**UNITED STATES SECURITIES ANDEXCHANGE COMMISSION**

**WASHINGTON, DC  20549**

** **

**FORM 10-Q**

 

**(MarkOne)**

**x****Quarterly ReportPursuant to Section 13 or 15 (d) of the Securities Exchange Act of1934**

 

**For the quarterly period ended March 31,2008.**

 

**OR**

 

**o****Transition Report Pursuant to Section 13or 15(d) of the Securities Exchange Act of 1934**

 

**For thetransition period from                    to                      .**

 

**Commission file number 001-32483**

 

**ACCURIDE CORPORATION**

(Exact Name of Registrant 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’sTelephone Number, Including Area Code: **(812)962-5000**

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x   No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, a non-acceleratedfiler, or a smaller reporting company. See definitions of “large acceleratedfiler,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2of the Exchange Act. (Check one):

 

| Large accelerated filer  o                     |   | Accelerated filer x          |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated filer o                        |   | Smaller reporting  company o |
| (Do not check if a  smaller reporting company) |   |                              |

 

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 8,2008, 35,431,159 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, 2008 and December 31, 2007              | 3 |
|                                         |                                                                                                     |   |
|                                         | Condensed Consolidated Statements of Operations for  the Three Months Ended March 31, 2008 and 2007 | 4 |
|                                         |                                                                                                     |   |
|                                         | Condensed Consolidated Statements of Cash Flows for  the Three Months Ended March 31, 2008 and 2007 | 5 |
|                                         |                                                                                                     |   |
|                                         | Notes to Condensed Consolidated Financial Statements                                                     | 6 |
|                                         |                                                                                                     |   |
| Item 2.                                      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations              | 16 |
|                                         |                                                                                                     |   |
| Item 3.                                      | Quantitative  and Qualitative Disclosures About Market Risk                                              | 22 |
|                                         |                                                                                                     |   |
| Item 4.                                      | Controls  and Procedures                                                                                 | 22 |
|                                         |                                                                                                     |   |
| **PART II  – OTHER INFORMATION**   |                                                                                                     |
| ** **                                   |                                                                                                     |
| Item 1.                                      | Legal  Proceedings                                                                                       | 23 |
|                                         |                                                                                                     |   |
| Item 6.                                      | Exhibits                                                                                                 | 23 |
|                                         |                                                                                                     |   |
| Signatures                                   |                                                                                                     | 25 |

 

2

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**Part I.  FINANCIALINFORMATION**

 

**Item 1.  FinancialStatements**

 

**ACCURIDECORPORATION**

**CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)**

 
| ** **                                                                                                                                                           | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| **(In thousands, except for per share data)**                                                                                          | ** ** | **2008**           | ** ** | **2007**              | ** ** |
| ** **                                                                                                                                                           | ** ** | ** **         | ** ** | ** **            | ** ** |
| **ASSETS**                                                                                                                                                           |       |               |       |                  |       |
| CURRENT ASSETS:                                                                                                                                                      |       |               |       |                  |       |
| Cash and cash  equivalents                                                                                                                                           |       | $                  | 46,842     |                  | $          | 90,935 |   |
| Customer  receivables, net of allowance for doubtful accounts of $1,232 and $1,461 in  2008 and 2007, respectively                                                   |       | 104,885            |       | 81,719                |       |
| Other  receivables                                                                                                                                                   |       | 6,588              |       | 5,476                 |       |
| Inventories, net                                                                                                                                                     |       | 99,872             |       | 92,570                |       |
| Supplies, net                                                                                                                                                        |       | 20,078             |       | 20,540                |       |
| Deferred income  taxes                                                                                                                                               |       | 19,449             |       | 19,422                |       |
| Income tax  receivable                                                                                                                                               |       | 2,800              |       | —                |       |
| Prepaid expenses  and other current assets                                                                                                                           |       | 3,342              |       | 2,703                 |       |
| Total current  assets                                                                                                                                                |       | 303,856            |       | 313,365               |       |
| PROPERTY, PLANT  AND EQUIPMENT, net                                                                                                                                  |       | 276,446            |       | 279,240               |       |
| OTHER ASSETS:                                                                                                                                                        |       |               |       |                  |       |
| Goodwill                                                                                                                                                             |       | 378,804            |       | 378,804               |       |
| Other intangible  assets, net                                                                                                                                        |       | 128,010            |       | 128,870               |       |
| Investment in  affiliates                                                                                                                                            |       | 1,600              |       | 1,090                 |       |
| Deferred  financing costs, net of accumulated amortization of $4,013 and $3,705 in 2008  and 2007, respectively                                                      |       | 6,486              |       | 6,794                 |       |
| Marketable  securities and other investments                                                                                                                         |       | 5,000              |       | —                |       |
| Other                                                                                                                                                                |       | 6,563              |       | 5,471                 |       |
| TOTAL                                                                                                                                                                |       | $                  | 1,106,765  |                  | $          | 1,113,634 |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                       |       |               |       |                  |       |
| CURRENT  LIABILITIES:                                                                                                                                                |       |               |       |                  |       |
| Accounts payable                                                                                                                                                     |       | $                  | 93,678     |                  | $          | 80,070 |   |
| Accrued payroll  and compensation                                                                                                                                    |       | 25,854             |       | 30,456                |       |
| Accrued interest  payable                                                                                                                                            |       | 5,214              |       | 11,105                |       |
| Accrued and  other liabilities                                                                                                                                       |       | 36,113             |       | 28,323                |       |
| Total current  liabilities                                                                                                                                           |       | 160,859            |       | 149,954               |       |
| LONG-TERM DEBT                                                                                                                                                       |       | 572,725            |       | 572,725               |       |
| DEFERRED INCOME  TAXES                                                                                                                                               |       | 27,440             |       | 34,644                |       |
| NON-CURRENT  INCOME TAXES PAYABLE                                                                                                                                    |       | 9,915              |       | 9,915                 |       |
| OTHER  POSTRETIREMENT BENEFIT PLAN LIABILITY                                                                                                                         |       | 58,725             |       | 58,519                |       |
| PENSION BENEFIT  PLAN LIABILITY                                                                                                                                      |       | 10,707             |       | 10,939                |       |
| OTHER  LIABILITIES                                                                                                                                                   |       | 3,206              |       | 3,138                 |       |
| COMMITMENTS AND  CONTINGENCIES (Note 6)                                                                                                                              |       | —             |       | —                |       |
| STOCKHOLDERS’  EQUITY:                                                                                                                                          |       |               |       |                  |       |
| Preferred stock,  $0.01 par value; 5,000 shares authorized and unissued                                                                                              |       | —             |       | —                |       |
| Common Stock,  $0.01 par value; 100,000 shares authorized, 36,118 and 36,066 shares issued,  and 35,414 and 35,362 shares outstanding in 2008 and 2007, respectively |       | 354                |       | 354                   |       |
| Additional  paid-in-capital                                                                                                                                          |       | 263,269            |       | 262,645               |       |
| Treasury stock –  76 shares at cost in 2008 and 2007                                                                                                            |       | (751               | )          | (751                  | )          |
| Accumulated  other comprehensive loss                                                                                                                                |       | (8,600             | )          | (9,105                | )          |
| Retained earnings                                                                                                                                                    |       | 8,916              |       | 20,657                |       |
| Total  stockholders’ equity                                                                                                                                     |       | 263,188            |       | 273,800               |       |
| TOTAL                                                                                                                                                                |       | $                  | 1,106,765  |                  | $          | 1,113,634 |   |

 

Seenotes to unaudited condensed consolidated financial statements.

 

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** **

**ACCURIDECORPORATION**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**

** **
| ** **                                                        | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| **(in thousands except per share data)** | ** ** | **2008**                                             | ** ** | **2007** | ** ** |
|                                                              |       |                                                 |       |   |   |
| NET SALES                                                         |       | $                                                    | 238,210    |   | $ | 325,430 |   |
| COST OF GOODS  SOLD                                               |       | 225,941                                              |       | 301,314 |   |
| GROSS PROFIT                                                      |       | 12,269                                               |       | 24,116 |   |
| OPERATING  EXPENSES:                                              |       |                                                 |       |   |   |
| Selling, general  and administrative                              |       | 13,654                                               |       | 15,051 |   |
| INCOME (LOSS)  FROM OPERATIONS                                    |       | (1,385                                               | )          | 9,065 |   |
| OTHER INCOME  (EXPENSE):                                          |       |                                                 |       |   |   |
| Interest income                                                   |       | 532                                                  |       | 544 |   |
| Interest expense                                                  |       | (16,246                                              | )          | (12,563 | ) |
| Other income (loss),  net                                         |       | (1,054                                               | )          | 74 |   |
| LOSS BEFORE  INCOME TAXES                                         |       | (18,153                                              | )          | (2,880 | ) |
| INCOME TAX  BENEFIT                                               |       | (6,412                                               | )          | (996 | ) |
| NET LOSS                                                          |       | $                                                    | (11,741    | ) | $ | (1,884 | ) |
|                                                              |       |                                                 |       |   |   |   |   |
| Weighted average  common shares outstanding—basic            |       | 35,412                                               |       | 34,894 |   |
|                                                              |       |                                                 |       |   |   |
| Basic loss per  share                                             |       | $                                                    | (0.33      | ) | $ | (0.05 | ) |
|                                                              |       |                                                 |       |   |   |   |   |
| Weighted average  common shares outstanding—diluted          |       | 35,412                                               |       | 34,894 |   |
|                                                              |       |                                                 |       |   |   |
| Diluted loss per  share                                           |       | $                                                    | (0.33      | ) | $ | (0.05 | ) |

 

Seenotes to unaudited condensed consolidated financial statements.

