What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 184 added, 176 removed, 815 unchanged (31% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

(In thousands, except per share amounts)

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Accounts payable $ 89,435 $ 63,058

Revolving credit facility 15,000 —

Current operating lease liabilities 8,874 7,620

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Treasury stock, at cost:

1,334,251 shares, as of June 2020 and December 2019

1,464,392 shares, as of September 2020 and December 2019

( 11,230 ) ( 11,230 )

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(as restated) 2020 2019

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

(as restated) 2020 2019

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Net (loss) income $ 4,178 $ 7,180 $ ( 32,913 ) $ 23,312

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency exchange translation adjustments 2,628 ( 3,388 ) ( 257 ) ( 3,051 )

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Derivative instrument, net of tax 893 ( 515 ) ( 781 ) ( 193 )

Other comprehensive income (loss) 2,578 1,955 ( 5,452 ) 1,749

Other comprehensive (loss) income 2,564 ( 5,998 ) ( 2,888 ) ( 4,249 )

Comprehensive (loss) income $ 6,742 $ 1,182 $ ( 35,801 ) $ 19,063

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

MMERCIAL VEHICLE GROUP, INC.

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

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Shares Amount

(In thousands)

(In thousands, except per share amounts)

Balance - December 31, 2019 30,801,255 $ 323 $ ( 11,230 ) $ 245,852 $ ( 60,307 ) $ ( 45,950 ) $ 128,688

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Total comprehensive loss — — — — ( 32,913 ) ( 2,888 ) ( 35,801 )

Balance - June 30, 2020 30,985 $ 309 $ ( 11,230 ) $ 247,582 $ ( 97,398 ) $ ( 51,402 ) $ 87,861

Balance - September 30, 2020 30,985,669 $ 310 $ ( 11,230 ) $ 248,323 $ ( 93,220 ) $ ( 48,838 ) $ 95,345

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(as restated)

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Proceeds from disposal/sale of property, plant and equipment 569 20

Payments for acquisition of business — ( 34,000 )

Net cash used in investing activities ( 5,452 ) ( 52,723 )

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Borrowing of Revolving Credit Facility 15,000 8,500

Repayment of Revolving Credit Facility ( 15,000 ) ( 8,500 )

Loan amendment costs ( 2,579 ) —

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Commercial Vehicle Group, Inc.

(through its subsidiaries) is a leading supplier of seating systems, electro-mechanical assemblies, engineered material products, and warehouse automation subsystems for many markets including the following:

trucking, military, warehouse automation, bus, agriculture, specialty transportation, mining, industrial equipment and off-road recreational markets.

(through its subsidiaries) is a diversified industrial company and leading supplier of seating systems, warehouse automation subsystems, wire harnesses, plastic parts, and mechanical assemblies for many markets including the following:

trucking, construction, retail, military, bus, agricultural, and off-road recreational markets .

References herein to the "Company", "CVG", "we", "our", or "us" refer to Commercial Vehicle Group, Inc.

and its subsidiaries.

We have manufacturing operations in the United States, Mexico, China, United Kingdom, Czech Republic, Ukraine, Thailand, India and Australia.

We have manufacturing operations in the United States, Mexico, China, United Kingdom, Belgium, Czech Republic, Ukraine, Thailand, India and Australia.

Our products are primarily sold in North America, Europe, and the Asia-Pacific region.

We are differentiated from automotive industry suppliers by our ability to manufacture low volume, customized products on a sequenced basis to meet the requirements of our customers.

We believe our products are used by a majority of the North American medium- and heavy-duty truck ("MD/HD Truck") and many medium- and heavy-duty construction vehicle original equipment manufacturers (“OEMs”), and to a lesser extent other makers of industrial equipment.

We primarily manufacture customized products on a sequenced basis to meet the requirements of our customers.

We believe our trucking products are used by a majority of the North American Commercial Truck markets, many construction vehicle original equipment manufacturers (“OEMs”), and many of the top e-commerce retailers.

We have prepared the unaudited condensed consolidated financial statements included herein pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

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Unless otherwise indicated, all amounts are in thousands, except share and per share amounts.

Certain changes to presentation of accounts receivable allowances in the Condensed Consolidated Statement of Operations have been made to conform to current year presentation.

Certain changes to presentation of balances in the Condensed Consolidated Statement of Operations have been made to conform to current year presentation.

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker (“CODM”), which is our President and Chief Executive Officer.

