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**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

** **

**FORM 10-Q**

 

**(MarkOne)**

 

**x****     Quarterly Report Pursuant to Section 13 or 15 (d) ofthe Securities Exchange Act of 1934**

 

**For thequarterly period ended June 30, 2009.**

 

**OR**

 

**o****       TransitionReport Pursuant to Section 13 or 15(d) of the Securities Exchange Actof 1934**

 

**For thetransition period from                    to                      .**

 

**Commission file number 001-32483**

 

**ACCURIDE CORPORATION**

(Exact Name ofRegistrant as Specified in Its Charter)

 

| **Delaware**                                                     | ** ** | **61-1109077**                        |
|------------------------------------------------------------------|------------|---------------------------------------|
| (State  or Other Jurisdiction of  Incorporation or Organization) |       | (I.R.S.  Employer Identification No.) |
|                                                             |       |                                  |
| **7140 Office Circle, Evansville, IN**                           | ** ** | **47715**                             |
| (Address  of Principal Executive Offices)                        |       | (Zip  Code)                           |

 

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

 

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

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files). Yes o  No o

 

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

 

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

 

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

 

As of August 4,2009, 36,255,288 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 June 30, 2009 and December 31,  2008                      |       | 3 |
|                                          |                                                                                                             |       |   |
|                                          | Condensed  Consolidated Statements of Operations for the Three and Six Months Ended June 30,  2009 and 2008 |       | 4 |
|                                          |                                                                                                             |       |   |
|                                          | Condensed  Consolidated Statements of Cash Flows for the Six Months Ended June 30,  2009 and 2008           |       | 5 |
|                                          |                                                                                                             |       |   |
|                                          | Notes to Condensed Consolidated Financial Statements                                                             |       | 6 |
|                                          |                                                                                                             |       |   |
| Item 2.                                       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                      |       | 21 |
|                                          |                                                                                                             |       |   |
| Item 3.                                       | Quantitative  and Qualitative Disclosures About Market Risk                                                      |       | 30 |
|                                          |                                                                                                             |       |   |
| Item 4.                                       | Controls and  Procedures                                                                                         |       | 30 |
|                                          |                                                                                                             |       |   |
| **PART II  – OTHER INFORMATION**    |                                                                                                             |       |
| ** **                                    |                                                                                                             |       |
| Item 1.                                       | Legal Proceedings                                                                                                |       | 31 |
|                                          |                                                                                                             |       |   |
| Item 4.                                       | Submission of  Matters to a Vote of Security Holders                                                             |       | 31 |
|                                          |                                                                                                             |       |   |
| Item 5.                                       | Other Information                                                                                                |       | 31 |
|                                          |                                                                                                             |       |   |
| Item 6.                                       | Exhibits                                                                                                         |       | 31 |
|                                          |                                                                                                             |       |   |
| Signatures                                    |                                                                                                             | 33         |

 

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**Part I.  FINANCIAL INFORMATION**

 

**Item1.  Financial Statements**

**ACCURIDE CORPORATION**

**CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)**

 
| ** **                                                                                                                                                                                | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| **(In thousands, except for per  share data)**                                                                                                                                            | ** ** | **2009**          | ** ** | **2008**              | ** ** |
| ** **                                                                                                                                                                                | ** ** | ** **        | ** ** | ** **            | ** ** |
| **ASSETS**                                                                                                                                                                                |       |              |       |                  |       |
| CURRENT  ASSETS:                                                                                                                                                                          |       |              |       |                  |       |
| Cash  and cash equivalents                                                                                                                                                                |       | $                 | 47,557     |                  | $          | 123,676 |   |
| Customer  receivables, net of allowance for doubtful accounts of $1,808 and $1,743 in  2009 and 2008, respectively                                                                        |       | 65,238            |       | 70,485                |       |
| Other  receivables                                                                                                                                                                        |       | 7,842             |       | 7,734                 |       |
| Inventories                                                                                                                                                                               |       | 63,250            |       | 78,805                |       |
| Supplies,  net                                                                                                                                                                            |       | 18,155            |       | 18,501                |       |
| Deferred  income taxes                                                                                                                                                                    |       | 1,955             |       | 1,955                 |       |
| Income  tax receivable                                                                                                                                                                    |       | 1,328             |       | 1,140                 |       |
| Prepaid  expenses and other current assets                                                                                                                                                |       | 5,674             |       | 5,463                 |       |
| Total  current assets                                                                                                                                                                     |       | 210,999           |       | 307,759               |       |
| PROPERTY,  PLANT AND EQUIPMENT, net                                                                                                                                                       |       | 247,234           |       | 258,638               |       |
| OTHER  ASSETS:                                                                                                                                                                            |       |              |       |                  |       |
| Goodwill                                                                                                                                                                                  |       | 127,474           |       | 127,474               |       |
| Other  intangible assets, net                                                                                                                                                             |       | 95,022            |       | 97,482                |       |
| Deferred  financing costs, net of accumulated amortization of $7,067 and $4,940 in 2009  and 2008, respectively                                                                           |       | 9,486             |       | 5,559                 |       |
| Marketable  securities and other investments                                                                                                                                              |       | 3,900             |       | 5,000                 |       |
| Other                                                                                                                                                                                     |       | 10,610            |       | 6,638                 |       |
| TOTAL                                                                                                                                                                                     |       | $                 | 704,725    |                  | $          | 808,550 |   |
| **LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**                                                                                                                                         |       |              |       |                  |       |
| CURRENT  LIABILITIES:                                                                                                                                                                     |       |              |       |                  |       |
| Accounts  payable                                                                                                                                                                         |       | $                 | 40,171     |                  | $          | 63,937 |   |
| Accrued  payroll and compensation                                                                                                                                                         |       | 21,941            |       | 19,651                |       |
| Accrued  interest payable                                                                                                                                                                 |       | 12,653            |       | 12,505                |       |
| Accrued  workers compensation                                                                                                                                                             |       | 7,797             |       | 7,969                 |       |
| Debt                                                                                                                                                                                      |       | 554,721           |       | —                |       |
| Indebtedness  to related parties                                                                                                                                                          |       | 73,708            |       | —                |       |
| Accrued  and other liabilities                                                                                                                                                            |       | 21,104            |       | 21,556                |       |
| Total  current liabilities                                                                                                                                                                |       | 732,095           |       | 125,618               |       |
| LONG-TERM  DEBT                                                                                                                                                                           |       | —            |       | 651,169               |       |
| DEFERRED  INCOME TAXES                                                                                                                                                                    |       | 12,258            |       | 12,554                |       |
| NON-CURRENT  INCOME TAXES PAYABLE                                                                                                                                                         |       | 8,715             |       | 8,715                 |       |
| OTHER  POSTRETIREMENT BENEFIT PLAN LIABILITY                                                                                                                                              |       | 50,140            |       | 50,400                |       |
| PENSION  BENEFIT PLAN LIABILITY                                                                                                                                                           |       | 32,099            |       | 31,941                |       |
| OTHER  LIABILITIES                                                                                                                                                                        |       | 10,875            |       | 1,968                 |       |
| COMMITMENTS  AND CONTINGENCIES (Note 7)                                                                                                                                                   |       | —            |       | —                |       |
| STOCKHOLDERS’  DEFICIENCY:                                                                                                                                                           |       |              |       |                  |       |
| Preferred  Stock, $0.01 par value; 5,000,000 shares authorized and 1 issued                                                                                                               |       | —            |       | —                |       |
| Common  Stock, $0.01 par value; 100,000,000 shares authorized, 36,956,000 and  36,573,000 shares issued, and 36,252,000 and 35,869,000 shares outstanding in  2009 and 2008, respectively |       | 363               |       | 359                   |       |
| Additional  paid-in-capital                                                                                                                                                               |       | 264,027           |       | 263,858               |       |
| Treasury  stock – 76,000 shares at cost in 2009 and 2008                                                                                                                             |       | (751              | )          | (751                  | )          |
| Accumulated  other comprehensive loss                                                                                                                                                     |       | (30,361           | )          | (29,672               | )          |
| Accumulated  deficiency                                                                                                                                                                   |       | (374,735          | )          | (307,609              | )          |
| Total  stockholders’ deficiency                                                                                                                                                      |       | (141,457          | )          | (73,815               | )          |
| TOTAL                                                                                                                                                                                     |       | $                 | 704,725    |                  | $          | 808,550 |   |

 

See notes to unauditedcondensed consolidated financial statements.

 

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**ACCURIDECORPORATION**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**

 
| ** **                                               | ** ** | **Three Months Ended********June 30,** | ** ** | **Six Months Ended********June 30,** | ** ** |
|----------------------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|
| **(in thousands except per share  data)**                | ** ** | **2009**                                    | ** ** | **2008**                                  | ** ** | **2009** | ** ** | **2008** | ** ** |
|                                                     |       |                                        |       |                                      |       |   |   |   |   |
| NET  SALES                                               |       | $                                           | 135,206    |                                      | $          | 244,919 |   | $ | 278,782 |   | $ | 483,129 |   |
| COST  OF GOODS SOLD                                      |       | 144,227                                     |       | 223,569                                   |       | 287,763 |   | 449,510 |   |
| GROSS  PROFIT (LOSS)                                     |       | (9,021                                      | )          | 21,350                                    |       | (8,981 | ) | 33,619 |   |
| OPERATING  EXPENSES:                                     |       |                                        |       |                                      |       |   |   |   |   |
| Selling,  general and administrative                     |       | 12,490                                      |       | 12,761                                    |       | 24,714 |   | 26,415 |   |
| INCOME  (LOSS) FROM OPERATIONS                           |       | (21,511                                     | )          | 8,589                                     |       | (33,695 | ) | 7,204 |   |
| OTHER  INCOME (EXPENSE):                                 |       |                                        |       |                                      |       |   |   |   |   |
| Interest  income                                         |       | 244                                         |       | 193                                       |       | 463 |   | 725 |   |
| Interest  expense                                        |       | (15,835                                     | )          | (8,677                                    | )          | (29,357 | ) | (24,923 | ) |
| Loss  on extinguishment of debt                          |       | —                                      |       | —                                    |       | (5,389 | ) | — |   |
| Other  income (loss), net                                |       | 1,543                                       |       | 933                                       |       | 2,354 |   | (121 | ) |
| INCOME  (LOSS) BEFORE INCOME TAXES                       |       | (35,559                                     | )          | 1,038                                     |       | (65,624 | ) | (17,115 | ) |
| INCOME  TAX PROVISION (BENEFIT)                          |       | 512                                         |       | (2,337                                    | )          | 1,502 |   | (8,749 | ) |
| NET  INCOME (LOSS)                                       |       | $                                           | (36,071    | )                                         | $          | 3,375 |   | $ | (67,126 | ) | $ | (8,366 | ) |
|                                                     |       |                                        |       |                                      |       |   |   |   |   |
| Weighted  average common shares outstanding—basic   |       | 36,252                                      |       | 35,430                                    |       | 36,210 |   | 35,421 |   |
|                                                     |       |                                        |       |                                      |       |   |   |   |   |
| Basic  income (loss) per share                           |       | $                                           | (1.00      | )                                         | $          | 0.10 |   | $ | (1.85 | ) | $ | (0.24 | ) |
|                                                     |       |                                        |       |                                      |       |   |   |   |   |
| Weighted  average common shares outstanding—diluted |       | 36,252                                      |       | 35,518                                    |       | 36,210 |   | 35,421 |   |
|                                                     |       |                                        |       |                                      |       |   |   |   |   |
| Diluted  income (loss) per share                         |       | $                                           | (1.00      | )                                         | $          | 0.10 |   | $ | (1.85 | ) | $ | (0.24 | ) |

 

See notes to unauditedcondensed consolidated financial statements.

 

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**ACCURIDE CORPORATION**

**CONDENSED CONSOLIDATED STATEMENTS OFCASH FLOWS (UNAUDITED)**

 
| ** **                                                                   | ** ** | **Six Months Ended********June 30,** | ** ** |
|------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| **(In thousands)**                                                           | ** ** | **2009**                                  | ** ** | **2008** | ** ** |
| CASH  FLOWS FROM OPERATING ACTIVITIES:                                       |       |                                      |       |   |   |
| Net  loss                                                                    |       | $                                         | (67,126    | ) | $ | (8,366 | ) |
| Adjustments  to reconcile net loss to net cash used in operating activities: |       |                                      |       |   |   |
| Depreciation  and impairment                                                 |       | 22,286                                    |       | 20,373 |   |
| Amortization  – deferred financing costs                                |       | 2,127                                     |       | 616 |   |
| Amortization  – other intangible assets                                 |       | 2,460                                     |       | 2,795 |   |
| Loss  on extinguishment of debt                                              |       | 5,389                                     |       | — |   |
| Loss  (gain) on disposal of assets                                           |       | (32                                       | )          | 62 |   |
| Provision  for deferred income taxes                                         |       | —                                    |       | (10,230 | ) |
| Non-cash  stock-based compensation                                           |       | 124                                       |       | 1,710 |   |
| Change  in warrant liability                                                 |       | (729                                      | )          | — |   |
| Paid-in-kind  interest                                                       |       | 3,643                                     |       | — |   |
| Changes  in certain assets and liabilities:                                  |       |                                      |       |   |   |
| Receivables                                                                  |       | 5,139                                     |       | (26,650 | ) |
| Inventories  and supplies                                                    |       | 15,901                                    |       | (6,180 | ) |
| Prepaid  expenses and other assets                                           |       | (4,105                                    | )          | (8,320 | ) |
| Accounts  payable                                                            |       | (21,519                                   | )          | 3,521 |   |
| Accrued  and other liabilities                                               |       | 4,029                                     |       | (1,744 | ) |
| Net  cash used in operating activities                                       |       | (32,413                                   | )          | (32,413 | ) |
| CASH  FLOWS FROM INVESTING ACTIVITIES:                                       |       |                                      |       |   |   |
| Purchases  of property, plant and equipment                                  |       | (10,729                                   | )          | (19,852 | ) |
| Purchase  of marketable securities                                           |       | —                                    |       | (5,000 | ) |
| Other                                                                        |       | 146                                       |       | (642 | ) |
| Net  cash used in investing activities                                       |       | (10,583                                   | )          | (25,494 | ) |
| CASH  FLOWS FROM FINANCING ACTIVITIES:                                       |       |                                      |       |   |   |
| Increase  in revolving credit advance                                        |       | 30,626                                    |       | — |   |
| Decrease  in revolving credit advance                                        |       | (53,000                                   | )          | — |   |
| Credit  facility amendment fees                                              |       | (10,797                                   | )          | — |   |
| Other                                                                        |       | 48                                        |       | 199 |   |
| Net  cash provided by (used in) financing activities                         |       | (33,123                                   | )          | 199 |   |
| DECREASE  IN CASH AND CASH EQUIVALENTS                                       |       | (76,119                                   | )          | (57,708 | ) |
| CASH  AND CASH EQUIVALENTS—Beginning of period                          |       | 123,676                                   |       | 90,935 |   |
| CASH  AND CASH EQUIVALENTS—End of period                                |       | $                                         | 47,557     |   | $ | 33,227 |   |
|                                                                         |       |                                      |       |   |   |
| Supplemental  cash flow information:                                         |       |                                      |       |   |   |
| Cash  paid for interest                                                      |       | $                                         | 24,199     |   | $ | 22,166 |   |
| Cash  paid for income taxes                                                  |       | $                                         | 1,691      |   | $ | 3,956 |   |
| Non-cash  transactions:                                                      |       |                                      |       |   |   |
| Purchases  of property, plant, and equipment in accounts payable             |       | $                                         | 2,868      |   | $ | 1,722 |   |
| Issuance  of warrant                                                         |       | $                                         | 4,655      |   | — |   |

 

Seenotes to unaudited condensed consolidated financial statements.

