Accuride (ACUZW) 10-Q 2008 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2008.

OR

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

For the transition period from                      to                       .

Commission file number 001-32483

ACCURIDE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

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

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

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 x   No o

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

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

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

As of May 8, 2008, 35,431,159 shares of Accuride Corporation common stock, par value $.01 per share, were outstanding.

ACCURIDE CORPORATION

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 6.	Exhibits	23
Signatures		25

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Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

ACCURIDE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

See notes to unaudited condensed consolidated financial statements.

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ACCURIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

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

See notes to unaudited condensed consolidated financial statements.

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ACCURIDE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

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

See notes to unaudited condensed consolidated financial statements.

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ACCURIDE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation– The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, except that the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  However, in the opinion of Accuride Corporation (“Accuride” or the “Company”), all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the condensed consolidated financial statements have been included.

The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results to be expected for the year ending December 31, 2008.  The unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited condensed consolidated financial statements and notes thereto disclosed in Accuride’s Annual Report on Form 10-K for the year ended December 31, 2007.

Management’s Estimates and Assumptions- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Derivative Financial Instruments – We use derivative financial instruments as part of our overall risk management strategy as further described under Item 7A of our 2007 Annual Report on Form 10-K.  The derivative instruments used from time to time include interest rate and foreign exchange instruments.  All derivative instruments are recognized on the balance sheet at their estimated fair values. As of March 31, 2008, there were no derivatives that were designated as hedges for financial reporting purposes.

Interest Rate Instruments – We use interest rate swap agreements as a means of fixing the interest rate on portions of our floating-rate debt.  As of March 31, 2008, we had one interest rate swap agreement outstanding, which was established in December 2007. Pursuant to the terms of the interest rate swap agreement, we exchange with the counterparty, at specified intervals, the difference between 3.81% from March 2008 through March 2010, and the variable rate interest amounts calculated by reference to the notional principal amount. The notional principal amounts under the terms are $200 million from March 2008 through March 2009, $150 million from March 2009 through September 2009 and $125 million from September 2009 through March 2010.

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

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

Foreign Exchange Instruments – We use foreign currency forward contracts and option contracts to limit foreign exchange risk on anticipated but not yet committed transactions expected to be denominated in Canadian dollars. At March 31, 2008, the notional amount of open foreign exchange forward contracts was $9.8 million.

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

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

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Commodity Price Instruments— We use commodity price swap contracts to limit exposure to changes in certain raw material prices. Commodity price instruments, which do not meet the normal purchase exception, are not designated as hedges for financial reporting purposes and, accordingly, are carried in the financial statements at fair value, with realized and unrealized gains and losses reflected in current period earnings as a component of “Cost of goods sold.” The notional amount of commodity price instruments at March 31, 2008 was $6.1 million.

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

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

Marketable Securities and Other Investments - We have certain investments in bonds, which are categorized as marketable securities. We believe that these are conservative investments with a low risk for significant loss of principal. We regularly assess our marketable security investments for impairments and adjust our investment strategy, as we deem appropriate. We classify these securities as held for sale and as non-current in the accompanying consolidated balance sheets based on original maturity dates of greater than one year. Any unrealized gains or losses would be recorded as a component of other comprehensive income.

Earnings Per Common Share – Basic and diluted earnings per common share were computed as follows:

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

There is no effect of dilutive share-based awards for purposes of calculating earnings per share in either period due to being in a net loss position.

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

Recent Accounting Adoptions

SFAS No. 157— In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to eliminate the diversity in practice that exists due to the different definitions of fair value and the limited guidance for applying those definitions in GAAP that are dispersed among the many accounting pronouncements that require fair value measurements.  However, on February 12, 2008, the FASB issued Staff Position 157-2 which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. For items within its scope, this Staff Position defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008.  The adoption of SFAS No. 157 on January 1, 2008 for financial assets and liabilities had no material impact on our consolidated financial statements.  We are currently assessing the impact of SFAS No. 157 for nonfinancial assets and liabilities on our consolidated financial position and results of operations.

