SEC Filing | Cooper Standard

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)



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

For the quarterly period ended September 30, 2019



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

For the transition period from __________ to __________.

Commission File Number: 001-36127

______________________________

COOPER-STANDARD HOLDINGS INC.

(Exact name of registrant as specified in its charter)

______________________________



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

39550 Orchard Hill Place Drive

Novi, Michigan 48375

(Address of principal executive offices)

(Zip Code)

(248) 596-5900

(Registrant’s telephone number, including area code)

______________________________

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



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



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

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 ☐ No ☒

As of October 31, 2019, there were 16,838,724 shares of the registrant’s common stock, $0.001 par value, outstanding.

COOPER-STANDARD HOLDINGS INC.

Form 10-Q

For the period ended September 30, 2019



		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	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43

	PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
SIGNATURES		46

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 September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Sales	$	729,021		$	861,653		$	2,373,865		$	2,757,306
Cost of products sold	659,313			741,998			2,088,631			2,315,406
Gross profit	69,708			119,655			285,234			441,900
Selling, administration & engineering expenses	63,020			82,134			224,164			238,913
Gain on sale of business	1,730			—			(188,180		)	—
Gain on sale of land	—			(10,714		)	—			(10,714		)
Amortization of intangibles	4,250			3,791			13,173			10,596
Restructuring charges	5,572			2,703			29,214			19,841
Impairment charges	1,958			—			4,146			—
Operating profit (loss)	(6,822		)	41,741			202,717			183,264
Interest expense, net of interest income	(10,351		)	(9,983		)	(33,858		)	(29,756		)
Equity in earnings of affiliates	1,515			1,413			5,764			4,348
Loss on refinancing and extinguishment of debt	—			—			—			(770		)
Other expense, net	(514		)	(1,697		)	(3,091		)	(3,973		)
Income (loss) before income taxes	(16,172		)	31,474			171,532			153,113
Income tax expense (benefit)	(574		)	(1,190		)	45,996			19,831
Net income (loss)	(15,598		)	32,664			125,536			133,282
Net (income) loss attributable to noncontrolling interests	1,745			(508		)	2,447			(2,457		)
Net income (loss) attributable to Cooper-Standard Holdings Inc.	$	(13,853	)	$	32,156		$	127,983		$	130,825

Earnings (loss) per share:
Basic	$	(0.82	)	$	1.80		$	7.42		$	7.29
Diluted	$	(0.82	)	$	1.77		$	7.40		$	7.13

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 September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	(15,598	)	$	32,664		$	125,536		$	133,282
Other comprehensive loss:
Currency translation adjustment	(29,513		)	(15,715		)	(33,407		)	(41,277		)
Benefit plan liabilities adjustment, net of tax	2,246			656			686			4,914
Fair value change of derivatives, net of tax	(1,558		)	1,481			523			1,871
Other comprehensive loss, net of tax	(28,825		)	(13,578		)	(32,198		)	(34,492		)
Comprehensive income (loss)	(44,423		)	19,086			93,338			98,790
Comprehensive loss (income) attributable to noncontrolling interests	2,606			584			3,558			(704		)
Comprehensive income (loss) attributable to Cooper-Standard Holdings Inc.	$	(41,817	)	$	19,670		$	96,896		$	98,086

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)



	September 30, 2019			December 31, 2018
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	323,142		$	264,980
Accounts receivable, net	462,244			418,607
Tooling receivable	158,826			141,106
Inventories	178,916			175,572
Prepaid expenses	32,795			36,878
Other current assets	71,901			108,683
Assets held for sale	—			103,898
Total current assets	1,227,824			1,249,724
Property, plant and equipment, net	961,793			984,241
Operating lease right-of-use assets, net	87,849			—
Goodwill	142,104			143,681
Intangible assets, net	88,325			99,602
Other assets	137,552			145,855
Total assets	$	2,645,447		$	2,623,103