 

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**ACCURIDECORPORATION**

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

**AS OF JUNE 30, 2009 AND DECEMBER31, 2008 AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008**

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

 

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

 

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

 

The results of operationsfor the three and six months ended June 30, 2009 are not necessarilyindicative of the results to be expected for the year ending December 31,2009.  The unaudited consolidatedfinancial statements and notes thereto should be read in conjunction with theaudited consolidated financial statements and notes thereto disclosed inAccuride’s Annual Report on Form 10-K for the year ended December 31,2008.

 

***Going Concern —***The accompanying condensed consolidated financialstatements have been prepared assuming that we will continue as a goingconcern, which contemplates the realization of assets and the liquidation ofliabilities in the normal course of business.

 

We continue to operate in a challenging economicenvironment and our ability to maintain liquidity and comply with our debtcovenants has been affected by economic and other conditions that are beyondour control and which are difficult to predict. We predict operating levels based upon North American Class 8, Class 5-7and trailer expected productions for the year as well as aftermarketsales.  We utilize ACT productionforecasts to help predict production for the Class 8, Class 5-7 andtrailer production levels.  The ACTforecasts for Class 8, Class 5-7, and trailer have seen declines of27%, 33% and 12%, respectively, since the forecasts at the time of the 10-Kfiling on March 13, 2009.

 

Our financial results as of and for the three and sixmonths ended June 30, 2009 are directly attributable to the decline ofproduction and the current economic conditions. We have incurred a net loss of $67,126 for the six months ended June 30,2009, negative operating cash flow of $32,413, and a reduction in cash and cashequivalents to $47,557 at June 30, 2009 from $123,676 at December 31,2008.

 

Due to the operating results as of and for the three and six monthperiods ended June 30, 2009, we have entered into a Temporary WaiverAgreement (the “Temporary Waiver”) with respect to our Credit Agreement amongthe Company, Accuride Canada Inc., the lenders party thereto, theadministrative agent for the lenders, and the other agents party thereto. TheTemporary Waiver is dated July 1, 2009 and became effective on July 8,2009.

 

Pursuant to the terms of the Temporary Waiver, the Lenders have agreedto waive our compliance with the following financial covenants under the CreditAgreement for the fiscal quarter ended June 30, 2009 and for the durationof the Temporary Waiver Period: (i) the Senior Secured Leverage Ratio setforth in Section 5.04(a), (ii) the Interest Coverage Ratio set forthin Section 5.04(c) and (iii) the Fixed Charge Coverage Ratio setforth in Section 5.04(d).  The Company’s failure to comply with anyof these covenants would be an immediate event of default under the CreditAgreement (each default a “Potential Default”).  The “Temporary WaiverPeriod” terminates on August 15, 2009, unless terminated earlier as theresult of, among other things: (i) an event of default under the CreditAgreement that is not a Potential Default, (ii) payment by the Company ofthe interest payment due and owing on August 1, 2009 to the holders of theCompany’s 8 1 / 2 % Senior Subordinated Notes due 2015 and (iii) thefailure by the Company or the subsidiary guarantors to comply with the termsand provisions of the Temporary Waiver.

 

Under the Temporary Waiver: (i) interest on advances and alloutstanding obligations under the Credit Agreement will accrue at an annualrate of 2.0% plus the otherwise applicable rate during the Temporary WaiverPeriod, (ii) the Company and its subsidiaries must comply with certainrestrictions on incurring additional debt, making investments and sellingassets and (iii) the Company must comply with a minimum liquidityrequirement.  Contemporaneously with the Temporary Waiver, Citicorp USA, Inc.has resigned as administrative agent and the lenders have appointed DeutscheBank Trust Company Americas to serve as administrative agent.

 

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To maintain compliancewith the Temporary Waiver, the Company did not pay the approximately $11.7million of interest due August 3, 2009, to the holders of its 8 1⁄2 percentSenior Subordinated Notes due 2015 (Notes) and intends to use the existing30-day grace period provided in the Note indenture to continue discussionsregarding a capital restructuring with its lenders.  Under the indenture,the failure to make this interest payment would not constitute an event ofdefault that permits acceleration of the Notes until the expiration of the30-day grace period.

 

Under U.S. GAAP, under anevent of default of financial covenants associated with debt agreements, allamounts outstanding shall be classified within current liabilities onthe balance sheet.  Although the Company has obtained the temporarywaiver, the Company has classified all outstanding amounts under its Fourth Amendedand Restated Credit Agreement, and due to cross-acceleration provisions, itssenior subordinated notes as current liabilities as of June 30, 2009.

 

The Board has appointed aspecial committee of independent directors to identify and, with the input ofmanagement and our financial advisors, evaluate alternatives to recommend anappropriate course of action to the full board. We are currently negotiating with both our senior and subordinatedlenders and we are negotiating alternatives such as additional amendments or waivers,the sale of non-core assets, and/or alternative debt structures, such as debtfor debt or debt for equity agreements. The success of any such alternative actions will depend on many factors,several of which are out of management’s control.  Therefore, we can provide no assurance as tothe success of such actions.  Thesuccessful execution of our plans, among other factors, raises substantialdoubt as to our ability to continue as a going concern.

 

If we are unable toobtain permanent waivers, extensions of the waivers, or restructure the Term BLoan Facility prior to August 15, 2009, and satisfactorily address theSenior Subordinated Notes interest payment due at the end of the grace periodon August 31, 2009, a default would arise with respect to theseobligations, which could also trigger cross accelerations on all ourindebtedness.  In such an event, we wouldbe required to repay all outstanding indebtedness immediately.  Wewould not have sufficient liquidity available to repay such indebtedness and,unless we were able to obtain additional capital resources or waivers, we wouldbe unable to continue to fund our operations or continue our business, therebypotentially requiring us to seek relief under the U.S. Bankruptcy Code.

 

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

 

***DerivativeFinancial Instruments*** — We use derivative financial instruments as part of our overall riskmanagement strategy as further described under Item 7A of our 2008 AnnualReport on Form 10-K.  The derivativeinstruments used from time to time include interest rate and foreign exchangeinstruments.  All derivative instrumentsare recognized on the balance sheet at their estimated fair values. As of June 30,2009, there were no derivatives that were designated as hedges for financialreporting purposes.

 

***Interest Rate Instruments*** — We use interest rate swap agreements as a means offixing the interest rate on portions of our floating-rate debt.  As of June 30, 2009 we had one interestrate swap agreement outstanding, which was established in December 2007.  Pursuant to the terms of the interest rateswap agreement, we exchange with the counterparty, at specified intervals, thedifference between 3.81% from March 2009 through March 2010, and thevariable rate interest amounts calculated by reference to the notionalprincipal amount. The notional principal amounts under the terms are $150million from March 2009 through September 2009 and $125 million from September 2009through March 2010.

 

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

 
| ** **             | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **             | ** ** | **2009**                             | ** ** | **2008**                           | ** ** | **2009** | ** ** | **2008** | ** ** |
| Realized Loss          |       | $                                    | (1,006     | )                                  | $          | (449 | ) | $ | (1,854 | ) | $ | (199 | ) |
| Unrealized Gain (Loss) |       | $                                    | 573        |                               | $          | 3,356 |   | $ | 1,381 |   | $ | (1,182 | ) |

 

***Foreign Exchange Instruments*** — We use foreign currency forwardcontracts and option contracts to limit foreign exchange risk on anticipatedbut not yet committed transactions expected to be denominated in Canadiandollars. As of June 30, 2009, the notional amount of open foreign exchangeforward contracts was $9.3 million.

 

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

 

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| ** **      | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **      | ** ** | **2009**                             | ** ** | **2008**                           | ** ** | **2009** | ** ** | **2008** | ** ** |
| Realized Gain   |       | $                                    | 543        |                               | $          | 165 |   | $ | 750 |   | $ | 236 |   |
| Unrealized Gain |       | $                                    | 601        |                               | $          | 14 |   | $ | 162 |   | $ | — |   |

 

***Commodity Price Instruments***— We use commodity price swap contractsto limit exposure to changes in certain raw material prices. Commodity priceinstruments, which do not meet the normal purchase exception, are notdesignated as hedges for financial reporting purposes and, accordingly, arecarried in the financial statements at fair value, with realized and unrealizedgains and losses reflected in current period earnings as a component of “Costof goods sold.” At June 30, 2009, we had no open commodity price swaps orfutures contracts.

 

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

 
| ** **             | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **             | ** ** | **2009**                             | ** ** | **2008**                           | ** ** | **2009** | ** ** | **2008** | ** ** |
| Realized Gain          |       | $                                    | —     |                               | $          | 847 |   | $ | — |   | $ | 1,634 |   |
| Unrealized Gain (Loss) |       | $                                    | —     |                               | $          | (902 | ) | $ | — |   | $ | 452 |   |

 

***MarketableSecurities and Other Investments***—******Wehave certain investments in municipal bonds with an auction rate feature, whichare categorized as marketable securities. We classify these securities asavailable for sale and as non-current in the accompanying consolidated balancesheets based on original maturity dates of greater than one year.Available-for-sale securities are reviewed quarterly for possibleother-than-temporary impairment. The review includes an analysis of the factsand circumstances of each individual investment such as the severity of loss,the length of time the fair value has been below cost, the expectation for thatsecurity’s performance, the creditworthiness of the issuer and management’sintent and ability to hold the security to recovery.  During the three months ended June 30,2009, management determined that the available-for-sale securities were otherthan temporarily impaired and recorded a loss of $1.1 million.

 

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

 
| ** **                                         | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| **(in thousands except per share  data)**          | ** ** | **2009**                             | ** ** | **2008**                           | ** ** | **2009** | ** ** | **2008** | ** ** |
| Numerator:                                         |       |                                 |       |                               |       |   |   |   |   |
| Net income (loss)                                  |       | $                                    | (36,071    | )                                  | $          | 3,375 |   | $ | (67,126 | ) | $ | (8,366 | ) |
| Denominator:                                       |       |                                 |       |                               |       |   |   |   |   |
| Weighted average shares outstanding — Basic   |       | 36,252                               |       | 35,430                             |       | 36,210 |   | 35,421 |   |
| Effect of dilutive stock options                   |       | —                               |       | 88                                 |       | — |   | — |   |
| Weighted average shares outstanding — Diluted |       | 36,252                               |       | 35,518                             |       | 36,210 |   | 35,421 |   |
| Basic earnings (loss) per common share             |       | $                                    | (1.00      | )                                  | $          | 0.10 |   | $ | (1.85 | ) | $ | (0.24 | ) |
| Diluted earnings (loss) per common share           |       | $                                    | (1.00      | )                                  | $          | 0.10 |   | $ | (1.85 | ) | $ | (0.24 | ) |

 

As of June 30, 2009, there were 544,738 stockoptions, 1,117,113 stock appreciation rights, and a warrant exercisable for12,269,489 shares that were not included in the computation of diluted earningsper share because the effect would be anti-dilutive.

 

***Stock-Based Compensation***—As of June 30, 2009, there wasapproximately $1.4 million of unrecognized pre-tax compensation expense relatedto share-based awards not yet vested that will be recognized over aweighted-average period of 1.4 years.

 

Expense was recognized for share-based compensation asfollows:

 
| ** **                                  | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **                                  | ** ** | **2009**                             | ** ** | **2008**                           | ** ** | **2009** | ** ** | **2008** | ** ** |
| Share-based compensation expense recognized |       | $                                    | 29         |                               | $          | 1,200 |   | $ | 124 |   | $ | 1,710 |   |
|                                             |            |                                      |            |                                    |            |  |  |  |  |  |  |  |  |

 

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

 

We have assessed the need to maintain a valuationallowance for deferred tax assets based on an assessment of whether it is morelikely than not that deferred tax benefits will be realized through thegeneration of future taxable income. Appropriate consideration is given to allavailable evidence, both positive and negative, in assessing the need for avaluation allowance. Due to our recent history of U.S. operating and taxablelosses, the inconsistency of these profits, and the uncertainty of ourfinancial outlook, we continue to maintain a full valuation allowance againstour domestic deferred tax assets.

 

***Recent Accounting Adoptions***

 

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

 

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

 

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

 

***SFAS No. 165*** - We adopted SFAS No. 165, *Subsequent Events* for the Quarterly Reportfor the period ending June 30, 2009.  SFAS 165 establishesgeneral standards of accounting for and disclosure of events that occur afterthe balance sheet date but before financial statements are issued, which arereferred to as subsequent events. The statement clarifies existing guidance onsubsequent events, including a requirement that a public entity should evaluatesubsequent events through the issue date of the financial statements, thedetermination of when the effects of subsequent events should be recognized inthe financial statement and disclosures regarding all subsequentevents.  Adoption of SFAS 165 did not have a material affect on ourcondensed consolidated financial statements. We have updated subsequent eventsthrough August 7, 2009, which is the date of this filing.

 

***New Accounting Pronouncements***

 

***FSP No. 157-2***—In February 2008, the FASB issued Staff Position(“FSP”) No. 157-2,*Effective Date of FASBStatement No. 157*, which delayed the effective date of fairvalue measurements for nonfinancial assets and liabilities to fiscal yearsbeginning after November 15, 2008, except for items that are recognized ordisclosed at fair value in the financial statements on a recurring basis.  Management is currently evaluating the impactof the adoption of FSP 157-2 on our consolidated financial statements.

 

**SFAS No. 132(R) **— In March 2008, the FASB issuedSFAS No. 132(R), *Employers’**Disclosures about Postretirement Benefit Plan Assets. *The statement requires disclosuresof the objectives of postretirement benefit plan assets, investment policiesand strategies, categories of plan assets, fair value measurements of planassets, and significant 

 

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concentrations ofrisk.  SFAS No. 132(R) iseffective for fiscal years and interim periods beginning after December 15,2009.  The adoption of SFAS No. 132(R) isexpected to increase our disclosures, but it is not expected to have an impacton our consolidated financial statements.

