UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)



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

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



¨ ☐	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.)

~~39550 Orchard Hill Place~~40300 Traditions Drive

~~Novi,~~ Northville, Michigan ~~48375~~48168

(Address of principal executive offices)

(Zip Code)

~~(248)~~ (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. Yesý☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yesý☒ 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 an 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	ý	☒	Accelerated filer	¨☐
Non-accelerated filer	¨	~~(Do not check if a smaller reporting company)~~☐	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 ý☒

As of ~~October 27, 2017~~May 5, 2020, there were ~~17,530,796~~16,884,542 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, 2017~~March 31, 2020

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~NET INCOME~~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,
	2017			2016			2017			2016			2020			2019
Sales	$	869,016		$	855,656		$	2,680,212		$	2,597,457		$	654,890		$	877,995
Cost of products sold	718,187			690,984			2,187,058			2,101,000			611,747			762,490
Gross profit	150,829			164,672			493,154			496,457			43,143			115,505
Selling, administration & engineering expenses	94,145			92,368			267,883			268,498			70,671			86,974
Amortization of intangibles	3,432			3,457			10,563			9,974			4,450			3,775
Impairment charges	—			—			4,270			—
Restructuring charges	9,909			10,430			28,220			33,468			7,276			17,715
Other operating loss	—			—			—			155
Operating profit	43,343			58,417			182,218			184,362
Impairment of assets held for sale													74,079			—
Other impairment charges													977			—
Operating (loss) profit													(114,310		)	7,041
Interest expense, net of interest income	(10,256		)	(10,114		)	(31,788		)	(29,861		)	(10,237		)	(11,932		)
Equity in earnings of affiliates	660			1,386			3,735			5,823			1,431			2,358
Loss on refinancing and extinguishment of debt	—			—			(1,020		)	—
Other expense, net	(451		)	(518		)	(3,275		)	(8,589		)	(3,440		)	(796		)
Income before income taxes	33,296			49,171			149,870			151,735
Income tax expense	7,838			12,525			40,258			43,312
Net income	25,458			36,646			109,612			108,423
Net income attributable to noncontrolling interests	(818		)	(284		)	(2,810		)	(549		)
Net income attributable to Cooper-Standard Holdings Inc.	$	24,640		$	36,362		$	106,802		$	107,874
Loss before income taxes													(126,556		)	(3,329		)
Income tax (benefit) expense													(14,117		)	2,034
Net loss													(112,439		)	(5,363		)
Net loss (income) attributable to noncontrolling interests													1,851			(52		)
Net loss attributable to Cooper-Standard Holdings Inc.													$	(110,588	)	$	(5,415	)

Earnings per share:
Loss per share:
Basic	$	1.39		$	2.08		$	6.01		$	6.20		$	(6.55	)	$	(0.31	)
Diluted	$	1.32		$	1.94		$	5.67		$	5.77		$	(6.55	)	$	(0.31	)

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollar amounts in thousands)



	Three Months Ended March 31,
	2020			2019
Net loss	$	(112,439	)	$	(5,363	)
Other comprehensive (loss) income:
Currency translation adjustment	(28,889		)	1,970
Benefit plan liabilities adjustment, net of tax	2,682			1,387
Fair value change of derivatives, net of tax	(10,076		)	1,253
Other comprehensive (loss) income, net of tax	(36,283		)	4,610
Comprehensive loss	(148,722		)	(753		)
Comprehensive loss (income) attributable to noncontrolling interests	2,358			(423		)
Comprehensive loss attributable to Cooper-Standard Holdings Inc.	$	(146,364	)	$	(1,176	)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income $ 25,458
$ 36,646
$ 109,612
$ 108,423
Other comprehensive income (loss):
Currency translation adjustment 16,535
2,663
41,204
12,330
Benefit plan liabilities adjustment, net of tax 3,963
(149 ) 1,235
(620 )
Fair value change of derivatives, net of tax (966 ) 1,881
617
(605 )
Other comprehensive income, net of tax 19,532
4,395
43,056
11,105
Comprehensive income 44,990
41,041
152,668
119,528
Comprehensive income attributable to noncontrolling interests (1,306 ) (266 ) (3,891 ) (317 )
Comprehensive income attributable to Cooper-Standard Holdings Inc. $ 43,684
$ 40,775
$ 148,777
$ 119,211

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, 2017			December 31, 2016			March 31, 2020			December 31, 2019
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	372,984		$	480,092		$	301,841		$	359,536
Accounts receivable, net	571,515			460,503			335,827			423,155
Tooling receivable	111,543			90,974
Tooling receivable, net							139,049			148,175
Inventories	179,470			146,449			168,036			143,439
Prepaid expenses	42,685			37,142			27,859			34,452
Other current assets	97,845			81,021			94,191			93,513
Assets held for sale							25,735			—
Total current assets	1,376,042			1,296,181			1,092,538			1,202,270
Property, plant and equipment, net	916,496			832,269			909,511			988,277
Operating lease right-of-use assets, net							113,090			83,376
Goodwill	170,765			167,441			141,870			142,187
Intangible assets, net	72,060			81,363			74,306			84,369
Other assets	100,233			114,448			152,948			135,103
Total assets	$	2,635,596		$	2,491,702		$	2,484,263		$	2,635,582

Liabilities and Equity
Current liabilities:
Debt payable within one year	$	32,448		$	33,439		$	62,530		$	61,449
Accounts payable	491,202			475,426			357,003			426,055
Payroll liabilities	138,127			144,812			82,980			88,486
Accrued liabilities	123,955			105,665			120,383			119,841
Current operating lease liabilities							21,314			24,094
Liabilities held for sale							55,452			—
Total current liabilities	785,732			759,342			699,662			719,925
Long-term debt	722,557			729,480			744,745			746,179
Pension benefits	178,406			172,950			133,123			140,010
Postretirement benefits other than pensions	56,876			54,225			43,423			48,313
Long-term operating lease liabilities							90,947			60,234
Other liabilities	47,859			53,914			44,802			44,939
Total liabilities	1,791,430			1,769,911			1,756,702			1,759,600
7% Cumulative participating convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding	—			—			—			—
Equity:
Common stock, $0.001 par value, 190,000,000 shares authorized; 19,602,827 shares issued and 17,596,621 shares outstanding as of September 30, 2017, and 19,686,917 shares issued and 17,690,611 outstanding as of December 31, 2016	17			17
Common stock, $0.001 par value, 190,000,000 shares authorized; 18,950,351 shares issued and 16,884,542 shares outstanding as of March 31, 2020, and 18,908,566 shares issued and 16,842,757 outstanding as of December 31, 2019							17			17
Additional paid-in capital	513,609			513,934			492,325			490,451
Retained earnings	502,806			425,972			507,287			619,448
Accumulated other comprehensive loss	(200,588		)	(242,563		)	(289,517		)	(253,741		)
Total Cooper-Standard Holdings Inc. equity	815,844			697,360			710,112			856,175
Noncontrolling interests	28,322			24,431			17,449			19,807
Total equity	844,166			721,791			727,561			875,982
Total liabilities and equity	$	2,635,596		$	2,491,702		$	2,484,263		$	2,635,582

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

COOPER-STANDARD HOLDINGS INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~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, 2016 17,690,611
$ 17
$ 513,934
$ 425,972
$ (242,563 ) $ 697,360
$ 24,431
$ 721,791
Repurchase of common stock (306,072 ) —
(7,407 ) (24,045 ) —
(31,452 ) —
(31,452 )
Warrant exercises 50,145
—
836
—
—
836
—
836
Share-based compensation, net 161,937
—
6,246
(5,923 ) —
323
—
323
Net income —
—
—
106,802
—
106,802
2,810
109,612
Other comprehensive income —
—
—
—
41,975
41,975
1,081
43,056
Balance as of September 30, 2017 17,596,621
$ 17
$ 513,609
$ 502,806
$ (200,588 ) $ 815,844
$ 28,322
$ 844,166



	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		—			—			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



	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	—		—		—			—			—			—			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

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,
	2017			2016			2020			2019
Operating Activities:
Net income	$	109,612		$	108,423
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss							$	(112,439	)	$	(5,363	)
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	88,850			81,725			33,313			32,830
Amortization of intangibles	10,563			9,974			4,450			3,775
Impairment charges	4,270			—
Impairment of assets held for sale							74,079			—
Other impairment charges							977			—
Share-based compensation expense	19,006			18,533			2,374			3,186
Equity in earnings of affiliates, net of dividends related to earnings	1,647			(2,801		)	3,814			2,559
Loss on refinancing and extinguishment of debt	1,020			—
Deferred income taxes							(20,191		)	(964		)
Other	14,706			1,396			1,138			1,495
Changes in operating assets and liabilities	(145,124		)	(35,205		)	10,455			(39,366		)
Net cash provided by operating activities	104,550			182,045
Net cash used in operating activities							(2,030		)	(1,848		)
Investing activities:
Capital expenditures	(137,446		)	(116,788		)	(50,591		)	(59,633		)
Acquisition of businesses, net of cash acquired	(478		)	(37,478		)	—			(452		)
Cash from consolidation of joint venture	—			3,395
Proceeds from sale of fixed assets and other	1,236			156			482			102
Net cash used in investing activities	(136,688		)	(150,715		)	(50,109		)	(59,983		)
Financing activities:
Principal payments on long-term debt	(15,616		)	(9,787		)	(1,498		)	(1,012		)
Increase in short-term debt, net	6,070			1,703			3,021			65,791
Repurchase of common stock	(30,680		)	(23,800		)	—			(6,550		)
Proceeds from exercise of warrants	836			2,498
Taxes withheld and paid on employees' share based payment awards	(11,949		)	(11,979		)
Taxes withheld and paid on employees' share-based payment awards							(512		)	(2,706		)
Other	(795		)	101			(625		)	1,827
Net cash used in financing activities	(52,134		)	(41,264		)
Effects of exchange rate changes on cash and cash equivalents	(22,836		)	(7,880		)
Changes in cash and cash equivalents	(107,108		)	(17,814		)
Cash and cash equivalents at beginning of period	480,092			378,243
Cash and cash equivalents at end of period	$	372,984		$	360,429
Net cash provided by financing activities							386			57,350
Effects of exchange rate changes on cash, cash equivalents and restricted cash							(6,200		)	1,477
Changes in cash, cash equivalents and restricted cash							(57,953		)	(3,004		)
Cash, cash equivalents and restricted cash at beginning of period							361,742			267,399
Cash, cash equivalents and restricted cash at end of period							$	303,789		$	264,395

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
							March 31, 2020			December 31, 2019
Cash and cash equivalents							$	301,841		$	359,536
Restricted cash included in other current assets							13			12
Restricted cash included in other assets							1,935			2,194
Total cash, cash equivalents and restricted cash shown in the statement of cash flows							$	303,789		$	361,742

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 ~~and anti-vibration~~ 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, ~~2016~~2019 (the ~~“2016~~“2019 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, 2017~~March 31, 2020 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.

~~Recently Adopted Accounting Pronouncements~~Immaterial Correction of Errors

InDuring the ~~first quarter of 2017,~~year ended December 31, 2019, the Company ~~adopted Accounting Standards Update (“ASU”) 2015-11,~~ ~~Inventory (Topic 330): Simplifying~~identified errors primarily related to periods prior to fiscal year 2019. The Company concluded these errors were not material individually or in the ~~Measurement~~aggregate to any of ~~Inventory.~~ ~~This ASU amended~~ the ~~guidelines for the measurement~~previously reported periods and, therefore, amendments of ~~inventory from lower of cost or market~~previously filed reports were not required. Corrections were made to the ~~lower~~applicable prior periods reflected in the financial information herein.

The following table presents the impact of ~~cost and net realizable value. This new guidance has been adopted prospectively and had an immaterial impact~~these corrections on the Company’s condensed consolidated ~~financial statements.~~statements of operations:

~~Recently Issued Accounting Pronouncements~~

~~In August 2017,~~



	Three Months Ended March 31, 2019
	As previously reported			Adjustment			As corrected
Sales	$	880,038		$	(2,043	)	$	877,995
Income tax expense	2,331			(297		)	2,034
Net income (loss) attributable to noncontrolling interests	157			(209		)	(52		)
Net loss attributable to Cooper-Standard Holdings Inc.	(3,460		)	(1,955		)	(5,415		)

Earnings (loss) per share:
Basic	$	(0.20	)	$	(0.11	)	$	(0.31	)
Diluted	$	(0.20	)	$	(0.11	)	$	(0.31	)

The following table presents the ~~Financial Accounting Standards Board (“FASB”) issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.~~ ~~This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value~~impact of a hedging instrument to be presented in the same income statement line as the hedged item. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The adoption of this ASU is not expected to have a material impactthese corrections on the Company’s condensed consolidated ~~financial statements.~~statements of comprehensive income (loss):

~~In May 2017,~~



	Three Months Ended March 31, 2019
	As previously reported			Adjustment			As corrected
Currency translation adjustment	$	2,219		$	(249	)	$	1,970
Comprehensive loss (income) attributable to noncontrolling interests	(247		)	(176		)	(423		)
Comprehensive income (loss) attributable to Cooper-Standard Holdings Inc.	995			(2,171		)	(1,176		)

The impact of these corrections on the ~~FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope~~balance as of ~~Modification Accounting. This guidance clarifies that modification accounting is required only if there is a change~~March 31, 2019 in the ~~fair value, vesting conditions, or classification (as~~Company’s condensed consolidated statements of changes in equity ~~or liability)~~includes a decrease to total equity of $10,022, which consists of a ~~share-based payment award due~~decrease to ~~changes in the terms or conditions. This guidance is effective for annual~~retained earnings of $8,765, increase to accumulated other comprehensive loss of $65, and ~~interim reporting periods beginning after December 15, 2017. Early adoption is permitted. The adoption~~decrease to noncontrolling interests of ~~this ASU is not expected to have a material impact on the Company’s consolidated financial statements.~~

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. This guidance requires the service cost component of net periodic benefit cost to be recorded in the same income statement line item as other employee compensation costs arising from services rendered during the period. Other components of the net periodic benefit cost must be presented separately outside of operating income. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. This guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This guidance is effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash. This guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and~~$1,192.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should now be included with cash and cash equivalents when reconcilingFor the ~~beginning-of-period and end-of-period total amounts shown~~three months ended March 31, 2019, the impact of these corrections on the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’scondensed consolidated statement of cash ~~flows.~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This guidance will require companies to recognize the~~flow included a $1,746 decrease in net income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the transfer occurs. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017, and should be applied on a modified retrospective approach with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.~~ The amendments provide guidance on eight specific cash flow issues, thereby reducing diversity in practice. The amendments are effective for annual and interim reporting periods beginning after December 15, 2017. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires companies to use a retrospective transition method upon adoption. The Company’s current accounting practices are consistent with the issues addressedoffset by ~~this guidance. Therefore, this guidance is not expected to have a material impact on the Company’s consolidated financial statements.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~. The guidance revises existing U.S. GAAP by requiring lessees to recognize right-of-use assets and lease liabilities for all leases (except for short-term leases). The standard also requires additional disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from lease transactions. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018. A modified retrospective transition approach is required with certain practical expedients available. The Company continues to perform a comprehensive evaluation on the impacts of adopting this standard and plans on adopting this ASU effective January 1, 2019. The Company believes this standard will primarily result in an increase of $1,746 in ~~the~~changes in operating assets and liabilities, ~~on its consolidated balance sheet and will not have a material~~resulting in no impact ~~on its consolidated income statement.~~to net cash provided by operating activities.

