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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 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,  2009.**                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                            |
| **OR**                                                                                                                                                                                                                                                                          |
| ** **                                                                                                                                                                                                                                                                      |
| **o**                                                                                                                                                                                                                                                                           | **Transition  Report Pursuant to Section 13 or 15(d) of the Securities Exchange  Act of 1934** |
| ** **                                                                                                                                                                                                                                                                      |
| **For the transition period from                       to                     .** |

** **

**Commission file number 001-32483**

 

**ACCURIDE CORPORATION**

(Exact Name ofRegistrant as Specified in Its Charter)

 

 

| **Delaware**                     | ** ** | **61-1109077**                        |
|----------------------------------|------------|---------------------------------------|
| (State  or Other Jurisdiction of |       | (I.R.S.  Employer Identification No.) |
| Incorporation  or Organization)  |       |                                  |

 

| **7140 Office Circle, Evansville, IN**    | ** ** | **47715**   |
|-------------------------------------------|------------|-------------|
| (Address  of Principal Executive Offices) |       | (Zip  Code) |

 

Registrant’s Telephone Number, Including Area Code: **(812) 962-5000**

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes x  No o

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted 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 registrantwas required to submit and post such files).  Yes o  No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

 

| Large Accelerated  Filer o |   | Accelerated Filer x         |
|---------------------------------|--------|-----------------------------|
|                            |   |                        |
| Non-Accelerated Filer o         |   | Smaller Reporting Company o |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes o  No x

 

As of May 5,2009, 36,252,036 shares of Accuride Corporation common stock, par value $.01per share, were outstanding. 

 

 

 

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**ACCURIDE CORPORATION**

 

**Table of Contents**

** **
| ** **                                   | **Page**                                                                                                  |
|----------------------------------------------|-----------------------------------------------------------------------------------------------------------|
| **PART I — FINANCIAL INFORMATION** |                                                                                                      |
| Item 1.                                      | Condensed Financial Statements  (Unaudited)                                                               |   |
|                                         | Condensed  Consolidated Balance Sheets as of March 31, 2009 and December 31,  2008              | 3 |
|                                         | Condensed  Consolidated Statements of Operations for the Three Months Ended  March 31, 2009 and 2008 | 4 |
|                                         | Condensed  Consolidated Statements of Cash Flows for the Three Months Ended  March 31, 2009 and 2008 | 5 |
|                                         | Notes to Condensed Consolidated  Financial Statements                                                     | 6 |
| Item 2.                                      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations               | 18 |
| Item 3.                                      | Quantitative  and Qualitative Disclosures About Market Risk                                               | 25 |
| Item 4.                                      | Controls and  Procedures                                                                                  | 25 |
| **PART II — OTHER  INFORMATION**   |                                                                                                      |
| Item 1.                                      | Legal Proceedings                                                                                         | 26 |
| Item 2.                                      | Issuance of  Securities                                                                                   | 26 |
| Item 4.                                      | Submission of  Matters to a Vote of Security Holders                                                      | 26 |
| Item 5.                                      | Other information                                                                                         | 27 |
| Item 6.                                      | Exhibits                                                                                                  | 28 |
|  Signatures                             | 30                                                                                                        |

 

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**Part I.  FINANCIAL INFORMATION**

 

**Item1.  Financial Statements**

 

**ACCURIDE CORPORATION**

**CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)**

 
| ** **                                                                                                                                                                               | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| **(In thousands, except for per share data)**                                                                                                              | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| ** **                                                                                                                                                                               | ** ** | ** **         | ** ** | ** **            | ** ** |
| **ASSETS**                                                                                                                                                                               |       |               |       |                  |       |
| CURRENT  ASSETS:                                                                                                                                                                         |       |               |       |                  |       |
| Cash and cash equivalents                                                                                                                                                                |       | $                  | 28,492     |                  | $          | 123,676 |   |
| Customer receivables, net of allowance for doubtful  accounts of $2,114 and $1,743 in 2009 and 2008, respectively                                                                        |       | 62,490             |       | 70,485                |       |
| Other receivables                                                                                                                                                                        |       | 6,779              |       | 7,734                 |       |
| Inventories                                                                                                                                                                              |       | 77,678             |       | 78,805                |       |
| Supplies, net                                                                                                                                                                            |       | 18,651             |       | 18,501                |       |
| Deferred income taxes                                                                                                                                                                    |       | 1,955              |       | 1,955                 |       |
| Income tax receivable                                                                                                                                                                    |       | 1,356              |       | 1,140                 |       |
| Prepaid expenses and other current assets                                                                                                                                                |       | 5,341              |       | 5,463                 |       |
| Total current assets                                                                                                                                                                     |       | 202,742            |       | 307,759               |       |
| PROPERTY, PLANT AND EQUIPMENT, net                                                                                                                                                       |       | 251,128            |       | 258,638               |       |
| OTHER  ASSETS:                                                                                                                                                                           |       |               |       |                  |       |
| Goodwill                                                                                                                                                                                 |       | 127,474            |       | 127,474               |       |
| Other intangible assets, net                                                                                                                                                             |       | 96,251             |       | 97,482                |       |
| Deferred financing costs, net of accumulated  amortization of $5,826 and $4,940 in 2009 and 2008, respectively                                                                           |       | 9,923              |       | 5,559                 |       |
| Marketable securities and other investments                                                                                                                                              |       | 5,000              |       | 5,000                 |       |
| Other                                                                                                                                                                                    |       | 8,334              |       | 6,638                 |       |
| TOTAL                                                                                                                                                                                    |       | $                  | 700,852    |                  | $          | 808,550 |   |
| **LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**                                                                                                                                        |       |               |       |                  |       |
| CURRENT  LIABILITIES:                                                                                                                                                                    |       |               |       |                  |       |
| Accounts payable                                                                                                                                                                         |       | $                  | 46,105     |                  | $          | 63,937 |   |
| Accrued payroll and compensation                                                                                                                                                         |       | 21,504             |       | 19,651                |       |
| Accrued interest payable                                                                                                                                                                 |       | 6,488              |       | 12,505                |       |
| Accrued workers compensation                                                                                                                                                             |       | 7,803              |       | 7,969                 |       |
| Accrued and other liabilities                                                                                                                                                            |       | 20,127             |       | 21,556                |       |
| Total current liabilities                                                                                                                                                                |       | 102,027            |       | 125,618               |       |
| LONG-TERM DEBT                                                                                                                                                                           |       | 523,708            |       | 651,169               |       |
| INDEBTEDNESS TO RELATED PARTIES                                                                                                                                                          |       | 71,437             |       | —                |       |
| DEFERRED INCOME TAXES                                                                                                                                                                    |       | 12,775             |       | 12,554                |       |
| NON-CURRENT INCOME TAXES PAYABLE                                                                                                                                                         |       | 8,715              |       | 8,715                 |       |
| OTHER POSTRETIREMENT BENEFIT PLAN LIABILITY                                                                                                                                              |       | 50,278             |       | 50,400                |       |
| PENSION BENEFIT PLAN LIABILITY                                                                                                                                                           |       | 31,845             |       | 31,941                |       |
| OTHER LIABILITIES                                                                                                                                                                        |       | 4,277              |       | 1,968                 |       |
| COMMITMENTS AND CONTINGENCIES (Note 7)                                                                                                                                                   |       | —             |       | —                |       |
| STOCKHOLDERS’  DEFICIENCY:                                                                                                                                                          |       |               |       |                  |       |
| Preferred Stock, $0.01 par value; 5,000,000 shares  authorized and 1 issued                                                                                                              |       | —             |       | —                |       |
| Common Stock, $0.01 par value; 100,000,000 shares  authorized, 36,946,000 and 36,573,000 shares issued, and 36,242,000 and  35,869,000 shares outstanding in 2009 and 2008, respectively |       | 362                |       | 359                   |       |
| Additional paid-in-capital                                                                                                                                                               |       | 263,996            |       | 263,858               |       |
| Treasury stock — 76,000 shares at cost in 2009 and  2008                                                                                                                            |       | (751               | )          | (751                  | )          |
| Accumulated other comprehensive loss                                                                                                                                                     |       | (29,153            | )          | (29,672               | )          |
| Retained deficiency                                                                                                                                                                      |       | (338,664           | )          | (307,609              | )          |
| Total stockholders’ deficiency                                                                                                                                                      |       | (104,210           | )          | (73,815               | )          |
| TOTAL                                                                                                                                                                                    |       | $                  | 700,852    |                  | $          | 808,550 |   |

 

See notes to unauditedcondensed consolidated financial statements.

 

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**ACCURIDECORPORATION**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**

 
| ** **                                               | ** ** | **Three Months Ended March 31,** | ** ** |
|----------------------------------------------------------|------------|---------------------------------------|------------|
| **(in thousands except per share data)**                 | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| NET SALES                                                |       | $                                     | 143,576    |   | $ | 238,210 |   |
| COST OF GOODS  SOLD                                      |       | 143,536                               |       | 225,941 |   |
| GROSS PROFIT                                             |       | 40                                    |       | 12,269 |   |
| OPERATING  EXPENSES:                                     |       |                                  |       |   |   |
| Selling, general  and administrative                     |       | 12,224                                |       | 13,654 |   |
| LOSS FROM  OPERATIONS                                    |       | (12,184                               | )          | (1,385 | ) |
| OTHER INCOME  (EXPENSE):                                 |       |                                  |       |   |   |
| Interest income                                          |       | 219                                   |       | 532 |   |
| Interest expense                                         |       | (13,522                               | )          | (16,246 | ) |
| Loss on  extinguishment of debt                          |       | (5,389                                | )          | — |   |
| Other income  (loss), net                                |       | 811                                   |       | (1,054 | ) |
| LOSS BEFORE  INCOME TAXES                                |       | (30,065                               | )          | (18,153 | ) |
| INCOME TAX  EXPENSE (BENEFIT)                            |       | 990                                   |       | (6,412 | ) |
| NET LOSS                                                 |       | $                                     | (31,055    | ) | $ | (11,741 | ) |
|                                                     |       |                                  |       |   |   |
| Weighted average  common shares outstanding—basic   |       | 36,169                                |       | 35,412 |   |
|                                                     |       |                                  |       |   |   |
| Basic loss per  share                                    |       | $                                     | (0.86      | ) | $ | (0.33 | ) |
|                                                     |       |                                  |       |   |   |
| Weighted average  common shares outstanding—diluted |       | 36,169                                |       | 35,412 |   |
|                                                     |       |                                  |       |   |   |
| Diluted loss per  share                                  |       | $                                     | (0.86      | ) | $ | (0.33 | ) |

 

See notes to unauditedcondensed consolidated financial statements.

 

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**ACCURIDECORPORATION**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS (UNAUDITED)**

 
| ** **                                                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| **(In thousands)**                                                      | ** ** | **2009**                                         | ** ** | **2008** | ** ** |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                       |       |                                             |       |   |   |
| Net loss                                                                     |       | $                                                | (31,055    | ) | $ | (11,741 | ) |
| Adjustments to reconcile net loss to net cash used  in operating activities: |       |                                             |       |   |   |
| Depreciation and impairment                                                  |       | 11,122                                           |       | 10,268 |   |
| Amortization — deferred financing costs                                 |       | 886                                              |       | 308 |   |
| Amortization — other intangible assets                                  |       | 1,231                                            |       | 1,420 |   |
| Loss on extinguishment of debt                                               |       | 5,389                                            |       | — |   |
| Loss on disposal of assets                                                   |       | 28                                               |       | 18 |   |
| Provision for deferred income taxes                                          |       | —                                           |       | (7,423 | ) |
| Non-cash stock-based compensation                                            |       | 95                                               |       | 510 |   |
| Gain on warrant valuation                                                    |       | (2,328                                           | )          | — |   |
| Paid-in-kind interest                                                        |       | 1,371                                            |       | — |   |
| Changes in certain assets and liabilities:                                   |       |                                             |       |   |   |
| Receivables                                                                  |       | 8,950                                            |       | (24,278 | ) |
| Inventories and supplies                                                     |       | 977                                              |       | (6,838 | ) |
| Prepaid expenses and other assets                                            |       | (1,349                                           | )          | (4,685 | ) |
| Accounts payable                                                             |       | (20,046                                          | )          | 16,538 |   |
| Accrued and other liabilities                                                |       | (5,774                                           | )          | (2,453 | ) |
| Net cash used in operating activities                                        |       | (30,503                                          | )          | (28,356 | ) |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                        |       |                                             |       |   |   |
| Purchases of property, plant and equipment                                   |       | (4,714                                           | )          | (10,424 | ) |
| Purchase of marketable securities                                            |       | —                                           |       | (5,000 | ) |
| Other                                                                        |       | 79                                               |       | (412 | ) |
| Net cash used in investing activities                                        |       | (4,635                                           | )          | (15,836 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                        |       |                                             |       |   |   |
| Decrease in revolving credit advance                                         |       | (53,000                                          | )          | — |   |
| Credit facility amendment fees                                               |       | (7,091                                           | )          | — |   |
| Other                                                                        |       | 45                                               |       | 99 |   |
| Net cash provided by (used in) financing activities                          |       | (60,046                                          | )          | 99 |   |
| DECREASE IN CASH AND CASH EQUIVALENTS                                        |       | (95,184                                          | )          | (44,093 | ) |
| CASH AND CASH EQUIVALENTS—Beginning of period                           |       | 123,676                                          |       | 90,935 |   |
| CASH AND CASH EQUIVALENTS—End of period                                 |       | $                                                | 28,492     |   | $ | 46,842 |   |
|                                                                         |       |                                             |       |   |   |
| Supplemental cash flow information:                                          |       |                                             |       |   |   |
| Cash paid for interest                                                       |       | $                                                | 17,819     |   | $ | 16,583 |   |
| Cash paid for income taxes                                                   |       | $                                                | 1,266      |   | $ | 3,210 |   |
| Purchases of property, plant, and equipment in  accounts payable             |       | $                                                | 4,041      |   | $ | 5,291 |   |
| Non-cash transaction:                                                        |       |                                             |       |   |   |   |   |
| Issuance of warrant                                                          |       | $                                                | 4,655      |   |   | — |   |

 

Seenotes to unaudited condensed consolidated financial statements.

