UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)


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

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


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

For the transition period from __________ to __________.

Commission File Number: 001-36127

______________________________

COOPER-STANDARD HOLDINGS INC.

(Exact name of registrant as specified in its charter)

______________________________


Delaware						20-1945088
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

40300 Traditions Drive

Northville, Michigan 48168

(Address of principal executive offices)

(Zip Code)

(248) 596-5900

(Registrant’s telephone number, including area code)

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

CPS

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒☐	Accelerated filer	☐☒
Non-accelerated filer	☐	Smaller reporting company	☐☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~April 30, ~~2020,~~2021, there were ~~16,896,726~~16,942,878 shares of the registrant’s common stock, $0.001 par value, outstanding.

COOPER-STANDARD HOLDINGS INC.

Form 10-Q

For the period ended ~~September 30, 2020~~March 31, 2021

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollar amounts in thousands except per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Sales	Sales	$	683,200	$	739,518	$	1,678,557	$	2,382,211	Sales		$	668,967	$	654,890
Cost of products sold	Cost of products sold	598,714		659,313		1,611,299		2,088,631		Cost of products sold		600,675		611,747
Gross profit	Gross profit	84,486		80,205		67,258		293,580		Gross profit		68,292		43,143
Selling, administration & engineering expenses	Selling, administration & engineering expenses	60,059		63,020		199,001		224,164		Selling, administration & engineering expenses		58,054		70,671
Gain on sale of business, net		(2,314)		1,730		(2,314)		(188,180)
Gain on sale of business										Gain on sale of business		(891)		0

Amortization of intangibles	Amortization of intangibles	1,669		4,250		9,632		13,173		Amortization of intangibles		1,772		4,450
Restructuring charges	Restructuring charges	6,186		5,572		23,236		29,214		Restructuring charges		21,047		7,276
Impairment of assets held for sale	Impairment of assets held for sale	0		0		86,470		0		Impairment of assets held for sale		0		74,079
Other impairment charges	Other impairment charges	100		1,958		1,240		4,146		Other impairment charges		0		977
Operating profit (loss)		18,786		3,675		(250,007)		211,063
Operating loss										Operating loss		(11,690)		(114,310)
Interest expense, net of interest income	Interest expense, net of interest income	(17,985)		(10,351)		(40,993)		(33,858)		Interest expense, net of interest income		(17,784)		(10,237)
Equity in earnings (losses) of affiliates		738		1,515		(842)		5,764
Equity in earnings of affiliates										Equity in earnings of affiliates		786		1,431

Other income (expense), net		2,784		(514)		(5,357)		(3,091)
Income (loss) before income taxes		4,323		(5,675)		(297,199)		179,878
Income tax (benefit) expense		(2,386)		745		(55,485)		47,001
Net income (loss)		6,709		(6,420)		(241,714)		132,877
Net (income) loss attributable to noncontrolling interests		(2,328)		1,543		1,288		2,036
Net income (loss) attributable to Cooper-Standard Holdings Inc.		$	4,381	$	(4,877)	$	(240,426)	$	134,913
Other expense, net										Other expense, net		(5,089)		(3,440)
Loss before income taxes										Loss before income taxes		(33,777)		(126,556)
Income tax expense (benefit)										Income tax expense (benefit)		936		(14,117)
Net loss										Net loss		(34,713)		(112,439)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests		849		1,851
Net loss attributable to Cooper-Standard Holdings Inc.										Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)	$	(110,588)

Earnings (loss) per share:
Loss per share:										Loss per share:
Basic	Basic	$	0.26	$	(0.29)	$	(14.22)	$	7.83	Basic		$	(2.00)	$	(6.55)
Diluted	Diluted	$	0.26	$	(0.29)	$	(14.22)	$	7.80	Diluted		$	(2.00)	$	(6.55)

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(Unaudited)

(Dollar amounts in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net income (loss) $ 6,709 $ (6,420) $ (241,714) $ 132,877
Other comprehensive income (loss):
Currency translation adjustment 17,488 (29,065) (4,612) (32,923)
Benefit plan liabilities adjustment, net of tax (853) 2,246 1,113 686
Fair value change of derivatives, net of tax 2,072 (1,558) (1,766) 523
Other comprehensive income (loss), net of tax 18,707 (28,377) (5,265) (31,714)
Comprehensive income (loss) 25,416 (34,797) (246,979) 101,163
Comprehensive (income) loss attributable to noncontrolling interests (2,970) 2,358 1,063 3,107
Comprehensive income (loss) attributable to Cooper-Standard Holdings Inc. $ 22,446 $ (32,439) $ (245,916) $ 104,270


	Three Months Ended March 31,
		2021		2020
Net loss		$	(34,713)	$	(112,439)
Other comprehensive loss:
Currency translation adjustment		(6,572)		(28,889)
Benefit plan liabilities adjustment, net of tax		2,739		2,682
Fair value change of derivatives, net of tax		(571)		(10,076)
Other comprehensive loss, net of tax		(4,404)		(36,283)
Comprehensive loss		(39,117)		(148,722)
Comprehensive loss attributable to noncontrolling interests		1,101		2,358
Comprehensive loss attributable to Cooper-Standard Holdings Inc.		$	(38,016)	$	(146,364)

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands except share amounts)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	462,666	$	359,536	Cash and cash equivalents	$	398,847	$	438,438
Accounts receivable, net	Accounts receivable, net	389,044		423,155		Accounts receivable, net	383,692		379,564
Tooling receivable, net	Tooling receivable, net	88,364		148,175		Tooling receivable, net	77,728		82,150
Inventories	Inventories	148,800		143,439		Inventories	171,086		143,742
Prepaid expenses	Prepaid expenses	31,873		34,452		Prepaid expenses	30,639		29,748

Income tax receivable and refundable credits						Income tax receivable and refundable credits	83,761		85,977
Other current assets	Other current assets	134,212		93,513		Other current assets	100,208		100,110

Total current assets	Total current assets	1,254,959		1,202,270		Total current assets	1,245,961		1,259,729
Property, plant and equipment, net	Property, plant and equipment, net	882,476		988,277		Property, plant and equipment, net	857,609		892,309
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	111,831		83,376		Operating lease right-of-use assets, net	106,670		109,795
Goodwill	Goodwill	142,079		142,187		Goodwill	142,307		142,250
Intangible assets, net	Intangible assets, net	69,690		84,369		Intangible assets, net	65,863		67,679

Other assets	Other assets	176,956		135,103		Other assets	146,951		140,182
Total assets	Total assets	$	2,637,991	$	2,635,582	Total assets	$	2,565,361	$	2,611,944

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities:	Current liabilities:					Current liabilities:
Debt payable within one year	Debt payable within one year	$	54,294	$	61,449	Debt payable within one year	$	43,441	$	40,731
Accounts payable	Accounts payable	372,845		426,055		Accounts payable	364,168		385,284
Payroll liabilities	Payroll liabilities	124,558		88,486		Payroll liabilities	103,394		112,727
Accrued liabilities	Accrued liabilities	106,847		119,841		Accrued liabilities	124,469		110,827
Current operating lease liabilities	Current operating lease liabilities	21,492		24,094		Current operating lease liabilities	25,666		21,711

Total current liabilities	Total current liabilities	680,036		719,925		Total current liabilities	661,138		671,280
Long-term debt	Long-term debt	982,659		746,179		Long-term debt	981,486		982,760
Pension benefits	Pension benefits	140,573		140,010		Pension benefits	146,790		152,230
Postretirement benefits other than pensions	Postretirement benefits other than pensions	44,690		48,313		Postretirement benefits other than pensions	49,735		49,613

Long-term operating lease liabilities	Long-term operating lease liabilities	91,782		60,234		Long-term operating lease liabilities	86,113		90,517
Other liabilities	Other liabilities	66,916		44,939		Other liabilities	54,153		41,433
Total liabilities	Total liabilities	2,006,656		1,759,600		Total liabilities	1,979,415		1,987,833
7% Cumulative participating convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding		0		0

Equity:	Equity:					Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized; 18,962,262 shares issued and 16,896,453 shares outstanding as of September 30, 2020, and 18,908,566 shares issued and 16,842,757 outstanding as of December 31, 2019		17		17
Common stock, $0.001 par value, 190,000,000 shares authorized; 19,008,361 shares issued and 16,942,552 shares outstanding as of March 31, 2021, and 18,962,894 shares issued and 16,897,085 outstanding as of December 31, 2020						Common stock, $0.001 par value, 190,000,000 shares authorized; 19,008,361 shares issued and 16,942,552 shares outstanding as of March 31, 2021, and 18,962,894 shares issued and 16,897,085 outstanding as of December 31, 2020	17		17
Additional paid-in capital	Additional paid-in capital	496,468		490,451		Additional paid-in capital	499,671		498,719
Retained earnings	Retained earnings	377,449		619,448		Retained earnings	316,406		350,270
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(259,231)		(253,741)		Accumulated other comprehensive loss	(246,048)		(241,896)
Total Cooper-Standard Holdings Inc. equity	Total Cooper-Standard Holdings Inc. equity	614,703		856,175		Total Cooper-Standard Holdings Inc. equity	570,046		607,110
Noncontrolling interests	Noncontrolling interests	16,632		19,807		Noncontrolling interests	15,900		17,001
Total equity	Total equity	631,335		875,982		Total equity	585,946		624,111
Total liabilities and equity	Total liabilities and equity	$	2,637,991	$	2,635,582	Total liabilities and equity	$	2,565,361	$	2,611,944

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(Dollar amounts in thousands except share amounts)

Total Equity
Common Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Cooper-Standard Holdings Inc. Equity Noncontrolling Interests Total Equity
Balance as of December 31, 2019 16,842,757 $ 17 $ 490,451 $ 619,448 $ (253,741) $ 856,175 $ 19,807 $ 875,982
Cumulative effect of change in accounting principle — — — (1,573) — (1,573) — (1,573)
Share-based compensation, net 41,785 — 1,874 0 — 1,874 — 1,874
Net loss — — — (110,588) — (110,588) (1,851) (112,439)
Other comprehensive loss — — — — (35,776) (35,776) (507) (36,283)
Balance as of March 31, 2020 16,884,542 $ 17 $ 492,325 $ 507,287 $ (289,517) $ 710,112 $ 17,449 $ 727,561
Share-based compensation, net 9,548 — 2,303 0 — 2,303 — 2,303
Net loss — — — (134,219) — (134,219) (1,765) (135,984)
Other comprehensive income — — — — 12,221 12,221 90 12,311
Balance as of June 30, 2020 16,894,090 $ 17 $ 494,628 $ 373,068 $ (277,296) $ 590,417 $ 15,774 $ 606,191
Share-based compensation, net 2,363 — 1,840 0 — 1,840 — 1,840
Deconsolidation of noncontrolling interest — — — — — — (2,112) (2,112)
Net income — — — 4,381 — 4,381 2,328 6,709
Other comprehensive income — — — — 18,065 18,065 642 18,707
Balance as of September 30, 2020 16,896,453 $ 17 $ 496,468 $ 377,449 $ (259,231) $ 614,703 $ 16,632 $ 631,335


	Total Equity
	Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Cooper-Standard Holdings Inc. Equity		Noncontrolling Interests		Total Equity
Balance as of December 31, 2020	16,897,085	$	17	$	498,719	$	350,270	$	(241,896)	$	607,110	$	17,001	$	624,111


Share-based compensation, net	45,467	—		952		0		—		952		—		952




Net loss	—	—		—		(33,864)		—		(33,864)		(849)		(34,713)
Other comprehensive loss	—	—		—		—		(4,152)		(4,152)		(252)		(4,404)
Balance as of March 31, 2021	16,942,552	$	17	$	499,671	$	316,406	$	(246,048)	$	570,046	$	15,900	$	585,946

Total Equity
Common Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Cooper-Standard Holdings Inc. Equity Noncontrolling Interests Total Equity
Balance as of December 31, 2018 17,554,737 $ 17 $ 501,511 $ 569,215 $ (245,937) $ 824,806 $ 26,669 $ 851,475
Cumulative effect of change in accounting principle — — — (2,607) — (2,607) — (2,607)
Repurchase of common stock (118,774) — (2,057) (3,880) — (5,937) — (5,937)
Share-based compensation, net 85,937 — 4 (214) — (210) — (210)
Contribution from noncontrolling interests — — 0 — — 0 2,112 2,112
Net (loss) income — — — (5,415) — (5,415) 52 (5,363)
Other comprehensive income — — — — 4,239 4,239 371 4,610
Balance as of March 31, 2019 17,521,900 $ 17 $ 499,458 $ 557,099 $ (241,698) $ 814,876 $ 29,204 $ 844,080
Repurchase of common stock (626,305) — (20,486) (9,514) — (30,000) — (30,000)
Share-based compensation, net 5,738 — 3,522 1 — 3,523 — 3,523
Purchase of noncontrolling interest — — 1,298 — — 1,298 (6,057) (4,759)
Dividends declared to noncontrolling interests — — — — — — (233) (233)
Net income (loss) — — — 145,205 — 145,205 (545) 144,660
Other comprehensive loss — — — — (7,320) (7,320) (627) (7,947)
Balance as of June 30, 2019 16,901,333 $ 17 $ 483,792 $ 692,791 $ (249,018) $ 927,582 $ 21,742 $ 949,324
Repurchase of common stock (72,875) — 1,084 (1,084) — 0 — 0
Share-based compensation, net 10,266 — 3,986 4 — 3,990 — 3,990
Contribution from noncontrolling interests — — — — — — 1,686 1,686
Net loss — — — (4,877) — (4,877) (1,543) (6,420)
Other comprehensive loss — — — — (27,562) (27,562) (815) (28,377)
Balance as of September 30, 2019 16,838,724 $ 17 $ 488,862 $ 686,834 $ (276,580) $ 899,133 $ 21,070 $ 920,203


	Total Equity
	Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Cooper-Standard Holdings Inc. Equity		Noncontrolling Interests		Total Equity
Balance as of December 31, 2019	16,842,757	$	17	$	490,451	$	619,448	$	(253,741)	$	856,175	$	19,807	$	875,982
Cumulative effect of change in accounting principle	—	—		—		(1,573)		—		(1,573)		—		(1,573)

Share-based compensation, net	41,785	—		1,874		0		—		1,874		—		1,874

Net loss	—	—		—		(110,588)		—		(110,588)		(1,851)		(112,439)
Other comprehensive loss	—	—		—		—		(35,776)		(35,776)		(507)		(36,283)
Balance as of March 31, 2020	16,884,542	$	17	$	492,325	$	507,287	$	(289,517)	$	710,112	$	17,449	$	727,561

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollar amounts in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Operating Activities:	Operating Activities:					Operating Activities:
Net (loss) income		$	(241,714)	$	132,877
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Net loss						Net loss	$	(34,713)	$	(112,439)
Adjustments to reconcile net loss to net cash used in operating activities:						Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	Depreciation	107,095		98,795		Depreciation	31,756		33,313
Amortization of intangibles	Amortization of intangibles	9,632		13,173		Amortization of intangibles	1,772		4,450
Gain on sale of business, net		(2,314)		(188,180)
Gain on sale of business						Gain on sale of business	(891)		0

Impairment of assets held for sale	Impairment of assets held for sale	86,470		0		Impairment of assets held for sale	0		74,079
Other impairment charges	Other impairment charges	1,240		4,146		Other impairment charges	0		977
Share-based compensation expense	Share-based compensation expense	6,977		10,293		Share-based compensation expense	2,178		2,374
Equity in earnings of affiliates, net of dividends related to earnings	Equity in earnings of affiliates, net of dividends related to earnings	6,087		(847)		Equity in earnings of affiliates, net of dividends related to earnings	(786)		3,814

Deferred income taxes	Deferred income taxes	(32,308)		20,581		Deferred income taxes	(1,434)		(20,191)
Other	Other	4,354		2,628		Other	130		1,138
Changes in operating assets and liabilities	Changes in operating assets and liabilities	27,949		(63,559)		Changes in operating assets and liabilities	(5,096)		10,455
Net cash (used in) provided by operating activities		(26,532)		29,907
Net cash used in operating activities						Net cash used in operating activities	(7,084)		(2,030)
Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(73,407)		(131,085)		Capital expenditures	(38,617)		(50,591)

Acquisition of businesses, net of cash acquired		0		(452)

Proceeds from sale of business, net of cash divested		(17,006)		243,362
Proceeds from sale of fixed assets and other		963		2,084
Net cash (used in) provided by investing activities		(89,450)		113,909
Financing activities:
Proceeds from issuance of long-term debt, net of discount		245,000		0
Principal payments on long-term debt		(4,792)		(3,556)
Decrease in short-term debt, net		(6,897)		(32,737)

Debt issuance costs		(6,722)		0
Purchase of noncontrolling interests		0		(4,797)
Repurchase of common stock		0		(36,550)
Proceeds from sale of fixed assets and other						Proceeds from sale of fixed assets and other	2,363		482
Net cash used in investing activities						Net cash used in investing activities	(36,254)		(50,109)
Financing activities:						Financing activities:

Principal payments on long-term debt						Principal payments on long-term debt	(1,797)		(1,498)
Increase in short-term debt, net						Increase in short-term debt, net	3,429		3,021

Taxes withheld and paid on employees' share-based payment awards	Taxes withheld and paid on employees' share-based payment awards	(533)		(2,757)		Taxes withheld and paid on employees' share-based payment awards	(729)		(512)
Other	Other	(925)		2,132		Other	385		(625)
Net cash provided by (used in) financing activities		225,131		(78,265)
Net cash provided by financing activities						Net cash provided by financing activities	1,288		386
Effects of exchange rate changes on cash, cash equivalents and restricted cash	Effects of exchange rate changes on cash, cash equivalents and restricted cash	(5,718)		(6,997)		Effects of exchange rate changes on cash, cash equivalents and restricted cash	5,358		(6,200)
Changes in cash, cash equivalents and restricted cash	Changes in cash, cash equivalents and restricted cash	103,431		58,554		Changes in cash, cash equivalents and restricted cash	(36,692)		(57,953)

Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	361,742		267,399		Cash, cash equivalents and restricted cash at beginning of period	443,578		361,742
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	465,173	$	325,953	Cash, cash equivalents and restricted cash at end of period	$	406,886	$	303,789

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:	Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:					Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
		Balance as of					Balance as of
		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	462,666	$	359,536	Cash and cash equivalents	$	398,847	$	438,438
Restricted cash included in other current assets	Restricted cash included in other current assets	11		12		Restricted cash included in other current assets	6,801		4,089
Restricted cash included in other assets	Restricted cash included in other assets	2,496		2,194		Restricted cash included in other assets	1,238		1,051
Total cash, cash equivalents and restricted cash shown in the statement of cash flows		$	465,173	$	361,742
Total cash, cash equivalents and restricted cash						Total cash, cash equivalents and restricted cash	$	406,886	$	443,578

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

1. Overview

Basis of Presentation

Cooper-Standard Holdings Inc. (together with its consolidated subsidiaries, the “Company” or “Cooper Standard”), through its wholly-owned subsidiary, Cooper-Standard Automotive Inc. (“CSA U.S.”), is a leading manufacturer of sealing, fuel and brake delivery, and fluid transfer systems. The Company’s products are primarily for use in passenger vehicles and light trucks that are manufactured by global automotive original equipment manufacturers (“OEMs”) and replacement markets. The Company conducts substantially all of its activities through its subsidiaries.

