leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately $ i 1,725. These operating leases will commence in 2020 with lease terms up to 10 years.

8. i Property, Plant and Equipment

Property, plant and equipment consists of the following:



	March 31, 2020			December 31, 2019
Land and improvements	$	i 56,571		$	i 66,670
Buildings and improvements	i 278,531			i 310,797
Machinery and equipment	i 1,163,390			i 1,204,457
Construction in progress	i 149,995			i 161,951
	i 1,648,487			i 1,743,875
Accumulated depreciation	( i 738,976		)	( i 755,598		)
Property, plant and equipment, net	$	i 909,511		$	i 988,277

Due to the deterioration of financial results in a certain Asia Pacific location, the Company recorded an impairment charge of $ i 977 during the three months ended March 31, 2020. The fair value was determined using estimated orderly liquidation value, which was deemed the highest and best use of the assets. Based on the Company’s interim impairment assessment, the Company has determined there were no additional indicators of impairment identified during the three months ended March 31, 2020. However, the Company continues to monitor the impacts of COVID-19 on its business and a lack of recovery of production volumes could result in an impairment charge in future periods.

9. i Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2020 were as follows:



	North America			Industrial Specialty Group		Total
Balance as of December 31, 2019	$	i 142,187		$	i —	$	i 142,187
Reorganization	( i 14,036		)	i 14,036		i —
Foreign exchange translation	( i 317		)	i —		( i 317		)
Balance as of March 31, 2020	$	i 127,834		$	i 14,036	$	i 141,870

The Company’s organizational structure changed on January 1, 2020. See Note 22. “Segment Reporting” for further detail on this reorganization of the Company’s business. Prior to this reorganization, the Company’s North America operating segment was the only reporting unit in which goodwill was recorded. As a result of the reorganization, a portion of the goodwill that was previously attributable to the North America reporting unit was reallocated to the Industrial Specialty Group reporting unit based on the relative fair value approach. The Industrial Specialty Group reporting unit is a component of the Advanced Technology Group operating segment, which is reflected in “Corporate, eliminations and other”.

The reorganization of the business represented a triggering event to test goodwill for impairment as of January 1, 2020. No impairment was identified as a result of completing the goodwill impairment test.

Goodwill is tested for impairment by reporting unit annually or more frequently if events or circumstances indicate that an impairment may exist. Other than the reorganization event noted above, there were no other indicators of potential impairment during the three months ended March 31, 2020. The Company continues to monitor the significant global economic uncertainty as a result of COVID-19 to assess the outlook for demand for products and the impact on the Company’s business and overall financial performance. A lack of recovery or further deterioration in market conditions and production volumes, among other factors, as a result of the COVID-19 pandemic could result in an impairment charge in future periods.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Intangible Assets

Intangible assets and accumulated amortization balances as of March 31, 2020 and December 31, 2019 were as follows:



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	i 154,345	$	( i 116,066	)	$	i 38,279
Other	i 43,595		( i 7,568		)	i 36,027
Balance as of March 31, 2020	$	i 197,940	$	( i 123,634	)	$	i 74,306

Customer relationships	$	i 156,557	$	( i 113,871	)	$	i 42,686
Other	i 49,556		( i 7,873		)	i 41,683
Balance as of December 31, 2019	$	i 206,113	$	( i 121,744	)	$	i 84,369

10. i Debt

A summary of outstanding debt as of March 31, 2020 and December 31, 2019 is as follows:



	March 31, 2020			December 31, 2019
Senior Notes	$	i 395,293		$	i 395,114
Term Loan	i 325,455			i 326,061
ABL Facility	i —			i —
Finance leases	i 28,706			i 29,773
Other borrowings	i 57,821			i 56,680
Total debt	i 807,275			i 807,628
Less current portion	( i 62,530		)	( i 61,449		)
Total long-term debt	$	i 744,745		$	i 746,179

5.625% Senior Notes due 2026

In November 2016, the Company issued $ i 400,000 aggregate principal amount of its i 5.625% Senior Notes due 2026 (the “Senior Notes”). The Senior Notes mature on i November 15, 2026. Interest on the Senior Notes is payable semi-annually in arrears in cash on May 15 and November 15 of each year.

Debt issuance costs related to the Senior Notes are amortized into interest expense over the term of the Senior Notes. As of March 31, 2020 and December 31, 2019, the Company had $ i 4,707 and $ i 4,886 of unamortized debt issuance costs, respectively, related to the Senior Notes, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets.

Term Loan Facility

Also in November 2016, the Company entered into Amendment No. 1 to its senior term loan facility (“Term Loan Facility”), which provides for loans in an aggregate principal amount of $ i 340,000. Subject to certain conditions, the Term Loan Facility, without the consent of the then-existing lenders (but subject to the receipt of commitments), may be expanded (or a new term loan or revolving facility added) i by an amount that will not cause the consolidated secured net debt ratio to exceed 2.25 to 1.00 plus $400,000 plus any voluntary prepayments, including the ABL Facility (as defined below) to the extent commitments are reduced, not funded from proceeds of long-term indebtedness. The Term Loan Facility matures on i November 2, 2023, unless earlier terminated.

On May 2, 2017, the Company entered into Amendment No. 2 to the Term Loan Facility to modify the interest rate. Subsequently, on March 6, 2018, the Company entered into Amendment No. 3 to the Term Loan Facility to further modify the interest rate. In accordance with this amendment, borrowings under the Term Loan Facility bear interest, at the Company’s option, at i either (1) with respect to Eurodollar rate loans, the greater of the applicable Eurodollar rate and 0.75% plus 2.0% per annum, or (2) with respect to base rate loans, the base rate, (which is the highest of the then current federal funds rate plus 0.5%, the prime rate most recently announced by the administrative agent under the term loan, and the one-month Eurodollar rate plus 1.0%) plus 1.0% per annum.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

As of March 31, 2020 and December 31, 2019, the Company had $ i 2,125 and $ i 2,273 of unamortized debt issuance costs, respectively, and $ i 1,370 and $ i 1,466 of unamortized original issue discount, respectively, related to the Term Loan Facility, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets. Both the debt issuance costs and the original issue discount are amortized into interest expense over the term of the Term Loan Facility.

ABL Facility

In November 2016, the Company entered into a Third Amended and Restated Loan Agreement of its ABL Facility, which provided an aggregate revolving loan availability of up to $ i 210,000, subject to borrowing base availability. In March 2020, the Company entered into the First Amendment of the Third Amended and Restated Loan Agreement (“the Amendment”). As a result of the Amendment, the senior asset-based revolving credit facility (“ABL Facility”) maturity was extended to March 2025 and the aggregate revolving loan availability was reduced to $ i 180,000. The aggregate revolving loan availability includes a $ i 100,000 letter of credit sub-facility and a $ i 25,000 swing line sub-facility. The ABL Facility also provides for an uncommitted $ i 100,000 incremental loan facility, for a potential total ABL Facility of $ i 280,000, if requested by the borrowers under the ABL Facility and the lenders agree to fund such increase. No consent of any lender is required to effect any such increase, except for those participating in the increase.

As of March 31, 2020, there were no loans outstanding under the ABL Facility. The Company’s borrowing base was $ i 173,278. Net of the 10% of the borrowing base that cannot be borrowed without triggering the fixed charge coverage ratio maintenance covenant and $ i 10,289 of outstanding letters of credit, the Company effectively had $ i 145,661 available for borrowing under its ABL facility.