 

4

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**ACCURIDECORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

 
| ** **                                                                                 | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| **(In thousands)**                                                                    | ** ** | **2008**                                         | ** ** | **2007** | ** ** |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                     |       |                                             |       |   |   |
| Net loss                                                                                   |       | $                                                | (11,741    | ) | $ | (1,884 | ) |
| Adjustments to  reconcile net loss to net cash provided by (used in) operating activities: |       |                                             |       |   |   |
| Depreciation and  impairment                                                               |       | 10,268                                           |       | 20,324 |   |
| Amortization –  deferred financing costs                                              |       | 308                                              |       | 307 |   |
| Amortization –  other intangible assets                                               |       | 1,420                                            |       | 1,418 |   |
| Loss on disposal  of assets                                                                |       | 18                                               |       | 16 |   |
| Provision for  deferred income taxes                                                       |       | (7,423                                           | )          | (11,396 | ) |
| Non-cash  stock-based compensation                                                         |       | 510                                              |       | 595 |   |
| Changes in  certain assets and liabilities:                                                |       |                                             |       |   |   |
| Receivables                                                                                |       | (24,278                                          | )          | (15,892 | ) |
| Inventories and  supplies                                                                  |       | (6,838                                           | )          | (8,243 | ) |
| Prepaid expenses  and other assets                                                         |       | (4,685                                           | )          | 1,298 |   |
| Accounts payable                                                                           |       | 16,538                                           |       | 7,206 |   |
| Accrued and  other liabilities                                                             |       | (2,453                                           | )          | 8,951 |   |
| Net cash  provided by (used in) operating activities                                       |       | (28,356                                          | )          | 2,700 |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                                                     |       |                                             |       |   |   |
| Purchases of  property, plant and equipment                                                |       | (10,424                                          | )          | (10,328 | ) |
| Purchase of  marketable securities                                                         |       | (5,000                                           | )          | — |   |
| Other                                                                                      |       | (412                                             | )          | 101 |   |
| Net cash used in  investing activities                                                     |       | (15,836                                          | )          | (10,227 | ) |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                     |       |                                             |       |   |   |
| Payments on  long-term debt                                                                |       | —                                           |       | (60,000 | ) |
| Increase in  revolving credit advance                                                      |       | —                                           |       | 5,000 |   |
| Decrease in  revolving credit advance                                                      |       | —                                           |       | (5,000 | ) |
| Other                                                                                      |       | 99                                               |       | 944 |   |
| Net cash  provided by (used in) financing activities                                       |       | 99                                               |       | (59,056 | ) |
| DECREASE IN CASH  AND CASH EQUIVALENTS                                                     |       | (44,093                                          | )          | (66,583 | ) |
| CASH AND CASH  EQUIVALENTS—Beginning of period                                        |       | 90,935                                           |       | 110,204 |   |
| CASH AND CASH  EQUIVALENTS—End of period                                              |       | $                                                | 46,842     |   | $ | 43,621 |   |
|                                                                                       |       |                                             |       |   |   |
| Supplemental  cash flow information:                                                       |       |                                             |       |   |   |
| Cash paid for  interest                                                                    |       | $                                                | 16,583     |   | $ | 17,912 |   |
| Cash paid for  income taxes                                                                |       | $                                                | 3,210      |   | $ | 2,776 |   |
| Purchases of  property, plant, and equipment in accounts payable                           |       | $                                                | 5,291      |   | $ | 8,221 |   |

 

See notes to unaudited condensedconsolidated financial statements.

 

5

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**ACCURIDECORPORATION**

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

**AS OF MARCH 31, 2008 ANDDECEMBER 31, 2007 AND FOR THE THREE MONTHS ENDED MARCH 31, 2008AND 2007**

**(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, 2008 are not necessarily indicativeof the results to be expected for the year ending December 31, 2008.  The unaudited condensed consolidatedfinancial statements and notes thereto should be read in conjunction with theaudited condensed consolidated financial statements and notes thereto disclosedin Accuride’s Annual Report on Form 10-K for the year ended December 31,2007.

 

***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 2007 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 31,2008, 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, 2008, we had oneinterest rate swap agreement outstanding, which was established in December 2007.Pursuant to the terms of the interest rate swap agreement, we exchange with thecounterparty, at specified intervals, the difference between 3.81% from March 2008through March 2010, and the variable rate interest amounts calculated byreference to the notional principal amount. The notional principal amountsunder the terms are $200 million from March 2008 through March 2009,$150 million from March 2009 through September 2009 and $125 millionfrom September 2009 through March 2010.

 

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

 
| ** **      | ** ** | **Three Months Ended March 31,** | ** ** |
|-----------------|------------|------------------------------------------------------|------------|
| ** **      | ** ** | **2008**                                             | ** ** | **2007** | ** ** |
| Realized Gain   |       | $                                                    | 250        |   | $ | 670 |   |
| Unrealized Loss |       | $                                                    | (4,538     | ) | $ | (680 | ) |

 

***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. At March 31, 2008, the notional amount of open foreign exchangeforward contracts was $9.8 million.

 

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

 
| ** **              | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------------------|------------|------------------------------------------------------|------------|
| ** **              | ** ** | **2008**                                             | ** ** | **2007** | ** ** |
| Realized Gain           |       | $                                                    | 126        |   | $ | 316 |   |
| Unrealized Gain  (Loss) |       | $                                                    | (14        | ) | $ | 563 |   |

 

6

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***Commodity Price Instruments***—We use commodity price swap contracts to limit exposure to changes in certain rawmaterial prices. Commodity price instruments, which do not meet the normalpurchase exception, are not designated as hedges for financial reportingpurposes and, accordingly, are carried in the financial statements at fairvalue, with realized and unrealized gains and losses reflected in currentperiod earnings as a component of “Cost of goods sold.” The notional amount ofcommodity price instruments at March 31, 2008 was $6.1 million.

 

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

*** ***
| ** **      | ** ** | **Three Months Ended March 31,** | ** ** |
|-----------------|------------|------------------------------------------------------|------------|
| ** **      | ** ** | **2008**                                             | ** ** | **2007** | ** ** |
| Realized Gain   |       | $                                                    | 203        |   | $ | — |   |
| Unrealized Gain |       | $                                                    | 1,589      |   | $ | — |   |

 

***MarketableSecurities and Other Investments -***We have certaininvestments in bonds, which are categorized as marketable securities. Webelieve that these are conservative investments with a low risk for significantloss of principal. We regularly assess our marketable security investments forimpairments and adjust our investment strategy, as we deem appropriate. Weclassify these securities as held for sale and as non-current in theaccompanying consolidated balance sheets based on original maturity dates ofgreater than one year. Any unrealized gains or losses would be recorded as acomponent of other comprehensive income.

 

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

 
| ** **                                     | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                     | ** ** | **2008**                                             | ** ** | **2007** | ** ** |
|                                           |       |                                                 |       |   |   |
| Numerator:                                     |       |                                                 |       |   |   |
| Net loss                                       |       | $                                                    | (11,741    | ) | $ | (1,884 | ) |
| Denominator:                                   |       |                                                 |       |   |   |
| Weighted average  shares outstanding - Basic   |       | 35,412                                               |       | 34,894 |   |
| Effect of  dilutive share-based awards         |       | —                                               |       | — |   |
| Weighted average  shares outstanding - Diluted |       | 35,412                                               |       | 34,894 |   |
|                                           |       |                                                 |       |   |   |
| Basic loss per  common share                   |       | $                                                    | (0.33      | ) | $ | (0.05 | ) |
| Diluted loss per  common share                 |       | $                                                    | (0.33      | ) | $ | (0.05 | ) |

 

There is no effect of dilutive share-based awards forpurposes of calculating earnings per share in either period due to being in anet loss position.

 

***Stock-Based Compensation***— We account for share-based compensationprograms in accordance with Statement of Financial Accounting Standards (“SFAS”)No. 123(R), *Share-Based Payment*.  Compensation expense of $0.5 million and $0.6million was recognized in the three monthsended March 31, 2008 and 2007, respectively. As of March 31, 2008,there was approximately $5.6 million of unrecognized pre-tax compensationexpense related to share-based awards not yet vested that will be recognizedover a weighted-average period of 1.0 years.

 

***Recent Accounting Adoptions***

 

***SFAS No. 157***—In September 2006, the FASB issued SFAS No. 157,*Fair ValueMeasurements*, to eliminate the diversity in practice that exists dueto the different definitions of fair value and the limited guidance forapplying those definitions in GAAP that are dispersed among the many accountingpronouncements that require fair value measurements.  However, on February 12, 2008, the FASBissued Staff Position 157-2 which delays the effective date of SFAS No. 157for all nonfinancial assets and nonfinancial liabilities, except those that arerecognized or disclosed at fair value in the financial statements on arecurring basis. For items within its scope, this Staff Position defers theeffective date of SFAS No. 157 to fiscal years beginning after November 15,2008.  The adoption of SFAS No. 157on January 1, 2008 for financial assets and liabilities had no materialimpact on our consolidated financial statements.  We are currently assessing the impactof SFAS No. 157 for nonfinancial assets and liabilitieson our consolidated financial position and results of operations.