During the first quarter of 2019 and in prior periods, the Company also operated an anti-vibration systems (“AVS”) product line. On April 1, 2019, the Company completed the divestiture of its AVS product line.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~“2020 Annual Report”), as filed with the SEC. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These financial statements include all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company. The operating results for the interim period ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of results for the full year. In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

~~Immaterial Correction of Errors~~

~~During the year ended December 31, 2019, the Company identified errors primarily related to periods prior to fiscal year 2019.~~ 2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The Company ~~concluded these errors were~~adopted the following Accounting Standard Updates (“ASU”) during the three months ended March 31, 2021, which did not have a material individually or in the aggregate to any of the previously reported periods and, therefore, amendments of previously filed reports were not required. Corrections were made to the applicable prior periods reflected in the financial information herein.

~~The following table presents the~~ impact ~~of these corrections~~ on ~~the Company’s~~its condensed consolidated ~~statements of operations:~~financial statements.

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
As previously reported Adjustment As corrected As previously reported Adjustment As corrected
Sales $ 729,021 $ 10,497 $ 739,518 $ 2,373,865 $ 8,346 $ 2,382,211
Income tax expense (benefit) (574) 1,319 745 45,996 1,005 47,001
Net loss attributable to noncontrolling interests 1,745 (202) 1,543 2,447 (411) 2,036
Net income (loss) attributable to Cooper-Standard Holdings Inc. (13,853) 8,976 (4,877) 127,983 6,930 134,913
Earnings (loss) per share:
Basic $ (0.82) $ 0.53 $ (0.29) $ 7.42 $ 0.41 $ 7.83
Diluted $ (0.82) $ 0.53 $ (0.29) $ 7.40 $ 0.40 $ 7.80

~~The following table presents the impact of these corrections on the Company’s condensed consolidated statements of comprehensive income (loss):~~

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
As previously reported Adjustment As corrected As previously reported Adjustment As corrected
Currency translation adjustment $ (29,513) $ 448 $ (29,065) $ (33,407) $ 484 $ (32,923)
Comprehensive loss attributable to noncontrolling interests 2,606 (248) 2,358 3,558 (451) 3,107
Comprehensive income (loss) attributable to Cooper-Standard Holdings Inc. (41,817) 9,378 (32,439) 96,896 7,374 104,270


Standard	Description	Effective Date
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	Modifies ASC Topic 740 by removing certain exceptions and amending existing guidance in order to simplify the accounting for income taxes.	January 1, 2021
ASU 2021-01, Reference Rate Reform (Topic 848): Scope	Clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition and tailors the existing guidance to derivative instruments affected by the discounting transition.	January 1, 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

The impact of these corrections on the balance as of September 30, 2019 in the Company’s condensed consolidated statements of changes in equity includes a decrease to total equity of $202, which consists of an increase to retained earnings of $120, a decrease to accumulated other comprehensive loss of $595, and a decrease to noncontrolling interests of $917.

For the nine months ended September 30, 2019, the impact of these corrections on the condensed consolidated statements of cash flows included a $7,341 increase in net income, a $1,005 increase in deferred income taxes, and a $8,346 decrease in changes in operating assets and liabilities, resulting in no impact to net cash provided by operating activities.

~~2. New Accounting Pronouncements~~

~~Recently Issued Accounting Pronouncements~~

~~ASU 2016-13, Financial Instruments — Credit Losses (Topic 326)~~

On January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, and all related amendments using the modified retrospective method whereby the cumulative effect of adopting the standard was recognized in equity at the date of initial application. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The most prominent among the changes in the standard is the consideration of losses not yet incurred, but expected, based on current conditions and future forecasts. Adoption of the new standard resulted in an immaterial increase in the allowance for credit losses, which decreased the tooling receivable on the Company’s condensed consolidated balance sheet in 2020. The increase in credit loss expense was recorded as an adjustment to the opening balance of retained earnings. Adoption of the new standard had no impact on the Company’s condensed consolidated statement of operations or on cash provided by (used in) operating, financing or investing activities on its condensed consolidated cash flow statements.

~~The cumulative effects of the changes made to the Company’s condensed consolidated balance sheet as of January 1, 2020 were as follows:~~

Balance as of December 31, 2019 Adjustments due to adoption of ASC 326 Balance as of
January 1, 2020
Tooling receivable, net $ 148,175 $ (1,573) $ 146,602
Retained earnings 619,448 (1,573) 617,875

~~The Company considered the issued accounting pronouncement summarized as follows, which will have an immaterial impact on its consolidated financial statements:~~


~~Standard~~	~~Description~~	~~Impact~~	~~Effective Date~~
~~ASU 2018-14,~~ ~~Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans~~	~~Modifies the disclosure requirements for ASC Topic 715 by removing and modifying existing disclosure requirements while also adding new disclosures.~~	The Company expects this standard will primarily result in additional pension disclosures while also removing certain other disclosures. Specifically, the weighted-average interest crediting rate for the cash balance plan and, if needed, an explanation for significant gains and losses related to changes in the benefit obligation for the period will be added while accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and the effects of a one-percentage-point change in the assumed health care cost trend rate will be removed.	~~January 1, 2021~~

3. ~~Divestitures~~Divestiture

2020 Divestiture

In the fourth quarter of 2019, management approved a plan to sell its European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations. The entities and the associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 2020, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

Upon meeting the criteria for held for sale classification and during the three months ended March 31, 2020, the Company recorded non-cash impairment charges of ~~$86,470 during the six months ended June 30, 2020~~$74,079 to reduce the carrying value of the held for sale entities to fair value less costs to sell. Fair value, which is categorized within Level 3 of the fair value hierarchy, was determined using a market approach, estimated based on expected proceeds. The fair value less costs to sell were assessed each reporting period that the asset group remained classified as held for sale. The difference between the impairment of the carrying value on the divested assets compared to the impairment recorded in the statements of operations is due to foreign currency translation offset by costs to sell incurred in the second quarter. The impairment charge includes the non-cash cumulative foreign currency translation losses recorded in equity related to the divested entities.

On July 1, 2020, the Company completed the divestiture of its European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations, to Mutares SE & Co. KGaA (“Mutares”). The transaction included payment denominated in Euro of €9,000, which consisted of €6,500 in cash paid and €2,500 in deferred payment obligations, payable in December 2021.

~~Upon finalizing~~During the ~~sale,~~three months ended March 31, 2021, the Company recorded a loss on deconsolidation of the businesses of $167. In addition, at closing, the Company and Mutares entered into certain ancillary agreements providing for the transition of the European rubber fluid transfer and specialty sealing businesses and Indian operations.

~~The major classes of assets and liabilities divested were as follows:~~


	~~July 1, 2020~~
~~Cash and cash equivalents~~	$	~~11,162~~
~~Accounts receivable, net~~	~~18,825~~
~~Tooling receivable, net~~	~~4,770~~
~~Inventories~~	~~17,022~~
~~Prepaid expenses~~	~~2,728~~
~~Other current assets~~	~~8,873~~
~~Property, plant and equipment, net~~	~~39,913~~
~~Operating lease right-of-use assets, net~~	~~2,946~~
~~Intangible assets, net~~	~~4,992~~
~~Other assets~~	~~4,114~~
~~Impairment of carrying value~~	~~(85,622)~~
~~Total assets divested~~	$	~~29,723~~

~~Accounts payable~~	$	~~13,219~~
~~Payroll liabilities~~	~~7,135~~
~~Accrued liabilities~~	~~5,744~~
~~Current operating lease liabilities~~	~~918~~
~~Pension benefits~~	~~3,574~~
~~Postretirement benefits other than pensions~~	~~2,778~~
~~Long-term operating lease liabilities~~	~~2,286~~
~~Other liabilities~~	~~1,934~~
~~Total liabilities divested~~	$	~~37,588~~

~~2020 Joint Venture Deconsolidation~~

~~In the third quarter of 2020, management approved and completed a plan to sell the Company’s entire controlling equity interest of a joint venture~~subsequent adjustments resulting in ~~the Asia Pacific region. Upon finalizing the sale, the Company recorded~~ a gain ~~on deconsolidation~~ of ~~the business of $1,334.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

~~2019 Divestiture~~

During the first quarter of 2019 and in prior periods, the Company also operated an AVS product line. On April 1, 2019, the Company completed its sale of the AVS product line to Continental AG. The total sale price of the transaction was $265,500, subject to certain adjustments. Cash proceeds received in the second quarter of 2019 were $243,362 after adjusting for certain liabilities assumed by the purchaser. The Company recognized a gain on the divestiture of $188,180 during the nine months ended September 30, 2019. In the third quarter of 2020, the Company finalized adjustments to the gain recorded in 2019 by recording an additional gain on divestiture of $1,147, primarily due to working capital adjustments.$891.

4. Revenue

Revenue is recognized for manufactured parts at a point in time, generally when products are shipped or delivered. The Company usually enters into agreements with customers to produce products at the beginning of a vehicle’s life. Blanket purchase orders received from customers and related documents generally establish the annual terms, including pricing, related to a vehicle model. Customers typically pay for parts based on customary business practices with payment terms generally between 30 and 90 days.

Revenue by customer group for the three months ended ~~September 30, 2020~~March 31, 2021 was as follows:

North America Europe Asia Pacific South America Corporate, Eliminations and Other Consolidated
Passenger and Light Duty $ 350,016 $ 141,754 $ 129,822 $ 17,558 $ 0 $ 639,150
Commercial 3,179 4,066 1,190 6 911 9,352
Other 5,812 209 51 16 28,610 34,698
Revenue $ 359,007 $ 146,029 $ 131,063 $ 17,580 $ 29,521 $ 683,200

~~Revenue by customer group for the nine months ended September 30, 2020 was as follows:~~


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	Passenger and Light Duty	$	796,937	$	383,288	$	312,871	$	41,878	$	0	$	1,534,974	Passenger and Light Duty	$	331,613	$	159,781	$	113,041	$	15,479	$	0	$	619,914
Commercial	Commercial	8,328		12,846		3,149		16		2,868		27,207		Commercial	4,281		5,881		1,182		7		1,251		12,602
Other	Other	14,880		13,942		113		38		87,403		116,376		Other	3,142		114		2		0		33,193		36,451
Revenue	Revenue	$	820,145	$	410,076	$	316,133	$	41,932	$	90,271	$	1,678,557	Revenue	$	339,036	$	165,776	$	114,225	$	15,486	$	34,444	$	668,967

Revenue by customer group for the three months ended ~~September 30, 2019~~March 31, 2020 was as follows:

North America Europe Asia Pacific South America Corporate, Eliminations and Other Consolidated
Passenger and Light Duty $ 361,244 $ 173,868 $ 123,121 $ 25,179 $ 0 $ 683,412
Commercial 3,923 6,305 0 9 178 10,415
Other 6,937 7,265 18 32 31,439 45,691
Revenue $ 372,104 $ 187,438 $ 123,139 $ 25,220 $ 31,617 $ 739,518

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

~~Revenue by customer group for the nine months ended September 30, 2019 was as follows:~~


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	Passenger and Light Duty	$	1,167,062	$	588,473	$	366,877	$	73,399	$	5	$	2,195,816	Passenger and Light Duty	$	325,982	$	170,781	$	78,742	$	20,439	$	0	$	595,944
Commercial	Commercial	15,154		22,602		17		92		1,213		39,078		Commercial	3,178		5,557		546		10		1,134		10,425
Other	Other	16,727		23,792		192		90		106,516		147,317		Other	5,641		8,904		56		22		33,898		48,521
Revenue	Revenue	$	1,198,943	$	634,867	$	367,086	$	73,581	$	107,734	$	2,382,211	Revenue	$	334,801	$	185,242	$	79,344	$	20,471	$	35,032	$	654,890

The passenger and light duty group consists of sales to automotive OEMs and automotive suppliers, while the commercial group represents sales to OEMs of on- and off-highway commercial equipment and vehicles. The other customer group includes sales related to specialty and adjacent markets.

Substantially all of the Company’s revenues were generated from sealing, fuel and brake delivery and fluid transfer systems for use in passenger vehicles and light trucks manufactured by global ~~OEMs~~OEMs.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and ~~until March 31, 2019, anti-vibrations systems. On April 1, 2019, the Company completed the divestiture of its AVS product line.~~share amounts)

A summary of the Company’s products is as follows:


Product Line						Description
Sealing Systems						Protect vehicle interiors from weather, dust and noise intrusion for improved driving experience; provide aesthetic and functional class-A exterior surface treatment
Fuel & Brake Delivery Systems						Sense, deliver and control fluids to fuel and brake systems
Fluid Transfer Systems						Sense, deliver and control fluids and vapors for optimal powertrain & HVAC operation
~~Anti-Vibration Systems (Divested on April 1, 2019)~~						~~Control and isolate vibration and noise in the vehicle to improve ride and handling~~

Revenue by product line for the three months ended ~~September 30, 2020~~March 31, 2021 was as follows:

North America Europe Asia Pacific South America Corporate, Eliminations and Other Consolidated
Sealing systems $ 138,823 $ 116,640 $ 82,754 $ 11,045 $ 0 $ 349,262
Fuel and brake delivery systems 118,997 25,218 29,877 5,134 0 179,226
Fluid transfer systems 101,187 4,171 18,432 1,401 0 125,191
Other 0 0 0 0 29,521 29,521
Consolidated $ 359,007 $ 146,029 $ 131,063 $ 17,580 $ 29,521 $ 683,200

~~Revenue by product line for the nine months ended September 30, 2020 was as follows:~~

North America Europe Asia Pacific South America Corporate, Eliminations and Other Consolidated
Sealing systems $ 312,331 $ 297,216 $ 201,295 $ 27,385 $ 0 $ 838,227
Fuel and brake delivery systems 266,203 65,078 75,061 11,707 0 418,049
Fluid transfer systems 241,611 35,673 39,777 2,840 0 319,901
Other 0 12,109 0 0 90,271 102,380
Consolidated $ 820,145 $ 410,076 $ 316,133 $ 41,932 $ 90,271 $ 1,678,557

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~


	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	$	121,175	$	129,361	$	69,673	$	11,274	$	0	$	331,483
Fuel and brake delivery systems	112,656		30,790		28,369		2,865		0		174,680
Fluid transfer systems	105,205		5,625		16,183		1,347		0		128,360
Other	0		0		0		0		34,444		34,444
Consolidated	$	339,036	$	165,776	$	114,225	$	15,486	$	34,444	$	668,967

Revenue by product line for the three months ended ~~September 30, 2019~~March 31, 2020 was as follows:

North America Europe Asia Pacific South America Corporate, Eliminations and Other Consolidated
Sealing systems $ 138,741 $ 130,737 $ 82,078 $ 18,599 $ 0 $ 370,155
Fuel and brake delivery systems 120,425 29,401 28,440 6,349 0 184,615
Fluid transfer systems 112,938 20,334 12,621 272 0 146,165
Other 0 6,966 0 0 31,617 38,583
Consolidated $ 372,104 $ 187,438 $ 123,139 $ 25,220 $ 31,617 $ 739,518

~~Revenue by product line for the nine months ended September 30, 2019 was as follows:~~


		North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated			North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	Sealing systems	$	425,146	$	430,116	$	243,860	$	55,445	$	0	$	1,154,567	Sealing systems	$	124,556	$	127,246	$	49,024	$	13,549	$	0	$	314,375
Fuel and brake delivery systems	Fuel and brake delivery systems	376,107		95,722		79,917		17,728		0		569,474		Fuel and brake delivery systems	104,934		28,562		19,818		5,747		0		159,061
Fluid transfer systems	Fluid transfer systems	340,767		64,646		41,845		408		0		447,666		Fluid transfer systems	105,311		21,945		10,502		1,175		0		138,933
Anti-vibration systems		56,457		20,807		1,464		0		0		78,728
Other	Other	466		23,576		0		0		107,734		131,776		Other	0		7,489		0		0		35,032		42,521
Consolidated	Consolidated	$	1,198,943	$	634,867	$	367,086	$	73,581	$	107,734	$	2,382,211	Consolidated	$	334,801	$	185,242	$	79,344	$	20,471	$	35,032	$	654,890

Contract Estimates

The amount of revenue recognized is usually based on the purchase order price and adjusted for variable consideration, including pricing concessions. The Company accrues for pricing concessions by reducing revenue as products are shipped or delivered. The accruals are based on historical experience, anticipated performance and management’s best judgment. The Company also generally has ongoing adjustments to customer pricing arrangements based on the content and cost of its products. Such pricing accruals are adjusted as they are settled with customers. Customer returns are usually related to quality or shipment issues and are recorded as a reduction of revenue. The Company generally does not recognize significant return obligations due to their infrequent nature.