Liabilities and Equity
Current liabilities:
Debt payable within one year	$	67,419		$	101,323
Accounts payable	405,766			452,320
Payroll liabilities	94,728			92,604
Accrued liabilities	104,965			98,907
Current operating lease liabilities	24,004			—
Liabilities held for sale	—			71,195
Total current liabilities	696,882			816,349
Long-term debt	736,044			729,805
Pension benefits	128,409			138,771
Postretirement benefits other than pensions	46,961			40,901
Long-term operating lease liabilities	64,102			—
Other liabilities	52,644			37,775
Total liabilities	1,725,042			1,763,601
7% Cumulative participating convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding	—			—
Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized; 18,904,533 shares issued and 16,838,724 shares outstanding as of September 30, 2019, and 19,620,546 shares issued and 17,554,737 outstanding as of December 31, 2018	17			17
Additional paid-in capital	488,862			501,511
Retained earnings	686,714			576,025
Accumulated other comprehensive loss	(277,175		)	(246,088		)
Total Cooper-Standard Holdings Inc. equity	898,418			831,465
Noncontrolling interests	21,987			28,037
Total equity	920,405			859,502
Total liabilities and equity	$	2,645,447		$	2,623,103

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, 2018	17,554,737		$	17	$	501,511		$	576,025		$	(246,088	)	$	831,465		$	28,037		$	859,502
Cumulative effect of change in accounting principle	—		—		—			(2,607		)	—			(2,607		)	—			(2,607		)
Repurchase of common stock	(118,774	)	—		(2,057		)	(3,880		)	—			(5,937		)	—			(5,937		)
Share-based compensation, net	85,937		—		4			(214		)	—			(210		)	—			(210		)
Contribution from noncontrolling interests	—		—		—			—			—			—			2,112			2,112
Net loss	—		—		—			(3,460		)	—			(3,460		)	(157		)	(3,617		)
Other comprehensive income	—		—		—			—			4,455			4,455			404			4,859
Balance as of March 31, 2019	17,521,900		$	17	$	499,458		$	565,864		$	(241,633	)	$	823,706		$	30,396		$	854,102
Repurchase of common stock	(626,305	)	—		(20,486		)	(9,514		)	—			(30,000		)	—			(30,000		)
Share-based compensation, net	5,738		—		3,522			1			—			3,523			—			3,523
Purchase of noncontrolling interest	—		—		1,298			—			—			1,298			(6,057		)	(4,759		)
Dividends declared to noncontrolling interests	—		—		—			—			—			—			(233		)	(233		)
Net income (loss)	—		—		—			145,296			—			145,296			(545		)	144,751
Other comprehensive loss	—		—		—			—			(7,578		)	(7,578		)	(654		)	(8,232		)
Balance as of June 30, 2019	16,901,333		$	17	$	483,792		$	701,647		$	(249,211	)	$	936,245		$	22,907		$	959,152
Repurchase of common stock	(72,875	)	—		1,084			(1,084		)	—			—			—			—
Share-based compensation, net	10,266		—		3,986			4			—			3,990			—			3,990
Contribution from noncontrolling interests	—		—		—			—			—			—			1,686			1,686
Net loss	—		—		—			(13,853		)	—			(13,853		)	(1,745		)	(15,598		)
Other comprehensive loss	—		—		—			—			(27,964		)	(27,964		)	(861		)	(28,825		)
Balance as of September 30, 2019	16,838,724		$	17	$	488,862		$	686,714		$	(277,175	)	$	898,418		$	21,987		$	920,405