 

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

 

***SFAS No. 167***— In June 2009, the FASB issued SFAS No. 167, *Amendments to FASB Interpretation No. 46(R*), which amends FASB Interpretation(FIN) No. 46(R), *Consolidation ofVariable Interest Entities*,for variable interest entities to determine whether a variable interest entitymust be consolidated. SFAS No. 167 requires an entity to perform ananalysis to determine whether an entity’s variable interest or interests giveit a controlling financial interest in a variable interest entity. Thisstatement requires ongoing reassessments of whether an entity is the primarybeneficiary of a variable interest entity and enhanced disclosures that providemore transparent information about an entity’s involvement with a variableinterest entity. The new standard will become effective for us on January 1,2010. We are currently evaluating the impact of adopting SFAS No. 167 onthe consolidated financial statements.

 

***SFAS No. 168*** - In June 2009, the FASB issuedSFAS No. 168, *The FASB AccountingStandards Codification TM and the Hierarchy of Generally Accepted AccountingPrinciples*.  SFAS 168 establishes the Accounting StandardsCodification (“Codification”) as the source of authoritative accountingprinciples recognized by the FASB to be applied by nongovernmental entities inthe preparation of financial statements in accordance with GAAP.  TheCodification is not intended to change GAAP but consolidates all existing GAAPsources into a single set of comprehensive standards.  SFAS 168 willbecome effective for us in the third quarter of 2009 and will not have amaterial effect on our condensed consolidated financial statements.

 

**Note2 — Restructuring**

 

During2008, in response to the slow commercial vehicle market and the decline insales, management undertook a review of current operations that led to a comprehensiverestructuring plan. On September 22, 2008, we approved a restructuringplan to more appropriately align our workforce in response to the relativelyslow commercial vehicle market.  On December 15,2008, we announced additional actions in regards to the restructuring plan thatfocused on the consolidation of several of our facilities. During 2008, werecognized restructuring expenses of $12.4 million in accordance with SFASNo. 146, *Accounting for Costs Associated with Exit orDisposal Activities*.

 

Costs incurred in 2009are shown below by reportable segment:

 
| ** **                              | ** ** | **Three Months Ended   June 30, 2009** | ** ** | **Six Months Ended   June 30, 2009** | ** ** |
|-----------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|
|                                    |       |                                        |       |                                      |       |
| **Wheels**                              |       |                                        |       |                                      |       |
| Employee severance costs                |       | $                                           | —     |                                      | $          | 643 |   |
| Lease and other contractual commitments |       | 141                                         |       | 141                                       |       |
| Subtotal                                |       | 141                                         |       | 784                                       |       |
|                                    |       |                                        |       |                                      |       |
| **Components**                          |       |                                        |       |                                      |       |
| Employee severance costs                |       | —                                      |       | 42                                        |       |
| Lease and other contractual commitments |       | 3,219                                       |       | 3,219                                     |       |
| Subtotal                                |       | 3,219                                       |       | 3,261                                     |       |
|                                    |       |                                        |       |                                      |       |
| **Corporate**                           |       |                                        |       |                                      |       |
| Employee severance costs                |       | 602                                         |       | 913                                       |       |
| Subtotal                                |       | 602                                         |       | 913                                       |       |
|                                    |       |                                        |       |                                      |       |
| **Total**                               |       | $                                           | 3,962      |                                      | $          | 4,958 |   |

 

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The following is areconciliation of the beginning and ending restructuring reserve balances forthe six-month period ended June 30, 2009:

 
| ** **                                       | ** ** | **Employee   Severance Costs** | ** ** | **Lease and Other   Contractual Costs** | ** ** | **Total** | ** ** |
|--------------------------------------------------|------------|--------------------------------|------------|-----------------------------------------|------------|-----------|------------|
| Balance December 31, 2008                   |       | $                              | 4,281      |                                    | $          | —    |       | $ | 4,281 |   |
| Costs incurred and charged to operating expenses |       | 913                            |       | —                                  |       | 913       |       |
| Costs incurred and charged to cost of goods sold |       | 685                            |       | 3,360                                   |       | 4,045     |       |
| Costs paid or otherwise settled                  |       | (3,772                         | )          | (73                                     | )          | (3,845    | )          |
| Balance  at June 30, 2009                   |       | $                              | 2,107      |                                    | $          | 3,287     |       | $ | 5,394 |   |

 

Ofthe remaining severance liability, $1,959 will be paid during 2009 with theremainder of $148 paid in 2010.  Of theremaining lease liability, $294 will be paid during 2009 and $355 will be paidin 2010 with the remainder paid thereafter.

 

**Note 3 -Inventories**

 

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

 
| ** **                   | ** ** | **June 30, 2009** | ** ** | **December 31, 2008** | ** ** |
|------------------------------|------------|------------------------|------------|----------------------------|------------|
| Raw  materials               |       | $                      | 16,901     |                       | $          | 22,839 |   |
| Work  in process             |       | 19,589                 |       | 21,930                     |       |
| Finished  manufactured goods |       | 26,760                 |       | 34,036                     |       |
| Total  inventories, net      |       | $                      | 63,250     |                       | $          | 78,805 |   |

 

**Note 4 - Goodwill and OtherIntangible Assets**

 

Under SFAS No. 142, *Goodwill and Other Intangible Assets,*we are required toassess goodwill and any indefinite-lived intangible assets for impairmentannually, or more frequently if circumstances indicate impairment may haveoccurred.  The analysis of potentialimpairment of goodwill requires a two-step approach.  The first step is the estimation of fair valueof each reporting unit.  If step oneindicates that impairment potentially exists, the second step is performed tomeasure the amount of impairment, if any. Goodwill impairment exists when the implied fair value is less than itscarrying value.

 

The carrying amount ofgoodwill as of June 30, 2009 by reportable segment, are as follows:

 
| ** **                        | ** ** | **Wheels** | ** ** | **Components** | ** ** | **Other** | ** ** | **Corporate** | ** ** | **Total** | ** ** |
|-----------------------------------|------------|------------|------------|----------------|------------|-----------|------------|---------------|------------|-----------|------------|
|                              |       |       |       |           |       |      |       |          |       |      |       |
| Balance  as of June 30, 2009 |       | $          | 123,199    |           | $          | —    |       | $             | 4,275      |      | $          | — |   | $ | 127,474 |   |
|                                   |            |            |            |                |            |           |            |               |            |           |            |  |  |  |  |  |

 

The changes in thecarrying amount of other intangible assets for the six months ended June 30,2009 by reportable segment, are as follows:

 
| ** **                            | ** ** | **Wheels** | ** ** | **Components** | ** ** | **Other** | ** ** | **Corporate** | ** ** | **Total** | ** ** |
|---------------------------------------|------------|------------|------------|----------------|------------|-----------|------------|---------------|------------|-----------|------------|
|                                  |       |       |       |           |       |      |       |          |       |      |       |
| Balance  as of December 31, 2008 |       | $          | —     |           | $          | 90,727    |       | $             | 6,195      |      | $          | 560 |   | $ | 97,482 |   |
| Amortization                          |       | —     |       | (2,175         | )          | (192      | )          | (93           | )          | (2,460    | )          |
| Balance  as of June 30, 2009     |       | $          | —     |           | $          | 88,552    |       | $             | 6,003      |      | $          | 467 |   | $ | 95,022 |   |

 

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The summary of goodwilland other intangible assets is as follows:

 
| ** **                | ** ** | **Weighted**                 | ** ** | **As of  June 30, 2009** | ** ** | **As of  December 31, 2008**                       | ** ** |
|---------------------------|------------|------------------------------|------------|-------------------------------|------------|---------------------------------------------------------|------------|
| ** **                | ** ** | **Average   Useful   Lives** | ** ** | **Gross   Amount**            | ** ** | **Accumulated    Amortization   & Impairment** |       | **Carrying    Amount** |   | **Gross   Amount** |   | **Accumulaed    Amortization   & Impairment** |   | **Carrying    Amount** |   |
| ** **                | ** ** | ** **                   | ** ** | ** **                    | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Goodwill                  |       | —                       |       | $                             | 378,804    |                                                    | $          | 251,330 |   | $ | 127,474 |   | $ | 378,804 |   | $ | 251,330 |   | $ | 127,474 |   |
| Other  intangible assets: |       |                         |       |                          |       |                                                    |       |   |   |   |   |   |   |   |   |
| Non-compete  agreements   |       | 3.0                          |       | $                             | 3,160      |                                                    | $          | 2,693 |   | $ | 467 |   | $ | 3,160 |   | $ | 2,599 |   | $ | 561 |   |
| Trade  names              |       | —                       |       | 38,080                        |       | 27,650                                                  |       | 10,430 |   | 38,080 |   | 27,650 |   | 10,430 |   |
| Technology                |       | 14.7                         |       | 33,540                        |       | 10,136                                                  |       | 23,404 |   | 33,540 |   | 8,989 |   | 24,551 |   |
| Customer  relationships   |       | 29.6                         |       | 71,500                        |       | 10,779                                                  |       | 60,721 |   | 71,500 |   | 9,560 |   | 61,940 |   |
|                      |       | 24.2                         |       | $                             | 146,280    |                                                    | $          | 51,258 |   | $ | 95,022 |   | $ | 146,280 |   | $ | 48,798 |   | $ | 97,482 |   |

 

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

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

 

**Note 5 -Comprehensive loss**

 

Comprehensive loss for thethree and six months ended June 30 is summarized as follows:

 
| ** **                                                  | ** ** | **For The Three Months********Ended June 30,** | ** ** | **For The Six Months********Ended June 30,** | ** ** |
|-------------------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                  | ** ** | **2009**                                            | ** ** | **2008**                                          | ** ** | **2009** | ** ** | **2008** | ** ** |
| Net income (loss)                                           |       | $                                                   | (36,071    | )                                                 | $          | 3,375 |   | $ | (67,126 | ) | $ | (8,366 | ) |
| Other comprehensive income (net of tax)                     |       |                                                |       |                                              |       |   |   |   |   |
| Foreign  currency translation impact on pension liabilities |       | (1,208                                              | )          | (104                                              | )          | (689 | ) | 401 |   |
| Total comprehensive income (loss)                           |       | $                                                   | (37,279    | )                                                 | $          | 3,271 |   | $ | (67,815 | ) | $ | (7,965 | ) |

 

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

 

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

 

Componentsof Net Periodic Benefit Cost for the three and six months ended June 30:

 
| ** **                                         | ** ** | **For The Three Months********Ended June 30,** | ** ** | **For The Six Months********Ended June 30,** | ** ** |
|----------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                         | ** ** | **Pension Benefits**                                | ** ** | **Other Benefits**                                | ** ** | **Pension Benefits** | ** ** | **Other Benefits** | ** ** |
| ** **                                         | ** ** | **2009**                                            | ** ** | **2008**                                          | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** |
| Service cost-benefits  earned during the year      |       | $                                                   | 373        |                                              | $          | 812 |   | $ | 79 |   | $ | 156 |   | $ | 745 |   | $ | 1,714 |   | $ | 155 |   | $ | 312 |   |
| Interest cost on  projected benefit obligation     |       | 2,894                                               |       | 2,883                                             |       | 922 |   | 961 |   | 5,715 |   | 5,795 |   | 1,827 |   | 1,922 |   |
| Expected return on plan  assets                    |       | (3,032                                              | )          | (3,749                                            | )          | — |   | — |   | (5,977 | ) | (7,513 | ) | — |   | — |   |
| Amortization of net  transition (asset)/obligation |       | 3                                                   |       | 4                                                 |       | — |   | — |   | 6 |   | 8 |   | — |   | — |   |
| Amortization of prior  service cost (benefit)      |       | 89                                                  |       | 102                                               |       | (393 | ) | (335 | ) | 171 |   | 204 |   | (786 | ) | (670 | ) |
| Amortization of  (gain)/loss                       |       | 555                                                 |       | 478                                               |       | (127 | ) | (133 | ) | 1,087 |   | 940 |   | (256 | ) | (267 | ) |
| Total amount charged to  income                    |       | $                                                   | 882        |                                              | $          | 530 |   | $ | 481 |   | $ | 649 |   | $ | 1,747 |   | $ | 1,148 |   | $ | 940 |   | $ | 1,297 |   |

 

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Asof June 30, 2009, $5.8 million has been contributed to our sponsored pensionplans.  We presently anticipatecontributing an additional $6.8 million to fund our pension plans in 2009 for atotal of $12.6 million.

 

**Note 7 —Contingencies**

 

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

 

As of June30, 2009, we had an environmental reserve of approximately $1.5 million,related primarily to our foundry operations. This reserve is based on currentcost estimates and does not reduce estimated expenditures to net present value,but does take into account the benefit of a contractual indemnity given to usby a prior owner of our wheel-end subsidiary. The failure for the indemnitor tofulfill its obligations could result in future costs that may be material. Anycash expenditures required by us or our subsidiaries to comply with applicableenvironmental laws and/or to pay for any remediation efforts will not bereduced or otherwise affected by the existence of the environmental reserve. Wecurrently anticipate spending approximately $0.2 million per year in 2009through 2012 for monitoring the various environmental sites associated with theenvironmental reserve, including attorney and consultant costs for strategicplanning and negotiations with regulators and other potentially responsibleparties, and payment of remedial investigation costs. Based on all of theinformation presently available to us, we believe that our environmentalreserves will be adequate to cover the future costs related to the sitesassociated with the environmental reserves, and that any additional costs willnot have a material adverse effect on our financial condition, results ofoperations or cash flows. However, the discovery of additional sites, themodification of existing or promulgation of new laws or regulations, morevigorous enforcement by regulators, the imposition of joint and severalliability under CERCLA or analogous state laws, or other unanticipated eventscould also result in such a material adverse effect.

 

Thefinal Iron and Steel Foundry National Emission Standard for Hazardous AirPollutants, or NESHAP, was developed pursuant to Section 112(d) of the CleanAir Act and requires all major sources of hazardous air pollutants to installcontrols representative of maximum achievable control technology. We believethat our foundry operations are in compliance with the applicable requirementsof the Iron and Steel Foundry NESHAP.

 

Pursuantto the Recapitalization of the Company on January 21, 1998, we were indemnifiedby Phelps Dodge Corporation with respect to certain environmental liabilitiesat our Henderson and London facilities, subject to certain limitations.  At the Erie, Pennsylvania, facility, we haveobtained an environmental insurance policy to provide coverage with respect tocertain environmental liabilities. Management does not believe that the outcome of any environmentalproceedings will have a material adverse effect on our consolidated financialcondition or results of operations.