Contract Balances

The Company’s contract assets consist of unbilled amounts associated with variable pricing arrangements in its Asia Pacific region. Once pricing is finalized, contract assets are transferred to accounts receivable. As a result, the timing of revenue recognition and billings, as well as changes in foreign exchange rates, will impact contract assets on an ongoing basis. Contract assets were not materially impacted by any other factors during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

The Company’s contract liabilities consist of advance payments received and due from customers. Net contract assets (liabilities) consisted of the following:


		September 30, 2020		December 31, 2019		Change			March 31, 2021		December 31, 2020		Change
Contract assets	Contract assets	$	281	$	1,100	$	(819)	Contract assets	$	5,274	$	777	$	4,497
Contract liabilities	Contract liabilities	(31)		(61)		30		Contract liabilities	(21)		(27)		6
Net contract assets	Net contract assets	$	250	$	1,039	$	(789)	Net contract assets	$	5,253	$	750	$	4,503

1310

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Other

The Company, at times, enters into agreements that provide for lump sum payments to customers. These payment agreements are recorded as a reduction of revenue during the period the commitment is made. Amounts related to commitments of future payments to customers on the condensed consolidated balance sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were current liabilities of ~~$8,352~~$15,882 and ~~$12,916,~~$16,932, respectively, and long-term liabilities of ~~$6,724~~$6,427 and ~~$9,502,~~$6,828, respectively.

The Company provides assurance-type warranties to its customers. Such warranties provide customers with assurance that the related product will function as intended and complies with any agreed-upon specifications, and are recognized in costs of products sold.

5. Restructuring

On an ongoing basis, the Company evaluates its business and objectives to ensure that it is properly configured and sized based on changing market conditions. Accordingly, the Company has implemented several restructuring initiatives, including closure or consolidation of facilities throughout the world and the reorganization of its operating structure.

The Company’s restructuring charges consist of severance, retention and outplacement services, and severance-related postemployment benefits (collectively, “employee separation costs”), other related exit costs and asset impairments related to restructuring activities. Employee separation costs are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy.

Restructuring expense by segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
North America	North America	$	3,721	$	863	$	10,468	$	6,857	North America		$	2,363	$	3,703
Europe	Europe	1,720		3,340		7,019		13,395		Europe		16,397		2,193
Asia Pacific	Asia Pacific	552		902		3,264		4,476		Asia Pacific		369		133
South America	South America	316		9		2,367		35		South America		1,587		1,202
Total Automotive	Total Automotive	6,309		5,114		23,118		24,763		Total Automotive		20,716		7,231
Corporate and other	Corporate and other	(123)		458		118		4,451		Corporate and other		331		45
Total	Total	$	6,186	$	5,572	$	23,236	$	29,214	Total		$	21,047	$	7,276

Restructuring activity for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was as follows:


		Employee Separation Costs		Other Exit Costs		Total			Employee Separation Costs		Other Exit Costs		Total
Balance as of December 31, 2019		$	22,990	$	4,005	$	26,995
Balance as of December 31, 2020								Balance as of December 31, 2020	$	15,029	$	8,406	$	23,435
Expense	Expense	12,325		10,911		23,236		Expense	18,152		2,895		21,047
Cash payments	Cash payments	(17,132)		(9,751)		(26,883)		Cash payments	(4,416)		(5,646)		(10,062)
Non-cash fixed asset impairments included in expense	Non-cash fixed asset impairments included in expense	0		(1,748)		(1,748)		Non-cash fixed asset impairments included in expense	0		(182)		(182)
Foreign exchange translation and other	Foreign exchange translation and other	(1,192)		263		(929)		Foreign exchange translation and other	(603)		1,928		1,325
Balance as of September 30, 2020		$	16,991	$	3,680	$	20,671
Balance as of March 31, 2021								Balance as of March 31, 2021	$	28,162	$	7,401	$	35,563

6. Inventories

Inventories consist of the following:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Finished goods	Finished goods	$	41,587	$	57,070	Finished goods	$	46,675	$	39,136
Work in process	Work in process	38,366		33,753		Work in process	41,153		35,477
Raw materials and supplies	Raw materials and supplies	68,847		52,616		Raw materials and supplies	83,258		69,129
		$	148,800	$	143,439		$	171,086	$	143,742

1411

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

7. Leases

The Company primarily has operating and finance leases for certain manufacturing facilities, corporate offices and certain equipment. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities and long-term operating lease liabilities on the Company’s condensed consolidated balance ~~sheet as of September 30, 2020.~~sheets. Finance leases are included in property, plant and equipment, net, debt payable within one year, and long-term debt on the Company’s condensed consolidated balance sheets.

The components of lease expense were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Operating lease expense	Operating lease expense	$	8,065	$	8,362	$	24,484	$	25,027	Operating lease expense		$	7,344	$	8,605
Short-term lease expense	Short-term lease expense	1,040		796		3,115		2,607		Short-term lease expense		1,640		1,010
Variable lease expense	Variable lease expense	273		517		678		1,051		Variable lease expense		248		250
Finance lease expense:	Finance lease expense:									Finance lease expense:
Amortization of right-of-use assets	Amortization of right-of-use assets	598		614		1,950		1,629		Amortization of right-of-use assets		546		681
Interest on lease liabilities	Interest on lease liabilities	384		400		1,169		1,307		Interest on lease liabilities		366		385
Total lease expense	Total lease expense	$	10,360	$	10,689	$	31,396	$	31,621	Total lease expense		$	10,144	$	10,931

Other information related to leases was as follows:


		Nine Months Ended September 30,							Three Months Ended March 31,
		2020			2019				2021			2020
Supplemental Cash Flows Information	Supplemental Cash Flows Information							Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:							Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	Operating cash flows for operating leases	$	23,038		$	25,671		Operating cash flows for operating leases	$	7,346		$	7,933
Operating cash flows for finance leases	Operating cash flows for finance leases	1,188			1,186			Operating cash flows for finance leases	362			410
Financing cash flows for finance leases	Financing cash flows for finance leases	1,578			735			Financing cash flows for finance leases	652			648
Non-cash right-of-use assets obtained in exchange for lease obligations:	Non-cash right-of-use assets obtained in exchange for lease obligations:							Non-cash right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	47,176			4,955			Operating leases	2,932			37,205
Finance leases	Finance leases	549			9,476			Finance leases	0			61

Weighted Average Remaining Lease Term (in years)	Weighted Average Remaining Lease Term (in years)							Weighted Average Remaining Lease Term (in years)
Operating leases	Operating leases	8.1			5.5			Operating leases	7.6			8.2
Finance leases	Finance leases	10.7			11.7			Finance leases	10.4			11.1

Weighted Average Discount Rate	Weighted Average Discount Rate							Weighted Average Discount Rate
Operating leases	Operating leases	5.4		%	4.7		%	Operating leases	5.4		%	5.3		%
Finance leases	Finance leases	5.7		%	9.7		%	Finance leases	5.7		%	6.1		%

1512

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Future minimum lease payments under non-cancellable leases as of ~~September 30, 2020~~March 31, 2021 were as follows:


Year	Year	Operating Leases		Finance Leases		Year	Operating Leases		Finance Leases
Remainder of 2020		$	7,340	$	872
2021		24,909		3,472
Remainder of 2021						Remainder of 2021	$	24,400	$	2,442
2022	2022	20,160		3,211		2022	22,224		3,181
2023	2023	16,508		3,122		2023	17,837		3,092
2024	2024	13,171		3,400		2024	13,616		3,370
2025						2025	10,416		3,442
Thereafter	Thereafter	60,979		24,861		Thereafter	50,890		21,120
Total future minimum lease payments	Total future minimum lease payments	143,067		38,938		Total future minimum lease payments	139,383		36,647
Less imputed interest	Less imputed interest	(29,793)		(10,594)		Less imputed interest	(27,604)		(9,624)
Total	Total	$	113,274	$	28,344	Total	$	111,779	$	27,023

Amounts recognized on the condensed consolidated balance sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows:


		September 30, 2020	December 31, 2019		March 31, 2021	December 31, 2020
Operating Leases	Operating Leases			Operating Leases

Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	111,831	83,376	Operating lease right-of-use assets, net	106,670	109,795
Current operating lease liabilities	Current operating lease liabilities	21,492	24,094	Current operating lease liabilities	25,666	21,711

Long-term operating lease liabilities	Long-term operating lease liabilities	91,782	60,234	Long-term operating lease liabilities	86,113	90,517

Finance Leases	Finance Leases			Finance Leases
Debt payable within one year	Debt payable within one year	2,295	2,343	Debt payable within one year	2,193	2,300
Long-term debt	Long-term debt	26,049	27,430	Long-term debt	24,830	26,152

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, assets recorded under finance leases, net of accumulated depreciation were ~~$30,558~~$29,837 and ~~$32,571,~~$30,847, respectively. As of ~~September 30, 2020,~~March 31, 2021, the Company had additional operating and finance leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately ~~$547.~~$5,563. These ~~operating~~ leases will commence ~~between 2020 and~~in 2021 with lease terms up to ~~three~~five years.

8. Property, Plant and Equipment

Property, plant and equipment consists of the following:

September 30, 2020 December 31, 2019
Land and improvements $ 59,137 $ 66,670
Buildings and improvements 297,768 310,797
Machinery and equipment 1,255,056 1,204,457
Construction in progress 91,201 161,951
1,703,162 1,743,875
Accumulated depreciation (820,686) (755,598)
Property, plant and equipment, net $ 882,476 $ 988,277

~~The Company recorded impairment charges of $100 and $1,240 during the three and nine months ended September 30, 2020, respectively.~~


	March 31, 2021		December 31, 2020
Land and improvements	$	58,334	$	61,226
Buildings and improvements	291,272		298,431
Machinery and equipment	1,283,381		1,277,624
Construction in progress	78,362		96,706
	1,711,349		1,733,987
Accumulated depreciation	(853,740)		(841,678)
Property, plant and equipment, net	$	857,609	$	892,309

Based on the Company’s interim impairment assessment, the Company determined there were no ~~additional~~ indicators of impairment identified during the ~~nine~~three months ended September 30, 2020. The Company continues to monitor the significant global economic uncertainty as a result of COVID-19 to assess the outlook for demand for products and the impact on the Company’s business and overall financial performance. A lack of recovery or further deterioration in market conditions and

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

~~production volumes, among other factors, as a result of the COVID-19 pandemic could result in an impairment charge in future periods.~~March 31, 2021.

During the three months ended ~~September 30, 2019,~~March 31, 2020, the Company recorded an impairment charge related to machinery and equipment of ~~$1,958~~$977 due to the ~~termination~~deterioration of ~~certain customer programs~~financial results in ~~the~~a certain Asia Pacific ~~region.~~location. The fair value of machinery and equipment was determined using estimated salvage value, which was deemed the highest and best use of the assets. Impairment charges of $4,146 recorded during the nine months ended September 30, 2019 also included an impairment charge recorded in the second quarter related to machinery and equipment in certain Asia Pacific locations. The fair value was determined using estimated orderly liquidation value, which was deemed the highest and best use of the assets.

~~9. Goodwill and Intangible Assets~~

~~Goodwill~~

~~Changes in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2020 were as follows:~~

North America Industrial Specialty Group Total
Balance as of December 31, 2019 $ 142,187 $ 0 $ 142,187
Reorganization (14,036) 14,036 0
Foreign exchange translation (108) 0 (108)
Balance as of September 30, 2020 $ 128,043 $ 14,036 $ 142,079

The Company’s organizational structure changed on January 1, 2020. See Note 22. “Segment Reporting” for further detail on this reorganization of the Company’s business. Prior to this reorganization, the Company’s North America operating segment was the only reporting unit in which goodwill was recorded. As a result of the reorganization, a portion of the goodwill that was previously attributable to the North America reporting unit was reallocated to the Industrial Specialty Group reporting unit based on the relative fair value approach. The Industrial Specialty Group reporting unit is a component of the Advanced Technology Group operating segment, which is reflected in “Corporate, eliminations and other”.

The reorganization of the business represented a triggering event to test goodwill for impairment as of January 1, 2020. No impairment was identified as a result of completing the goodwill impairment test.

Goodwill is tested for impairment by reporting unit annually or more frequently if events or circumstances indicate that an impairment may exist. Other than the reorganization event noted above, there were no other indicators of potential impairment during the nine months ended September 30, 2020. The Company continues to monitor the significant global economic uncertainty as a result of COVID-19 to assess the outlook for demand for products and the impact on the Company’s business and overall financial performance. A lack of recovery or further deterioration in market conditions and production volumes, among other factors, as a result of the COVID-19 pandemic could result in an impairment charge in future periods.

~~Intangible Assets~~

~~Intangible assets and accumulated amortization balances as of September 30, 2020 and December 31, 2019 were as follows:~~

Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Customer relationships $ 154,903 $ (120,252) $ 34,651
Other 44,082 (9,043) 35,039
Balance as of September 30, 2020 $ 198,985 $ (129,295) $ 69,690
Customer relationships $ 156,557 $ (113,871) $ 42,686
Other 49,556 (7,873) 41,683
Balance as of December 31, 2019 $ 206,113 $ (121,744) $ 84,369

1713

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

9. Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2021 were as follows:


	North America		Industrial Specialty Group		Total
Balance as of December 31, 2020	$	128,214	$	14,036	$	142,250


Foreign exchange translation	57		0		57
Balance as of March 31, 2021	$	128,271	$	14,036	$	142,307

Goodwill is tested for impairment by reporting unit annually or more frequently if events or circumstances indicate that an impairment may exist. There were no indicators of potential impairment during the three months ended March 31, 2021.

Intangible Assets

Intangible assets and accumulated amortization balances as of March 31, 2021 and December 31, 2020 were as follows:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	154,510	$	(122,837)	$	31,673
Other	44,725		(10,535)		34,190
Balance as of March 31, 2021	$	199,235	$	(133,372)	$	65,863

Customer relationships	$	155,409	$	(122,657)	$	32,752
Other	44,826		(9,899)		34,927
Balance as of December 31, 2020	$	200,235	$	(132,556)	$	67,679

10. Debt

A summary of outstanding debt as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 is as follows:

September 30, 2020 December 31, 2019
Senior Notes $ 395,650 $ 395,114
Senior Secured Notes 239,142 0
Term Loan 324,242 326,061
ABL Facility 0 0
Finance leases 28,344 29,773
Other borrowings 49,575 56,680
Total debt 1,036,953 807,628
Less current portion (54,294) (61,449)
Total long-term debt $ 982,659 $ 746,179


	March 31, 2021		December 31, 2020
Senior Notes	$	396,008	$	395,829
Senior Secured Notes	240,043		239,567
Term Loan	323,030		323,636
ABL Facility	0		0
Finance leases	27,023		28,452
Other borrowings	38,823		36,007
Total debt	1,024,927		1,023,491
Less current portion	(43,441)		(40,731)
Total long-term debt	$	981,486	$	982,760

5.625% Senior Notes due 2026

In November 2016, the Company issued $400,000 aggregate principal amount of its 5.625% Senior Notes due 2026 (the “Senior Notes”). The Senior Notes mature on November 15, 2026. Interest on the Senior Notes is payable semi-annually in arrears in cash on May 15 and November 15 of each year.

Debt issuance costs related to the Senior Notes are amortized into interest expense over the term of the Senior Notes. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had ~~$4,350~~$3,992 and ~~$4,886~~$4,171 of unamortized debt issuance costs, respectively, related to the Senior Notes, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

13.0% Senior Secured Notes due 2024

OnIn May ~~29,~~ 2020, ~~Cooper Standard Automotive Inc. (the “Issuer”), a wholly-owned subsidiary of~~ the Company issued $250,000 aggregate principal amount of its 13.0% Senior Secured Notes due 2024 (the “Senior Secured Notes”), pursuant to the Indenture, dated as of May 29, 2020 (the “Indenture”), by and among the Issuer, the other guarantors party thereto and U.S. Bank National Association, as trustee, in a transaction exempt from registration under Rule 144A and Regulation S of the Securities Act of 1933. Proceeds from the Senior Secured Notes were used to provide additional liquidity for the Company.