 

***SFAS No. 159***— In February 2007,the FASB issued SFAS No. 159, *Establishing the FairValue Option for Financial Assets and Liabilities*, which permits anentity to measure certain financial assets and financial liabilities at fairvalue. Under SFAS No. 159, entities that elect the fair value option willreport unrealized gains and losses in earnings at each 

 

7

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subsequent reporting date. The fair value option may be elected on aninstrument-by-instrument basis, with a few exceptions, as long as it is appliedto the instrument in its entirety. The fair value option election isirrevocable, unless a new election date occurs. SFAS No. 159 alsoestablishes presentation and disclosure requirements to help financialstatement users understand the effect of the entity’s election on itsearnings.  Due to making no election onany of our instruments, the adoption of SFAS No. 159 on January 1, 2008 hadno impact on our consolidated financial statements.

 

***Recent AccountingPronouncements***

 

***SFAS No. 141(R) ***— In December 2007,the FASB issued SFAS No. 141(R),*Business Combinations*, which replaces SFAS No. 141,*Business Combinations*.  SFAS No. 141(R) requires theacquirer 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 transactionscosts 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 are currently evaluating the impact of SFAS No. 141(R) relatedto future acquisitions, if any, on our consolidated financial statements.

 

***SFAS No. 160*** — In December 2007,the FASB issued SFAS No. 160,*Noncontrolling Interests in Consolidated Financial Statements*.  SFAS No. 160 requires all entities toreport noncontrolling (minority) interests in subsidiaries as equity in theconsolidated financial statements. Its intention is to eliminate the diversityin practice regarding the accounting for transactions between an entity andnoncontrolling interests. SFAS No. 160 will apply to fiscal yearsbeginning on or after December 15, 2008. We are currently evaluating the impact of SFAS No. 160 on ourconsolidated financial statements.

 

***SFAS No. 161*** — In March 2008,the FASB issued SFAS No. 161, *Disclosures aboutDerivative Instruments and Hedging 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 beginningafter November 15, 2008. We are currently evaluating the impact of SFAS No. 161on our consolidated financial statements.

 

**Note 2 -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 basis,except at our subsidiary in Mexico, which values inventories using an averagecost basis, are as follows:

 
| ** **                   | ** ** | **March 31,  2008** | ** **   | **December 31,  2007** | ** ** |
|------------------------------|------------|--------------------------|--------------|-----------------------------|------------|
| Raw materials           |       | $                        |  34,197 |                        | $          |  30,267 |   |
| Work in process              |       | 29,785                   |         | 28,193                      |       |
| Finished  manufactured goods |       | 35,890                   |         | 34,110                      |       |
| Total  inventories, net      |       | $                        | 99,872       |                        | $          | 92,570 |   |

 

**Note 3 - Goodwill and OtherIntangible Assets**

 

SFAS No. 141, *Business Combinations,* and SFAS No. 142,*Goodwill and Other Intangible Assets,*have been applied to the acquisition of TTI, which occurred on January 31,2005.  Accordingly, the tangible andidentifiable intangible assets and liabilities were adjusted to fair valueswith the remainder of the purchase price recorded as goodwill.  Additionally, goodwill and indefinite livedintangibles assets (trade names) are not amortized but are reviewed forimpairment at least annually or more frequently if impairment indicators arise.

 

The summary of goodwilland other intangible assets is as follows:

 
| ** **               | ** ** | **Weighted**               | ** ** | **As of March 31, 2008** | ** ** | **As of December 31, 2007**      | ** ** |
|--------------------------|------------|----------------------------|------------|----------------------------------------------|------------|------------------------------------------------------|------------|
| ** **               | ** ** | **Average  Useful  Lives** | ** ** | **Gross  Amount**                            | ** ** | **Accumulated  Amortization  & Impairment** | ** ** | **Carrying  Amount** | ** ** | **Gross  Amount** | ** ** | **Accumulated  Amortization  & Impairment** | ** ** | **Carrying  Amount** | ** ** |
| Goodwill                 |       | —                     |       | $                                            | 378,804    |                                                 | —     |   | $ | 378,804 |   | $ | 378,804 |   | — |   | $ | 378,804 |   |
| Other intangible assets: |       |                       |       |                                         |       |                                                 |       |   |   |   |   |   |   |   |   |
| Non-compete  agreements  |       | 3.0                        |       | $                                            | 3,160      |                                                 | $          | 2,174 |   | $ | 986 |   | $ | 2,600 |   | $ | 1,938 |   | $ | 662 |   |
| Trade names              |       | —                     |       | 38,080                                       |       | 1,100                                                |       | 36,980 |   | 38,080 |   | 1,100 |   | 36,980 |   |
| Technology               |       | 14.7                       |       | 33,540                                       |       | 7,262                                                |       | 26,278 |   | 33,540 |   | 6,690 |   | 26,850 |   |
| Customer  relationships  |       | 29.6                       |       | 71,500                                       |       | 7,734                                                |       | 63,766 |   | 71,500 |   | 7,122 |   | 64,378 |   |
|                     |       |                       |       | $                                            | 146,280    |                                                 | $          | 18,270 |   | $ | 128,010 |   | $ | 145,720 |   | $ | 16,850 |   | $ | 128,870 |   |

 

8

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We estimate thataggregate amortization expense by year as follows:

** **
| 2008 |   | $ |  5,397 |   |
|------|--------|---|-------------|--------|
| 2009 |   | $ | 4,923       |   |
| 2010 |   | $ | 4,923       |   |
| 2011 |   | $ | 4,922       |   |
| 2012 |   | $ | 4,736       |   |

 

**Note 4 -Comprehensive loss**

 

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

 
| ** **                              | ** ** | **For The Three Months Ended March 31,** | ** ** |
|-----------------------------------------|------------|------------------------------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                                               | ** ** | **2007** | ** ** |
| Net loss                                |       | $                                                                      | (11,741    | ) | $ | (1,884 | ) |
| Other  comprehensive loss (net of tax): |       |                                                                   |       |   |   |
| Pension  liability adjustment           |       | 505                                                                    |       | (141 | ) |
| Total  comprehensive loss               |       | $                                                                      | (11,236    | ) | $ | (2,025 | ) |

 

Included in accumulatedother comprehensive income is the impact of pension liability fluctuations inthe Canadian dollar to U.S. dollar exchange rate related to our Canadianpension plans.

 

**Note 5 -Pension and Other Postretirement Benefit Plans**

 

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

 
| ** **                                         | ** ** | **Pension Benefits** | ** ** | **Other Benefits** | ** ** |
|----------------------------------------------------|------------|---------------------------|------------|-------------------------|------------|
| ** **                                         | ** ** | **2008**                  | ** ** | **2007**                | ** ** | **2008** | ** ** | **2007** | ** ** |
| Service  cost-benefits earned during the year      |       | $                         | 902        |                    | $          | 1,082 |   | $ | 156 |   | $ | 331 |   |
| Interest cost on  projected benefit obligation     |       | 2,912                     |       | 2,446                   |       | 961 |   | 1,203 |   |
| Expected return  on plan assets                    |       | (3,764                    | )          | (3,450                  | )          | — |   | — |   |
| Amortization of  net transition (asset)/obligation |       | 4                         |       | 7                       |       | — |   | — |   |
| Amortization of  prior service cost (benefit)      |       | 102                       |       | 170                     |       | (335 | ) | (179 | ) |
| Amortization of  (gain)/loss                       |       | 462                       |       | 448                     |       | (134 | ) | 75 |   |
| Net amount  charged to income                      |       | $                         | 618        |                    | $          | 703 |   | $ | 648 |   | $ | 1,430 |   |
| Curtailment  charge                                |       | —                    |       | 3,178                   |       | — |   | (283 | ) |
| Contractual  termination benefits charge           |       | —                    |       | 6,334                   |       | — |   | — |   |
| Total amount  charged to income                    |       | $                         | 618        |                    | $          | 10,215 |   | $ | 648 |   | $ | 1,147 |   |

 

Duringthe three months ended March 31, 2007, we recorded a pre-tax curtailmentand other contractual termination benefit charges of $9.2 million related to areduction-in-force in our London, Ontario, facility. The contractual benefitscharge represented a potential partial pension wind-up, which was determined tobe probable for purposes of recognizing one-time benefits in accordance withSFAS No. 146, *Accounting for CostsAssociated with Exit or Disposal Activities*and SFAS No. 88,*Employers’ Accounting for Settlements andCurtailments of Defined Benefit Plans and Termination Benefits*. Asof March 31, 2008, $1.9 million has been contributed to our sponsoredpension plans.  We presently anticipatecontributing an additional $14.0 million to fund our pension plans in 2008 fora total of $15.9 million.

 

Alsoduring the three months ended March 31, 2007, we recorded $9.2 million ofseverance costs related to the reduction-in-force as a component of cost ofgood sold.  There were no cash paymentsmade in that period.

 

9

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**Note 6 –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.

 

As of March 31,2008, we had an environmental reserve of approximately $2.6 million,related primarily to TTI’s 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 be reducedor otherwise affected by the existence of the environmental reserve. Wecurrently anticipate spending approximately $0.2 million per year in 2008through 2011 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. We believe that our foundry operations are incompliance with the applicable requirements of the Iron and Steel FoundryNESHAP.

 

Pursuantto the Recapitalization of the Company on January 21, 1998, we wereindemnified by Phelps Dodge Corporation with respect to certain environmentalliabilities at our Henderson and London facilities, subject to certainlimitations.  At the Erie, Pennsylvania,facility, we have obtained an environmental insurance policy to providecoverage 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. 

 

Duringthe fourth quarter of 2006, we resolved a commercial dispute with Ford MotorCompany.  As a result of the resolution,we recognized $10.4 million of revenue in 2006 and $10.6 million in 2007.  The recognition in the three months endedMarch 31,2007 was $8.0 million.  Inaddition, cash flow increased by $10.0 million in 2006 and $11.0 million in2007.  The cash received in 2007 of $11million was during the three months ended June 30, 2007.  Ford re-sourced its Accuride business toanother supplier during 2007.  In 2007,total sales to Ford were less than 5% of total revenues.