 

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**ACCURIDECORPORATION**

**NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**AS OF MARCH 31, 2009 ANDDECEMBER 31, 2008 AND FOR THE THREE MONTHS ENDEDMARCH 31, 2009 AND 2008**

**(AMOUNTS IN THOUSANDS, EXCEPTSHARE AND PER SHARE DATA)**

 

**Note 1 -Summary of Significant Accounting Policies**

 

***Basis ofPresentation*****— Theaccompanying unaudited condensed consolidated financial statements have beenprepared in accordance with accounting principles generally accepted in theUnited States of America, except that the unaudited condensed consolidatedfinancial statements do not include all of the information and footnotesrequired by accounting principles generally accepted in the United States ofAmerica for complete financial statements. However, in the opinion of Accuride Corporation (“Accuride” or the “Company”),all adjustments (consisting of normal recurring accruals) considered necessaryto present fairly the condensed consolidated financial statements have beenincluded.

 

The results of operationsfor the three months ended March 31, 2009 are not necessarily indicativeof the results to be expected for the year ending December 31, 2009.  The unaudited consolidated financialstatements and notes thereto should be read in conjunction with the auditedcondensed consolidated financial statements and notes thereto disclosed inAccuride’s Annual Report on Form 10-K for the year ended December 31,2008.

 

***Management’sEstimates and Assumptions*****— The preparation of financial statements inconformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosures of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.  Actual results could differ from thoseestimates.

 

***DerivativeFinancial Instruments*** — We use derivative financial instruments as part of our overall riskmanagement strategy as further described under Item 7A of our 2008 AnnualReport on Form 10-K.  The derivativeinstruments used from time to time include interest rate and foreign exchangeinstruments.  All derivative instrumentsare recognized on the balance sheet at their estimated fair values. As of March 31,2009, there were no derivatives that were designated as hedges for financialreporting purposes.

 

***Interest Rate Instruments*** — We use interest rate swap agreements as a means offixing the interest rate on portions of our floating-rate debt.  As of March 31, 2009 we had one interestrate swap agreement outstanding, which was established in December 2007.  Pursuant to the terms of the interest rateswap agreement, we exchange with the counterparty, at specified intervals, thedifference between 3.81% from March 2009 through March 2010, and thevariable rate interest amounts calculated by reference to the notionalprincipal amount. The notional principal amounts under the terms are $150million from March 2009 through September 2009 and $125 million from September 2009through March 2010.

 

Gains and losses includedas a component of interest expense are as follows:

 
| ** **              | ** ** | **Three Months  Ended March 31,** | ** ** |
|-------------------------|------------|----------------------------------------|------------|
| ** **              | ** ** | **2009**                               | ** ** | **2008** | ** ** |
| Realized Gain  (Loss)   |       | $                                      | (848       | ) | $ | 250 |   |
| Unrealized Gain  (Loss) |       | $                                      | 808        |   | $ | (4,538 | ) |

 

***Foreign Exchange Instruments*** — We use foreign currency forwardcontracts and option contracts to limit foreign exchange risk on anticipatedbut not yet committed transactions expected to be denominated in Canadiandollars. As of March 31, 2009, the notional amount of open foreignexchange forward contracts was $20.2 million.

 

Gains and losses included as a component of otherincome (expense) are as follows:

 
| ** **      | ** ** | **Three  Months Ended March 31,** | ** ** |
|-----------------|------------|----------------------------------------|------------|
| ** **      | ** ** | **2009**                               | ** ** | **2008** | ** ** |
| Realized Gain   |       | $                                      | 207        |   | $ | 71 |   |
| Unrealized Loss |       | $                                      | (439       | ) | $ | (14 | ) |

 

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***Commodity Price Instruments***— We use commodity price swap contractsto limit exposure to changes in certain raw material prices. Commodity priceinstruments, which do not meet the normal purchase exception, are notdesignated as hedges for financial reporting purposes and, accordingly, arecarried in the financial statements at fair value, with realized and unrealizedgains and losses reflected in current period earnings as a component of “Costof goods sold.” At March 31, 2009, we had no open commodity price swaps orfutures contracts.

 

Gainsand losses included as a component of cost of goods sold are as follows:

*** ***
| ** **      | ** ** | **Three  Months Ended March 31,** | ** ** |
|-----------------|------------|----------------------------------------|------------|
| ** **      | ** ** | **2009**                               | ** ** | **2008** | ** ** |
| Realized Gain   |       | $                                      | —     |   | $ | 787 |   |
| Unrealized Gain |       | $                                      | —     |   | $ | 1,354 |   |

 

***MarketableSecurities and Other Investments***—******Wehave certain investments in municipal bonds with an auction rate feature, whichare categorized as marketable securities. We believe that these areconservative investments with a low risk for significant loss of principal. Weregularly assess our marketable security investments for impairments and adjustour investment strategy, as we deem appropriate. We classify these securitiesas available for sale and as non-current in the accompanying consolidatedbalance sheets based on original maturity dates of greater than one year.  Any unrealized gains or losses would berecorded as a component of other comprehensive income.

 

***Earnings Per Common Share*** — Basic and diluted earnings per commonshare were computed as follows:

 
|                                          |   | **Three  Months Ended March 31,** |    |
|-----------------------------------------------|--------|----------------------------------------|---------|
|                                          |   | **2009**                               |    | **2008** |   |
|                                          |   |                                   |    |   |   |
| Numerator:                                    |   |                                   |    |   |   |
| Net loss                                      |   | $                                      | (31,055 | ) | $ | (11,741 | ) |
| Denominator:                                  |   |                                   |    |   |   |
| Weighted average shares outstanding - Basic   |   | 36,169                                 |    | 35,412 |   |
| Effect of dilutive share-based awards         |   | —                                 |    | — |   |
| Weighted average shares outstanding - Diluted |   | 36,169                                 |    | 35,412 |   |
|                                          |   |                                   |    |   |   |
| Basic loss per  common share                  |   | $                                      | (0.86   | ) | $ | (0.33 | ) |
| Diluted loss per common share                 |   | $                                      | (0.86   | ) | $ | (0.33 | ) |

 

As of March 31, 2009, there were 545,461 stockoptions, 796,151 stock appreciation rights, and a warrant exercisable for12,249,529 shares that were not included in the computation of diluted earningsper share because the effect would be anti-dilutive.

 

***Stock-Based Compensation***—Compensation expense for share-basedcompensation programs of $0.1 million and $0.5 million was recognized in thethree months ended March 31, 2009 and 2008, respectively. As of March 31,2009, there was approximately $1.9 million of unrecognized pre-tax compensationexpense related to share-based awards not yet vested that will be recognizedover a weighted-average period of 1.4 years.

*** ***

***Income Tax***—Under Accounting Principles BoardOpinion No. 28, *Interim FinancialReporting*, we compute on a quarterly basis an estimated annualeffective tax rate considering ordinary income and related income tax expense.Ordinary income refers to income (loss) before income tax expense excludingsignificant, unusual, or infrequently occurring items. The tax effect of anunusual or infrequently occurring item is recorded in the interim period in whichit occurs. To the extent the Company cannot reliably estimate annual projectedtaxes for a taxing jurisdiction, taxes on ordinary income for such ajurisdiction are reported in the period in which they are incurred, which isthe case for our domestic tax jurisdictions. Other items included in income taxexpense in the periods in which they occur include the cumulative effect ofchanges in tax laws or rates, foreign exchange gains and losses, adjustments touncertain tax positions, and adjustments to our valuation allowance due tochanges in judgment in the realizability of deferred tax assets in futureyears.

 

Wehave assessed the need to maintain a valuation allowance for deferred taxassets based on an assessment of whether it is more likely than not thatdeferred tax benefits will be realized through the generation of future taxableincome. Appropriate consideration is given to all available evidence, bothpositive and negative, in assessing the need for a valuation allowance. Due 

 

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to ourrecent history of U.S. operating and taxable losses, the inconsistency of theseprofits, and the uncertainty of their financial outlook, we continue tomaintain a full valuation allowance against our domestic deferred tax assets.

*** ***

***Recent Accounting Adoptions***

 

***SFAS No. 141(R) ***— In December 2007, the FinancialAccounting Standards Board (“FASB”) issued SFAS No. 141(R), *Business Combinations*, which replaces SFAS No. 141, *Business Combinations*. SFAS No. 141(R) requiresthe acquirer of a business to recognize and measure the identifiable assetsacquired, the liabilities assumed, and any non-controlling interest in theacquiree at fair value. SFAS No. 141(R) also requires transactioncosts related to the business combination to be expensed as incurred. SFAS No. 141(R) appliesprospectively to business combinations for which the acquisition date is on orafter the beginning of the first annual reporting period beginning on or after December 15,2008. We adopted SFAS No. 141(R) on January 1, 2009 and it hadno material impact on our consolidated financial statements.

 

***SFAS No. 160*** — In December 2007, the FASB issued SFAS No. 160,*Noncontrolling Interests in Consolidated FinancialStatements*.  SFAS No. 160requires all entities to report noncontrolling (minority) interests insubsidiaries as equity in the consolidated financial statements. Its intentionis to eliminate the diversity in practice regarding the accounting fortransactions between an entity and noncontrolling interests. SFAS No. 160will apply to fiscal years and interim periods beginning on or after December 15,2008.  We adopted SFAS No. 160 on January 1,2009 and it had no material impact on our consolidated financial statements.

 

***SFAS No. 161*** — In March 2008, the FASB issued SFAS No. 161,*Disclosures about Derivative Instruments andHedging Activities - an amendment of FASB Statement No. 133.*  SFAS No. 161 amends and expands thedisclosure requirements of SFAS No. 133 to provide a better understandingof how and why an entity uses derivative instruments, how derivativeinstruments and related hedged items are accounted for, and their effect on anentity’s financial position, financial performance, and cashflows.  SFAS No. 161 is effective for fiscal years and interimperiods beginning after November 15, 2008. We adopted SFAS No. 161 on January 1, 2009 and it had nomaterial impact on our consolidated financial statements.

 

***New Accounting Pronouncements***

 

***FSP No. 157-2***—In February 2008, the FASB issued Staff Position(“FSP”) No. 157-2,*Effective Date of FASBStatement No. 157*, which delayed the effective date of fairvalue measurements for nonfinancial assets and liabilities, except for itemsthat are recognized or disclosed at fair value in the financial statements on arecurring basis.  Management is currentlyevaluating the impact of the adoption of FSP 157-2 on our consolidated financialstatements.

 

**SFAS No. 132(R) **— In March 2008, the FASB issuedSFAS No. 132(R), *Employers’**Disclosures about Postretirement Benefit Plan Assets. *The statement requires disclosuresof the objectives of postretirement benefit plan assets, investment policiesand strategies, categories of plan assets, fair value measurements of planassets, and significant concentrations of risk. SFAS No. 132(R) is effective for fiscal years and interimperiods beginning after December 15, 2009. The adoption of SFAS No. 132(R) is expected to increase ourdisclosures, but it is not expected to have an impact on our consolidatedfinancial statements.

 

In April 2009, theFASB issued three new FSPs, all of which impact the accounting and disclosurerelated to certain financial instruments.  FSP FAS 157-4, *Determining Fair Value When the Volume and Level of Activity for theAsset or Liability Have Significantly Decreased and Identifying TransactionsThat Are Not Orderly,* provides additional guidance for estimatingfair value in accordance with SFAS 157 when the volume and level of activityfor the asset or liability have significantly decreased.  It also includesguidance on identifying circumstances that indicate a transaction is notorderly.  FSP FAS 115-2 and FAS 124-2, *Recognition ofOther-Than-Temporary Impairment,* amends the other-than-temporaryimpairment guidance for debt securities to make the guidance more operationaland to improve the presentation and disclosure of other-than-temporaryimpairments on debt and equity securities in the financial statements. FSP FAS 107-1 and APB 28-1, *Interim Disclosures aboutFair Value of Financial Instruments*, amends FASB Statement No. 107to require disclosures about the fair value of financial instruments on aninterim basis in addition to the annual disclosure requirements.  Allthree FSPs are required to be adopted for interim periods ending after June 15,2009.  We do not expect adoption of these staff positions to have amaterial impact on our consolidatedfinancial statements.

 

**Note2 — Restructuring**

 

During 2008, in responseto the slow commercial vehicle market and the decline in sales, managementundertook a review of current operations that led to a comprehensiverestructuring plan. On September 22, 2008, we approved a restructuringplan to more appropriately align our workforce in response to the relativelyslow commercial vehicle market.  

 

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During 2008, werecognized restructuring expenses of $12.4 million in accordance with SFASNo. 146, *Accounting for Costs Associated with Exit orDisposal Activities*.  In thethree months ended March 31, 2009, we recognized additional restructuringexpenses of $1.0 million, of which, $0.7 million was recorded as a component ofCost of goods sold and $0.3 million was recorded as a component of Operatingexpenses.

 

A summary of the Company’srestructuring liability, included as a component of Accrued payroll andcompensation, in regards to employee severance costs is, as follows:

 
| Balance December 31,  2008 | $      |  4,281 |   |
|---------------------------------|--------|-------------|--------|
| Severance-related charges       | 996    |        |
| Severance-related payments      | (1,669 | )           |
| Balance March 31,  2009    | $      |  3,608 |   |

 

   Ofthe remaining liability, $3,372 will be paid during 2009 with the remainder of$236 paid in 2010.

 

**Note 3 -Inventories**

 

Inventories are stated atthe lower of cost or market.  We reviewinventory on hand and write down excess and obsolete inventory based on ourassessment of future demand and historical experience.  The components of inventory on a FIFO basisare as follows:

 
| ** **                   | ** ** | **March 31,  2009** | ** ** | **December 31,  2008** | ** ** |
|------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Raw materials                |       | $                        | 20,867     |                        | $          | 22,839 |   |
| Work in process              |       | 24,914                   |       | 21,930                      |       |
| Finished  manufactured goods |       | 31,897                   |       | 34,036                      |       |
| Total  inventories, net      |       | $                        | 77,678     |                        | $          | 78,805 |   |

 

**Note 4 - Goodwill and OtherIntangible Assets**

 

Under SFAS No. 142, *Goodwill and Other Intangible Assets*, we are required toassess goodwill and any indefinite-lived intangible assets for impairmentannually, or more frequently if circumstances indicate impairment may haveoccurred.  The analysis of potentialimpairment of goodwill requires a two-step approach.  The first step is the estimation of fairvalue of each reporting unit.  If stepone indicates that impairment potentially exists, the second step is performedto measure the amount of impairment, if any. Goodwill impairment exists when the estimated fair value of goodwill isless than its carrying value.