SFAS No. 159— In February 2007, the FASB issued SFAS No. 159, Establishing the Fair Value Option for Financial Assets and Liabilities, which permits an entity to measure certain financial assets and financial liabilities at fair value. Under SFAS No. 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each

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subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a new election date occurs. SFAS No. 159 also establishes presentation and disclosure requirements to help financial statement users understand the effect of the entity’s election on its earnings.  Due to making no election on any of our instruments, the adoption of SFAS No. 159 on January 1, 2008 had no impact on our consolidated financial statements.

Recent Accounting Pronouncements

SFAS No. 141(R) — In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations.  SFAS No. 141(R) requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at fair value. SFAS No. 141(R) also requires transactions costs related to the business combination to be expensed as incurred. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating the impact of SFAS No. 141(R) related to future acquisitions, if any, on our consolidated financial statements.

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

SFAS No. 161 — In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133.  SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and their effect on an entity’s financial position, financial performance, and cash flows.  SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. We are currently evaluating the impact of SFAS No. 161 on our consolidated financial statements.

Note 2 - Inventories

Inventories are stated at the lower of cost or market.  We review inventory on hand and write down excess and obsolete inventory based on our assessment of future demand and historical experience.  The components of inventory on a FIFO basis, except at our subsidiary in Mexico, which values inventories using an average cost basis, are as follows:

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

Note 3 - Goodwill and Other Intangible Assets

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

The summary of goodwill and other intangible assets is as follows:

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

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We estimate that aggregate amortization expense by year as follows:

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

Note 4 - Comprehensive loss

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

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

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

Note 5 - Pension and Other Postretirement Benefit Plans

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

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

During the three months ended March 31, 2007, we recorded a pre-tax curtailment and other contractual termination benefit charges of $9.2 million related to a reduction-in-force in our London, Ontario, facility. The contractual benefits charge represented a potential partial pension wind-up, which was determined to be probable for purposes of recognizing one-time benefits in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities and SFAS No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Plans and Termination Benefits. As of March 31, 2008, $1.9 million has been contributed to our sponsored pension plans.  We presently anticipate contributing an additional $14.0 million to fund our pension plans in 2008 for a total of $15.9 million.

Also during the three months ended March 31, 2007, we recorded $9.2 million of severance costs related to the reduction-in-force as a component of cost of good sold.  There were no cash payments made in that period.

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Note 6 – Contingencies

We are from time to time involved in various legal proceedings of a character normally incident to our business. We do not believe that the outcome of these proceedings will have a material adverse effect on our consolidated financial condition or results of our operations.

As of March 31, 2008, we had an environmental reserve of approximately $2.6 million, related primarily to TTI’s foundry operations. This reserve is based on current cost estimates and does not reduce estimated expenditures to net present value, but does take into account the benefit of a contractual indemnity given to us by a prior owner of our wheel-end subsidiary. The failure for the indemnitor to fulfill its obligations could result in future costs that may be material. Any cash expenditures required by us or our subsidiaries to comply with applicable environmental laws and/or to pay for any remediation efforts will not be reduced or otherwise affected by the existence of the environmental reserve. We currently anticipate spending approximately $0.2 million per year in 2008 through 2011 for monitoring the various environmental sites associated with the environmental reserve, including attorney and consultant costs for strategic planning and negotiations with regulators and other potentially responsible parties, and payment of remedial investigation costs. Based on all of the information presently available to us, we believe that our environmental reserves will be adequate to cover the future costs related to the sites associated with the environmental reserves, and that any additional costs will not have a material adverse effect on our financial condition, results of operations or cash flows. However, the discovery of additional sites, the modification of existing or promulgation of new laws or regulations, more vigorous enforcement by regulators, the imposition of joint and several liability under CERCLA or analogous state laws, or other unanticipated events could also result in such a material adverse effect.