 

As ofMarch 31, 2008, we had approximately 3,700 employees, of which 890 weresalaried employees with the remainder paid hourly. Unions representapproximately 1,800 of our employees, or 49% of the total. There is onecontract expiring on August 31, 2008 for our Fabco facility in California. Wedo not anticipate that the outcome of these negotiations will have a materialadverse effect on our operating performance or costs. Our contract with the UAWat our Rockford, Illinois, facility expired in November 2007.  We were not able to negotiate a mutuallyacceptable agreement with the UAW, and as a result on November 18, 2007, webegan an indefinite lock-out in order to protect the supply of products to ourcustomers as well as provide security for facility personnel andequipment.  On March 9, 2008, the workersrepresented by the UAW voted to approve a new contract and subsequentlyreturned to work.  While we did notexperience a supply disruption to our customers during the lockout, there is noguarantee that the lock-out and the reinstatement of the unionized workforcewill not have a material adverse affect on operating performance, costs, orpre-tax earnings in 2008.

 

 

**Note7 – Financial Instruments**

 

Wehave determined 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 establishes a fair value hierarchy for thoseinstruments measured at fair value that distinguishes between assumptions basedon market data (observable inputs) and our own assumptions (unobservableinputs).  Determining which category an asset or liability fallswithin the hierarchy requires significant judgment.  We evaluate ourhierarchy disclosures each quarter.

 

10

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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 because of the relatively short maturity ofthese instruments.  The carrying amountsand related estimated fair values for our remaining financial instruments as ofMarch 31, 2008 are as follows:

 
| ** **                          | ** ** | **Carrying** | ** ** | **Fair Value** | ** ** |
|-------------------------------------|------------|--------------|------------|---------------------|------------|
| ** **                          | ** ** | **Amount**   | ** ** | **Level 1**    | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|                                |       |         |       |                |       |   |   |   |   |   |   |
| **Assets**                          |       |         |       |                |       |   |   |   |   |   |   |
| Marketable  securities              |       | $            | 5,000      |                |       |   |   |   | $ | 5,000 |   | $ | 5,000 |   |
| Aluminum forward  contracts         |       | $            | 1,137      |                |       |   | $ | 1,137 |   |   |   | $ | 1,137 |   |
|                                |       |         |       |                |       |   |   |   |   |   |   |
| **Liabilities**                     |       |         |       |                |       |   |   |   |   |   |   |
| Interest rate  swap contracts       |       | $            | 4,494      |                |       |   | $ | 4,494 |   |   |   | $ | 4,494 |   |
| Foreign exchange  forward contracts |       | $            | 14         |                |       |   | $ | 14 |   |   |   | $ | 14 |   |
| Total debt                          |       | $            | 572,725    |                |       |   | $ | 492,388 |   |   |   | $ | 492,388 |   |
|                                     |            |              |            |                     |            |  |  |  |  |  |  |  |  |  |  |

 

The fair value related tomarketable securities has been determined by evaluating other similar securities.  Fair values relating to derivative financialinstruments reflect the estimated amounts that we would receive or pay toterminate the contracts at the reporting date based on quoted market prices ofcomparable contracts as of the balance sheet date. The fair value of ourlong-term debt has been determined on the basis of the specific securitiesissued and outstanding. All of our long-term debt instruments have variableinterest rates except for the senior subordinated notes, which have a fixed interestrate of 8.50%.

 

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 as of March 31,2008:

 
| Balance at  December 31, 2007 |   | — |   |
|------------------------------------|--------|--------|--------|
| Purchase of  securities            |   | $      | 5,000  |   |
| Unrealized gain  (loss) recognized |   | — |   |
| Net settlements                    |   | — |   |
| Balance at  March 31, 2008    |   | $      | 5,000  |   |

 

11

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**Note8 – Segment Reporting**

 

As a part of ourcontinual monitoring of the long-term economic characteristics, products and productionprocesses, class of customer, and distribution methods of our operatingsegments, we aggregate our seven operating segments into three reportablesegments shown below.  The accountingpolicies of the reportable segments are the same as described in Note 1, Summaryof Significant Accounting Policies.

 
| ** **                      | ** ** | **Three Months Ended March 31,** | ** ** |
|---------------------------------|------------|------------------------------------------------------|------------|
| ** **                      | ** ** | **2008**                                             | ** ** | **2007** | ** ** |
| Net sales:                      |       |                                                 |       |   |   |
| Wheels                          |       | $                                                    | 104,010    |   | $ | 159,329 |   |
| Components                      |       | 120,759                                              |       | 152,900 |   |
| Other                           |       | 13,441                                               |       | 13,201 |   |
| Consolidated  total             |       | $                                                    | 238,210    |   | $ | 325,430 |   |
|                            |       |                                                 |       |   |   |
| Income (loss)  from operations: |       |                                                 |       |   |   |
| Wheels                          |       | $                                                    | 17,827     |   | $ | 10,115 |   |
| Components                      |       | (12,771                                              | )          | 7,577 |   |
| Other                           |       | 2,647                                                |       | 1,821 |   |
| Corporate                       |       | (9,088                                               | )          | (10,448 | ) |
| Consolidated  total             |       | $                                                    | (1,385     | ) | $ | 9,065 |   |

 
| ** **          | ** ** | **As of**               | ** ** |
|---------------------|------------|------------------------------|------------|
| ** **          | ** ** | **March 31, 2008** | ** ** | **December 31, 2007** | ** ** |
| Total assets:       |       |                         |       |   |   |
| Wheels              |       | $                            | 206,121    |   | $ | 188,288 |   |
| Components          |       | 586,979                      |       | 578,158 |   |
| Other               |       | 51,725                       |       | 45,466 |   |
| Corporate           |       | 261,940                      |       | 301,722 |   |
| Consolidated  total |       | $                            | 1,106,765  |   | $ | 1,113,634 |   |

 

12

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**Note9 – Guarantor and Non-guarantor Financial Statements**

 

Our81⁄2% Senior Subordinated Notes due 2015 are fully and unconditionallyguaranteed, on a joint and several basis, by substantially all of our 100%owned domestic subsidiaries (“Guarantor Subsidiaries”). The non-guarantorsubsidiaries are our foreign subsidiaries. The following condensed financialinformation illustrates the composition of the combined Guarantor Subsidiaries:

 

**CONDENSED CONSOLIDATED BALANCE SHEET**

 
| ** **                                    | ** ** | **March 31, 2008** | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|
| ** **                                    | ** ** | **Parent**                   | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| **ASSETS**                                    |       |                         |       |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                     |       | $                            | 37,935     |   | $ | (1,403 | ) | $ | 10,310 |   | — |   | $ | 46,842 |   |
| Accounts receivable, net                      |       | 31,880                       |       | 208,162 |   | 9,683 |   | $ | (138,252 | ) | 111,473 |   |
| Inventories and supplies                      |       | 25,366                       |       | 80,090 |   | 14,957 |   | (463 | ) | 119,950 |   |
| Other current assets                          |       | 9,399                        |       | 12,823 |   | 3,369 |   | — |   | 25,591 |   |
| Total current assets                          |       | 104,580                      |       | 299,672 |   | 38,319 |   | (138,715 | ) | 303,856 |   |
| Property, plant, and equipment, net           |       | 40,536                       |       | 186,100 |   | 49,810 |   | — |   | 276,446 |   |
| Goodwill                                      |       | 66,973                       |       | 303,790 |   | 8,041 |   | — |   | 378,804 |   |
| Intangible assets, net                        |       | 948                          |       | 127,062 |   | — |   | — |   | 128,010 |   |
| Investment in subsidiaries and affiliates     |       | 630,985                      |       | — |   | — |   | (629,385 | ) | 1,600 |   |
| Deferred tax assets                           |       | 34,309                       |       | 14,131 |   | 12,690 |   | (61,130 | ) | — |   |
| Other non-current assets                      |       | 11,569                       |       | 252 |   | 6,228 |   | — |   | 18,049 |   |
| TOTAL                                         |       | $                            | 889,900    |   | $ | 931,007 |   | $ | 115,088 |   | $ | (829,230 | ) | $ | 1,106,765 |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY** |       |                         |       |   |   |   |   |   |   |   |   |
| Accounts payable                              |       | $                            | 15,199     |   | $ | 67,358 |   | $ | 11,121 |   | — |   | $ | 93,678 |   |
| Accrued payroll and compensation              |       | 4,584                        |       | 14,145 |   | 7,125 |   | — |   | 25,854 |   |
| Accrued interest payable                      |       | 5,137                        |       | 10 |   | 67 |   | — |   | 5,214 |   |
| Accrued and other liabilities                 |       | 7,658                        |       | 257,529 |   | 15,731 |   | $ | (244,805 | ) | 36,113 |   |
| Total current liabilities                     |       | 32,578                       |       | 339,042 |   | 34,044 |   | (244,805 | ) | 160,859 |   |
| Long term debt                                |       | 569,625                      |       | 3,100 |   | — |   | — |   | 572,725 |   |
| Deferred and non-current income taxes         |       | 13,255                       |       | 67,991 |   | 17,239 |   | (61,130 | ) | 37,355 |   |
| Other non-current liabilities                 |       | 11,254                       |       | 50,857 |   | 10,527 |   | — |   | 72,638 |   |
| Stockholders’ equity                     |       | 263,188                      |       | 470,017 |   | 53,278 |   | (523,295 | ) | 263,188 |   |
| TOTAL                                         |       | $                            | 889,900    |   | $ | 931,007 |   | $ | 115,088 |   | $ | (829,230 | ) | $ | 1,106,765 |   |