 

The carrying amount ofgoodwill as of March 31, 2009 by reportable segment, are as follows:

 
| ** **                        | ** ** | **Wheels** | ** ** | **Components** | ** ** | **Other** | ** ** | **Corporate** | ** ** | **Total** | ** ** |
|-----------------------------------|------------|------------|------------|----------------|------------|-----------|------------|---------------|------------|-----------|------------|
|                              |       |       |       |           |       |      |       |          |       |      |       |
| Balance as of March 31, 2009 |       | $          | 123,199    |           | $          | —    |       | $             | 4,275      |      | $          | — |   | $ | 127,474 |   |
|                                   |            |            |            |                |            |           |            |               |            |           |            |  |  |  |  |  |

 

The changes in thecarrying amount of other intangible assets for the period ended March 31,2009 by reportable segment, are as follows:

 
| ** **                           | ** ** | **Wheels** | ** ** | **Components** | ** ** | **Other** | ** ** | **Corporate** | ** ** | **Total** | ** ** |
|--------------------------------------|------------|------------|------------|----------------|------------|-----------|------------|---------------|------------|-----------|------------|
|                                 |       |       |       |           |       |      |       |          |       |      |       |
| Balance as of December 31, 2008 |       | $          | —     |           | $          | 90,727    |       | $             | 6,195      |      | $          | 560 |   | $ | 97,482 |   |
| Amortization                         |       | —     |       | (1,088         | )          | (96       | )          | (47           | )          | (1,231    | )          |
| Balance as of March 31,  2009   |       | $          | —     |           | $          | 89,639    |       | $             | 6,099      |      | $          | 513 |   | $ | 96,251 |   |
|                                      |            |            |            |                |            |           |            |               |            |           |            |  |  |  |  |  |  |

 

The summary of goodwilland other intangible assets is as follows:

 

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| ** **                | ** ** | **Weighted**               | ** ** | **As of  March 31, 2009** | ** ** | **As of  December 31, 2008**               | ** ** |
|---------------------------|------------|----------------------------|------------|--------------------------------|------------|-------------------------------------------------|------------|
| ** **                | ** ** | **Average  Useful  Lives** | ** ** | **Gross  Amount**              | ** ** | **Accumulated  Amortization  & Impairment** | ** ** | **Carrying  Amount** | ** ** | **Gross  Amount** | ** ** | **Accumulated  Amortization  & Impairment** | ** ** | **Carrying  Amount** | ** ** |
| Goodwill                  |       | —                     |       | $                              | 378,804    |                                            | $          | 251,330 |   | $ | 127,474 |   | $ | 378,804 |   | $ | 251,330 |   | $ | 127,474 |   |
| Other intangible  assets: |       |                       |       |                           |       |                                            |       |   |   |   |   |   |   |   |   |
| Non-compete  agreements   |       | 3.0                        |       | $                              | 3,160      |                                            | $          | 2,646 |   | $ | 514 |   | $ | 3,160 |   | $ | 2,599 |   | $ | 561 |   |
| Trade names               |       | —                     |       | 38,080                         |       | 27,650                                          |       | 10,430 |   | 38,080 |   | 27,650 |   | 10,430 |   |
| Technology                |       | 14.7                       |       | 33,540                         |       | 9,562                                           |       | 23,978 |   | 33,540 |   | 8,989 |   | 24,551 |   |
| Customer  relationships   |       | 29.6                       |       | 71,500                         |       | 10,171                                          |       | 61,329 |   | 71,500 |   | 9,560 |   | 61,940 |   |
|                      |       | 24.2                       |       | $                              | 146,280    |                                            | $          | 50,029 |   | $ | 96,251 |   | $ | 146,280 |   | $ | 48,798 |   | $ | 97,482 |   |

 

We estimate thataggregate amortization expense for our other intangible assets by year asfollows:

** **
| 2009 | $ | 4,923 |   |
|------|---|-------|--------|
| 2010 | $ | 4,923 |   |
| 2011 | $ | 4,922 |   |
| 2012 | $ | 4,736 |   |
| 2013 | $ | 4,736 |   |

 

**Note 5 -Comprehensive loss**

 

Comprehensive loss for thethree months ended March 31 is summarized as follows:

 
| ** **                                                             | ** ** | **For The Three Months Ended March 31,** | ** ** |
|------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                             | ** ** | **2009**                                      | ** ** | **2008** | ** ** |
| Net loss                                                               |       | $                                             | (31,055    | ) | $ | (11,741 | ) |
| Other  comprehensive loss (net of tax):                                |       |                                          |       |   |   |
| Foreign currency  translation impact on pension liabilities adjustment |       | 519                                           |       | 505 |   |
| Total  comprehensive loss                                              |       | $                                             | (30,536    | ) | $ | (11,236 | ) |

 

Included in accumulatedother comprehensive loss is the impact of pension liability fluctuations in theCanadian dollar to U.S. dollar exchange rate related to our Canadian pensionplans.

 

**Note 6 -Pension and Other Postretirement Benefit Plans**

 

Componentsof Net Periodic Benefit Cost for the three months ended March 31:

 
| ** **                                         | ** ** | **Pension Benefits** | ** ** | **Other Benefits** | ** ** |
|----------------------------------------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                         | ** ** | **2009**             | ** ** | **2008**           | ** ** | **2009** | ** ** | **2008** | ** ** |
| Service  cost-benefits earned during the period    |       | $                    | 372        |               | $          | 902 |   | $ | 76 |   | $ | 156 |   |
| Interest cost on  projected benefit obligation     |       | 2,821                |       | 2,912              |       | 905 |   | 961 |   |
| Expected return  on plan assets                    |       | (2,945               | )          | (3,764             | )          | — |   | — |   |
| Amortization of  net transition (asset)/obligation |       | 3                    |       | 4                  |       | — |   | — |   |
| Amortization of  prior service cost (benefit)      |       | 82                   |       | 102                |       | (393 | ) | (335 | ) |
| Amortization of  (gain)/loss                       |       | 532                  |       | 462                |       | (129 | ) | (134 | ) |
| Total amount  charged to income                    |       | $                    | 865        |               | $          | 618 |   | $ | 459 |   | $ | 648 |   |

 

Asof March 31, 2009, $2.9 million has been contributed to our sponsoredpension plans.  We presently anticipatecontributing an additional $9.7 million to fund our pension plans in 2009 for atotal of $12.6 million.

 

**Note 7 —Contingencies**

 

We arefrom time to time involved in various legal proceedings of a character normallyincident to our business. We do not believe that the outcome of theseproceedings will have a material adverse effect on our consolidated financialcondition or results of our operations.

 

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As of March 31,2009, we had an environmental reserve of approximately $1.5 million,related primarily to our foundry operations. This reserve is based on currentcost estimates and does not reduce estimated expenditures to net present value,but does take into account the benefit of a contractual indemnity given to usby a prior owner of our wheel-end subsidiary. The failure for the indemnitor tofulfill its obligations could result in future costs that may be material. Anycash expenditures required by us or our subsidiaries to comply with applicableenvironmental laws and/or to pay for any remediation efforts will not bereduced or otherwise affected by the existence of the environmental reserve. Wecurrently anticipate spending approximately $0.2 million per year in 2009through 2012 for monitoring the various environmental sites associated with theenvironmental reserve, including attorney and consultant costs for strategicplanning and negotiations with regulators and other potentially responsibleparties, and payment of remedial investigation costs. Based on all of theinformation presently available to us, we believe that our environmentalreserves will be adequate to cover the future costs related to the sitesassociated with the environmental reserves, and that any additional costs willnot have a material adverse effect on our financial condition, results ofoperations or cash flows. However, the discovery of additional sites, themodification of existing or promulgation of new laws or regulations, morevigorous enforcement by regulators, the imposition of joint and severalliability under CERCLA or analogous state laws, or other unanticipated eventscould also result in such a material adverse effect.

 

Thefinal Iron and Steel Foundry National Emission Standard for Hazardous AirPollutants, or NESHAP, was developed pursuant to Section 112(d) ofthe Clean Air Act and requires all major sources of hazardous air pollutants toinstall controls representative of maximum achievable control technology. Webelieve that our foundry operations are in compliance with the applicablerequirements of the Iron and Steel Foundry NESHAP.

 

                Pursuant to the Recapitalization of the Company on January 21,1998, we were indemnified by Phelps Dodge Corporation with respect to certainenvironmental liabilities at our Henderson and London facilities, subject tocertain limitations.  At the Erie,Pennsylvania, facility, we have obtained an environmental insurance policy toprovide coverage with respect to certain environmental liabilities.  Management does not believe that the outcomeof any environmental proceedings will have a material adverse effect on ourconsolidated financial condition or results of operations.

 

As of March 31, 2009, we had approximately 2,440employees, of which 683 were salaried employees with the remainder paid hourly.Unions represent approximately 1,110 of our employees, or 45% of the total. Each of our unionized facilities has aseparate contract with the union that represents the workers employed at suchfacility. The union contracts expire at various times over the next few yearswith the exception of our union contract that covers the hourly employees at ourMonterrey, Mexico, facility, which expires on an annual basis in January unlessotherwise renewed. The 2009 negotiations in Monterrey were successfullycompleted prior to the expiration of our union contract.  In 2009, we have contracts expiring at our Brillion,Cuyahoga Falls, Elkhart Plant 2, and London, Ontario facilities.  Based onthe consolidation of the Cuyahoga Falls operations into our Erie plant, we willbe ceasing operations performed by the collective bargaining unit at theCuyahoga Falls facility and do not anticipate negotiating for a new contract atthat location.  Although our collective bargaining agreement at ourLondon, Ontario facility expired on March 12, 2009, both the Company andthe Canadian Auto Workers continue to negotiate in good faith to reach amutually acceptable collective bargaining agreement.  We do not anticipate that the outcome of theremaining 2009 negotiations will have a material adverse effect on ouroperating performance or costs.

 

**Note8 — Financial Instruments**

 

We havedetermined the estimated fair value amounts of financial instruments usingavailable market information and other appropriate valuation methodologies.However, considerable judgment is required in interpreting market data todevelop the estimates of fair value. SFAS No. 157, *Fair Value Measurements,*establishes a fair value hierarchy for those instruments measured at fair valuethat distinguishes between assumptions based on market data (observable inputs)and our own assumptions (unobservable inputs).  Determining whichcategory an asset or liability falls within the hierarchy requires significantjudgment.  We evaluate our hierarchy disclosures each quarter.

 

The hierarchy consists ofthree levels:

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

 

Thecarrying amounts of cash and cash equivalents, trade receivables, and accountspayable approximate fair value 

 

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because of the relativelyshort maturity of these instruments.  Thecarrying amounts and related estimated fair values for our remaining financialinstruments as of March 31, 2009 are as follows:

 
| ** **                          | ** ** | **Carrying** | ** ** | **Fair Value** | ** ** |
|-------------------------------------|------------|--------------|------------|----------------|------------|
| ** **                          | ** ** | **Amount**   | ** ** | **Level 1**    | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|                                |       |         |       |           |       |   |   |   |   |   |   |
| **Assets**                          |       |         |       |           |       |   |   |   |   |   |   |
| Marketable  securities              |       | $            | 5,000      |           |       |   |   |   | $ | 5,000 |   | $ | 5,000 |   |
| Foreign exchange  forward contracts |       | $            | 404        |           |       |   | $ | 404 |   |   |   | $ | 404 |   |
|                                |       |         |       |           |       |   |   |   |   |   |   |
| **Liabilities**                     |       |         |       |           |       |   |   |   |   |   |   |
| Interest rate  swap contracts       |       | $            | 3,645      |           |       |   | $ | 3,645 |   |   |   | $ | 3,645 |   |
| Common stock  warrant               |       | $            | 2,327      |           |       |   |   |   | $ | 2,327 |   | $ | 2,327 |   |
| Total debt                          |       | $            | 595,145    |           |       |   | $ | 241,996 |   |   |   | $ | 241,996 |   |

 

The fair value related tomarketable securities has been determined by evaluating other similarsecurities.  Fair values relating toderivative financial instruments reflect the estimated amounts that we wouldreceive or pay to terminate the contracts at the reporting date based on quotedmarket prices of comparable contracts as of the balance sheet date. The fairvalue of our long-term debt has been determined on the basis of the specificsecurities issued and outstanding. All of our long-term debt instruments havevariable interest rates except for the senior subordinated notes, which have afixed interest rate of 8.50%.  The fairvalue of the common stock warrant has been calculated using a Black-Scholesvaluation model.

 

Our Level 3 assetsconsist of municipal bonds with an auction reset feature (“auction ratesecurities”) whose underlying assets are generally student loans which aresubstantially backed by the federal government. In February 2008, auctionsbegan to fail for these securities and each auction since then has failed.Based on the overall failure rate of these auctions, the frequency of thefailures, and the underlying maturities of the securities (40 years), we haveclassified auction rate securities as long-term assets on our balance sheet.