The final Iron and Steel Foundry National Emission Standard for Hazardous Air Pollutants, or NESHAP, was developed pursuant to Section 112(d) of the Clean Air Act and requires all major sources of hazardous air pollutants to install controls representative of maximum achievable control technology. We believe that our foundry operations are in compliance with the applicable requirements of the Iron and Steel Foundry NESHAP.

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

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

As of March 31, 2008, we had approximately 3,700 employees, of which 890 were salaried employees with the remainder paid hourly. Unions represent approximately 1,800 of our employees, or 49% of the total. There is one contract expiring on August 31, 2008 for our Fabco facility in California. We do not anticipate that the outcome of these negotiations will have a material adverse effect on our operating performance or costs. Our contract with the UAW at our Rockford, Illinois, facility expired in November 2007.  We were not able to negotiate a mutually acceptable agreement with the UAW, and as a result on November 18, 2007, we began an indefinite lock-out in order to protect the supply of products to our customers as well as provide security for facility personnel and equipment.  On March 9, 2008, the workers represented by the UAW voted to approve a new contract and subsequently returned to work.  While we did not experience a supply disruption to our customers during the lockout, there is no guarantee that the lock-out and the reinstatement of the unionized workforce will not have a material adverse affect on operating performance, costs, or pre-tax earnings in 2008.

Note 7 – Financial Instruments

We have determined the estimated fair value amounts of financial instruments using available market information and other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value.  SFAS No. 157 establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs).  Determining which category an asset or liability falls within the hierarchy requires significant judgment.  We evaluate our hierarchy disclosures each quarter.

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The hierarchy consists of three levels:

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

The carrying amounts of cash and cash equivalents, trade receivables, and accounts payable approximate fair value because of the relatively short maturity of these instruments.  The carrying amounts and related estimated fair values for our remaining financial instruments as of March 31, 2008 are as follows:

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

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

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

The following table provides a summary of changes in fair value of our Level 3 assets as of March 31, 2008:

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

11

Note 8 – Segment Reporting

As a part of our continual monitoring of the long-term economic characteristics, products and production processes, class of customer, and distribution methods of our operating segments, we aggregate our seven operating segments into three reportable segments shown below.  The accounting policies of the reportable segments are the same as described in Note 1, Summary of Significant Accounting Policies.

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

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

12

Note 9 – Guarantor and Non-guarantor Financial Statements

Our 8½% Senior Subordinated Notes due 2015 are fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our 100% owned domestic subsidiaries (“Guarantor Subsidiaries”). The non-guarantor subsidiaries are our foreign subsidiaries. The following condensed financial information illustrates the composition of the combined Guarantor Subsidiaries:

CONDENSED CONSOLIDATED BALANCE SHEET

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

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

13

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

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

14

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

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

15

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

The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and such principles are applied on a basis consistent with the information reflected in our Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC.  In the opinion of management, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments, which are necessary for a fair presentation of results for the respective interim periods.  The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2008 or any interim period.  Except for the historical information contained herein, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties.  Our actual results may differ materially from those indicated by such forward-looking statements.

Overview

Our business consists of seven operating segments that design, manufacture, and distribute components for trucks, trailers, and other vehicles. These operating segments are aggregated into three reportable segments as each reportable segment has similar economic characteristics, products and production processes, class of customer and distribution methods. The Wheels segment’s products consist of wheels for heavy- and medium-duty trucks and commercial trailers.  The Components segment’s products consist of truck body and chassis parts, wheel-end components and assemblies, and seats.  The Other segment’s products primarily consist of other commercial vehicle components, including steerable drive axles and gearboxes. We believe this segmentation is appropriate based upon management’s operating decisions and performance assessment.