~~In May 2014, the FASB issued~~

2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2016-13, Financial Instruments — Credit Losses (Topic ~~606)~~. The guidance prescribes a single, common revenue standard that replaces most existing revenue recognition guidance in U.S. GAAP. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The standard also requires new, expanded revenue disclosures.326)

Several ASUs addressing revenue recognition have been issued since the issuance of ASU 2014-09. These ASUs, which modify certain sections of ASU 2014-09, are intended to promote a more consistent interpretation and application of the principles outlined in the standard. The Company will adopt the guidance effectiveOn January 1, ~~2018,~~2020, the ~~standard’s effective date,~~Company adopted Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, and all related amendments using the modified retrospective ~~method. Under this~~ method whereby the cumulative effect of adopting the standard iswas recognized in equity at the date of initial application.

~~To assess~~ Comparative information has not been restated and continues to be reported under the ~~impact~~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 ~~Company developed a comprehensive project plan. This project plan includes analyzing~~allowance for credit losses, which decreased the ~~standard’s impact~~tooling receivable on ~~customer contracts across~~ the Company’s ~~business segments, comparing its historical accounting policies and practices~~condensed consolidated balance sheet in 2020. The increase in credit loss expense was recorded as an adjustment to the ~~requirements~~opening balance of retained earnings. Adoption of the new standard ~~and identifying potential differences from applying~~had no impact on the ~~new standard’s requirements.~~ 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 ~~has substantially completed its assessment and does~~adopted the following Accounting Standard Updates (“ASU”) during the three months ended March 31, 2020, which did not ~~expect that adopting the new standard will~~ have a material impact on its condensed consolidated financial statements. As a result, it expects to recognize substantially all of its revenue at a point in time, generally when products are either shipped or delivered. The Company will finalize its evaluation of the effect on its consolidated financial statements during the fourth quarter of 2017.statements:

The Company has completed its evaluation of pre-production costs related to long-term supply arrangements, such as reimbursable tooling, and expects to continue accounting for pre-production costs in accordance with existing guidance. In addition, the Company’s internal control framework is not expected to significantly change. Instead, existing internal controls will be modified and augmented, as necessary. While implementing the new standard, the Company will continue to monitor FASB activities and interpretations of various non-authoritative industry groups for any possible impact on the Company’s findings.



Standard	Description	Effective Date
ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract	Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	January 1, 2020
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	Provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.	January 1, 2020

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

~~2. Acquisitions~~3. Assets Held for Sale and Divestiture

~~AMI Acquisition~~Assets Held for Sale

In ~~2016,~~ the fourth quarter of 2019, management approved a plan to sell certain manufacturing facilities within its Europe and Asia Pacific segments. The Company ~~acquired~~expects to sell the North American fuel and brake business of AMI Industries (the “AMI Business”) for cash consideration of $32,000 (the “AMI Acquisition”). This acquisition directly aligns with the Company’s growth strategy by expanding the Company’s fuel and brake business. The results of operations of the AMI Business are includedmanufacturing facilities in the Company’s condensed consolidated financial statements from the date of acquisition, August 15, 2016, and reported within the North America segment. This acquisition was accounted for as a business combination, resulting in the recognition of intangible assets of $19,410 and goodwill of $7,175 in 2016. In the second quarter of ~~2017,~~2020. The manufacturing facilities and the associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 2020, and as such, the assets and liabilities associated with the transaction are separately classified as held for sale in the condensed consolidated balance sheet and depreciation of long-lived assets ceased. The planned divestiture did not meet the criteria for presentation as a discontinued operation.

The major classes of assets and liabilities held for sale were as follows:



	March 31, 2020
Accounts receivable, net	$	17,171
Tooling receivable, net	3,508
Inventories	18,157
Prepaid expenses	3,519
Other current assets	9,817
Property, plant and equipment, net	38,691
Operating lease right-of-use assets, net	2,782
Intangible assets, net	4,981
Other assets	1,188
Impairment of carrying value	(74,079		)
Total assets held for sale	$	25,735

Accounts payable	$	29,341
Payroll liabilities	5,642
Accrued liabilities	9,137
Current operating lease liabilities	955
Pension benefits	3,461
Postretirement benefits other than pensions	2,715
Long-term operating lease liabilities	2,363
Other liabilities	1,838
Total liabilities related to assets held for sale	$	55,452

Upon meeting the criteria for held for sale classification, the Company ~~agreed~~recorded a non-cash impairment charge of $74,079 to ~~purchase~~reduce the ~~China fuel and brake business~~carrying value of ~~AMI Industries,~~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 cost to sell must be assessed each reporting period that the asset group remains classified as held for sale.

The impairment charge, which is subject to ~~regulatory approval.~~

~~Other Acquisitions~~

~~In 2016,~~adjustments as the ~~Company acquired a business in furtherance~~transaction is finalized, includes the anticipated release of non-cash cumulative foreign currency translation losses, which were included as part of the ~~Company’s China operations. The total purchase price~~carrying value of the ~~acquisition was $5,478,~~held for sale entities. These losses will be reclassified from accumulated other comprehensive loss to net income (loss) upon closure of ~~which $3,020 was paid during~~the transaction.

Divestiture

During the first quarter of ~~2016~~2019 and ~~$2,458 was paid~~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.

Subsequent Event

Subsequent to the end of the Company's first quarter, on May 7, 2020, the Company entered into a definitive agreement to divest certain manufacturing facilities within its Europe and Asia Pacific segments. The planned divestiture of the facilities is expected to close in the ~~third~~second quarter of ~~2016.~~2020 and is subject to customary closing conditions, including regulatory and third-party approvals.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

4. Revenue

Revenue is recognized for manufactured parts at a point in time, generally when products are shipped or delivered. The Company ~~recognized $2,972~~usually enters into agreements with customers to produce products at the beginning of ~~goodwill in 2016~~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 March 31, 2020 was as ~~a result~~follows:



	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	$	325,982	$	170,781	$	78,742	$	20,439	$	—	$	595,944
Commercial	3,178		5,557		546		10		1,134		10,425
Other	5,641		8,904		56		22		33,898		48,521
Revenue	$	334,801	$	185,242	$	79,344	$	20,471	$	35,032	$	654,890

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



	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Passenger and Light Duty	$	436,866	$	225,451	$	125,355	$	23,192	$	—	$	810,864
Commercial	5,792		8,425		—		23		547		14,787
Other	5,060		8,524		97		22		38,641		52,344
Revenue	$	447,718	$	242,400	$	125,452	$	23,237	$	39,188	$	877,995

The passenger and light duty group consists of ~~this acquisition.~~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.

Also in 2016, the Company obtained control of its 51%-owned joint venture, Shenya Sealing (Guangzhou) Company Limited (“Guangzhou”) through an amendment of the joint venture governing document. This joint venture was previously accounted for as an investment under the equity method. The results of operations of Guangzhou are included in the Company’s consolidated financial statements from the date of consolidation, August 4, 2016, and reported within the Asia Pacific segment. Business combination accounting was completed, resulting in the recognition of intangible assets of $6,605 and goodwill of $9,741 in 2016. There was no gain or loss recognized on the remeasurementSubstantially all of the Company’s ~~equity method investment~~revenues were generated from sealing, fuel and brake delivery, fluid transfer and anti-vibration systems for use in ~~Guangzhou.~~passenger vehicles and light trucks manufactured by global OEMs. On April 1, 2019, the Company completed the divestiture of its AVS product line.

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 March 31, 2020 was as follows:



	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	$	124,556	$	127,246	$	49,024	$	13,549	$	—	$	314,375
Fuel and brake delivery systems	104,934		28,562		19,818		5,747		—		159,061
Fluid transfer systems	105,311		21,945		10,502		1,175		—		138,933
Other	—		7,489		—		—		35,032		42,521
Consolidated	$	334,801	$	185,242	$	79,344	$	20,471	$	35,032	$	654,890

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

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



	North America		Europe		Asia Pacific		South America		Corporate, Eliminations and Other		Consolidated
Sealing systems	$	145,646	$	155,391	$	83,529	$	17,829	$	—	$	402,395
Fuel and brake delivery systems	131,703		35,298		25,168		5,335		—		197,504
Fluid transfer systems	113,448		22,798		15,302		73		—		151,621
Anti-vibration systems	56,457		20,649		1,453		—		—		78,559
Other	464		8,264		—		—		39,188		47,916
Consolidated	$	447,718	$	242,400	$	125,452	$	23,237	$	39,188	$	877,995

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 three months ended March 31, 2020.

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



	March 31, 2020			December 31, 2019			Change
Contract assets	$	9,130		$	1,100		$	8,030
Contract liabilities	(43		)	(61		)	18
Net contract assets	$	9,087		$	1,039		$	8,048

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 March 31, 2020 and December 31, 2019 were current liabilities of $11,954 and $12,916, respectively, and long-term liabilities of $7,360 and $9,502, 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.

3.5. 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.

In January 2015, the Company announced its intention to further restructure its European manufacturing footprint based on anticipated market demands. The total estimated cost of this initiative, which is expected to be substantially completed by the end of 2017, is approximately $120,000 to $125,000, of which approximately $107,000 has been incurred to date. We expect to incur total employee separation costs of approximately $63,000 to $66,000, other related exit costs of approximately $56,000 to $58,000 and non-cash asset impairments related to restructuring activities of approximately $500.

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.

~~Restructuring expense by segment for the three~~ Employee separation costs are recorded based on existing union and ~~nine months ended September 30, 2017~~employee contracts, statutory requirements, completed negotiations and ~~2016 was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
North America $ 2,503
$ 306
$ 3,320
$ 1,661
Europe 6,236
9,691
22,341
30,184
Asia Pacific 1,170
433
2,559
1,623
Total $ 9,909
$ 10,430
$ 28,220
$ 33,468
Company policy.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Restructuring expense by segment for the three months ended March 31, 2020 and 2019 was as follows:



	Three Months Ended March 31,
	2020		2019
North America	$	3,703	$	5,208
Europe	2,193		6,103
Asia Pacific	133		2,513
South America	1,202		16
Total Automotive	7,231		13,840
Corporate and other	45		3,875
Total	$	7,276	$	17,715

Restructuring activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was as follows:



	Employee Separation Costs			Other Exit Costs			Total
Balance as of December 31, 2019	$	22,990		$	4,005		$	26,995
Expense	4,415			2,861			7,276
Cash payments	(6,362		)	(3,037		)	(9,399		)
Foreign exchange translation and other	(626		)	(38		)	(664		)
Balance as of March 31, 2020	$	20,417		$	3,791		$	24,208

Employee Separation Costs Other Exit Costs Total
Balance as of December 31, 2016 $ 21,927
$ 2,311
$ 24,238
Expense 14,991
13,229
28,220
Cash payments (22,224 ) (11,811 ) (34,035 )
Foreign exchange translation and other 1,769
450
2,219
Balance as of September 30, 2017 $ 16,463
$ 4,179
$ 20,642

4.6. Inventories

Inventories consist of the following:



	March 31, 2020		December 31, 2019
Finished goods	$	54,135	$	57,070
Work in process	36,741		33,753
Raw materials and supplies	77,160		52,616
	$	168,036	$	143,439

September 30, 2017 December 31, 2016
Finished goods $ 48,596
$ 43,511
Work in process 39,499
32,839
Raw materials and supplies 91,375
70,099
$ 179,470
$ 146,449

5.7. 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 March 31, 2020. 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 March 31,
	2020		2019
Operating lease expense	$	8,605	$	8,680
Short-term lease expense	1,010		679
Variable lease expense	250		215
Finance lease expense:
Amortization of right-of-use assets	681		443
Interest on lease liabilities	385		455
Total lease expense	$	10,931	$	10,472

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Other information related to leases was as follows:



	Three Months Ended March 31,
	2020			2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	7,933		$	8,656
Operating cash flows for finance leases	410			323
Financing cash flows for finance leases	648			267
Non-cash right-of-use assets obtained in exchange for lease obligations:
Operating leases	37,205			164
Finance leases	61			9,452

Weighted Average Remaining Lease Term (in years)
Operating leases	8.2			5.5
Finance leases	11.1			12.0

Weighted Average Discount Rate
Operating leases	5.3		%	4.7		%
Finance leases	6.1		%	9.6		%

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



Year	Operating Leases			Finance Leases
Remainder of 2020	$	21,117		$	2,696
2021	23,120			3,543
2022	18,019			3,301
2023	15,143			3,047
2024	12,385			3,190
Thereafter	56,959			23,988
Total future minimum lease payments	146,743			39,765
Less imputed interest	(31,164		)	(11,059		)
Total	$	115,579		$	28,706

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



	March 31, 2020		December 31, 2019
Operating Leases
Assets held for sale	$	2,782	$	—
Operating lease right-of-use assets, net	113,090		83,376
Current operating lease liabilities	21,314		24,094
Liabilities held for sale	3,318		—
Long-term operating lease liabilities	90,947		60,234

Finance Leases
Debt payable within one year	2,284		2,343
Long-term debt	26,422		27,430

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

As of March 31, 2020 and December 31, 2019, assets recorded under finance leases, net of accumulated depreciation were $31,705 and $32,571, respectively. As of March 31, 2020, the Company had additional operating leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately $1,725. These operating leases will commence in 2020 with lease terms up to 10 years.