 

As of June 30, 2009, we had approximately 2,350employees, of which 644 were salaried employees with the remainder paid hourly.Unions represent approximately 1,150 of our employees, or 49% of the total. Each of our unionized facilities has aseparate contract with the union that represents the workers employed at suchfacility. The union contracts expire at various times over the next few yearswith the exception of our union contract that covers the hourly employees at ourMonterrey, Mexico, facility, which expires on an annual basis in January unlessotherwise renewed. The 2009 negotiations in Monterrey were successfullycompleted prior to the expiration of our union contract.  Contracts expiring during the remainder of 2009include our facilities at Cuyahoga Falls and Elkhart Plant 2.  Based on the consolidation of the CuyahogaFalls operations into our Erie plant, we will be ceasing operations performedby the collective bargaining unit at the Cuyahoga Falls facility and do notanticipate negotiating for a new contract at that location.  To date in 2009, we have successfullycompleted negotiations for new collective bargaining agreements at our Londonand Brillion facilities.  We do notanticipate that the outcome of any remaining 2009 negotiations will have amaterial adverse effect on our operating performance or costs.

 

**Note8 — 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, *Fair Value Measurements,*establishes a fair value hierarchy for those instruments measured at fair valuethat distinguishes between assumptions based on market data (observable inputs)and our own assumptions (unobservable inputs). Determining which category an asset or liability falls within thehierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.

 

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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 ofJune 30, 2009 are as follows:

 
| ** **                          | ** ** | **Carrying** | ** ** | **Fair Value** | ** ** |
|-------------------------------------|------------|--------------|------------|----------------|------------|
| ** **                          | ** ** | **Amount**   | ** ** | **Level 1**    | ** ** | **Level 2** | ** ** | **Level 3** | ** ** |
|                                |       |         |       |           |       |   |   |   |   |
| **Assets**                          |       |         |       |           |       |   |   |   |   |
| Marketable  securities              |       | $            | 3,900      |           |       |   |   |   | $ | 3,900 |   |
| Foreign  exchange forward contracts |       | $            | 1,005      |           |       |   | $ | 1,005 |   |   |   |
|                                |       |         |       |           |       |   |   |   |   |
| **Liabilities**                     |       |         |       |           |       |   |   |   |   |
| Interest  rate swap contracts       |       | $            | 3,113      |           |       |   | $ | 3,113 |   |   |   |
| Common  stock warrant               |       | $            | 3,926      |           |       |   |   |   | $ | 3,926 |   |
| Total  debt                         |       | $            | 628,429    |           |       |   | $ | 339,802 |   |   |   |

 

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

 

Our Level 3 assetsconsist of municipal bonds with an auction reset feature (“auction ratesecurities”) and warrants for our common stock. The bonds’ 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 tablesummarizes changes in fair value of our Level 3 assets and liabilities as of June30, 2009:

 
| ** **                         | ** ** | **Marketable   Securities** | ** ** | **Common   Stock   Warrant** | ** ** |
|------------------------------------|------------|-----------------------------|------------|------------------------------|------------|
| Balance  at December 31, 2008      |       | $                           | 5,000      |                         | $          | — |   |
| Purchase  (issuance) of securities |       | —                      |       | (4,655                       | )          |
| Unrealized  gain (loss) recognized |       | (1,100                      | )          | 729                          |       |
| Net  settlements                   |       | —                      |       | —                       |       |
| Balance  at June 30, 2009          |       | $                           | 3,900      |                         | $          | (3,926 | ) |

 

**Note9 — Segment Reporting**

 

As a part of ourcontinual monitoring of the long-term economic characteristics, products andproduction processes, class of customer, and distribution methods of ouroperating segments, we aggregate our seven operating segments into threereportable segments shown below.  Theaccounting policies of the reportable segments are the same as described in Note1, Summary of Significant Accounting Policies.

 

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| ** **          | ** ** | **Three Months Ended********June 30,** | ** ** | **Six Months Ended********June 30,** | ** ** |
|---------------------|------------|----------------------------------------|------------|--------------------------------------|------------|
| ** **          | ** ** | **2009**                               | ** ** | **2008**                             | ** ** | **2009** | ** ** | **2008** | ** ** |
| ***Net Sales***     |       |                                   |       |                                 |       |   |   |   |   |
| Wheels              |       | $                                      | 54,220     |                                 | $          | 105,154 |   | $ | 111,105 |   | $ | 209,164 |   |
| Components          |       | 73,067                                 |       | 127,359                              |       | 147,123 |   | 248,118 |   |
| Other               |       | 7,919                                  |       | 12,406                               |       | 20,554 |   | 25,847 |   |
| Consolidated  Total |       | $                                      | 135,206    |                                 | $          | 244,919 |   | $ | 278,782 |   | $ | 483,129 |   |

 
| ***Operating  Income (Loss)*** |   |    |    |   |   |    |   |    |    |
|--------------------------------|--------|---------|---------|--------|--------|---------|--------|---------|---------|
| Wheels                         |   | $       | (2,614  | )      | $      | 14,718  |   | $       | 2,874   |   | $ | 32,545 |   |
| Components                     |   | (11,329 | )       | 1,112  |   | (23,545 | )      | (11,659 | )       |
| Other                          |   | 605     |    | 2,313  |   | 3,245   |   | 4,960   |    |
| Corporate                      |   | (8,173  | )       | (9,554 | )      | (16,269 | )      | (18,642 | )       |
| Consolidated  Total            |   | $       | (21,511 | )      | $      | 8,589   |   | $       | (33,695 | ) | $ | 7,204 |   |

 
| ** **         | ** ** | **As of**         | ** ** |
|--------------------|------------|-------------------|------------|
| ** **         | ** ** | **June 30, 2009** | ** ** | **December 31, 2008** | ** ** |
| Total assets:      |       |              |       |   |   |
| Wheels             |       | $                 | 291,328    |   | $ | 191,435 |   |
| Components         |       | 255,816           |       | 285,966 |   |
| Other              |       | 33,439            |       | 38,064 |   |
| Corporate          |       | 124,142           |       | 293,085 |   |
| Consolidated total |       | $                 | 704,725    |   | $ | 808,550 |   |

 

**Note10 - Debt**

 

Debt at June 30, 2009,and December 31, 2008, consisted of the following:

 
| ** **                                | ** ** | **June 30,   2009** | ** ** | **December 31,   2008** | ** ** |
|-------------------------------------------|------------|---------------------|------------|-------------------------|------------|
| Term  Facility — Non-related Parties |       | $                   | 224,559    |                    | $          | 294,625 |   |
| Term  Facility — Related Party       |       | 73,708              |       | —                  |       |
| Senior  Subordinated Notes                |       | 275,000             |       | 275,000                 |       |
| Revolving  Credit Facility                |       | 56,070              |       | 78,444                  |       |
| Industrial  Revenue Bond                  |       | 3,100               |       | 3,100                   |       |
| Term  Facility Discount                   |       | (4,008              | )          | —                  |       |
| Total                                     |       | $                   | 628,429    |                    | $          | 651,169 |   |

 

On February 4, 2009, weamended (the “Second Amendment”) our Term Facility and Revolving CreditFacility (as defined below) under our Fourth Amended and Restated CreditAgreement, dated January 31, 2005 among Accuride, Accuride Canada, Inc.,Citicorp USA, Inc., as administrative agent, and other lender parties thereto(as amended, the “Credit Agreement”).  OnFebruary 4, 2009, we also completed a transaction (the “Sun Capital Transaction”)with an affiliate of Sun Capital Securities Group (“Sun Capital”), whichcurrently holds approximately $70.1 million principal amount of Last-Out Loansalong with approximately $3.6 million of interest accrued aspayable-in-kind.  As of June 30, 2009,fees paid associated with the amendment were $10.8 million.

 

In connection with themodification of the Last-Out Loans and pursuant to a Last-Out Debt Agreement,we issued a warrant (the “Warrant”) to Sun Capital exercisable for 25 percentof our fully-diluted common stock at an exercise price of $0.01 per share.  The grant date fair value of the warrant of$4,655 was recorded as a liability and a discount to our long-term debt andwill be amortized over the life of our Term Facility, which matures on January 31,2012.  The warrant liability is marked tomarket each period.  During the threemonths ended June 30, 2009, we recorded an unrealized loss of $1,599 and duringthe six months ended June 30, 2009 we recorded unrealized gains of $729 as acomponent of Other income (expense) for the warrant liability.

 

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Under the terms of ourCredit Agreement, there are certain restrictive covenants that limit thepayment of cash dividends and establish minimum financial ratios. Our seniorcredit facilities and the indenture governing our Registered SeniorSubordinated Notes restrict our ability to pay dividends. In addition, oursenior credit facilities include other more restrictive covenants and prohibitus from prepaying our other indebtedness, including our Registered Senior SubordinatedNotes, while borrowings under our senior credit facilities are outstanding.

 

As explained in Note 1,we have obtained a temporary waiver agreement from our senior lendors whichwaives our compliance with our financial covenants and places additional restrictionson our business for the duration of the term of the temporary waiveragreement.  We are currently negotiatingamendments to our Credit Agreement and we are negotiating alternatives such asadditional amendments or waivers, the sale of non-core assets, and/oralternative debt structures, such as debt for debt or debt for equityagreements.  The Board has appointed aspecial committee of independent directors to identify and, with the input ofmanagement and our financial advisors, evaluate alternatives to recommend anappropriate course of action to the full board. However, the success of any such alternative actions will depend on manyfactors, some of which are out of management’s control.  Therefore, we can provide no assurance as tothe success of such actions.

 

To maintain compliancewith the Temporary Waiver, the Company did not pay the approximately $11.7million of interest due August 3, 2009, to the holders of its 8 1⁄2 percentSenior Subordinated Notes due 2015 (Notes) and intends to use the existing30-day grace period provided in the Note indenture to continue discussionsregarding a capital restructuring with its lenders.  Under the indenture, the failure to make thisinterest payment would not constitute an event of default that permitsacceleration of the Notes until the expiration of the 30-day grace period.

 

Due to the short termnature of the temporary waiver, we have classified our debt as current as of June30, 2009 in accordance with U.S. GAAP. The Company is currently discussing the possibility of a waiverextension with lenders.

 

If we are unable toobtain permanent waivers, extensions of the waivers, or restructure the Term BLoan Facility prior to August 15, 2009, and satisfactorily address the SeniorSubordinated Notes interest payment due at the end of the grace period on August31, 2009, a default would arise with respect to these obligations, which couldalso trigger cross accelerations on all our indebtedness.  In such an event, we would be required torepay all outstanding indebtedness immediately. We would not have sufficient liquidity available to repay suchindebtedness and, unless we were able to obtain additional capital resources orwaivers, we would be unable to continue to fund our operations or continue ourbusiness, thereby potentially requiring us to seek relief under the U.S.Bankruptcy Code.

 

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

 

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

 

**CONDENSEDCONSOLIDATED BALANCE SHEET**

 
| ** **                                     | ** ** | **June 30, 2009** | ** ** |
|------------------------------------------------|------------|------------------------|------------|
| ** **                                     | ** ** | **Parent**             | ** ** | **Guarantor   Subsidiaries** | ** ** | **Non-guarantor   Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| **ASSETS**                                     |       |                   |       |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                      |       | $                      | 35,898     |   | $ | (218 | ) | $ | 11,877 |   | — |   | $ | 47,557 |   |
| Accounts receivable, net                       |       | 29,709                 |       | 184,534 |   | 5,011 |   | $ | (146,174 | ) | 73,080 |   |
| Inventories and supplies                       |       | 22,707                 |       | 49,584 |   | 9,679 |   | (565 | ) | 81,405 |   |
| Other current assets                           |       | 2,591                  |       | 2,332 |   | 4,034 |   | — |   | 8,957 |   |
| Total current assets                           |       | 90,905                 |       | 236,232 |   | 30,601 |   | (146,739 | ) | 210,999 |   |
| Property, plant, and equipment, net            |       | 38,025                 |       | 165,754 |   | 43,455 |   | — |   | 247,234 |   |
| Goodwill                                       |       | 66,973                 |       | 52,460 |   | 8,041 |   | — |   | 127,474 |   |
| Intangible assets, net                         |       | 467                    |       | 94,555 |   | — |   | — |   | 95,022 |   |
| Investment in subsidiaries and affiliates      |       | 315,329                |       | — |   | — |   | (315,329 | ) | — |   |
| Other non-current assets                       |       | 13,592                 |       | 1,677 |   | 8,727 |   | — |   | 23,996 |   |
| TOTAL                                          |       | $                      | 525,291    |   | $ | 550,678 |   | $ | 90,824 |   | $ | (462,068 | ) | $ | 704,725 |   |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY** |       |                   |       |   |   |   |   |   |   |   |   |
| Accounts payable                               |       | $                      | 8,317      |   | $ | 29,646 |   | $ | 2,208 |   | — |   | $ | 40,171 |   |
| Accrued payroll and compensation               |       | 3,198                  |       | 13,530 |   | 5,213 |   | — |   | 21,941 |   |
| Accrued interest payable                       |       | 12,312                 |       | 9 |   | 332 |   | — |   | 12,653 |   |
| Debt                                           |       | 603,329                |       | 3,100 |   | 22,000 |   | — |   | 628,429 |   |
| Accrued and other liabilities                  |       | 8,943                  |       | 273,185 |   | 1,819 |   | $ | (255,046 | ) | 28,901 |   |
| Total current liabilities                      |       | 636,099                |       | 319,470 |   | 31,572 |   | (255,046 | ) | 732,095 |   |
| Deferred and non-current income taxes          |       | 6,997                  |       | 13,247 |   | 729 |   | — |   | 20,973 |   |
| Other non-current liabilities                  |       | 23,652                 |       | 58,679 |   | 10,783 |   | — |   | 93,114 |   |
| Stockholders’ equity (deficiency)         |       | (141,457               | )          | 159,282 |   | 47,740 |   | (207,022 | ) | (141,457 | ) |
| TOTAL                                          |       | $                      | 525,291    |   | $ | 550,678 |   | $ | 90,824 |   | $ | (462,068 | ) | $ | 704,725 |   |

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

 