Any borrowings under the ABL Facility will mature, and the commitments of the lenders under the ABL Facility will terminate, on the earlier of i March 24, 2025 or the date 91 days prior to the maturity date of the Term Loan Facility (or another fixed asset facility replacing the Term Loan Facility).

As a result of the Amendment, the Company wrote off $ i 177 in unamortized debt issuance costs, which are presented in interest expense, net of interest income in the condensed consolidated statements of operations. As of March 31, 2020 and December 31, 2019, the Company had $ i 1,352 and $ i 657, respectively, of unamortized debt issuance costs related to the ABL Facility, which are presented in other assets in the condensed consolidated balance sheets.

Debt Covenants

The Company was in compliance with all covenants of the Senior Notes, Term Loan Facility and ABL Facility as of March 31, 2020.

Other

Other borrowings as of March 31, 2020 and December 31, 2019 reflect borrowings under local bank lines classified in debt payable within one year on the condensed consolidated balance sheet.

11. i Fair Value Measurements and Financial Instruments

Fair Value Measurements

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



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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Items Measured at Fair Value on a Recurring Basis

Estimates of the fair value of foreign currency and interest rate derivative instruments are determined using exchange traded prices and rates. The Company also considers the risk of non-performance in the estimation of fair value and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. In certain instances where market data is not available, the Company uses management judgment to develop assumptions that are used to determine fair value. i Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured or disclosed at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 were as follows:



	March 31, 2020			December 31, 2019			Input
Forward foreign exchange contracts - other current assets	$	i 203		$	i 467		Level 2
Forward foreign exchange contracts - accrued liabilities	( i 12,777		)	( i 42		)	Level 2

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a nonrecurring basis, which are not included in the table above. As these nonrecurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For further information on assets and liabilities measured at fair value on a nonrecurring basis see Note 3. “Assets Held for Sale and Divestiture” and Note 8. “Property, Plant and Equipment.”

Items Not Carried at Fair Value

Fair values of the Company’s Senior Notes and Term Loan Facility were as follows:



	March 31, 2020		December 31, 2019
Aggregate fair value	$	i 476,660	$	i 693,600
Aggregate carrying value ⁽¹⁾	i 728,950		i 729,800

⁽¹⁾ Excludes unamortized debt issuance costs and unamortized original issue discount.

Fair values were based on quoted market prices and are classified within Level 1 of the fair value hierarchy.

Derivative Instruments and Hedging Activities

The Company is exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices. The Company enters into derivative instruments primarily to hedge portions of its forecasted foreign currency denominated cash flows and designates these derivative instruments as cash flow hedges in order to qualify for hedge accounting.

The Company formally documents its hedge relationships, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the cash flow hedges. The Company also formally assesses whether a cash flow hedge is highly effective in offsetting changes in the cash flows of the hedged item. Derivatives are recorded at fair value in other current assets, other assets, accrued liabilities and other long-term liabilities. For a cash flow hedge, the effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”) in the condensed consolidated balance sheet and reclassified into earnings when the underlying hedged transaction is realized. The realized gains and losses are recorded on the same line as the hedged transaction in the condensed consolidated statements of operations.

The Company is exposed to credit risk in the event of nonperformance by its counterparties on its derivative financial instruments. The Company mitigates this credit risk exposure by entering into agreements directly with major financial institutions with high credit standards that are expected to fully satisfy their obligations under the contracts.

Cash Flow Hedges

Forward Foreign Exchange Contracts - The Company uses forward contracts to mitigate the potential volatility to earnings and cash flow arising from changes in currency exchange rates that impact the Company’s foreign currency transactions. The principal currencies hedged by the Company include various European currencies, the Canadian Dollar, and the Mexican Peso. As of March 31, 2020 and December 31, 2019, the notional amount of these contracts was $ i 101,856 and $ i 92,150, respectively, and consisted of hedges of transactions up to December 2020.

Interest rate swaps - The Company has historically used interest rate swap contracts to manage cash flow variability associated with its variable rate Term Loan Facility. The interest rate swap contract, which fixes the interest payments of variable

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

rate debt instruments, is used to manage exposure to fluctuations in interest rates. As of March 31, 2020, there were no interest rate swap contracts outstanding.

Pretax amounts related to the Company’s cash flow hedges that were recognized in other comprehensive income (loss) (“OCI”) were as follows:



	Gain (Loss) Recognized in OCI
	Three Months Ended March 31,
	2020			2019
Forward foreign exchange contracts	$	( i 12,871	)	$	i 1,943

/ i

Pretax amounts related to the Company’s cash flow hedges that were reclassified from AOCI were as follows:



		Gain (Loss) Reclassified from AOCI to Income
		Three Months Ended March 31,
	Classification	2020		2019
Forward foreign exchange contracts	Cost of products sold	$	i 115	$	i 325

12. i Accounts Receivable Factoring

As a part of its working capital management, the Company sells certain receivables through a single third-party financial institution in a pan-European program (the “Factor”). The amount sold varies each month based on the amount of underlying receivables and cash flow needs of the Company. These are permitted transactions under the Company’s credit agreements governing the ABL Facility and Term Loan Facility and the indenture governing the Senior Notes. The European factoring facility, which was renewed in March 2020, allows the Company to factor up to € i 120 million of its Euro-denominated accounts receivable, accelerating access to cash and reducing credit risk. The factoring facility expires in December 2023.

Costs incurred on the sale of receivables are recorded in other expense, net in the condensed consolidated statements of operations. The sale of receivables under this contract is considered an off-balance sheet arrangement to the Company and is accounted for as a true sale and is excluded from accounts receivable in the condensed consolidated balance sheet. i Amounts outstanding under receivable transfer agreements entered into by various locations as of the period end were as follows:



	March 31, 2020		December 31, 2019
Off-balance sheet arrangements	$	i 102,605	$	i 103,818

Accounts receivable factored and related costs throughout the period were as follows:



	Off-Balance Sheet Arrangements
	Three Months Ended March 31,
	2020		2019
Accounts receivable factored	$	i 176,508	$	i 173,703
Costs	i 309		i 325

The Company continues to service sold receivables and acts as collection agent for the Factor. As of March 31, 2020 and December 31, 2019, cash collections on behalf of the Factor that have yet to be remitted were $ i 17,377 and $ i 21,485, respectively, and are reflected in cash and cash equivalents in the condensed consolidated balance sheet.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

13. i Pension and Postretirement Benefits Other Than Pensions

The components of net periodic benefit (income) cost for the Company’s defined benefit plans and other postretirement benefit plans were as follows:

Pension Benefits

Three Months Ended March 31,

2020

2019

U.S.

Non-U.S.

U.S.

Non-U.S.

Service cost

i 213

i 989

i 189

i 1,111

Interest cost

i 2,033

i 782

i 2,952

i 1,060

Expected return on plan assets

( i 3,421

)

( i 577

)

( i 4,155

)

( i 595

)

Amortization of prior service cost and actuarial loss

i 485

i 794

i 781

i 616

Net periodic benefit (income) cost

( i 690

)

i 1,988

( i 233

)

i 2,192

Other Postretirement Benefits

Three Months Ended March 31,

2020

2019

U.S.

