UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2005

or

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

Commission File Number: 333-123708


COOPER-STANDARD HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 20-1945088
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
39550 Orchard Hill Place Drive
Novi, Michigan 48375
(Address of principal executive offices)
(Zip Code)
(248) 596-5900
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[ ]  Yes    [X]  No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

[ ]  Yes    [X]  No

Number of shares of common stock of registrant outstanding, at April 30, 2005:

3,194,500 shares of common stock, $0.01 par value
    




PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements.

COMBINED AND CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2004 AND 2005
(UNAUDITED)
(Dollar amounts in thousands)


  Predecessor Successor
  2004 2005
Sales $ 496,984   $ 470,141  
Cost of products sold   407,707     401,764  
Gross profit   89,277     68,377  
Selling, administration & engineering expenses   45,517     43,748  
Amortization of intangibles   136     6,970  
Restructuring   4,420     243  
Operating profit   39,204     17,416  
Interest expense, net of interest income   (1,066   (16,131
Equity earnings (losses)   (218   802  
Other income (expense)   (502   (2,662
Income (loss) before income taxes   37,418     (575
Provision for income tax expense (benefit)   10,875     (97
Net income (loss) $ 26,543   $ (478

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

2




CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)


  Successor
  December 31,
2004
March 31,
2005
    (Unaudited)
Assets            
Current assets:            
Cash and cash equivalents $ 83,658   $ 98,668  
Accounts receivable, net   299,906     315,756  
Inventories, net   117,859     108,711  
Prepaid expenses   19,994     23,460  
Total current assets   521,417     546,595  
Property, plant and equipment, net   509,943     495,246  
Goodwill   402,598     403,901  
Intangibles, net   311,605     304,632  
Other assets   54,765     55,696  
  $ 1,800,328   $ 1,806,070  
Liabilities and Stockholders' Equity            
Current liabilities:            
Notes payable $ 2,387   $ 1,989  
Accounts payable   136,543     148,127  
Payroll liabilities   57,210     59,511  
Accrued liabilities   54,452     61,783  
Deferred purchase price payment   53,423     54,270  
Payable to stockholder   8,000      
Current portion of long-term debt   10,758     11,001  
Total current liabilities   322,773     336,681  
Long-term debt   899,572     896,408  
Pension benefits   48,090     49,902  
Postretirement benefits other than pensions   87,410     88,832  
Deferred tax liabilities   109,885     107,430  
Other long-term liabilities   14,438     14,245  
Stockholders' Equity:            
Common stock, $0.01 par value, 3,500,000 shares authorized,
3,192,000 and 3,194,500 shares issued and outstanding
at December 31, 2004 and March 31, 2005, respectively
  32     32  
Additional paid-in capital   319,168     319,418  
Retained earnings (deficit)   (4,545   (5,023
Cummulative other comprehensive income   3,505     (1,855
Total stockholders' equity   318,160     312,572  
  $ 1,800,328   $ 1,806,070  

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

3




COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2004 AND 2005
(UNAUDITED)
(Dollar amounts in thousands)


  Predecessor Successor
  2004 2005
Operating activities:            
Net income (loss) $ 26,543   $ (478
Adjustments to reconcile net income (loss) to net cash provided by operating activities:            
Depreciation   20,225     18,609  
Amortization   317     6,970  
Amortization of debt issuance costs       924  
Changes in operating assets and liabilities:            
Accounts receivable   (57,320   (19,080
Inventories   (715   8,059  
Prepaid expenses   473     (3,734
Accounts payable   35,533     9,878  
Accrued liabilities   2,661     20,345  
Other non-current items   4,678     (12,490
Net cash provided by operating activities   32,395     29,003  
Investing activities:            
Property, plant, and equipment   (12,606   (8,295
Transaction costs related to Acquisition       (8,000
Proceeds from the sale of assets and other   6,219     708  
Net cash used in investing activities   (6,387   (15,587
Financing activities:            
Increase (decrease) in short-term debt   629     517  
Proceeds from long-term debt       183  
Principal payments on long-term debt   (723   (1,267
Net changes in advances from Parent   36,343      
Equity contributions       250  
Net cash provided by (used in) financing activities   36,249     (317
Effects of exchange rate changes on cash   (2,859   1,911  
             