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**CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS**

 
| ** **                                  | ** ** | **Three Months Ended June 30, 2009** | ** ** |
|---------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                  | ** ** | **Parent**                                | ** ** | **Guarantor   Subsidiaries** | ** ** | **Non-guarantor   Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                                   |       | $                                         | 68,603     |   | $ | 69,542 |   | $ | 18,916 |   | $ | (21,855 | ) | $ | 135,206 |   |
| Cost of goods sold                          |       | 70,786                                    |       | 73,415 |   | 21,881 |   | (21,855 | ) | 144,227 |   |
| Gross loss                                  |       | (2,183                                    | )          | (3,873 | ) | (2,965 | ) | — |   | (9,021 | ) |
| Operating expenses                          |       | 9,278                                     |       | 3,098 |   | 114 |   | — |   | 12,490 |   |
| Loss from operations                        |       | (11,461                                   | )          | (6,971 | ) | (3,079 | ) | — |   | (21,511 | ) |
| Other income (expense):                     |       |                                      |       |   |   |   |   |   |   |   |   |
| Interest expense, net                       |       | (15,211                                   | )          | (54 | ) | (326 | ) | — |   | (15,591 | ) |
| Equity in earnings (losses) of subsidiaries |       | (7,523                                    | )          | — |   | — |   | 7,523 |   | — |   |
| Other income (expense), net                 |       | (1,846                                    | )          | 75 |   | 3,314 |   | — |   | 1,543 |   |
| Income (loss) before income taxes           |       | (36,041                                   | )          | (6,950 | ) | (91 | ) | 7,523 |   | (35,559 | ) |
| Income tax provision                        |       | 30                                        |       | — |   | 482 |   | — |   | 512 |   |
| Net loss                                    |       | $                                         | (36,071    | ) | $ | (6,950 | ) | $ | (573 | ) | $ | 7,523 |   | $ | (36,071 | ) |

 
| ** **                         | ** ** | **Three Months Ended June 30, 2008** | ** ** |
|------------------------------------|------------|-------------------------------------------|------------|
| ** **                         | ** ** | **Parent**                                | ** ** | **Guarantor   Subsidiaries** | ** ** | **Non-guarantor   Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                          |       | $                                         | 69,089     |   | $ | 173,376 |   | $ | 35,796 |   | $ | (33,342 | ) | $ | 244,919 |   |
| Cost of goods sold                 |       | 60,121                                    |       | 163,927 |   | 32,863 |   | (33,342 | ) | 223,569 |   |
| Gross profit                       |       | 8,968                                     |       | 9,449 |   | 2,933 |   | — |   | 21,350 |   |
| Operating expenses                 |       | 9,708                                     |       | 2,841 |   | 212 |   | — |   | 12,761 |   |
| Income (loss) from operations      |       | (740                                      | )          | 6,608 |   | 2,721 |   | — |   | 8,589 |   |
| Other income (expense):            |       |                                      |       |   |   |   |   |   |   |   |   |
| Interest expense, net              |       | (6,698                                    | )          | (26 | ) | (1,760 | ) | — |   | (8,484 | ) |
| Equity in earnings of subsidiaries |       | 8,489                                     |       | — |   | — |   | (8,489 | ) | — |   |
| Other income, net                  |       | 607                                       |       | 114 |   | 212 |   | — |   | 933 |   |
| Income (loss) before income taxes  |       | 1,658                                     |       | 6,696 |   | 1,173 |   | (8,489 | ) | 1,038 |   |
| Income tax benefit                 |       | (1,717                                    | )          | — |   | (620 | ) | — |   | (2,337 | ) |
| Net income                         |       | $                                         | 3,375      |   | $ | 6,696 |   | $ | 1,793 |   | $ | (8,489 | ) | $ | 3,375 |   |

 

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| ** **                         | ** ** | **Six Months Ended June 30, 2009** | ** ** |
|------------------------------------|------------|-----------------------------------------|------------|
| ** **                         | ** ** | **Parent**                              | ** ** | **Guarantor   Subsidiaries** | ** ** | **Non-guarantor   Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                          |       | $                                       | 132,858    |   | $ | 148,370 |   | $ | 41,075 |   | $ | (43,521 | ) | $ | 278,782 |   |
| Cost of goods sold                 |       | 129,874                                 |       | 161,616 |   | 39,794 |   | (43,521 | ) | 287,763 |   |
| Gross profit (loss)                |       | 2,984                                   |       | (13,246 | ) | 1,281 |   | — |   | (8,981 | ) |
| Operating expenses                 |       | 18,312                                  |       | 6,062 |   | 340 |   | — |   | 24,714 |   |
| Income (loss) from operations      |       | (15,328                                 | )          | (19,308 | ) | 941 |   | — |   | (33,695 | ) |
| Other income (expense):            |       |                                    |       |   |   |   |   |   |   |   |   |
| Interest expense, net              |       | (27,749                                 | )          | (67 | ) | (1,078 | ) | — |   | (28,894 | ) |
| Loss on extinguishment of debt     |       | (5,389                                  | )          | — |   | — |   | — |   | (5,389 | ) |
| Equity in earnings of subsidiaries |       | (17,380                                 | )          | — |   | — |   | 17,380 |   | — |   |
| Other income (expense), net        |       | (260                                    | )          | 154 |   | 2,460 |   | — |   | 2,354 |   |
| Income (loss) before income taxes  |       | (66,106                                 | )          | (19,221 | ) | 2,323 |   | 17,380 |   | (65,624 | ) |
| Income tax provision               |       | 1,020                                   |       | — |   | 482 |   | — |   | 1,502 |   |
| Net income (loss)                  |       | $                                       | (67,126    | ) | $ | (19,221 | ) | $ | 1,841 |   | $ | 17,380 |   | $ | (67,126 | ) |

 
| ** **                         | ** ** | **Six Months Ended June 30, 2008** | ** ** |
|------------------------------------|------------|-----------------------------------------|------------|
| ** **                         | ** ** | **Parent**                              | ** ** | **Guarantor   Subsidiaries** | ** ** | **Non-guarantor   Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| Net sales                          |       | $                                       | 100,623    |   | $ | 339,110 |   | $ | 80,350 |   | $ | (36,954 | ) | $ | 483,129 |   |
| Cost of goods sold                 |       | 79,118                                  |       | 333,206 |   | 74,140 |   | (36,954 | ) | 449,510 |   |
| Gross profit                       |       | 21,505                                  |       | 5,904 |   | 6,210 |   | — |   | 33,619 |   |
| Operating expenses                 |       | 19,999                                  |       | 6,002 |   | 414 |   | — |   | 26,415 |   |
| Income (loss) from operations      |       | 1,506                                   |       | (98 | ) | 5,796 |   | — |   | 7,204 |   |
| Other income (expense):            |       |                                    |       |   |   |   |   |   |   |   |   |
| Interest expense, net              |       | (20,696                                 | )          | (50 | ) | (3,452 | ) | — |   | (24,198 | ) |
| Equity in earnings of subsidiaries |       | 2,145                                   |       | — |   | — |   | (2,145 | ) | — |   |
| Other income (expense), net        |       | (339                                    | )          | 210 |   | 8 |   | — |   | (121 | ) |
| Income (loss) before income taxes  |       | (17,384                                 | )          | 62 |   | 2,352 |   | (2,145 | ) | (17,115 | ) |
| Income tax provision (benefit)     |       | (9,018                                  | )          | — |   | 269 |   | — |   | (8,749 | ) |
| Net income (loss)                  |       | $                                       | (8,366     | ) | $ | 62 |   | $ | 2,083 |   | $ | (2,145 | ) | $ | (8,366 | ) |

 

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**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

** **
| ** **                                                                                          | ** ** | **Six  Months Ended June 30, 2009** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                                          | ** ** | **Parent   Company**                     | ** ** | **Guarantor    Subsidiaries** | ** ** | **Non-guarantor    Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                               |       |                                     |       |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                   |       | $                                        | (67,126    | ) | $ | (19,221 | ) | $ | 1,841 |   | $ | 17,380 |   | $ | (67,126 | ) |
| Adjustments to reconcile net income (loss) to net  cash provided by (used in) operating activities: |       |                                     |       |   |   |   |   |   |   |   |   |
| Depreciation                                                                                        |       | 3,722                                    |       | 15,672 |   | 2,892 |   | — |   | 22,286 |   |
| Amortization — deferred financing costs                                                        |       | 2,112                                    |       | 2 |   | 13 |   | — |   | 2,127 |   |
| Amortization — other intangible assets                                                         |       | 93                                       |       | 2,367 |   | — |   | — |   | 2,460 |   |
| Loss on extinguishment of debt                                                                      |       | 5,389                                    |       | — |   | — |   | — |   | 5,389 |   |
| Change in warrant liability                                                                         |       | (729                                     | )          | — |   | — |   | — |   | (729 | ) |
| Paid-in-kind interest                                                                               |       | 3,643                                    |       | — |   | — |   | — |   | 3,643 |   |
| Loss (gain) on disposal of assets                                                                   |       | (170                                     | )          | 139 |   | (1 | ) | — |   | (32 | ) |
| Equity in earnings of subsidiaries and affiliates                                                   |       | 17,380                                   |       | — |   | — |   | (17,380 | ) | — |   |
| Non-cash stock-based compensation                                                                   |       | 124                                      |       | — |   | — |   | — |   | 124 |   |
| Change in other operating items                                                                     |       | 5,412                                    |       | 8,252 |   | (14,219 | ) | — |   | (555 | ) |
| Net cash provided by (used in) operating activities                                                 |       | (30,150                                  | )          | 7,211 |   | (9,474 | ) | — |   | (32,413 | ) |
|                                                                                                |       |                                     |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                               |       |                                     |       |   |   |   |   |   |   |   |   |
| Purchases of property, plant, and equipment                                                         |       | (4,459                                   | )          | (5,942 | ) | (328 | ) | — |   | (10,729 | ) |
| Other                                                                                               |       | —                                   |       | 146 |   | — |   | — |   | 146 |   |
| Net cash used in investing activities                                                               |       | (4,459                                   | )          | (5,796 | ) | (328 | ) | — |   | (10,583 | ) |
|                                                                                                |       |                                     |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                               |       |                                     |       |   |   |   |   |   |   |   |   |
| Net change in revolving credit advance                                                              |       | (14,374                                  | )          | — |   | (8,000 | ) | — |   | (22,374 | ) |
| Other                                                                                               |       | (10,749                                  | )          | — |   | — |   | — |   | (10,749 | ) |
| Net cash used in financing activities                                                               |       | (25,123                                  | )          | — |   | (8,000 | ) | — |   | (33,123 | ) |
|                                                                                                |       |                                     |       |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                                                    |       | (59,732                                  | )          | 1,415 |   | (17,802 | ) | — |   | (76,119 | ) |
| Cash and cash equivalents, beginning of year                                                        |       | 95,630                                   |       | (1,633 | ) | 29,679 |   | — |   | 123,676 |   |
| Cash and cash equivalents, end of period                                                            |       | $                                        | 35,898     |   | $ | (218 | ) | $ | 11,877 |   | $ | — |   | $ | 47,557 |   |

 
| ** **                                                                                          | ** ** | **Six  Months Ended June 30, 2008** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                                          | ** ** | **Parent Company**                       | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                               |       |                                     |       |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                   |       | $                                        | (8,366     | ) | $ | 62 |   | $ | 2,083 |   | $ | (2,145 | ) | $ | (8,366 | ) |
| Adjustments to reconcile net income (loss) to net  cash provided by (used in) operating activities: |       |                                     |       |   |   |   |   |   |   |   |   |
| Depreciation                                                                                        |       | 3,833                                    |       | 13,336 |   | 3,204 |   | — |   | 20,373 |   |
| Amortization — deferred financing costs                                                        |       | 602                                      |       | 2 |   | 12 |   | — |   | 616 |   |
| Amortization — other intangible assets                                                         |       | 353                                      |       | 2,442 |   | — |   | — |   | 2,795 |   |
| Loss on disposal of assets                                                                          |       | 16                                       |       | 17 |   | 29 |   | — |   | 62 |   |
| Deferred income taxes                                                                               |       | (11,045                                  | )          | — |   | 815 |   | — |   | (10,230 | ) |
| Equity in earnings of subsidiaries and affiliates                                                   |       | (2,145                                   | )          | — |   | — |   | 2,145 |   | — |   |
| Non-cash stock-based compensation                                                                   |       | 1,710                                    |       | — |   | — |   | — |   | 1,710 |   |
| Change in other operating items                                                                     |       | (28,512                                  | )          | (5,315 | ) | (5,546 | ) | — |   | (39,373 | ) |
| Net cash provided by (used in) operating activities                                                 |       | (43,554                                  | )          | 10,544 |   | 597 |   | — |   | (32,413 | ) |
|                                                                                                |       |                                     |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                               |       |                                     |       |   |   |   |   |   |   |   |   |
| Purchases of property, plant, and equipment                                                         |       | (7,798                                   | )          | (11,663 | ) | (391 | ) | — |   | (19,852 | ) |
| Other                                                                                               |       | (5,826                                   | )          | 184 |   | — |   | — |   | (5,642 | ) |
| Net cash used in investing activities                                                               |       | (13,624                                  | )          | (11,479 | ) | (391 | ) | — |   | (25,494 | ) |
|                                                                                                |       |                                     |       |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                               |       |                                     |       |   |   |   |   |   |   |   |   |
| Other                                                                                               |       | 199                                      |       | — |   | — |   | — |   | 199 |   |
| Net cash provided by financing activities                                                           |       | 199                                      |       | — |   | — |   | — |   | 199 |   |
|                                                                                                |       |                                     |       |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                                                    |       | (56,979                                  | )          | (935 | ) | 206 |   | — |   | (57,708 | ) |
| Cash and cash equivalents, beginning of year                                                        |       | 85,940                                   |       | (2,474 | ) | 7,469 |   | — |   | 90,935 |   |
| Cash and cash equivalents, end of year                                                              |       | $                                        | 28,961     |   | $ | (3,409 | ) | $ | 7,675 |   | $ | — |   | $ | 33,227 |   |

 

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**Item 2. Management’s Discussion and Analysis of FinancialCondition and Results of Operations.**

 

The accompanyingunaudited condensed interim consolidated financial statements are prepared inconformity with accounting principles generally accepted in the United Statesof America and such principles are applied on a basis consistent with theinformation reflected in our Form 10-K for the year ended December 31, 2008filed with the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America have beencondensed or omitted pursuant to the rules and regulations promulgated by theSEC.  In the opinion of management, theinterim financial information includes all adjustments and accruals, consistingonly of normal recurring adjustments, which are necessary for a fairpresentation of results for the respective interim periods.  The results of operations for the three andsix months ended June 30, 2009 are not necessarily indicative of the results tobe expected for the full fiscal year ending December 31, 2009 or any interimperiod.  Except for the historicalinformation contained herein, this quarterly report on Form 10-Q containsforward-looking statements that involve risks and uncertainties.  Our actual results may differ materially fromthose indicated by such forward-looking statements.