Non-U.S.

U.S.

Non-U.S.

Service cost

i 26

i 96

i 41

i 117

Interest cost

i 170

i 173

i 259

i 203

Amortization of prior service credit and actuarial gain

( i 483

)

i 107

( i 742

)

i 38

Net periodic benefit (income) cost

( i 287

)

i 376

( i 442

)

i 358

The service cost component of net periodic benefit (income) cost is included in cost of products sold and selling, administrative and engineering expenses in the condensed consolidated statements of operations. All other components of net periodic benefit (income) cost are included in other expense, net in the condensed consolidated statements of operations for all periods presented.

In accordance with the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the Company will defer making minimum funding cash contributions of approximately $ i 3,600 to its U.S. pension plans until 2021.

14. i Other Expense, Net

The components of other expense, net were as follows:



	Three Months Ended March 31,
	2020			2019
Foreign currency losses	$	( i 3,232	)	$	( i 284	)
Components of net periodic benefit cost other than service cost	( i 63		)	( i 417		)
Losses on sales of receivables	( i 309		)	( i 325		)
Miscellaneous income	i 164			i 230
Other expense, net	$	( i 3,440	)	$	( i 796	)

15. i Income Taxes

The Company determines its effective tax rate each quarter based upon its estimated annual effective tax rate. The Company records the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Income tax (benefit) expense, loss before income taxes and the corresponding effective tax rate for the three months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended March 31,
	2020			2019
Income tax (benefit) expense	$	( i 14,117	)	$	i 2,034
Loss before income taxes	( i 126,556		)	( i 3,329		)
Effective tax rate	i 11		%	( i 61		)%

The effective tax rate for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was higher primarily due to the geographic mix of pre-tax losses driven by the impairment charge on held for sale entities and the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions. Additionally, a discrete expense of $ i 13,309 for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the three months ended March 31, 2020. In accordance with recent legislation, one of the business tax provisions of the CARES Act included allowing net operating losses (“NOL”) generated by the Company in tax years to be carried back up to five years at the tax rates in effect during those periods, rather than carried forward at current federal tax rates of 21%. The Company has included a benefit in the estimated annual effective tax rate for this CARES Act provision which was used to calculate the income tax benefit recorded in the three months ended March 31, 2020. The income tax rate for the three months ended March 31, 2020 and 2019 varies from the U.S. statutory rate primarily due to the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions to the extent not offset by other categories of income, tax credits, the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, and other permanent items. Further, the Company’s current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these valuation allowances until it is more likely than not that the deferred tax assets will be realized.

16. i Net Income (Loss) Per Share Attributable to Cooper-Standard Holdings Inc.

Basic net loss per share attributable to Cooper-Standard Holdings Inc. was computed by dividing net loss attributable to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method by dividing diluted net loss available to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding, including the dilutive effect of common stock equivalents, using the average share price during the period.

Information used to compute basic and diluted net loss per share attributable to Cooper-Standard Holdings Inc. was as follows:



	Three Months Ended March 31,
	2020			2019
Net loss available to Cooper-Standard Holdings Inc. common stockholders	$	( i 110,588	)	$	( i 5,415	)

Basic weighted average shares of common stock outstanding	i 16,883,717			i 17,535,195
Dilutive effect of common stock equivalents	i —			i —
Diluted weighted average shares of common stock outstanding	i 16,883,717			i 17,535,195

Basic net loss per share attributable to Cooper-Standard Holdings Inc.	$	( i 6.55	)	$	( i 0.31	)

Diluted net loss per share attributable to Cooper-Standard Holdings Inc.	$	( i 6.55	)	$	( i 0.31	)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

17. i Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of related tax, were as follows:



	Three Months Ended March 31,
	2020				2019
Foreign currency translation adjustment
Balance at beginning of period	$	( i 153,933	)		$	( i 141,104	)
Other comprehensive income (loss) before reclassifications	( i 28,382		)	⁽¹⁾	i 1,599			⁽¹⁾
Balance at end of period	$	( i 182,315	)		$	( i 139,505	)
Benefit plan liabilities
Balance at beginning of period	$	( i 100,160	)		$	( i 104,375	)
Other comprehensive income before reclassifications	i 2,024			⁽²⁾	i 877			⁽²⁾
Amounts reclassified from accumulated other comprehensive loss	i 658			⁽³⁾	i 510			⁽⁴⁾
Balance at end of period	$	( i 97,478	)		$	( i 102,988	)
Fair value change of derivatives
Balance at beginning of period	$	i 352			$	( i 458	)
Other comprehensive income (loss) before reclassifications	( i 9,984		)	⁽⁵⁾	i 1,490			⁽⁵⁾
Amounts reclassified from accumulated other comprehensive loss	( i 92		)	⁽⁶⁾	( i 237		)	⁽⁶⁾
Balance at end of period	$	( i 9,724	)		$	i 795
Accumulated other comprehensive loss, ending balance	$	( i 289,517	)		$	( i 241,698	)


(1)	Includes other comprehensive income (loss) related to intra-entity foreign currency balances that are of a long-term investment nature of $( i 22,703) and $ i 2,814 for the three months ended March 31, 2020 and 2019, respectively.


(2)	Net of tax expense of $ i 337 and $ i 11 for the three months ended March 31, 2020 and 2019, respectively.


(3)	Includes the effect of the amortization of actuarial losses of $ i 872 and amortization of prior service cost of $ i 21, net of tax of $ i 235. See Note 13. “Pension and Postretirement Benefits Other Than Pensions.”


(4)	Includes the effect of the amortization of prior service credits of $ i 79, offset by the amortization of actuarial losses of $ i 773, net of tax of $ i 184. See Note 13. “Pension and Postretirement Benefits Other Than Pensions.”


(5)	Net of tax (benefit) expense of $( i 2,887) and $ i 453 for the three months ended March 31, 2020 and 2019, respectively. See Note 11. “Fair Value Measurements and Financial Instruments.”


(6)	Net of tax expense of $ i 23 and $ i 88 for the three months ended March 31, 2020 and 2019, respectively. See Note 11. “Fair Value Measurements and Financial Instruments.”

18. i Common Stock

Share Repurchase Program

In June 2018, the Company’s Board of Directors approved a common stock repurchase program (the “2018 Program”) authorizing the Company to repurchase, in the aggregate, up to $ i 150,000 of its outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by management and in accordance with prevailing market conditions and federal securities laws and regulations. The Company expects to fund any future repurchases from cash on hand and future cash flows from operations. The Company is not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at the Company’s discretion. The 2018 Program became effective in November 2018. As of March 31, 2020, the Company had approximately $ i 98,720 of repurchase authorization remaining under the 2018 Program.

The Company did not make any repurchases during the three months ended March 31, 2020. During the three months ended March 31, 2019, the Company repurchased i 85,000 shares at an average purchase price of $ i 69.85 per share, excluding commissions, for a total cost of $ i 5,937.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

19. i Share-Based Compensation

The Company’s long-term incentive plans allow for the grant of various types of share-based awards to key employees and directors of the Company and its affiliates. The Company generally awards grants on an annual basis.