Changes in cash and cash equivalents   59,398     15,010  
Cash and cash equivalents at beginning of period   102,599     83,658  
Cash and cash equivalents at end of period $ 161,997   $ 98,668  

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

4




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands except per share amounts)

1.    Overview

Description of business

Cooper-Standard Holdings Inc. (the "Company"), through its wholly-owned subsidiary Cooper-Standard Automotive Inc., is a leading global manufacturer of body sealing, fluid handling, and noise, vibration and harshness control ("NVH") components, systems, subsystems and modules, primarily for use in passenger vehicles and light trucks primarily for global original equipment manufacturers ("OEMs") and replacement markets. The Company conducts substantially all of its activities through its subsidiaries.

Change in ownership

The Company acquired the Automotive segment of Cooper Tire & Rubber Company ("Cooper Tire") on December 23, 2004 for a cash purchase price of $1,165 million, subject to adjustment based on the amount of cash and cash equivalents less debt obligations and the difference between targeted working capital and working capital at the closing date (estimated at $61 million) (hereafter, the "Acquisition"). Additionally, the Company incurred approximately $24 million of direct acquisition costs, principally for investment banking, legal, and other professional services, for a total purchase price of $1,250 million. The consolidated balance sheet includes a deferred purchase price payment ($54 million at March 31, 2005 and $53 million at December 31, 2004) related to final settlement of a post-closing working capital adjustment. Final payment of the $54 million occurred in April 2005.

At closing, the Company funded the acquisition through $318 million of equity contributions, $200 million of senior notes (the "Senior Notes"), $350 million of senior subordinated notes (the "Senior Subordinated Notes") and revolving credit and term loan facilities (the "Senior Secured Credit Facilities") of $350 million. The Company incurred approximately $28 million of issuance costs associated with these borrowings, which are included in other assets on the consolidated balance sheet. The Company amortizes such costs over the terms of the related borrowings.

Basis of presentation

The accompanying unaudited combined and consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information and should be read in conjunction with the combined and consolidated financial statements and notes thereto included in the Company's Registration Statement on Form S-4 as of December 31, 2004, as filed with the SEC. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements include all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company. Operating results for the three months ended March 31, 2005 are not necessarily indicative of results that may be expected for the year ending December 31, 2005.

As a result of the Acquisition on December 23, 2004, the consolidated financial statements of the Company reflect the Acquisition under the purchase method of accounting, in accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"). For periods following the Acquisition, the consolidated financial statements of the Company are presented as Successor. For periods preceding the Acquisition, the combined financial statements are presented as Predecessor.

The combined statements of operations include expenses recorded by the Predecessor or directly charged to the Predecessor by Cooper Tire for periods prior to the Acquisition. In addition, the combined statements of operations include an allocation of certain general and administrative corporate expenses from Cooper Tire. These services primarily consisted of compensation and benefits administration, payroll processing, legal services, purchasing, auditing, income tax planning and compliance, treasury services, general corporate management and governance and other corporate

5




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)

functions. These allocations totaled $3,719 in the three months ended March 31, 2004. The allocations were determined based on specific services being provided or were allocated based on net sales, headcount, assets or a combination of these factors and are reported in cost of products sold and selling, administration and engineering expenses in the combined statements of income. In addition, Cooper Tire charged the Predecessor market rate interest expense on net intercompany advances of $1,253 in the three months ended March 31, 2004.

The domestic operations of the Predecessor were included in the United States consolidated tax returns of Cooper Tire with current taxes refundable and payable reported in advances from Parent through the date of the Acquisition. The Predecessor's provisions for income taxes were computed on a basis consistent with separate returns.