 

The following tableprovides a summary of changes in fair value of our Level 3 assets andliabilities as of March 31, 2009:

 
| ** **                         | ** ** | **Marketable  Securities** | ** ** | **Common  Stock  Warrant** | ** ** |
|------------------------------------|------------|----------------------------|------------|----------------------------|------------|
| Balance at  December 31, 2008 |       | $                          | 5,000      |                       | $          | — |   |
| Purchase  (issuance) of securities |       | —                     |       | (4,655                     | )          |
| Unrealized gain  (loss) recognized |       | —                     |       | 2,328                      |       |
| Net settlements                    |       | —                     |       | —                     |       |
| Balance at  March 31, 2009    |       | $                          | 5,000      |                       | $          | (2,327 | ) |

 

**Note9 — Segment Reporting**

 

As a part of ourcontinual monitoring of the long-term economic characteristics, products andproduction processes, class of customer, and distribution methods of ouroperating segments, we aggregate our seven operating segments into threereportable segments shown below.  Theaccounting policies of the reportable segments are the same as described inNote 1, Summary of Significant Accounting Policies.

 
| ** **             | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------|------------|---------------------------------------|------------|
| ** **             | ** ** | **2009**                              | ** ** | **2008** | ** ** |
| Net sales:             |       |                                  |       |   |   |
| Wheels                 |       | $                                     | 56,885     |   | $ | 104,010 |   |
| Components             |       | 74,056                                |       | 120,759 |   |
| Other                  |       | 12,635                                |       | 13,441 |   |
| Consolidated  total    |       | $                                     | 143,576    |   | $ | 238,210 |   |
|                   |       |                                  |       |   |   |
| Loss from  operations: |       |                                  |       |   |   |
| Wheels                 |       | $                                     | 5,488      |   | $ | 17,827 |   |
| Components             |       | (12,216                               | )          | (12,771 | ) |
| Other                  |       | 2,640                                 |       | 2,647 |   |
| Corporate              |       | (8,096                                | )          | (9,088 | ) |
| Consolidated  total    |       | $                                     | (12,184    | ) | $ | (1,385 | ) |

 

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| ** **          | ** ** | **As of**               | ** ** |
|---------------------|------------|-------------------------|------------|
| ** **          | ** ** | **March 31, 2009** | ** ** | **December 31, 2008** | ** ** |
| Total assets:       |       |                    |       |   |   |
| Wheels              |       | $                       | 290,464    |   | $ | 191,435 |   |
| Components          |       | 270,633                 |       | 285,966 |   |
| Other               |       | 39,485                  |       | 38,064 |   |
| Corporate           |       | 100,270                 |       | 293,085 |   |
| Consolidated  total |       | $                       | 700,852    |   | $ | 808,550 |   |

 

**Note10 - Debt**

 

Debt at March 31,2009, and December 31, 2008, consisted of the following:

 
| ** **                                | ** ** | **March 31,  2009** | ** ** | **December 31,  2008** | ** ** |
|-------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Term Facility —  Non-related Parties |       | $                        | 224,559    |                        | $          | 294,625 |   |
| Term Facility —  Related Party       |       | 71,437                   |       | —                      |       |
| Senior  Subordinated Notes                |       | 275,000                  |       | 275,000                     |       |
| Revolving Credit  Facility                |       | 25,444                   |       | 78,444                      |       |
| Industrial  Revenue Bond                  |       | 3,100                    |       | 3,100                       |       |
| Discount on  long-term debt               |       | (4,395                   | )          | —                      |       |
| Total                                     |       | $                        | 595,145    |                        | $          | 651,169 |   |

 

On February 4, 2009,we amended (the “Second Amendment”) our Term Facility and Revolving CreditFacility (as defined below) under our Fourth Amended and Restated CreditAgreement, dated January 31, 2005 among Accuride, Accuride Canada, Inc.,Citicorp USA, Inc., as administrative agent, and other lender partiesthereto (as amended, the “Credit Agreement”).  On February 4, 2009,we also completed a transaction (the “Sun Capital Transaction”) with anaffiliate of Sun Capital Securities Group (“Sun Capital”), which currentlyholds approximately $70.1 million principal amount of Last-Out Loans (asdefined below) along with approximately $1.3 million of interest accrued aspayable-in-kind.  As of March 31,2009, fees paid associated with the amendment were $7.1 million.  Fees to be paid in 2009 in the three monthsending June 30, 2009, are approximately $3.3 million.

 

In connection with themodification of the Last-Out Loans and pursuant to a Last-Out Debt Agreement,we issued a warrant (the “Warrant”) to Sun Capital exercisable for 25 percentof our fully-diluted common stock at an exercise price of $0.01 per share.  The grant date fair value of the warrant of $4,655was recorded as a liability and a discount to our long-term debt and will beamortized over the life of our Term Facility, which matures on January 31,2012.  During the three months ended March 31,2009, we recorded unrealized gains of $2,328 as a component of Other income(expense) with the offsetting impact to our warrant liability.

 

Under the terms of ourCredit Agreement, there are certain restrictive covenants that limit thepayment of cash dividends and establish minimum financial ratios. Our seniorcredit facilities and the indenture governing our Registered SeniorSubordinated Notes (as described below) restrict our ability to pay dividends.In addition, our senior credit facilities include other more restrictivecovenants and prohibit us from prepaying our other indebtedness, including ourRegistered Senior Subordinated Notes, while borrowings under our senior creditfacilities are outstanding. We were in compliance with all such covenants at March 31,2009.

 

Although the Companycontinues to benefit from strong brand awareness, market presence andmanagement expertise, we continue to operate in a very challenging economicenvironment which is beyond our control and difficult to predict.  The latest 2009 production units for thesignificant commercial vehicle markets we serve as forecasted by ACTPublications are as follows:

 
| North American Class 8 | 135,442 |
|-----------------------------|---------|
| North American Classes  5-7 | 126,684 |
| U.S. Trailers               | 82,370  |

 

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However, there is asignificant difference of opinion between research firms, with Global Insightand FTR Associates forecasting 121,950 and 105,998 production units,respectively, for North American Class 8 production in calendar 2009.  These forecasts represent a significantdecline from 2008 actuals and 2009 forecasts at the time of our Form 10-Kfiling on March 13, 2009.  Inaddition to the reduction in OEM forecasts, we have experienced a significantdecline in demand for aftermarket products as a result of lower vehicle usageand customer inventory reductions.

 

If OEM production remainsin the current range of forecasts or the aftermarket does not recover to morenormalized levels, our projections indicate that we will continue to havesufficient liquidity in 2009 for our working capital needs, planned capitalexpenditures and scheduled debt service obligation.  While we continue to improve our operationalefficiency and focus on cash management, there is a reasonable likelihood thatwe will violate one or more of our debt covenants as early as the end of thethree months ending June 30, 2009. This could result in an event ofdefault, permit our lenders to restrict our access to available cash, andpossibly the acceleration of the related debt and the acceleration of debtunder other instruments evidencing indebtedness that may containcross-acceleration or cross-default provisions. We are proactively evaluating alternatives such as additional amendmentsor waivers, the sale of non-core assets, and/or alternative debtstructures.  The Board has appointed aspecial committee of independent directors to identify and, with the input ofmanagement and our financial advisors, evaluate alternatives to recommend anappropriate course of action to the full board. However, the success of any such alternative actions will depend on manyfactors, some of which are out of management’s control.  Therefore, we can provide no assurance as tothe success of such actions. No changes have been made to the classification ofdebt on the balance sheet as a result of this uncertainty.

 

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**Note 11 –Guarantor and Non-guarantor Financial Statements**

 

Our 81⁄2% SeniorSubordinated Notes due 2015 are fully and unconditionally guaranteed, on ajoint and several basis, by substantially all of our 100% owned domesticsubsidiaries (“Guarantor Subsidiaries”). The non-guarantor subsidiaries are ourforeign subsidiaries. The following condensed financial information illustratesthe composition of the combined Guarantor Subsidiaries:

 

**CONDENSEDCONSOLIDATED BALANCE SHEET**

 
| ** **                                     | ** ** | **March 31, 2009** | ** ** |
|------------------------------------------------|------------|-------------------------|------------|
| ** **                                     | ** ** | **Parent**              | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| **ASSETS**                                     |       |                    |       |   |   |   |   |   |   |   |   |
| Cash and cash  equivalents                     |       | $                       | 25,656     |   | $ | (1,020 | ) | $ | 3,856 |   | — |   | $ | 28,492 |   |
| Accounts  receivable, net                      |       | 26,120                  |       | 184,803 |   | 4,988 |   | $ | (146,642 | ) | 69,269 |   |
| Inventories and  supplies                      |       | 23,953                  |       | 56,455 |   | 16,619 |   | (698 | ) | 96,329 |   |
| Other current  assets                          |       | 2,006                   |       | 2,646 |   | 4,000 |   | — |   | 8,652 |   |
| Total current  assets                          |       | 77,735                  |       | 242,884 |   | 29,463 |   | (147,340 | ) | 202,742 |   |
| Property, plant,  and equipment, net           |       | 38,530                  |       | 167,799 |   | 44,799 |   | — |   | 251,128 |   |
| Goodwill                                       |       | 66,973                  |       | 52,460 |   | 8,041 |   | — |   | 127,474 |   |
| Intangible  assets, net                        |       | 513                     |       | 95,738 |   | — |   | — |   | 96,251 |   |
| Investment in  subsidiaries and affiliates     |       | 332,823                 |       | — |   | — |   | (332,823 | ) | — |   |
| Other non-current  assets                      |       | 14,961                  |       | 1,289 |   | 7,007 |   | — |   | 23,257 |   |
| TOTAL                                          |       | $                       | 531,535    |   | $ | 560,170 |   | $ | 89,310 |   | $ | (480,163 | ) | $ | 700,852 |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY** |       |                    |       |   |   |   |   |   |   |   |   |
| Accounts payable                               |       | $                       | 11,666     |   | $ | 30,312 |   | $ | 4,127 |   | — |   | $ | 46,105 |   |
| Accrued payroll  and compensation              |       | 3,194                   |       | 12,972 |   | 5,338 |   | — |   | 21,504 |   |
| Accrued interest  payable                      |       | 6,152                   |       | 9 |   | 327 |   | — |   | 6,488 |   |
| Accrued and  other liabilities                 |       | 8,696                   |       | 277,500 |   | 6,024 |   | $ | (264,290 | ) | 27,930 |   |
| Total current  liabilities                     |       | 29,708                  |       | 320,793 |   | 15,816 |   | (264,290 | ) | 102,027 |   |
| Long term debt                                 |       | 580,045                 |       | 3,100 |   | 12,000 |   | — |   | 595,145 |   |
| Deferred and  non-current income taxes         |       | 6,997                   |       | 13,246 |   | 1,247 |   | — |   | 21,490 |   |
| Other  non-current liabilities                 |       | 18,995                  |       | 56,799 |   | 10,606 |   | — |   | 86,400 |   |
| Stockholders’  equity (deficiency)        |       | (104,210                | )          | 166,232 |   | 49,641 |   | (215,873 | ) | (104,210 | ) |
| TOTAL                                          |       | $                       | 531,535    |   | $ | 560,170 |   | $ | 89,310 |   | $ | (480,163 | ) | $ | 700,852 |   |

 
| ** **                                     | ** ** | **December 31, 2008** | ** ** |
|------------------------------------------------|------------|----------------------------|------------|
| ** **                                     | ** ** | **Parent**                 | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| **ASSETS**                                     |       |                       |       |   |   |   |   |   |   |   |   |
| Cash                                           |       | $                          | 95,630     |   | $ | (1,633 | ) | $ | 29,679 |   | — |   | $ | 123,676 |   |
| Accounts receivable,  net                      |       | 21,244                     |       | 202,230 |   | 4,416 |   | $ | (149,671 | ) | 78,219 |   |
| Inventories and  supplies                      |       | 21,278                     |       | 64,506 |   | 12,056 |   | (534 | ) | 97,306 |   |
| Other current  assets                          |       | 2,449                      |       | 3,465 |   | 2,644 |   | — |   | 8,558 |   |
| Total current  assets                          |       | 140,601                    |       | 268,568 |   | 48,795 |   | (150,205 | ) | 307,759 |   |
| Property, plant,  and equipment, net           |       | 39,365                     |       | 173,255 |   | 46,018 |   | — |   | 258,638 |   |
| Goodwill                                       |       | 66,973                     |       | 52,460 |   | 8,041 |   | — |   | 127,474 |   |
| Intangible  assets, net                        |       | 560                        |       | 96,922 |   | — |   | — |   | 97,482 |   |
| Investment in  affiliates                      |       | 343,655                    |       | — |   | — |   | (343,655 | ) | — |   |
| Deferred tax  assets                           |       | —                     |       | — |   | — |   | — |   | — |   |
| Other  non-current assets                      |       | 10,593                     |       | 1,472 |   | 5,132 |   | — |   | 17,197 |   |
| TOTAL                                          |       | $                          | 601,747    |   | $ | 592,677 |   | $ | 107,986 |   | $ | (493,860 | ) | $ | 808,550 |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY** |       |                       |       |   |   |   |   |   |   |   |   |
| Accounts payable                               |       | $                          | 10,523     |   | $ | 45,172 |   | $ | 8,242 |   | — |   | 63,937 |   |
| Accrued payroll  and compensation              |       | 2,380                      |       | 11,349 |   | 5,922 |   | — |   | 19,651 |   |
| Accrued interest  payable                      |       | 12,128                     |       | 9 |   | 368 |   | — |   | 12,505 |   |
| Accrued and  other liabilities                 |       | 9,101                      |       | 279,329 |   | 5,082 |   | (263,987 | ) | 29,525 |   |
| Total current  liabilities                     |       | 34,132                     |       | 335,859 |   | 19,614 |   | (263,987 | ) | 125,618 |   |
| Long term debt,  net                           |       | 618,069                    |       | 3,100 |   | 30,000 |   | — |   | 651,169 |   |
| Deferred and  long-term income taxes           |       | 6,997                      |       | 13,248 |   | 1,024 |   | — |   | 21,269 |   |
| Other  non-current liabilities                 |       | 16,364                     |       | 57,422 |   | 10,523 |   | — |   | 84,309 |   |
| Stockholders’  equity (deficiency)        |       | (73,815                    | )          | 183,048 |   | 46,825 |   | $ | (229,873 | ) | (73,815 | ) |
| TOTAL                                          |       | $                          | 601,747    |   | $ | 592,677 |   | $ | 107,986 |   | $ | (493,860 | ) | $ | 808,550 |   |

 