In February 2020, the Company granted Restricted Stock Units (“RSUs”), Performance Units (“PUs”) and stock options. The RSUs cliff vest after three years, the PUs vest ratably over three years after the initial two-year performance period, and the stock options vest ratably over three years. The number of PUs that will vest depends on the Company’s achievement of target performance goals related to the Company’s return on invested capital (“ROIC”) and total shareholder return, which may range from i 0% to i 200% of the target award amount.

Share-based compensation expense was as follows:



	Three Months Ended March 31,
	2020		2019
PUs	$	i 74	$	i 649
RSUs	i 1,643		i 1,722
Stock options	i 657		i 815
Total	$	i 2,374	$	i 3,186

20. i Related Party Transactions

A summary of the material related party transactions with affiliates accounted for under the equity method was as follows:



	Three Months Ended March 31,
	2020		2019
Sales⁽¹⁾	$	i 6,075	$	i 7,434
Purchases⁽²⁾	i 156		i 325
Dividends received⁽³⁾	i 5,245		i 4,917

⁽¹⁾Relates to transactions with Nishikawa Cooper LLC (“NISCO”)

⁽²⁾ Relates to transactions with NISCO and Polyrub Cooper Standard FTS Private Limited

⁽³⁾ From NISCO and Nishikawa Tachaplalert Cooper Ltd. inclusive of any gross up of dividend related to withholding tax

Amounts receivable from NISCO as of March 31, 2020 and December 31, 2019 were $ i 4,070 and $ i 4,297, respectively.

21. i Commitments and Contingencies

The Company is periodically involved in claims, litigation and various legal matters that arise in the ordinary course of business. The Company accrues for litigation exposure when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified. As of March 31, 2020, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for claims, litigation and various legal matters, if any, has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company’s financial condition, results of operations or cash flows could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

In addition, the Company conducts and monitors environmental investigations and remedial actions at certain locations. As of March 31, 2020 and December 31, 2019, the undiscounted reserve for environmental investigation and remediation was approximately $ i 5,835 and $ i 6,104, respectively. While the Company’s costs to defend and settle known claims arising under environmental laws have not been material in the past and are not currently estimated to be material, such costs may be material in the future.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

22. i Segment Reporting

The Company’s organizational structure changed on January 1, 2020, creating a global automotive business (“Automotive”) and Advanced Technology Group (“ATG”). The Company’s business is now organized in the following reportable segments: North America, Europe, Asia Pacific and South America. ATG and all other business activities are reported in Corporate, eliminations and other. The Corporate, eliminations and other External Sales and Intersegment Sales amounts previously reported for the three months ended March 31, 2019 have been reclassified from North America and Europe from the table below. The adjusted EBITDA amounts previously reported for the three months ended March 31, 2019 and Segment Asset amounts previously reported as of December 31, 2019 have been reclassified from North America, Europe, Asia Pacific and South America from the tables below.

The Company’s principal products within each of these segments are sealing, fuel and brake delivery, and fluid transfer systems. During the first quarter of 2019 and in prior periods, the Company also operated an anti-vibration systems product line. On April 1, 2019, the Company completed the divestiture of the AVS product line.

The Company uses Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. The results of each segment include certain allocations for general, administrative and other shared costs. Segment adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Certain financial information on the Company’s reportable segments was as follows:

Three Months Ended March 31,

2020

2019

External Sales

Intersegment Sales

Adjusted EBITDA

External Sales

Intersegment Sales

Adjusted EBITDA

North America

i 334,801

i 4,468

i 37,019

i 447,718

i 4,707

i 59,151

Europe

i 185,242

i 3,091

( i 4,623

)

i 242,400

i 3,085

i 9,275

Asia Pacific

i 79,344

i 457

( i 17,057

)

i 125,452

i 741

( i 407

)

South America

i 20,471

i 68

( i 4,577

)

i 23,237

i 5

( i 1,033

)

Total Automotive

i 619,858

i 8,084

i 10,762

i 838,807

i 8,538

i 66,986

Corporate, eliminations and other

i 35,032

( i 8,084

)

( i 2,483

)

i 39,188

( i 8,538

)

( i 2,852

)

Consolidated

i 654,890

i —

i 8,279

i 877,995

i —

i 64,134



	Three Months Ended March 31,
	2020			2019
Adjusted EBITDA	$	i 8,279		$	i 64,134
Impairment of assets held for sale	( i 74,079		)	i —
Restructuring charges	( i 7,276		)	( i 17,715		)
Project costs	( i 2,425		)	( i 1,263		)
Other impairment charges	( i 684		)	i —
Lease termination costs	( i 520		)	i —
EBITDA	$	( i 76,705	)	$	i 45,156
Income tax benefit (expense)	i 14,117			( i 2,034		)
Interest expense, net of interest income	( i 10,237		)	( i 11,932		)
Depreciation and amortization	( i 37,763		)	( i 36,605		)
Net loss attributable to Cooper-Standard Holdings Inc.	$	( i 110,588	)	$	( i 5,415	)



	March 31, 2020		December 31, 2019
Segment assets:
North America	$	i 1,011,035	$	i 1,040,650
Europe	i 455,656		i 553,977
Asia Pacific	i 536,618		i 614,952
South America	i 58,923		i 65,438
Total Automotive	i 2,062,232		i 2,275,017
Corporate, eliminations and other	i 422,031		i 360,565
Consolidated	$	i 2,484,263	$	i 2,635,582

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

This management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Our historical results may not indicate, and should not be relied upon as an indication of, our future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. See “Forward-Looking Statements” below for a discussion of risks associated with reliance on forward-looking statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed below and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the U.S. Securities and Exchange Commission (“2019 Annual Report”) see Item 1A. “Risk Factors.” The following should be read in conjunction with our 2019 Annual Report and the other information included herein. Our discussion of trends and conditions supplements and updates such discussion included in our 2019 Annual Report. References in this quarterly report on Form 10-Q (the “Report”) to “we,” “our,” or the “Company” refer to Cooper-Standard Holdings Inc., together with its consolidated subsidiaries.

Executive Overview

Our Business

We design, manufacture and sell sealing, fuel and brake delivery, and fluid transfer systems for use primarily in passenger vehicles and light trucks manufactured by global automotive original equipment manufacturers (“OEMs”). We are primarily a “Tier 1” supplier, with approximately 83% of our sales in 2019 made directly to major OEMs. We operate our business along the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other.

During the first quarter of 2019 and in prior periods, we also operated an anti-vibration systems (“AVS”) business. On April 1, 2019, we completed the divestiture of the anti-vibration systems business.

Recent Trends and Conditions

General Economic Conditions and Outlook

The global automotive industry is susceptible to uncertain economic conditions that could adversely impact new vehicle demand and production. Business conditions may vary significantly from period to period or region to region. The COVID-19 pandemic created an unusually high degree of economic disruption during the first quarter of 2020 and is continuing to drive uncertainty for the economic outlook and the automotive industry around the world. Economists at the International Monetary Fund (IMF) are now expecting the global economy to contract by approximately 3.0% in 2020.

Economic conditions and consumer confidence in North America have been negatively impacted by concerns over the COVID-19 pandemic and government imposed lock-downs to contain the spread of the disease. The United States government has taken historic measures to provide fiscal stimulus to the economy in an effort to sustain businesses, limit job losses and preempt deeper declines in consumer confidence. Despite these efforts, IMF economists now expect economic contraction of approximately 6.0% for the region in 2020. In addition, the IMF is projecting unemployment in North America will approach 10.4% for the year.