Following a strong 2006, the North American heavy- and medium-duty truck and commercial trailer markets experienced a significant decline in 2007 due to stricter emissions standards that became effective in January 2007. The emissions regulations that took effect in 2007 were expected to result in cleaner operating, yet more costly, trucks. As a result, some of our customers altered their traditional buying trends, which resulted in higher than normal demand in late 2006, which was followed by a period of reduced demand in 2007.  Industry analysts, including America’s Commercial Transportation (“ACT”) Publications, expect that total demand in 2008 will be similar to 2007.  Delayed or failed economic recovery could have a material adverse effect on our business, results of operations, or financial condition.

We believe that the commercial vehicle market continued at a reasonably slow pace during the first three months of 2008.  We experienced reduced demand from the commercial vehicle industry in the first three months of 2008 compared to the first three months of 2007.  Net sales for the three months ended March 31, 2008, were $238.2 million compared to net sales of $325.4 million for the three months ended March 31, 2007.  We anticipate that this trend toward decreased net sales in 2008 compared to 2007 will begin to change the remainder of this year as we approach 2009, which is predicted by industry analysts to be a robust year for production in the North American commercial vehicle industry.  Our challenge is to meet the varying levels of production while improving our internal productivity and mitigating the margin pressure from rising material costs.

On January 31, 2005, pursuant to the terms of an agreement and plan of merger, one of our wholly-owned subsidiaries was merged with and into TTI, resulting in TTI becoming a wholly-owned subsidiary of Accuride.  In connection with the TTI merger, we entered into a Fourth Amended and Restated Credit Agreement consisting of (1) a new term credit facility in an aggregate principal amount of $550.0 million that will mature on January 31, 2012, and (2) a revolving credit facility in an aggregate principal amount of $125.0 million that will terminate on January 31, 2010.  In addition, we issued $275.0 million aggregate principal amount of 8½% senior subordinated notes due in 2015.

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

During the fourth quarter of 2006, we resolved a commercial dispute with Ford Motor Company.  As a result of the resolution, we recognized $10.4 million of revenue in 2006, $8.0 million in the three months ended March 31, 2007, and an additional $2.6 million in the remainder of 2007.  In addition, cash flow increased by $10.0 million in 2006 and $11.0 million in mid-2007.  Ford re-sourced its Accuride business to another supplier during 2007.  In 2007, sales to Ford represented less than 5% of consolidated revenues.

16

Results of Operations

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

The following table sets forth certain income statement information of Accuride for the three months ended March 31, 2008 and March 31, 2007:

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

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

Gross Profit - Consolidated gross profit decreased $11.8 million to $12.3 million for the three months ended March 31, 2008 from $24.1 million for the three months ended March 31, 2007.

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

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

Operating Expenses - Operating expenses decreased $1.4 million to $13.7 million for the three months ended March 31, 2008 from $15.1 million for the three months ended March 31, 2007.  This was primarily due to decreases in consulting and other purchased services.

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

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

17

Changes in Financial Condition

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

We use working capital and cash flow measures to evaluate the performance of our operations and our ability to meet our financial obligations. We require working capital investment to maintain our position as a leading manufacturer and supplier of commercial vehicle components.  We continue to strive for aligning our working capital investment with our customers’ purchase requirements and our production schedules.

The following table summarizes the major components of our working capital as of the periods listed below:

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

Significant changes in working capital from December 31, 2007 included:

·an increase in net customer receivables of $24.3 million due to the comparative increase in revenue in the months leading up to the respective period-end dates;

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

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

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

·a reduction of accrued payroll and compensation of $4.6 million due to annual incentive payments made in the current period;

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

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

Capital Resources and Liquidity

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

Operating Activities

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

18

working capital requirements due to the increase in production in the current period compared to the reduced levels of production experienced during the fourth quarter of 2007 as our largest customers reduce their purchase requirements for shutdowns normally reserved for maintenance related activities.