 
| ** **                                    | ** ** | **December 31, 2007** | ** ** |
|-----------------------------------------------|------------|---------------------------------|------------|
| ** **                                    | ** ** | **Parent**                      | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| **ASSETS**                                    |       |                            |       |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                     |       | $                               | 85,940     |   | $ | (2,474 | ) | $ | 7,469 |   | — |   | $ | 90,935 |   |
| Accounts receivable, net                      |       | 23,485                          |       | 194,935 |   | 8,222 |   | $ | (139,447 | ) | 87,195 |   |
| Inventories and supplies                      |       | 23,819                          |       | 76,865 |   | 13,436 |   | (1,010 | ) | 113,110 |   |
| Other current assets                          |       | 6,952                           |       | 11,836 |   | 3,337 |   | — |   | 22,125 |   |
| Total current assets                          |       | 140,196                         |       | 281,162 |   | 32,464 |   | (140,457 | ) | 313,365 |   |
| Property, plant, and equipment, net           |       | 42,020                          |       | 185,948 |   | 51,272 |   | — |   | 279,240 |   |
| Goodwill                                      |       | 66,973                          |       | 303,790 |   | 8,041 |   | — |   | 378,804 |   |
| Intangible assets, net                        |       | 587                             |       | 128,283 |   | — |   | — |   | 128,870 |   |
| Investment in subsidiaries and affiliates     |       | 613,448                         |       | — |   | — |   | (612,358 | ) | 1,090 |   |
| Deferred tax assets                           |       | 26,011                          |       | 14,134 |   | 13,316 |   | (53,461 | ) | — |   |
| Other non-current assets                      |       | 6,862                           |       | 265 |   | 5,138 |   | — |   | 12,265 |   |
| TOTAL                                         |       | $                               | 896,097    |   | $ | 913,582 |   | $ | 110,231 |   | $ | (806,276 | ) | $ | 1,113,634 |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY** |       |                            |       |   |   |   |   |   |   |   |   |
| Accounts payable                              |       | $                               | 8,843      |   | $ | 61,478 |   | $ | 9,749 |   | — |   | $ | 80,070 |   |
| Accrued payroll and compensation              |       | 7,442                           |       | 14,227 |   | 8,787 |   | — |   | 30,456 |   |
| Accrued interest payable                      |       | 11,066                          |       | 10 |   | 29 |   | — |   | 11,105 |   |
| Accrued and other liabilities                 |       | 1,367                           |       | 239,177 |   | 11,344 |   | $ | (223,565 | ) | 28,323 |   |
| Total current liabilities                     |       | 28,718                          |       | 314,892 |   | 29,909 |   | (223,565 | ) | 149,954 |   |
| Long term debt                                |       | 569,625                         |       | 3,100 |   | — |   | — |   | 572,725 |   |
| Deferred income taxes                         |       | 12,790                          |       | 67,991 |   | 17,239 |   | (53,461 | ) | 44,559 |   |
| Other non-current liabilities                 |       | 11,164                          |       | 50,950 |   | 10,482 |   | — |   | 72,596 |   |
| Stockholders’ equity                     |       | 273,800                         |       | 476,649 |   | 52,601 |   | (529,250 | ) | 273,800 |   |
| TOTAL                                         |       | $                               | 896,097    |   | $ | 913,582 |   | $ | 110,231 |   | $ | (806,276 | ) | $ | 1,113,634 |   |

 

13

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**CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS**

 
| ** **                         | ** ** | **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 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 | ) |

 
| ** **                         | ** ** | **Three Months Ended March 31, 2007** | ** ** |
|------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                         | ** ** | **Parent**                                                     | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                          |       | $                                                              | 101,468    |   | $ | 215,850 |   | $ | 97,405 |   | $ | (89,293 | ) | $ | 325,430 |   |
| Cost of goods sold                 |       | 106,007                                                        |       | 195,973 |   | 88,627 |   | (89,293 | ) | 301,314 |   |
| Gross profit                       |       | (4,539                                                         | )          | 19,877 |   | 8,778 |   | — |   | 24,116 |   |
| Operating expenses                 |       | 11,614                                                         |       | 2,918 |   | 519 |   | — |   | 15,051 |   |
| Income (loss) from operations      |       | (16,153                                                        | )          | 16,959 |   | 8,259 |   | — |   | 9,065 |   |
| Other income (expense):            |       |                                                           |       |   |   |   |   |   |   |   |   |
| Interest (expense), net            |       | (10,858                                                        | )          | (35 | ) | (1,126 | ) | — |   | (12,019 | ) |
| Equity in earnings of subsidiaries |       | 21,823                                                         |       | — |   | — |   | (21,823 | ) | — |   |
| Other income (expense), net        |       | 514                                                            |       | 115 |   | (555 | ) | — |   | 74 |   |
| Income (loss) before income taxes  |       | (4,674                                                         | )          | 17,039 |   | 6,578 |   | (21,823 | ) | (2,880 | ) |
| Income tax (benefit) provision     |       | (2,790                                                         | )          | — |   | 1,794 |   | — |   | (996 | ) |
| Net income (loss)                  |       | $                                                              | (1,884     | ) | $ | 17,039 |   | $ | 4,784 |   | $ | (21,823 | ) | $ | (1,884 | ) |

 

14

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**CONDENSED CONSOLIDATED STATEMENTS OFCASH FLOWS**

** **
| ** **                                                                                          | ** ** | **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 year                                                              |       | $                                                              | 37,935     |   | $ | (1,403 | ) | $ | 10,310 |   | $ | — |   | $ | 46,842 |   |

 
| ** **                                                                                   | ** ** | **Three Months Ended  March 31, 2007** | ** ** |
|----------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                   | ** ** | **Parent  Company**                         | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor   Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                        |       |                                        |       |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                            |       | $                                           | (1,884     | ) | $ | 17,039 |   | $ | 4,784 |   | $ | (21,823 | ) | $ | (1,884 | ) |
| Adjustments to reconcile net income to net cash provided  by (used in) operating activities: |       |                                        |       |   |   |   |   |   |   |   |   |
| Depreciation                                                                                 |       | 1,418                                       |       | 7,137 |   | 11,769 |   | — |   | 20,324 |   |
| Amortization – deferred financing costs                                                 |       | 301                                         |       | — |   | 6 |   | — |   | 307 |   |
| Amortization – other intangible assets                                                  |       | 198                                         |       | 1,220 |   | — |   | — |   | 1,418 |   |
| Loss (gain) on disposal of assets                                                            |       | (4                                          | )          | — |   | 20 |   | — |   | 16 |   |
| Deferred income taxes                                                                        |       | (3,594                                      | )          | — |   | (7,802 | ) | — |   | (11,396 | ) |
| Equity in earnings of subsidiaries and affiliates                                            |       | (21,823                                     | )          | — |   | — |   | 21,823 |   | — |   |
| Non-cash stock-based compensation                                                            |       | 595                                         |       | — |   | — |   | — |   | 595 |   |
| Change in other operating items                                                              |       | 34,037                                      |       | (21,087 | ) | (19,630 | ) | — |   | (6,680 | ) |
| Net cash provided by (used in) operating activities                                          |       | 9,244                                       |       | 4,309 |   | (10,853 | ) | — |   | 2,700 |   |
|                                                                                         |       |                                        |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                        |       |                                        |       |   |   |   |   |   |   |   |   |
| Purchases of property, plant, and equipment                                                  |       | (7,327                                      | )          | (2,773 | ) | (228 | ) | — |   | (10,328 | ) |
| Other                                                                                        |       | —                                      |       | 101 |   | — |   | — |   | 101 |   |
| Net cash used in investing activities                                                        |       | (7,327                                      | )          | (2,672 | ) | (228 | ) | — |   | (10,227 | ) |
|                                                                                         |       |                                        |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                        |       |                                        |       |   |   |   |   |   |   |   |   |
| Net payments on long-term and revolving debt                                                 |       | (60,000                                     | )          | — |   | — |   | — |   | (60,000 | ) |
| Other                                                                                        |       | 944                                         |       | — |   | — |   | — |   | 944 |   |
| Net cash used in financing activities                                                        |       | (59,056                                     | )          | — |   | — |   | — |   | (59,056 | ) |
|                                                                                         |       |                                        |       |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                                             |       | (57,139                                     | )          | 1,637 |   | (11,081 | ) | — |   | (66,583 | ) |
| Cash and cash equivalents, beginning of year                                                 |       | 84,855                                      |       | (4,502 | ) | 29,851 |   | — |   | 110,204 |   |
| Cash and cash equivalents, end of year                                                       |       | $                                           | 27,716     |   | $ | (2,865 | ) | $ | 18,770 |   | $ | — |   | $ | 43,621 |   |

 

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Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations.