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, 2017	17,914,599		$	18	$	512,815		$	511,367		$	(197,631	)	$	826,569		$	28,520		$	855,089
Cumulative effect of change in accounting principle	—		—		—			8,639			(8,639		)	—			—			—
Share-based compensation, net	151,288		—		(73		)	(4,714		)	—			(4,787		)	—			(4,787		)
Purchase of noncontrolling interests	—		—		(2,682		)	—			—			(2,682		)	312			(2,370		)
Net income	—		—		—			56,792			—			56,792			624			57,416
Other comprehensive income	—		—		—			—			16,662			16,662			949			17,611
Balance as of March 31, 2018	18,065,887		$	18	$	510,060		$	572,084		$	(189,608	)	$	892,554		$	30,405		$	922,959
Repurchase of common stock	(276,696	)	—		(13,696		)	(29,829		)	—			(43,525		)	—			(43,525		)
Share-based compensation, net	29,765		—		4,319			(610		)	—			3,709			—			3,709
Contribution from noncontrolling interests	—		—		—			—			—			—			299			299
Net income	—		—		—			41,877			—			41,877			1,325			43,202
Other comprehensive loss	—		—		—			—			(36,915		)	(36,915		)	(1,610		)	(38,525		)
Balance as of June 30, 2018	17,818,956		$	18	$	500,683		$	583,522		$	(226,523	)	$	857,700		$	30,419		$	888,119
Repurchase of common stock	(51,092	)	—		5,608			(5,608		)	—			—			—			—
Share-based compensation, net	6,765		—		4,058			(108		)	—			3,950			—			3,950
Net income	—		—		—			32,156			—			32,156			508			32,664
Other comprehensive loss	—		—		—			—			(12,486		)	(12,486		)	(1,092		)	(13,578		)
Balance as of September 30, 2018	17,774,629		$	18	$	510,349		$	609,962		$	(239,009	)	$	881,320		$	29,835		$	911,155

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)



	Nine Months Ended September 30,
	2019			2018
Operating Activities:
Net income	$	125,536		$	133,282
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	98,795			98,675
Amortization of intangibles	13,173			10,596
Gain on sale of business	(188,180		)	—
Gain on sale of land	—			(10,714		)
Impairment charges	4,146			—
Share-based compensation expense	10,293			14,117
Equity in earnings of affiliates, net of dividends related to earnings	(847		)	160
Loss on refinancing and extinguishment of debt	—			770
Deferred income taxes	19,576			7,083
Other	2,628			1,583
Changes in operating assets and liabilities	(55,213		)	(177,548		)
Net cash provided by operating activities	29,907			78,004
Investing activities:
Capital expenditures	(131,085		)	(160,088		)
Acquisition of businesses, net of cash acquired	(452		)	(98,673		)
Proceeds from sale of business	243,362			—
Proceeds from sale of fixed assets and other	2,084			8,173
Net cash provided by (used in) investing activities	113,909			(250,588		)
Financing activities:
Principal payments on long-term debt	(3,556		)	(2,928		)
(Decrease) increase in short-term debt, net	(32,737		)	3,554
Purchase of noncontrolling interests	(4,797		)	(2,450		)
Repurchase of common stock	(36,550		)	(43,525		)
Taxes withheld and paid on employees' share-based payment awards	(2,757		)	(11,571		)
Contribution from noncontrolling interests and other	2,132			(88		)
Net cash used in financing activities	(78,265		)	(57,008		)
Effects of exchange rate changes on cash, cash equivalents and restricted cash	(6,997		)	(3,045		)
Changes in cash, cash equivalents and restricted cash	58,554			(232,637		)
Cash, cash equivalents and restricted cash at beginning of period	267,399			518,461
Cash, cash equivalents and restricted cash at end of period	$	325,953		$	285,824

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
	Balance as of
	September 30, 2019			December 31, 2018
Cash and cash equivalents	$	323,142		$	264,980
Restricted cash included in other current assets	12			18
Restricted cash included in other assets	2,799			2,401
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	325,953		$	267,399

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

1. Overview

Basis of Presentation

Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company” 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 product line. On April 1, 2019, the Company completed the divestiture of its anti-vibration systems product line. See Note 4. “Divestiture.”

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, 2018 (the “2018 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 September 30, 2019 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.