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**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

 
| ** **                                   | ** ** | **Three Months Ended March 31, 2009** | ** ** |
|----------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                   | ** ** | **Parent**                                 | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                                    |       | $                                          | 64,255     |   | $ | 78,828 |   | $ | 22,159 |   | $ | (21,666 | ) | $ | 143,576 |   |
| Cost of goods  sold                          |       | 59,088                                     |       | 88,201 |   | 17,913 |   | (21,666 | ) | 143,536 |   |
| Gross profit  (loss)                         |       | 5,167                                      |       | (9,373 | ) | 4,246 |   | — |   | 40 |   |
| Operating  expenses                          |       | 9,034                                      |       | 2,964 |   | 226 |   | — |   | 12,224 |   |
| Income (loss)  from operations               |       | (3,867                                     | )          | (12,337 | ) | 4,020 |   | — |   | (12,184 | ) |
| Other income  (expense):                     |       |                                       |       |   |   |   |   |   |   |   |   |
| Interest  (expense), net                     |       | (12,538                                    | )          | (13 | ) | (752 | ) | — |   | (13,303 | ) |
| Loss on  extinguishment of debt              |       | (5,389                                     | )          | — |   | — |   | — |   | (5,389 | ) |
| Equity in  earnings (losses) of subsidiaries |       | (9,857                                     | )          | — |   | — |   | 9,857 |   | — |   |
| Other income  (expense), net                 |       | 1,586                                      |       | 79 |   | (854 | ) | — |   | 811 |   |
| Income (loss)  before income taxes           |       | (30,065                                    | )          | (12,271 | ) | 2,414 |   | 9,857 |   | (30,065 | ) |
| Income tax  provision                        |       | 990                                        |       | — |   | — |   | — |   | 990 |   |
| Net income  (loss)                           |       | $                                          | (31,055    | ) | $ | (12,271 | ) | $ | 2,414 |   | $ | 9,857 |   | $ | (31,055 | ) |

 
| ** **                                   | ** ** | **Three Months Ended March 31, 2008** | ** ** |
|----------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                   | ** ** | **Parent**                                 | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                                    |       | $                                          | 64,876     |   | $ | 165,734 |   | $ | 44,554 |   | $ | (36,954 | ) | $ | 238,210 |   |
| Cost of goods  sold                          |       | 52,339                                     |       | 169,279 |   | 41,277 |   | (36,954 | ) | 225,941 |   |
| Gross profit                                 |       | 12,537                                     |       | (3,545 | ) | 3,277 |   | — |   | 12,269 |   |
| Operating  expenses                          |       | 10,291                                     |       | 3,161 |   | 202 |   | — |   | 13,654 |   |
| Income (loss)  from operations               |       | 2,246                                      |       | (6,706 | ) | 3,075 |   | — |   | (1,385 | ) |
| Other income  (expense):                     |       |                                       |       |   |   |   |   |   |   |   |   |
| Interest  (expense), net                     |       | (13,998                                    | )          | (24 | ) | (1,692 | ) | — |   | (15,714 | ) |
| Equity in  earnings (losses) of subsidiaries |       | (6,344                                     | )          | — |   | — |   | 6,344 |   | — |   |
| Other income  (expense), net                 |       | (946                                       | )          | 96 |   | (204 | ) | — |   | (1,054 | ) |
| Income (loss)  before income taxes           |       | (19,042                                    | )          | (6,634 | ) | 1,179 |   | 6,344 |   | (18,153 | ) |
| Income tax  (benefit) provision              |       | (7,301                                     | )          | — |   | 889 |   | — |   | (6,412 | ) |
| Net income  (loss)                           |       | $                                          | (11,741    | ) | $ | (6,634 | ) | $ | 290 |   | $ | 6,344 |   | $ | (11,741 | ) |

 

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**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

** **
| ** **                                                                                           | ** ** | **Three Months Ended March 31, 2009** | ** ** |
|------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                           | ** ** | **Parent  Company**                        | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| Net income  (loss)                                                                                   |       | $                                          | (31,055    | ) | $ | (12,271 | ) | $ | 2,414 |   | $ | 9,857 |   | $ | (31,055 | ) |
| Adjustments to  reconcile net income (loss) to net cash provided by (used in) operating  activities: |       |                                       |       |   |   |   |   |   |   |   |   |
| Depreciation                                                                                         |       | 1,922                                      |       | 7,791 |   | 1,409 |   | — |   | 11,122 |   |
| Amortization –  deferred financing costs                                                        |       | 880                                        |       | — |   | 6 |   | — |   | 886 |   |
| Amortization –  other intangible assets                                                         |       | 47                                         |       | 1,184 |   | — |   | — |   | 1,231 |   |
| Loss on  extinguishment of debt                                                                      |       | 5,389                                      |       | — |   | — |   | — |   | 5,389 |   |
| Gain on warrant  valuation                                                                           |       | (2,328                                     | )          | — |   | — |   | — |   | (2,328 | ) |
| Paid-in-kind  interest                                                                               |       | 1,371                                      |       | — |   | — |   | — |   | 1,371 |   |
| Loss (gain) on  disposal of assets                                                                   |       | (48                                        | )          | 16 |   | 60 |   | — |   | 28 |   |
| Equity in  earnings of subsidiaries and affiliates                                                   |       | 9,857                                      |       | — |   | — |   | (9,857 | ) | — |   |
| Non-cash  stock-based compensation                                                                   |       | 95                                         |       | — |   | — |   | — |   | 95 |   |
| Change in other  operating items                                                                     |       | (11,945                                    | )          | 6,165 |   | (11,462 | ) | — |   | (17,242 | ) |
| Net cash  provided by (used in) operating activities                                                 |       | (25,815                                    | )          | 2,885 |   | (7,573 | ) | — |   | (30,503 | ) |
|                                                                                                 |       |                                       |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| Purchases of  property, plant, and equipment                                                         |       | (2,113                                     | )          | (2,351 | ) | (250 | ) | — |   | (4,714 | ) |
| Other                                                                                                |       | —                                     |       | 79 |   | — |   | — |   | 79 |   |
| Net cash used in  investing activities                                                               |       | (2,113                                     | )          | (2,272 | ) | (250 | ) | — |   | (4,635 | ) |
|                                                                                                 |       |                                       |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| Decrease in  revolving credit advance                                                                |       | (35,000                                    | )          | — |   | (18,000 | ) | — |   | (53,000 | ) |
| Other                                                                                                |       | (7,046                                     | )          | — |   | — |   | — |   | (7,046 | ) |
| Net cash used in  financing activities                                                               |       | (42,046                                    | )          | — |   | (18,000 | ) | — |   | (60,046 | ) |
|                                                                                                 |       |                                       |       |   |   |   |   |   |   |   |   |
| Increase  (decrease) in cash and cash equivalents                                                    |       | (69,974                                    | )          | 613 |   | (25,823 | ) | — |   | (95,184 | ) |
| Cash and cash  equivalents, beginning of year                                                        |       | 95,630                                     |       | (1,633 | ) | 29,679 |   | — |   | 123,676 |   |
| Cash and cash  equivalents, end of period                                                            |       | $                                          | 25,656     |   | $ | (1,020 | ) | $ | 3,856 |   | $ | — |   | $ | 28,492 |   |

 
| ** **                                                                                           | ** ** | **Three Months Ended March 31, 2008** | ** ** |
|------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                                           | ** ** | **Parent  Company**                                            | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                               |       |                                                           |       |   |   |   |   |   |   |   |   |
| Net income  (loss)                                                                                   |       | $                                                              | (11,741    | ) | $ | (6,634 | ) | $ | 290 |   | $ | 6,344 |   | $ | (11,741 | ) |
| Adjustments to  reconcile net income (loss) to net cash provided by (used in) operating  activities: |       |                                                           |       |   |   |   |   |   |   |   |   |
| Depreciation                                                                                         |       | 1,951                                                          |       | 6,732 |   | 1,585 |   | — |   | 10,268 |   |
| Amortization –  deferred financing costs                                                        |       | 301                                                            |       | 1 |   | 6 |   | — |   | 308 |   |
| Amortization –  other intangible assets                                                         |       | 199                                                            |       | 1,221 |   | — |   | — |   | 1,420 |   |
| Loss (gain) on  disposal of assets                                                                   |       | 1                                                              |       | 14 |   | 3 |   | — |   | 18 |   |
| Deferred income  taxes                                                                               |       | (7,833                                                         | )          | — |   | 410 |   | — |   | (7,423 | ) |
| Equity in  earnings of subsidiaries and affiliates                                                   |       | 6,344                                                          |       | — |   | — |   | (6,344 | ) | — |   |
| Non-cash  stock-based compensation                                                                   |       | 510                                                            |       | — |   | — |   | — |   | 510 |   |
| Change in other  operating items                                                                     |       | (28,925                                                        | )          | 6,536 |   | 673 |   | — |   | (21,716 | ) |
| Net cash  provided by (used in) operating activities                                                 |       | (39,193                                                        | )          | 7,870 |   | 2,967 |   | — |   | (28,356 | ) |
|                                                                                                 |       |                                                           |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                                                               |       |                                                           |       |   |   |   |   |   |   |   |   |
| Purchases of  property, plant, and equipment                                                         |       | (3,401                                                         | )          | (6,897 | ) | (126 | ) | — |   | (10,424 | ) |
| Other                                                                                                |       | (5,510                                                         | )          | 98 |   | — |   | — |   | (5,412 | ) |
| Net cash used in  investing activities                                                               |       | (8,911                                                         | )          | (6,799 | ) | (126 | ) | — |   | (15,836 | ) |
|                                                                                                 |       |                                                           |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                               |       |                                                           |       |   |   |   |   |   |   |   |   |
| Other                                                                                                |       | 99                                                             |       | — |   | — |   | — |   | 99 |   |
| Net cash  provided by financing activities                                                           |       | 99                                                             |       | — |   | — |   | — |   | 99 |   |
|                                                                                                 |       |                                                           |       |   |   |   |   |   |   |   |   |
| Increase  (decrease) in cash and cash equivalents                                                    |       | (48,005                                                        | )          | 1,071 |   | 2,841 |   | — |   | (44,093 | ) |
| Cash and cash  equivalents, beginning of year                                                        |       | 85,940                                                         |       | (2,474 | ) | 7,469 |   | — |   | 90,935 |   |
| Cash and cash  equivalents, end of period                                                            |       | $                                                              | 37,935     |   | $ | (1,403 | ) | $ | 10,310 |   | $ | — |   | $ | 46,842 |   |

 

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

 

The accompanyingunaudited condensed interim consolidated financial statements are prepared inconformity with accounting principles generally accepted in the United Statesof America and such principles are applied on a basis consistent with theinformation reflected in our Form 10-K for the year ended December 31,2008 filed with the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America have beencondensed or omitted pursuant to the rules and regulations promulgated bythe SEC.  In the opinion of management,the interim financial information includes all adjustments and accruals,consisting only of normal recurring adjustments, which are necessary for a fairpresentation of results for the respective interim periods.  The results of operations for the threemonths ended March 31, 2009 are not necessarily indicative of the resultsto be expected for the full fiscal year ending December 31, 2009 or anyinterim period.  Except for thehistorical information contained herein, this quarterly report on Form 10-Qcontains forward-looking statements that involve risks and uncertainties.  Our actual results may differ materially fromthose indicated by such forward-looking statements.

 

Overview

 

Our business consists ofseven operating segments that design, manufacture, and distribute componentsfor trucks, trailers, and other vehicles. These operating segments areaggregated into three reportable segments as each reportable segment hassimilar economic characteristics, products and production processes, class ofcustomer and distribution methods. The Wheels segment’s products consist ofwheels for heavy- and medium-duty trucks and commercial trailers.  The Components segment’s products consist oftruck body and chassis parts, wheel-end components and assemblies, andseats.  The Other segment’s productsprimarily consist of other commercial vehicle components, including steerabledrive axles and gearboxes. We believe this segmentation is appropriate basedupon management’s operating decisions and performance assessment.

 

Recent global market andeconomic conditions have been unprecedented and challenging with tighter creditconditions and recession in most major economies continuing into 2009.  As a result of these market conditions, thecost and availability of credit has been and may continue to be adverselyaffected by illiquid credit markets and wider credit spreads.  Concern about the stability of the marketsgenerally and the strength of counterparties specifically has led many lendersand institutional investors to reduce, and in some cases, cease to providecredit to businesses and consumers. These factors have lead to a decrease in spending by businesses andconsumers alike. Continued turbulence in the U.S. and international markets andeconomies and prolonged declines in business and consumer spending mayadversely affect our liquidity and financial condition, and the liquidity andfinancial condition of our customers, including our ability to refinancematuring liabilities and access the capital markets to meet liquidity needs.

 

The heavy- andmedium-duty truck and commercial trailer markets and the related aftermarketare the primary drivers of our sales. These markets are, in turn, directlyinfluenced by conditions in the North American truck industry generally and byoverall economic growth and consumer spending.  Accordingly, the current economic conditions described above have led toa severe downturn in the North American truck and vehicle supply industries,which has resulted in a significant decline in our sales volume.  Furthermore, industry analysts expect thatdemand in 2009 will be lower than in 2008. Net sales for the three months ended March 31, 2009, were $143.6million compared to net sales of $238.2 million for the three months ended March 31,2008.  We cannot accurately predict howprolonged this downturn may be, and this downturn may lead to further reducedspending and deterioration in the North American truck and vehicle supplyindustries for the foreseeable future. Delayed or failed economic recoverycould have a material adverse effect on our business, results of operations, orfinancial condition.

 

On February 4, 2009,we completed the Sun Capital Transaction and the Second Amendment to the termfacility (the “Term Facility”) and revolving credit facility (the “RevolvingCredit Facility”) under our Credit Agreement.  Sun Capital currently holdsapproximately $70.1 million principal amount of the indebtedness outstandingunder the Term Facility (the “Last-Out Loans”) and approximately $1.3 millionof interest accrued as payable-in-kind.

 

The Second Amendmentadjusts certain financial covenants under the Credit Agreement from the fourthquarter of 2008 through 2010, including leverage, interest coverage and fixedcharge coverage ratios, and extends the maturity date of the Revolving CreditFacility until January 31, 2011.  In connection with the SecondAmendment, Sun Capital agreed to modify the Last-Out Loans to become last outas to payment to the other loans outstanding under the Term Facility.  SunCapital also agreed to modify certain voting provisions and other rights underthe Credit Agreement as a holder of the Last-Out Loans.