8. Property, Plant and Equipment

Property, plant and equipment consists of the following:



	March 31, 2020			December 31, 2019
Land and improvements	$	56,571		$	66,670
Buildings and improvements	278,531			310,797
Machinery and equipment	1,163,390			1,204,457
Construction in progress	149,995			161,951
	1,648,487			1,743,875
Accumulated depreciation	(738,976		)	(755,598		)
Property, plant and equipment, net	$	909,511		$	988,277

September 30, 2017 December 31, 2016
Land and improvements $ 72,737
$ 71,002
Buildings and improvements 293,257
265,824
Machinery and equipment 998,643
864,337
Construction in progress 184,991
153,924
1,549,628
1,355,087
Accumulated depreciation (633,132 ) (522,818 )
Property, plant and equipment, net $ 916,496
$ 832,269

~~Impairment of Long-Lived Assets~~

Due to the ~~Company’s decision to divest two~~deterioration of ~~its inactive European sites,~~financial results in a certain Asia Pacific location, the Company recorded an impairment ~~charges~~charge of ~~$4,270 in~~$977 during the ~~nine~~three months ended ~~September 30, 2017. Fair~~March 31, 2020. The fair value was determined ~~based~~using estimated orderly liquidation value, which was deemed the highest and best use of the assets. Based on ~~current real estate market conditions.~~the Company’s interim impairment assessment, the Company has determined there were no additional indicators of impairment identified during the three months ended March 31, 2020. However, the Company continues to monitor the impacts of COVID-19 on its business and a lack of recovery of production volumes could result in an impairment charge in future periods.

6.9. Goodwill and Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by ~~reportable~~reporting unit for the three months ended March 31, 2020 were as follows:



	North America			Industrial Specialty Group		Total
Balance as of December 31, 2019	$	142,187		$	—	$	142,187
Reorganization	(14,036		)	14,036		—
Foreign exchange translation	(317		)	—		(317		)
Balance as of March 31, 2020	$	127,834		$	14,036	$	141,870

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 ~~nine months ended September 30, 2017 were as follows:~~

North America Europe Asia Pacific Total
Balance as of December 31, 2016 $ 121,996
$ 10,753
$ 34,692
$ 167,441
Acquisition —
236
—
236
Foreign exchange translation 240
1,259
1,589
3,088
Balance as of September 30, 2017 $ 122,236
$ 12,248
$ 36,281
$ 170,765
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. ~~There~~Other than the reorganization event noted above, there were no other indicators of potential impairment during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Intangible Assets

Intangible assets and accumulated amortization balances as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 were as follows:



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	154,345	$	(116,066	)	$	38,279
Other	43,595		(7,568		)	36,027
Balance as of March 31, 2020	$	197,940	$	(123,634	)	$	74,306

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

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
Customer relationships $ 135,680
$ (83,044 ) $ 52,636
Developed technology 9,144
(9,053 ) 91
Other 21,863
(2,530 ) 19,333
Balance as of September 30, 2017 $ 166,687
$ (94,627 ) $ 72,060

Customer relationships $ 134,918
$ (73,088 ) $ 61,830
Developed technology 8,762
(8,386 ) 376
Other 20,965
(1,808 ) 19,157
Balance as of December 31, 2016 $ 164,645
$ (83,282 ) $ 81,363

7.10. Debt

A summary of outstanding debt as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016 was~~2019 is as follows:



	March 31, 2020			December 31, 2019
Senior Notes	$	395,293		$	395,114
Term Loan	325,455			326,061
ABL Facility	—			—
Finance leases	28,706			29,773
Other borrowings	57,821			56,680
Total debt	807,275			807,628
Less current portion	(62,530		)	(61,449		)
Total long-term debt	$	744,745		$	746,179

September 30, 2017 December 31, 2016
Senior Notes $ 393,505
$ 393,060
Term Loan 331,382
332,827
Other borrowings 30,118
37,032
Total debt 755,005
762,919
Less current portion (32,448 ) (33,439 )
Total long-term debt $ 722,557
$ 729,480

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.~~2026. Interest on the Senior Notes is payable semi-annually in arrears in cash on May 15 and November 15 of each ~~year, commencing on May 15, 2017.~~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, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company ~~has $6,495~~had $4,707 and ~~$6,940~~$4,886 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.

Term Loan Facility

Also 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. Subject to certain conditions, the Term Loan Facility, without the consent of the then-existing lenders (but subject to the receipt of commitments), may be expanded (or a new term loan or revolving facility added) by an amount that will not cause the consolidated secured net debt ratio to exceed 2.25 to 1.00 plus $400,000 plus any voluntary prepayments, including the ~~senior asset-based revolving credit facility (“~~ABL ~~Facility”)~~Facility (as defined below) to the extent commitments are reduced, not funded from proceeds of long-term indebtedness. The Term Loan Facility matures on November 2, 2023, unless earlier terminated.

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 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 ~~2.25%~~2.0% per annum, or (2) with respect to base rate loans, the base rate, (which is the highest of the ~~then-current~~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 ~~1.25%~~1.0% per annum. ~~As a result of the amendment, the Company recognized a loss on refinancing and extinguishment of~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

~~debt of $1,020 in the second quarter of 2017, which was due to the partial write off of new and unamortized debt issuance costs and unamortized original issue discount.~~

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company had ~~$3,689~~$2,125 and ~~$4,352~~$2,273 of unamortized debt issuance costs, respectively, and ~~$2,379~~$1,370 and ~~$2,821~~$1,466 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 ~~$210,000~~ Third Amended and Restated Loan Agreement of its ~~senior asset-based revolving credit facility (“ABL Facility”).~~

~~The~~ ABL Facility, ~~provides for~~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 ~~including~~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 ~~$310,000,~~$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, 2017,~~March 31, 2020, there were no ~~borrowings~~loans outstanding under the ABL ~~Facility, and subject to~~Facility. The Company’s borrowing base ~~availability,~~was $173,278. Net of the ~~Company had $197,074 in availability, less~~10% of the borrowing base that cannot be borrowed without triggering the fixed charge coverage ratio maintenance covenant and $10,289 of outstanding letters of credit, ~~of $8,542.~~the Company effectively had $145,661 available for borrowing under its ABL facility.

Any borrowings under ~~our~~the ABL Facility will mature, and the commitments of the lenders under ~~our~~the ABL Facility will terminate, on ~~November 2, 2021.~~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 ~~September 30, 2017~~the Amendment, 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 March 31, 2020 and December 31, ~~2016,~~2019, the Company had ~~$1,440~~$1,352 and ~~$1,706,~~$657, 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, Term Loan Facility and ABL Facility as of ~~September 30, 2017.~~March 31, 2020.

Other

Other borrowings as of March 31, 2020 and December 31, 2019 reflect borrowings under ~~capital leases,~~ local bank lines ~~and accounts receivable factoring sold with recourse~~ classified in debt payable within one year on the condensed consolidated balance ~~sheets.~~sheet.

8.11. 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Items Measured at Fair Value on a Recurring Basis

Estimates of the fair value of foreign currency and interest rate 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, 2017~~March 31, 2020 and December 31, ~~2016 was~~2019 were as follows:



	March 31, 2020			December 31, 2019			Input
Forward foreign exchange contracts - other current assets	$	203		$	467		Level 2
Forward foreign exchange contracts - accrued liabilities	(12,777		)	(42		)	Level 2

September 30, 2017 December 31, 2016 Input
Forward foreign exchange contracts - other current assets $ 888
$ 764
Level 2
Forward foreign exchange contracts - accrued liabilities (1,140 ) (535 ) Level 2
Interest rate swaps - accrued liabilities (1,090 ) (2,458 ) Level 2
Interest rate swaps - other liabilities —
(661 ) 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 ~~2. “Acquisitions,” Note~~ 3. ~~“Restructuring”~~“Assets Held for Sale and Divestiture” and Note 5.8. “Property, Plant and Equipment.”

Items Not Carried Atat Fair Value

Fair values of the Company’s ~~debt instruments~~Senior Notes and Term Loan Facility were as follows:



	March 31, 2020		December 31, 2019
Aggregate fair value	$	476,660	$	693,600
Aggregate carrying value ⁽¹⁾	728,950		729,800

September 30, 2017 December 31, 2016
Aggregate fair value $ 746,746
$ 735,850
Aggregate carrying value ⁽¹⁾
737,450
740,000

⁽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. ~~Gains or losses on derivative instruments resulting from hedge ineffectiveness are reported in earnings.~~

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 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 ~~net income.~~operations.

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,~~Peso. As of March 31, 2020 and December 31, 2019, the notional amount of these contracts was $101,856 and $92,150, respectively, and consisted of hedges of transactions up to December 2020.

Interest rate swaps - The Company has historically used interest rate swap contracts to manage cash flow variability associated with its variable rate Term Loan Facility. The interest rate swap contract, which fixes the interest payments of variable

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

~~the Brazilian Real. As of September 30, 2017, the notional amount of these contracts was $107,053 and consisted of hedges of transactions up to September 2018.~~

~~Interest rate swaps~~ - The Company uses interest rate swap transactions to manage cash flow variability associated with its variable rate Term Loan Facility. The interest rate swap contracts, which fix the interest payments of variable rate debt instruments, ~~are~~is used to manage exposure to fluctuations in interest rates. As of ~~September 30, 2017, the notional amount of these contracts was $150,000, with maturities through September 2018. The fair market value of all outstanding~~March 31, 2020, there were no interest rate swap contracts ~~is subject to change due to fluctuations in interest rates.~~outstanding.

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



	Gain (Loss) Recognized in OCI
	Three Months Ended March 31,
	2020			2019
Forward foreign exchange contracts	$	(12,871	)	$	1,943

Gain (Loss) Recognized in AOCI
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Forward foreign exchange contracts $ (763 ) $ 854
$ 1,860
$ (3,384 )
Interest rate swaps 22
131
(27 ) (2,123 )
Total $ (741 ) $ 985
$ 1,833
$ (5,507 )

Pretax amounts related to the Company’s cash flow hedges that were reclassified from AOCI were as follows:



		Gain (Loss) Reclassified from AOCI to Income
		Three Months Ended March 31,
	Classification	2020		2019
Forward foreign exchange contracts	Cost of products sold	$	115	$	325

Gain (Loss) Reclassified from AOCI to Income (Effective Portion) Gain (Loss) Reclassified from AOCI to Income (Ineffective Portion)
Three Months Ended September 30,
Classification 2017 2016 2017 2016
Forward foreign exchange contracts Cost of products sold $ 915
$ (769 ) $ —
$ —
Interest rate swaps Interest expense, net of interest income (570 ) (803 ) 107
—
Total $ 345
$ (1,572 ) $ 107
$ —

Gain (Loss) Reclassified from AOCI to Income (Effective Portion) Gain (Loss) Reclassified from AOCI to Income (Ineffective Portion)
Nine Months Ended September 30,
Classification
2017 2016 2017 2016
Forward foreign exchange contracts Cost of products sold $ 2,371
$ (2,380 ) $ —
$ —
Interest rate swaps Interest expense, net of interest income (2,048 ) (2,393 ) 284
—
Total $ 323
$ (4,773 ) $ 284
$ —

~~The amount of losses to be reclassified from AOCI into income in the next twelve months related to the interest rate swap is expected to be approximately $1,090.~~

9.12. Accounts Receivable Factoring

As a part of its working capital management, the Company sells certain receivables through ~~third party~~a single third-party financial ~~institutions with and without recourse.~~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. ~~The Company continues to service the receivables.~~ These are permitted transactions under the Company’s credit ~~agreement~~agreements governing the ABL Facility ~~the~~and Term Loan Facility and the indenture governing the Senior 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.

Costs incurred on the sale of receivables are recorded in other expense, net ~~and interest expense, net of interest income~~ in the condensed consolidated statements of ~~net income. Receivables sold with recourse are~~operations. The sale of receivables under this contract is considered an off-balance sheet arrangement to the Company and is accounted for as ~~secured borrowings~~a true sale and ~~are recorded in debt payable within one year, and receivables are pledged equal to the balance of the borrowings. Receivables sold without recourse are accounted for as true sales and are~~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:



	March 31, 2020		December 31, 2019
Off-balance sheet arrangements	$	102,605	$	103,818

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



	Off-Balance Sheet Arrangements
	Three Months Ended March 31,
	2020		2019
Accounts receivable factored	$	176,508	$	173,703
Costs	309		325

The Company continues to service sold receivables and acts as collection agent for the Factor. As of March 31, 2020 and December 31, 2019, cash collections on behalf of the Factor that have yet to be remitted were $17,377 and $21,485, respectively, and are reflected in 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)

~~Amounts outstanding under receivable transfer agreements entered into by various locations were as follows:~~

September 30, 2017 December 31, 2016
Without recourse $ 62,594
$ 56,936
With recourse 5,018
5,258

~~Accounts receivable factored and related costs were as follows:~~

Without Recourse With Recourse
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016 2017 2016 2017 2016
Accounts receivable factored $ 98,244
$ 120,220
$ 390,354
$ 381,190
$ 6,326
$ 7,550
$ 20,432
$ 18,078
Costs 452
391
1,517
1,286
29
55
74
185

~~Repurchase of accounts receivable~~

During the three months ended September 30, 2017, the Company repurchased $12,043 of its accounts receivable in Europe that were previously sold to certain third party financial institutions through receivable purchase agreements. In addition, the Company repurchased $19,378 of its receivables in Europe in October 2017. The repurchases were made as part of the Company’s transition to a pan-European program under a single third party financial institution, which is expected to be completed in the fourth quarter of 2017.