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• Electrical wire harnesses, control panels, electro-mechanical and cable assemblies primarily for the construction, agricultural, industrial, automotive, truck, mining, rail and military industries in North America, Europe and Asia-Pacific;

• Trim systems and components ("Trim") primarily for the North America MD/HD Truck market;

• Plastic components ("Trim") primarily for the North America medium- and heavy-duty truck ("MD/HD Truck") market;

• Mirrors, wipers and controls primarily for the truck, bus, agriculture, construction, rail and military markets in North America and Europe;

• Cab structures for the North American MD/HD Truck market;

• Aftermarket components in North America.

• Warehouse automation subsystems.

The Global Seating Segment manufactures and sells the following products:

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Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU No.

In March 2020, the FASB issued Accounting Standards Update ("ASU") No.

2020-04, "Reference Rate Reform (Topic 848)".

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We are evaluating the effect this ASU will have on the Company.

Accounting Pronouncements Implemented in the six months ended June 30, 2020

Accounting Pronouncements Implemented in the nine months ended September 30, 2020

In March 2020, the FASB issued ASU No.

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Subsequent to such implementation, we fully impaired our goodwill.

Refer to Note 11 for more details.

Refer to Note 11, Goodwill and Intangible Assets for more details.

In June 2016, the FASB issued ASU No.

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Restatement Background

As noted in our 2019 Form 10-K, the Audit Committee of the Board of Directors (the “Audit Committee”) of the Company, after considering the recommendations of management, and discussing such recommendations with outside SEC counsel, concluded that our 2018 Financial Statements, included in our Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2018 (the “2018 Annual Report”), and our unaudited consolidated financial statements as of and for the quarterly periods ended March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018, included in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2019, June 30, 2019 and September 30, 2019 (the "2019

Quarterly Reports”), should no longer be relied upon due to misstatements that are described in greater detail below, and that we would restate such financial statements to make the necessary accounting corrections.

The Company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No.

99, Materiality and SAB No.

108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of these corrections was material to the consolidated financial statements as of and for the year ended December 31, 2018 and the quarterly periods ended March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018.

2019 and 2018, and September 30, 2019 and 2018.

As a result of the material misstatements, we have restated our consolidated financial statements as of and for the year ended December 31, 2018 and our unaudited consolidated financial statements as of and for the quarterly periods ended March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018, in accordance with ASC 250, Accounting Changes and Error Corrections (the "Restated Financial Statements").

The following tables present the impacts of the restatement adjustments to the previously reported financial information for the period ended June 30, 2019.

The following tables present the impacts of the restatement adjustments to the previously reported financial information for the period ended September 30, 2019.

The restatement references identified in the following tables directly correlate to the restatement adjustments detailed below.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

As Previously Reported Restatement Adjustments As Restated As Previously Reported Restatement Adjustments As Restated Restatement References

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Diluted 30,852 30,852 30,852 30,829 30,829 30,829

For the three months ended June 30, 2019

For the three months ended September 30, 2019

(a) Understatement of cost of revenues and impacted balance sheet accounts.

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and an immaterial increase in net income.

For the six months ended June 30, 2019

For the nine months ended September 30, 2019

(a) Understatement of cost of revenues and impacted balance sheet accounts.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

As Previously Reported Restatement Adjustments As Restated As Previously Reported Restatement Adjustments As Restated Restatement References

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Comprehensive income $ 2,522 $ ( 1,340 ) $ 1,182 $ 22,578 $ ( 3,515 ) $ 19,063

For the three months ended June 30, 2019

For the three months ended September 30, 2019

(a) Understatement of cost of revenues and impacted balance sheet accounts.

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Refer to descriptions of the adjustment and its impact to net income above.

For the six months ended June 30, 2019

For the nine months ended September 30, 2019

(a) Understatement of cost of revenues and impacted balance sheet accounts.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

As Previously Reported Restatement Adjustments As Restated Restatement References

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Deferred income taxes 2,903 ( 1,063 ) 1,840 a, b

Non-cash loss on derivative contracts 1,823 — 1,823

Non-cash loss / (gain) on derivative contracts 2,092 — 2,092

Change in other operating items:

Accounts receivable ( 23,610 ) — ( 23,610 )

Accounts receivable ( 19,765 ) ( 689 ) ( 20,454 ) a

Inventories 1,191 — 1,191

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Cash Flows from Investing Activities:

Purchases of property, plant and equipment ( 12,702 ) ( 98 ) ( 12,800 )

Purchases of property, plant and equipment ( 19,270 ) 527 ( 18,743 ) a

Proceeds from disposal/sale of property, plant and equipment 20 — 20

Payments for acquisitions ( 34,000 ) — ( 34,000 )

Net cash used in investing activities ( 53,250 ) 527 ( 52,723 )

Cash Flows from Financing Activities:

Borrowings on Revolving Credit Facility 8,500 — 8,500

Repayment of Revolving Credit Facility ( 8,500 ) — ( 8,500 )

Repayment of Term Loan ( 6,338 ) — ( 6,338 )

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Unpaid purchases of property and equipment included in accounts payable $ 155 $ — $ 155

For the six months ended June 30, 2019

For the nine months ended September 30, 2019

(a) Understatement of cost of revenues and impacted balance sheet accounts.