 

Overview

 

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

 

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

 

The heavy- andmedium-duty truck and commercial trailer markets and the related aftermarketare the primary drivers of our sales. These markets are, in turn, directlyinfluenced by conditions in the North American truck industry generally and byoverall economic growth and consumer spending.  Accordingly, the current economic conditions described above have led toa severe downturn in the North American truck and vehicle supply industries,which has resulted in a significant decline in our sales volume.  Furthermore, industry analysts expect thatdemand in 2009 will be lower than in 2008. Net sales for the three months ended June 30, 2009, were $135.2 millioncompared to net sales of $244.9 million for the three months ended June 30,2008.  We cannot accurately predict howprolonged this downturn may be, and this downturn may lead to further reducedspending and deterioration in the North American truck and vehicle supplyindustries for the foreseeable future. Delayed or failed economic recoverycould have a material adverse effect on our business, results of operations, orfinancial condition.

 

On February 4, 2009, wecompleted the Sun Capital Transaction and the Second Amendment to the termfacility (the “Term Facility”) and revolving credit facility (the “RevolvingCredit Facility”) under our Credit Agreement.  Sun Capital currently holds approximately$70.1 million principal amount of the indebtedness outstanding under the TermFacility (the “Last-Out Loans”) and approximately $3.6 million of interestaccrued as payable-in-kind.

 

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

 

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In connection with themodification of the Last-Out Loans and pursuant to a Last-Out Debt Agreement, datedFebruary 4, 2009, that Accuride entered into with Sun Capital, we issued theWarrant to Sun Capital exercisable for 25 percent of our fully-diluted commonstock, expanded our board of directors to 12 members and granted Sun Capitalthe right to elect the five directors and nominate one independent director.  Sun Capital has not yet nominated itsindependent director and, prior to such nomination, Sun Capital has 50 percentof the voting power of the Board of Directors. We amended our bylaws to require approval of two thirds of the Board ofDirectors for certain corporate actions and issued a preferred share (the “PreferredShare”) to Sun Capital that gives Sun Capital the right to approve certaincorporate actions so long as Sun Capital maintains 10 percent ownership of ourcommon stock.  Sun Capital has alsoagreed to provide customary strategic, business and operational support toAccuride.  Sun Capital currently ownsapproximately 9.9 percent of our outstanding common stock.

 

As of June 30, 2009, feespaid associated with the Second Amendment were $10.8 million.

 

Subsequent to the Second Amendment, we entered into a Temporary WaiverAgreement (the “Temporary Waiver”) with respect to our Credit Agreement amongthe Company, Accuride Canada Inc., the lenders party thereto, theadministrative agent for the lenders, and the other agents party thereto. TheTemporary Waiver is dated July 1, 2009 and became effective on July 8, 2009.

 

Pursuant to the terms of the Temporary Waiver, the Lenders have agreedto waive our compliance with the following financial covenants under the CreditAgreement for the fiscal quarter ended June 30, 2009 for the duration of theTemporary Waiver Period: (i) the Senior Secured Leverage Ratio set forth in Section5.04(a), (ii) the Interest Coverage Ratio set forth in Section 5.04(c) and (iii)the Fixed Charge Coverage Ratio set forth in Section 5.04(d).  The Company’s failure to comply with any ofthese covenants would be an immediate event of default under the CreditAgreement (each default a “Potential Default”).  The “Temporary Waiver Period” terminates on August15, 2009, unless terminated earlier as the result of, among other things: (i) anevent of default under the Credit Agreement that is not a Potential Default, (ii)payment by the Company of the interest payment due and owing on August 1, 2009to the holders of the Company’s 8 1 / 2 % Senior Subordinated Notes due 2015 and (iii) thefailure by the Company or the subsidiary guarantors to comply with the termsand provisions of the Temporary Waiver.

 

Under the TemporaryWaiver: (i) interest on advances and all outstanding obligations under theCredit Agreement will accrue at an annual rate of 2.0% plus the otherwiseapplicable rate during the Temporary Waiver Period, (ii) the Company and itssubsidiaries must comply with certain restrictions on incurring additionaldebt, making investments and selling assets and (iii) the Company must complywith a minimum liquidity requirement.  Contemporaneously with the Temporary Waiver,Citicorp USA, Inc. has resigned as administrative agent and the lenders haveappointed Deutsche Bank Trust Company Americas to serve as administrativeagent.

 

Under U.S. GAAP, under anevent of default of financial covenants associated with debt agreements, allamounts outstanding shall be classified within current liabilities on thebalance sheet.  Although the Company hasobtained the temporary waiver, the Company has classified all outstandingamounts under its Fourth Amended and Restated Credit Agreement, and due tocross-acceleration provisions, its senior subordinated notes as currentliabilities as of June 30, 2009.

 

To maintain compliancewith the Temporary Waiver, the Company did not pay the approximately $11.7million of interest due August 3, 2009, to the holders of its 8 1⁄2 percentSenior Subordinated Notes due 2015 (Notes) and intends to use the existing30-day grace period provided in the Note indenture to continue discussionsregarding a capital restructuring with its lenders.  Under the indenture, the failure to make thisinterest payment would not constitute an event of default that permitsacceleration of the Notes until the expiration of the 30-day grace period.

 

Due to the short termnature of the temporary waiver, we have classified our debt as current as of June30, 2009 in accordance with U.S. GAAP. The Company is currently discussing the possibility of a waiverextension with lenders.

 

If we are unable toobtain permanent waivers, extensions of the waivers, or restructure the Term BLoan Facility prior to August 15, 2009, and satisfactorily address the SeniorSubordinated Notes interest payment due at the end of the grace period on August31, 2009, a default would arise with respect to these obligations, which couldalso trigger cross accelerations on all our indebtedness.  In such an event, we would be required torepay all outstanding indebtedness immediately. We would not have sufficient liquidity available to repay suchindebtedness and, unless we were able to obtain additional capital resources orwaivers, we would be unable to continue to fund our operations or continue ourbusiness, thereby potentially requiring us to seek relief under the U.S.Bankruptcy Code.

 

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**Resultsof Operations**

 

***ThreeMonths Ended June 30, 2009 Compared to the Three Months Ended June 30, 2008***

The following table setsforth certain income statement information of Accuride for the three monthsended June 30, 2009 and June 30, 2008:

 
| **(Dollars in thousands)**      |   | **Fiscal  2009** |    | **Fiscal  2008** |   |
|---------------------------------|--------|------------------|---------|------------------|--------|
| Net  sales:                     |   |             |    |             |   |   |   |   |   |
| Wheels                          |   | $                | 54,220  |             | 40.1   | % | $ | 105,154 |   | 43.0 | % |
| Components                      |   | 73,067           |    | 54.0             | %      | 127,359 |   | 52.0 | % |
| Other                           |   | 7,919            |    | 5.9              | %      | 12,406 |   | 5.0 | % |
| Total  net sales                |   | $                | 135,206 |             | 100.0  | % | $ | 244,919 |   | 100.0 | % |
| Gross  profit (loss):           |   |             |    |             |   |   |   |   |   |
| Wheels                          |   | (843             | )       | (1.6             | )%     | 17,072 |   | 16.2 | % |
| Components                      |   | (9,100           | )       | (12.5            | )%     | 2,873 |   | 2.3 | % |
| Other                           |   | 1,503            |    | 19.0             | %      | 3,378 |   | 27.2 | % |
| Corporate                       |   | (581             | )       | —           | %      | (1,973 | ) | — | % |
| Total  gross profit (loss)      |   | (9,021           | )       | (6.7             | )%     | 21,350 |   | 8.7 | % |
| Operating  expenses             |   | 12,490           |    | 9.2              | %      | 12,761 |   | 5.2 | % |
| Income  (loss) from operations  |   | (21,511          | )       | (15.9            | )%     | 8,589 |   | 3.5 | % |
| Interest  expense, net          |   | (15,591          | )       | (11.5            | )%     | (8,484 | ) | (3.5 | )% |
| Other  income (loss), net       |   | 1,543            |    | 1.1              | %      | 933 |   | 0.4 | % |
| Income  tax provision (benefit) |   | 512              |    | 0.4              | %      | (2,337 | ) | (1.0 | )% |
| Net  income (loss)              |   | $                | (36,071 | )                | (26.7  | )% | $ | 3,375 |   | 1.4 | % |

 

**Net Sales.** Consolidated net sales for the three months ended June 30, 2009, were$135.2 million, which was a decrease of 44.8%, compared to net sales of $244.9million for the three months ended June 30, 2008.  The decrease in net sales is primarily aresult of the reduced demand in the commercial vehicle industry.  Sales decreased in the Wheels and Componentssegments by 48.4% and 42.6%, respectively.

 

**Gross Profit. **Consolidated gross profit for the three months ended June30, 2009, decreased $30.4 million to a loss of $9.0 million.  Gross profit in the Wheels segment decreased$17.9 million to a loss of $0.8 million primarily due to the contribution loston the reduced sales demand of $51.0 million. Gross profit in the Components segment decreased $12.0 million to a lossof $9.1 million due to reduced sales of $54.3 million and recognition of alease abandonment charge of $3.2 million.

 

**Operating Expenses. **Operating expenses decreased $0.3 million to $12.5million for the three months ended June 30, 2009 from $12.8 million for thethree months ended June 30, 2008.  Thiswas primarily due to decreases in salary related expenses resulting fromreduced headcount and other elimination or suspension of other certain wagesand benefits, partially offset by $1.5 million of expenses incurred in thecurrent period related to professional and other fees related to the TemporaryWaiver associated with our Credit Agreement.

 

**Interest Expense. **Net interest expenseincreased $7.1 million to $15.6 million for the three months ended June 30,2009 from $8.5 million for the three months ended June 30, 2008.  The increase is primarily attributable toincreased rates on our Term Facility resulting in $2.8 million in incrementalexpense and $0.6 million of non-cash unrealized gains from the mark to marketof our interest rate swap agreements in the current period compared to $3.4million of unrealized gains in the comparable quarter in 2008.  Interest expense recognized in the currentperiod included $1.4 million related to the outstanding revolver and $0.9million of increased amortization of deferred financing fees and otherdiscounts.  Approximately $2.3 million ofinterest expense recognized in the current period was accrued aspayable-in-kind to Sun Capital and does not impact cash during 2009.

 

**Income Tax. **Income tax expense in the three months ended June 30,2009, was $0.5 million on pre-tax losses of $35.6 million compared to a taxbenefit of $2.3 million on pre-tax gains of $1.0 million recognized in thethree months ended June 30, 2008.  Due toour recent history of U.S. operating and taxable losses, the inconsistency ofthese profits, and the uncertainty of our financial outlook, we continue tomaintain a full valuation allowance against our domestic deferred tax assets.

 

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**Net Loss. **We had a netloss of $36.1 million for the three months ended June 30,2009 compared to net income of $3.4 million for the three months ended June 30,2008.  This was primarily a result of thelower gross profit due to the reduction in sales volume.

 

***SixMonths Ended June 30, 2009 Compared to the Six Months Ended June 30, 2008***

The following table setsforth certain income statement information of Accuride for the six months endedJune 30, 2009 and June 30, 2008:

 
| **(In thousands except per share data)** |   | **Fiscal  2009** |    | **Fiscal  2008** |   |
|------------------------------------------|--------|------------------|---------|------------------|--------|
| Net  sales:                              |   |             |    |             |   |   |   |   |   |
| Wheels                                   |   | $                | 111,105 |             | 39.8   | % | $ | 209,164 |   | 43.3 | % |
| Components                               |   | 147,123          |    | 52.8             | %      | 248,118 |   | 51.3 | % |
| Other                                    |   | 20,554           |    | 7.4              | %      | 25,847 |   | 5.4 | % |
| Total  net sales                         |   | 278,782          |    | 100.0            | %      | 483,129 |   | 100.0 | % |
| Gross  profit (loss):                    |   |             |    |             |   |   |   |   |   |
| Wheels                                   |   | 6,740            |    | 6.1              | %      | 37,243 |   | 17.8 | % |
| Components                               |   | (19,551          | )       | (13.3            | )%     | (7,942 | ) | (3.2 | )% |
| Other                                    |   | 5,367            |    | 26.1             | %      | 7,188 |   | 27.8 | % |
| Corporate                                |   | (1,537           | )       | —           | %      | (2,870 | ) | — | % |
| Total  gross profit (loss)               |   | (8,981           | )       | (3.2             | )%     | 33,619 |   | 7.0 | % |
| Operating  expenses                      |   | 24,714           |    | 8.9              | %      | 26,415 |   | 5.5 | % |
| Income  (loss) from operations           |   | (33,695          | )       | (12.1            | )%     | 7,204 |   | 1.5 | % |
| Interest  expense, net                   |   | (28,894          | )       | (10.4            | )%     | (24,198 | ) | (5.0 | )% |
| Loss  on extinguishment of debt          |   | (5,389           | )       | (1.9             | )%     | — |   | — |   |
| Other  income (loss), net                |   | 2,354            |    | 0.8              | %      | (121 | ) | (0.0 | )% |
| Income  tax provision (benefit)          |   | 1,502            |    | 0.5              | %      | (8,749 | ) | (1.8 | )% |
| Net  income (loss)                       |   | $                | (67,126 | )                | (24.1  | )% | $ | (8,366 | ) | (1.7 | )% |

 

**Net sales.** Net sales for the six months ended June 30,2009 were $278.8 million, which was a decrease of 42.3% compared to net salesof $483.1 million for the six months ended June 30, 2008.  The decrease in net sales was realized atboth of the larger segments and was primarily a result of the reduced demand in2009.

 

**Gross profit. **Gross profit decreased $42.6 million to a loss of $9.0million for the six months ended June 30, 2009 from profit of $33.6 million forthe six months ended June 30, 2008, primarily due to the $204.3 millionreduction in sales. Gross profit in the Components segment in the current year includeda lease abandonment charge of $3.2 million.

 

**Operating expenses.** Operating expenses decreased $1.7 million to $24.7 million for the sixmonths ended June 30, 2009 from $26.4 million for the six months ended June 30,2008.  This was primarily due todecreases in salary related expenses resulting from reduced headcount and otherelimination or suspension of other certain wages and benefits, partially offsetby $1.5 million of expenses incurred in the current year related to feesrelated to the Temporary Waiver associated with our Credit Agreement.

 

**Interest expense, net. **Net interest expenseincreased $4.7 million to $28.9 million for the six months ended June 30, 2009from $24.2 million for the six months ended June 30, 2008.  The increase is attributable to having ahigher rate on our Term Facility, resulting in $4.1 million of incrementalexpense and revolver interest of $2.5 million in the current year compared tohaving no outstanding revolver in the prior year, partially offset by $2.6million of additional unrealized gains from our interest rate swap agreementsin the current year.  Interest expenserecognized in the current period included $0.7 million of increasedamortization of deferred financing fees and other discounts.  Approximately $3.6 million of interestexpense recognized in the current year was accrued as payable-in-kind to SunCapital and does not impact cash during 2009.