~~10.~~13. Pension and Postretirement Benefits Other Than Pensions

The components of net periodic benefit (income) cost ~~for the three and nine months ended September 30, 2017 and 2016~~ for the Company’s defined benefit plans and other postretirement benefit plans were as follows:



	Pension Benefits
	Three Months Ended March 31,
	2020						2019
	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	213		$	989		$	189		$	1,111
Interest cost	2,033			782			2,952			1,060
Expected return on plan assets	(3,421		)	(577		)	(4,155		)	(595		)
Amortization of prior service cost and actuarial loss	485			794			781			616
Net periodic benefit (income) cost	$	(690	)	$	1,988		$	(233	)	$	2,192


	Pension Benefits												Other Postretirement Benefits
	Three Months Ended September 30,												Three Months Ended March 31,
	2017						2016						2020					2019
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.		U.S.			Non-U.S.
Service cost	$	204		$	1,018		$	202		$	861		$	26		$	96	$	41		$	117
Interest cost	2,925			1,140			3,145			1,267			170			173		259			203
Expected return on plan assets	(4,003		)	(694		)	(3,959		)	(788		)
Amortization of prior service cost and actuarial loss	468			760			429			555
Settlement	—			5,717			—			—
Amortization of prior service credit and actuarial gain													(483		)	107		(742		)	38
Net periodic benefit (income) cost	$	(406	)	$	7,941		$	(183	)	$	1,895		$	(287	)	$	376	$	(442	)	$	358

	Pension Benefits
	Nine Months Ended September 30,
	2017						2016
	U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	612		$	2,926		$	606		$	2,575
Interest cost	8,775			3,268			9,435			3,805
Expected return on plan assets	(12,009		)	(2,001		)	(11,877		)	(2,367		)
Amortization of prior service cost and actuarial loss	1,404			2,171			1,287			1,664
Settlement	—			5,717			—			—
Net periodic benefit (income) cost	$	(1,218	)	$	12,081		$	(549	)	$	5,677

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

~~(Unaudited)~~

~~(Dollar amounts~~The service cost component of net periodic benefit (income) cost is included in ~~thousands except per share~~cost of products sold and ~~share amounts)~~

Other Postretirement Benefits
Three Months Ended September 30,
2017 2016
U.S. Non-U.S. U.S. Non-U.S.
Service cost $ 79
$ 110
$ 90
$ 94
Interest cost 324
179
346
172
Amortization of prior service credit and actuarial gain (479 ) (4 ) (507 ) (16 )
Other 1
—
1
—
Net periodic benefit (income) cost $ (75 ) $ 285
$ (70 ) $ 250

Other Postretirement Benefits
Nine Months Ended September 30,
2017 2016
U.S. Non-U.S. U.S. Non-U.S.
Service cost $ 237
$ 316
$ 270
$ 280
Interest cost 972
516
1,038
510
Amortization of prior service credit and actuarial gain (1,437 ) (12 ) (1,521 ) (47 )
Other 3
—
3
—
Net periodic benefit (income) cost $ (225 ) $ 820
$ (210 ) $ 743

~~U.K Pension Settlement~~

~~During 2016, the Company undertook an initiative to de-risk pension obligations in the U.K. by purchasing a bulk annuity policy designed to match the liabilities of the plan,~~selling, administrative and subsequently entered into a wind-up process. During the three months ended September 30, 2017, the Company completed the wind-up process, resulting in a non-cash settlement charge of $5,717 and administrative expenses of $185, both of which are recorded in selling, administration & engineering expenses in the condensed consolidated statements of operations. All other components of net ~~income. As a result~~periodic benefit (income) cost are included in other expense, net in the condensed consolidated statements of operations for all periods presented.

In accordance with the ~~settlement,~~Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the ~~Company’s overall projected benefit obligation as~~Company will defer making minimum funding cash contributions of ~~December 31, 2016 was reduced by $17,100.~~

~~Contributions~~

~~The Company made a discretionary contribution of $3,500~~approximately $3,600 to its U.S. pension ~~plan in the three months ended September 30, 2017.~~plans until 2021.

~~11.~~14. Other Expense, Net

The components of other expense, net were as follows:



	Three Months Ended March 31,
	2020			2019
Foreign currency losses	$	(3,232	)	$	(284	)
Components of net periodic benefit cost other than service cost	(63		)	(417		)
Losses on sales of receivables	(309		)	(325		)
Miscellaneous income	164			230
Other expense, net	$	(3,440	)	$	(796	)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Foreign currency losses $ (1,455 ) $ (331 ) $ (4,033 ) $ (2,035 )
Secondary offering underwriting fees —
—
—
(5,900 )
Losses on sales of receivables (221 ) (207 ) (781 ) (674 )
Miscellaneous income 1,225
20
1,539
20
Other expense, net $ (451 ) $ (518 ) $ (3,275 ) $ (8,589 )

~~12.~~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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

Income tax (benefit) expense, ~~income~~loss before income taxes and the corresponding effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, was~~2019 were as follows:



	Three Months Ended March 31,
	2020			2019
Income tax (benefit) expense	$	(14,117	)	$	2,034
Loss before income taxes	(126,556		)	(3,329		)
Effective tax rate	11		%	(61		)%

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Income tax expense $ 7,838
$ 12,525
$ 40,258
$ 43,312
Income before income taxes 33,296
49,171
149,870
151,735
Effective tax rate 24 % 25 % 27 % 29 %

The effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 compared to the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2019 was ~~lower~~higher primarily due to ~~nonrecurring~~the geographic mix of pre-tax losses driven by the impairment charge on held for sale entities and the inability to record a tax benefit for pre-tax losses in certain foreign jurisdictions. Additionally, a discrete ~~items, including~~expense of $13,309 for the ~~impact~~initial recognition of ~~participating~~valuation allowances against net deferred tax assets in acertain foreign ~~tax amnesty program,~~jurisdictions was recorded in the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2020. In accordance with recent legislation, one of the business tax provisions of the CARES Act included allowing net operating losses (“NOL”) generated by the Company in tax years 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 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 March 31, 2020. The income tax rate for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and 2019 varies from ~~statutory rates primarily due to the impact of income taxes on foreign earnings taxed at rates lower than~~ 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 credits, the impact of income ~~tax incentives, excess tax benefits related to share-based compensation~~taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, and other permanent items. Further, the Company’s current and future provision for income taxes ~~may be~~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.

~~13.~~16. Net Income (Loss) Per Share Attributable to Cooper-Standard Holdings Inc.

Basic net ~~income~~loss per share attributable to Cooper-Standard Holdings Inc. was computed by dividing net ~~income~~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 per share attributable to Cooper-Standard Holdings Inc. was computed using the treasury stock method by dividing diluted net ~~income~~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 per share attributable to Cooper-Standard Holdings Inc. was as follows:



	Three Months Ended March 31,
	2020			2019
Net loss available to Cooper-Standard Holdings Inc. common stockholders	$	(110,588	)	$	(5,415	)

Basic weighted average shares of common stock outstanding	16,883,717			17,535,195
Dilutive effect of common stock equivalents	—			—
Diluted weighted average shares of common stock outstanding	16,883,717			17,535,195

Basic net loss per share attributable to Cooper-Standard Holdings Inc.	$	(6.55	)	$	(0.31	)

Diluted net loss per share attributable to Cooper-Standard Holdings Inc.	$	(6.55	)	$	(0.31	)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income attributable to Cooper-Standard Holdings Inc. $ 24,640
$ 36,362
$ 106,802
$ 107,874
Increase in fair value of share-based awards —
37
—
49
Diluted net income available to Cooper-Standard Holdings Inc. common stockholders $ 24,640
$ 36,399
$ 106,802
$ 107,923

Basic weighted average shares of common stock outstanding 17,703,660
17,469,156
17,769,808
17,388,541
Dilutive effect of common stock equivalents 976,858
1,291,507
1,068,479
1,315,037
Diluted weighted average shares of common stock outstanding 18,680,518
18,760,663
18,838,287
18,703,578

Basic net income per share attributable to Cooper-Standard Holdings Inc. $ 1.39
$ 2.08
$ 6.01
$ 6.20

Diluted net income per share attributable to Cooper-Standard Holdings Inc. $ 1.32
$ 1.94
$ 5.67
$ 5.77

Approximately 107,000 securities were excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 2017, because the inclusion of such securities in the calculation would have been anti-dilutive.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

~~14.~~17. Accumulated Other Comprehensive ~~Income (Loss)~~Loss

Changes in accumulated other comprehensive ~~income (loss)~~loss by component, ~~for the three and nine months ended September 30, 2017 and 2016,~~ net of related tax, were as follows:

Three Months Ended September 30, 2017
Cumulative currency translation adjustment Benefit plan
liabilities Fair value change of derivatives Total
Balance as of June 30, 2017 $ (119,405 ) $ (100,340 ) $ 113
$ (219,632 )
Other comprehensive income (loss) before reclassifications 16,047
⁽¹⁾
(1,714 )
⁽²⁾
(619 )
⁽³⁾
13,714
Amounts reclassified from accumulated other comprehensive income (loss) —
5,677
⁽⁴⁾
(347 )
⁽⁵⁾
5,330
Balance as of September 30, 2017 $ (103,358 ) $ (96,377 ) $ (853 ) $ (200,588 )



	Three Months Ended March 31,
	2020				2019
Foreign currency translation adjustment
Balance at beginning of period	$	(153,933	)		$	(141,104	)
Other comprehensive income (loss) before reclassifications	(28,382		)	⁽¹⁾	1,599			⁽¹⁾
Balance at end of period	$	(182,315	)		$	(139,505	)
Benefit plan liabilities
Balance at beginning of period	$	(100,160	)		$	(104,375	)
Other comprehensive income before reclassifications	2,024			⁽²⁾	877			⁽²⁾
Amounts reclassified from accumulated other comprehensive loss	658			⁽³⁾	510			⁽⁴⁾
Balance at end of period	$	(97,478	)		$	(102,988	)
Fair value change of derivatives
Balance at beginning of period	$	352			$	(458	)
Other comprehensive income (loss) before reclassifications	(9,984		)	⁽⁵⁾	1,490			⁽⁵⁾
Amounts reclassified from accumulated other comprehensive loss	(92		)	⁽⁶⁾	(237		)	⁽⁶⁾
Balance at end of period	$	(9,724	)		$	795
Accumulated other comprehensive loss, ending balance	$	(289,517	)		$	(241,698	)


(1)	Includes ~~$4,314 of~~ other comprehensive income (loss) related to intra-entity foreign currency balances that are of a long-term investment ~~nature.~~


~~(2)~~	~~Net~~nature of ~~tax benefit of $130.~~


~~(3)~~	~~Net of tax benefit of $122. See Note 8.~~


~~(4)~~	~~Includes losses related to~~$(22,703) and $2,814 for the ~~U.K. pension settlement of $6,288~~three months ended March 31, 2020 and ~~actuarial losses of $901, offset by prior service credits of $84, net of tax of $1,428. See Note 10.~~


~~(5)~~	~~Net of tax expense of $105. See Note 8.~~

Three Months Ended September 30, 2016
Cumulative currency translation adjustment Benefit plan
liabilities Fair value change of derivatives Total
Balance as of June 30, 2016 $ (120,780 ) $ (84,595 ) $ (4,766 ) $ (210,141 )
Other comprehensive income (loss) before reclassifications 2,681
⁽¹⁾
(497 )
⁽²⁾
828
⁽³⁾
3,012
Amounts reclassified from accumulated other comprehensive income (loss) —
348
⁽⁴⁾
1,053
⁽⁵⁾
1,401
Balance as of September 30, 2016 $ (118,099 ) $ (84,744 ) $ (2,885 ) $ (205,728 )


~~(1)~~	~~Includes $511 of other comprehensive income related to intra-entity foreign currency balances that are of a long-term investment nature.~~2019, respectively.


(2)	Net of tax expense of ~~$46.~~$337 and $11 for the three months ended March 31, 2020 and 2019, respectively.


(3)	~~Net~~Includes the effect of the amortization of actuarial losses of $872 and amortization of prior service cost of $21, net of tax ~~expense~~ of ~~$157.~~$235. See Note 8.13. “Pension and Postretirement Benefits Other Than Pensions.”


(4)	Includes ~~actuarial losses~~the effect of ~~$555, offset by~~the amortization of prior service credits of $79, offset by the amortization of actuarial losses of $773, net of tax of ~~$128.~~$184. See Note ~~10.~~13. “Pension and Postretirement Benefits Other Than Pensions.”


(5)	Net of tax ~~benefit~~(benefit) expense of ~~$519.~~$(2,887) and $453 for the three months ended March 31, 2020 and 2019, respectively. See Note 8.

Nine Months Ended September 30, 2017
Cumulative currency translation adjustment Benefit plan
liabilities Fair value change of derivatives Total
Balance as of December 31, 2016 $ (143,481 ) $ (97,612 ) $ (1,470 ) $ (242,563 )
Other comprehensive income (loss) before reclassifications 40,123
⁽¹⁾
(5,428 )
⁽²⁾
1,242
⁽³⁾
35,937
Amounts reclassified from accumulated other comprehensive income (loss) —
6,663
⁽⁴⁾
(625 )
⁽⁵⁾
6,038
Balance as of September 30, 2017 $ (103,358 ) $ (96,377 ) $ (853 ) $ (200,588 )


~~(1)~~	~~Includes $10,484 of other comprehensive income related to intra-entity foreign currency balances that are of a long-term investment nature.~~11. “Fair Value Measurements and Financial Instruments.”


~~(2)~~(6)	~~Net of tax benefit of $189.~~


~~(3)~~	Net of tax expense of ~~$591.~~$23 and $88 for the three months ended March 31, 2020 and 2019, respectively. See Note 8.11. “Fair Value Measurements and Financial Instruments.”


~~(4)~~	~~Includes losses related to the U.K. pension settlement of $6,288 and actuarial losses of $2,443, offset by prior service credits of $248, net of tax of $1,820. See Note 10.~~

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 March 31, 2020, the Company had approximately $98,720 of repurchase authorization remaining under the 2018 Program.

The Company did not make any repurchases during the three months ended March 31, 2020. During the three months ended March 31, 2019, the Company repurchased 85,000 shares at an average purchase price of $69.85 per share, excluding commissions, for a total cost of $5,937.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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


~~(5)~~	~~Net of tax benefit of $18. See Note 8.~~

Nine Months Ended September 30, 2016
Cumulative currency translation adjustment Benefit plan
liabilities Fair value change of derivatives Total
Balance as of December 31, 2015 $ (130,661 ) $ (84,124 ) $ (2,280 ) $ (217,065 )
Other comprehensive income (loss) before reclassifications 12,562
⁽¹⁾
(1,638 )
⁽²⁾
(3,803 )
⁽³⁾
7,121
Amounts reclassified from accumulated other comprehensive income (loss) —

1,018
⁽⁴⁾
3,198
⁽⁵⁾
4,216
Balance as of September 30, 2016 $ (118,099 ) $ (84,744 ) $ (2,885 ) $ (205,728 )


~~(1)~~	~~Includes $9,699 of other comprehensive income related to intra-entity foreign currency balances that are of a long-term investment nature.~~


~~(2)~~	~~Net of tax benefit of $122.~~


~~(3)~~	~~Net of tax benefit of $1,704. See Note 8.~~


~~(4)~~	~~Includes actuarial losses of $1,636 offset by prior service credits of $246, net of tax of $372. See Note 10.~~


~~(5)~~	~~Net of tax benefit of $1,575. See Note 8.~~

~~15. Common Stock~~

~~Share Repurchase Program and Secondary Offering~~

In March 2016, the Company’s Board of Directors approved a securities repurchase program (the “Program”) authorizing the Company to repurchase, in the aggregate, up to $125,000 of its outstanding common stock or warrants to purchase common stock. Under the Program, repurchases may be made on the open market or through private transactions, as determined by the Company’s management and in accordance with prevailing market conditions and federal securities laws and regulations. During the nine months ended September 30, 2017, the Company repurchased 306,072 shares at an average purchase price of $102.76 per share, excluding commissions, for a total cost of $31,452, of which $30,680 was settled in cash as of September 30, 2017.