Investing Activities

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

Financing Activities

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

Bank Borrowing.   In connection with the TTI merger, we entered into a Fourth Amended and Restated Credit Agreement consisting of (1) a term credit facility (the Term B Loan Facility) in an aggregate principal amount of $550.0 million that will mature on January 31, 2012 and (2) a revolving credit facility (the “Revolver”) in an aggregate principal amount of $125.0 million (comprised of a $95.0 million U.S. revolving credit facility and the continuation of a $30.0 million Canadian revolving credit facility) that will terminate on January 31, 2010.  As of March 31, 2008, $294.6 million was outstanding under the Term B Loan Facility and the Revolver was undrawn.  The Term B Loan Facility requires quarterly amortization payments of $1.4 million that commenced on March 31, 2005, with the balance paid on the maturity date for the Term B Loan Facility. As of March 31, 2008, the regularly scheduled payments due through December 31, 2011 were prepaid without penalty.  The interest rates per annum applicable to loans under our senior credit facilities are, at the option of the Company or Accuride Canada Inc., as applicable, a base rate or Eurodollar rate plus, in each case, an applicable margin which is subject to adjustment based on our leverage ratio. The base rate is a fluctuating interest rate equal to the highest of (a) the base rate reported by Citibank, N.A. (or, with respect to the Canadian revolving credit facility, the reference rate of interest established or quoted by Citibank Canada for determining interest rates on U.S. dollar denominated commercial loans made by Citibank Canada in Canada), (b) a reserve adjusted three-week moving average of offering rates for three-month certificates of deposit plus one-half of one percent (0.5%) and (c) the federal funds effective rate plus one-half of one percent (0.5%). The obligations under our senior credit facilities are guaranteed by all of our domestic subsidiaries.  The loans under the senior credit facilities are secured by, among other things, a lien on substantially all of our U.S. properties and assets and of our domestic subsidiaries and a pledge of 65% of the stock of our foreign subsidiaries.  The loans under the Canadian revolving facility are also secured by substantially all of the properties and assets of Accuride Canada Inc.

Restrictive Debt Covenants.  Our senior credit facilities contain numerous financial and operating covenants that limit the discretion of management with respect to certain business matters.  These covenants place significant restrictions on, among other things, our ability to incur additional debt, to pay dividends, to create liens, to make certain payments and investments and to sell or otherwise dispose of assets and merge or consolidate with other entities.  We are also required to meet certain financial ratios and tests, including a leverage ratio, an interest coverage ratio and a fixed charge coverage ratio.  Failure to comply with the obligations contained in the credit documents could result in an event of default, and possibly the acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions.

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

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

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

Off-Balance Sheet Arrangements.  We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.  From time to time we may enter into operating leases, letters of credit, or take-or-pay obligations related to the purchase of raw materials that would not be reflected in our balance sheet.

Recent Accounting Pronouncements.

SFAS No. 141(R) — In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations.  SFAS No. 141(R) requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at fair value. SFAS No. 141(R) also requires transactions costs related to the business combination to be expensed as incurred. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating the impact of SFAS No. 141(R) related to future acquisitions, if any, on our consolidated financial statements.

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

SFAS No. 161 — In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133.  SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and their effect on an entity’s financial position, financial performance, and cash flows.  SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. We are currently evaluating the impact of SFAS No. 161 on our consolidated financial statements.

Critical Accounting Policies and Estimates.  We have made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America.  Actual results could differ significantly from those estimates under different assumptions and conditions.  We included in our Form 10-K for the year ended December 31, 2007 a discussion of our most critical accounting policies, which are those that have a material impact on our financial condition or operating performance and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Factors Affecting Future Results

In this report, we have made various statements regarding current expectations or forecasts of future events, which speak only as of the date the statements, are made.  These statements are “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements are also made from time-to-time in press releases and in oral statements made by the officers of Accuride.  Forward-looking statements are identified by the words “estimate,” “project,” “anticipate,” “will continue,” “will likely result,” “expect,” “intend,” “believe,” “plan,” “predict” and similar expressions.  Forward looking statements also include, but are not limited to, statements regarding commercial vehicle market recovery, projections of revenue, income, loss, or working capital, capital expenditure levels, ability to mitigate rising raw material costs through increases in selling prices, plans for future operations, financing needs, the ultimate outcome and impact of any litigation against Accuride, the sufficiency of our capital resources and plans and assumptions relating to the foregoing.