 

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In connection with themodification of the Last-Out Loans and pursuant to a Last-Out Debt Agreement,dated February 4, 2009, that Accuride entered into with Sun Capital, weissued the Warrant to Sun Capital exercisable for 25 percent of ourfully-diluted common stock, expanded our board of directors to 12 members andgranted Sun Capital the right to elect the five directors and nominate oneindependent director.  Sun Capital has not yet nominated its independentdirector and, prior to such nomination, Sun Capital has 50 percent of thevoting power of the Board of Directors. We amended our bylaws to require approval of two thirds of the Board ofDirectors for certain corporate actions and issued a preferred share (the “PreferredShare”) to Sun Capital that gives Sun Capital the right to approve certaincorporate actions so long as Sun Capital maintains 10 percent ownership of ourcommon stock.  Sun Capital has also agreed to provide customary strategic,business and operational support to Accuride.  Sun Capital currently ownsapproximately 9.9 percent of our outstanding common stock.

 

As of March 31,2009, fees paid associated with the Second Amendment were $7.1 million.  Fees to be paid in 2009 in the three monthsended June 30, 2009, are approximately $3.3 million.

 

**Resultsof Operations**

 

***ThreeMonths Ended March 31, 2009 Compared to the Three Months Ended March 31,2008***

The following table setsforth certain income statement information of Accuride for the three monthsended March 31, 2009 and March 31, 2008:

 
| **(Dollars in thousands)**      | ** ** | **Fiscal 2009** | ** ** | **Fiscal 2008** | ** ** |
|---------------------------------|------------|-----------------|------------|-----------------|------------|
| Net  sales:                     |       |            |       |            |       |   |   |   |   |
| Wheels                          |       | $               | 56,885     |            | 39.6       | % | $ | 104,010 |   | 43.7 | % |
| Components                      |       | 74,056          |       | 51.6            | %          | 120,759 |   | 50.7 | % |
| Other                           |       | 12,635          |       | 8.8             | %          | 13,441 |   | 5.6 | % |
| Total  net sales                |       | $               | 143,576    |            | 100        | % | $ | 238,210 |   | 100.0 | % |
| Gross  profit:                  |       |            |       |            |       |   |   |   |   |
| Wheels                          |       | 7,583           |       | 13.3            | %          | 20,171 |   | 19.4 | % |
| Components                      |       | (10,451         | )          | (14.1           | )%         | (10,815 | ) | (9.0 | )% |
| Other                           |       | 3,864           |       | 30.6            | %          | 3,810 |   | 28.3 | % |
| Corporate                       |       | (956            | )          | —          | %          | (897 | ) | — | % |
| Total  gross profit             |       | 40              |       | 0.0             | %          | 12,269 |   | 5.2 | % |
| Operating  expenses             |       | 12,224          |       | 8.5             | %          | 13,654 |   | 5.7 | % |
| Loss  from operations           |       | (12,184         | )          | (8.5            | )%         | (1,385 | ) | (0.6 | )% |
| Interest  (expense), net        |       | (13,303         | )          | (9.3            | )%         | (15,714 | ) | (6.6 | )% |
| Loss  on extinguishment of debt |       | (5,389          | )          | (3.7            | )%         | — |   | — |   |
| Other  income (loss), net       |       | 811             |       | 0.6             | )%         | (1,054 | ) | (0.4 | )% |
| Income  tax expense (benefit)   |       | 990             |       | 0.7             | %          | (6,412 | ) | (2.7 | )% |
| Net  loss                       |       | $               | (31,055    | )               | (21.6      | )% | $ | (11,741 | ) | (4.9 | )% |

 

**Net Sales.** Consolidated net sales for the three months ended March 31, 2009,were $143.6 million, which was a decrease of 39.7%, compared to net sales of$238.2 million for the three months ended March 31, 2008.  The decrease in net sales is primarily a resultof the reduced demand in the commercial vehicle industry.  Sales decreased in the Wheels and Componentssegments by 45.3% and 38.7%, respectively.

 

**Gross Profit. **Consolidated gross profit decreased $12.3 million to$0.0 million for the three months ended March 31, 2009.  Gross profit in the Wheels segment decreased$12.6 million to $7.6 million primarily due to the contribution lost on thereduced volume.  Gross profit in theComponents segment increased by $0.4 million to a loss of $10.5 million due toreduced sales partially offset by $8.1 million of one-time labor interruptioncosts incurred in the three months ended March 31, 2008, at our Rockford,Illinois facility.

 

**Operating Expenses. **Operating expenses decreased $1.4 million to $12.2million for the three months ended March 31, 2009 from $13.6 million forthe three months ended March 31, 2008. This was primarily due to decreases in salary related expenses resultingfrom reduced headcount and other elimination or suspension of other certain wagesand benefits.

 

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**Interest Expense. **Net interest expensedecreased $2.4 million to $13.3 million for the three months ended March 31,2009 from $15.7 million for the three months ended March 31, 2008.  The decrease is primarily attributable to$0.8 million of non-cash unrealized gains from the mark to market of ourinterest rate swap agreements in the current period compared to $4.5 million ofunrealized losses in the prior year’s results. Offsetting that favorable variance, interest expense in the currentperiod was $2.8 million higher due to $2.5 million of increased expense relatedto the outstanding revolver and the increased rates compared to the prior yearand $0.3 million increased amortization of deferred financing fees.  Approximately $1.3 million of interestexpense recognized was accrued as payable-in-kind to Sun Capital and does notimpact cash during 2009.

 

**Income Tax. **Income tax expense in the three months ended March 31,2009 was $1.0 million on pre-tax losses of $31.1 million compared to a taxbenefit of $6.4 million on pre-tax losses of 18.2 million recognized in thethree months ended March 31, 2008. Due to our recent history of U.S. operating and taxable losses, theinconsistency of these profits, and the uncertainty of their financial outlook,we continue to maintain a full valuation allowance against our domesticdeferred tax assets.

 

**Net Loss. **We had a netloss of $31.1 million for the three months ended March 31,2009 compared to a net loss of $11.7 million for the three months ended March 31,2008.  This was primarily a result of thelower gross profit due to the reduction in sales volume.

 

***Changes in Financial Condition***

 

At March 31, 2009,we had total assets of $700.9 million, as compared to $808.6 million at December 31,2008.  The $107.7 million, or 13.3%,decrease in total assets during the three months ended March 31, 2009primarily resulted from the reduction of cash of $95.2 million partially offsetby an increase in working capital assets. We define working capital as current assets (excluding cash) lesscurrent liabilities.

 

We use working capitaland cash flow measures to evaluate the performance of our operations and ourability to meet our financial obligations. We require working capitalinvestment to maintain our position as a leading manufacturer and supplier ofcommercial vehicle components.  Wecontinue to strive for aligning our working capital investment with ourcustomers’ purchase requirements and our production schedules.

 

The following tablesummarizes the major components of our working capital as of the periods listedbelow:

 
| ** **                        | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                        | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| Accounts  receivable              |       | $                  | 69,269     |                  | $          | 78,219 |   |
| Inventories  and supplies         |       | 96,329             |       | 97,306                |       |
| Deferred  income taxes (current)  |       | 1,955              |       | 1,955                 |       |
| Other  current assets             |       | 6,697              |       | 6,603                 |       |
| Accounts  payable                 |       | (46,105            | )          | (63,937               | )          |
| Accrued  payroll and compensation |       | (21,504            | )          | (19,651               | )          |
| Accrued  interest payable         |       | (6,488             | )          | (12,505               | )          |
| Accrued  workers compensation     |       | (7,803             | )          | (7,969                | )          |
| Other  current liabilities        |       | (20,127            | )          | (21,556               | )          |
| Working  Capital                  |       | $                  | 72,223     |                  | $          | 58,465 |   |

 

Significant changes inworking capital from December 31, 2008 included:

·                  a decrease in receivables of $8.9 milliondue to the comparative decrease in revenue in the months leading up to therespective period-end dates;

·                  a decrease of accounts payable of $17.8million primarily due to the reduction in raw material purchases in the monthsleading up to the respective period-end dates;

·                  an increase in accrued payroll andcompensation of $1.8 million due to severance related charges;

·                  a reduction of interest payable of $6.0million due to timing of the interest payment for our Notes which is paid each February andAugust.

 

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**Capital Resources and Liquidity**

 

Our primarysources of liquidity during the three months ended March 31, 2009, werecash reserves.  We believe that cash fromoperations, existing cash reserves, and proceeds from our April 2009Revolving Credit Facility draw and the remaining availability under ourRevolving Credit Facility will provide adequate funds for our working capitalneeds, planned capital expenditures and debt service obligations through 2009and the foreseeable future.  Our abilityto fund working capital needs, planned capital expenditures, scheduled debtpayments, and to comply with all of the financial covenants under the CreditAgreement, depends on our future operating performance and cash flow, which inturn, are subject to prevailing economic conditions and to financial, businessand other factors, some of which are beyond our control.

 

##### **Operating Activities**

 

Net cash used inoperating activities during the first three months of 2009 amounted to $30.5million compared to a use of $28.4 million for the comparable period in2008.  Other than the reduction of netincome, the significant drivers of the net cash used in the current period werea $20.0 million reduction in accounts payable and $17.8 million of cash paidfor interest.  The decline in accountspayable was a result of a reduction in purchases late in the period while theinterest payment included the $11.7 million semi-annual payment for interestfor our senior-subordinated notes that is payable each  February and August.

 

##### **Investing Activities**

 

Net cash used ininvesting activities totaled $4.6 million for the three months ended March 31,2009, compared to a use of $15.8 million for the three months ended March 31,2008.  Our most significant cash outlaysfor investing activities are the purchases of property, plant andequipment.  Our capital expenditures in2008 were $29.7 million.  Capitalexpenditures for 2009 are expected to be approximately $20 million to $25million, which we expect to fund through existing cash reserves.   Capital expenditures for the three monthsended March 31, 2009 were $4.7 million compared to use of $10.4 millionfor the comparable period in 2008. Included in the 2008 use of investing cash was an investment inmarketable securities of $5.0 million.

 

##### **Financing Activities**

 

Net cash used infinancing activities totaled $60.0 million for the three months ended March 31,2009, compared to $0.1 million of net cash provided for the comparable periodin 2008. Included in the 2009 cash used was $53.0 million for decrease inrevolving credit advance and $7.1 million for amendment fees.

 

**BankBorrowing**

 

Effective January 31,2005, we entered into the Fourth Amended and Restated Credit Agreement inconjunction with the acquisition of TTI to refinance substantially all of ourexisting bank facilities, as well as the senior bank debt and subordinated debtof TTI. Under the refinancing, we entered into (i) the Term Facility in anaggregate principal amount of $550 million that requires annualamortization payments of 1% per year, with the balance payable on January 31,2012, and (ii) the Revolving Credit Facility in an aggregate amount of$100 million (comprised of a $76 million U.S. revolving creditfacility and a $24 million Canadian revolving credit facility) whichmatures on January 31, 2010.** **The U.S. and Canadian RevolvingCredit Facilities were drawn down $13.4 million and $12 million, respectively,as of March 31, 2009, leaving availability of approximately $32.0 million,which considers outstanding letters of credit of $18.4 million and excludes$24.2 million of the Revolving Credit Facility held by Lehman Commercial Paper,Inc. During April 2009, the Company made a draw of $30.6 million, whichreduced availability on the Revolving Credit Facility to approximately $1.4million.  The loans under the TermFacility and the U.S. revolving credit facility are secured by, among otherthings, a lien on substantially all of our U.S. properties, assets and domesticsubsidiaries and a pledge of 65% of the stock of our foreign subsidiaries. Theloans under the Canadian revolving facility are secured by substantially allthe properties and assets of Accuride Canada, Inc. As of March 31,2009, the outstanding balance on the term debt was $294.6 million.

 

On November 28,2007, we entered into the first amendment (the “First Amendment”) to the FourthAmended and Restated Credit Agreement, dated as of January 31, 2005. TheFirst Amendment increased pricing and modified certain financial covenantsthrough 2008, including changes to the leverage, interest coverage and fixedcharge coverage ratios.

 

As described above, on February 4,2009, we completed the Second Amendment and the Sun Capital Transaction. Sun Capital currently holds approximately $70.1 million principal amount of theLast-Out Loans and approximately $1.3 million of interest accrued aspayable-in-kind.  The Second Amendmentadjusts certain financial covenants under the Credit Agreement from the fourthquarter of 2008 through 2010, including leverage, interest coverage and fixedcharge coverage ratios, and extends the maturity date of the Revolving CreditFacility until January 31, 2011.  In connection with the SecondAmendment, Sun Capital agreed to modify the Last-Out Loans to become last outas to payment to First-Out Loans.  Sun 

 

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Capital also agreed to modify certain voting provisions and otherrights under the Credit Agreement as a holder of the Last-Out Loans.  As of March 31, 2009, fees paidassociated with the Second Amendment were $7.1 million.  Fees expected to be paid in the three monthsended June 30, 2009 are approximately $3.3 million.

 

**RestrictiveDebt Covenants.**  Our credit documents contain numerousfinancial and operating covenants that limit the discretion of management withrespect to certain business matters. These covenants place significantrestrictions on, among other things, the ability to incur additional debt, topay dividends, to create liens, to make certain payments and investments and tosell or otherwise dispose of assets and merge or consolidate with otherentities. Accuride is also required to meet certain financial ratios and testsincluding a leverage ratio, an interest coverage ratio, and a fixed chargecoverage ratio. A failure to comply with the obligations contained in thecredit documents could result in an event of default, permit our lenders torestrict our access to available cash, and possibly the acceleration of therelated debt and the acceleration of debt under other instruments evidencingindebtedness that may contain cross-acceleration or cross-default provisions.We were in compliance with all such covenants at March 31, 2009 accordingto the provisions of the Second Amendment.