In March 2016, certain selling stockholders affiliated with Silver Point Capital, L.P., Oak Hill Advisors, L.P. and Capital World Investors (the “Selling Stockholders”) sold 2,278,031 shares, including overallotments, of the Company’s common stock at a public offering price of $68.00 per share, in a secondary public offering. Of the 2,278,031 shares sold in the offering, 350,000 shares were purchased by the Company for $23,800. The Company paid the underwriting discounts and commissions payable on the shares sold by the Selling Stockholders, excluding the shares the Company repurchased, resulting in $5,900 of fees incurred for the nine months ended September 30, 2016, which is included in other expense, net in the condensed consolidated statement of net income. The Company also incurred approximately $600 of other expenses related to legal and audit services for the nine months ended September 30, 2016, which is included in selling, administration & engineering expenses in the condensed consolidated statement of net income. The Company did not sell or receive any proceeds from the sales of shares by the Selling Stockholders.

~~As of September 30, 2017, the Company had approximately $69,700 of repurchase authorization remaining under the Program.~~

~~16.~~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 ~~2017,~~2020, the Company granted Restricted Stock Units (“RSUs”), Performance Units (“PUs”) and stock options. The RSUs cliff vest after three years, the PUs ~~cliff~~ vest atratably over three years after the ~~end of their three-year~~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. The grant-date fair value of the RSUs and PUs was determined using the closing price of the Company’s common stock on the date of grant. The grant-date fair value of the stock options was determined using the Black-Scholes option pricing model.

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

~~(Unaudited)~~

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

Share-based compensation expense was as follows:



	Three Months Ended March 31,
	2020		2019
PUs	$	74	$	649
RSUs	1,643		1,722
Stock options	657		815
Total	$	2,374	$	3,186

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
PUs $ 4,327
$ 4,635
$ 9,171
$ 9,953
RSUs 2,052
2,052
6,896
5,805
Stock options 933
953
2,939
2,775
Total $ 7,312
$ 7,640
$ 19,006
$ 18,533

~~17.~~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 March 31,
	2020		2019
Sales⁽¹⁾	$	6,075	$	7,434
Purchases⁽²⁾	156		325
Dividends received⁽³⁾	5,245		4,917

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Sales⁽¹⁾
$ 8,288
$ 9,029
$ 26,124
$ 26,027
Purchases⁽¹⁾
186
170
580
365
Dividends received⁽²⁾
—
—
5,382
3,022

⁽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 ~~and Sujan Cooper Standard AVS Private Limited~~ as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 were ~~$3,789~~$4,070 and ~~$4,078,~~$4,297, respectively.

~~In March 2016, as part of the secondary offering, the Company paid $5,900 of fees incurred on behalf of the Selling Stockholders as defined in Note 15. “Common Stock.”~~

~~18.~~21. 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, 2017,~~March 31, 2020, 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, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the undiscounted reserve for environmental investigation and remediation was approximately ~~$4,742~~$5,835 and ~~$5,490,~~$6,104, respectively. ~~The Company does~~While the Company’s costs to defend and settle known claims arising under environmental laws have not ~~believe that~~been material in the ~~environmental liabilities associated with its current~~past and ~~former properties will have a~~are not currently estimated to be material, ~~adverse impact on its financial condition, results of operations or cash flows; however, no assurances can~~such costs may be ~~given~~material in ~~this regard.~~the future.

The Company is participating in a voluntary foreign tax amnesty program, which allows for the settlement of certain tax matters at reduced amounts. During the three months ended September 30, 2017, the Company incurred charges of $3,121, of which $2,886 was a non-cash charge offset by the utilization of tax net operating loss carryforwards, resulting in a net $235 expense impact to net income. The Company does not expect to incur additional material losses under this program, however the settlement of these tax matters is outstanding and the outcome of the program is uncertain.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(Unaudited)

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

~~19.~~22. Segment Reporting

The ~~Company has determined that it operates~~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 ~~four~~the following reportable ~~segments,~~segments: North America, Europe, Asia Pacific and South America. ATG and 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 months ended March 31, 2019 have been reclassified from North America and Europe from the table below. The adjusted EBITDA amounts previously reported for the three months ended March 31, 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 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.~~ systems product line. On April 1, 2019, the Company completed the divestiture of the AVS product line.

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

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,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020								2019
Sales to external customers
													External Sales		Intersegment Sales			Adjusted EBITDA			External Sales		Intersegment Sales			Adjusted EBITDA
North America	$	437,406		$	450,795		$	1,403,270		$	1,361,183		$	334,801	$	4,468		$	37,019		$	447,718	$	4,707		$	59,151
Europe	254,399			242,773			776,346			794,411			185,242		3,091			(4,623		)	242,400		3,085			9,275
Asia Pacific	148,493			137,174			421,926			380,483			79,344		457			(17,057		)	125,452		741			(407		)
South America	28,718			24,914			78,670			61,380			20,471		68			(4,577		)	23,237		5			(1,033		)
Total Automotive													619,858		8,084			10,762			838,807		8,538			66,986
Corporate, eliminations and other													35,032		(8,084		)	(2,483		)	39,188		(8,538		)	(2,852		)
Consolidated	$	869,016		$	855,656		$	2,680,212		$	2,597,457		$	654,890	$	—		$	8,279		$	877,995	$	—		$	64,134

Intersegment sales
North America	$	3,285		$	3,409		$	10,108		$	9,908
Europe	3,861			3,600			11,188			10,081
Asia Pacific	1,566			1,426			3,876			3,925
South America	2			1			11			5
Eliminations	(8,714		)	(8,436		)	(25,183		)	(23,919		)
Consolidated	$	—		$	—		$	—		$	—

Segment profit (loss)
North America	$	44,214		$	55,031		$	170,971		$	169,857
Europe	(9,024		)	(5,632		)	(20,633		)	(7,510		)
Asia Pacific	3,050			3,037			11,036			6,073
South America	(4,944		)	(3,265		)	(11,504		)	(16,685		)
Consolidated income before income taxes	$	33,296		$	49,171		$	149,870		$	151,735

September 30,
2017 December 31,
2016
Segment assets
North America $ 1,030,321
$ 985,809
Europe 648,588
582,385
Asia Pacific 653,688
611,849
South America 57,794
46,125
Eliminations and other 245,205
265,534
Consolidated $ 2,635,596
$ 2,491,702



	Three Months Ended March 31,
	2020			2019
Adjusted EBITDA	$	8,279		$	64,134
Impairment of assets held for sale	(74,079		)	—
Restructuring charges	(7,276		)	(17,715		)
Project costs	(2,425		)	(1,263		)
Other impairment charges	(684		)	—
Lease termination costs	(520		)	—
EBITDA	$	(76,705	)	$	45,156
Income tax benefit (expense)	14,117			(2,034		)
Interest expense, net of interest income	(10,237		)	(11,932		)
Depreciation and amortization	(37,763		)	(36,605		)
Net loss attributable to Cooper-Standard Holdings Inc.	$	(110,588	)	$	(5,415	)



	March 31, 2020		December 31, 2019
Segment assets:
North America	$	1,011,035	$	1,040,650
Europe	455,656		553,977
Asia Pacific	536,618		614,952
South America	58,923		65,438
Total Automotive	2,062,232		2,275,017
Corporate, eliminations and other	422,031		360,565
Consolidated	$	2,484,263	$	2,635,582

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, ~~2016~~2019 filed with the U.S. Securities and Exchange Commission (“~~2016~~2019 Annual Report”) see Item 1A. “Risk Factors.” The following should be read in conjunction with our ~~2016~~2019 Annual Report and the other information included herein. Our discussion of trends and conditions supplements and updates such discussion included in our ~~2016~~2019 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 ~~and anti-vibration~~ systems for use primarily in passenger vehicles and light trucks manufactured by global automotive original equipment manufacturers (“OEMs”) ~~and replacement markets.~~. We are primarily a “Tier 1” supplier, with approximately 83% of our sales in 2019 made directly to major OEMs. We operate our business along ~~four~~the following reportable segments: North America, Europe, Asia Pacific and South America. WeAll other business activities are ~~primarily a “Tier 1” supplier, with approximately 84%~~reported in Corporate, eliminations and other.

During the first quarter of ~~our sales~~2019 and in ~~2016 made directly to major OEMs.~~prior periods, we also operated an anti-vibration systems (“AVS”) business. On April 1, 2019, we completed the divestiture of the anti-vibration systems business.

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.~~demand and production. Business conditions may vary significantly from period to period or region to region. The COVID-19 pandemic created an unusually high degree of economic disruption during the first quarter of 2020 and is continuing to drive uncertainty for the economic outlook and the automotive industry around the world. Economists at the International Monetary Fund (IMF) are now expecting the global economy to contract by approximately 3.0% in 2020.

InEconomic conditions and consumer confidence in North America have been negatively impacted by concerns over the COVID-19 pandemic and government imposed lock-downs to contain the spread of the disease. The United States government has taken historic measures to provide fiscal stimulus to the economy in an effort to sustain businesses, limit job losses and preempt deeper declines in consumer confidence. Despite these efforts, IMF economists now expect economic contraction of approximately 6.0% for the region in 2020. In addition, the IMF is projecting unemployment in North America will approach 10.4% for the year.

The duration of the government imposed lock-downs, while ~~the U.S. economy has been relatively stable, market indicators show signs~~unknown at this time, will be a major determinant of ~~softening consumer demand. The mix of vehicles produced continues to shift away from passenger cars into crossover utility vehicles and light trucks.~~

~~In Europe, the continuing~~when economic recovery ~~is driving increased demand~~can begin. Even after the lock-downs are lifted, concerns about a resurgence of COVID-19 cases and uncertainty related to the presidential election in the United States will likely weigh on consumer confidence for ~~light vehicles. Certain countries within~~an extended period of time.

In the European region, the IMF is projecting economic contraction of approximately 6.6% for 2020. Unemployment rates will vary by country, but are ~~faced with~~generally expected to increase by 200 to 500 basis points versus 2019 levels. Geopolitical concerns and the implementation of new environmental regulations in the automotive industry will continue to weigh on the economies of the region but have been superseded by concerns over the current and potential future impacts of the COVID-19 pandemic. Certain European governments have mandated closures of broad segments of the economy, and the timing of when industries are allowed to resume operations will be a key to beginning a recovery.

In the Asia Pacific region, the IMF expects China’s economic growth rate to slow to just 1.0% in 2020 following two months of aggressive COVID-19 containment measures during the first quarter. While the containment measures have been lifted and industries are currently ramping up towards full production, significant challenges remain for the Chinese economy. Consumer confidence is likely to remain suppressed for a period of time, dampening both investment and consumption. In addition, potential new policies by the United States and other developed countries that would encourage the repatriation of

production of certain strategically sensitive products in the wake of the COVID-19 pandemic could reduce export demand and further pressure employment levels.

In South America, the IMF estimates that the Brazilian economy will contract by approximately 5.3% in 2020 as compared to 2019. Unemployment is projected to increase to nearly 15.0%. In response to the COVID-19 pandemic, the Brazilian government has approved an ~~uncertain~~aggressive fiscal spending package to stimulate economic activity. While seen as urgently necessary, this spending will add to the country’s already high national debt level and ~~potentially volatile geopolitical climate, which~~ could ~~impact~~lead to lower consumer confidence and foreign investment in the region going forward. We remain cautious for the mid to long-term outlook given the long history of political instability and economic ~~growth.~~volatility in the region.

~~The Chinese government continues~~Raw Materials

Our business is susceptible to ~~manage~~inflationary pressures with respect to raw materials which may place operational and profitability burdens on the ~~nation’s economy with a goal of sustaining growth. Overall economic growth, consumer preferences~~entire supply chain. Costs related to raw materials, such as steel, aluminum, and ~~an expanding middle class in China~~oil and oil-derived commodities, continue to ~~drive crossover utility vehicle demand higher, while demand for passenger cars is expected~~be volatile. In addition, we continue to ~~decline slightly year over year.~~

~~Finally, due~~expect commodity cost volatility to ~~continued volatility in Brazil,~~have an impact on future earnings and operating cash flows. As such, on an ongoing basis, we ~~remain cautious about consumer confidence~~work with our customers and ~~vehicle demand in this region.~~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. ~~New vehicle demand is driven by macroeconomic and other factors, such~~Beginning in early Q1 2020, as interest rates, manufacturer and dealer sales incentives, fuel prices, consumer confidence, employment levels, income growth trends and government and tax incentives. The industry could face uncertaintiesa 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 ~~may adversely impact consumer demand~~region. Facility shutdowns then occurred in March 2020 for ~~vehicles as well as the future production environment.~~

Ina majority of our facilities in North America, ~~light vehicle inventory~~Europe and South America.

Production resumed in ~~the U.S. had risen significantly above normalized levels at~~Asia Pacific by the end of ~~the second quarter of 2017. Production cuts by OEMs~~Q1 2020, albeit at a lower capacity. We anticipate that production will increase steadily throughout Q2 2020. We expect production to gradually resume in Q2 2020 for our North America, Europe and South America facilities, in conjunction with production resuming for our customers in the ~~third quarter of 2017 were successful~~regions. We are collaborating closely with our customers in ~~bringing inventory closer~~preparing our own restart plans, while also adding enhanced safety standards and measures to normalized levels and more aligned with consumer demand. Even in view of lower inventory levels, we expect overall light vehicle production in the fourth quarter of 2017 to be slightly lower than in the fourth quarter of 2016, driven largely by continued lower production of passenger cars. European light vehicle production has seen modest year-over-year growth through the first three quarters of 2017 and we expect this trend to continue through the fourth quarter of 2017. In Asia Pacific, we expect light vehicle production to continue to grow sequentially at modest levels through the remainder of 2017, driven mainly by China.

protect our employees.