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

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contemplated in these “forward-looking statements.”  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.  You are advised to consult further disclosures we may make on related subjects in our filings with the SEC.  In addition to other factors discussed in this report, some of the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include the following:

·a more severe than anticipated commercial vehicle industry downturn in 2008 could have a material adverse effect on our business;

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

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

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

·our credit documents contain significant financial and operating covenants that limit the discretion of management with respect to certain business matters.  We must also meet certain financial ratios and tests as described above.  Failure to comply with the obligations contained in the debt agreements could result in an event of default, and possibly the acceleration of the related debt and the acceleration of debt under other instruments evidencing debt that may contain cross-acceleration or cross-default provisions;

·a labor strike may disrupt our supply to our customer base;

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

·our significant indebtedness may have important consequences, including, but not limited to, impairment of our ability to obtain additional financing, reduction of funds available for operations and business opportunities or limitations on our ability to dispose of assets;

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

·our ability to service our indebtedness is dependent upon operating cash flow;

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

·an interruption in supply of steel or aluminum could reduce our ability to obtain favorable sourcing of such raw materials;

·we may be subject to liability under certain environmental laws and the cost of compliance with these regulations could have a material adverse effect on our financial condition and may adversely affect our ability to sell or rent such property or to borrow using such property as collateral;

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

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

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of doing business, we are exposed to risks associated with changes in foreign exchange rates, raw material/commodity prices, and interest rates.  We use derivative instruments to manage these exposures.  The objectives for holding derivatives are to minimize the risks using the most effective methods to eliminate or reduce the impacts of these exposures.

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

Raw Material/Commodity Price Risk - We rely upon the supply of certain raw materials and commodities in our production processes and have entered into long-term supply contracts for our steel and aluminum requirements.  The exposures associated with these commitments are primarily managed through the terms of the sales, supply, and procurement contracts.  From time to time, we use commodity price swaps and futures contracts to manage the variability in certain commodity prices.  At March 31, 2008, we had $6.1 million of material commodity price swaps and futures contracts.

Interest Rate Risk - We use long-term debt as a primary source of capital in our business.  The following table presents the principal cash repayments and related weighted average interest rates by maturity date for our long-term fixed-rate debt and other types of long-term debt at March 31, 2008:

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

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

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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

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

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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Neither Accuride nor any of our subsidiaries is a party to any legal proceeding which, in the opinion of management, would have a material adverse effect on our business or financial condition.  However, we from time-to-time are involved in ordinary routine litigation incidental to our business, including actions related to product liability, contractual liability, workplace safety and environmental claims.  We establish reserves for matters in which losses are probable and can be reasonably estimated.  While we believe that we have established adequate accruals for our expected future liability with respect to our pending legal actions and proceedings, we cannot assure you that our liability with respect to any such action or proceeding would not exceed our established accruals.  Further, we cannot assure that litigation having a material adverse affect on our financial condition will not arise in the future.