 

Theaccompanying unaudited condensed interim consolidated financial statements areprepared in conformity with accounting principles generally accepted in theUnited States of America and such principles are applied on a basis consistentwith the information reflected in our Form 10-K for the year ended December 31,2007 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 havebeen condensed or omitted pursuant to the rules and regulationspromulgated by the SEC.  In the opinionof management, the interim financial information includes all adjustments andaccruals, consisting only of normal recurring adjustments, which are necessaryfor a fair presentation of results for the respective interim periods.  The results of operations for the threemonths ended March 31, 2008 are not necessarily indicative of the resultsto be expected for the full fiscal year ending December 31, 2008 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

 

Ourbusiness consists of seven operating segments that design, manufacture, anddistribute components for trucks, trailers, and other vehicles. These operatingsegments are aggregated into three reportable segments as each reportablesegment has similar economic characteristics, products and productionprocesses, class of customer and distribution methods. The Wheels segment’sproducts consist of wheels for heavy- and medium-duty trucks and commercialtrailers.  The Components segment’sproducts consist of truck body and chassis parts, wheel-end components andassemblies, and seats.  The Other segment’sproducts primarily consist of other commercial vehicle components, includingsteerable drive axles and gearboxes. We believe this segmentation isappropriate based upon management’s operating decisions and performanceassessment.

 

Followinga strong 2006, the North American heavy- and medium-duty truck and commercialtrailer markets experienced a significant decline in 2007 due to stricteremissions standards that became effective in January 2007. The emissionsregulations that took effect in 2007 were expected to result in cleaneroperating, yet more costly, trucks. As a result, some of our customers alteredtheir traditional buying trends, which resulted in higher than normal demand inlate 2006, which was followed by a period of reduced demand in 2007.  Industry analysts, including America’sCommercial Transportation (“ACT”) Publications, expect that total demand in2008 will be similar to 2007.  Delayed orfailed economic recovery could have a material adverse effect on our business,results of operations, or financial condition.

 

Webelieve that the commercial vehicle market continued at a reasonably slow paceduring the first three months of 2008. We experienced reduced demand from the commercial vehicle industry inthe first three months of 2008 compared to the first three months of 2007.  Net sales for the three months ended March 31,2008, were $238.2 million compared to net sales of $325.4 million for the threemonths ended March 31, 2007.  Weanticipate that this trend toward decreased net sales in 2008 compared to 2007will begin to change the remainder of this year as we approach 2009, which ispredicted by industry analysts to be a robust year for production in the NorthAmerican commercial vehicle industry. Our challenge is to meet the varying levels of production whileimproving our internal productivity and mitigating the margin pressure fromrising material costs.

 

On January 31,2005, pursuant to the terms of an agreement and plan of merger, one of ourwholly-owned subsidiaries was merged with and into TTI, resulting in TTIbecoming a wholly-owned subsidiary of Accuride. In connection with the TTI merger, we entered into a Fourth Amended andRestated Credit Agreement consisting of (1) a new term credit facility inan aggregate principal amount of $550.0 million that will mature on January 31,2012, and (2) a revolving credit facility in an aggregate principal amountof $125.0 million that will terminate on January 31, 2010.  In addition, we issued $275.0 millionaggregate principal amount of 81⁄2% senior subordinated notes due in 2015.

 

On April 26,2005, our common stock commenced trading on the New York Stock Exchange underthe symbol “ACW.”  During 2006 and 2007,we reduced our senior debt by a total of $125.0 million from cash fromoperations and existing cash reserves.

 

During the fourth quarter of 2006, we resolved acommercial dispute with Ford Motor Company.  As a result of theresolution, we recognized $10.4 million of revenue in 2006, $8.0 million in thethree months ended March 31, 2007, and an additional $2.6 million in theremainder of 2007.  In addition, cash flow increased by $10.0 million in2006 and $11.0 million in mid-2007.  Fordre-sourced its Accuride business to another supplier during 2007.  In 2007, sales to Ford represented less than5% of consolidated revenues.

 

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**Results of Operations**

 

***ThreeMonths Ended March 31, 2008 Compared to the Three Months Ended March 31,2007***

 

The following table setsforth certain income statement information of Accuride for the three monthsended March 31, 2008 and March 31, 2007:

 
| **(In thousands except per share data)** | ** ** | **Fiscal 2008** | ** ** | **Fiscal 2007** | ** ** |
|-------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
| ** **                                                        | ** ** | ** **           | ** ** | ** **           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales:                                                        |       |                 |       |                 |       |   |   |   |   |
| Wheels                                                            |       | $                    | 104,010    |                 | 43.7       | % | $ | 159,329 |   | 47.1 | % |
| Components                                                        |       | 120,759              |       | 50.7                 | %          | 152,900 |   | 48.5 | % |
| Other                                                             |       | 13,441               |       | 5.6                  | %          | 13,201 |   | 4.5 | % |
| Total net sales                                                   |       | $                    | 238,210    |                 | 100.0      | % | $ | 325,430 |   | 100.0 | % |
| Gross profit:                                                     |       |                 |       |                 |       |   |   |   |   |
| Wheels                                                            |       | 20,171               |       | 19.4                 | %          | 12,797 |   | 8.0 | % |
| Components                                                        |       | (10,815              | )          | (9.0                 | )%         | 9,323 |   | 6.1 | % |
| Other                                                             |       | 3,810                |       | 28.3                 | %          | 2,930 |   | 22.2 | % |
| Corporate                                                         |       | (897                 | )          | —               | %          | (934 | ) | — | % |
| Total gross profit                                                |       | 12,269               |       | 5.2                  | %          | 24,116 |   | 7.4 | % |
| Operating expenses                                                |       | 13,654               |       | 5.7                  | %          | 15,051 |   | 4.6 | % |
| Income (loss) from operations                                     |       | (1,385               | )          | (0.6                 | )%         | 9,065 |   | 2.8 | % |
| Interest (expense), net                                           |       | (15,714              | )          | (6.6                 | )%         | (12,019 | ) | (3.7 | )% |
| Other income (loss), net                                          |       | (1,054               | )          | (0.4                 | )%         | 74 |   | 0.0 | % |
| Income tax benefit                                                |       | (6,412               | )          | (2.7                 | )%         | (996 | ) | (0.3 | )% |
| Net loss                                                          |       | $                    | (11,741    | )                    | (4.9       | )% | $ | (1,884 | ) | (0.6 | )% |
|                                                              |       |                 |       |                 |       |   |   |   |   |

 

**Net Sales-** Consolidatednet sales for the three months ended March 31, 2008 were $238.2 million,which was a decrease of 26.8%, compared to net sales of $325.4 million for thethree months ended March 31, 2007. The decrease in net sales is primarily a result of the reduced demand inthe commercial vehicle industry.  Salesdecreased in the Wheels and Components segments by 34.7% and 21%,respectively.  Sales decreased at a greaterrate in the Wheels segment due to reduced sales to Ford of approximately $24million.  Sales to Ford wereapproximately 17% of the revenue in the first quarter of 2007.

 

**GrossProfit -**Consolidatedgross profit decreased $11.8 million to $12.3 million for the three monthsended March 31, 2008 from $24.1 million for the three months ended March 31,2007.

 

Although revenuedecreased in all segments, gross profit in the Wheels segment increased due tothe 2007 results including additional depreciation expense of $9.8 million andseverance and other benefit charges of $18.2 million related to a reduction inour workforce in our London, Ontario, facility. While the absence of those charges in 2008 is creating a positive yearover year impact, the loss of revenue had a greater than normal impact to grossprofit due to the $8.0 million revenue recognition in the first quarter of 2007from a resolution of a commercial dispute mentioned on the previous page.

 

Gross profit inthe Components segment decreased $20.1 million due to the reduction of revenueof $32.1 million and $8.1 million of one-time costs incurred in the currentperiod related to a labor interruption at our Rockford, Illinois facility.

 

**OperatingExpenses -**Operatingexpenses decreased $1.4 million to $13.7 million for the three months ended March 31,2008 from $15.1 million for the three months ended March 31, 2007.  This was primarily due to decreases inconsulting and other purchased services.

 

**InterestExpense, net -**Netinterest expense increased $3.7million to $15.7 million for the three months ended March 31, 2008 from$12.0 million for the three months ended March 31, 2007.  The increase is attributable to $4.9 millionof non-cash unrealized losses from the mark to market of our interest rate swapagreements in the current period compared to $0.7 million of unrealized lossesin the prior year’s results.

 

**Net Loss-**We had a net loss of$11.7 million for the threemonths ended March 31, 2008 compared to a net loss of $1.9 million for thethree months ended March 31, 2007. This was primarily a result of the lower gross profit due to thereduction in sales volume and the $8.1 million of one-time costs related to theRockford labor interruption.

 

17

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***Changes in Financial Condition***

 

At March 31,2008, we had total assets of $1,106.8 million, as compared to $1,113.6 millionat December 31, 2007.  The $6.8million, or 0.6%, decrease in total assets during the three months ended March 31,2008 primarily resulted from the reduction of cash of $44.1 million partiallyoffset by an increase in working capital assets.  We define working capital as current assets(excluding cash) less current liabilities.

 

We useworking capital and cash flow measures to evaluate the performance of ouroperations and our ability to meet our financial obligations. We requireworking capital investment to maintain our position as a leading manufacturerand supplier of commercial vehicle components. We continue to strive for aligning our working capital investment withour customers’ purchase requirements and our production schedules.

 

Thefollowing table summarizes the major components of our working capital as ofthe periods listed below:

 
| ** **                       | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|----------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                       | ** ** | **2008**           | ** ** | **2007**              | ** ** |
| Accounts receivable              |       | $                  | 111,473    |                  | $          | 87,195 |   |
| Inventories and supplies         |       | 119,948            |       | 113,110               |       |
| Deferred income taxes (current)  |       | 19,449             |       | 19,422                |       |
| Other current assets             |       | 6,144              |       | 2,703                 |       |
| Accounts payable                 |       | (93,678            | )          | (80,070               | )          |
| Accrued payroll and compensation |       | (25,854            | )          | (30,456               | )          |
| Accrued interest payable         |       | (5,214             | )          | (11,105               | )          |
| Other current liabilities        |       | (36,113            | )          | (28,323               | )          |
| Working Capital                  |       | $                  | 96,155     |                  | $          | 72,476 |   |

 

Significantchanges in working capital from December 31, 2007 included:

 

·            an increase in net customer receivablesof $24.3 million due to the comparative increase in revenue in the monthsleading up to the respective period-end dates;

·            an increase in inventories and suppliesof $6.8 million due to the draw-down of inventories at year-end and pre-buy ofraw materials in March 2007 due to escalating prices.

