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 June 30, 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 20-194508
(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.
  [X]   Yes    [ ]   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 July 31, 2005:

3,237,100 shares of common stock, $0.01 par value




PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements.

COMBINED AND CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2005
(UNAUDITED)
(Dollar amounts in thousands)


  Predecessor Successor Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
                         
Sales $ 484,970   $ 489,141   $ 981,954   $ 959,282  
Cost of products sold   391,986     409,872     799,693     811,636  
                         
Gross profit   92,984     79,269     182,261     147,646  
                         
Selling, administration & engineering expenses   44,262     43,839     89,779     87,587  
Amortization of intangibles   131     6,976     267     13,946  
Restructuring   4,502     157     8,922     400  
                         
Operating profit   44,089     28,297     83,293     45,713  
                         
Interest expense, net of interest income   (593   (16,743   (1,659   (32,874
Equity earnings (losses)   834     485     616     1,287  
Other income (expense)   (661   (3,275   (1,163   (5,937
                         
Income before income taxes   43,669     8,764     81,087     8,189  
                         
Provision for income tax expense   12,692     1,096     23,567     999  
                         
Net income $ 30,977   $ 7,668   $ 57,520   $ 7,190  

The accompanying notes are an integral part of these financial statements. See Note 1 for a description of the Predecessor and Successor presentation.

2




CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)


  Successor
  December 31,
2004
June 30,
2005
    (Unaudited)
Assets
Current assets:                  
Cash and cash equivalents $ 83,658   $ 66,807  
Accounts receivable, net   299,906     319,060  
Inventories, net   117,859     97,604  
Prepaid expenses   19,994     18,230  
Total current assets   521,417     501,701  
Property, plant and equipment, net   509,943     475,429  
Goodwill   402,598     403,966  
Intangibles, net   311,605     297,662  
Other assets   54,765     55,556  
  $ 1,800,328   $ 1,734,314  
 
Liabilities and Stockholders' Equity
Current liabilities:
Debt payable within one year $ 13,145   $ 11,520  
Accounts payable   136,543     150,795  
Payroll liabilities   57,210     59,693  
Accrued liabilities   54,452     43,976  
Deferred purchase price payment   53,423      
Payable to stockholder   8,000      
Total current liabilities   322,773     265,984  
Long-term debt   899,572     893,260  
Pension benefits   48,090     46,721  
Postretirement benefits other than pensions   87,410     89,566  
Deferred tax liabilities   109,885     106,409  
Other long-term liabilities   14,438     14,911  
Stockholders' Equity:
Common stock, $0.01 par value, 3,500,000 shares authorized,
3,192,000 and 3,237,100 shares issued and outstanding
at December 31, 2004 and June 30, 2005, respectively
  32     32  
Additional paid-in capital   319,168     323,678  
Retained earnings (deficit)   (4,545   2,645  
Cummulative other comprehensive income (loss)   3,505     (8,892
Total stockholders' equity   318,160     317,463  
  $ 1,800,328   $ 1,734,314  

The accompanying notes are an integral part of these financial statements. See Note 1 for a description of the Predecessor and Successor presentation.

3




COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2004 AND 2005
(UNAUDITED)
(Dollar amounts in thousands)


  Predecessor Successor
  2004 2005
Operating activities:            
Net income $ 57,520   $ 7,190  
Adjustments to reconcile net income to net
cash provided by operating activities:
           
Depreciation   38,669     39,759  
Amortization   628     13,946  
Non-cash restructuring charges   588     122  
Amortization of debt issuance costs       1,840  
Changes in operating assets and liabilities:            
Accounts receivable   (44,076   (26,446
Inventories   88     18,306  
Prepaid expenses   (141   1,114  
Accounts payable   12,562     19,756  
Accrued liabilities   6,847     (3,409
Other non-current items   16,567     (11,635
Net cash provided by operating activities   89,252     60,543  
Investing activities:            
Property, plant, and equipment   (26,095   (20,314
Settlement of working capital adjustment related to Acquisition       (54,270
Payment to stockholder related to Acquisition       (8,000
Proceeds from the sale of assets and other   6,236     784  
Net cash used in investing activities   (19,859   (81,800
Financing activities:            
Increase (decrease) in short-term debt   621     (776
Debt issue costs       (445
Principal payments on Acquisition-related debt       (4,028
Principal payments on other borrowings   (1,261   (1,482
Net changes in advances from Cooper Tire   (91,814    
Equity contributions       4,510  
Net cash provided by (used in) financing activities   (92,454   (2,221
Effects of exchange rate changes on cash   (21,616   6,627  
             