Stock-based compensation

The Company accounts for employee stock option plans in accordance with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees." The following table illustrates the effect on net income as if the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," had been applied. Amounts related to the Predecessor period represent stock options granted by Cooper Tire to employees of the Predecessor. Amounts related to the Successor period relate to stock options granted by the Company.


  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
Net income (loss), as reported $ 26,543   $ (478
Add: Stock-based compensation, as reported        
Deduct: Stock-based compensation under SFAS 123 fair value method, net of tax   (180   (133
Pro forma net income (loss) $ 26,363   $ (611

The fair value for options awarded was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
Risk-free interest rate   2.2   3.7
Dividend yield   2.1   0.0
Expected volatility   34.0   0.0
Expected life (in years)   4.7     6.0  

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation. As a result of changing to a net presentation of cash held in our global cash management vehicle, which we use to pool cash funds from foreign subsidiaries, cash and notes payable both decreased by $79,230 at December 31, 2004 as compared to the previous classification.

Recent accounting pronouncements

In December 2004, the FASB issued a FASB Staff Position ("FSP") 109-2 "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004", which provides accounting and disclosure guidance for the foreign earnings repatriation provision within the American Jobs Creation Act of 2004. The Act provides a special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer. FSP

6




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)

109-2 provides for a period of time beyond the financial reporting period of enactment for a company to evaluate the effect of the Act on its plan for reinvestment or repatriation of foreign earnings. The Company is in the process of evaluating the effects of one-time repatriation opportunities provided by the Act. At the time of filing these statements, the Company cannot reasonably estimate the income tax effects of such repatriation under the Act.

2.    Goodwill and Intangibles

In connection with the Acquisition, the Company recorded goodwill totaling $402,598 at December 31, 2004. The Company increased goodwill by $1,303 as of March 31, 2005 as the result of settlement of the post-closing working capital adjustment and other adjustments to recorded assets and liabilities. As a result of the close proximity of the Acquisition to the reporting period and the pending completion of the purchase price allocation, goodwill has not been allocated to the applicable reporting units as of March 31, 2005. Such allocation will occur upon completion of the purchase price allocation in 2005.

The following table presents intangible assets and accumulated amortization balances of the Successor as of March 31, 2005:


  Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortization
Period
Customer contracts $ 141,000   $ (4,869 $ 136,131   7 to 8 years
Customer relationships   153,000     (2,076   150,924   20 years
Developed technology   18,200     (623   17,577   6 to 10 years
  $ 312,200   $ (7,568 $ 304,632    

Amortization expense totaled $317 and $6,970 for the three months ended March 31, 2004 and 2005, respectively. Estimated amortization expense will total approximately $28,000 for the year ending December 31, 2005.

3.    Restructuring

The following table summarizes the activity for these initiatives:


  Employee
Separation
Costs
Other
Exit
Costs
Asset
Impairments
Total
Balance at January 1, 2004 $ 3,300   $   $   $ 3,300  
Expense incurred   3,000     1,120     300     4,420  
Cash payments   (1,700   (1,120       (2,820
Utilization of reserve           (300   (300
Balance at March 31, 2004 $ 4,600   $   $   $ 4,600  
 
Balance at January 1, 2005 $   $   $   $  
Expense incurred   243             243  
Cash payments   (243           (243
Utilization of reserve                
Balance at March 31, 2005 $   $   $   $  

The Predecessor had an accrual of $700 at January 1, 2004 for employee severance costs related to the closure of a plastics manufacturing facility in Cleveland, OH. This closure was completed in 2004 at a

7




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)

total cost of approximately $4,000 and affected approximately 190 hourly and salaried employees. During the three months ended March 31, 2004, the Predecessor recorded $125 in employee severance costs and $200 of other exit costs related to this closure. The Predecessor also had an accrual of $2,600 at January 1, 2004 for employee severance costs related to the closure of two manufacturing facilities in the United Kingdom. This initiative was completed in 2004 at a total cost of $18,900 and affected approximately 515 hourly and salaried employees. During the three months ended March 31, 2004, $2,000 of severance costs were recorded representing amounts to be paid to employees upon their termination. These costs were recorded over the remaining work life of the employees. The Predecessor also recorded asset impairments of $300 and other exit costs of $900 related to this initiative during the three months ended March 31, 2004.