Light vehicle production in certain regions for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 was:~~2019 was as follows:


	Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended March 31,
(In millions of units)	2017⁽¹⁾	2016⁽¹⁾	% Change	2017⁽¹⁾	2016⁽¹⁾	% Change	2020⁽¹⁾	2019⁽¹⁾	% Change
North America	4.0	4.4	(9.7)%	13.0	13.5	(3.7)%	3.8	4.2	(10.3)%
Europe	5.0	4.7	5.2%	16.6	16.2	2.4%	4.6	5.7	(18.9)%
Asia Pacific⁽²⁾	11.9	11.5	3.5%	36.0	34.7	3.6%	8.2	11.7	(30.1)%
Greater China							3.2	6.0	(46.1)%
South America	0.9	0.7	26.1%	2.4	2.0	20.9%	0.7	0.8	(16.9)%


(1)	Production data based on IHS Automotive, ~~October 2017.~~


~~(2)~~	~~Includes Greater China units of 6.4 for both the three months ended September 30, 2017 and 2016, and 19.5 and 19.0 for the nine months ended September 30, 2017 and 2016, respectively.~~April 2020.

~~Industry Overview~~

~~Competition~~Total vehicle production has decreased substantially across the globe. The COVID-19 pandemic has emerged as the biggest risk factor facing the automotive industry. Plant shutdowns have greatly slowed production and been accompanied by decreased demand for vehicles, as new vehicle sales are highly dependent on strong consumer confidence and low unemployment. Until consumers regain confidence in the ~~automotive supplier industry is intense~~markets and ~~has increased in recent years~~unemployment returns to lower levels, new vehicle sales, particularly of light vehicles, will likely be significantly lower than historical and previously forecasted sales levels. We expect that as OEMs have demonstrated a preference for stronger relationships with fewer suppliers. Because of a growing emphasis on global vehicle platforms, automotive suppliers with a global manufacturing footprint capable of fully servicing customers ~~around the world~~restart production, they will ~~typically have a competitive advantage over smaller, regional competitors. This dynamic is likely to result in further consolidation of competing suppliers within our industry over time.~~

OEMs have shifted some research and development, design and testing responsibility to suppliers, while at the same time shortening new product cycle times. To remain competitive, suppliers must have state-of-the-art engineering and design capabilities and must be able to continuously improve their engineering, design and manufacturing processes to effectively service the customer. Suppliers are increasingly expected to collaborate on, or assume the product design and development of, key automotive components and to provide innovative solutions to meet evolving technologies aimed at improved emissions and fuel economy.

~~Increased competitiveness in the industry, as well as customer~~ focus on ~~costs, has resulted in pressure on suppliers for price reductions, reducing the overall profitability of the industry. Consolidations~~their most profitable platforms including light trucks, sport utility vehicles and market share shifts among vehicle manufacturers continue to put additional pressures on the supply chain. These pricing and market pressures will continue to drive our focus on reducing our overall cost structure through continuous improvement initiatives, capital redeployment, restructuring and other cost management processes.crossover vehicles.

In addition to the above, other factors will present opportunities for automotive suppliers who are positioned for the changing environment, including autonomous and connected vehicles, evolving government regulation, and consumer preference for environmentally friendly products and technology, including hybrid and electric vehicle architectures.

Results of Operations


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
	2017			2016			Change			2017			2016			Change			2020			2019			Change
	(dollar amounts in thousands)																		(dollar amounts in thousands)
Sales	$	869,016		$	855,656		$	13,360		$	2,680,212		$	2,597,457		$	82,755		$	654,890		$	877,995		$	(223,105	)
Cost of products sold	718,187			690,984			27,203			2,187,058			2,101,000			86,058			611,747			762,490			(150,743		)
Gross profit	150,829			164,672			(13,843		)	493,154			496,457			(3,303		)	43,143			115,505			(72,362		)
Selling, administration & engineering expenses	94,145			92,368			1,777			267,883			268,498			(615		)	70,671			86,974			(16,303		)
Amortization of intangibles	3,432			3,457			(25		)	10,563			9,974			589			4,450			3,775			675
Impairment charges	—			—			—			4,270			—			4,270
Restructuring charges	9,909			10,430			(521		)	28,220			33,468			(5,248		)	7,276			17,715			(10,439		)
Other operating loss	—			—			—			—			155			(155		)
Operating profit	43,343			58,417			(15,074		)	182,218			184,362			(2,144		)
Impairment of assets held for sale																			74,079			—			74,079
Other impairment charges																			977			—			977
Operating (loss) profit																			(114,310		)	7,041			(121,351		)
Interest expense, net of interest income	(10,256		)	(10,114		)	(142		)	(31,788		)	(29,861		)	(1,927		)	(10,237		)	(11,932		)	1,695
Equity in earnings of affiliates	660			1,386			(726		)	3,735			5,823			(2,088		)	1,431			2,358			(927		)
Loss on refinancing and extinguishment of debt	—			—			—			(1,020		)	—			(1,020		)
Other expense, net	(451		)	(518		)	67			(3,275		)	(8,589		)	5,314			(3,440		)	(796		)	(2,644		)
Income before income taxes	33,296			49,171			(15,875		)	149,870			151,735			(1,865		)
Income tax expense	7,838			12,525			(4,687		)	40,258			43,312			(3,054		)
Net income	25,458			36,646			(11,188		)	109,612			108,423			1,189
Net income attributable to noncontrolling interests	(818		)	(284		)	(534		)	(2,810		)	(549		)	(2,261		)
Net income attributable to Cooper-Standard Holdings Inc.	$	24,640		$	36,362		$	(11,722	)	$	106,802		$	107,874		$	(1,072	)
Loss before income taxes																			(126,556		)	(3,329		)	(123,227		)
Income tax (benefit) expense																			(14,117		)	2,034			(16,151		)
Net loss																			(112,439		)	(5,363		)	(107,076		)
Net loss (income) attributable to noncontrolling interests																			1,851			(52		)	1,903
Net loss attributable to Cooper-Standard Holdings Inc.																			$	(110,588	)	$	(5,415	)	$	(105,173	)

Three Months Ended ~~September 30, 2017~~March 31, 2020 Compared with Three Months Ended ~~September 30, 2016~~March 31, 2019

~~Sales.~~Sales

Sales for the three months ended ~~September 30, 2017 increased $13.4 million, or 1.6%~~March 31, 2020 decreased 25.4%, compared to the three months ended ~~September 30, 2016, primarily~~March 31, 2019. The decline was mainly driven by the ~~acquisition~~decrease in vehicle production volume due to government imposed global lock-downs related to the COVID-19 pandemic, the sale of ~~AMI Industries’ fuel and brake business, consolidation of a previously unconsolidated joint venture and favorable foreign exchange, partially offset by~~our AVS product line, customer price ~~reductions.~~reductions and foreign exchange.



	Three Months Ended March 31,							Variance Due To:
	2020		2019		Change			Volume / Mix*			Foreign Exchange			Acquisitions / Divestiture, Net
	(dollar amounts in thousands)
Total sales	$	654,890	$	877,995	$	(223,105	)	$	(131,819	)	$	(13,540	)	$	(77,746	)

~~Cost~~* Net of ~~Products Sold.~~customer price reductions

Gross Profit



	Three Months Ended March 31,									Variance Due To:
	2020			2019			Change			Volume / Mix*			Foreign Exchange			Cost Increases / (Decreases)**
	(dollar amounts in thousands)
Cost of products sold	$	611,747		$	762,490		$	(150,743	)	$	(67,676	)	$	(11,055	)	$	(72,012	)
Gross profit	43,143			115,505			(72,362		)	(64,143		)	(2,485		)	(5,734		)
Gross profit percentage of sales	6.6		%	13.2		%

* Net of customer price reductions

** Includes the net impact of acquisitions and divestiture

Cost of products sold is primarily comprised of material, labor, manufacturing overhead, freight, depreciation, ~~and amortization~~warranty costs and other direct operating expenses. ~~Cost of products sold for the three months ended September 30, 2017 increased $27.2 million, or 3.9%, compared to the three months ended September 30, 2016. Cost~~The Company’s material cost of products sold was ~~impacted by commodity price pressures, transactional foreign exchange pressure, general inflation~~approximately 47% and ~~acquisitions. These items were partially offset by continuous improvement and material cost savings. Materials comprise the largest component~~52% of ~~our cost of products sold and represented approximately 50% of the~~ total cost of products sold for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively. The change in the cost of products sold was driven by government imposed global lock-downs related to the COVID-19 pandemic, the sale of our AVS product line, continuous improvement and lean manufacturing, material cost reductions, commodity price fluctuations, foreign exchanges, and wage inflation.

~~Gross Profit.~~Gross profit for the three months ended ~~September 30, 2017~~March 31, 2020 decreased ~~$13.8~~$72.4 million or ~~8.4%,~~62.6% compared to the three months ended ~~September 30, 2016. As a percentage of sales, gross profit was 17.4% and 19.2% for the three months ended September 30, 2017 and 2016, respectively.~~March 31, 2019. The decrease ~~in gross profit~~ was driven ~~primarily~~ by the decline in vehicle production volume due to government imposed global lock-downs related to the COVID-19 pandemic, customer price reductions, commodity price inflation, foreign exchange pressures, and ~~unfavorable vehicle production mix.~~wage inflation. These items were partially offset by ~~continuous improvement,~~net favorable operational performance, restructuring savings, and material cost ~~savings.~~reductions.

Selling, Administration and ~~Engineering.~~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 three months ended ~~September 30, 2017~~March 31, 2020 was ~~$94.1 million, or~~ 10.8% of sales compared to ~~$92.4 million, or 10.8% of sales,~~9.9% for the three months ended ~~September 30, 2016. Selling, administration~~March 31, 2019. The increase in rate was driven by lower total sales while the decrease in amount was driven by savings generated from lower compensation-related expenses and ~~engineering expense for~~ the ~~three months ended September 30, 2017 increased as a result of non-cash settlement charges relating to the wind-up~~sale of our ~~U.K. pension plan of $5.7 million and investments to support growth and innovation,~~AVS product line, partially offset by ~~lower compensation related costs.~~general inflation.

Restructuring.Restructuring charges for the three months ended ~~September 30, 2017~~March 31, 2020 decreased ~~$0.5~~$10.4 million compared to the three months ended ~~September 30, 2016.~~March 31, 2019. The decrease was primarily driven by lower restructuring ~~expenses related to our~~

~~European~~charges in North America, Europe and Asia Pacific, as certain salaried employee initiatives ~~of $3.4 million, partially offset by higher restructuring charges attributed to~~in North America and footprint rationalization initiatives in Europe and Asia Pacific were substantially completed.

Impairment Charges. Non-cash impairment charges of ~~$2.9 million.~~$74.1 million for the three months ended March 31, 2020 related to reducing the carrying value of the held for sale facilities to fair value less costs to sell. Fair value was determined using a market approach, estimated based on expected proceeds. Other non-cash impairment charges of $1.0 million related to property, plant and equipment in the Asia Pacific region.

Interest Expense, Net. Net interest expense for the three months ended March 31, 2020 decreased $1.7 million compared to the three months ended March 31, 2019, primarily due to lower outstanding debt balances.

Other Expense, Net. Other expense for the three months ended ~~September 30, 2017 decreased $0.1~~March 31, 2020 increased $2.6 million compared to the three months ended ~~September 30, 2016,~~March 31, 2019 primarily due to ~~other miscellaneous income, partially offset by increased~~higher foreign currency losses.

Income Tax ~~Expense~~. Expense. Income tax ~~expense~~benefit for the three months ended ~~September 30, 2017~~March 31, 2020 was ~~$7.8~~$14.1 million on ~~earnings~~a loss before income taxes of ~~$33.3~~$126.6 million. This compares to an income tax expense of ~~$12.5~~$2.0 million on ~~earnings~~a loss before income taxes of ~~$49.2~~$3.3 million for the same period of ~~2016.~~2019. The effective tax rate for the three months ended ~~September 30, 2017~~March 31, 2020 compared to the three months ended September 30, 2016 was lower primarily due to nonrecurring discrete items, including the impact of participating in a foreign tax amnesty program, recorded in the three months ended September 30, 2017. The income tax rate for the three months ended September 30, 2017 varied from statutory ratesMarch 31, 2019 differed primarily due to the ~~impact~~geographic mix of ~~income taxes~~pre-tax losses driven by the impairment change on ~~foreign earnings taxed at rates lower than the U.S. statutory rate,~~held for sale entities and the inability to record a tax benefit for pre-tax losses in certain foreign ~~jurisdictions to the extent not offset by other categories~~jurisdictions. Additionally, a discrete expense of ~~income, tax credits, income tax incentives, excess tax benefits related to share-based compensation and other permanent items.~~

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

~~Sales.~~ Sales for the nine months ended September 30, 2017 increased $82.8 million, or 3.2%, compared to the nine months ended September 30, 2016, primarily due to improved volume and mix in all regions, the acquisition of AMI Industries’ fuel and brake business and consolidation of a previously unconsolidated joint venture, partially offset by customer price reductions and unfavorable foreign exchange.

~~Cost of Products Sold.~~ Cost of products sold for the nine months ended September 30, 2017 increased $86.1 million, or 4.1%, compared to the nine months ended September 30, 2016. Cost of products sold increased primarily due to inflation, commodity price pressures, higher production volumes and acquisitions. These items were partially offset by continuous improvement and material cost savings. Materials comprise the largest component of our cost of products sold and represented approximately 51% and 50% of the total cost of products sold for the nine months ended September 30, 2017 and 2016, respectively.

~~Gross Profit.~~ Gross profit for the nine months ended September 30, 2017 decreased $3.3 million, or 0.7%, compared to the nine months ended September 30, 2016. The decrease in gross profit was driven primarily by inflation, commodity price pressures and unfavorable vehicle production mix. As a percentage of sales, gross profit was 18.4% and 19.1% for the nine months ended September 30, 2017 and 2016, respectively.

~~Selling, Administration and Engineering.~~ Selling, administration and engineering expense for the nine months ended September 30, 2017 was $267.9 million or 10.0% of sales, compared to $268.5 million, or 10.3% of sales, for the nine months ended September 30, 2016. Selling, administration and engineering expense for the nine months ended September 30, 2017 was favorable as a result of lower compensation related costs, partially offset by non-cash settlement charges relating to the wind-up of our U.K. pension plan of $5.7 million, and investments to support growth and innovation.