Changes in cash and cash equivalents   (44,677   (16,851
Cash and cash equivalents at beginning of period   102,599     83,658  
Cash and cash equivalents at end of period $ 57,922   $ 66,807  
             

The accompanying notes are an integral part of these financial statements. See Note 1 for a description of the Predecessor and Successor presentation.

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 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 (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 at December 31, 2004 includes a deferred purchase price payment of $53 million related to the estimated settlement of a post-closing working capital adjustment. Final settlement of the working capital adjustment resulted in a payment of $54 million 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 and six months ended June 30, 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").

The following provides a description of the basis of presentation during all periods presented:

Predecessor:    Represents the combined financial position, results of operations and cash flows of the Automotive segment of Cooper Tire for all periods prior to the Acquisition on December 23, 2004. This presentation reflects the historical basis of accounting without any application of purchase accounting for the Acquisition.

Successor:    Represents our consolidated financial position and our consolidated results of operations and cash flows for periods following the Acquisition. The financial position as of June 30,

5




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

2005, results of operations for the three and six months ended June 30, 2005 and cash flows for the six months then ended reflect the preliminary application of purchase accounting relating to the Acquisition and the adjustments required to reflect the assets and liabilities not acquired in the Acquisition and the adjustments for domestic pension liabilities previously held by Cooper Tire.

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 and general corporate management. These allocations totaled $3,719 and $7,438 in the three and six months ended June 30, 2004, respectively. 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 $654 and $1,907 in the three and six months ended June 30, 2004, respectively.

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 Cooper Tire 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 Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
Net income, as reported $ 30,977   $ 7,668   $ 57,520   $ 7,190  
Add:    Stock-based compensation, as reported                
Deduct:    Stock-based compensation
under SFAS 123 fair value method,
net of tax
  (178   (133   (358   (266
Pro forma net income $ 30,799   $ 7,535   $ 57,162   $ 6,924  

6




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

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 Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
Risk-free interest rate   2.2   3.7   2.2   3.7
Dividend yield   2.1   0.0   2.1   0.0
Expected volatility   34.0   0.0   34.0   0.0
Expected life (in years)   4.7     6.0     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 debt payable within one year both decreased by $79,230 at December 31, 2004 as compared to the previous classification. Additionally, we reclassified our presentation of the statement of cash flows related to non-cash restructuring charges and proceeds from the sale of certain assets. This reclassification increased net cash provided by operating activities by $2,418 for the six months ended June 30, 2004 as compared to the previous classification with a corresponding decrease to net cash used in investing activities.

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 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 $1,368 during the six months ended June 30, 2005 as a result of the settlement of the post-closing working capital adjustment and other purchase price allocation adjustments to recorded assets and liabilities. Due to 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 June 30, 2005. Such allocation will occur upon completion of the purchase price allocation in 2005.

7




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

The following table presents intangible assets and accumulated amortization balances of the Successor as of June 30, 2005:


  Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
                   
Customer contracts $ 141,000   $ (9,355 $ 131,645  
Customer relationships   153,000     (3,987   149,013  
Developed technology   18,200     (1,196   17,004  
  $ 312,200   $ (14,538 $ 297,662  
                   

Amortization expense totaled $6,976 and $311 for the three months ended June 30, 2005 and 2004, respectively, and $13,946 and $628 for the six months ended June 30, 2005 and 2004, 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
Severance
Costs
Other
Exit
Costs
Asset
Impairments
Total
Balance at January 1, 2004 $ 3,300   $   $   $ 3,300  
Expense incurred   5,400     2,922     600     8,922  
Cash payments   (3,300   (2,922       (6,222
Utilization of reserve           (600   (600
Balance at June 30, 2004 $ 5,400   $   $   $ 5,400  
                         