In addition to the Cleveland and United Kingdom closures included in the above table, the Predecessor incurred $875 during the three months ended March 31, 2004, related to workforce reductions and other costs associated with closed facilities, primarily in Europe and North America.

During the three months ended March 31, 2005, the Successor initiated a restructuring initiative in Australia. This initiative is expected to be completed in the third quarter of 2005 and to affect approximately 30 employees, of which 20 were terminated as of March 31, 2005.

4.    Inventories

Inventories are comprised of the following:


  Successor
  December 31,
2004
March 31,
2005
Finished goods $ 45,572   $ 50,987  
Work in process   21,423     17,113  
Raw materials and supplies   50,864     40,611  
  $ 117,859   $ 108,711  

Inventory at December 31, 2004 includes a $9,806 fair value write-up related to the Acquisition. Such inventory was liquidated as of March 31, 2005 and recorded as an increase to cost of products sold.

8




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)

5.    Debt

Outstanding debt consisted of the following at December 31, 2004 and March 31, 2005:


  December 31,
2004
March 31,
2005
Senior Notes $ 200,000   $ 200,000  
Senior Subordinated Notes   350,000     350,000  
Term Loan A   51,320     49,617  
Term Loan B   115,000     114,713  
Term Loan C   185,000     184,537  
Revolving Credit facility        
Capital leases and other borrowings   9,010     8,542  
 
Total debt   910,330     907,409  
Less current portion   (10,758   (11,001
 
Total long-term debt $ 899,572   $ 896,408  

As of March 31, 2005, the Company had $3,726 of standby letters of credit outstanding under the Revolving Credit facility leaving $121,274 of availability.

6.    Pension and Postretirement Benefits other than Pensions

The following tables disclose the amount of net periodic benefit costs for the three month periods ended March 31, 2004 and 2005 for the Group's defined benefit plans and other postretirement benefit plans:

9




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)


  Pension Benefits
  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
  U.S. Non-U.S. U.S. Non-U.S.
Service cost $ 2,246   $ 603   $ 2,171   $ 825        
Interest cost   2,945     953     2,842     933        
Expected return on plan assets   (3,393   (976   (3,171   (840      
Amortization of prior service cost and recognized actuarial loss   777     464          
Net periodic benefit cost $ 2,575   $ 1,044   $ 1,842   $ 918  
 
  Other Postretirement Benefits
  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
Service cost $ 722   $ 769  
Interest cost   1,575     1,397  
Amortization of prior service cost and recognized actuarial loss   426      
Net periodic benefit cost $ 2,723   $ 2,166  

7.    Income Taxes

Under Accounting Principles Board Opinion No. 28, Interim Financial Reporting, the Company is required to compute its effective tax rate each quarter based upon its estimated annual effective tax rate. The effective tax rate for the three months ended March 31, 2004, was 29% as compared to 17% for the three months ended March 31, 2005. The income tax rate for the three months ended March 31, 2005 varies from the United States statutory income tax rate due primarily to lower than United States statutory effective income tax rates in certain foreign jurisdictions, the effect of losses in certain foreign jurisdictions for which valuation allowances are recorded, and the benefit of tax credits, primarily in the U.S.

8.    Comprehensive Income

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


  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
Net income (loss) $ 26,543   $ (478
Currency translation adjustment   (4,983   (5,360
Minimum pension liability   31      
Change in the fair value of derivatives and
unrealized gain on marketable securities
  1,998      
Comprehensive income (loss) $ 23,589   $ (5,838

10




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)

9.    Other Income (Expense)

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


  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
Foreign currency gains (losses) $ (384 $ (2,657
Minority interest   (118   (5
Other income (expense) $ (502 $ (2,662

Included in foreign currency gains (losses) in the three months ended March 31, 2005 are unrealized losses of $2,327 related to indebtedness used to finance the Acquisition, including $959 related to Term Loan B, a U.S. dollar denominated obligation of our Canadian subsidiary.