·            an increase of other current assets of$3.4 million due to the $2.8 million income tax receivable at March 31,2008, which did not exist at December 31, 2007.

·            an increase of accounts payable of $13.6million due to the comparative increase in raw material purchases in the monthsleading up to the respective period-end dates;

·            a reduction of accrued payroll andcompensation of $4.6 million due to annual incentive payments made in thecurrent period;

·            a reduction of interest payable of $5.9million due to timing of the interest payment for our Notes which is paid each February andAugust; and

·            An increase in other current liabilitiesof $7.8 million due primarily to a $4.1 million increase in the mark to marketvaluation of our interest rate swap agreements.

 

## **Capital Resourcesand Liquidity**

 

                Our primary sources of liquidity during the threemonths ended March 31, 2008 were cash reserves.  We believe that cash from operations,existing cash reserves, and availability under our Revolver will provideadequate funds for our working capital needs, planned capital expenditures anddebt service obligations for the next 12 months and the foreseeable future.  Our ability to fund working capital needs,planned capital expenditures, scheduled debt payments, and to comply with allof the financial covenants under our credit agreement, depends on our futureoperating performance and cash flow, which in turn, are subject to prevailing economicconditions and to financial, business and other factors, some of which arebeyond our control.

 

##### **Operating Activities**

##### ** **

Net cash used by operating activities during the firstthree months of 2008 amounted to $28.4 million compared to cash of $2.7 millionprovided for the comparable period in 2007. As expected, the primary difference was the increase in 

 

18

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working capitalrequirements due to the increase in production in the current period comparedto the reduced levels of production experienced during the fourth quarter of2007 as our largest customers reduce their purchase requirements for shutdownsnormally reserved for maintenance related activities.

 

##### **Investing Activities**

##### ** **

Net cash used in investing activities totaled $15.8million for the three months ended March 31, 2008 compared to a use of$10.2 million for the three months ended March 31, 2007.  Our most significant cash outlays forinvesting activities are the purchases of property, plant and equipment.  Our capital expenditures in 2007 were $36.5million.  Capital expenditures for 2008are expected to be approximately $35 million to $40 million, which we expect tofund through our cash from operations or existing cash reserves.   Included in the 2008 use of investing cashwas an investment in marketable securities of $5.0 million.

 

##### **Financing Activities**

##### ** **

Net cash provided by financing activities totaled $0.1million for the three months ended March 31, 2008 compared to $59.1million of net cash used for the comparable period in 2007 due to payments madein 2007 to reduce our senior debt.

 

**BankBorrowing.**  Inconnection with the TTI merger, we entered into a Fourth Amended and RestatedCredit Agreement consisting of (1) aterm credit facility (the Term B Loan Facility) in an aggregate principalamount of $550.0 million that will mature on January 31, 2012 and (2) arevolving credit facility (the “Revolver”) in an aggregate principal amount of$125.0 million (comprised of a $95.0 million U.S. revolving creditfacility and the continuation of a $30.0 million Canadian revolving creditfacility) that will terminate on January 31, 2010.  As of March 31, 2008, $294.6 million wasoutstanding under the Term B Loan Facility and the Revolver was undrawn.  The Term B Loan Facility requires quarterlyamortization payments of $1.4 million that commenced on March 31,2005, with the balance paid on the maturity date for the Term B Loan Facility.As of March 31, 2008, the regularly scheduled payments due through December 31,2011 were prepaid without penalty.  Theinterest rates per annum applicable to loans under our senior credit facilitiesare, at the option of the Company or Accuride Canada Inc., as applicable, abase rate or Eurodollar rate plus, in each case, an applicable margin which issubject to adjustment based on our leverage ratio. The base rate is afluctuating interest rate equal to the highest of (a) the base ratereported by Citibank, N.A. (or, with respect to the Canadian revolving creditfacility, the reference rate of interest established or quoted by CitibankCanada for determining interest rates on U.S. dollar denominated commercialloans made by Citibank Canada in Canada), (b) a reserve adjustedthree-week moving average of offering rates for three-month certificates ofdeposit plus one-half of one percent (0.5%) and (c) the federal fundseffective rate plus one-half of one percent (0.5%). The obligations under oursenior credit facilities are guaranteed by all of our domesticsubsidiaries.  The loans under the seniorcredit facilities are secured by, among other things, a lien on substantiallyall of our U.S. properties and assets and of our domestic subsidiaries and apledge of 65% of the stock of our foreign subsidiaries.  The loans under the Canadian revolvingfacility are also secured by substantially all of the properties and assets ofAccuride Canada Inc.

 

**RestrictiveDebt Covenants**.  Oursenior credit facilities contain numerous financial and operating covenantsthat limit the discretion of management with respect to certain businessmatters.  These covenants place significant restrictions on, among other things,our ability to incur additional debt, to pay dividends, to create liens, tomake certain payments and investments and to sell or otherwise dispose ofassets and merge or consolidate with other entities.  We are also required to meet certainfinancial ratios and tests, including a leverage ratio, an interest coverageratio and a fixed charge coverage ratio. Failure to comply with the obligations contained in the credit documentscould result in an event of default, 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.

 

On November 28,2007, we entered into an amendment to the Fourth Amended and Restated CreditAgreement. The amendment increased pricing and modified certain financialcovenants through 2008, including changes to the leverage, interest coverageand fixed charge coverage ratios.  As of March 31, 2008, we were in compliancewith our financial covenants and ratios.

 

**SeniorSubordinated Notes**.  In connection with the TTI merger, weissued $275.0 million aggregate principal amount of 81¤2%senior subordinated notes due 2015 in a private placement transaction.  Interest on the senior subordinated notes ispayable on February 1 and August 1 of each year, beginning on August 1,2005.  The notes mature on February 1,2015 and may be redeemed, at our option, in whole or in part, at any time on orbefore February 1, 2010 at a price equal to 100% of the principal amount,plus an applicable make-whole premium, and accrued and unpaid interest andspecial interest if any, to the date of redemption, and on or after February 1,2010 at certain specified redemption prices. The senior subordinated notes are general unsecured obligations (1) subordinatedin right of payment to all of our and the guarantors’ existing and futuresenior 

 

19

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indebtedness,including any borrowings under our senior credit facilities; (2) equal inright of payment with any of our and the guarantors’ existing and future seniorsubordinated indebtedness; (3) senior in right of payment to all of ourand the guarantors’ existing and future subordinated indebtedness and (4) structurallysubordinated to all obligations of our subsidiaries that do not guarantee theoutstanding notes.  On June 15,2005, we completed an exchange offer of these senior subordinated notes forsubstantially identical notes registered under the Securities Act of 1933, asamended.  As of March 31, 2008,those Notes remain outstanding.

 

**Off-BalanceSheet Arrangements. **Wedo not currently have any off-balance sheet arrangements that have or arereasonably likely to have a material current or future effect on our financialcondition, revenues or expenses, results of operations, liquidity, capitalexpenditures or capital resources.  Fromtime to time we may enter into operating leases, letters of credit, ortake-or-pay obligations related to the purchase of raw materials that would notbe reflected in our balance sheet.

 

**RecentAccounting Pronouncements.**

 

***SFAS No. 141(R) ***—In December 2007, the FASB issued SFAS No. 141(R),*Business Combinations*, which replacesSFAS No. 141,*Business Combinations*.  SFAS No. 141(R) requires theacquirer of a business to recognize and measure the identifiable assetsacquired, the liabilities assumed, and any non-controlling interest in the acquireeat fair value. SFAS No. 141(R) also requires transactions costsrelated 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 are currently evaluating the impact of SFAS No. 141(R) relatedto future acquisitions, if any, 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 beginning on or after December 15, 2008.  We are currently evaluating the impact of SFASNo. 160 on our consolidated financial statements.

 

***SFAS No. 161*** —In March 2008, the FASB issued SFAS No. 161, *Disclosuresabout Derivative Instruments and Hedging Activities - an amendment of FASBStatement No. 133.*  SFAS No. 161amends and expands the disclosure requirements of SFAS No. 133 to providea better understanding of how and why an entity uses derivative instruments,how derivative instruments and related hedged items are accounted for, andtheir effect on an entity’s financial position, financial performance, and cashflows.  SFAS No. 161 is effective for fiscal years beginningafter November 15, 2008. We are currently evaluating the impact of SFAS No. 161on our consolidated financial statements.

 

**CriticalAccounting Policies and Estimates. **Wehave made a number of estimates and assumptions relating to the reporting ofresults of operations and financial position in the preparation of ourfinancial statements in conformity with accounting principles generallyaccepted in the United States of America. Actual results could differ significantly from those estimates underdifferent assumptions and conditions.  Weincluded in our Form 10-K for the year ended December 31, 2007 adiscussion of our most critical accounting policies, which are those that havea material impact on our financial condition or operating performance andrequire management’s most difficult, subjective and complex judgments, often asa result of the need to make estimates about the effect of matters that areinherently uncertain.