~~Impairment charges.~~ ~~Impairment charges of $4.3~~$13.3 million for the ~~nine months ended September 30, 2017 resulted from our decision to divest two~~initial recognition of ~~our inactive European sites based on current real estate market conditions.~~

~~Restructuring.~~ Restructuring charges for the nine months ended September 30, 2017 decreased $5.2 million compared to the nine months ended September 30, 2016. The decrease was primarily driven by lower expenses related to our European initiatives of $7.8 million, partially offset by higher restructuring charges attributed to North America and Asia Pacific of $2.6 million.

~~Interest Expense, Net.~~ Net interest expense for the nine months ended September 30, 2017 increased $1.9 million compared to the nine months ended September 30, 2016, which resulted primarily from higher interest rates related to the new Senior Notes.

~~Loss on Refinancing and Extinguishment of Debt.~~ Loss on refinancing and extinguishment of debt of $1.0 million for the nine months ended September 30, 2017 resulted from the partial write off of new and unamortized debt issuance costs and unamortized original issue discount related to the amendment of the Term Loan Facility.

~~Other Expense, Net.~~ Other expense for the nine months ended September 30, 2017 decreased $5.3 million compared to the nine months ended September 30, 2016. The decrease was primarily due to the nonrecurrence of underwriting fees related to the secondary offering of $5.9 million recorded in the nine months ended September 30, 2016 and other miscellaneous income, partially offset by increased foreign currency losses.

~~Income Tax Expense. Income~~valuation allowances against net deferred tax expense for the nine months ended September 30, 2017 was $40.3 million on earnings before income taxes of $149.9 million. This compares to income tax expense of $43.3 million on earnings before income taxes of $151.7 million for the same period of 2016. The effective tax rate for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was lower primarily due to nonrecurring discrete items, including the impact of participating in a foreign tax amnesty program, recorded in the nine months ended September 30, 2017. The income tax rate for the nine months ended September 30, 2017 varied from statutory rates primarily due to the impact of income taxes on foreign earnings taxed at rates lower than the U.S. statutory rate, the inability to record a tax benefit for pre-tax lossesassets in certain foreign jurisdictions towas recorded in the ~~extent not offset by other categories of income, tax credits, income tax incentives, excess tax benefits related to share-based compensation and other permanent items.~~three months ended March 31, 2020.

Segment Results of Operations

Our business is now organized in 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 ~~table presents~~tables present sales and segment ~~profit (loss)~~adjusted EBITDA for each of the reportable ~~segments for the three and nine months ended September 30, 2017 and 2016:~~segments.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change 2017 2016 Change
(dollar amounts in thousands)
Sales to external customers
North America $ 437,406
$ 450,795
$ (13,389 ) $ 1,403,270
$ 1,361,183
$ 42,087
Europe 254,399
242,773
11,626
776,346
794,411
(18,065 )
Asia Pacific 148,493
137,174
11,319
421,926
380,483
41,443
South America 28,718
24,914
3,804
78,670
61,380
17,290
Consolidated $ 869,016
$ 855,656
$ 13,360
$ 2,680,212
$ 2,597,457
$ 82,755

Segment profit (loss)
North America $ 44,214
$ 55,031
$ (10,817 ) $ 170,971
$ 169,857
$ 1,114
Europe (9,024 ) (5,632 ) (3,392 ) (20,633 ) (7,510 ) (13,123 )
Asia Pacific 3,050
3,037
13
11,036
6,073
4,963
South America (4,944 ) (3,265 ) (1,679 ) (11,504 ) (16,685 ) 5,181
Consolidated income before income taxes $ 33,296
$ 49,171
$ (15,875 ) $ 149,870
$ 151,735
$ (1,865 )

Three Months Ended ~~September 30, 2017~~March 31, 2020 Compared with Three Months Ended ~~September 30, 2016~~March 31, 2019

~~North America.~~Sales ~~for the three months ended September 30, 2017 decreased $13.4 million, or 3.0%, compared to the three months ended September 30, 2016, primarily due to decreased volume~~



	Three Months Ended March 31,							Variance Due To:
	2020		2019		Change			Volume/ Mix^*			Foreign Exchange			Acquisitions/ Divestiture, Net
	(dollar amounts in thousands)
Sales to external customers
North America	$	334,801	$	447,718	$	(112,917	)	$	(57,291	)	$	(795	)	$	(54,831	)
Europe	185,242		242,400		(57,158		)	(29,880		)	(5,816		)	(21,462		)
Asia Pacific	79,344		125,452		(46,108		)	(41,669		)	(2,986		)	(1,453		)
South America	20,471		23,237		(2,766		)	830			(3,596		)	—
Total Automotive	619,858		838,807		(218,949		)	(128,010		)	(13,193		)	(77,746		)
Corporate, eliminations and other	35,032		39,188		(4,156		)	(3,809		)	(347		)	—
Consolidated	$	654,890	$	877,995	$	(223,105	)	$	(131,819	)	$	(13,540	)	$	(77,746	)

^* Net of customer price reductions

Volume and ~~unfavorable~~ mix, ~~and~~net of customer price reductions ~~partially offset~~includes the impact of the decline in vehicle production volume as driven by government imposed global lock-downs related to the ~~acquisition~~COVID-19 pandemic.

The impact of ~~AMI Industries’ fuel~~foreign currency exchange primarily relates to the Euro, Brazilian Real, and ~~brake business.~~ Chinese Renminbi.

Segment ~~profit for the three months ended September 30, 2017 decreased by $10.8 million, primarily due to lower volume and unfavorable mix,~~adjusted EBITDA



	Three Months Ended March 31,									Variance Due To:
	2020			2019			Change			Volume/ Mix^*			Foreign Exchange			Cost (Increases)/ Decreases		Acquisitions/ Divestiture, Net
	(dollar amounts in thousands)
Segment adjusted EBITDA
North America	$	37,019		$	59,151		$	(22,132	)	$	(26,827	)	$	127		$	8,328	$	(3,760	)
Europe	(4,623		)	9,275			(13,898		)	(17,520		)	1,612			4,766		(2,756		)
Asia Pacific	(17,057		)	(407		)	(16,650		)	(17,348		)	(1,509		)	2,558		(351		)
South America	(4,577		)	(1,033		)	(3,544		)	(481		)	(3,513		)	450		—
Total Automotive	10,762			66,986			(56,224		)	(62,176		)	(3,283		)	16,102		(6,867		)
Corporate, eliminations and other	(2,483		)	(2,852		)	369			(1,967		)	(1,052		)	3,388		—
Consolidated adjusted EBITDA	$	8,279		$	64,134		$	(55,855	)	$	(64,143	)	$	(4,335	)	$	19,490	$	(6,867	)

^*Net of customer price reductions ~~and continued investments to support innovation, partially offset by operational efficiencies and net material cost savings.~~

~~Europe.~~ Sales for the three months ended September 30, 2017 increased $11.6 million, or 4.8%, compared to the three months ended September 30, 2016, primarily due to favorable foreign exchange and improved volume and mix. Segment loss for the three months ended September 30, 2017 increased by $3.4 million, primarily due to non-cash settlement charges relating to the wind-up of our U.K. pension plan of $5.7 million and commodity price pressures, partially offset by lower restructuring expense, improved volumeVolume and mix, ~~and operational efficiencies, including restructuring savings.~~

~~Asia Pacific.~~ Sales for the three months ended September 30, 2017 increased $11.3 million, or 8.3%, compared to the three months ended September 30, 2016, primarily due to improved volume and mix and the consolidationnet of a previously unconsolidated joint venture, partially offset by customer price reductions. Segment profit for the three months ended September 30, 2017 was flat compared to the three months ended September 20, 2016. Continuous improvement and material cost savings were offset by customer price reductions, ~~wage inflation, and higher engineering costs to support growth in the region.~~

~~South America.~~ Sales for the three months ended September 30, 2017 increased $3.8 million, or 15.3%, compared to the three months ended September 30, 2016, primarily due to improved volume and mix and favorable foreign exchange, partially

offset by customer price reductions. Segment loss for the three months ended September 30, 2017 increased by $1.7 million primarily due to a $3.1 million pre-tax charge for costs associated with a foreign tax amnesty program, of which $0.2 million was paid in cash, and customer price reductions, partially offset by continuous improvement, volume and mix.

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

~~North America.~~ Sales for the nine months ended September 30, 2017 increased $42.1 million, or 3.1%, compared to the nine months ended September 30, 2016, primarily due to improved volume and mix and the acquisition of AMI Industries’ fuel and brake business, partially offset by customer price reductions. Segment profit for the nine months ended September 30, 2017 increased by $1.1 million, primarily due to continuous improvement, net material cost savings, favorable foreign exchange and acquisitions, partially offset by customer price reductions,includes the impact of the decline in vehicle production ~~mix and continued investments to support innovation.~~

~~Europe.~~ ~~Sales for the nine months ended September 30, 2017 decreased $18.1 million, or 2.3%, compared~~volume as driven by government imposed global lock-downs related to the nine months ended September 30, 2016, primarily due to customer price reductions and unfavorable foreign exchange, partially offset by improvement in volume and mix. Segment loss for the nine months ended September 30, 2017 increased by $13.1 million, primarily due to non-cash settlement charges relating to the wind-up of our U.K. pension plan of $5.7 million, impairment charges recorded in the first quarter of 2017, customer price reductions, commodity price pressure, product mix and foreign exchange, partially offset by lower restructuring expense and operational efficiencies, including restructuring savings.COVID-19 pandemic.

~~Asia Pacific~~. Sales for the nine months ended September 30, 2017 increased $41.4 million, or 10.9% compared to the nine months ended September 30, 2016, primarily due to the consolidation of a previously unconsolidated joint venture and improved volume and mix, partially offset by unfavorable foreign exchange and customer price reductions. Segment profit for the nine months ended September 30, 2017 increased by $5.0 million primarily driven by continuous improvement and material cost savings, partially offset by customer price reductions, higher engineering costs to support growth in the region and wage inflation.

~~South America.~~ Sales for the nine months ended September 30, 2017 increased $17.3 million, or 28.2%, compared to the nine months ended September 30, 2016, primarily due to improved volume and mix and favorable foreign exchange. Segment loss for the nine months ended September 30, 2017 improved by $5.2 million primarily due to continuous improvement and net material cost savings and improved volume and mix, partially offset by a $3.1 million pre-tax charge for costs associated with a foreign tax amnesty program, of which $0.2 million was paid in cash.


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


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


◦	Reduction in compensation-related expenses, purchasing savings through lean initiatives, restructuring savings;


◦	Increase in commodity costs and wage increases;


◦	Net operational efficiencies of $16 million, weakened by the impact of COVID-19, primarily driven by our North America and European 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 7.10. “Debt” to the unaudited condensed consolidated financial statements included in Part 1,I, Item 1 of this Report for additional information.

Based on our current expectations and projections for OEM customer restart plans, whether formally announced or simply anticipated, ~~levels of operations~~ and due to the ~~condition in our markets~~aggressive actions we have taken to preserve cash and ~~industry,~~enhance liquidity, 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. However,~~months, despite the challenges presented by the COVID-19 pandemic. 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 ~~flow~~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 ~~provided by~~used in operations was ~~$104.6~~$2.0 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~$182.0~~net cash used in operations of $1.8 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. The ~~change~~net outflow was primarily ~~driven by an increase in receivables~~ due to ~~customer payment timing and repurchase of receivables as part of the transition to a pan-European factoring program, increased inventory and higher payments related to incentive compensation,~~decreased cash earnings, partially offset by ~~increased cash earnings and reduced cash paid for restructuring and taxes.~~working capital improvements.

Investing Activities. Net cash used in investing activities was ~~$136.7~~$50.1 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~$150.7 million for the nine months ended September 30, 2016. Cash~~net cash used in investing activities ~~consisted~~

~~primarily~~ of ~~capital spending of $137.4 million and $116.8~~$60.0 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively. We anticipate that we will spend approximately $165 million to $175 million on~~March 31, 2019. Significant decreases in capital expenditures are expected in ~~2017.~~the second quarter of 2020, as the capital expenditure cash outflow in the first three months ended March 31, 2020 partially relates to purchases that were made in months prior to the first quarter of 2020.

Financing Activities. Net cash ~~used in~~provided by financing activities totaled ~~$52.1~~$0.4 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~$41.3~~net cash provided by financing activities of $57.4 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. The ~~increase~~change was primarily due to ~~increased repurchase activity under~~drawing on our revolving credit facility and an increase in local borrowing lines during the three months ended March 31, 2019. There were no share ~~repurchase program, certain paydowns of foreign bank loans in 2017 and decreased warrant exercises.~~repurchases during the three months ended March 31, 2020. Cash used for share repurchases was $6.6 million for the three months ended March 31, 2019.

Share Repurchase Program

In ~~March 2016,~~June 2018, our Board of Directors approved a ~~securities~~new common stock repurchase program (the ~~“Program”~~“2018 Program”) authorizing us to repurchase, in the aggregate, up to ~~$125~~$150.0 million of our outstanding common ~~stock or warrants to purchase common~~ stock. Under the 2018 Program, repurchases may be made on the open market, or through private transactions, accelerated share repurchases, round lot or block transactions on the New York Stock Exchange or otherwise, as determined by ~~our management~~us and in accordance with prevailing market conditions and federal securities laws and regulations.

In March 2016, we purchased $23.8 million of our common stock (350,000 shares at $68.00 per share) from the Selling Stockholders (as described in Note 15. “Common Stock” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report). In 2017, we repurchased $31.5 million of our common stock (306,072 shares at an average purchase price of $102.76 per share, excluding commissions) in the open market, of which $30.7 million was settled in cash during the nine months ended September 30, 2017. 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, 2017,~~March 31, 2020, we ~~have~~had approximately ~~$69.7~~$98.7 million of repurchase authorization remaining under the 2018 Program.

We did not make any repurchases during the three months ended March 31, 2020. During the three months ended March 31, 2019, we repurchased 85,000 shares of common stock.