The Senior Secured Notes are guaranteed on a senior secured basis by CS Intermediate HoldCo 1 LLC and each of the Issuer’s present and future subsidiaries that are obligors or guarantee the Term Loan Facility and each of the Issuer’s wholly owned domestic subsidiaries that are obligors under, or guarantee, certain other indebtedness, subject to certain exceptions. The notes are also guaranteed on a senior unsecured basis by Cooper-Standard Latin America B.V.

~~The Issuer may redeem all or part of the Senior Secured Notes prior to maturity at the prices set forth in the Indenture.~~. The Senior Secured Notes mature on June 1, 2024. Interest on the Senior Secured Notes is payable semi-annually in arrears in cash on June 1 and December 1 of each ~~year, commencing on December 1, 2020.~~

The Indenture contains certain covenants that limit the Issuer’s and its subsidiaries’ ability to, among other things, incur or guarantee additional indebtedness or issue certain preferred stock; make restricted payments; sell assets; create or incur liens; and merge or consolidate with other entities. These covenants are subject to a number of important limitations and exceptions. The Indenture also provides for customary events of default for non-investment grade debt securities, which, if any occur, would permit or require the principal, interest and any other monetary obligations on all the then-outstanding Senior Secured Notes to be due and payable immediately.year.

The Company paid approximately ~~$6,459~~$6,431 of debt issuance costs in connection with the transaction. Additionally, the Senior Secured Notes were issued at a discount of $5,000. As of ~~September 30,~~March 31, 2021 and December 31, 2020, the Company had ~~$6,075~~$5,547 and $5,828 of unamortized debt issuance costs, respectively, and ~~$4,783~~$4,410 and $4,605 of unamortized original issue discount, respectively, related to the Senior Secured Notes, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets. Both the debt issuance costs and the original issue discount are amortized into interest expense over the term of the Senior Secured Notes.

Term Loan Facility

In November 2016, the Company entered into Amendment No. 1 to its senior term loan facility (“Term Loan Facility”), which provides for loans in an aggregate principal amount of $340,000. On May 2, 2017, the Company entered into Amendment No. 2 to the Term Loan Facility to modify the interest rate. Subsequently, on March 6, 2018, the Company entered

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

into Amendment No. 3 to the Term Loan Facility to further modify the interest rate. In accordance with this amendment, borrowings under the Term Loan Facility bear interest, at the Company’s option, at either (1) with respect to Eurodollar rate loans, the greater of the applicable Eurodollar rate and 0.75% plus 2.0% per annum, or (2) with respect to base rate loans, the base rate, (which is the highest of the then current federal funds rate plus 0.5%, the prime rate most recently announced by the administrative agent under the term loan, and the one-month Eurodollar rate plus 1.0%) plus 1.0% per annum. The Term Loan Facility matures on November 2, 2023, unless earlier terminated.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had ~~$1,828~~$1,532 and ~~$2,273~~$1,680 of unamortized debt issuance costs, respectively, and ~~$1,179~~$998 and ~~$1,466~~$1,084 of unamortized original issue discount, respectively, related to the Term Loan Facility, which are presented as direct deductions from the principal balance in the condensed consolidated balance sheets. Both the debt issuance costs and the original issue discount are amortized into interest expense over the term of the Term Loan Facility.

ABL Facility

In November 2016, the Company entered into a Third Amended and Restated Loan Agreement of its ABL Facility, which provided an aggregate revolving loan availability of up to $210,000, subject to borrowing base availability. In March 2020, the Company entered into the First Amendment of the Third Amended and Restated Loan Agreement (“the Amendment”). As a result of the Amendment, the senior asset-based revolving credit facility (“ABL Facility”) maturity was extended to March 2025 and the aggregate revolving loan availability was reduced to $180,000. The aggregate revolving loan availability includes a $100,000 letter of credit sub-facility and a $25,000 swing line sub-facility. The ABL Facility also provides for an uncommitted $100,000 incremental loan facility, for a potential total ABL Facility of $280,000, if requested by the borrowers under the ABL Facility and the lenders agree to fund such increase. No consent of any lender is required to effect any such increase, except for those participating in the increase.

As of ~~September 30, 2020,~~March 31, 2021, there were no loans outstanding under the ABL Facility. The Company’s borrowing base was ~~$172,770.~~$163,208. Net of the greater of 10% of the borrowing base or $15,000 that cannot be borrowed without triggering the fixed charge coverage ratio maintenance covenant and ~~$5,339~~$5,530 of outstanding letters of credit, the Company effectively had ~~$150,154~~$141,357 available for borrowing under its ABL facility.

Any borrowings under the ABL Facility will mature, and the commitments of the lenders under the ABL Facility will terminate, on the earlier of March 24, 2025 or the date 91 days prior to the maturity date of the Term Loan Facility (or another fixed asset facility replacing the Term Loan Facility).

As a result of the Amendment in March 2020, the Company wrote off $177 in unamortized debt issuance costs, which are presented in interest expense, net of interest income in the condensed consolidated statements of operations. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had ~~$1,215~~$967 and ~~$657,~~$1,029, respectively, of unamortized debt issuance costs related to the ABL Facility, which are presented in other assets in the condensed consolidated balance sheets.

Debt Covenants

The Company was in compliance with all covenants of the Senior Notes, Senior Secured Notes, Term Loan Facility and ABL Facility as of ~~September 30, 2020.~~March 31, 2021.

Other

Other borrowings as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 reflect borrowings under local bank lines classified in debt payable within one year on the condensed consolidated balance sheet.

1915

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

11. Fair Value Measurements and Financial Instruments

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy is utilized, which prioritizes the inputs used in measuring fair value as follows:


Level 1:			Observable inputs such as quoted prices in active markets;
Level 2:			Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:			Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Items Measured at Fair Value on a Recurring Basis

Estimates of the fair value of foreign currency derivative instruments are determined using exchange traded prices and rates. The Company also considers the risk of non-performance in the estimation of fair value and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. In certain instances where market data is not available, the Company uses management judgment to develop assumptions that are used to determine fair value. Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured or disclosed at fair value on a recurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows:


		September 30, 2020		December 31, 2019		Input		March 31, 2021		December 31, 2020		Input
Forward foreign exchange contracts - other current assets	Forward foreign exchange contracts - other current assets	$	153	$	467	Level 2	Forward foreign exchange contracts - other current assets	$	1,129	$	1,826	Level 2
Forward foreign exchange contracts - accrued liabilities	Forward foreign exchange contracts - accrued liabilities	(1,876)		(42)		Level 2	Forward foreign exchange contracts - accrued liabilities	(788)		(750)		Level 2

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a nonrecurring basis, which are not included in the table above. As these nonrecurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For further information on assets and liabilities measured at fair value on a nonrecurring basis see Note 3. ~~“Divestitures”~~“Divestiture” and Note 8. “Property, Plant and Equipment.”

Items Not Carried at Fair Value

Fair values of the Company’s Senior Notes, Senior Secured Notes and Term Loan Facility were as follows:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Aggregate fair value	Aggregate fair value	$	806,890	$	693,600	Aggregate fair value	$	942,438	$	965,052
Aggregate carrying value (1)	Aggregate carrying value (1)	977,250		729,800		Aggregate carrying value (1)	975,550		976,400

(1) Excludes unamortized debt issuance costs and unamortized original issue discount.

Fair values were based on quoted market prices and are classified within Level 1 of the fair value hierarchy.

Derivative Instruments and Hedging Activities

The Company is exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices. The Company enters into derivative instruments primarily to hedge portions of its forecasted foreign currency denominated cash flows and designates these derivative instruments as cash flow hedges in order to qualify for hedge accounting.

The Company formally documents its hedge relationships, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the cash flow hedges. The Company also formally assesses whether a cash flow hedge is highly effective in offsetting changes in the cash flows of the hedged item. Derivatives are recorded at fair value in other current assets, other assets, accrued liabilities and other long-term liabilities. For a cash flow hedge, the effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”) in the condensed consolidated balance sheet and reclassified into earnings when the

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

underlying hedged transaction is realized. The realized gains and losses are recorded on the same line as the hedged transaction in the condensed consolidated statements of operations.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

The Company is exposed to credit risk in the event of nonperformance by its counterparties on its derivative financial instruments. The Company mitigates this credit risk exposure by entering into agreements directly with major financial institutions with high credit standards that are expected to fully satisfy their obligations under the contracts.

Cash Flow Hedges

Forward Foreign Exchange Contracts - The Company uses forward contracts to mitigate the potential volatility to earnings and cash flow arising from changes in currency exchange rates that impact the Company’s foreign currency transactions. The principal currencies hedged by the Company include various European currencies, the Canadian Dollar, and the Mexican Peso. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the notional amount of these contracts was ~~$69,693~~$66,133 and ~~$92,150,~~$97,503, respectively, and consisted of hedges of transactions up to December 2021.

Pretax amounts related to the Company’s cash flow hedges that were recognized in other comprehensive income (loss) (“OCI”) were as follows:

Gain (Loss) Recognized in OCI
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Forward foreign exchange contracts $ 1,051 $ (1,367) $ (8,448) $ 2,443


		Gain (Loss) Recognized in OCI
	Three Months Ended March 31,
		2021		2020
Forward foreign exchange contracts		$	(548)	$	(12,871)

Pretax amounts related to the Company’s cash flow hedges that were reclassified from AOCI and recognized in cost of products sold were as follows:

Gain (Loss) Reclassified from AOCI to Income
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Forward foreign exchange contracts $ (1,764) $ 614 $ (6,315) $ 1,766


		Gain (Loss) Reclassified from AOCI to Income
	Three Months Ended March 31,
		2021		2020
Forward foreign exchange contracts		$	188	$	115

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

12. Accounts Receivable Factoring

As a part of its working capital management, the Company sells certain receivables through a single third-party financial institution in a pan-European program (the “Factor”). The amount sold varies each month based on the amount of underlying receivables and cash flow needs of the Company. These are permitted transactions under the Company’s credit agreements governing the ABL Facility and Term Loan Facility and the indentures governing the Senior Notes and Senior Secured Notes. The European factoring facility, which was renewed in March 2020, allows the Company to factor up to €120 million of its Euro-denominated accounts receivable, accelerating access to cash and reducing credit risk. The factoring facility expires in December 2023.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Costs incurred on the sale of receivables are recorded in other expense, net in the condensed consolidated statements of operations. The sale of receivables under this contract is considered an off-balance sheet arrangement to the Company and is accounted for as a true sale and is excluded from accounts receivable in the condensed consolidated balance sheet. Amounts outstanding under receivable transfer agreements entered into by various locations as of the period end were as follows:

September 30, 2020 December 31, 2019
Off-balance sheet arrangements $ 77,856 $ 103,818


	March 31, 2021		December 31, 2020
Off-balance sheet arrangements	$	80,461	$	85,108

Accounts receivable factored and related costs throughout the period were as follows:


		Off-Balance Sheet Arrangements								Off-Balance Sheet Arrangements
		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Accounts receivable factored	Accounts receivable factored	$	124,910	$	108,957	$	352,103	$	376,944		Accounts receivable factored	$	117,271	$	176,508
Costs	Costs	120		218		591		691			Costs	154		309

During the quarter, the Factor changed to an alternative remittance and settlement process provided for under the factoring agreement, which resulted in the Company having an insignificant receivable due from the Factor. As of March 31, 2021 and December 31, ~~2019,~~2020, cash collections on behalf of the Factor that have yet to be remitted were ~~$21,485~~$6,174 and $1,786, respectively, and are reflected in other current assets as restricted cash ~~and cash equivalents~~ in the condensed consolidated balance sheet.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

13. Pension and Postretirement Benefits Other Than Pensions

The components of net periodic benefit (income) cost for the Company’s defined benefit plans and other postretirement benefit plans were as follows:


		Pension Benefits
		Three Months Ended September 30,
		2020				2019
		U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost		$	213	$	884	$	189	$	931
Interest cost		2,033		736		2,952		924
Expected return on plan assets		(3,421)		(580)		(4,155)		(599)
Amortization of prior service cost and actuarial loss		485		833		781		589

Net periodic benefit (income) cost		$	(690)	$	1,873	$	(233)	$	1,845

		Pension Benefits									Pension Benefits
		Nine Months Ended September 30,									Three Months Ended March 31,
		2020				2019					2021				2020
		U.S.		Non-U.S.		U.S.		Non-U.S.			U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost	Service cost	$	639	$	2,838	$	567	$	2,985	Service cost	$	223	$	914	$	213	$	989
Interest cost	Interest cost	6,099		2,277		8,856		3,047		Interest cost	1,629		648		2,033		782
Expected return on plan assets	Expected return on plan assets	(10,263)		(1,716)		(12,465)		(1,785)		Expected return on plan assets	(3,564)		(334)		(3,421)		(577)
Amortization of prior service cost and actuarial loss	Amortization of prior service cost and actuarial loss	1,455		2,417		2,343		1,798		Amortization of prior service cost and actuarial loss	418		932		485		794

Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	(2,070)	$	5,816	$	(699)	$	6,045	Net periodic benefit (income) cost	$	(1,294)	$	2,160	$	(690)	$	1,988


		Other Postretirement Benefits									Other Postretirement Benefits
		Three Months Ended September 30,									Three Months Ended March 31,
		2020				2019					2021				2020
		U.S.		Non-U.S.		U.S.		Non-U.S.			U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost	Service cost	$	26	$	97	$	26	$	93	Service cost	$	26	$	90	$	26	$	96
Interest cost	Interest cost	170		175		202		182		Interest cost	133		177		170		173
Amortization of prior service credit and actuarial (gain) loss	Amortization of prior service credit and actuarial (gain) loss	(483)		108		(566)		94		Amortization of prior service credit and actuarial (gain) loss	(349)		190		(483)		107

Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	(287)	$	380	$	(338)	$	369	Net periodic benefit (income) cost	$	(190)	$	457	$	(287)	$	376
		Other Postretirement Benefits
		Nine Months Ended September 30,
		2020				2019
		U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost		$	78	$	286	$	92	$	301
Interest cost		510		516		663		564
Amortization of prior service credit and actuarial (gain) loss		(1,449)		319		(1,874)		225

Net periodic benefit (income) cost		$	(861)	$	1,121	$	(1,119)	$	1,090

The service cost component of net periodic benefit (income) cost is included in cost of products sold and selling, administrative and engineering expenses in the condensed consolidated statements of operations. All other components of net periodic benefit (income) cost are included in other expense, net in the condensed consolidated statements of operations for all periods presented.

2318

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

14. Other ~~Income (Expense),~~Expense, Net

The components of other ~~income (expense),~~expense, net were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Foreign currency gains (losses) $ 2,626 $ (73) $ (4,397) $ (1,529)
Components of net periodic benefit cost other than service cost (56) (404) (165) (1,372)
Factoring costs (120) (218) (591) (691)
Miscellaneous income (expense) 334 181 (204) 501
Other income (expense), net $ 2,784 $ (514) $ (5,357) $ (3,091)


	Three Months Ended March 31,
		2021		2020
Foreign currency losses		$	(5,264)	$	(3,232)
Components of net periodic benefit income (cost) other than service cost		120		(63)
Factoring costs		(154)		(309)
Miscellaneous income		209		164
Other expense, net		$	(5,089)	$	(3,440)

15. Income Taxes

The Company determines its effective tax rate each quarter based upon its estimated annual effective tax rate. The Company records the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

Income tax ~~(benefit)~~ expense ~~income (loss)~~(benefit), loss before income taxes and the corresponding effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Income tax (benefit) expense $ (2,386) $ 745 $ (55,485) $ 47,001
Income (loss) before income taxes 4,323 (5,675) (297,199) 179,878
Effective tax rate (55) % (13) % 19 % 26 %


	Three Months Ended March 31,
		2021			2020
Income tax expense (benefit)		$	936		$	(14,117)
Loss before income taxes		(33,777)			(126,556)
Effective tax rate		(3)		%	11		%

The effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 compared to the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 varied from prior periods primarily due to the geographic mix of pre-tax losses, ~~driven by the impairment charge on divested entities and~~ the inability to record a tax benefit for pre-tax losses in certain foreign ~~jurisdictions.~~jurisdictions and U.S. states, and due to a benefit in the three months ended March 31, 2020 for net operating losses carried back up to five years at tax rates in effect during those periods under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), rather than carried forward at current federal tax rates of 21%. The incremental loss in the three months ended March 31, 2020 was driven by impairment charges on held for sale entities for which no tax benefit was recognized. Additionally, a discrete expense of ~~$13,414~~$13,309 for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the ~~nine~~three months ended ~~September 30,~~March 31, 2020. In accordance with recent legislation, one of the business tax provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) allows net operating losses (“NOL”) generated by the Compa~~ny to be~~ carried back up to five years at the tax rates in effect during those periods, rather than carried forward at current federal tax rates of 21%. The Company has included a $19,764 benefit in the estimated annual effective tax rate for this CARES Act provision which was used to calculate the income tax benefit recorded in the three and nine months ended September 30, 2020.