Balance at January 1, 2005 $   $   $   $  
Expense incurred   274     4     122     400  
Cash payments   (274   (4       (278
Utilization of reserve           (122   (122
Balance at June 30, 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 total cost of approximately $4,000 and affected approximately 190 hourly and salaried employees. During the six months ended June 30, 2004, the Predecessor recorded $225 in employee severance costs and $500 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 six months ended June 30, 2004, $3,600 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 $600 and other exit costs of $2,400 related to this initiative during the six months ended June 30, 2004.

8




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

In addition to the Cleveland and United Kingdom closures included in the above table, the Predecessor incurred costs of $1,575 during the six months ended June 30, 2004, related to workforce reductions and other costs associated with closed facilities, primarily in Europe and North America.

During the first quarter of 2005, the Successor initiated a restructuring initiative in Australia. This initiative is expected to be completed in the fourth quarter of 2005 and to affect approximately 30 employees, of which 21 were terminated as of June 30, 2005.

4.    Inventories

Inventories are comprised of the following:


  December 31,
2004
June 30,
2005
Finished goods $ 45,572   $ 33,595  
Work in process   21,423     15,817  
Raw materials and supplies   50,864     48,192  
  $ 117,859   $ 97,604  

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.

5.    Debt

Outstanding debt consisted of the following at December 31, 2004 and June 30, 2005:


  December 31,
2004
June 30,
2005
Senior Notes $ 200,000   $ 200,000  
Senior Subordinated Notes   350,000     350,000  
Term Loan A   51,320     47,702  
Term Loan B   115,000     114,425  
Term Loan C   185,000     184,075  
Revolving Credit facility        
Capital leases and other borrowings   11,397     8,578  
             
Total debt   912,717     904,780  
Less: debt payable within one year   (13,145   (11,520
             
Total long-term debt $ 899,572   $ 893,260  

As of June 30, 2005, the Company had $12,566 of standby letters of credit outstanding under the Revolving Credit facility leaving $112,434 of availability.

9




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

6.    Pension and Postretirement Benefits other than Pensions

The following tables disclose the amount of net periodic benefit costs for the three and six month periods ended June 30, 2004 and 2005 for the Company's defined benefit plans and other postretirement benefit plans:


  Pension Benefits
  Predecessor Successor
  Three Months Ended June 30,
  2004 2005
  U.S. Non-U.S. U.S. Non-U.S.
Service cost $ 2,246   $ 585   $ 2,171   $ 812  
Interest cost   2,946     931     2,842     915  
Expected return on plan assets   (3,393   (956   (3,171   (827
Amortization of prior service cost
and recognized actuarial loss
  777     459          
Net periodic benefit cost $ 2,576   $ 1,019   $ 1,842   $ 900  

  Pension Benefits
  Predecessor Successor
  Six Months Ended June 30,
  2004 2005
  U.S. Non-U.S. U.S. Non-U.S.
Service cost $ 4,491   $ 1,187   $ 4,343   $ 1,637  
Interest cost   5,891     1,884     5,684     1,847  
Expected return on plan assets   (6,786   (1,933   (6,340   (1,667
Amortization of prior service cost
and recognized actuarial loss
  1,554     923          
Net periodic benefit cost $ 5,150   $ 2,061   $ 3,687   $ 1,817  

  Other Postretirement Benefits Other Postretirement Benefits
  Predecessor Successor Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
Service cost $ 720   $ 768   $ 1,442   $ 1,537  
Interest cost   1,572     1,395     3,147     2,791  
Amortization of prior service cost
and recognized actuarial loss
  425         851      
Net periodic benefit cost $ 2,717   $ 2,163   $ 5,440   $ 4,328  

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 rates for the three and six months ended June 30, 2004, were 29% and 29%, respectively, as compared to 13% and 12%, respectively, for the three and six months ended June 30, 2005. The income tax rate for the three and six months ended June 30, 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.