 

*FactorsAffecting Future Results*

 

Inthis report, we have made various statements regarding current expectations orforecasts of future events, which speak only as of the date the statements, aremade.  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 arealso made from time-to-time in press releases and in oral statements made bythe officers of Accuride. Forward-looking statements are identified by the words “estimate,” “project,”“anticipate,” “will continue,” “will likely result,” “expect,” “intend,” “believe,”“plan,” “predict” and similar expressions. Forward looking statements also include, but are not limited to,statements regarding commercial vehicle market recovery, projections ofrevenue, income, loss, or working capital, capital expenditure levels, abilityto mitigate rising raw material costs through increases in selling prices,plans for future operations, financing needs, the ultimate outcome and impactof any litigation against Accuride, the sufficiency of our capital resourcesand plans and assumptions relating to the foregoing.

 

Suchforward-looking statements are based on assumptions and estimates, whichalthough believed to be reasonable, may turn out to be incorrect.  Therefore, undue reliance should not beplaced upon these estimates and statements. We cannot assure that any of these statements, estimates, or beliefs willbe realized and actual results may differ from those 

 

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contemplated in these “forward-looking statements.”  We undertake no obligation to publicly updateany forward-looking statements, whether as a result of new information, futureevents, or otherwise.  You are advised toconsult further disclosures we may make on related subjects in our filings withthe SEC.  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 the following:

 

·                  a more severe than anticipated commercialvehicle industry downturn in 2008 could have a material adverse effect on ourbusiness;

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

·                  the demands of original equipment manufacturersfor price reductions may adversely affect profitability;

·                  we use a substantial amount of raw steeland aluminum and are vulnerable to industry shortages, significant priceincreases, and surcharges, some of which we may not be able to pass through toour customers;

·                  our credit documents contain significantfinancial and operating covenants that limit the discretion of management withrespect to certain business matters.  Wemust also meet 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 toour customer base;

·                  we may encounter increased competition inthe future from existing competitors or new competitors;

·                  our significant indebtedness may haveimportant consequences, including, but not limited to, impairment of ourability to obtain additional financing, reduction of funds available foroperations and business opportunities or limitations on our ability to disposeof assets;

·                  significant volatility in the foreigncurrency markets could have an adverse effect on us;

·                  our ability to service our indebtednessis dependent upon operating cash flow;

·                  an interruption of performance of ourmachinery and equipment could have an adverse effect on us;

·                  an interruption in supply of steel oraluminum could reduce our ability to obtain favorable sourcing of such rawmaterials;

·                  we may be subject to liability undercertain environmental laws and the cost of compliance with these regulationscould have a material adverse effect on our financial condition and mayadversely affect our ability to sell or rent such property or to borrow usingsuch property as collateral;

·                  our success depends largely upon theabilities and experience of certain key management personnel, and the loss ofthe services of one or more of these key personnel could have a negative impacton our business.

 

Forfurther information, refer to the business description and additional riskfactors sections included in our Form 10-K for the year ended December 31,2007, as filed with the SEC.

 

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

 

In thenormal course of doing business, we are exposed to risks associated withchanges in foreign exchange rates, raw material/commodity prices, and interestrates.  We use derivative instruments tomanage these exposures.  The objectivesfor holding derivatives are to minimize the risks using the most effective methodsto eliminate or reduce the impacts of these exposures.

 

**ForeignCurrency Risk** -Certain forecasted transactions, assets, and liabilities are exposed to foreigncurrency risk.  We monitor our foreigncurrency exposures to maximize the overall effectiveness of our foreigncurrency derivatives.  The principalcurrency of exposure is the Canadian dollar. Foreign exchange forward contracts and option contracts are used tooffset the impact of the variability in exchange rates on our operations, cashflows, assets and liabilities.  At March 31,2008, we had open foreign exchange forward contracts of $9.8 million.

 

**RawMaterial/Commodity Price Risk -**We rely upon the supply ofcertain raw materials and commodities in our production processes and haveentered into long-term supply contracts for our steel and aluminumrequirements.  The exposures associatedwith these commitments are primarily managed through the terms of the sales,supply, and procurement contracts.  Fromtime to time, we use commodity price swaps and futures contracts to manage thevariability in certain commodity prices. At March 31, 2008, we had $6.1 million of material commodity priceswaps and futures contracts.

 

**InterestRate Risk** - We use long-term debt as a primary source ofcapital in our business.  The followingtable presents the principal cash repayments and related weighted averageinterest rates by maturity date for our long-term fixed-rate debt and othertypes of long-term debt at March 31, 2008:

 
| **(Dollars in thousands)** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **Fair Value** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|---------------------|------------|
| Long-term Debt:                      |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |                |       |
| Fixed                                |       | —   |       | —   |       | —   |       | —   |       | —   |       | $              | 275,000    |      | $          | 275,000             |       | $ | 224,125 |   |
| Average Rate                         |       | —   |       | —   |       | —   |       | —   |       | —   |       | 8.50           | %          | 8.50      | %          |                |       |
| Variable                             |       | —   |       | —   |       | —   |       | —   |       | $        | 294,625    |           | $          | 3,100     |       | $                   | 297,725    |   | $ | 268,263 |   |
| Average Rate                         |       | —   |       | —   |       | —   |       | —   |       | 6.41     | %          | 2.47           | %          | 6.37      | %          |                |       |
|                                      |            |          |            |          |            |          |            |          |            |          |            |                |            |           |            |                     |            |  |  |  |  |

 

We have used interestrate swaps to alter interest rate exposure between fixed and variable rates ona portion of our long-term debt.  As of March 31,2008, we had one interest rate swap agreement outstanding, which wasestablished in December 2007 and the terms with the counterparty are toexchange, at specified intervals, the difference between 3.81% from March 2008through March 2010, and the variable rate interest amounts calculated byreference to the notional principal amount. The notional principal amountsunder the terms are $200 million from March 2008 through March 2009,$150 million from March 2009 through September 2009 and $125 millionfrom September 2009 through March 2010.

 

**Item 4.Controls and Procedures**

 

Wemaintain disclosure controls and procedures that are designed to ensure thatinformation required to be disclosed in our Exchange Act reports is recorded,processed, summarized and reported within the time periods specified in the SEC’srules and forms, and that such information is accumulated and communicatedto our management, including our Chief Executive Officer and Chief FinancialOfficer, as appropriate, to allow timely decisions regarding requireddisclosure.  In designing and evaluatingthe disclosure controls and procedures, management recognized that any controlsand procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, andmanagement is required to apply its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.

 

Asrequired by SEC Rule 13a-15(b), we carried out an evaluation, under thesupervision and with the participation of the Company’s management, includingour Chief Executive Officer and Chief Financial Officer, of the effectivenessof the design and operation of our disclosure controls and procedures as of theend of the period covered by this report. Based on that evaluation, our Chief Executive Officer and ChiefFinancial Officer concluded that our disclosure controls and procedures wereeffective at the reasonable assurance level.

 

***Changes in Internal Control Over Financial Reporting.***  We recently implemented a new enterpriseresource planning system at one of our subsidiaries. As a result, the internalcontrols at this subsidiary have been updated as necessary to accommodate themodifications to our business processes and accounting procedures.  There have been no other changes in ourinternal controls over financial reporting during our most recent quarter thathas materially affected, or is reasonably likely to materially affect, ourinternal controls over financial reporting.

 

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**PART II.  OTHER INFORMATION**

 

**Item 1.  LegalProceedings**

 

NeitherAccuride nor any of our subsidiaries is a party to any legal proceeding which,in the opinion of management, would have a material adverse effect on ourbusiness or financial condition. However, we from time-to-time are involved in ordinary routinelitigation incidental to our business, including actions related to productliability, contractual liability, workplace safety and environmentalclaims.  We establish reserves formatters in which losses are probable and can be reasonably estimated.  While we believe that we have establishedadequate accruals for our expected future liability with respect to our pendinglegal actions and proceedings, we cannot assure you that our liability withrespect to any such action 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.

 

**Item 6.  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                  | —     | Amended and  Restated Bylaws of Accuride Corporation. Previously filed as an exhibit to  Form 8-K filed on December 22, 2005 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 81¤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                  | —     | Stockholders’  Agreement, dated January 21, 1998, as amended and assigned, by and among  Accuride Corporation, RSTW Partners III, L.P. (as successor to Phelps  Dodge Corporation) and Hubcap Acquisition L.L.C. 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.                                                |
| 4.7*                 | —     | 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.                                                                                                                                                                                                |

 

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| 4.8*             | — | Form of  Amendment to Stockholders’ Agreement by and among Accuride Corporation,  certain employees and the Hubcap Acquisition L.L.C. Previously filed as an  exhibit to Amendment No. 1, filed September 22, 2005 (Reg.  No. 333-128327) and incorporated herein by reference.                              |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.9              | — | 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. |
| 31.1†       | — | Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and  Rule 13a-14 of the Exchange Act of 1934 – John R. Murphy.                                                                                                                                                                                |
| 31.2†       | — | Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and  Rule 13a-14 of the Exchange Act of 1934 – David K. Armstrong.                                                                                                                                                                            |
| 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/ JOHN R.  MURPHY                              |   | Dated: | May 12,  2008 |
| John R. Murphy                                   |   |   |   |
| President and  Chief Executive Officer           |   |   |
| (Principal  Executive Officer)                   |   |   |
|                                             |   |   |
|                                             |   |   |
| /s/ DAVID K.  ARMSTRONG                          |   | Dated: | May 12,  2008 |
| David K.  Armstrong                              |   |   |   |
| Senior Vice  President / Chief Financial Officer |   |   |
| (Principal  Financial and Accounting Officer)    |   |   |
|                                                  |        |        |  |  |

 

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