The income tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019 varies~~varied from the U.S. statutory rate primarily due to the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions ~~to the extent not offset by other categories of income, tax benefits related to the CARES Act,~~and U.S. states, tax credits, the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, and other permanent items. Additionally, the income tax rate for the three months ended March 31, 2020 varied from the U.S. statutory rate as a result of benefits from net operating loss carry backs under the CARES Act. Further, the Company’s current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these valuation allowances until it is more likely than not that the deferred tax assets will be realized.

2419

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

16. Net ~~Income (Loss)~~Loss Per Share Attributable to Cooper-Standard Holdings Inc.

Basic net ~~income (loss)~~loss per share attributable to Cooper-Standard Holdings Inc. was computed by dividing net ~~income (loss)~~loss attributable to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding during the period. Diluted net ~~income (loss)~~loss per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method by dividing diluted net ~~income (loss)~~loss available to Cooper-Standard Holdings Inc. by the weighted average number of shares of common stock outstanding, including the dilutive effect of common stock equivalents, using the average share price during the period.

Information used to compute basic and diluted net ~~income (loss)~~loss per share attributable to Cooper-Standard Holdings Inc. was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020

Net income (loss) available to Cooper-Standard Holdings Inc. common stockholders		$	4,381	$	(4,877)	$	(240,426)	$	134,913
Net loss available to Cooper-Standard Holdings Inc. common stockholders										Net loss available to Cooper-Standard Holdings Inc. common stockholders		$	(33,864)	$	(110,588)

Basic weighted average shares of common stock outstanding	Basic weighted average shares of common stock outstanding	16,927,924		16,880,736		16,908,940		17,240,366		Basic weighted average shares of common stock outstanding		16,951,190		16,883,717
Dilutive effect of common stock equivalents	Dilutive effect of common stock equivalents	87,031		0		0		64,428		Dilutive effect of common stock equivalents		0		0
Diluted weighted average shares of common stock outstanding	Diluted weighted average shares of common stock outstanding	17,014,955		16,880,736		16,908,940		17,304,794		Diluted weighted average shares of common stock outstanding		16,951,190		16,883,717

Basic net income (loss) per share attributable to Cooper-Standard Holdings Inc.		$	0.26	$	(0.29)	$	(14.22)	$	7.83
Basic net loss per share attributable to Cooper-Standard Holdings Inc.										Basic net loss per share attributable to Cooper-Standard Holdings Inc.		$	(2.00)	$	(6.55)

Diluted net income (loss) per share attributable to Cooper-Standard Holdings Inc.		$	0.26	$	(0.29)	$	(14.22)	$	7.80
Diluted net loss per share attributable to Cooper-Standard Holdings Inc.										Diluted net loss per share attributable to Cooper-Standard Holdings Inc.		$	(2.00)	$	(6.55)

Approximately 189,000 and 13,000 securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2021 and 2020, respectively, because the inclusion of such securities in the calculation would have been anti-dilutive.

2520

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

17. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of related tax, were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020			2019			2020			2019					2021			2020
Foreign currency translation adjustment	Foreign currency translation adjustment													Foreign currency translation adjustment
Balance at beginning of period	Balance at beginning of period	$	(175,616)		$	(144,706)		$	(153,933)		$	(141,104)		Balance at beginning of period		$	(136,579)		$	(153,933)
Other comprehensive income (loss) before reclassifications		15,200		(1)	(28,250)		(1)	(6,483)		(1)	(35,676)		(1)
Amounts reclassified from accumulated other comprehensive loss		1,646			0			1,646			3,824
Other comprehensive loss before reclassifications														Other comprehensive loss before reclassifications		(6,320)		(1)	(28,382)		(1)

Balance at end of period	Balance at end of period	$	(158,770)		$	(172,956)		$	(158,770)		$	(172,956)		Balance at end of period		$	(142,899)		$	(182,315)
Benefit plan liabilities	Benefit plan liabilities													Benefit plan liabilities
Balance at beginning of period	Balance at beginning of period	$	(98,194)		$	(105,935)		$	(100,160)		$	(104,375)		Balance at beginning of period		$	(106,079)		$	(100,160)
Other comprehensive income (loss) before reclassifications		(2,422)		(2)	1,634		(2)	(1,803)		(2)	(714)		(2)
Other comprehensive income before reclassifications														Other comprehensive income before reclassifications		1,643		(2)	2,024		(2)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	1,569		(3)	612		(4)	2,916		(5)	1,400		(6)	Amounts reclassified from accumulated other comprehensive loss		1,096		(3)	658		(4)
Balance at end of period	Balance at end of period	$	(99,047)		$	(103,689)		$	(99,047)		$	(103,689)		Balance at end of period		$	(103,340)		$	(97,478)
Fair value change of derivatives	Fair value change of derivatives													Fair value change of derivatives
Balance at beginning of period	Balance at beginning of period	$	(3,486)		$	1,623		$	352		$	(458)		Balance at beginning of period		$	762		$	352
Other comprehensive income (loss) before reclassifications		786		(7)	(1,109)		(7)	(6,370)		(7)	1,819		(7)
Other comprehensive loss before reclassifications														Other comprehensive loss before reclassifications		(432)		(5)	(9,984)		(5)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	1,286		(8)	(449)		(8)	4,604		(8)	(1,296)		(8)	Amounts reclassified from accumulated other comprehensive loss		(139)		(6)	(92)		(6)
Balance at end of period	Balance at end of period	$	(1,414)		$	65		$	(1,414)		$	65		Balance at end of period		$	191		$	(9,724)
Accumulated other comprehensive loss, ending balance	Accumulated other comprehensive loss, ending balance	$	(259,231)		$	(276,580)		$	(259,231)		$	(276,580)		Accumulated other comprehensive loss, ending balance		$	(246,048)		$	(289,517)

(1)Includes other comprehensive ~~income (loss)~~loss related to intra-entity foreign currency balances that are of a long-term investment nature of ~~$7,368~~$4,389 and ~~$(10,785)~~$22,703 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $(11,850) and $(8,819) for the nine months ended September 30, 2020 and 2019,~~ respectively.

(2)Net of tax (benefit) expense ~~(benefit)~~ of ~~$57~~$(245) and ~~$(76)~~$337 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $347 and $(983) for the nine months ended September 30, 2020 and 2019,~~ respectively. Includes other comprehensive loss of $371 for each of the three and nine months ended September 30, 2020 related to benefit plan liability remeasurement due to the divestiture of certain businesses in Europe and India. Includes other comprehensive loss of $3,224 for the nine months ended September 30, 2019 related to benefit plan liability remeasurement due to the divestiture of the Company’s AVS product line.

(3)Includes the effect of the amortization of actuarial losses of ~~$982,~~$1,124 and amortization of prior service cost of ~~$25, and net settlement loss of $1,059, offset by net curtailment gain of $315 and~~$65, net of tax of ~~$182. The settlement and curtailment during the three months ended September 30, 2020 relate to the divestiture of certain businesses in Europe and India.~~$93.

(4)Includes the effect of the amortization of actuarial losses of ~~$864, offset by the amortization of prior service credits of $39, net of tax of $213.~~

~~(5)Includes the effect of the amortization of actuarial losses of $2,769,~~$872 and amortization of prior service cost of ~~$67, and net settlement loss of $1,059, offset by net curtailment gain of $315,~~$21, net of tax of ~~$664. The settlement~~$235.

(5)Net of tax benefit of $116 and ~~curtailment during~~$2,887 for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~relate to the divestiture of certain businesses in Europe and India.~~respectively.

(6)Includes the effect of the amortization of actuarial losses of $2,607, offset by the amortization of prior service credits of $152, net settlement gain of $65, and curtailment gain of $204, net of tax of $786. The settlement and curtailment during the nine months ended September 30, 2019 relate to the divestiture of the Company’s AVS product line.

~~(7)~~Net of tax expense ~~(benefit)~~ of ~~$265~~$49 and ~~$(258)~~$23 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $(2,078) and $624 for the nine months ended September 30, 2020 and 2019,~~ respectively.

~~(8)~~Net of tax (benefit) expense of $(478) and $165 for the three months ended September 30, 2020 and 2019, respectively, and $(1,711) and $470 for the nine months ended September 30, 2020 and 2019, respectively.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

18. Common Stock

Share Repurchase Program

In June 2018, the Company’s Board of Directors approved a common stock repurchase program (the “2018 Program”) authorizing the Company to repurchase, in the aggregate, up to $150,000 of its outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by management and in accordance with prevailing market conditions and federal securities laws and regulations. The Company expects to fund any future repurchases from cash on hand and future cash flows from operations. The Company is not obligated to acquire a particular amount of securities, and the 2018 Program may be discontinued at any time at the Company’s discretion. The 2018 Program became effective in November 2018. As of ~~September 30, 2020,~~March 31, 2021, the Company had approximately $98,720 of repurchase authorization remaining under the 2018 Program.

The Company did not make any repurchases under the 2018 Program during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 or during the three months ended March 31, 2020.

~~2019 Repurchases~~

In May 2019, the Company entered into an accelerated share repurchase (“ASR”) agreement with a third-party financial institution to repurchase the Company’s common stock pursuant to the 2018 Program. Under the ASR agreement, the Company made an up-front payment of $30,000 and received an initial delivery of 626,305 shares of its common stock

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in the second quarter of 2019. The repurchase was completed in the third quarter of 2019 when the Company received final delivery of an additional 72,875 shares. A total of 699,180 shares were repurchased at a weighted average purchase price of $42.91 per share.

~~In addition to the repurchase under the ASR agreement, during the nine months ended September 30, 2019, the Company repurchased 85,000 shares at an average purchase price of $69.85~~thousands except per share ~~excluding commissions, for a total cost of $5,937.~~and share amounts)

19. Share-Based Compensation

The Company’s long-term incentive plans allow for the grant of various types of share-based awards to key employees and directors of the Company and its affiliates. The Company generally awards grants on an annual basis.

In February ~~2020,~~2021, the Company granted Restricted Stock Units (“RSUs”), Performance Units (“PUs”) and stock options. The RSUs cliff vest after three years, the PUs vest ratably over three years after the initial two-year performance period, and the stock options vest ratably over three years. The number of PUs that will vest depends on the Company’s achievement of target performance goals related to the Company’s return on invested capital (“ROIC”) and total shareholder return, which may range from 0% to 200% of the target award amount.

Share-based compensation expense was as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
PUs $ 127 $ 617 $ 346 $ 1,507
RSUs 1,305 2,382 4,715 6,391
Stock options 610 812 1,916 2,395
Total $ 2,042 $ 3,811 $ 6,977 $ 10,293

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

~~20. Related Party Transactions~~

~~A summary of the material related party transactions with affiliates accounted for under the equity method was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Sales(1)
$ 6,826 $ 6,723 $ 15,256 $ 22,256
Purchases(2)
84 82 262 806
Dividends received(3)
0 0 5,245 4,917

~~(1)~~ ~~Relates to transactions with Nishikawa Cooper LLC (“NISCO”)~~

~~(2)~~ ~~Relates to transactions with NISCO and Polyrub Cooper Standard FTS Private Limited~~

~~(3)~~ ~~From NISCO and Nishikawa Tachaplalert Cooper Ltd. inclusive of any gross up of dividend related to withholding tax~~

~~Amounts receivable from NISCO as of September 30, 2020 and December 31, 2019 were $4,175 and $4,297, respectively.~~


	Three Months Ended March 31,
		2021		2020
PUs		$	339	$	74
RSUs		1,246		1,643
Stock options		593		657
Total		$	2,178	$	2,374

~~21.~~20. Commitments and Contingencies

The Company is periodically involved in claims, litigation and various legal matters that arise in the ordinary course of business. The Company accrues for litigation exposure when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified. As of ~~September 30, 2020,~~March 31, 2021, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for claims, litigation and various legal matters, if any, has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company’s financial condition, results of operations or cash flows could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

In addition, the Company conducts and monitors environmental investigations and remedial actions at certain locations. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had approximately $12,012 and $13,302, respectively, reserved in accrued liabilities and other liabilities on the condensed consolidated balance sheets on an undiscounted ~~reserve for environmental investigation and remediation was approximately $7,603 and $6,104, respectively.~~basis. While the Company’s costs to defend and settle known claims arising under environmental laws have not been material in the past and are not currently estimated to behave a material adverse effect on the Company’s financial condition, such costs may be material to the Company’s financial statements in the future.

~~22.~~21. Segment Reporting

The Company’s ~~organizational structure changed on January 1, 2020, creating a global automotive business (“Automotive”) and Advanced Technology Group (“ATG”). The Company’s~~ business is ~~now~~ organized in the following reportable segments: North America, Europe, Asia Pacific and South America. ~~ATG and all~~All other business activities are reported in Corporate, eliminations and other. The Corporate, eliminations and other External Sales and Intersegment Sales amounts previously reported for the three and nine months ended September 30, 2019 have been reclassified from North America and Europe from the table below. The adjusted EBITDA amounts previously reported for the three and nine months ended September 30, 2019 and Segment Asset amounts previously reported as of December 31, 2019 have been reclassified from North America, Europe, Asia Pacific and South America from the tables below.

~~The~~ Company’s principal products within each of ~~these~~the reportable segments are sealing, fuel and brake delivery, and fluid transfer systems. During the first quarter of 2019 and in prior periods, the Company also operated an anti-vibration systems product line. On April 1, 2019, the Company completed the divestiture of the AVS product line.

The Company uses Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. The results of each segment include certain allocations for general, administrative and other shared costs. Segment adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

2822

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

(Dollar amounts in thousands except per share and share amounts)

Certain financial information on the Company’s reportable segments was as follows:


		Three Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
		External Sales		Intersegment Sales		Adjusted EBITDA		External Sales		Intersegment Sales		Adjusted EBITDA			External Sales		Intersegment Sales		Adjusted EBITDA		External Sales		Intersegment Sales		Adjusted EBITDA
North America	North America	$	359,007	$	2,372	$	58,115	$	372,104	$	5,828	$	59,819	North America	$	339,036	$	2,633	$	41,233	$	334,801	$	4,468	$	37,019
Europe	Europe	146,029		2,440		(1,466)		187,438		3,054		6,269		Europe	165,776		2,979		(1,489)		185,242		3,091		(4,623)
Asia Pacific	Asia Pacific	131,063		1,008		12,246		123,139		894		(12,080)		Asia Pacific	114,225		630		3,552		79,344		457		(17,057)
South America	South America	17,580		4		(2,680)		25,220		18		(2,678)		South America	15,486		12		(2,608)		20,471		68		(4,577)
Total Automotive	Total Automotive	653,679		5,824		66,215		707,901		9,794		51,330		Total Automotive	634,523		6,254		40,688		619,858		8,084		10,762
Corporate, eliminations and other	Corporate, eliminations and other	29,521		(5,824)		(2,081)		31,617		(9,794)		2,491		Corporate, eliminations and other	34,444		(6,254)		(2,148)		35,032		(8,084)		(2,483)
Consolidated	Consolidated	$	683,200	$	0	$	64,134	$	739,518	$	0	$	53,821	Consolidated	$	668,967	$	0	$	38,540	$	654,890	$	0	$	8,279

		Nine Months Ended September 30,
		2020						2019
		External Sales		Intersegment Sales		Adjusted EBITDA		External Sales		Intersegment Sales		Adjusted EBITDA
North America		$	820,145	$	8,968	$	52,260	$	1,198,943	$	14,894	$	172,853
Europe		410,076		6,755		(47,492)		634,867		9,261		21,540
Asia Pacific		316,133		1,678		(6,983)		367,086		2,512		(14,313)
South America		41,932		72		(11,608)		73,581		71		(4,817)
Total Automotive		1,588,286		17,473		(13,823)		2,274,477		26,738		175,263
Corporate, eliminations and other		90,271		(17,473)		(7,516)		107,734		(26,738)		663
Consolidated		$	1,678,557	$	0	$	(21,339)	$	2,382,211	$	0	$	175,926


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020
Adjusted EBITDA	Adjusted EBITDA	$	64,134	$	53,821	$	(21,339)	$	175,926	Adjusted EBITDA		$	38,540	$	8,279
Restructuring charges										Restructuring charges		(21,047)		(7,276)
Gain on sale of business										Gain on sale of business		891		0
Impairment of assets held for sale	Impairment of assets held for sale	0		0		(86,470)		0		Impairment of assets held for sale		0		(74,079)
Restructuring charges		(6,186)		(5,572)		(23,236)		(29,214)
Project costs	Project costs	0		(335)		(4,234)		(2,003)		Project costs		0		(2,425)
Other impairment charges	Other impairment charges	(100)		(1,958)		(947)		(4,146)		Other impairment charges		0		(684)
Lease termination costs	Lease termination costs	(83)		(512)		(684)		(1,003)		Lease termination costs		0		(520)
Gain on sale of business, net		2,314		(1,730)		2,314		188,180
Divested noncontrolling interest debt extinguishment		(3,595)		0		(3,595)		0

EBITDA	EBITDA	$	56,484	$	43,714	$	(138,191)	$	327,740	EBITDA		$	18,384	$	(76,705)
Income tax benefit (expense)		2,386		(745)		55,485		(47,001)
Income tax (expense) benefit										Income tax (expense) benefit		(936)		14,117
Interest expense, net of interest income	Interest expense, net of interest income	(17,985)		(10,351)		(40,993)		(33,858)		Interest expense, net of interest income		(17,784)		(10,237)
Depreciation and amortization	Depreciation and amortization	(36,504)		(37,495)		(116,727)		(111,968)		Depreciation and amortization		(33,528)		(37,763)
Net income (loss) attributable to Cooper-Standard Holdings Inc.		$	4,381	$	(4,877)	$	(240,426)	$	134,913
Net loss attributable to Cooper-Standard Holdings Inc.										Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)	$	(110,588)


	March 31, 2021		December 31, 2020
Segment assets:
North America	$	941,996	$	907,652
Europe	447,340		465,031
Asia Pacific	543,970		587,610
South America	61,714		64,800
Total Automotive	1,995,020		2,025,093
Corporate, eliminations and other	570,341		586,851
Consolidated	$	2,565,361	$	2,611,944

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(Unaudited)~~

~~(Dollar amounts in thousands except per share and share amounts)~~

September 30, 2020 December 31, 2019
Segment assets:
North America $ 1,001,464 $ 1,040,650
Europe 433,292 553,977
Asia Pacific 561,681 614,952
South America 59,496 65,438
Total Automotive 2,055,933 2,275,017
Corporate, eliminations and other 582,058 360,565
Consolidated $ 2,637,991 $ 2,635,582

The decrease in asset amounts in Europe and Asia Pacific as of September 30, 2020 is primarily attributable to the Company’s recent divestitures in those regions. See Note 3. “Divestitures” for further detail on these transactions.