10




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

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 Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
Net income (loss) $ 30,977   $ 7,668   $ 57,520   $ 7,190  
Currency translation adjustment   (24,304   (7,037   (29,287   (12,397
Minimum pension liability   (104       (73    
Change in the fair value of derivatives and                    
    unrealized gain on marketable securities   (5,242       (3,244    
Comprehensive income (loss) $ 1,327   $ 631   $ 24,916   $ (5,207

9.    Other Income (Expense)

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


  Predecessor Successor Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
Foreign currency gains (losses) $ (428 $ (2,879 $ (812 $ (5,536
Minority interest   (230   (412   (348   (417
Gains (losses) on fixed assets disposals   (3   16     (3   16  
Other income (expense) $ (661 $ (3,275 $ (1,163 $ (5,937

Included in foreign currency gains (losses) in the three and six months ended June 30, 2005 are unrealized losses of $1,815 and $4,142, respectively, related to indebtedness used to finance the Acquisition, including $1,528 and $2,487, respectively, 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 $6,195 and $12,213 during the three and six months ended June 30, 2004, respectively. 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 terminated by June 30, 2005, though payroll services are scheduled to continue through September 30, 2005. The Company incurred approximately $300 and $600 of expenses related to these services in the three and six months ended June 30, 2005, respectively.

Sales to NISCO, a 50% owned joint venture, totaled $3,240 and $4,730 in the three months ended June 30, 2004 and 2005, respectively, and $6,960 and $9,631 in the six months ended June 30, 2004 and 2005, respectively.

11




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

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.    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 Predecessor Successor
  Three Months Ended June 30, Six Months Ended June 30,
  2004 2005 2004 2005
Sales to external customers                        
Sealing $ 226,786   $ 240,294   $ 453,288   $ 470,481  
Fluid   165,921     166,596     338,245     326,953  
NVH   92,258     82,160     190,666     161,625  
Eliminations and other   5     91     (245   223  
Consolidated   484,970     489,141     981,954     959,282  
                         
Intersegment sales                        
Sealing   2     4     48     23  
Fluid                
NVH   8,965     8,964     18,319     18,528  
Eliminations and other   (8,967   (8,968   (18,367   (18,551
Consolidated                
                         
Segment profit                        
Sealing   13,611     692     15,316     (1,366
Fluid   19,078     10,686     41,257     14,035  
NVH   11,266     (2,614   25,151     (4,480
Other   (286       (637    
Income before income taxes $ 43,669   $ 8,764   $ 81,087   $ 8,189  

Restructuring costs included in segment profit for Sealing, Fluid and NVH totaled $3,734, $768 and $0, respectively, for the three months ended June 30, 2004, $7,131, $1,791 and $0, respectively, for the six months ended June 30, 2004, $95, $62 and $0, respectively, for the three months ended June 30, 2005, and $124, $276 and $0, respectively, for the six months ended June 30, 2005.

12.    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

COMBINING STATEMENT OF INCOME
For the Three Months Ended June 30, 2004


  Predecessor
  Issuer Guarantors Non-Guarantors Eliminations Combined
Totals
Sales $ 167.0   $ 88.5   $ 245.6   $ (16.2 $ 484.9  
Cost of products sold   146.2     69.9     192.1     (16.2   392.0  
Selling, admin, & engineering expenses   28.7     4.8     10.8         44.3  
Amortization of intangibles   0.1                 0.1  
Restructuring   0.4         4.1         4.5  
Operating profit   (8.4   13.8     38.6         44.0  
Interest expense, net of interest income   (0.1       (0.4       (0.5
Equity earnings (losses)       0.8             0.8  
Other income (expense)   8.5     (4.3   (4.8       (0.6
Income (loss) before income taxes       10.3     33.4         43.7  
Provision for income tax expense (benefit)       2.6     10.1         12.7  
Income (loss) before equity in income
(loss) of subsidiaries
      7.7     23.3         31.0  
Equity in net income (loss) of subsidiaries   31.0             (31.0    
                               