 

Although the Company continuesto benefit from strong brand awareness, market presence and managementexpertise, we continue to operate in a very challenging economic environmentwhich is beyond our control and difficult to predict.  The latest 2009 production units for the significantcommercial vehicle markets we serve as forecasted by ACT Publications are asfollows:

 
| North American  Class 8 |   | 135,442 |   |
|------------------------------|--------|---------|--------|
| North American  Classes 5-7  |   | 126,684 |   |
| U.S. Trailers                |   | 82,370  |   |

 

However, there is asignificant difference of opinion between research firms, with Global Insightand FTR Associates forecasting 121,950 and 105,998 production units,respectively, for North American Class 8 production in calendar 2009.  These forecasts represent a significantdecline from 2008 actuals and 2009 forecasts at the time of our Form 10-Kfiling on March 13, 2009.  Inaddition to the reduction in OEM forecasts, we have experienced a significantdecline in demand for aftermarket products as a result of lower vehicle usageand customer inventory reductions.

 

If OEM production remainsin the current range of forecasts or the aftermarket does not recover to morenormalized levels, our projections indicate that we will continue to havesufficient liquidity in 2009 for our working capital needs, planned capital expendituresand scheduled debt service obligation. While we continue to improve our operational efficiency and focus oncash management, there is a reasonable likelihood that we will violate one ormore of our debt covenants as early as the end of the three months ending June 30,2009. This could result in an event of default, permit our lenders to restrictour access to available cash, and possibly the acceleration of the related debtand the acceleration of debt under other instruments evidencing indebtednessthat may contain cross-acceleration or cross-default provisions.  We are proactively evaluating alternativessuch as additional amendments or waivers, the sale of non-core assets, and/oralternative debt structures.  The Boardhas appointed a special committee of independent directors to identify, withthe input of management and our financial advisors, and evaluate alternativesto recommend an appropriate course of action to the full board.  However, the success of any such alternativeactions will depend on many factors, some of which are out of management’scontrol.  Therefore, we can provide noassurance as to the success of such actions. No changes have been made to theclassification of debt on the balance sheet as a result of this uncertainty.

 

**SeniorSubordinated Notes.**  Effective January 31, 2005, we issued$275 million aggregate principal amount of 8 1¤2% senior subordinated notes due 2015 (the “SeniorSubordinated Notes”) in a private placement transaction. Interest on the seniorsubordinated notes is payable on February 1 and August 1 of eachyear, beginning on August 1, 2005. The Senior Subordinated Notes mature onFebruary 1, 2015 and may be redeemed, at our option, in whole or in part,at any time on or before February 1, 2010 in cash at the redemption pricesset forth in the indenture, plus interest. The Senior Subordinated Notes aregeneral unsecured obligations ranking senior in right of payment to all of ourexisting and future subordinated indebtedness. The Senior Subordinated Notes aresubordinated to all of our existing and future senior indebtedness includingindebtedness incurred under the Credit Agreement.

 

In May 2005, wesuccessfully completed an exchange offer as required per the terms of theregistration rights agreement we entered into with the initial purchasers inconnection with the issuance of our Senior Subordinated Notes. Pursuant to aneffective exchange offer registration statement filed with the SEC, holders ofour outstanding senior subordinated notes exchanged such notes for otherwiseidentical 8 1¤2% Senior Subordinated Notes due 2015 (the“Registered Senior Subordinated Notes”) which have been registered under theSecurities Act.

 

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**Off-BalanceSheet Arrangements. **We do not currently have any off-balancesheet arrangements that have or are reasonably likely to have a materialcurrent or future effect on our financial condition, revenues or expenses,results of operations, liquidity, capital expenditures or capitalresources.  From time to time we mayenter into operating leases, letters of credit, or take-or-pay obligationsrelated to the purchase of raw materials that would not be reflected in ourbalance sheet.

 

**RecentDevelopments**

 

***New Accounting Pronouncements***

 

***FSP No. 157-2***—In February 2008, the FASB issued Staff Position No. 157-2,*Effective Date of FASB Statement No. 157*, whichdelayed the effective date of fair value measurements for nonfinancial assetsand liabilities, except for items that are recognized or disclosed at fairvalue in the financial statements on a recurring basis.  Management is currently evaluating the impactof the adoption of FSP 157-2 on our consolidated financial statements.

 

***SFAS No. 132(R) ***— In March 2008, the FASB issuedSFAS No. 132(R), *Employers’**Disclosures about Postretirement Benefit Plan Assets. *The statement requires disclosuresof the objectives of postretirement benefit plan assets, investment policiesand strategies, categories of plan assets, fair value measurements of planassets, and significant concentrations of risk. SFAS No. 132(R) is effective for fiscal years and interimperiods beginning after December 15, 2009. The adoption of SFAS No. 132(R) is expected to increase ourdisclosures, but it is not expected to have an impact on our consolidatedfinancial statements.

 

In April 2009, theFASB issued three new FSPs, all of which impact the accounting and disclosurerelated to certain financial instruments.  FSP FAS 157-4, “*Determining Fair Value When the Volume and Level of Activity for theAsset or Liability Have Significantly Decreased and Identifying TransactionsThat Are Not Orderly*” provides additional guidance for estimatingfair value in accordance with SFAS 157 when the volume and level of activityfor the asset or liability have significantly decreased.  It also includesguidance on identifying circumstances that indicate a transaction is notorderly.  FSP FAS 115-2 and FAS 124-2, “*Recognitionof Other-Than-Temporary Impairment*” amends the other-than-temporaryimpairment guidance for debt securities to make the guidance more operationaland to improve the presentation and disclosure of other-than-temporaryimpairments on debt and equity securities in the financial statements. FSP FAS 107-1 and APB 28-1 “*Interim Disclosures aboutFair Value of Financial Instruments*” amends FASB Statement No. 107to require disclosures about the fair value of financial instruments on aninterim basis in addition to the annual disclosure requirements.  Allthree FSPs are required to be adopted for interim periods ending after June 15,2009.  We do not expect adoption of these staff positions to have amaterial impact on our consolidatedfinancial statements.

 

**CriticalAccounting Policies and Estimates. **We have made a number of estimates andassumptions relating to the reporting of results of operations and financialposition in the preparation of our financial statements in conformity with accountingprinciples generally accepted in the United States of America.  Actual results could differ significantlyfrom those estimates under different assumptions and conditions.  We included in our Form 10-K for theyear ended December 31, 2008 a discussion of our most critical accountingpolicies, which are those that have a material impact on our financialcondition or operating performance and require management’s most difficult,subjective and complex judgments, often as a result of the need to make estimatesabout the effect of matters that are inherently uncertain.

 

*CautionaryStatements Regarding Forward-Looking Statements*

 

In this report, we havemade various statements regarding current expectations or forecasts of futureevents, which speak only as of the date the statements, are made.  These statements are “forward-lookingstatements” within the meaning of that term in Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Act of1934.  Forward-looking statements are alsomade from time-to-time in press releases and in oral statements made by theofficers of Accuride.  Forward-lookingstatements are identified by the words “estimate,” “project,” “anticipate,” “willcontinue,” “will likely result,” “expect,” “intend,” “believe,” “plan,” “predict”and similar expressions.  Forward lookingstatements also include, but are not limited to, statements regardingcommercial vehicle market recovery, projections of revenue, income, loss, orworking capital, capital expenditure levels, ability to mitigate rising rawmaterial costs through increases in selling prices, plans for futureoperations, financing needs, the ultimate outcome and impact of any litigationagainst Accuride, the sufficiency of our capital resources and plans andassumptions relating to the foregoing.

 

Such forward-lookingstatements are based on assumptions and estimates, which although believed tobe reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates andstatements.  We cannot assure that any ofthese statements, estimates, or beliefs will be realized and actual results maydiffer from those contemplated in these “forward-looking statements.”  We undertake no obligation to publicly updateany forward-looking 

 

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statements, whether as a result of new information, future events, orotherwise.  You are advised to consultfurther disclosures we may make on related subjects in our filings with theSEC.  In addition to other factorsdiscussed in this report, some of the important factors that could cause actualresults to differ materially from those discussed in the forward-lookingstatements include, without limitation, the following:

 

·                  a more severe or prolonged than anticipated commercialvehicle industry downturn in 2009 could have a material adverse effect on ourbusiness;

·                  the loss of a major customer could have a materialadverse effect on our business;

·                  the demands of original equipment manufacturers forprice reductions may adversely affect profitability;

·                  we use a substantial amount of raw steel and aluminumand are vulnerable to industry shortages, significant price increases, andsurcharges, some of which we may not be able to pass through to our customers;

·                  our credit documents contain significant financial andoperating covenants that limit the discretion of management with respect tocertain business matters.  We must alsomeet certain financial ratios and tests as described above.  Failure to comply with the obligationscontained in the debt agreements could result in an event of default, andpossibly the acceleration of the related debt and the acceleration of debtunder other instruments evidencing debt that may contain cross-acceleration orcross-default provisions;

·                  a labor strike may disrupt our supply to our customerbase;

·                  we may encounter increased competition in the futurefrom existing competitors or new competitors;

·                  our significant indebtedness may have importantconsequences, including, but not limited to, impairment of our ability toobtain additional financing, reduction of funds available for operations andbusiness opportunities or limitations on our ability to dispose of assets;

·                  significant volatility in the foreign currency marketscould have an adverse effect on us;

·                  our ability to service our indebtedness is dependentupon operating cash flow;

·                  an interruption of performance of our machinery andequipment could have an adverse effect on us;

·                  an interruption in supply of metals could reduce our abilityto obtain favorable sourcing of such raw materials;

·                  we may be subject to liability under certainenvironmental laws and the cost of compliance with these regulations could havea material adverse effect on our financial condition and may adversely affectour ability to sell or rent such property or to borrow using such property ascollateral; and

·                  our success depends largely upon the abilities andexperience of certain key management personnel and the loss of the services ofone or more of these key personnel could have a negative impact on ourbusiness.

 

For further information,refer to the business description and additional risk factors sections includedin our Form 10-K for the year ended December 31, 2008, as filed withthe SEC.

 

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**Item 3.Quantitative and Qualitative Disclosures about Market Risk**

 

In the normal course ofdoing business, we are exposed to risks associated with changes in foreignexchange rates, raw material/commodity prices, and interest rates.  We use derivative instruments to manage theseexposures.  The objectives for holdingderivatives are to minimize the risks using the most effective methods toeliminate or reduce the impacts of these exposures.

 

**ForeignCurrency Risk**

 

Certain forecastedtransactions, assets, and liabilities are exposed to foreign currency risk. Wemonitor our foreign currency exposures to maximize the overall effectiveness ofour foreign currency derivatives. The principal currency of exposure is theCanadian dollar. From time to time, we use foreign currency financialinstruments to offset the impact of the variability in exchange rates on ouroperations, cash flows, assets and liabilities. At March 31, 2009, thenotional amount of open foreign exchange forward contracts was $20.2 million.

 

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

 

The counterparty to theforeign exchange contracts is a financial institution with an investment gradecredit rating. The use of forward contracts protects our cash flows againstunfavorable movements in exchange rates, to the extent of the amount undercontract.

 

**RawMaterial/Commodity Price Risk**

 

We rely upon the supplyof certain raw materials and commodities in our production processes, and wehave entered into firm purchase commitments for certain metals and natural gas.Additionally, from time to time, we use commodity price swaps and futurescontracts to manage the variability in certain commodity prices on our operationsand cash flows. At March 31, 2009, we had no open commodity price swaps orfutures contracts.

 

**InterestRate Risk**

 

We use long-term debt asa primary source of capital. The following table presents the principal cashrepayments and related weighted average interest rates by maturity date for ourlong-term fixed-rate debt and other types of long-term debt at March 31,2009:

 
| **(Dollars in thousands)** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2013** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **Fair  Value** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|-----------------|------------|
| Long-term Debt:                      |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Fixed Rate                           |       | —   |       | —   |       | —   |       | —   |       | —   |       | $              | 275,000    |      | $          | 275,000         |       | $ | 58,438 |   |
| Average Rate                         |       | —   |       | —   |       | —   |       | —   |       | —   |       | 8.50           | %          | 8.50      | %          |            |       |
| Variable Rate                        |       | —   |       | —   |       | $        | 25,444     |     | $          | 291,601  |       | —         |       | $         | 3,100      |            | $          | 320,145 |   | $ | 183,558 |   |
| Average Rate                         |       | —   |       | —   |       | 8.00     | %          | 8.84     | %          | —   |       | 0.87           | %          | 8.70      | %          |            |       |
|                                      |            |          |            |          |            |          |            |          |            |          |            |                |            |           |            |                 |            |  |  |  |  |  |

 

We have usedinterest rate swaps to alter interest rate exposure between fixed and variablerates on a portion of our long-term debt. As of March 31, 2009, we had one interest rate swap agreementoutstanding, which was established in December 2007 and the terms with thecounterparty are to exchange, at specified intervals, the difference between3.81% from March 2009 through March 2010, and the variable rateinterest amounts calculated by reference to the notional principal amount. Thenotional principal amounts under the terms are $150 million from March 2009through September 2009 and $125 million from September 2009 through March 2010.

 

**Item 4.Controls and Procedures**

 

We maintain disclosurecontrols and procedures that are designed to ensure that information requiredto be disclosed in our Exchange Act reports is recorded, processed, summarizedand reported within the time periods specified in the SEC’s rules andforms, and that such information is accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief Financial Officer,as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosurecontrols and procedures, management recognized that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, 

 

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and management isrequired to apply its judgment in evaluating the cost-benefit relationship ofpossible controls and procedures.

 

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

 

***Changesin Internal Control Over Financial Reporting.*** During the first quarter of fiscal 2009 there were no changes to ourinternal controls over financial reporting that have materially affected or arereasonably likely to materially affect our internal control over financialreporting.

 

**PART II.  OTHER INFORMATION**

 

**Item1.  Legal Proceedings**

 

Neither Accuride nor anyof our subsidiaries is a party to any legal proceeding which, in the opinion ofmanagement, would have a material adverse effect on our business or financialcondition.  However, we from time-to-timeare involved in ordinary routine litigation incidental to our business,including actions related to product liability, contractual liability,intellectual property, workplace safety and environmental claims.  We establish reserves for matters in which lossesare probable and can be reasonably estimated. While we believe that we have established adequate accruals for ourexpected future liability with respect to our pending legal actions andproceedings, we cannot assure you that our liability with respect to any suchaction or proceeding would not exceed our established accruals.  Further, we cannot assure that litigationhaving a material adverse affect on our financial condition will not arise inthe future.