3023

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

This management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Our historical results may not indicate, and should not be relied upon as an indication of, our future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. See “Forward-Looking Statements” below for a discussion of risks associated with reliance on forward-looking statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed below and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 filed with the U.S. Securities and Exchange Commission (“~~2019~~2020 Annual Report”), including Item 1A. “Risk Factors.” The following should be read in conjunction with our ~~2019~~2020 Annual Report and the other information included herein. Our discussion of trends and conditions supplements and updates such discussion included in our ~~2019~~2020 Annual Report. References in this quarterly report on Form 10-Q (the “Report”) to “we,” “our,” or the “Company” refer to Cooper-Standard Holdings Inc., together with its consolidated subsidiaries.

Executive Overview

Our Business

We design, manufacture and sell sealing, fuel and brake delivery, and fluid transfer systems for use primarily in passenger vehicles and light trucks manufactured by global automotive original equipment manufacturers (“OEMs”). We are primarily a “Tier 1” supplier, with approximately 83% of our sales in ~~2019~~2020 made directly to major OEMs. We operate our business along the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other.

~~During the first quarter of 2019 and in prior periods, we also operated an anti-vibration systems (“AVS”) product line. On April 1, 2019, we completed the divestiture of our AVS product line.~~

Recent Trends and Conditions

General Economic Conditions and Outlook

The global automotive industry is susceptible to uncertain economic conditions that could adversely impact new vehicle demand and production. Business conditions may vary significantly from period to period or region to region. The global COVID-19 pandemic created an unusually high degree of economic disruption and uncertainty during 2020, which has continued into 2021. Although optimism for an economic recovery has increased in the first ~~nine months~~quarter of ~~2020. Although most automotive manufacturing operations continued~~2021, a considerable amount of uncertainty remains. The rate of recovery has varied across regions, and, in some cases, rapid growth and spikes in consumer and industrial demand have outpaced production ~~during the third quarter, many industries remain significantly impacted by policies, regulations, risks~~ and ~~concerns surrounding the novel coronavirus, which is continuing to drive significant~~supply chain capacity. These supply/demand imbalances have added another layer of uncertainty for the broader economic outlook and for the automotive industry around the world. ~~Economists~~Despite these uncertainties, economists at the International Monetary Fund (IMF) ~~believe~~remain positive in their outlook and have recently increased their forecasts for global economic ~~activity is likely to remain subdued until perceived health risks abate.~~growth. They are now expecting the global economy to ~~contract~~grow by approximately ~~4.4%~~6.0% in ~~2020.~~2021.

In North America, ~~economic conditions and consumer confidence have improved compared to~~ the second quarter but continue to be negatively impacted by concerns over the COVID-19 pandemic and related government-imposed restrictions. Uncertainty related to the outcome of the presidential election in the United States will also likely weigh on consumer confidence in the region through the fourth quarter of 2020.

~~The~~ United States government has ~~taken~~injected historic ~~measures to provide~~levels of fiscal stimulus ~~to the~~into its economy ~~in an effort~~ to sustain businesses, ~~limit job losses~~create jobs and ~~preempt deeper declines in~~drive consumer confidence ~~during~~and spending. In addition, rapid distribution and administration of COVID-19 vaccines have enabled large segments of the ~~pandemic. Further stimulus actions are being considered. Despite these efforts,~~economy to return to near normal activity, spurring growth. IMF economists now expect economic ~~contraction~~growth of approximately ~~4.7%~~6.0% for the North America region in 2021. Further, the IMF expects unemployment to decline to approximately 6.0% in 2021, compared to more than 8.0% in 2020.

In ~~the European region,~~Europe, the IMF is projecting economic ~~contraction~~growth of approximately ~~8.3%~~4.4% for ~~2020. Current~~2021. The region continues to experience recurring outbreaks of COVID-19 and ~~potential future impacts of~~some localized increases in pandemic related restrictions. However, vaccinations are increasing throughout the ~~COVID-19 pandemic will continue~~region and this is expected to ~~weigh on the economies of the region. Due to the pandemic, certain European governments mandated closures of broad segments of the economy~~drive additional economic activity in the ~~first~~second half of the year. ~~Partial re-opening of~~Despite the ~~closed sectors has occurred at varying times and rates across~~improving health outlook, the region. More recently, however, a resurgence of COVID-19 cases is causing some governments to consider further shutdown actions. While automotive manufacturers have resumed production, on-going health risks, geopolitical concerns and the implementation of new environmental regulationsIMF expects unemployment in the ~~automotive industry will likely continue~~region to ~~impact vehicle demand~~increase to 8.0% in 2021, keeping consumer confidence and economic ~~growth.~~growth rates below those of other developed regions.

In ~~the~~ Asia Pacific, ~~region,~~ the IMF expects China’s ~~economic growth rate~~economy to ~~slow~~grow by 8.4% in 2021. Unemployment is expected to ~~just 1.8% in 2020. The post-COVID-19~~decline slightly to 3.6%. China’s central government has pledged to maintain continuity of macroeconomic policies during 2021. In addition, it has extended certain loan repayment deferral policies for small and medium businesses, an indication that it does not yet believe its post pandemic economic recovery ~~in the country~~ is ~~continuing, driven, in part, by a new infrastructure initiative that is focused on~~

accelerating the digital transformation of the country’s industries. The retail sector has also been improving in the third quarter, pointing to improved consumer confidence. Finally, the manufacturers purchasing managers index (PMI) reached a nine-year high in September, suggesting a strong industrial growth environment through the remainder of the year.complete.

In South America, the IMF estimates that the Brazilian economy will ~~contract~~grow by approximately ~~5.8%~~3.7% in ~~2020 as compared~~2021. Unemployment is expected to ~~2019. Economic activity rebounded~~decline slightly to 10.6% from 11.4% in 2020. Despite the ~~third quarter but not sufficiently~~high unemployment rate and continuing regional outbreaks of COVID-19, Brazil is beginning to ~~offset the sharp decline in the second quarter that was driven by the COVID-19 pandemic. The Brazilian government has extended certain economic assistance programs~~experience upward price pressures. With inflation now expected to ~~the end of the year to help support consumers. This spending will add to~~exceed 4.5%, the country’s ~~already high national debt level and could lead~~central bank has recently raised its benchmark interest rate to ~~lower consumer confidence and foreign investment in the region going forward. We remain cautious for the mid~~2.75% from 2.00%,

suggesting that aggressive monetary incentives are no longer necessary to ~~long-term outlook given~~support economic activity. Given the long history of political instability and economic volatility, we remain cautious for the mid to long-term economic outlook in the region.

Raw Materials

Our business is susceptible to inflationary pressures with respect to raw materials which may place operational and profitability burdens on the entire supply chain. Costs related to raw materials, such as steel, aluminum, and oil and oil-derived commodities, continue to be volatile. In addition, we continue to expect commodity cost volatility to have an impact on future earnings and operating cash flows. As such, on an ongoing basis, we work with our customers and suppliers to mitigate both inflationary pressures and our material-related cost exposures.

Production Levels

Our business is directly affected by the automotive vehicle production rates in North America, Europe, Asia Pacific and South America. Beginning in the first quarter of 2020, as a result of COVID-19, we experienced the shutdown of effectively all of our facilities ~~in Asia Pacific~~ coinciding with the shutdown of our customer facilities in ~~that region. Facility shutdowns then occurred in March 2020 for a majority of our facilities in North America, Europe and South America.~~

all regions. Production subsequently resumed in ~~Asia Pacific by the end of the first quarter of 2020, albeit~~all regions, at ~~a lower capacity, and has~~ steadily ~~increased in production capacity~~increasing rates throughout the year. For our North America and Europe facilities, production resumed in May 2020 at a lower capacity and has increased through the subsequent months. Finally, for our South America facilities, production resumed in the second quarter, but has increased more slowly compared to the other regions. We ~~are collaborating~~collaborate closely with our customers as production ~~volume continues~~volumes continue to increase and approach pre-COVID-19 levels, while also adhering to enhanced safety standards and measures to protect our employees.

In the first quarter of 2021, OEM production volumes were disrupted by the global shortage of semiconductors, as well as weather-induced shutdowns in North America and the resulting chemical shortages. The shortage of semiconductors and chemicals has resulted in slowdowns and occasional stoppages in the final production of vehicles. While the supply issues are expected to improve in the second half of 2021, we are collaborating closely with our customers to minimize production inefficiencies while supporting their needs.

Light vehicle production in certain regions for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was as follows:


		Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended March 31,
(In millions of units)	(In millions of units)	2020(1)	2019(1)	% Change	2020(1)	2019(1)	% Change	(In millions of units)		2021(1)	2020(1)	% Change
North America	North America	4.0	4.0	0.5%	9.2	12.5	(26.5)%	North America		3.6	3.8	(4.5)%
Europe	Europe	4.3	4.7	(7.7)%	11.3	16.0	(29.5)%	Europe		4.7	4.7	(0.9)%
Asia Pacific	Asia Pacific	10.9	11.0	(1.4)%	27.7	33.6	(17.8)%	Asia Pacific		10.9	8.2	32.6%
Greater China	Greater China	6.4	5.8	10.6%	15.8	17.3	(8.8)%	Greater China		5.8	3.3	77.1%
South America	South America	0.7	0.9	(21.4)%	1.5	2.5	(40.9)%	South America		0.7	0.7	3.9%

(1)Production data based on IHS Automotive, ~~October 2020.~~April 2021.

In North America and Europe, first quarter vehicle production declined in 2021 compared to the prior year period, primarily due to the impact of semiconductor supply issues. In Asia Pacific, first quarter vehicle production increased significantly in 2021 compared to the prior year period primarily due to the impact of COVID-19 plant shutdowns in the prior year, which affected the region for much of the first quarter of 2020. The ~~COVID-19 pandemic~~largest increases in production have been in China, which has ~~emerged~~had strong production volumes since industry wide shutdowns in the prior year. In South America, vehicle production slightly increased, as the ~~biggest risk factor facing~~region continues steady volume increases after industry wide shutdowns in the automotive industry. In the first half of the year, total vehicle production decreased substantially across the globe. Plant shutdowns have greatly slowed production and have been accompanied by decreased demand for vehicles, as new vehicle sales are highly dependent on strong consumer confidence and low unemployment. While the outlook for the fourth quarter of 2020 and the full year 2021 remains uncertain, the global economy has begun to rebound from the impacts of the pandemic. Lower unemployment rates, improving consumer confidence and lower than normal light vehicle inventory levels could all have a positive impact on light vehicle production going forward.prior year.

3225

Results of Operations


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020		2019		Change		2020		2019		Change				2021		2020		Change
		(dollar amounts in thousands)														(dollar amounts in thousands)
Sales	Sales	$	683,200	$	739,518	$	(56,318)	$	1,678,557	$	2,382,211	$	(703,654)	Sales		$	668,967	$	654,890	$	14,077
Cost of products sold	Cost of products sold	598,714		659,313		(60,599)		1,611,299		2,088,631		(477,332)		Cost of products sold		600,675		611,747		(11,072)
Gross profit	Gross profit	84,486		80,205		4,281		67,258		293,580		(226,322)		Gross profit		68,292		43,143		25,149
Selling, administration & engineering expenses	Selling, administration & engineering expenses	60,059		63,020		(2,961)		199,001		224,164		(25,163)		Selling, administration & engineering expenses		58,054		70,671		(12,617)
Gain on sale of business, net		(2,314)		1,730		(4,044)		(2,314)		(188,180)		185,866
Gain on sale of business														Gain on sale of business		(891)		—		(891)
Amortization of intangibles	Amortization of intangibles	1,669		4,250		(2,581)		9,632		13,173		(3,541)		Amortization of intangibles		1,772		4,450		(2,678)
Restructuring charges	Restructuring charges	6,186		5,572		614		23,236		29,214		(5,978)		Restructuring charges		21,047		7,276		13,771
Impairment of assets held for sale	Impairment of assets held for sale	—		—		—		86,470		—		86,470		Impairment of assets held for sale		—		74,079		(74,079)
Other impairment charges	Other impairment charges	100		1,958		(1,858)		1,240		4,146		(2,906)		Other impairment charges		—		977		(977)
Operating profit (loss)		18,786		3,675		15,111		(250,007)		211,063		(461,070)
Operating loss														Operating loss		(11,690)		(114,310)		102,620
Interest expense, net of interest income	Interest expense, net of interest income	(17,985)		(10,351)		(7,634)		(40,993)		(33,858)		(7,135)		Interest expense, net of interest income		(17,784)		(10,237)		(7,547)
Equity in earnings (losses) of affiliates		738		1,515		(777)		(842)		5,764		(6,606)
Other income (expense), net		2,784		(514)		3,298		(5,357)		(3,091)		(2,266)
Income (loss) before income taxes		4,323		(5,675)		9,998		(297,199)		179,878		(477,077)
Income tax (benefit) expense		(2,386)		745		(3,131)		(55,485)		47,001		(102,486)
Net income (loss)		6,709		(6,420)		13,129		(241,714)		132,877		(374,591)
Net (income) loss attributable to noncontrolling interests		(2,328)		1,543		(3,871)		1,288		2,036		(748)
Net income (loss) attributable to Cooper-Standard Holdings Inc.		$	4,381	$	(4,877)	$	9,258	$	(240,426)	$	134,913	$	(375,339)
Equity in earnings of affiliates														Equity in earnings of affiliates		786		1,431		(645)
Other expense, net														Other expense, net		(5,089)		(3,440)		(1,649)
Loss before income taxes														Loss before income taxes		(33,777)		(126,556)		92,779
Income tax expense (benefit)														Income tax expense (benefit)		936		(14,117)		15,053
Net loss														Net loss		(34,713)		(112,439)		77,726
Net loss attributable to noncontrolling interests														Net loss attributable to noncontrolling interests		849		1,851		(1,002)
Net loss attributable to Cooper-Standard Holdings Inc.														Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)	$	(110,588)	$	76,724

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared with Three Months Ended ~~September 30, 2019~~March 31, 2020

Sales

Sales for the three months ended ~~September 30, 2020 decreased 7.6%~~March 31, 2021 increased 2.1%, compared to the three months ended ~~September 30, 2019. The decline was driven~~March 31, 2020. Vehicle production volume increases in China, due to the impact of COVID-19 plant shutdowns in 2020, and foreign exchange drove the increase in sales, which were partially offset by customer shutdowns in North America and Europe primarily due to semiconductor supply shortages in 2021, and by the ~~decrease in vehicle production volume and the~~prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations.

Three Months Ended September 30, Variance Due To:
2020 2019 Change Volume / Mix* Foreign Exchange Divestitures
(dollar amounts in thousands)
Total sales $ 683,200 $ 739,518 $ (56,318) $ (8,958) $ 2,234 $ (49,594)


	Three Months Ended March 31,						Variance Due To:
	2021		2020		Change		Volume / Mix*		Foreign Exchange		Divestitures
	(dollar amounts in thousands)
Total sales	$	668,967	$	654,890	$	14,077	$	40,941	$	20,081	$	(46,945)

* Net of customer price reductions

3326

Gross Profit


		Three Months Ended September 30,								Variance Due To:							Three Months Ended March 31,								Variance Due To:
		2020			2019			Change		Volume / Mix*		Foreign Exchange		Cost Increases / (Decreases)**			2021			2020			Change		Volume / Mix*		Foreign Exchange		Cost Increases / (Decreases)**
		(dollar amounts in thousands)															(dollar amounts in thousands)
Cost of products sold	Cost of products sold	$	598,714		$	659,313		$	(60,599)	$	(806)	$	3,246	$	(63,039)	Cost of products sold	$	600,675		$	611,747		$	(11,072)	$	34,786	$	18,655	$	(64,513)
Gross profit	Gross profit	84,486			80,205			4,281		(8,152)		(1,012)		13,445		Gross profit	68,292			43,143			25,149		6,155		1,426		17,568
Gross profit percentage of sales	Gross profit percentage of sales	12.4		%	10.8		%									Gross profit percentage of sales	10.2		%	6.6		%

* Net of customer price reductions

** Includes the net impact of divestitures

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. The Company’s material cost of products sold was approximately ~~49%~~48% and ~~50%~~47% of total cost of products sold for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The change in the cost of products sold was ~~driven~~impacted by vehicle volume and mix, the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations, continuous improvement and lean manufacturing, material cost reductions, commodity price fluctuations, foreign exchange and wage inflation.