The duration of the government imposed lock-downs, while unknown at this time, will be a major determinant of when economic recovery can begin. Even after the lock-downs are lifted, concerns about a resurgence of COVID-19 cases and uncertainty related to the presidential election in the United States will likely weigh on consumer confidence for an extended period of time.

In the European region, the IMF is projecting economic contraction of approximately 6.6% for 2020. Unemployment rates will vary by country, but are generally expected to increase by 200 to 500 basis points versus 2019 levels. Geopolitical concerns and the implementation of new environmental regulations in the automotive industry will continue to weigh on the economies of the region but have been superseded by concerns over the current and potential future impacts of the COVID-19 pandemic. Certain European governments have mandated closures of broad segments of the economy, and the timing of when industries are allowed to resume operations will be a key to beginning a recovery.

In the Asia Pacific region, the IMF expects China’s economic growth rate to slow to just 1.0% in 2020 following two months of aggressive COVID-19 containment measures during the first quarter. While the containment measures have been lifted and industries are currently ramping up towards full production, significant challenges remain for the Chinese economy. Consumer confidence is likely to remain suppressed for a period of time, dampening both investment and consumption. In addition, potential new policies by the United States and other developed countries that would encourage the repatriation of

production of certain strategically sensitive products in the wake of the COVID-19 pandemic could reduce export demand and further pressure employment levels.

In South America, the IMF estimates that the Brazilian economy will contract by approximately 5.3% in 2020 as compared to 2019. Unemployment is projected to increase to nearly 15.0%. In response to the COVID-19 pandemic, the Brazilian government has approved an aggressive fiscal spending package to stimulate economic activity. While seen as urgently necessary, this spending will add to the country’s already high national debt level and could lead to lower consumer confidence and foreign investment in the region going forward. We remain cautious for the mid to long-term outlook given the long history of political instability and economic volatility in the region.

Raw Materials

Our business is susceptible to inflationary pressures with respect to raw materials which may place operational and profitability burdens on the entire supply chain. Costs related to raw materials, such as steel, aluminum, and oil and oil-derived commodities, continue to be volatile. In addition, we continue to expect commodity cost volatility to have an impact on future earnings and operating cash flows. As such, on an ongoing basis, we work with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures.

Production Levels

Our business is directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America. Beginning in early Q1 2020, as a result of COVID-19, we experienced the shutdown of effectively all of our facilities in Asia Pacific coinciding with the shutdown of our customer facilities in that region. Facility shutdowns then occurred in March 2020 for a majority of our facilities in North America, Europe and South America.

Production resumed in Asia Pacific by the end of Q1 2020, albeit at a lower capacity. We anticipate that production will increase steadily throughout Q2 2020. We expect production to gradually resume in Q2 2020 for our North America, Europe and South America facilities, in conjunction with production resuming for our customers in the regions. We are collaborating closely with our customers in preparing our own restart plans, while also adding enhanced safety standards and measures to protect our employees.

Light vehicle production in certain regions for the three months ended March 31, 2020 and 2019 was as follows:



	Three Months Ended March 31,
(In millions of units)	2020⁽¹⁾	2019⁽¹⁾	% Change
North America	3.8	4.2	(10.3)%
Europe	4.6	5.7	(18.9)%
Asia Pacific	8.2	11.7	(30.1)%
Greater China	3.2	6.0	(46.1)%
South America	0.7	0.8	(16.9)%


(1)	Production data based on IHS Automotive, April 2020.

Total vehicle production has decreased substantially across the globe. The COVID-19 pandemic has emerged as the biggest risk factor facing the automotive industry. Plant shutdowns have greatly slowed production and been accompanied by decreased demand for vehicles, as new vehicle sales are highly dependent on strong consumer confidence and low unemployment. Until consumers regain confidence in the markets and unemployment returns to lower levels, new vehicle sales, particularly of light vehicles, will likely be significantly lower than historical and previously forecasted sales levels. We expect that as customers restart production, they will focus on their most profitable platforms including light trucks, sport utility vehicles and crossover vehicles.

Results of Operations



	Three Months Ended March 31,
	2020			2019			Change
	(dollar amounts in thousands)
Sales	$	654,890		$	877,995		$	(223,105	)
Cost of products sold	611,747			762,490			(150,743		)
Gross profit	43,143			115,505			(72,362		)
Selling, administration & engineering expenses	70,671			86,974			(16,303		)
Amortization of intangibles	4,450			3,775			675
Restructuring charges	7,276			17,715			(10,439		)
Impairment of assets held for sale	74,079			—			74,079
Other impairment charges	977			—			977
Operating (loss) profit	(114,310		)	7,041			(121,351		)
Interest expense, net of interest income	(10,237		)	(11,932		)	1,695
Equity in earnings of affiliates	1,431			2,358			(927		)
Other expense, net	(3,440		)	(796		)	(2,644		)
Loss before income taxes	(126,556		)	(3,329		)	(123,227		)
Income tax (benefit) expense	(14,117		)	2,034			(16,151		)
Net loss	(112,439		)	(5,363		)	(107,076		)
Net loss (income) attributable to noncontrolling interests	1,851			(52		)	1,903
Net loss attributable to Cooper-Standard Holdings Inc.	$	(110,588	)	$	(5,415	)	$	(105,173	)

Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019

Sales

Sales for the three months ended March 31, 2020 decreased 25.4%, compared to the three months ended March 31, 2019. The decline was mainly driven by the decrease in vehicle production volume due to government imposed global lock-downs related to the COVID-19 pandemic, the sale of our AVS product line, customer price reductions and foreign exchange.



	Three Months Ended March 31,							Variance Due To:
	2020		2019		Change			Volume / Mix*			Foreign Exchange			Acquisitions / Divestiture, Net
	(dollar amounts in thousands)
Total sales	$	654,890	$	877,995	$	(223,105	)	$	(131,819	)	$	(13,540	)	$	(77,746	)

* Net of customer price reductions

Gross Profit



	Three Months Ended March 31,									Variance Due To:
	2020			2019			Change			Volume / Mix*			Foreign Exchange			Cost Increases / (Decreases)**
	(dollar amounts in thousands)
Cost of products sold	$	611,747		$	762,490		$	(150,743	)	$	(67,676	)	$	(11,055	)	$	(72,012	)
Gross profit	43,143			115,505			(72,362		)	(64,143		)	(2,485		)	(5,734		)
Gross profit percentage of sales	6.6		%	13.2		%

* Net of customer price reductions

** Includes the net impact of acquisitions and divestiture

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. The Company’s material cost of products sold was approximately 47% and 52% of total cost of products sold for the three months ended March 31, 2020 and 2019, respectively. The change in the cost of products sold was driven by government imposed global lock-downs related to the COVID-19 pandemic, the sale of our AVS product line, continuous improvement and lean manufacturing, material cost reductions, commodity price fluctuations, foreign exchanges, and wage inflation.

Gross profit for the three months ended March 31, 2020 decreased $72.4 million or 62.6% compared to the three months ended March 31, 2019. The decrease was driven by the decline in vehicle production volume due to government imposed global lock-downs related to the COVID-19 pandemic, customer price reductions, commodity price inflation, foreign exchange pressures, and wage inflation. These items were partially offset by net favorable operational performance, restructuring savings, and material cost reductions.