 

**Item2.  Issuance of Securities**

 

On February 4, 2009,in connection with the Second Amendment and the Sun Capital Transaction, asdescribed above, we issued to Sun Capital: (1) the Warrant, which isexercisable for 25% of our fully-diluted Common Stock and (2) thePreferred Share, which carries voting rights equal to the number of shares ofour common stock issuable upon the exercise of the Warrant in an amount not toexceed 25% of our outstanding common stock. The Warrant and the Preferred Share were issued pursuant to Section 4(2) ofthe Securities Act.  The Warrant and thePreferred Share were issued to Sun Capital as consideration for Sun Capital’sagreement to enter into the Second Amendment and the Sun Capital Transaction,in which, among other things, Sun Capital agreed to modify the Last-Out Loansit holds to become last out as to payment to the other loans under the TermFacility and to provide certain customary strategic, business and operationalsupport to the Company.  The holder ofthe Warrant may exercise the Warrant, in whole or in part, at an exercise priceof $.01 per share, at any time up to and including February 4, 2019.

 

**Item4.  Submission of Matters to a Vote ofSecurity Holders**

 

Accuride Corporation (the“Company”) held its annual meeting of stockholders on April 22, 2009 inChicago, Illinois. At the meeting, the Company’s stockholders elected each ofthe director nominees listed in the Company’s proxy statement, ratified theselection of Deloitte & Touche LLP as the Company’s independentregistered public accounting firm for 2009 and approved the Company’s IncentiveCompensation Plan.

 

With respect to theelection of directors, six of the director nominees were elected by the holdersof the Common Stock and the holder of the Preferred Share, voting together as asingle class (the “Common Directors”), and five Series A Directors were electedby the holder of the Preferred Share, voting as a separate class.  The following table sets forth the votes foreach director.

 

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| ** **                   | ** ** | **FOR**    | ** ** | **WITHHELD** | ** ** |
|------------------------------|------------|------------|------------|--------------|------------|
| **Common  Directors**        |       |       |       |         |       |
| Mark D. Dalton               |       | 40,638,955 |       | 737,574      |       |
| John D.  Durrett, Jr.   |       | 40,672,576 |       | 703,953      |       |
| Donald T.  Johnson, Jr. |       | 40,668,927 |       | 707,602      |       |
| William M. Lasky             |       | 39,586,747 |       | 1,789,782    |       |
| Charles E.  Rentschler       |       | 40,653,597 |       | 722,932      |       |
| Donald C. Roof               |       | 40,635,921 |       | 740,608      |       |
|                         |       |       |       |         |       |
| **Series A  Directors** |       |       |       |         |       |
| Donald C.  Mueller           |       | 1          |       | 0            |       |
| Jason H. Neimark             |       | 1          |       | 0            |       |
| Thomas V.  Taylor, Jr.  |       | 1          |       | 0            |       |
| Brian J. Urbanek             |       | 1          |       | 0            |       |
| Douglas C.  Werking          |       | 1          |       | 0            |       |

 

With respect to theratification of Deloitte & Touche LLP as the Company’s independentregistered public accounting firm for 2009, 41,117,073 votes were cast in favorof the proposal, 89,579 votes were cast against the proposal, 169,878 votesabstained and there were no broker non-votes.

 

With respect to theapproval of the Accuride Corporation Incentive Compensation Plan, 25,951,753votes were cast in favor of the proposal, 379,715 votes were cast against theproposal, votes 27,471 abstained and there were 15,017,591 broker non-votes.

 

**Item5.  Other Information**

 

On May 7, 2009 weentered into retention bonus agreements with Edward J. Gulda and Richard F.Schomer pursuant to which each executive will receive a bonus equal to theircurrent base salary if they remain employed through May 7, 2010, or areterminated without cause prior thereto.

 

These bonus agreementsare subject to the executive entering into and complying with certainnoncompete and confidential information covenants. The noncompete appliesduring employment and for a period of 24 months following executive’stermination for any reason. The covenant regarding confidential information hasno set duration and remains applicable as long as the information the executivepossesses remains confidential.

 

If the executive violateshis noncompete or confidential information covenants prior to November 7,2010, then he is obligated to repay his retention bonus in full, and we mayoffset that amount against any other amounts that we may owe him.

 

The retention bonuseswill not offset any severance that may be payable under the executive’sSeverance and Retention Agreement (a form of which can be found as Exhibit 10.12to our annual report on Form 10-K for the year ended December 31,2008).

 

The foregoing is asummary of the retention bonus agreements, the full terms of which areincorporated herein by this reference to the copy filed herewith as Exhibit 10.11.

 

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**Item6.  Exhibits**

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                  | —     | Agreement and Plan of  Merger, dated as of December 24, 2004, by and among Accuride  Corporation, Amber Acquisition Corp., Transportation Technologies  Industries, Inc., certain signing stockholders and the Company  Stockholders Representatives. Previously filed as an exhibit to the  Form 8-K filed on December 30, 2004 and incorporated herein by  reference.                                                                                                                                     |
| 2.2                  | —     | Stock Subscription and  Redemption Agreement, dated as of November 17, 1997, among Accuride  Corporation, Hubcap Acquisition L.L.C. and Phelps Dodge Corporation.  Previously filed as an exhibit to the Form S-4 effective July 23,  1998 (Reg. No. 333-50239) and incorporated herein by reference.                                                                                                                                                                                                       |
| 2.3                  | —     | Amendment to Agreement  and Plan of Merger, dated as of January 28, 2005, by and among Accuride  Corporation, Amber Acquisition Corp., Transportation Technologies  Industries, Inc. certain signing stockholders and the Company  Stockholders Representatives. Previously filed as an exhibit to the  Form 8-K filed on February 4, 2005 and incorporated herein by  reference.                                                                                                                           |
| 3.1                  | —     | Amended and Restated  Certificate of Incorporation of Accuride Corporation. Previously filed as an  exhibit to Amendment 4, filed on April 21, 2005, to the  Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and  incorporated herein by reference.                                                                                                                                                                                                                                            |
| 3.2                  | —     | Certificate of  Designations for the Series A Preferred Share, dated February 4,  2009. Previously filed as an exhibit to Form 8-K filed on  February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                         |
| 3.3                  | —     | Amended and Restated  Bylaws of Accuride Corporation (effective February 4, 2009). Previously  filed as an exhibit to Form 8-K filed on February 4, 2009 and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                  |
| 4.1                  | —     | Specimen common stock  certificate of registrant. Previously filed as an exhibit to  Amendment 2, filed March 25, 2005, to Form S-1 effective  April 25, 2005 (Reg. No. 333-121944) and incorporated herein by  reference.                                                                                                                                                                                                                                                                             |
| 4.2                  | —     | Indenture, dated as of  January 31, 2005, by and among the Registrant, all of the Registrant’s  direct and indirect Domestic Subsidiaries existing on the Issuance Date and  The Bank of New York Trust Company, N.A., with respect to $275.0 million  aggregate principal amount of 8 1¤2% Senior Subordinated Notes due 2015. Previously  filed as an exhibit to the Form 8-K filed on February 4, 2005 and  incorporated herein by reference.                                                  |
| 4.3                  | —     | Amended and Restated  Registration Rights Agreement dated January 31, 2005 by and between the  Registrant and each of the Stockholders (as defined therein). Previously  filed as an exhibit to the Form 8-K filed on February 4, 2005 and  incorporated herein by reference.                                                                                                                                                                                                                                    |
| 4.4                  | —     | Shareholder Rights  Agreement dated January 31, 2005 by and between the Registrant and the  Stockholders (as defined therein). Previously filed as an exhibit to the  Form 8-K filed on February 4, 2005 and incorporated herein by  reference.                                                                                                                                                                                                                                                                  |
| 4.5                  | —     | Registration Rights  Agreement, dated January 31, 2005, by and among Accuride Corporation, as  issuer, the Guarantors named in Schedule A thereto and Lehman  Brothers Inc., Citigroup Global Markets Inc. and UBS Securities  LLC, as initial purchasers. Previously filed as an exhibit to  Amendment 2, filed March 25, 2005, to Form S-1 effective  April 25, 2005 (Reg. No. 333-121944) and incorporated herein by  reference.                                                |
| 4.6*                 | —     | Form of  Stockholders’ Agreement by and among Accuride Corporation, certain employees  and Hubcap Acquisition L.L.C. Previously filed as an exhibit to the  Form S-4 effective July 23, 1998 (Reg. No. 333-50239) and  incorporated herein by reference.                                                                                                                                                                                                                                               |
| 4.7*                 | —     | Form of Amendment  to Stockholders’ Agreement by and among Accuride Corporation, certain  employees and Hubcap Acquisition L.L.C. Previously filed as an exhibit to  Amendment No. 1, filed September 22, 2005 to Form S-1  effective October 3, 2005 (Reg. No. 333-128327) and incorporated  herein by reference.                                                                                                                                                                           |
| 4.8                  | —     | Bond Guaranty Agreement  dated as of March 1, 1999 by Bostrom Seating, Inc. in favor of NBD  Bank as Trustee. Previously filed as an exhibit to Amendment No. 1 filed  on February 23, 2005 to the Form S-1 effective April 25, 2005  (Reg. No. 333-121944) and incorporated herein by reference.                                                                                                                                                                                            |
| 4.9                  | —     | Stock Purchase Warrant,  issued February 4, 2009. Previously filed as an exhibit to Form 8-K  filed on February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                    |
| 4.10                 | —     | Registration Agreement,  dated February 4, 2009, between Accuride Corporation and Sun Accuride  Debt Investments, LLC. Previously filed as an exhibit to Form 8-K filed  on February 4, 2009 and incorporated herein by reference                                                                                                                                                                                                                                                                                |
| 10.1                 | —     | Agreement of Lease,  effective as of January 5, 2009, by and between Accuride Corporation and  I-65 Corridor 1, L.L.C. Previously filed as an exhibit to the Form 8-K  filed on January 12, 2009, and incorporated herein by reference.                                                                                                                                                                                                                                                                          |
| 10.2                 | —     | Second Amendment, dated  as of January 28, 2009, to the Fourth Amended and Restated Credit  Agreement, dated January 31, 2005, as amended, among the Accuride  Corporation, Accuride Canada, Inc., as borrowers, the several banks and  other financial institutions or entities parties thereto, as lenders, and  Citicorp USA, Inc., as administrative agent for the lenders.   Previously filed as an exhibit to Form 8-K filed on February 4,  2009 and incorporated herein by reference |

 

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| 10.3             | — | Last Out Debt  Agreement, dated February 4, 2009, between Accuride and Sun Accuride  Debt Investments, LLC.  Previously filed as an exhibit to Form 8-K  filed on February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                  |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.4             | — | Consulting Agreement,  dated February 4, 2009, between Accuride and Sun Capital Partners  Management V, LLC.  Previously filed as an exhibit to Form 8-K  filed on February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                 |
| 10.5*            | — | Form of  Indemnification Agreement between Accuride and each member of the Board of  Directors.  Previously filed as an exhibit to Form 8-K filed on  February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                              |
| 10.6             | — | Indemnification Subordination  Agreement, dated February 4, 2009, among Accuride, the subsidiaries of  Accuride parties thereto, Sun Capital Partners Management V, LLC and Sun  Capital Partners V, Ltd.  Previously filed as an exhibit to  Form 8-K filed on February 4, 2009 and incorporated herein by  reference.                                                                                                                   |
| 10.7             | — | Indemnification  Subordination Agreement, dated February 4, 2009, among Accuride, the  subsidiaries of Accuride parties thereto, Sun Capital Securities Fund, LP,  Sun Capital Securities Advisors, LP, Sun Capital Securities, LLC, Sun Capital  Securities Management, LLC and Sun Capital Securities Offshore Fund,  Ltd.  Previously filed as an exhibit to Form 8-K filed on  February 4, 2009 and incorporated herein by reference. |
| 10.8             | — | Indemnification  Subordination Agreement, dated February 4, 2009, among Accuride, the  subsidiaries of Accuride parties thereto, Sun Capital Master Securities Fund  III, L.P., Sun Capital Securities Fund III, LP, Sun Capital Securities  Advisors III, L.P., Sun Capital.  Previously filed as an exhibit to  Form 8-K filed on February 4, 2009 and incorporated herein by  reference.                                               |
| 10.9*            | — | Form of Cash Award  Agreement for use with 2005 Incentive Award Plan. Previously filed as an  exhibit to Form 8-K filed on April 28, 2009 and incorporated herein  by reference                                                                                                                                                                                                                                                                |
| 10.10*†     | — | Accuride Corporation  Incentive Compensation Plan                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.11*†     | — | Form of Retention  Bonus Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1†       | — | Section 302  Certification of William M. Lasky in connection with the Quarterly Report on  Form 10-Q of Accuride Corporation for the period ended March 31,  2009.                                                                                                                                                                                                                                                                             |
| 31.2†       | — | Section 302  Certification of James H. Woodward, Jr. in connection with the Quarterly  Report on Form 10-Q of Accuride Corporation for the period ended  March 31, 2009.                                                                                                                                                                                                                                                                  |
| 32.1†† | — | Certifications Pursuant  to Section 1350 of Chapter 63 of Title 18 of the United States Code.                                                                                                                                                                                                                                                                                                                                                            |

 

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†              Filed herewith

 

††            Furnished herewith

 

*              Management contract or compensatory agreement

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 
| ACCURIDE  CORPORATION                              |   |   |             |
|----------------------------------------------------|--------|--------|------------------|
|                                               |   |   |             |
| /s/ WILLIAM M. LASKY                               |   | Dated: | May 7, 2009 |
| William M. Lasky                                   |   |   |             |
| President and Chief  Executive Officer             |   |   |             |
| (Principal Executive  Officer)                     |   |   |             |
|                                               |   |   |             |
|                                               |   |   |             |
| /s/ JAMES H.  WOODWARD, Jr.                   |   | Dated: | May 7, 2009 |
| James H.  Woodward, Jr.                       |   |   |             |
| Senior Vice President  and Chief Financial Officer |   |   |             |
| (Principal Financial  and Accounting Officer)      |   |   |             |

 

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