Gross profit for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~$4.3~~$25.1 million or ~~5.3%~~58.3% compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The increase was driven by net favorable operational performance, restructuring savings and material cost ~~reductions.~~reductions, the prior year divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations. These items were partially offset by wage inflation, employee incentives and foreign exchange.

Selling, Administration and Engineering Expense. Selling, administration and engineering expense includes administrative expenses as well as product engineering and design and development costs. ~~Sales,~~Selling, administration and engineering expense for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~8.8%~~8.7% of sales compared to ~~8.5%~~10.8% for the three months ended ~~September 30, 2019. The increase in rate was driven by the decline in total sales.~~March 31, 2020. Selling, administration and engineering expenses were lower by ~~$3.0~~$12.6 million. The decrease ~~in amount~~ was primarily due to savings generated from salaried headcount initiatives, ~~including~~ net divestitures and lower travel expenses, partially offset by general inflation and higher variable employee compensation expenses.

Gain on Sale of Business N~~et.~~. The gain on sale of business of ~~$2.3~~$0.9 million for the three months ended ~~September 30, 2020~~March 31, 2021 related primarily to deconsolidation adjustments for the ~~net effect~~sale of our ~~2020 divestitures, which included the~~ European fluid transfer and specialty sealing ~~business,~~businesses and Indian ~~operations, the deconsolidation of a joint venture in our Asia Pacific region, and the finalized adjustments related to~~operations. We completed the sale ~~of our AVS product line. The gain~~ on sale of business for the three months ended September 30, 2019 included a $1.7 million adjustment, decreasing the amount of the gain recognized on the sale of the AVS business in the second quarter of 2019, primarily due to working capital adjustments.July 1, 2020.

Amortization of Intangibles. Intangible amortization for the three months ended ~~September 30, 2020~~March 31, 2021 decreased ~~$2.6~~$2.7 million compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The decrease was primarily driven by a customer relationship intangible asset in the North America region that was fully amortized during the second quarter of 2020.

Restructuring. Restructuring charges for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~$0.6~~$13.8 million compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The increase was driven by higher restructuring charges in ~~North America,~~Europe, primarily related to ~~plant closures.~~headcount initiatives and footprint rationalization.

Impairment Charges. ~~Non-cash~~There were no non-cash impairment charges for the three months ended ~~September 30, 2020 decreased $1.9 million compared to~~March 31, 2021. Impairment charges during the three months ended ~~September 30, 2019,~~March 31, 2020 primarily related to ~~tooling machinery~~reducing the carrying value of our held for sale facilities to fair value less costs to sell. Other non-cash impairment charges also related to property, plant and equipment ~~charges due to the termination of certain customer programs~~ in the Asia Pacific ~~region in the third quarter of 2019.~~region.

Interest Expense, Net. Net interest expense for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~$7.6~~$7.5 million compared to the three months ended ~~September 30, 2019,~~March 31, 2020, primarily due to higher outstanding debt ~~balances including our recently issued Senior Secured Notes.~~balances.

Other ~~Income (Expense),~~Expense, Net. Other ~~income~~expense for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~$3.3~~$1.6 million compared to the three months ended ~~September 30, 2019,~~March 31, 2020, primarily due to higher foreign currency ~~gains.~~losses.

Income Tax Expense (Benefit) ~~Expense.~~. Income tax ~~benefit~~expense for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$2.4~~$0.9 million on ~~earnings~~losses before income taxes of ~~$4.3~~$33.8 million. This compares to an income tax ~~expense~~benefit of ~~$0.7~~$14.1 million on losses before income taxes of ~~$5.7~~$126.6 million for the three months ended ~~September 30, 2019.~~March 31, 2020. The effective tax rate for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the three months ended ~~September 30, 2019~~March 31, 2020 differed primarily due to the geographic mix of

pre-tax losses, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions and U.S. states, as well as due to benefits recorded in the three month period ended March 31, 2020 as a result of the Coronavirus Aid, Relief, and Economic Security Act (“CARES

Act”) net operating loss (“NOL”) carry back provision that allows NOLs generated to be carried back up to five years at the tax rates in effect during those periods, rather than carried forward at current federal tax rates of 21%. We have included a $19.8 million benefit in the estimated annual effective tax rate for this CARES Act provision which was used to calculate the income tax benefit recorded in the three months ended September 30, 2020.

~~Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019~~

~~Sales~~

Sales for the nine months ended September 30, 2020 decreased 29.5%, compared to the nine months ended September 30, 2019. The decline was mainly driven by the decrease in vehicle production volume due to government imposed global shutdowns related to the COVID-19 pandemic, net divestitures, foreign exchange and customer price reductions.

Nine Months Ended September 30, Variance Due To:
2020 2019 Change Volume / Mix* Foreign Exchange Divestitures
(dollar amounts in thousands)
Total sales $ 1,678,557 $ 2,382,211 $ (703,654) $ (557,327) $ (18,003) $ (128,324)

* Net of customer price reductions

~~Gross Profit~~

Nine Months Ended September 30, Variance Due To:
2020 2019 Change Volume / Mix* Foreign Exchange Cost Increases / (Decreases)**
(dollar amounts in thousands)
Cost of products sold $ 1,611,299 $ 2,088,631 $ (477,332) $ (311,037) $ (15,548) $ (150,747)
Gross profit 67,258 293,580 (226,322) (246,290) (2,455) 22,423
Gross profit percentage of sales 4.0 % 12.3 %

* Net of customer price reductions

** Includes the net impact of divestitures

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, warranty costs and other direct operating expenses. The Company’s material cost of products sold was approximately 45% and 51% of total cost of products sold for the nine months ended September 30, 2020 and 2019, respectively. The change in the cost of products sold was driven by government imposed global shutdowns related to the COVID-19 pandemic, the sale of our AVS product line, the divestiture of our European rubber fluid transfer and specialty sealing businesses and Indian operations, continuous improvement and lean manufacturing, material cost reductions, commodity price fluctuations, foreign exchange, and wage inflation.

Gross profit for the nine months ended September 30, 2020 decreased 77.1% compared to the nine months ended September 30, 2019. The decrease was driven by the decline in vehicle production volume due to government imposed global shutdowns related to the COVID-19 pandemic, customer price reductions, employee incentives and wage inflation. These items were partially offset by net favorable operational performance, restructuring savings, foreign exchange and material cost reductions.

~~Selling, Administration and Engineering Expense.~~ Selling, administration and engineering expense includes administrative expenses as well as product engineering and design and development costs. Sales, administration and engineering expense for the nine months ended September 30, 2020 was 11.9% of sales compared to 9.4% for the nine months ended September 30, 2019. This increase in rate was primarily due to the significant decline in total sales. The decrease in amount was primarily due to savings generated from salaried headcount initiatives, net divestitures and lower travel expenses, partially offset by general inflation and higher variable employee compensation expenses.

~~Gain on Sale of Business, Net.~~ The gain on sale of business of $2.3 million for the nine months ended September 30, 2020 related to the net effect of our 2020 divestitures, which included certain European businesses and our Indian operations, the deconsolidation of a joint venture in our Asia Pacific region, and the finalized adjustments related to the sale of our AVS product line. The gain on sale of business of $188.2 million for the nine months ended September 30, 2019 related to the sale of our AVS product line within our North America, Europe and Asia Pacific segments.

~~Amortization of Intangibles.~~ Intangible amortization for the nine months ended September 30, 2020 decreased $3.5 million compared to the nine months ended September 30, 2019. The decrease was primarily driven by a customer relationship intangible asset in the North America region that was fully amortized during the second quarter of 2020.

~~Restructuring.~~ Restructuring charges for the nine months ended September 30, 2020 decreased $6.0 million compared to the nine months ended September 30, 2019. The decrease was a result of lower restructuring charges in Europe, Asia Pacific and Corporate and other.

~~Impairment Charges.~~ Non-cash impairment charges for the nine months ended September 30, 2020 increased $83.6 million compared to the nine months ended September 30, 2019. The increase primarily related to reducing the carrying value of the divested assets to fair value less costs to sell. Fair value was determined using a market approach, estimated based on expected proceeds.

~~Interest Expense, Net.~~ Net interest expense for the nine months ended September 30, 2020 increased $7.1 million compared to the nine months ended September 30, 2019, primarily due to higher outstanding debt balances including our recently issued Senior Secured Notes.

~~Other Expense, Net.~~ Other expense for the nine months ended September 30, 2020 increased $2.3 million compared to the nine months ended September 30, 2019, primarily due to higher foreign currency losses, partially offset by lower benefit related costs.

~~Income Tax (Benefit) Expense.~~ Income tax benefit for the nine months ended September 30, 2020 was $55.5 million on losses before income taxes of $297.2 million. This compares to income tax expense of $47.0 million on earnings before income taxes of $179.9 million for the nine months ended September 30, 2019. The effective tax rate for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 differed primarily due to the geographic mix of pre-tax losses driven by the impairment charge on divested entities, the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions, as well as benefits recorded as a result of the CARES Act net operating loss carry back provision. We have included a $19.8 million benefit in the estimated annual effective tax rate for this CARES Act provision which was used to calculate the income tax benefit recorded in the nine months ended September 30, 2020. Additionally, a discrete expense of $13.4 million for the initial recognition of valuation allowances against net deferred tax assets in certain foreign jurisdictions was recorded in the nine months ended September 30, 2020.

Segment Results of Operations

Our business is organized into the following reportable segments: North America, Europe, Asia Pacific and South America. All other business activities are reported in Corporate, eliminations and other. The Company uses Segment adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We have defined adjusted EBITDA as net income before interest, taxes, depreciation, amortization, restructuring expense, and special items.

The following tables present sales and segment adjusted EBITDA for each of the reportable segments.

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared with Three Months Ended ~~September 30, 2019~~March 31, 2020

Sales


		Three Months Ended September 30,						Variance Due To:							Three Months Ended March 31,						Variance Due To:
		2020		2019		Change		Volume/ Mix*		Foreign Exchange		Divestitures			2021		2020		Change		Volume/ Mix*		Foreign Exchange		Divestitures
		(dollar amounts in thousands)													(dollar amounts in thousands)
Sales to external customers	Sales to external customers													Sales to external customers
North America	North America	$	359,007	$	372,104	$	(13,097)	$	(11,812)	$	(1,285)	$	—	North America	$	339,036	$	334,801	$	4,235	$	3,497	$	738	$	—
Europe	Europe	146,029		187,438		(41,409)		(13,526)		7,448		(35,331)		Europe	165,776		185,242		(19,466)		279		14,077		(33,822)
Asia Pacific	Asia Pacific	131,063		123,139		7,924		20,377		1,810		(14,263)		Asia Pacific	114,225		79,344		34,881		40,087		7,917		(13,123)
South America	South America	17,580		25,220		(7,640)		(1,448)		(6,192)		—		South America	15,486		20,471		(4,985)		(1,377)		(3,608)		—
Total Automotive	Total Automotive	653,679		707,901		(54,222)		(6,409)		1,781		(49,594)		Total Automotive	634,523		619,858		14,665		42,486		19,124		(46,945)
Corporate, eliminations and other	Corporate, eliminations and other	29,521		31,617		(2,096)		(2,549)		453		—		Corporate, eliminations and other	34,444		35,032		(588)		(1,545)		957		—
Consolidated	Consolidated	$	683,200	$	739,518	$	(56,318)	$	(8,958)	$	2,234	$	(49,594)	Consolidated	$	668,967	$	654,890	$	14,077	$	40,941	$	20,081	$	(46,945)

* Net of customer price reductions

•Volume and mix, net of customer price reductions, iswas driven by volume increases in China due to the ~~regional mix~~impact of ~~vehicles~~COVID-19 plant shutdowns in 2020, partially offset by the impact of customer shutdowns primarily due to semiconductor supply shortages in both North American and Europe ~~North America and China.~~in 2021.

•The impact of foreign currency exchange primarily ~~relates~~related to the Euro, Renminbi, and Brazilian Real.

Segment adjusted EBITDA


		Three Months Ended September 30,						Variance Due To:									Three Months Ended March 31,						Variance Due To:
		2020		2019		Change		Volume/ Mix*		Foreign Exchange		Cost (Increases)/ Decreases		Divestitures			2021		2020		Change		Volume/ Mix*		Foreign Exchange		Cost (Increases)/ Decreases		Divestitures
		(dollar amounts in thousands)															(dollar amounts in thousands)
Segment adjusted EBITDA	Segment adjusted EBITDA															Segment adjusted EBITDA
North America	North America	$	58,115	$	59,819	$	(1,704)	$	(7,544)	$	562	$	6,062	$	(784)	North America	$	41,233	$	37,019	$	4,214	$	(2,362)	$	(4,719)	$	11,295	$	—
Europe	Europe	(1,466)		6,269		(7,735)		(5,960)		(375)		(1,488)		88		Europe	(1,489)		(4,623)		3,134		914		(860)		2,908		172
Asia Pacific	Asia Pacific	12,246		(12,080)		24,326		6,321		1,726		14,480		1,799		Asia Pacific	3,552		(17,057)		20,609		6,994		1,631		9,133		2,851
South America	South America	(2,680)		(2,678)		(2)		1,863		(1,781)		(84)		—		South America	(2,608)		(4,577)		1,969		1,430		882		(343)		—
Total Automotive	Total Automotive	66,215		51,330		14,885		(5,320)		132		18,970		1,103		Total Automotive	40,688		10,762		29,926		6,976		(3,066)		22,993		3,023
Corporate, eliminations and other	Corporate, eliminations and other	(2,081)		2,491		(4,572)		(2,832)		205		(3,775)		1,830		Corporate, eliminations and other	(2,148)		(2,483)		335		(821)		428		728		—
Consolidated adjusted EBITDA	Consolidated adjusted EBITDA	$	64,134	$	53,821	$	10,313	$	(8,152)	$	337	$	15,195	$	2,933	Consolidated adjusted EBITDA	$	38,540	$	8,279	$	30,261	$	6,155	$	(2,638)	$	23,721	$	3,023

* Net of customer price reductions

•Volume and mix, net of customer price reductions, iswas driven by the regional mix of ~~vehicles~~vehicle production in ~~Europe,~~each of our segments and includes increases in China due to the impact of COVID-19 plant shutdowns in 2020, partially offset by the impact of customer shutdowns primarily due to the semiconductor supply shortages in both North America and ~~China.~~Europe in 2021.

•The impact of foreign currency exchange iswas driven by the ~~Chinese Renminbi, Brazilian Real, Euro,~~Mexican Peso, Polish Zloty, Czech Koruna, and ~~Czech Koruna.~~Chinese Renminbi.

•The Cost (Increases) / Decreases category above includes:

◦Reduction in compensation-related expenses due to salaried headcount initiatives, ~~purchasing savings through lean initiatives, and restructuring savings;~~

◦~~Wage and variable employee compensation increases;~~

◦~~The non-recurrence of prior year one-time impact of commercial settlements in Asia Pacific;~~

◦~~Net manufacturing efficiencies of $10 million, primarily driven by our North America and Asia Pacific segments.~~

~~Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019~~

~~Sales~~

Nine Months Ended September 30, Variance Due To:
2020 2019 Change
Volume/ Mix*
Foreign Exchange Divestitures
(dollar amounts in thousands)
Sales to external customers
North America $ 820,145 $ 1,198,943 $ (378,798) $ (321,792) $ (2,175) $ (54,831)
Europe 410,076 634,867 (224,791) (167,710) 685 (57,766)
Asia Pacific 316,133 367,086 (50,953) (29,847) (5,379) (15,727)
South America 41,932 73,581 (31,649) (20,572) (11,077) —
Total Automotive 1,588,286 2,274,477 (686,191) (539,921) (17,946) (128,324)
Corporate, eliminations and other 90,271 107,734 (17,463) (17,406) (57) —
Consolidated $ 1,678,557 $ 2,382,211 $ (703,654) $ (557,327) $ (18,003) $ (128,324)

* ~~Net of customer price reductions~~

•Volume and mix, net of customer price reductions, is mainly driven by the impact of the decline in vehicle production volume driven by government imposed global shutdowns related to the COVID-19 pandemic.

•~~The impact of foreign currency exchange primarily relates to the Brazilian Real, Chinese Renminbi, Canadian Dollar and Mexican Peso.~~

~~Segment adjusted EBITDA~~

Nine Months Ended September 30, Variance Due To:
2020 2019 Change Volume/ Mix* Foreign Exchange Cost (Increases)/ Decreases Divestitures
(dollar amounts in thousands)
Segment adjusted EBITDA
North America $ 52,260 $ 172,853 $ (120,593) $ (140,772) $ 174 $ 24,542 $ (4,537)
Europe (47,492) 21,540 (69,032) (74,178) 635 6,978 (2,467)
Asia Pacific (6,983) (14,313) 7,330 (17,735) 1,139 22,717 1,209
South America (11,608) (4,817) (6,791) (4,283) (6,465) 3,957 —
Total Automotive (13,823) 175,263 (189,086) (236,968) (4,517) 58,194 (5,795)
Corporate, eliminations and other (7,516) 663 (8,179) (9,322) (1,492) 805 1,830
Consolidated adjusted EBITDA $ (21,339) $ 175,926 $ (197,265) $ (246,290) $ (6,009) $ 58,999 $ (3,965)

* ~~Net of customer price reductions~~

•Volume and mix, net of customer price reductions primarily includes the impact of the decline in vehicle production volume as driven by government imposed global shutdowns related to the COVID-19 pandemic.