10.    Related Party Transactions

The Predecessor had transactions in the normal course of business with Cooper Tire, including the purchase of raw materials which totaled $6,018 during the three months ended March 31, 2004. Such purchases are no longer considered related party transactions for periods subsequent to the Acquisition. Additionally, as part of the Acquisition, the Company executed a Transition Services Agreement with Cooper Tire whereby Cooper Tire agreed to provide a number of transitional services to the Company, including payroll, travel and employee benefits administration, treasury, purchasing, employee training, and information technology. The Company agreed to pay Cooper Tire specified amounts for certain of these services on a specific period or an as needed basis. Cooper Tire's obligation to provide such services generally terminates by June 30, 2005, though payroll services are scheduled to continue through September 30, 2005. The Company incurred approximately $300 of expenses related to these services in the three months ended March 31, 2005.

Sales to NISCO, a 50% owned joint venture, totaled $3,720 and $4,901 in the three months ended March 31, 2004 and 2005, respectively.

In connection with the Acquisition, the Company paid one of its primary stockholders transaction advisory fees totaling $8,000 in January 2005. Such amount is reflected on the consolidated balance sheet as of December 31, 2004 as a payable to stockholder.

11




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands except per share amounts)

11.    Business Segments

The Company evaluates segment performance based on segment profit before tax. The following table details information on the Company's business segments:


  Predecessor Successor
  Three Months Ended March 31,
  2004 2005
Sales to external customers            
Sealing $ 226,502   $ 230,187  
Fluid   172,324     160,357  
NVH   98,408     79,465  
Eliminations and other   (250   132  
Consolidated   496,984     470,141  
 
Intersegment sales            
Sealing   45     18  
Fluid        
NVH   9,355     9,564  
Eliminations and other   (9,400   (9,582
Consolidated        
 
Segment profit            
Sealing   1,705     (2,058
Fluid   22,181     3,349  
NVH   13,885     (1,866
Other   (353    
Income before income taxes $ 37,418   $ (575

Restructuring costs included in segment profit for Sealing, Fluid and NVH totaled $3,397, $1,023 and $0, respectively, for the three months ended March 31, 2004, and $29, $214 and $0, respectively, for the three months ended March 31, 2005.

12.    Subsequent Events

On December 23, 2004, the Company issued the Senior Notes and Senior Subordinated Notes in a private offering. The Company agreed to consummate an exchange offer to exchange these privately issued notes for notes registered under the Securities Act of 1933. Accordingly, the Company filed a registration statement on Form S-4 with the SEC. The registration statement, as amended, was declared effective by the SEC on April 19, 2005. The exchange offer will expire at midnight on May 23, 2005.

13.    Guarantor and Non-Guarantor Subsidiaries

In connection with the Acquisition, Cooper-Standard Automotive Inc. (the "Issuer"), a wholly-owned subsidiary, issued the Senior Notes and Senior Subordinated Notes with a total principal amount of $550,000. Cooper-Standard Holdings Inc. (the "Parent") and all wholly-owned domestic subsidiaries of Cooper-Standard Automotive Inc. (the "Guarantors") unconditionally guarantee the notes. The following condensed consolidating and combining financial data provides information regarding the financial position, results of operations and cash flows of the Guarantors. Separate financial statements of the Guarantors are not presented because management has determined that those would not be material to the holders of the notes. The Guarantors account for their investments in the non-guarantor subsidiaries on the equity method. The principal elimination entries are to eliminate the investments in subsidiaries and intercompany balances and transactions (dollars in millions).