NET INCOME (LOSS) $ 31.0   $ 7.7   $ 23.3   $ (31.0 $ 31.0  

CONSOLIDATING STATEMENT OF INCOME
For the Three Months Ende d June 30, 2005


  Successor
  Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated
Totals
Sales $   $ 153.6   $ 84.8   $ 266.6   $ (15.8 $ 489.2  
Cost of products sold       136.1     66.6     222.9     (15.8   409.8  
Selling, admin, & engineering expenses       25.8     5.1     13.0         43.9  
Amortization of intangibles       6.9                 6.9  
Restructuring       0.1         0.1         0.2  
Operating profit       (15.3   13.1     30.6         28.4  
Interest expense, net of interest income       (13.9       (2.9       (16.8
Equity earnings (losses)           0.5             0.5  
Other income (expense)       7.1         (10.4       (3.3
Income (loss) before income taxes       (22.1   13.6     17.3         8.8  
Provision for income tax expense (benefit)       (8.9   5.6     4.4         1.1  
Income (loss) before equity in income
(loss) of subsidiaries
      (13.2   8.0     12.9         7.7  
Equity in net income (loss) of subsidiaries   7.7     20.9             (28.6    
                                     
NET INCOME (LOSS) $ 7.7   $ 7.7   $ 8.0   $ 12.9   $ (28.6 $ 7.7  

13




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS

COMBINING STATEMENT OF INCOME
For the Six Months Ended June 30, 2004


  Predecessor
  Issuer Guarantors Non-Guarantors Eliminations Combined
Totals
Sales $ 337.6   $ 178.4   $ 498.3   $ (32.4 $ 981.9  
Cost of products sold   299.3     138.4     394.4     (32.4   799.7  
Selling, admin, & engineering expenses   58.8     9.7     21.3         89.8  
Amortization of intangibles   0.2         0.1         0.3  
Restructuring   0.8         8.1         8.9  
Operating profit   (21.5   30.3     74.4         83.2  
Interest expense, net of interest income   (0.3       (1.3       (1.6
Equity earnings (losses)       0.6             0.6  
Other income (expense)   8.5         (9.6       (1.1
Income (loss) before income taxes   (13.3   30.9     63.5         81.1  
Provision for income tax expense (benefit)   (3.5   7.8     19.3         23.6  
Income (loss) before equity in income
(loss) of subsidiaries
  (9.8   23.1     44.2         57.5  
Equity in net income (loss) of subsidiaries   67.3             (67.3    
                               
NET INCOME (LOSS) $ 57.5   $ 23.1   $ 44.2   $ (67.3 $ 57.5  

CONSOLIDATING STATEMENT OF INCOME
For the Six Months Ended June 30, 2005


  Successor
  Parent Issuer Guarantors Non-Guarantors Eliminations Consolidated
Totals
Sales $   $ 307.9   $ 169.6   $ 514.6   $ (32.8 $ 959.3  
Cost of products sold       282.8     134.7     426.9     (32.8   811.6  
Selling, admin, & engineering expenses       52.9     10.0     24.7         87.6  
Amortization of intangibles       13.9                 13.9  
Restructuring       0.1         0.3         0.4  
Operating profit       (41.8   24.9     62.7         45.8  
Interest expense, net of interest income       (27.4       (5.5       (32.9
Equity earnings (losses)       (0.1   1.4             1.3  
Other income (expense)       16.1         (22.1       (6.0
Income (loss) before income taxes       (53.2   26.3     35.1         8.2  
Provision for income tax expense (benefit)       (22.0   10.9     12.1         1.0  
Income (loss) before equity in income
(loss) of subsidiaries
      (31.2   15.4     23.0         7.2  
Equity in net income (loss) of subsidiaries   7.2     38.4             (45.6    
                                     
NET INCOME (LOSS) $ 7.2   $ 7.2   $ 15.4   $ 23.0   $ (45.6 $ 7.2  

14




NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS

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   $