•~~The impact of foreign currency exchange is driven by the Brazilian Real, Euro, Chinese Renminbi, Brazilian Real, Euro, Polish Zloty, and Czech Koruna.~~

•~~The Cost (Increases) / Decreases category above includes:~~

◦~~Reduction in compensation-related~~lower travel expenses, ~~due to salaried headcount initiatives,~~ purchasing savings through lean initiatives, and restructuring savings;

◦Commodity cost, ~~fluctuations,~~ wage ~~increases~~ and variable employee compensation increases;

◦~~The non-recurrence of prior year one-time impact of commercial settlements in Asia Pacific;~~

◦~~Net manufacturing~~Manufacturing efficiencies of ~~$45~~$18 million, ~~weakened by the impact of COVID-19,~~ primarily driven by our ~~European,~~ North America and Asia Pacific segments.

Liquidity and Capital Resources

Short and Long-Term Liquidity Considerations and Risks

We intend to fund our ongoing working capital, capital expenditures, debt service and other funding requirements through a combination of cash flows from operations, cash on hand, borrowings under our senior asset-based revolving credit facility (“ABL Facility”) and receivables factoring. The Company utilizes intercompany loans and equity contributions to fund its worldwide operations. There may be country-specific regulations which may restrict or result in increased costs in the repatriation of these funds. See Note 10. “Debt” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report for additional information.

We continue to ~~take aggressive action to~~actively preserve cash and enhance liquidity, including ~~significantly~~ decreasing our capital expenditures. Based on those actions and current projections ~~for increasing~~of OEM customer production, we believe that our cash flows from operations, cash on hand, borrowings under our ABL Facility and receivables factoring will enable us to meet our ongoing working capital, capital expenditures, debt service and other funding requirements for the next twelve months, despite the challenges presented by the COVID-19 ~~pandemic.~~pandemic and supply chain issues facing the industry. We continuously monitor and forecast our liquidity situation, take the necessary actions to preserve our liquidity and evaluate other financial alternatives that may be available to us should the need arise. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants, including borrowing base limitations, under our ABL Facility, depend on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials, the state of the overall automotive industry and financial and economic conditions, including the impact of COVID-19, and other factors.

Cash Flows

Operating Activities. Net cash used in operations was ~~$26.5~~$7.1 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to net cash ~~provided by~~used in operations of ~~$29.9~~$2.0 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The net outflow was primarily due to ~~decreased cash earnings,~~working capital outflows, partially offset by ~~working capital improvements.~~higher cash earnings.

Investing Activities. Net cash used in investing activities was ~~$89.5~~$36.3 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to net cash ~~provided by~~used in investing activities of ~~$113.9~~$50.1 million for the ~~nine~~three months ended ~~September 30, 2019. Significant~~March 31, 2020. The reduction was primarily due to lower capital expenditures. In response to the COVID-19 pandemic, significant decreases in capital expenditures occurred throughout ~~2020,~~2020. We expect lower expenditures will continue in ~~order~~2021, primarily as part of initiatives to ~~preserve liquidity in response~~consistently reduce overall capital spending. We anticipate that we will spend approximately $100 million to ~~the COVID-19 pandemic. Additionally, lower~~$125 million on capital expenditures ~~are expected~~ in the fourth quarter of 2020. Cash provided by investing activities in 2019 consisted primarily of gross proceeds of $243.4 million from the sale of our AVS product line, partially offset by capital spending.2021.

Financing Activities. Net cash provided by financing activities totaled ~~$225.1~~$1.3 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to net cash ~~used in~~provided by financing activities of ~~$78.3~~$0.4 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The inflow was primarily due to ~~proceeds from issuance of the Senior Secured Notes~~increases in short-term debt during the ~~nine~~three months ended ~~September 30, 2020. There were no share repurchases during the nine months ended September 30, 2020. Cash used for share repurchases was $36.6 million for the nine months ended September 30, 2019.~~March 31, 2021.

Share Repurchase Program

In June 2018, our Board of Directors approved a new common stock repurchase program (the “2018 Program”) authorizing us to repurchase, in the aggregate, up to $150.0 million of our outstanding common stock. Under the 2018 Program, repurchases may be made on the open market, through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by us and in accordance with prevailing market conditions and federal securities laws and regulations. We expect to fund any future repurchases from cash on hand and future cash flows from operations. The specific timing and amount of any future repurchase will vary based on market and business conditions and other factors. We are not obligated to acquire a particular amount of securities, and the 2018 Program may be

discontinued at any time at our discretion. As of ~~September 30, 2020,~~March 31, 2021, we had approximately $98.7 million of repurchase authorization remaining under the 2018 Program. ~~We currently have no plans to repurchase shares in the foreseeable future.~~

We did not make any repurchases under the 2018 Program during the ~~nine~~three months ended ~~September 30, 2020.~~

~~2019 Repurchases~~

In May 2019, we entered into an accelerated share repurchase (“ASR”) agreement with a third-party financial institution to repurchase our common stock pursuant to the 2018 Program. Under the ASR agreement, we made an up-front payment of $30.0 million and received an initial delivery of 626,305 shares of our common stock in the second quarter of 2019. The repurchase was completed in the third quarter of 2019 when we received final delivery of an additional 72,875 shares. A total of 699,180 shares were repurchased at a weighted average purchase price of $42.91 per share.

~~In addition to the repurchase under the ASR agreement,~~March 31, 2021 or during the ~~nine~~three months ended ~~September 30, 2019, we repurchased 85,000 shares at an average purchase price of $69.85 per share, excluding commissions, for a total cost of $5.9 million.~~March 31, 2020.

Non-GAAP Financial Measures

In evaluating our business, management considers EBITDA and Adjusted EBITDA to be key indicators of our operating performance. Our management also uses EBITDA and Adjusted EBITDA:

•because similar measures are utilized in the calculation of the financial covenants and ratios contained in our financing arrangements;

•in developing our internal budgets and forecasts;

•as a significant factor in evaluating our management for compensation purposes;

•in evaluating potential acquisitions;

•in comparing our current operating results with corresponding historical periods and with the operational performance of other companies in our industry; and

•in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in their assessments of performance and in forecasting and budgeting for our company.

In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts and other interested parties in evaluating our performance. We define Adjusted EBITDA as net income (loss) plus income tax expense (benefit), interest expense, net of interest income, depreciation and amortization or EBITDA, as adjusted for items that management does not consider to be reflective of our core operating performance. These adjustments include, but are not limited to, restructuring costs, impairment charges, non-cash fair value adjustments and acquisition-related costs.

EBITDA and Adjusted EBITDA are not financial measurements recognized under U.S. GAAP, and when analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA as a supplement to, and not as alternatives for, net income (loss), operating income, or any other performance measure derived in accordance with U.S. GAAP, nor as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our results of operations as reported under U.S. GAAP. These limitations include:

•they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments;

•they do not reflect changes in, or cash requirements for, our working capital needs;

•they do not reflect interest expense or cash requirements necessary to service interest or principal payments under our ABL Facility, Term Loan Facility, Senior Notes and Senior Secured Notes;

•they do not reflect certain tax payments that may represent a reduction in cash available to us;

•although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and

•other companies, including companies in our industry, may calculate these measures differently and, as the number of differences in the way companies calculate these measures increases, the degree of their usefulness as a comparative measure correspondingly decreases.

In addition, in evaluating Adjusted EBITDA, it should be noted that in the future, we may incur expenses similar to the adjustments in the below presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by special items.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA from net ~~income (loss),~~loss, which is the most comparable financial measure in accordance with U.S. GAAP:

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(dollar amounts in thousands)
Net income (loss) attributable to Cooper-Standard Holdings Inc. $ 4,381 $ (4,877) $ (240,426) $ 134,913
Income tax (benefit) expense (2,386) 745 (55,485) 47,001
Interest expense, net of interest income 17,985 10,351 40,993 33,858
Depreciation and amortization 36,504 37,495 116,727 111,968
EBITDA $ 56,484 $ 43,714 $ (138,191) $ 327,740
Impairment of assets held for sale — — 86,470 —
Restructuring charges 6,186 5,572 23,236 29,214
Project costs (1)
— 335 4,234 2,003
Other impairment charges (2)
100 1,958 947 4,146
Lease termination costs (3)
83 512 684 1,003
Gain on sale of business, net (4)
(2,314) 1,730 (2,314) (188,180)
Divested noncontrolling interest debt extinguishment 3,595 — 3,595 —
Adjusted EBITDA $ 64,134 $ 53,821 $ (21,339) $ 175,926


	Three Months Ended March 31,
		2021		2020
		(dollar amounts in thousands)
Net loss attributable to Cooper-Standard Holdings Inc.		$	(33,864)	$	(110,588)
Income tax expense (benefit)		936		(14,117)
Interest expense, net of interest income		17,784		10,237
Depreciation and amortization		33,528		37,763
EBITDA		$	18,384	$	(76,705)
Restructuring charges		21,047		7,276
Gain on sale of business (1)		(891)		—
Impairment of assets held for sale (2)		—		74,079
Project costs (3)		—		2,425
Other impairment charges (4)		—		684
Lease termination costs (5)		—		520
Adjusted EBITDA		$	38,540	$	8,279

(1)Gain on sale of business related to divestitures in 2020.

(2)Non-cash impairment charges related to reducing the carrying value of the held for sale entities to fair value less costs to sell.

(3)Project costs recorded in selling, administration and engineering expense related to divestitures in ~~2020 and acquisitions and divestiture costs in 2019.~~2020.

~~(2)~~(4)Non-cash impairment charges of ~~$947~~$684 related to fixed assets, net of approximately $293 attributable to our noncontrolling ~~interests for the nine months ended September 30, 2020.~~interests.

~~(3)~~(5)Lease termination costs no longer recorded as restructuring charges in accordance with ASC 842.

~~(4)~~Gain on sale of business primarily related to divestitures in 2020. In the third quarter of 2019, there were working capital adjustments to the net gain on sale of business, which related to the divestiture of the AVS product line in 2019.

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Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note ~~21.~~20. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report, is incorporated herein by reference.

Recently Issued Accounting Pronouncements

See Note 2. “New Accounting Pronouncements” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

Critical Accounting Estimates

There have been no significant changes in our critical accounting estimates during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Forward-Looking Statements

This quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. Our use of words “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “outlook”, “guidance”, “forecast,” or future or conditional verbs, such as “will,” “should,” “could,” “would,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that these expectations, beliefs and projections will be achieved. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. Among other items, such factors may include: the impact, and expected continued impact, of the recent COVID-19 outbreak on our financial condition and results of operations; significant risks to our liquidity presented by the COVID-19 pandemic risk; prolonged or material contractions in automotive sales and production volumes; our inability to realize sales represented by awarded business; escalating pricing pressures; loss of large customers or significant platforms; our ability to successfully compete in the automotive parts industry; availability and increasing volatility in costs of manufactured components and raw materials; disruption in our supply base; competitive threats and commercial risks associated with our diversification strategy through Advanced Technology Group; possible variability of our working capital requirements; risks associated with our international operations, including changes in laws, regulations, and policies governing the terms of foreign trade such as increased trade restrictions and tariffs; foreign currency exchange rate fluctuations; our ability to control the operations of our joint ventures for our sole benefit; our substantial amount of ~~indebtedness;~~indebtedness and variable rates of interest; our ability to obtain adequate financing sources in the future; operating and financial restrictions imposed on us under our debt instruments; the underfunding of our pension plans; significant changes in discount rates and the actual return on pension assets; effectiveness of continuous improvement programs and other cost savings plans; manufacturing facility closings or consolidation; our ability to execute new program launches; our ability to meet customers’ needs for new and improved products; the possibility that our acquisitions and divestitures may not be successful; product liability, warranty and recall claims brought against us; laws and regulations, including environmental, health and safety laws and regulations; legal and regulatory proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, data privacy concerns, other disruptions in, or the inability to implement upgrades to, our information technology systems; the possible volatility of our annual effective tax rate; ~~changes in our assumptions as a result of IRS issuing guidance on the Tax Cuts and Jobs Act;~~ the possibility of a failure to maintain effective controls and procedures; the possibility of future impairment charges to our goodwill and long-lived assets; our ability to identify, attract, develop and retain a skilled, engaged and diverse workforce; our ability to procure insurance at reasonable rates; and our dependence on our subsidiaries for cash to satisfy our obligations.

You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this quarterly report on Form 10-Q, and we undertake no obligation to publicly update or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except where we are expressly required to do so by law.

This quarterly report on Form 10-Q also contains estimates and other information that is based on industry publications, surveys, and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information.

4232

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Except for the broad effects of COVID-19 on the global economy and major financial markets, which has and could continue to cause interest rates, currency exchange rates and commodity prices to fluctuate, thereThere have been no material changes to the quantitative and qualitative information about the Company’s market risk from those previously disclosed in the Company’s ~~2019~~2020 Annual Report.

4333

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has evaluated, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Based on that evaluation, the Company’s Chief Executive Officer along with the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this Report.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended ~~September 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

4434

PART II — OTHER INFORMATION

~~Item 1A.Risk Factors~~

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, other than as updated in Part II, “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company is authorized to purchase, in the aggregate, up to $150 million of our outstanding common stock under our common stock repurchase program, which was effective in November 2018. As of ~~September 30, 2020,~~March 31, 2021, we had approximately $98.7 million of repurchase authorization remaining under our ongoing common stock share repurchase program as discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Share Repurchase Program,” and Note 18. “Common Stock” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

A summary of our shares of common stock repurchased during the three months ended ~~September 30, 2020~~March 31, 2021 is shown below:

Period
Total Number of Shares Purchased(1)
Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
July 1, 2020 through July 31, 2020 800 $ 12.55 — $ 98.7
August 1, 2020 through August 31, 2020 — — — 98.7
September 1, 2020 through September 30, 2020 — — — 98.7
Total 800 —


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
January 1, 2021 through January 31, 2021	—	$	—	—	$	98.7
February 1, 2021 through February 28, 2021	17,138	37.19		—	98.7
March 1, 2021 through March 31, 2021	5,324	42.69		—	98.7
Total	22,462			—

(1)~~Includes~~Represents shares repurchased by the Company to satisfy employee tax withholding requirements due upon the vesting of restricted stock awards and the exercise of stock option awards.

4535

Item 6. Exhibits



Exhibit No.						Description of Exhibit

10.1*						Form of 2021 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Nonqualified Stock Option Agreement.

10.2*						Form of 202 1 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Performance Unit Award Agreement (cash-settled award).

10.3*						Form of 202 1 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (cash or stock -settled award)

10.4*						Separation Agreement between Jeffrey DeBest, Cooper-Standard Holdings Inc. and Cooper-Standard Automotive Inc. effect i ve as of March 1, 2021.

31.1*						Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

31.2*						Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002).

32**						Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS***						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH***						Inline XBRL Taxonomy Extension Schema Document

101.CAL***						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF***						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB***						Inline XBRL Taxonomy Label Linkbase Document

101.PRE***						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104***						Cover Page Interactive Data File, formatted in Inline XBRL


*			Filed with this Report.
**			Furnished with this Report.
***			Submitted electronically with this Report in accordance with the provisions of Regulation S-T.

4636

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COOPER-STANDARD HOLDINGS INC.

~~November 6, 2020~~May 7, 2021

/S/ JONATHAN P. BANAS

Date

Jonathan P. Banas
Chief Financial Officer
(Principal Financial Officer)

4737



		Page

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Changes in Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3124
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4333
Item 4.	Controls and Procedures	4434

	PART II. OTHER INFORMATION

~~Item 1A.~~	~~Risk Factors~~	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4535

Item 6.	Exhibits	4636
SIGNATURES		4737


	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
	As previously reported		Adjustment		As corrected		As previously reported		Adjustment		As corrected
Sales	$	729,021	$	10,497	$	739,518	$	2,373,865	$	8,346	$	2,382,211



Income tax expense (benefit)	(574)		1,319		745		45,996		1,005		47,001

Net loss attributable to noncontrolling interests	1,745		(202)		1,543		2,447		(411)		2,036
Net income (loss) attributable to Cooper-Standard Holdings Inc.	(13,853)		8,976		(4,877)		127,983		6,930		134,913

Earnings (loss) per share:
Basic	$	(0.82)	$	0.53	$	(0.29)	$	7.42	$	0.41	$	7.83
Diluted	$	(0.82)	$	0.53	$	(0.29)	$	7.40	$	0.40	$	7.80


	Balance as of December 31, 2019		Adjustments due to adoption of ASC 326		Balance as of January 1, 2020

Tooling receivable, net	$	148,175	$	(1,573)	$	146,602
Retained earnings	619,448		(1,573)		617,875