Selling, Administration and Engineering Expense. Selling, administration and engineering expense includes administrative expenses as well as product engineering and design and development costs. Sales, administration and engineering expense for the three months ended March 31, 2020 was 10.8% of sales compared to 9.9% for the three months ended March 31, 2019. The increase in rate was driven by lower total sales while the decrease in amount was driven by savings generated from lower compensation-related expenses and the sale of our AVS product line, partially offset by general inflation.

Restructuring. Restructuring charges for the three months ended March 31, 2020 decreased $10.4 million compared to the three months ended March 31, 2019. The decrease was primarily driven by lower restructuring charges in North America, Europe and Asia Pacific, as certain salaried employee initiatives in North America and footprint rationalization initiatives in Europe and Asia Pacific were substantially completed.

Impairment Charges. Non-cash impairment charges of $74.1 million for the three months ended March 31, 2020 related to reducing the carrying value of the held for sale facilities to fair value less costs to sell. Fair value was determined using a market approach, estimated based on expected proceeds. Other non-cash impairment charges of $1.0 million related to property, plant and equipment in the Asia Pacific region.

Interest Expense, Net. Net interest expense for the three months ended March 31, 2020 decreased $1.7 million compared to the three months ended March 31, 2019, primarily due to lower outstanding debt balances.

Other Expense, Net. Other expense for the three months ended March 31, 2020 increased $2.6 million compared to the three months ended March 31, 2019 primarily due to higher foreign currency losses.

Income Tax Expense. Income tax benefit for the three months ended March 31, 2020 was $14.1 million on a loss before income taxes of $126.6 million. This compares to an income tax expense of $2.0 million on a loss before income taxes of $3.3 million for the same period of 2019. The effective tax rate for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 differed primarily due to the geographic mix of pre-tax losses driven by the impairment change on held for sale entities and the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions. Additionally, a discrete expense of $13.3 million for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the three months ended March 31, 2020.

Segment Results of Operations

Our business is now organized in the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other. The Company uses Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items.

The following tables present sales and segment adjusted EBITDA for each of the reportable segments.

Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019

Sales



	Three Months Ended March 31,							Variance Due To:
	2020		2019		Change			Volume/ Mix^*			Foreign Exchange			Acquisitions/ Divestiture, Net
	(dollar amounts in thousands)
Sales to external customers
North America	$	334,801	$	447,718	$	(112,917	)	$	(57,291	)	$	(795	)	$	(54,831	)
Europe	185,242		242,400		(57,158		)	(29,880		)	(5,816		)	(21,462		)
Asia Pacific	79,344		125,452		(46,108		)	(41,669		)	(2,986		)	(1,453		)
South America	20,471		23,237		(2,766		)	830			(3,596		)	—
Total Automotive	619,858		838,807		(218,949		)	(128,010		)	(13,193		)	(77,746		)
Corporate, eliminations and other	35,032		39,188		(4,156		)	(3,809		)	(347		)	—
Consolidated	$	654,890	$	877,995	$	(223,105	)	$	(131,819	)	$	(13,540	)	$	(77,746	)

^* Net of customer price reductions


•	Volume and mix, net of customer price reductions includes the impact of the decline in vehicle production volume as driven by government imposed global lock-downs related to the COVID-19 pandemic.


•	The impact of foreign currency exchange primarily relates to the Euro, Brazilian Real, and Chinese Renminbi.

Segment adjusted EBITDA



	Three Months Ended March 31,									Variance Due To:
	2020			2019			Change			Volume/ Mix^*			Foreign Exchange			Cost (Increases)/ Decreases		Acquisitions/ Divestiture, Net
	(dollar amounts in thousands)
Segment adjusted EBITDA
North America	$	37,019		$	59,151		$	(22,132	)	$	(26,827	)	$	127		$	8,328	$	(3,760	)
Europe	(4,623		)	9,275			(13,898		)	(17,520		)	1,612			4,766		(2,756		)
Asia Pacific	(17,057		)	(407		)	(16,650		)	(17,348		)	(1,509		)	2,558		(351		)
South America	(4,577		)	(1,033		)	(3,544		)	(481		)	(3,513		)	450		—
Total Automotive	10,762			66,986			(56,224		)	(62,176		)	(3,283		)	16,102		(6,867		)
Corporate, eliminations and other	(2,483		)	(2,852		)	369			(1,967		)	(1,052		)	3,388		—
Consolidated adjusted EBITDA	$	8,279		$	64,134		$	(55,855	)	$	(64,143	)	$	(4,335	)	$	19,490	$	(6,867	)

^*Net of customer price reductions


•	Volume and mix, net of customer price reductions, includes the impact of the decline in vehicle production volume as driven by government imposed global lock-downs related to the COVID-19 pandemic.


•	The impact of foreign currency exchange is primarily driven by the Brazilian Real, Chinese Renminbi, Euro, Polish Zloty, and Czech Koruna.


•	The Cost (Increases) / Decreases category above includes:


◦	Reduction in compensation-related expenses, purchasing savings through lean initiatives, restructuring savings;


◦	Increase in commodity costs and wage increases;


◦	Net operational efficiencies of $16 million, weakened by the impact of COVID-19, primarily driven by our North America and European segments.

Liquidity and Capital Resources

Short and Long-Term Liquidity Considerations and Risks

We intend to fund our ongoing working capital, capital expenditures, debt service and other funding requirements through a combination of cash flows from operations, cash on hand, borrowings under our senior asset-based revolving credit facility (“ABL Facility”) and receivables factoring. The Company utilizes intercompany loans and equity contributions to fund its worldwide operations. There may be country-specific regulations which may restrict or result in increased costs in the repatriation of these funds. See Note 10. “Debt” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report for additional information.

Based on our current expectations and projections for OEM customer restart plans, whether formally announced or simply anticipated, and due to the aggressive actions we have taken to preserve cash and enhance liquidity, we believe that our cash flows from operations, cash on hand, borrowings under our ABL Facility and receivables factoring will enable us to meet our ongoing working capital, capital expenditures, debt service and other funding requirements for the next twelve months, despite the challenges presented by the COVID-19 pandemic. We continuously monitor and forecast our liquidity situation, take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our ABL Facility, depend on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials, the state of the overall automotive industry and financial and economic conditions, including the impact of COVID-19, and other factors.

Cash Flows

Operating Activities. Net cash used in operations was $2.0 million for the three months ended March 31, 2020, compared to net cash used in operations of $1.8 million for the three months ended March 31, 2019. The net outflow was primarily due to decreased cash earnings, partially offset by working capital improvements.

Investing Activities. Net cash used in investing activities was $50.1 million for the three months ended March 31, 2020, compared to net cash used in investing activities of $60.0 million for the three months ended March 31, 2019. Significant decreases in capital expenditures are expected in the second quarter of 2020, as the capital expenditure cash outflow in the first three months ended March 31, 2020 partially relates to purchases that were made in months prior to the first quarter of 2020.