 

**Net loss. **We had a netloss of $67.1 million for the six months ended June 30,2009 compared to a net loss of $8.4 million for the six months ended June 30,2008.  This was primarily a result of thelower gross profit due to the reduction in sales demand.

 

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***Changes in Financial Condition***

 

At June 30, 2009, we hadtotal assets of $704.7 million, as compared to $808.6 million at December 31,2008.  The $103.9 million, or 12.8%,decrease in total assets during the six months ended June 30, 2009 primarilyresulted from the reduction of cash of $76.1 million and reduction of inventoryof $15.5 million partially offset by an increase in working capitalassets.  We define working capital ascurrent assets less current liabilities, excluding net debt.

 

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

 

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

 
| ** **                        | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|--------------|------------|------------------|------------|
| ** **                        | ** ** | **2009**     | ** ** | **2008**         | ** ** |
| Accounts  receivable              |       | $            | 73,080     |             | $          | 78,219 |   |
| Inventories  and supplies         |       | 81,405       |       | 97,306           |       |
| Deferred  income taxes (current)  |       | 1,955        |       | 1,955            |       |
| Other  current assets             |       | 7,002        |       | 6,603            |       |
| Accounts  payable                 |       | (40,171      | )          | (63,937          | )          |
| Accrued  payroll and compensation |       | (21,941      | )          | (19,651          | )          |
| Accrued  interest payable         |       | (12,653      | )          | (12,505          | )          |
| Accrued  workers compensation     |       | (7,797       | )          | (7,969           | )          |
| Other  current liabilities        |       | (21,104      | )          | (21,556          | )          |
| Working  Capital                  |       | $            | 59,776     |             | $          | 58,465 |   |

 

Significant changes inworking capital from December 31, 2008 include:

·             a decrease in receivables of $5.1 milliondue to the comparative decrease in revenue in the months leading up to therespective period-end dates;

·             a decrease in inventories of $15.9million due to reduction in sales volume and demand;

·             a decrease of accounts payable of $23.7million primarily due to the reduction in raw material purchases in the monthsleading up to the respective period-end dates;

·             an increase in accrued payroll andcompensation of $2.3 million due to severance related charges.

 

## **CapitalResources and Liquidity**

## ** **

Our primarysources of liquidity during the three months ended June 30, 2009, were cashreserves.  We believe that cash fromoperations and existing cash reserves will provide adequate funds for ourworking capital needs, planned capital expenditures and debt serviceobligations through 2009, excluding acceleration of our debt.  Our ability to fund working capital needs,planned capital expenditures, scheduled debt payments, and to comply with allof the financial covenants under the Credit Agreement, depends on our futureoperating performance and cash flow, which in turn, are subject to prevailingeconomic conditions and to financial, business and other factors, some of whichare beyond our control.

 

To maintaincompliance with the Temporary Waiver, the Company did not pay the approximately$11.7 million of interest due August 3, 2009, to the holders of its 8 1⁄2 percentSenior Subordinated Notes due 2015 (Notes) and intends to use the existing30-day grace period provided in the Note indenture to continue discussionsregarding a capital restructuring with its lenders.  Under the indenture, the failure to make thisinterest payment would not constitute an event of default that permitsacceleration of the Notes until the expiration of the 30-day grace period.

 

If we are unableto obtain permanent waivers, extensions of the waivers, or restructure the TermB Loan Facility prior to August 15, 2009, and satisfactorily address the SeniorSubordinated Notes interest payment due at the end of the grace period, adefault would arise with respect to these obligations, which could also triggercross accelerations on our indebtedness. In such an event, absent other arrangements we would be required to repayall outstanding indebtedness immediately. In that event, we would not have sufficient liquidity available to repaysuch indebtedness and, unless the Company were able to obtain additionalcapital resources, waivers or other accommodations, the Company would be unable

 

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to continue tofund its operations or continue its business, thereby potentially requiring usto seek relief under the U.S. Bankruptcy Code.

 

##### **Operating Activities**

##### ** **

Net cash used inoperating activities during the first six months of 2009 amounted to $32.4million compared to a use of $32.4 million for the comparable period in2008.  Other than the increase in netloss, the significant drivers of the net cash used in the current period were a$21.5 million reduction in accounts payable and $24.2 million of cash paid forinterest.  The decline in accountspayable was primarily a result of reduced inventory.

 

##### **Investing Activities**

##### ** **

Net cash used ininvesting activities totaled $10.6 million for the six months ended June 30,2009, compared to a use of $25.5 million for the six months ended June 30,2008.  Our most significant cash outlaysfor investing activities are the purchases of property, plant andequipment.  Capital expenditures for 2009are expected to be approximately $20 million to $25 million, which we expect tofund through existing cash reserves.  Capital expenditures for the six months ended June 30, 2009 were $10.7million compared to use of $19.9 million for the comparable period in2008.  Included in the 2008 use ofinvesting cash was an investment in marketable securities of $5.0 million andinvestments in joint ventures of $0.8 million.

 

##### **Financing Activities**

##### ** **

Net cash used in financingactivities totaled $33.1 million for the six months ended June 30, 2009,compared to $0.2 million of net cash provided for the comparable period in2008. Included in the 2009 cash used was $22.4 million for decrease inrevolving credit advance and $10.8 million for amendment fees.

 

**BankBorrowing**

 

Effective January 31,2005, we entered into the Fourth Amended and Restated Credit Agreement inconjunction with the acquisition of TTI to refinance substantially all of ourexisting bank facilities, as well as the senior bank debt and subordinated debtof TTI. Under the refinancing, we entered into (i) the Term Facility in anaggregate principal amount of $550 million that requires annual amortizationpayments of 1% per year, with the balance payable on January 31, 2012, and (ii)the Revolving Credit Facility in an aggregate amount of $100 million (comprisedof a $76 million U.S. revolving credit facility and a $24 million Canadianrevolving credit facility) which matures on January 31, 2010.** **The U.S. andCanadian Revolving Credit Facilities were drawn down $34.1 million and $22million, respectively, as of June 30, 2009, leaving availability ofapproximately $1.5 million, which considers outstanding letters of credit of$18.2 million and excludes $24.2 million of the Revolving Credit Facility heldby Lehman Commercial Paper, Inc. The loans under the Term Facility and the U.S.revolving credit facility are secured by, among other things, a lien onsubstantially all of our U.S. properties, assets and domestic subsidiaries anda pledge of 65% of the stock of our foreign subsidiaries. The loans under theCanadian revolving facility are secured by substantially all the properties andassets of Accuride Canada, Inc. As of June 30, 2009, the outstanding balance onthe term debt was $294.6 million.

 

On November 28, 2007, weentered into the first amendment (the “First Amendment”) to the Fourth Amendedand Restated Credit Agreement, dated as of January 31, 2005. The FirstAmendment increased pricing and modified certain financial covenants through2008, including changes to the leverage, interest coverage and fixed chargecoverage ratios.

 

As described above, on February4, 2009, we completed the Second Amendment and the Sun Capital Transaction.  Sun Capital currently holds approximately$70.1 million principal amount of the Last-Out Loans and approximately $3.6million of interest accrued as payable-in-kind. The Second Amendment adjusted certain financial covenants under the CreditAgreement from the fourth quarter of 2008 through 2010, including leverage,interest coverage and fixed charge coverage ratios, and extended the maturitydate of the Revolving Credit Facility until January 31, 2011.  In connection with the Second Amendment, SunCapital agreed to modify the Last-Out Loans to become last out as to payment toFirst-Out Loans.  Sun Capital also agreedto modify certain voting provisions and other rights under the Credit Agreementas a holder of the Last-Out Loans.  As ofJune 30, 2009, fees paid associated with the Second Amendment were $10.8million.

 

**RestrictiveDebt Covenants.**  Our credit documents contain numerousfinancial and operating covenants that limit the discretion of management withrespect to certain business matters. These covenants place significantrestrictions on, among other things, the ability to incur additional debt, topay dividends, to create liens, to make certain payments and investments and tosell or otherwise dispose of assets and merge or consolidate with otherentities. Accuride is also required to meet certain financial ratios and testsincluding a leverage ratio, an interest coverage ratio, and a fixed chargecoverage 

 

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ratio. A failure tocomply with the obligations contained in the credit documents could result inan event of default, permit our lenders to restrict our access to availablecash, and possibly the acceleration of the related debt and the acceleration ofdebt under other instruments evidencing indebtedness that may containcross-acceleration or cross-default provisions.

 

As explained below, wehave already obtained a temporary waiver agreement from our senior lendorswhich waives our compliance with our financial covenants and places additionalrestrictions on our business for the duration of the term of the temporarywaiver agreement.  We are currentlynegotiating amendments to our Credit Agreement and we are negotiating alternativessuch as additional amendments or waivers, the sale of non-core assets, and/oralternative debt structures, such as debt for debt or equity for debtagreements.  The Board has appointed aspecial committee of independent directors to identify and, with the input ofmanagement and our financial advisors, evaluate alternatives to recommend anappropriate course of action to the full board. However, the success of any such alternative actions will depend on manyfactors, some of which are out of management’s control.  Therefore, we can provide no assurance as tothe success of such actions.

 

We entered into a Temporary Waiver Agreement (the “Temporary Waiver”)with respect to our Credit Agreement among the Company, Accuride Canada Inc.,the lenders party thereto, the administrative agent for the lenders, and theother agents party thereto. The Temporary Waiver is dated July 1, 2009 andbecame effective on July 8, 2009.

 

Pursuant to the terms of the Temporary Waiver, the Lenders have agreedto waive our compliance with the following financial covenants under the CreditAgreement for the fiscal quarter ended June 30, 2009 for the duration of theTemporary Waiver Period: (i) the Senior Secured Leverage Ratio set forth in Section5.04(a), (ii) the Interest Coverage Ratio set forth in Section 5.04(c) and (iii)the Fixed Charge Coverage Ratio set forth in Section 5.04(d).  The Company’s failure to comply with any ofthese covenants would be an immediate event of default under the CreditAgreement (each default a “Potential Default”).  The “Temporary Waiver Period” terminates on August15, 2009, unless terminated earlier as the result of, among other things: (i) anevent of default under the Credit Agreement that is not a Potential Default, (ii)payment by the Company of the interest payment due and owing on August 1, 2009to the holders of the Company’s 81/2% Senior Subordinated Notes due 2015 and (iii)the failure by the Company or the subsidiary guarantors to comply with theterms and provisions of the Temporary Waiver.

 

Under the TemporaryWaiver: (i) interest on advances and all outstanding obligations under theCredit Agreement will accrue at an annual rate of 2.0% plus the otherwiseapplicable rate during the Temporary Waiver Period, (ii) the Company and its subsidiariesmust comply with certain restrictions on incurring additional debt, makinginvestments and selling assets and (iii) the Company must comply with a minimumliquidity requirement.  Contemporaneouslywith the Temporary Waiver, Citicorp USA, Inc. has resigned as administrativeagent and the lenders have appointed Deutsche Bank Trust Company Americas toserve as administrative agent.

 

Due to the short termnature of the temporary waiver, we have classified our debt as current as of June30, 2009 in accordance with U.S. GAAP. The Company is currently discussing the possibility of a waiverextension with lenders.

 

**SeniorSubordinated Notes.**  Effective January 31, 2005, we issued $275 millionaggregate principal amount of 81/2% senior subordinated notes due 2015 (the“Senior Subordinated Notes”) in a private placement transaction. Interest onthe senior subordinated notes is payable on February 1 and August 1 of eachyear, beginning on August 1, 2005. The Senior Subordinated Notes mature on February1, 2015 and may be redeemed, at our option, in whole or in part, at any time onor before February 1, 2010 in cash at the redemption prices set forth in theindenture, plus interest. The Senior Subordinated Notes are general unsecuredobligations ranking senior in right of payment to all of our existing andfuture subordinated indebtedness. The Senior Subordinated Notes aresubordinated to all of our existing and future senior indebtedness includingindebtedness incurred under the Credit Agreement.

 

In May 2005, wesuccessfully completed an exchange offer as required per the terms of theregistration rights agreement we entered into with the initial purchasers inconnection with the issuance of our Senior Subordinated Notes. Pursuant to aneffective exchange offer registration statement filed with the SEC, holders ofour outstanding senior subordinated notes exchanged such notes for otherwiseidentical 81/2% Senior Subordinated Notes due 2015 (the“Registered Senior Subordinated Notes”) which have been registered under theSecurities Act.

 

To maintaincompliance with the Temporary Waiver, the Company did not pay the approximately$11.7 million of interest due August 3, 2009, to the holders of its 8 1⁄2 percentSenior Subordinated Notes due 2015 (Notes) and intends to use the existing30-day grace period provided in the Note indenture to continue discussionsregarding a capital restructuring with its lenders.  Under the indenture, the failure to make thisinterest payment would not constitute an event of default that permitsacceleration of the Notes until the expiration of the 30-day grace period.

 

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

 

**ContractualObligations and Commercial Commitments**

 

Due to theclassification of debt from a non-current liability to a current liability (seeNote 1), the corresponding impact to our Contractual Obligations and CommercialCommitments table as filed in our Form 10-K on March 13, 2009, would be toclassify cash flow for debt in the less than 1 year category.  Also impacted would be a reduction in thecash flows related to the interest associated with the debt.

 

**RecentDevelopments**

 

***New Accounting Pronouncements***

 

***FSP No. 157-2***—In February 2008, the FASB issued Staff Position No. 157-2,*Effective Date of FASB Statement No. 157*, which delayed theeffective date of fair value measurements for nonfinancial assets andliabilities to fiscal years beginning after November 15, 2008, except for itemsthat are recognized or disclosed at fair value in the financial statements on arecurring basis.  Management is currentlyevaluating the impact of the adoption of FSP 157-2 on our consolidatedfinancial statements.

 

***SFAS No.132(R)***— In March2008, the FASB issued SFAS No. 132(R), *Employers’**Disclosures about Postretirement Benefit Plan Assets. *The statement requires disclosuresof the objectives of postretirement benefit plan assets, investment policiesand strategies, categories of plan assets, fair value measurements of planassets, and significant concentrations of risk. SFAS No. 132(R) is effective for fiscal years and interim periodsbeginning after December 15, 2009.  Theadoption of SFAS No. 132(R) is expected to increase our disclosures, but it isnot expected to have an impact on our consolidated financial statements.