Item 6.  Exhibits

Exhibit No.		Description
2.1	—	Agreement and Plan of Merger, dated as of December 24, 2004, by and among Accuride Corporation, Amber Acquisition Corp., Transportation Technologies Industries, Inc., certain signing stockholders and the Company Stockholders Representatives. Previously filed as an exhibit to the Form 8-K filed on December 30, 2004 and incorporated herein by reference.
2.2	—	Stock Subscription and Redemption Agreement, dated as of November 17, 1997, among Accuride Corporation, Hubcap Acquisition L.L.C. and Phelps Dodge Corporation. Previously filed as an exhibit to the Form S-4 effective July 23, 1998 (Reg. No. 333-50239) and incorporated herein by reference.
2.3	—	Amendment to Agreement and Plan of Merger, dated as of January 28, 2005, by and among Accuride Corporation, Amber Acquisition Corp., Transportation Technologies Industries, Inc. certain signing stockholders and the Company Stockholders Representatives. Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and incorporated herein by reference.
3.1	—	Amended and Restated Certificate of Incorporation of Accuride Corporation. Previously filed as an exhibit to Amendment 4, filed on April 21, 2005, to the Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and incorporated herein by reference.
3.2	—	Amended and Restated Bylaws of Accuride Corporation. Previously filed as an exhibit to Form 8-K filed on December 22, 2005 and incorporated herein by reference.
4.1	—	Specimen common stock certificate of registrant. Previously filed as an exhibit to Amendment 2, filed March 25, 2005, to Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and incorporated herein by reference.
4.2	—	Indenture, dated as of January 31, 2005, by and among the Registrant, all of the Registrant’s direct and indirect Domestic Subsidiaries existing on the Issuance Date and The Bank of New York Trust Company, N.A., with respect to $275.0 million aggregate principal amount of 81¤2% Senior Subordinated Notes due 2015. Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and incorporated herein by reference.
4.3	—	Amended and Restated Registration Rights Agreement dated January 31, 2005 by and between the Registrant and each of the Stockholders (as defined therein). Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and incorporated herein by reference.
4.4	—	Shareholder Rights Agreement dated January 31, 2005 by and between the Registrant and the Stockholders (as defined therein). Previously filed as an exhibit to the Form 8-K filed on February 4, 2005 and incorporated herein by reference.
4.5	—	Registration Rights Agreement, dated January 31, 2005, by and among Accuride Corporation, as issuer, the Guarantors named in Schedule A thereto and Lehman Brothers Inc., Citigroup Global Markets Inc. and UBS Securities LLC, as initial purchasers. Previously filed as an exhibit to Amendment 2, filed March 25, 2005, to Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and incorporated herein by reference.
4.6	—	Stockholders’ Agreement, dated January 21, 1998, as amended and assigned, by and among Accuride Corporation, RSTW Partners III, L.P. (as successor to Phelps Dodge Corporation) and Hubcap Acquisition L.L.C. Previously filed as an exhibit to Amendment 2, filed March 25, 2005, to Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and incorporated herein by reference.
4.7*	—	Form of Stockholders’ Agreement by and among Accuride Corporation, certain employees and Hubcap Acquisition L.L.C. Previously filed as an exhibit to the Form S-4 effective July 23, 1998 (Reg. No. 333-50239) and incorporated herein by reference.

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4.8*	—	Form of Amendment to Stockholders’ Agreement by and among Accuride Corporation, certain employees and the Hubcap Acquisition L.L.C. Previously filed as an exhibit to Amendment No. 1, filed September 22, 2005 (Reg. No. 333-128327) and incorporated herein by reference.
4.9	—	Bond Guaranty Agreement dated as of March 1, 1999 by Bostrom Seating, Inc. in favor of NBD Bank as Trustee. Previously filed as an exhibit to Amendment No. 1 filed on February 23, 2005 to the Form S-1 effective April 25, 2005 (Reg. No. 333-121944) and incorporated herein by reference.
31.1†	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14 of the Exchange Act of 1934 – John R. Murphy.
31.2†	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14 of the Exchange Act of 1934 – David K. Armstrong.
32.1††	—	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

†              Filed herewith

††            Furnished herewith

*              Management contract or compensatory agreement

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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.

ACCURIDE CORPORATION
/s/ JOHN R. MURPHY	Dated:	May 12, 2008
John R. Murphy
President and Chief Executive Officer
(Principal Executive Officer)
/s/ DAVID K. ARMSTRONG	Dated:	May 12, 2008
David K. Armstrong
Senior Vice President / Chief Financial Officer
(Principal Financial and Accounting Officer)

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