Correction of Errors

During the third quarter of 2019, the Company identified errors related to the timing of recording pricing matters with customers in the Asia Pacific region. These errors primarily related to periods prior to fiscal year 2019 and resulted in an out-of-period adjustment that decreased sales by $8,498, net income by $6,220 and diluted EPS by $0.36 for the nine months ended September 30, 2019 and increased accrued liabilities and other liabilities as of September 30, 2019 by $6,220, net of tax impact. In addition, an immaterial amount related to these matters was recorded during the third quarter of 2019 that related to the first and second quarters of 2019.

Management evaluated the effect of the adjustments on the Company’s financial statements under the provision of ASC 250: Accounting Changes and Error Corrections, Staff Accounting Bulletin No. 99: Materiality and Staff Accounting Bulletin No. 108: Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements and concluded that the errors were immaterial to the prior year’s annual financial statements and expected financial results for the current year.

2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2016-02, Leases (Topic 842)

On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) 842, Leases, 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 recognition of right-of-use assets and lease liabilities for all leases (except for short-term leases). The Company made a policy election for all asset classes to exclude the balance sheet recognition of leases with a lease term, at lease commencement, of 12 months or less and no purchase option reasonably certain to be exercised. The standard also requires additional disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from lease transactions. The new standard resulted in a material increase in right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheet beginning in 2019 and had no impact on its condensed consolidated income statement or to cash provided by (used in) operating, financing or investing activities on its condensed consolidated cash flow statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

The difference between the lease assets and lease liabilities was recorded as an adjustment to the opening balance of retained earnings. The cumulative effects of the changes made to the Company’s condensed consolidated balance sheet as of January 1, 2019 were as follows:



	Balance as of December 31, 2018		Adjustments due to adoption of ASC 842			Balance as of January 1, 2019

Prepaid expenses	$	36,878	$	(2,704	)	$	34,174
Assets held for sale	103,898		9,559			113,457
Operating lease right-of-use assets, net	—		102,268			102,268
Accrued liabilities	98,907		(336		)	98,571
Current operating lease liabilities	—		27,229			27,229
Liabilities held for sale	71,195		9,561			80,756
Long-term operating lease liabilities	—		75,276			75,276
Retained earnings	576,025		(2,607		)	573,418

The Company elected the package of practical expedients on existing leases as of the effective date which permits the Company to carry forward lease classification and not reassess existing contracts in order to determine if the contracts contain a lease. The Company did not elect the hindsight practical expedient. Additionally, the Company elected the practical expedient to not reassess whether any expired or existing land easements contain leases.

Recently Issued Accounting Pronouncements

The Company considered the recently issued accounting pronouncement summarized as follows, which is not expected to have a material impact on its consolidated financial statements:



Standard	Description	Effective Date
ASU 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	Amends guidance on the measurement of all expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions and reasonable and supportable forecasts.	January 1, 2020

3. Acquisitions

Lauren Acquisition

In the third quarter of 2018, the Company acquired the assets and liabilities of Lauren Manufacturing and Lauren Plastics (together, “Lauren”), extruders and molders of organic, silicone, thermoplastic and engineered polymer products with expertise in sealing solutions, to further expand the Company’s Industrial and Specialty Group and non-automotive and adjacent markets. The base purchase price of the acquisition was $92,700. The results of operations of Lauren are included in the Company’s condensed consolidated financial statements from the date of acquisition and reported within the North America segment. The pro forma effect of this acquisition would not have materially impacted the Company’s reported results for any periods presented, and as a result no pro forma information has been presented. This acquisition was accounted for as a business combination, resulting in the recognition of intangible assets of $34,810 and tax deductible goodwill of $26,080. Since completion of initial estimates in the third quarter of 2018, the Company has recorded insignificant measurement period adjustments to increase the provisional identifiable net assets acquired, which resulted in a decrease to goodwill.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