 

In April 2009, the FASBissued three new FSPs, all of which impact the accounting and disclosurerelated to certain financial instruments.  FSP FAS 157-4, “*DeterminingFair Value When the Volume and Level of Activity for the Asset or LiabilityHave Significantly Decreased and Identifying Transactions That Are Not Orderly*”provides additional guidance for estimating fair value in accordance with SFAS157 when the volume and level of activity for the asset or liability havesignificantly decreased.  It alsoincludes guidance on identifying circumstances that indicate a transaction isnot orderly.  FSP FAS 115-2 and FAS124-2, “*Recognition of Other-Than-Temporary Impairment*”amends the other-than-temporary impairment guidance for debt securities to makethe guidance more operational and to improve the presentation and disclosure ofother-than-temporary impairments on debt and equity securities in the financialstatements.  FSP FAS 107-1 and APB 28-1 “*Interim Disclosures about Fair Value of Financial Instruments*”amends FASB Statement No. 107 to require disclosures about the fair value offinancial instruments on an interim basis in addition to the annual disclosurerequirements.  All three FSPs arerequired to be adopted for interim periods ending after June 15, 2009.  We do not expect adoption of these staffpositions to have a material impact on our consolidated financial statements.

 

***SFAS No. 167***— In June 2009, the FASB issued SFAS No. 167, *Amendments to FASB Interpretation No. 46(R*), which amends FASB Interpretation(FIN) No. 46(R), *Consolidation of VariableInterest Entities*, for variable interestentities to determine whether a variable interest entity must be consolidated.SFAS No. 167 requires an entity to perform an analysis to determine whether anentity’s variable interest or interests give it a controlling financial interestin a variable interest entity. This statement requires ongoing reassessments ofwhether an entity is the primary beneficiary of a variable interest entity andenhanced disclosures that provide more transparent information about an entity’sinvolvement with a variable interest entity. The new standard will becomeeffective for us on January 1, 2010. We are currently evaluating the impact ofadopting SFAS No. 167 on the consolidated financial statements.

 

***SFAS No.168*** - In June2009, the FASB issued SFAS No. 168, *The FASBAccounting Standards Codification TM and the Hierarchy of Generally AcceptedAccounting Principles*.  SFAS168 establishes the Accounting Standards Codification (“Codification”) as thesource of authoritative accounting principles recognized by the FASB to beapplied by nongovernmental entities in the preparation of financial statementsin accordance with GAAP.  TheCodification is not intended to change GAAP but consolidates all existing GAAPsources into a single set of comprehensive standards.  SFAS 

 

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168 will become effectivefor us in the third quarter of 2009 and will not have a material effect on ourcondensed consolidated financial statements.

 

**CriticalAccounting Policies and Estimates. **We have made a number of estimates andassumptions relating to the reporting of results of operations and financialposition in the preparation of our financial statements in conformity withaccounting principles generally accepted in the United States of America.  Actual results could differ significantlyfrom those estimates under different assumptions and conditions.  We included in our Form 10-K for the yearended December 31, 2008 a discussion of our most critical accounting policies,which are those that have a material impact on our financial condition oroperating performance and require management’s most difficult, subjective andcomplex judgments, often as a result of the need to make estimates about theeffect of matters that are inherently uncertain.

 

*CautionaryStatements Regarding Forward-Looking Statements*

 

In this report, we havemade various statements regarding current expectations or forecasts of futureevents, which speak only as of the date the statements, are made.  These statements are “forward-lookingstatements” within the meaning of that term in Section 27A of the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements are also made fromtime-to-time in press releases and in oral statements made by the officers ofAccuride.  Forward-looking statements areidentified by the words “estimate,” “project,” “anticipate,” “will continue,” “willlikely result,” “expect,” “intend,” “believe,” “plan,” “predict” and similarexpressions.  Forward looking statementsalso include, but are not limited to, statements regarding commercial vehiclemarket recovery, projections of revenue, income, loss, or working capital,capital expenditure levels, ability to mitigate rising raw material coststhrough increases in selling prices, plans for future operations, financingneeds, the ultimate outcome and impact of any litigation against Accuride, thesufficiency of our capital resources and plans and assumptions relating to theforegoing.

 

Such forward-lookingstatements are based on assumptions and estimates, which although believed tobe reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates andstatements.  We cannot assure that any ofthese statements, estimates, or beliefs will be realized and actual results maydiffer from those contemplated in these “forward-looking statements.”  We undertake no obligation to publicly updateany forward-looking 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, without limitation, the following:

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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

 

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

 

**ForeignCurrency Risk**

 

Certain forecastedtransactions, assets, and liabilities are exposed to foreign currency risk. Wemonitor our foreign currency exposures to maximize the overall effectiveness ofour foreign currency derivatives. The principal currency of exposure is theCanadian dollar. From time to time, we use foreign currency financialinstruments to offset the impact of the variability in exchange rates on ouroperations, cash flows, assets and liabilities. At June 30, 2009, the notionalamount of open foreign exchange forward contracts was $9.3 million.

 

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

 

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

 

**RawMaterial/Commodity Price Risk**

 

We rely upon the supplyof certain raw materials and commodities in our production processes, and wehave entered into firm purchase commitments for certain metals and natural gas.Additionally, from time to time, we use commodity price swaps and futurescontracts to manage the variability in certain commodity prices on ouroperations and cash flows. At June 30, 2009, we had no open commodity priceswaps or futures contracts.

 

**InterestRate Risk**

 

We use long-term debt asa primary source of capital. However, due to the short term nature of thetemporary waiver discussed above, we have classified our debt as current as of June30, 2009 in accordance with U.S. GAAP. The following table presents the principal cash repayments and relatedweighted average interest rates by maturity date for our fixed-rate debt andother types of debt at June 30, 2009 assuming no acceleration:

 
| **(Dollars in thousands)** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2013** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **Fair  Value** | ** ** |
|----------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|-----------------|------------|
| Debt:                      |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |            |       |
| Fixed Rate                 |       | —   |       | —   |       | —   |       | —   |       | —   |       | $              | 275,000    |      | $          | 275,000         |       | $ | 55,000 |   |
| Average Rate               |       | —   |       | —   |       | —   |       | —   |       | —   |       | 8.50           | %          | 8.50      | %          |            |       |
| Variable Rate              |       | —   |       | —   |       | $        | 56,070     |     | $          | 294,259  |       | —         |       | $         | 3,100      |            | $          | 353,429 |   | $ | 284,802 |   |
| Average Rate               |       | —   |       | —   |       | 7.25     | %          | 8.82     | %          | —   |       | 0.57           | %          | 8.50      | %          |            |       |
|                            |            |          |            |          |            |          |            |          |            |          |            |                |            |           |            |                 |            |  |  |  |  |  |

 

We have usedinterest rate swaps to alter interest rate exposure between fixed and variablerates on a portion of our long-term debt. As of June 30, 2009, we had one interest rate swap agreementoutstanding, which was established in December 2007 and the terms with thecounterparty are to exchange, at specified intervals, the difference between3.81% from March 2009 through March 2010, and the variable rate interestamounts calculated by reference to the notional principal amount. The notionalprincipal amounts under the terms are $150 million from March 2009 through September2009 and $125 million from September 2009 through March 2010.

 

**Item 4.Controls and Procedures**

 

We maintain disclosurecontrols and procedures that are designed to ensure that information requiredto be disclosed in our Exchange Act reports is recorded, processed, summarizedand reported within the time periods specified in the SEC’s 

 

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rules and forms, and thatsuch information is accumulated and communicated to our management, includingour Chief Executive Officer and Chief Financial Officer, as appropriate, toallow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controlsand procedures, management recognized that any controls and procedures, nomatter how well designed and operated, can provide only reasonable assurance ofachieving the desired control objectives, and management is required to applyits judgment in evaluating the cost-benefit relationship of possible controlsand procedures.

 

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

 

***Changesin Internal Control Over Financial Reporting.*** There have been no changes in our internal controls over financialreporting during our most recent quarter that has materially affected, or isreasonably likely to materially affect, our internal controls over financialreporting.

 

**PART II.  OTHER INFORMATION**

 

**Item1.  Legal Proceedings**

 

Neither Accuride nor anyof our subsidiaries is a party to any pending legal proceeding which, in theopinion of management, would have a material adverse effect on our business orfinancial condition.  However, we fromtime-to-time are involved in ordinary routine litigation incidental to ourbusiness, including actions related to product liability, contractualliability, intellectual property, 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 establishedaccruals.  Further, we cannot assure thatlitigation having a material adverse affect on our financial condition will notarise in the future.

 

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

 

The results of the Company’s annual meeting ofshareholders, held on April 22, 2009, were reported in a Form 10-Q, filed withthe Securities and Exchange Commission on May 7, 2009.

 

**Item5.  Other Information**

 

On July 8, 2009 the Boardagreed to compensate the non-employee directors serving on a special committeeto the Board by paying each of them a flat fee of $45,000.

 

**Item6.  Exhibits**

 
| **Exhibit No.** | ** ** | ** ** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------|------------|------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |       |       |       |                                                                                                                                                                                                                                                                                                                                                                             |
| 2.1             |       | —     |       | Agreement and Plan of  Merger, dated as of December 24, 2004, by and among Accuride Corporation,  Amber Acquisition Corp., Transportation Technologies Industries, Inc.,  certain signing stockholders and the Company Stockholders Representatives.  Previously filed as an exhibit to the Form 8-K filed on December 30, 2004 and  incorporated herein by reference.           |
| 2.2             |       | —     |       | Stock Subscription and  Redemption Agreement, dated as of November 17, 1997, among Accuride  Corporation, Hubcap Acquisition L.L.C. and Phelps Dodge Corporation.  Previously filed as an exhibit to the Form S-4 effective July 23, 1998 (Reg.  No. 333-50239) and incorporated herein by reference.                                                                            |
| 2.3             |       | —     |       | Amendment to Agreement  and Plan of Merger, dated as of January 28, 2005, by and among Accuride  Corporation, Amber Acquisition Corp., Transportation Technologies Industries,  Inc. certain signing stockholders and the Company Stockholders Representatives.  Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and  incorporated herein by reference. |
| 3.1             |       | —     |       | Amended and Restated  Certificate of Incorporation of Accuride Corporation. Previously filed as an  exhibit to Amendment 4, filed on April 21, 2005, to the Form S-1 effective  April 25, 2005 (Reg. No. 333-121944) and incorporated herein by reference.                                                                                                                       |
| 3.2             |       | —     |       | Certificate of  Designations for the Series A Preferred Share, dated February 4, 2009.  Previously filed as an                                                                                                                                                                                                                                                                   |

 

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|             |   |   |   | exhibit to Form 8-K  filed on February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3              |   | — |   | Amended and Restated  Bylaws of Accuride Corporation (effective February 4, 2009). Previously filed  as an exhibit to Form 8-K filed on February 4, 2009 and incorporated herein  by reference.                                                                                                                                                                                                                                                                                                                                                                         |
| 4.1              |   | — |   | Specimen common stock  certificate of registrant. Previously filed as an exhibit to Amendment 2,  filed March 25, 2005, to Form S-1 effective April 25, 2005 (Reg. No.  333-121944) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                               |
| 4.2              |   | — |   | Indenture, dated as of  January 31, 2005, by and among the Registrant, all of the Registrant’s direct  and indirect Domestic Subsidiaries existing on the Issuance Date and The Bank  of New York Trust Company, N.A., with respect to $275.0 million aggregate  principal amount of 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*             |   | — |   | Form of Stockholders’  Agreement by and among Accuride Corporation, certain employees and Hubcap  Acquisition L.L.C. Previously filed as an exhibit to the Form S-4 effective  July 23, 1998 (Reg. No. 333-50239) and incorporated herein by reference.                                                                                                                                                                                                                                                                                                            |
| 4.7*             |   | — |   | Form of Amendment to Stockholders’  Agreement by and among Accuride Corporation, certain employees and Hubcap  Acquisition L.L.C. Previously filed as an exhibit to Amendment No. 1, filed  September 22, 2005 to Form S-1 effective October 3, 2005 (Reg. No.  333-128327) and incorporated herein by reference.                                                                                                                                                                                                                                                  |
| 4.8              |   | — |   | Bond Guaranty Agreement  dated as of March 1, 1999 by Bostrom Seating, Inc. in favor of NBD Bank as  Trustee. Previously filed as an exhibit to Amendment No. 1 filed on February  23, 2005 to the Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and  incorporated herein by reference.                                                                                                                                                                                                                                                                       |
| 4.9              |   | — |   | Stock Purchase Warrant,  issued February 4, 2009. Previously filed as an exhibit to Form 8-K filed on  February 4, 2009 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.10             |   | — |   | Registration Agreement,  dated February 4, 2009, between Accuride Corporation and Sun Accuride Debt  Investments, LLC. Previously filed as an exhibit to Form 8-K filed on  February 4, 2009 and incorporated herein by reference                                                                                                                                                                                                                                                                                                                                       |
| 10.1*            |   | — |   | Form of Cash Award  Agreement for use with 2005 Incentive Award Plan. Previously filed as an  exhibit to Form 8-K filed on April 28, 2009 and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.2*            |   | — |   | Accuride Corporation  Incentive Compensation Plan. Previously filed as an exhibit to Form 10-Q  filed on May 7, 2009 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.3*            |   | — |   | Form of Retention Bonus  Agreement. Previously filed as an exhibit to Form 10-Q filed on May 7, 2009  and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.4             |   | — |   | Amended and Restated  Plant Parcel Lease Agreement, dated as of March 31, 2005 and amended and  restated as of March 1, 2009, by and between Accuride Erie, L.P. and Greater  Erie Industrial Development Corporation, as further amended by the attached  Subordination, Non-disturbance and Attornment Agreement, dated June 9, 2009,  between First National Bank of Pennsylvania, Greater Erie Industrial  Development Corporation and Accuride Erie, L.P. Previously filed as an  exhibit to Form 8-K filed on June 15, 2009 and incorporated herein by  reference |
| 10.5             |   | — |   | Temporary Waiver  Agreement, dated July 1, 2009, by and among Accuride, Accuride Canada Inc.,  the lenders party thereto, the administrative agent for the lenders, and the  other agents party thereto. Previously filed as an exhibit to Form 8-K filed  on July 9, 2009 and incorporated herein by reference                                                                                                                                                                                                                                                         |
| 31.1†       |   | — |   | Section 302  Certification of William M. Lasky in connection with the Quarterly Report of  Form 10-Q on Accuride Corporation for the period ended June 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                        |
| 31.2†       |   | — |   | Section 302  Certification of James H. Woodward, Jr. in connection with the Quarterly  Report on Form 10-Q of Accuride Corporation for the period ended June 30,  2009.                                                                                                                                                                                                                                                                                                                                                                                                 |
| 32.1†† |   | — |   | Certifications Pursuant  to Section 1350 of Chapter 63 of Title 18 of the United States Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

 

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†              Filed herewith

††            Furnished herewith

*              Management contract or compensatory agreement

 

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Tableof Contents

 

**SIGNATURES**

 

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

 

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

 

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