Financing Activities. Net cash provided by financing activities totaled $0.4 million for the three months ended March 31, 2020, compared to net cash provided by financing activities of $57.4 million for the three months ended March 31, 2019. The change was primarily due to drawing on our revolving credit facility and an increase in local borrowing lines during the three months ended March 31, 2019. There were no share repurchases during the three months ended March 31, 2020. Cash used for share repurchases was $6.6 million for the three months ended March 31, 2019.

Share Repurchase Program

In June 2018, our Board of Directors approved a new common stock repurchase program (the “2018 Program”) authorizing us to repurchase, in the aggregate, up to $150.0 million of our outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by us and in accordance with prevailing market conditions and federal securities laws and regulations. We expect to fund any future repurchases from cash on hand and future cash flows from operations. The specific timing and amount of any future repurchase will vary based on market and business

conditions and other factors. We are not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at our discretion. As of March 31, 2020, we had approximately $98.7 million of repurchase authorization remaining under the 2018 Program.

We did not make any repurchases during the three months ended March 31, 2020. During the three months ended March 31, 2019, we repurchased 85,000 shares of common stock.

Non-GAAP Financial Measures

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


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


•	in developing our internal budgets and forecasts;


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


•	in evaluating potential acquisitions;


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


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

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

EBITDA and Adjusted EBITDA are not financial measurements recognized under U.S. GAAP, and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA as a supplement to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include:


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


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


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


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


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


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

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

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



	Three Months Ended March 31,
	2020			2019
	(dollar amounts in thousands)
Net loss attributable to Cooper-Standard Holdings Inc.	$	(110,588	)	$	(5,415	)
Income tax (benefit) expense	(14,117		)	2,034
Interest expense, net of interest income	10,237			11,932
Depreciation and amortization	37,763			36,605
EBITDA	$	(76,705	)	$	45,156
Impairment of assets held for sale	74,079			—
Restructuring charges	7,276			17,715
Project costs ⁽¹⁾	2,425			1,263
Other impairment charges ⁽²⁾	684			—
Lease termination costs ⁽³⁾	520			—
Adjusted EBITDA	$	8,279		$	64,134


(1)	Project costs recorded in selling, administration and engineering expense related to assets held for sale in 2020 and acquisitions and divestiture costs in 2019.


(2)	Non-cash impairment charges of $684 related to fixed assets, net of approximately $293 attributable to our noncontrolling interests.


(3)	Lease termination costs no longer recorded as Restructuring charges in accordance with ASC 842.

Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note 21. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report, is incorporated herein by reference.

Recently Issued Accounting Pronouncements

See Note 2. “New Accounting Pronouncements” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

Critical Accounting Estimates

There have been no significant changes in our critical accounting estimates during the three months ended March 31, 2020.

Forward-Looking Statements

This quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. Our use of words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “outlook”, “guidance”, “forecast,” or future or conditional verbs, such as “will,” “should,” “could,” “would,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. Among other items, such factors may include: the impact, and expected continued impact, of the recent COVID-19 outbreak on our financial condition and results of operations; significant risks to our liquidity presented by the COVID-19 pandemic risk; prolonged or material contractions in automotive sales and production volumes; our inability to realize sales represented by awarded business; escalating pricing pressures; loss of large customers or significant platforms; our ability to successfully compete in the automotive parts industry; availability and increasing volatility in costs of manufactured components and raw materials; disruption in our supply base; competitive threats and commercial risks associated with our diversification strategy through Advanced Technology Group; possible variability of our working capital requirements; risks associated with our international operations, including changes in laws, regulations, and policies governing the terms of foreign trade such as increased trade restrictions and tariffs; foreign currency exchange rate fluctuations; our ability to control the operations of our joint ventures for our sole benefit; our substantial amount of indebtedness; our ability to obtain adequate financing sources in the future; operating and financial restrictions imposed on us under our debt instruments; the underfunding of our pension plans; significant changes in discount rates and the actual return on pension assets; effectiveness of continuous improvement programs and other cost savings plans; manufacturing facility closings or consolidation; our ability to execute new program launches; our ability to meet customers’ needs for new and improved products; the possibility that our acquisitions and divestitures may not be successful; product liability, warranty and recall claims brought against us; laws and regulations, including environmental, health and safety laws and regulations; legal proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, data privacy concerns, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; changes in our assumptions as a result of IRS issuing guidance on the Tax Cuts and Jobs Act; the possibility of a failure to maintain effective controls and procedures; the possibility of future impairment charges to our goodwill and long-lived assets; our dependence on our subsidiaries for cash to satisfy our obligations.

You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this quarterly report on Form 10-Q, and we undertake no obligation to publicly update or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except where we are expressly required to do so by law.

This quarterly report on Form 10-Q also contains estimates and other information that is based on industry publications, surveys, and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Except for the broad effects of COVID-19 on the global economy and major financial markets, there have been no material changes to the quantitative and qualitative information about the Company’s market risk from those previously disclosed in the Company’s 2019 Annual Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1A. Risk Factors

The Company is supplementing the risk factors set out under “Item 1A. Risk Factors” in its Annual Report on Form 10-K the fiscal year ended December 31, 2019 with the additional risk factors set forth below. The risk factors below should be read in conjunction with the risk factors set out in the Company’s Form 10-K.

Our financial condition and results of operations have been, and are expected to continue to be, adversely affected by the recent COVID-19 outbreak.

We face risks related to public health issues, including epidemics and pandemics such as the global outbreak of COVID-19. To date, the COVID-19 outbreak, which has surfaced in nearly all regions around the world, and preventative measures taken to contain or mitigate the COVID-19 outbreak have caused, and are continuing to cause, business slowdowns or shutdowns and significant disruption in the financial markets both in the United States and globally. Our China manufacturing facilities experienced an extended shutdown in January and February 2020. These facilities began to re-open and ramp production, consistent with governmental guidelines and customer schedules, in late February and early March 2020.

In March 2020, our automotive customers elected to shut down their manufacturing operations in regions around the world outside of China. As a result, we correspondingly shut down our automotive manufacturing operations in all regions other than China. As of April 29, 2020, only our 12 China automotive plants and three non-automotive plants (two in the United States and one in Germany) are operating. Although our automotive operations will generally not realize revenue while our facilities are shut down, we continue to incur significant operating and non-operating expenses associated with these facilities.

We expect to restart our manufacturing operations only when our automotive customers restart their operations and start issuing orders. While, based on the information received from our automotive customers, we are currently considering a scenario for a phased restart of our manufacturing plants, supply network and other dependent functions (in addition to what is already underway in China) in mid-to-late May 2020 with enhanced safety standards in place to protect workers, we do not know when our automotive customers will actually resume their manufacturing operations. Furthermore, any decisions on resumptions will need to be in compliance with local government requirements and made in cooperation with our customers, local unions and other stakeholders, and, accordingly, any projected timetable for resumption is subject to change. Fully ramping up our operations may take several months and will depend, in part, on whether our customers and suppliers have resumed normal operations. In addition, government regulations and safety and social distancing procedures that we implement may increase our operating costs, and we may not be able to pass along these increased costs to our customers.

Our business relies on a number of third parties, including suppliers and distribution and logistics providers. One or more of these third parties may experience financial distress, staffing shortages or liquidity challenges, file for bankruptcy protection, go out of business, or suffer disruptions in their business due to the COVID-19 pandemic. These supply chain effects may have an adverse effect on our ability to restart our business and meet customer demand and may result in an increase in our costs of production and distribution, including increased freight and logistics costs and other expenses. A continued significant disruption to our production schedule will have an adverse effect on our financial condition, liquidity and results of operations.