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 and Senior 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), which is the most comparable financial measure in accordance with U.S. GAAP:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(dollar amounts in thousands)
Net income attributable to Cooper-Standard Holdings Inc. $ 24,640
$ 36,362
$ 106,802
$ 107,874
Income tax expense 7,838
12,525
40,258
43,312
Interest expense, net of interest income 10,256
10,114
31,788
29,861
Depreciation and amortization 34,368
31,325
99,413
91,699
EBITDA $ 77,102
$ 90,326
$ 278,261
$ 272,746
Restructuring charges 9,909
10,430
28,220
33,468
Settlement charges ⁽¹⁾
5,902
—
5,902
—
Foreign tax amnesty program ⁽²⁾
3,121
—
3,121
—
Impairment charges ⁽³⁾
—
—
4,270
—
Loss on refinancing and extinguishment of debt ⁽⁴⁾
—
—
1,020
—
Secondary offering underwriting fees and other expenses ⁽⁵⁾
—
—
—
6,500
Other —
—
—
155
Adjusted EBITDA $ 96,034
$ 100,756
$ 320,794
$ 312,869



	Three Months Ended March 31,
	2020			2019
	(dollar amounts in thousands)
Net loss attributable to Cooper-Standard Holdings Inc.	$	(110,588	)	$	(5,415	)
Income tax (benefit) expense	(14,117		)	2,034
Interest expense, net of interest income	10,237			11,932
Depreciation and amortization	37,763			36,605
EBITDA	$	(76,705	)	$	45,156
Impairment of assets held for sale	74,079			—
Restructuring charges	7,276			17,715
Project costs ⁽¹⁾	2,425			1,263
Other impairment charges ⁽²⁾	684			—
Lease termination costs ⁽³⁾	520			—
Adjusted EBITDA	$	8,279		$	64,134


(1)	~~Non-cash settlement charges of $5.7 million~~ Project costs recorded in selling, administration and ~~administrative fees of $0.2 million relating~~engineering expense related to ~~the U.K. pension plan.~~assets held for sale in 2020 and acquisitions and divestiture costs in 2019.


(2)	~~Relates~~ Non-cash impairment charges of $684 related to ~~indirect taxes recorded in cost~~fixed assets, net of ~~products sold.~~approximately $293 attributable to our noncontrolling interests.


(3)	~~Impairment~~ Lease termination costs no longer recorded as Restructuring charges ~~related to fixed assets.~~


~~(4)~~	~~Loss on refinancing and extinguishment of debt related to the May 2017 amendment of the Term Loan Facility.~~


~~(5)~~	~~Fees and other expenses associated~~in accordance with ~~the March 2016 secondary offering.~~ASC 842.

Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note ~~18.~~21. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report, is incorporated herein by ~~references.~~reference.

Recently Issued Accounting Pronouncements

See Note ~~1. “Overview”~~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, 2017.~~March 31, 2020.

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 ~~and other factors~~ 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;~~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; 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'~~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 proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyber-attacks, ordata 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; ~~and~~ our dependence on our subsidiaries for cash to satisfy our obligations.

You should not place undue reliance on these forward-looking statements. WeOur 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~There~~Except for the broad effects of COVID-19 on the global economy and major financial markets, there 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 ~~2016~~2019 Annual Report.

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, 2017~~March 31, 2020 that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1A.Risk Factors

The Company is supplementing the risk factors set out under “Item 1A. Risk Factors” in its Annual Report on Form 10-K the fiscal year ended December 31, 2019 with the additional risk factors set forth below. The risk factors below should be read in conjunction with the risk factors set out in the Company’s Form 10-K.

Our financial condition and results of operations have been, and are expected to continue to be, adversely affected by the recent COVID-19 outbreak.

We face risks related to public health issues, including epidemics and pandemics such as the global outbreak of COVID-19. To date, the COVID-19 outbreak, which has surfaced in nearly all regions around the world, and preventative measures taken to contain or mitigate the COVID-19 outbreak have caused, and are continuing to cause, business slowdowns or shutdowns and significant disruption in the financial markets both in the United States and globally. Our China manufacturing facilities experienced an extended shutdown in January and February 2020. These facilities began to re-open and ramp production, consistent with governmental guidelines and customer schedules, in late February and early March 2020.

In March 2020, our automotive customers elected to shut down their manufacturing operations in regions around the world outside of China. As a result, we correspondingly shut down our automotive manufacturing operations in all regions other than China. As of April 29, 2020, only our 12 China automotive plants and three non-automotive plants (two in the United States and one in Germany) are operating. Although our automotive operations will generally not realize revenue while our facilities are shut down, we continue to incur significant operating and non-operating expenses associated with these facilities.

We expect to restart our manufacturing operations only when our automotive customers restart their operations and start issuing orders. While, based on the information received from our automotive customers, we are currently considering a scenario for a phased restart of our manufacturing plants, supply network and other dependent functions (in addition to what is already underway in China) in mid-to-late May 2020 with enhanced safety standards in place to protect workers, we do not know when our automotive customers will actually resume their manufacturing operations. Furthermore, any decisions on resumptions will need to be in compliance with local government requirements and made in cooperation with our customers, local unions and other stakeholders, and, accordingly, any projected timetable for resumption is subject to change. Fully ramping up our operations may take several months and will depend, in part, on whether our customers and suppliers have resumed normal operations. In addition, government regulations and safety and social distancing procedures that we implement may increase our operating costs, and we may not be able to pass along these increased costs to our customers.

Our business relies on a number of third parties, including suppliers and distribution and logistics providers. One or more of these third parties may experience financial distress, staffing shortages or liquidity challenges, file for bankruptcy protection, go out of business, or suffer disruptions in their business due to the COVID-19 pandemic. These supply chain effects may have an adverse effect on our ability to restart our business and meet customer demand and may result in an increase in our costs of production and distribution, including increased freight and logistics costs and other expenses. A continued significant disruption to our production schedule will have an adverse effect on our financial condition, liquidity and results of operations.

If a significant percentage of our workforce, or the workforces of our suppliers and other third-party partners, is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted. We also depend on senior management and other key personnel and consultants, and the illness of certain personnel or consultants could result in the loss of expertise and negatively affect our operations.

The economic slowdown attributable to COVID-19 has led to a global decrease in vehicle sales in markets around the world. Based on current weak consumer confidence, rising unemployment levels, risks to small businesses and overall economic uncertainty, it is likely that global demand for light vehicles will be significantly lower than both historical and previously projected levels for an extended period, even as the COVID-19 pandemic begins to abate. As described in more detail under the risk factor entitled “We are highly dependent on the automotive industry. A prolonged or material contraction in automotive sales and production volumes could adversely affect our business, results of operations and financial condition.” in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, a sustained decline in vehicle sales would adversely affect our business, results of operations and financial condition.

The COVID-19 pandemic has also caused significant disruptions to global financial markets. Such disruptions, together with the impact of COVID-19 on the automotive industry, may have a negative impact on our ability to access capital in the future on favorable terms or at all.

The full impact of the COVID-19 pandemic on our financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the outbreak, its impact on our customers, suppliers and logistics partners, how quickly normal operations can resume and the duration and magnitude of the economic downturn caused by the pandemic in our key markets. Further, government-sponsored liquidity or stimulus programs in response to the COVID-19 pandemic may not be available to our customers, suppliers or us, and if available, may nevertheless be insufficient to address the impacts of COVID-19. While we expect the impacts of COVID-19 to have an adverse effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.

The COVID-19 pandemic may also exacerbate the other risks disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.

The COVID-19 pandemic risk presents significant risks to our liquidity.

Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the effects of the COVID-19 pandemic on our customers and their production rates, the condition of global financial markets, the availability of sufficient amounts of financing, our operating performance and our credit ratings. While we currently have no outstanding borrowings under our ABL facility, our ability to borrow against the ABL facility is limited to our borrowing base, which consists primarily of our U.S. and Canadian accounts receivable and inventory. Such working capital account balances are expected to decrease over the next few months as a result of the production shutdown, and thus our ability to borrow under our ABL facility will decrease significantly.

In addition, if the Company has availability for borrowing under its ABL facility less than the greater of (i) $15,000,000 and (ii) 10% of the Borrowing Base (as defined in the ABL facility), it must be in compliance with a springing Fixed Charge Coverage Ratio maintenance covenant of 1.00:1.00. The Company currently would not be able to satisfy such covenant and does not expect to be able to for the foreseeable future due to the impact of the COVID-19 pandemic on its business. Accordingly, the Company intends to manage any borrowings under its ABL facility to avoid triggering this maintenance covenant, which would further constrain its ability to utilize the ABL facility. As of March 31, 2020, the Company’s Borrowing Base was $173 million. Net of the 10% of the Borrowing Base that cannot be borrowed without triggering the fixed charge coverage ratio maintenance covenant and $10 million of outstanding letters of credit, the Company effectively had $146 million available for borrowing under its ABL facility.

Furthermore, production shutdowns will result in working capital swings which are expected to result in increased outflows during 2020. As a result of the impacts of the COVID-19 pandemic, we may be required to raise additional capital, and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. Such capital may not be available on favorable terms or at all.

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 March 31, 2020, 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 ~~15.~~18. “Common Stock” to the unaudited condensed consolidated financial statements included in Part 1,I, Item 1 of this ~~Report, we have approximately $69.7 million of repurchase authorization remaining under our ongoing common stock share repurchase program.~~Report.

A summary of our shares of common stock repurchased during the three months ended ~~September 30, 2017~~March 31, 2020 is shown ~~below~~: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, 2017 through July 31, 2017 71,671
$ 103.63
71,663
$ 84.5
August 1, 2017 through August 31, 2017 76,038
$ 100.56
76,000
$ 76.8
September 1, 2017 through September 30, 2017 66,003
$ 107.02
66,000
$ 69.7
Total 213,712
$ 103.58
213,663
$ 69.7



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, 2020 through January 31, 2020	—	$	—	—	$	98.7
February 1, 2020 through February 29, 2020	19,086	25.19		—	98.7
March 1, 2020 through March 31, 2020	306	12.44		—	98.7
Total	19,392			—


(1)	Includes 49 shares repurchased by the Company to satisfy employee tax withholding requirements due upon the vesting of restricted stock awards.

Item 6. Exhibits




Exhibit No.		Description of Exhibit
10.1*		Form of 2020 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Nonqualified Stock Option Agreement.

10.2*		Form of 2020 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Performance Unit Award Agreement (cash-settled award).

10.3*		Form of 2020 Cooper-Standard Holdings Inc. 2017 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (cash-settled award).

10.4*		Amendment No. 1, dated as of March 24, 2020, to the Third Amended and Restated Loan Agreement and Limited Waiver by and among CS Intermediate Holdco 1 LLC, Cooper-Standard Automotive Inc., Cooper-Standard Automotive Canada Limited, Cooper-Standard Automotive International Holdings B.V., certain subsidiaries of Cooper-Standard Automotive Inc., the lenders party thereto and Bank of America, N.A. as agent for such lenders.

10.5*		Cooper-Standard Automotive Inc. US Salary Deferral Program, dated April 20, 2020, with Program Term starting May 4, 2020.

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.

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 1, 2017~~May 11, 2020				/S/ JONATHAN P. BANAS
Date				Jonathan P. Banas Chief Financial Officer (Principal Financial Officer)

~~INDEX TO EXHIBITS~~



~~Exhibit~~ ~~No.~~		~~Description of Exhibit~~

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***		~~XBRL Instance Document~~

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

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

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

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

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



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



		Page

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of ~~Net Income~~Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated ~~Statement~~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	2326
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3135
Item 4.	Controls and Procedures	3136

	PART II. OTHER INFORMATION

Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3239
Item 6.	Exhibits	3340
SIGNATURES		34
~~INDEX TO EXHIBITS AND EXHIBITS~~		3541



	Gain (Loss) Recognized in AOCI
	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Forward foreign exchange contracts	$	(763	)	$	854	$	1,860		$	(3,384	)
Interest rate swaps	22			131		(27		)	(2,123		)
Total	$	(741	)	$	985	$	1,833		$	(5,507	)



	September 30, 2017		December 31, 2016
Without recourse	$	62,594	$	56,936
With recourse	5,018		5,258



	Three Months Ended September 30, 2017
	Cumulative currency translation adjustment				Benefit plan liabilities				Fair value change of derivatives				Total
Balance as of June 30, 2017	$	(119,405	)		$	(100,340	)		$	113			$	(219,632	)
Other comprehensive income (loss) before reclassifications	16,047			⁽¹⁾	(1,714		)	⁽²⁾	(619		)	⁽³⁾	13,714
Amounts reclassified from accumulated other comprehensive income (loss)	—				5,677			⁽⁴⁾	(347		)	⁽⁵⁾	5,330
Balance as of September 30, 2017	$	(103,358	)		$	(96,377	)		$	(853	)		$	(200,588	)



	Three Months Ended September 30, 2016
	Cumulative currency translation adjustment				Benefit plan liabilities				Fair value change of derivatives				Total
Balance as of June 30, 2016	$	(120,780	)		$	(84,595	)		$	(4,766	)		$	(210,141	)
Other comprehensive income (loss) before reclassifications	2,681			⁽¹⁾	(497		)	⁽²⁾	828			⁽³⁾	3,012
Amounts reclassified from accumulated other comprehensive income (loss)	—				348			⁽⁴⁾	1,053			⁽⁵⁾	1,401
Balance as of September 30, 2016	$	(118,099	)		$	(84,744	)		$	(2,885	)		$	(205,728	)



	Nine Months Ended September 30, 2017
	Cumulative currency translation adjustment				Benefit plan liabilities				Fair value change of derivatives				Total
Balance as of December 31, 2016	$	(143,481	)		$	(97,612	)		$	(1,470	)		$	(242,563	)
Other comprehensive income (loss) before reclassifications	40,123			⁽¹⁾	(5,428		)	⁽²⁾	1,242			⁽³⁾	35,937
Amounts reclassified from accumulated other comprehensive income (loss)	—				6,663			⁽⁴⁾	(625		)	⁽⁵⁾	6,038
Balance as of September 30, 2017	$	(103,358	)		$	(96,377	)		$	(853	)		$	(200,588	)



	Nine Months Ended September 30, 2016
	Cumulative currency translation adjustment				Benefit plan liabilities				Fair value change of derivatives				Total
Balance as of December 31, 2015	$	(130,661	)		$	(84,124	)		$	(2,280	)		$	(217,065	)
Other comprehensive income (loss) before reclassifications	12,562			⁽¹⁾	(1,638		)	⁽²⁾	(3,803		)	⁽³⁾	7,121
Amounts reclassified from accumulated other comprehensive income (loss)	—				1,018			⁽⁴⁾	3,198			⁽⁵⁾	4,216
Balance as of September 30, 2016	$	(118,099	)		$	(84,744	)		$	(2,885	)		$	(205,728	)



	September 30, 2017		December 31, 2016
Segment assets
North America	$	1,030,321	$	985,809
Europe	648,588		582,385
Asia Pacific	653,688		611,849
South America	57,794		46,125
Eliminations and other	245,205		265,534
Consolidated	$	2,635,596	$	2,491,702