12




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
(Dollar amounts in thousands except per share amounts)

COMBINING STATEMENT OF INCOME
For the Three Months Ended March 31, 2004


  Predecessor
  Issuer Guarantors Non-Guarantors Eliminations Combined
Totals
Sales $ 170.6   $ 89.9   $ 252.7   $ (16.2 $ 497.0  
Cost of products sold   153.1     68.5     202.3     (16.2   407.7  
Selling, admin, & engineering expenses   30.1     4.9     10.5         45.5  
Amortization of intangibles   0.1         0.1         0.2  
Restructuring   0.4         4.0         4.4  
Operating profit   (13.1   16.5     35.8         39.2  
Interest expense, net of interest income   (0.2       (0.9       (1.1
Equity earnings (losses)       (0.2           (0.2
Other income (expense)       4.3     (4.8       (0.5
Income (loss) before income taxes   (13.3   20.6     30.1         37.4  
Provision for income tax expense (benefit)   (3.5   5.2     9.2         10.9  
Income (loss) before equity in income
(loss) of subsidiaries
  (9.8   15.4     20.9         26.5  
Equity in net income (loss) of subsidiaries   36.3             (36.3    
NET INCOME (LOSS) $ 26.5   $ 15.4   $ 20.9   $ (36.3 $ 26.5  

CONSOLIDATING STATEMENT OF INCOME
For the Three Months Ended March 31, 2005


  Successor
  Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated
Totals
Sales $   $ 154.3   $ 84.8   $ 248.0   $ (17.0 $ 470.1  
Cost of products sold       146.7     68.1     204.0     (17.0   401.8  
Selling, admin, & engineering expenses       27.1     4.9     11.7         43.7  
Amortization of intangibles       7.0                 7.0  
Restructuring               0.2         0.2  
Operating profit       (26.5   11.8     32.1         17.4  
Interest expense, net of interest income       (13.5       (2.6       (16.1
Equity earnings (losses)       (0.1   0.9             0.8  
Other income (expense)       9.0         (11.7       (2.7
Income (loss) before income taxes       (31.1   12.7     17.8         (0.6
Provision for income tax expense (benefit)       (13.1   5.3     7.7         (0.1
Income (loss) before equity in income
(loss) of subsidiaries
      (18.0   7.4     10.1         (0.5
Equity in net income (loss) of subsidiaries   (0.5   17.5             (17.0    
NET INCOME (LOSS) $ (0.5 $ (0.5 $ 7.4   $ 10.1   $ (17.0 $ (0.5

13




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
(Dollar amounts in thousands except per share amounts)

CONSOLIDATING BALANCE SHEET
December 31, 2004


  Successor
  Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated
Totals
ASSETS                                    
Current assets:                                    
Cash and cash equivalents $   $ 32.9   $   $ 50.8   $   $ 83.7  
Accounts receivable, net       77.7     48.8     173.4         299.9  
Inventories       45.4     13.8     58.6         117.8  
Other       4.7     1.0     14.3         20.0  
Total current assets       160.7     63.6     297.1         521.4  
Investments in affiliates   318.2     103.2     22.8     192.6     (613.1   23.7  
Property, plant, and equipment, net       142.0     93.1     274.8         509.9  
Goodwill       403.1         (0.5       402.6  
Other assets       321.5         21.2         342.7  
  $ 318.2   $ 1,130.5   $ 179.5   $ 785.2   $ (613.1 $ 1,800.3  
LIABILITIES & STOCKHOLDERS' EQUITY                                    
Current liabilities:                                    
Notes payable $   $   $   $ 2.4   $   $ 2.4  
Current portion of long-term debt       8.5     0.2     2.1         10.8  
Accounts payable       40.8     10.7     85.0         136.5  
Accrued liabilities       287.6     (173.7   59.2         173.1  
Total current liabilities       336.9     (162.8   148.7         322.8  
Long-term debt       727.2         172.4         899.6  
Intercompany payable (receivable)       171.3     (144.3   (27.0        
Other long-term liabilities       224.4     (0.1   35.4         259.7  
        1,459.8     (307.2   329.5         1,482.1  
Total stockholders' equity   318.2     (329.3   486.7     455.7     (613.1   318.2  
  $ 318.2   $ 1,130.5   $ 179.5   $ 785.2   $ (613.1 $ 1,800.3  