If a significant percentage of our workforce, or the workforces of our suppliers and other third-party partners, is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted. We also depend on senior management and other key personnel and consultants, and the illness of certain personnel or consultants could result in the loss of expertise and negatively affect our operations.

The economic slowdown attributable to COVID-19 has led to a global decrease in vehicle sales in markets around the world. Based on current weak consumer confidence, rising unemployment levels, risks to small businesses and overall economic uncertainty, it is likely that global demand for light vehicles will be significantly lower than both historical and previously projected levels for an extended period, even as the COVID-19 pandemic begins to abate. As described in more detail under the risk factor entitled “We are highly dependent on the automotive industry. A prolonged or material contraction in automotive sales and production volumes could adversely affect our business, results of operations and financial condition.” in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, a sustained decline in vehicle sales would adversely affect our business, results of operations and financial condition.

The COVID-19 pandemic has also caused significant disruptions to global financial markets. Such disruptions, together with the impact of COVID-19 on the automotive industry, may have a negative impact on our ability to access capital in the future on favorable terms or at all.

The full impact of the COVID-19 pandemic on our financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the outbreak, its impact on our customers, suppliers and logistics partners, how quickly normal operations can resume and the duration and magnitude of the economic downturn caused by the pandemic in our key markets. Further, government-sponsored liquidity or stimulus programs in response to the COVID-19 pandemic may not be available to our customers, suppliers or us, and if available, may nevertheless be insufficient to address the impacts of COVID-19. While we expect the impacts of COVID-19 to have an adverse effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.

The COVID-19 pandemic may also exacerbate the other risks disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.

The COVID-19 pandemic risk presents significant risks to our liquidity.

Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the effects of the COVID-19 pandemic on our customers and their production rates, the condition of global financial markets, the availability of sufficient amounts of financing, our operating performance and our credit ratings. While we currently have no outstanding borrowings under our ABL facility, our ability to borrow against the ABL facility is limited to our borrowing base, which consists primarily of our U.S. and Canadian accounts receivable and inventory. Such working capital account balances are expected to decrease over the next few months as a result of the production shutdown, and thus our ability to borrow under our ABL facility will decrease significantly.

In addition, if the Company has availability for borrowing under its ABL facility less than the greater of (i) $15,000,000 and (ii) 10% of the Borrowing Base (as defined in the ABL facility), it must be in compliance with a springing Fixed Charge Coverage Ratio maintenance covenant of 1.00:1.00. The Company currently would not be able to satisfy such covenant and does not expect to be able to for the foreseeable future due to the impact of the COVID-19 pandemic on its business. Accordingly, the Company intends to manage any borrowings under its ABL facility to avoid triggering this maintenance covenant, which would further constrain its ability to utilize the ABL facility. As of March 31, 2020, the Company’s Borrowing Base was $173 million. Net of the 10% of the Borrowing Base that cannot be borrowed without triggering the fixed charge coverage ratio maintenance covenant and $10 million of outstanding letters of credit, the Company effectively had $146 million available for borrowing under its ABL facility.

Furthermore, production shutdowns will result in working capital swings which are expected to result in increased outflows during 2020. As a result of the impacts of the COVID-19 pandemic, we may be required to raise additional capital, and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. Such capital may not be available on favorable terms or at all.

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

The Company is authorized to purchase, in the aggregate, up to $150 million of our outstanding common stock under our common stock repurchase program, which was effective in November 2018. As of March 31, 2020, we had approximately $98.7 million of repurchase authorization remaining under our ongoing common stock share repurchase program as discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Share Repurchase Program,” and Note 18. “Common Stock” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

A summary of our shares of common stock repurchased during the three months ended March 31, 2020 is shown below:



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
January 1, 2020 through January 31, 2020	—	$	—	—	$	98.7
February 1, 2020 through February 29, 2020	19,086	25.19		—	98.7
March 1, 2020 through March 31, 2020	306	12.44		—	98.7
Total	19,392			—


(1)	Includes shares repurchased by the Company to satisfy employee tax withholding requirements due upon the vesting of restricted stock awards.

Item 6. Exhibits




Exhibit No.		Description of Exhibit
10.1*		Form of 2020 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Nonqualified Stock Option Agreement.

10.2*		Form of 2020 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Performance Unit Award Agreement (cash-settled award).

10.3*		Form of 2020 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (cash-settled award).

10.4*		Amendment No. 1, dated as of March 24, 2020, to the Third Amended and Restated Loan Agreement and Limited Waiver by and among CS Intermediate Holdco 1 LLC, Cooper-Standard Automotive Inc., Cooper-Standard Automotive Canada Limited, Cooper-Standard Automotive International Holdings B.V., certain subsidiaries of Cooper-Standard Automotive Inc., the lenders party thereto and Bank of America, N.A. as agent for such lenders.

10.5*		Cooper-Standard Automotive Inc. US Salary Deferral Program, dated April 20, 2020, with Program Term starting May 4, 2020.

31.1*		Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

31.2*		Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

32**		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.DEF***		Inline XBRL Taxonomy Extension Definition Linkbase Document

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104***		Cover Page Interactive Data File, formatted in Inline XBRL



*	Filed with this Report.
**	Furnished with this Report.
***	Submitted electronically with this Report in accordance with the provisions of Regulation S-T.

SIGNATURES

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



				COOPER-STANDARD HOLDINGS INC.

May 11, 2020				/S/ *JONATHAN P. BANAS*
Date				Jonathan P. Banas Chief Financial Officer (Principal Financial Officer)

Cooper-Standard Holdings Inc. – ‘10-Q’ for 3/31/20

On: Monday, 5/11/20, at 5:04pm ET · For: 3/31/20 · Accession #: 1320461-20-25 · File #: 1-36127

Previous ‘10-Q’: ‘10-Q’ on 11/7/19 for 9/30/19 · Next: ‘10-Q’ on 8/5/20 for 6/30/20 · Latest: ‘10-Q’ on 11/3/23 for 9/30/23 · 4 References:

Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘10-Q’ — Quarterly Report
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		Page

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Changes in Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

	PART II. OTHER INFORMATION

Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6.	Exhibits	40
SIGNATURES		41

This ‘10-Q’ Filing	Date	Other Filings

	11/15/26
	3/24/25
	11/2/23
Filed on:	5/11/20	8-K
	5/7/20
	5/5/20
	4/29/20
For Period end:	3/31/20
	3/1/20
	2/29/20
	2/1/20
	1/31/20
	1/1/20
	12/31/19	10-K, SD
	4/1/19
	3/31/19	10-Q
	12/31/18	10-K, SD
	3/6/18	4
	5/2/17	4, 8-K
		List all Filings

Cooper-Standard Holdings Inc. – ‘10-Q’ for 3/31/20

On: Monday, 5/11/20, at 5:04pm ET · For: 3/31/20 · Accession #: 1320461-20-25 · File #: 1-36127

Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘10-Q’ — Quarterly ReportDocument Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

4 Subsequent Filings that Reference this Filing

Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘10-Q’ — Quarterly Report
Document Table of Contents