LS Mtron Automotive Parts Acquisition

In the fourth quarter of 2018, the Company acquired 80.1% of LS Mtron Ltd.’s automotive parts business, now named Cooper Standard Automotive and Industrial, Inc. The acquisition adds jounce brake lines and charge air cooling technology to the Company’s automotive fluid transfer and fuel and brake delivery systems product lines and further expands core product offerings. The base purchase price was $25,750. The noncontrolling interest was determined to have a fair value of $6,400. The results of operations of Cooper Standard Automotive and Industrial, Inc. are included in the Company’s condensed consolidated financial statements from the date of acquisition and reported within the Asia Pacific segment. The pro forma effect of this acquisition would not have materially impacted the Company’s reported results for any periods presented, and as a result no pro forma information has been presented. This acquisition was accounted for as a business combination, and the fair value of identifiable assets acquired and liabilities assumed approximated the fair value of the consideration transferred. In 2019, the Company recorded insignificant measurement period adjustments primarily due to working capital adjustments, which resulted in an increase to the base purchase price.

Hutchings Automotive Products Acquisition

In the fourth quarter of 2018, the Company acquired the assets and liabilities of Hutchings Automotive Products, LLC (“Hutchings”), a North American supplier of high quality fluid carrying products for automotive powertrain and coolant systems applications. The base purchase price was $42,100. The results of operations of Hutchings are included in the Company's condensed consolidated financial statements from the date of acquisition and reported within the North America segment. The pro forma effect of this acquisition would not have materially impacted the Company’s reported results for any periods presented, and as a result no pro forma information has been presented. This acquisition was accounted for as a business combination, resulting in the recognition of intangible assets of $11,100 and tax deductible goodwill of $5,200.

4. Divestiture

In the third quarter of 2018, management approved a plan to sell the anti-vibration systems (“AVS”) product line within its North America, Europe and Asia Pacific segments. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of September 1, 2018, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.

On November 2, 2018, the Company entered into a definitive agreement with an unaffiliated company to divest the AVS product line. On April 1, 2019, the Company completed its sale of the AVS product line to Continental AG. The total sale price of the transaction was $265,500, subject to certain adjustments. Cash proceeds received in the second quarter were $243,362 after adjusting for certain liabilities assumed by the purchaser. The net cash proceeds after taxes, post-closing adjustments and transaction-related expenses and fees are expected to be approximately $215,000 to $220,000. The Company recognized a gain on the divestiture of $188,180, subject to post-closing adjustments. Adjustments to the gain recorded in the third quarter of 2019 relate primarily to working capital adjustments. In addition, at closing, the Company and Continental AG entered into certain ancillary agreements providing for the transition of the AVS product line.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

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



	December 31, 2018
Accounts receivable, net	$	35,498
Tooling receivable	3,797
Inventories	13,774
Prepaid expenses	1,759
Other current assets	1,197
Property, plant and equipment, net	31,148
Goodwill	13,500
Other assets	3,225
Total assets held for sale	$	103,898

Accounts payable	$	38,065
Payroll liabilities	6,826
Accrued liabilities	1,000
Pension benefits	15,894
Postretirement benefits other than pensions	9,281
Other liabilities	129
Total liabilities related to assets held for sale	$	71,195

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

5. 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 September 30, 2019 was as follows:



	North America		Europe		Asia Pacific		South America		Consolidated
Automotive	$	361,246	$	173,863	$	112,625	$	25,182	$	672,916
Commercial	4,101		6,305		—		9		10,415
Other	28,400		17,241		17		32		45,690
Revenue	$	393,747	$	197,409	$	112,642	$	25,223	$	729,021

Revenue by customer group for the nine months ended September 30, 2019 was as follows:



	North America		Europe		Asia Pacific		South America		Consolidated
Automotive	$	1,167,065	$	588,474	$	358,532	$	73,401	$	2,187,472
Commercial	16,367		22,602		17		92		39,078
Other	89,885		57,149		191		90		147,315
Revenue	$	1,273,317	$	668,225	$	358,740	$	73,583	$	2,373,865

Revenue by customer group for the three months ended September 30, 2018 was as follows:



	North America		Europe		Asia Pacific		South America		Consolidated
Automotive	$	441,142	$	201,885	$	136,147	$	25,466	$	804,640
Commercial	5,926		7,693		4