14




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
(Dollar amounts in thousands except per share amounts)

CONSOLIDATING BALANCE SHEET
March 31, 2005


  Successor
  Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated
Totals
ASSETS                                    
Current assets:                                    
Cash and cash equivalents $   $ 29.0   $ 0.2   $ 69.5   $   $ 98.7  
Accounts receivable, net       86.3     51.3     178.2         315.8  
Inventories       36.7     15.3     56.7         108.7  
Other       5.4     1.4     16.6         23.4  
Total current assets       157.4     68.2     321.0         546.6  
Investments in affiliates   312.3     (227.0   23.8     192.3     (277.3   24.1  
Property, plant, and equipment, net       138.9     92.2     264.1         495.2  
Goodwill       404.4         (0.5       403.9  
Other assets       317.7     (0.4   19.0         336.3  
  $ 312.3   $ 791.4   $ 183.8   $ 795.9   $ (277.3 $ 1,806.1  
LIABILITIES & STOCKHOLDERS' EQUITY                                    
Current liabilities:                                    
Notes payable $               $ 2.0   $   $ 2.0  
Current portion of long-term debt     $ 8.2   $     2.8         11.0  
Accounts payable       56.1     12.4     79.6         148.1  
Accrued liabilities       263.3     (175.9   88.2         175.6  
Total current liabilities       327.6     (163.5   172.6         336.7  
Long-term debt       726.7         169.7         896.4  
Intercompany payable (receivable)   (0.3   170.9     (152.1   (18.5        
Other long-term liabilities       248.9     (0.2   11.7         260.4  
    (0.3   1,474.1     (315.8   335.5         1,493.5  
Total stockholders' equity   312.6     (682.7   499.6     460.4     (277.3   312.6  
  $ 312.3   $ 791.4   $ 183.8   $ 795.9   $ (277.3 $ 1,806.1  

15




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
(Dollar amounts in thousands except per share amounts)

COMBINING STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2004


  Predecessor
  Issuer Guarantors Non-Guarantors Eliminations Combined
Totals
OPERATING ACTIVITIES                              
Net cash provided by (used in) operating activities $ (1.8 $ 3.4   $ 30.5   $ 0.3   $ 32.4  
INVESTING ACTIVITIES                              
Property, plant, and equipment   (2.9   (3.1   (6.6       (12.6
Proceeds from the sale of assets   6.1         0.1         6.2  
Net cash provided by (used in) investing activities   3.2     (3.1   (6.5       (6.4
FINANCING ACTIVITIES                              
Increase (decrease) in short-term debt           0.6         0.6  
Borrowings under long-term debt                    
Principal payments on long-term debt   (0.2   (0.1   (0.4       (0.7
Net changes in advances from parent   7.8     (0.1   29.0     (0.3   36.4  
Net cash provided by (used in) financing activities   7.6     (0.2   29.2     (0.3   36.3  
Effects of exchange rate changes on cash           (2.9       (2.9
Increase (decrease) in cash and cash equivalents   9.0     0.1     50.3         59.4  
Cash and cash equivalents at beginning of period   7.4         95.2         102.6  
Cash and cash equivalents at end of period $ 16.4   $ 0.1   $ 145.5   $   $ 162.0  
Depreciation and amortization $ 7.9   $ 2.5   $ 10.1   $   $ 20.5  

16




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
(Dollar amounts in thousands except per share amounts)

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2005


  Successor
  Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated
Totals
OPERATING ACTIVITIES                                    
Net cash provided by (used in) operating activities $   $ 6.9   $ 2.4   $ 19.7   $   $ 29.0  
INVESTING ACTIVITIES                                    
Property, plant, and equipment       (2.7   (2.2   (3.4       (8.3
Acquisition of business, net of cash acquired       (8.0               (8.0
Proceeds from the sale of assets       0.5     0.2             0.7  
Net cash provided by (used in) investing activities       (10.2   (2.0   (3.4       (15.6
FINANCING ACTIVITIES