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a $ 1.1 million decrease in deferred income tax;

a $ 3.0 million decrease in change in prepaid expenses;

and a $ 0.1 million increase in purchases of property, plant and equipment.

a $ 0.7 million increase in change in accounts receivable, a $ 4.9 million decrease in change in prepaid expenses;

and a $ 0.5 million decrease in purchases of property, plant and equipment.

(b) Property, plant and equipment, net error correction.

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Our products include electrical wire harnesses, control panels, electro-mechanical and cable assemblies;

trim systems and components ("Trim");

seats and seating systems ("Seats");

and cab structures and sleeper boxes;

mirrors, wipers and controls.

We sell these products into multiple geographic regions including North America, Europe and Asia-Pacific and to multiple customer end markets including MD/HD Truck OEMs, Construction OEMs, industrial, military, Bus OEMs, the aftermarket and other markets.

mirrors, wipers, controls and warehouse automation subsystems.

We sell these products, except warehouse automation subsystems, into multiple geographic regions including North America, Europe and Asia-Pacific and to multiple customer end markets including MD/HD Truck OEMs, Construction OEMs, industrial, military, Bus OEMs, the aftermarket and other markets.

We sell warehouse automation subsystems to warehouse automation customers.

The nature, timing and uncertainty of recognition of revenue and associated cash flows across the varying product lines, geographic regions and customer end markets is substantially consistent.

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Our payment terms vary by customer.

None of the Company's contracts as of June 30, 2020, contained a significant financing component.

None of the Company's contracts as of September 30, 2020, contained a significant financing component.

We typically do not have multiple performance obligations requiring us to allocate a transaction price.

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Our customers typically do not have a general right of return for our products.

We had outstanding customer accounts receivable, net of allowances, of $ 102.8 million as of June 30, 2020 and $ 115.1 million as of December 31, 2019.

We had outstanding customer accounts receivable, net of allowances, of $ 128.6 million as of September 30, 2020 and $ 115.1 million as of December 31, 2019.

We generally do not have other assets or liabilities associated with customer arrangements.

In general, we do not make significant judgments or have material variable consideration that impact our recognition of revenue.

Refer to Note 16 for revenue disclosures by reportable segments.

In general, we do not make significant judgments that impact our recognition of revenue.

Refer to Note 16, Segment Reporting for revenue disclosures by reportable segments.

Fair Value Measurement

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The gains and losses as a result of the changes in fair value of the hedge contract are deferred in accumulated other comprehensive loss and recognized in cost of revenues in the period the related hedge transactions are recognized.

Refer to Note 17 for additional disclosures.

Refer to Note 17, Derivative Contracts for additional disclosures.

Interest Rate Swap Agreement.

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The Company expects this agreement to remain effective during the remaining term of the Interest Rate Swap Agreement and records the impact of the agreement in interest and other expense in the Condensed Consolidated Statements of Operations.

Refer to Note 17 for additional disclosures.

Refer to Note 17, Derivative Contracts for additional disclosures.

The fair values of our derivative assets and liabilities and contingent consideration measured on a recurring basis are categorized as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

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$ ( 317 ) $ — $ ( 317 ) $ — $ 464 $ — $ 464 $ —

1 Presented in the Condensed Consolidated Balance Sheets in other current assets and based on observable market transactions of spot and forward rates.

2 Presented in the Condensed Consolidated Balance Sheets in other assets and based on observable market transactions of forward rates.

Presented in the Condensed Consolidated Balance Sheets in other current assets and other non-current assets and based on observable market transactions of spot and forward rates.

Presented in the Condensed Consolidated Balance Sheets in accrued liabilities and based on observable market transactions of forward rates.

Presented in the Condensed Consolidated Balance Sheets in accrued liabilities and other and based on observable market transactions of forward rates.

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The fair value of long-term debt obligations is based on a fair value model utilizing observable inputs.

Based on these inputs, our long-term debt is classified as Level 2.

Based on these inputs, our long-term debt fair value as disclosed is classified as Level 2.

The carrying amounts and fair values of our long-term debt obligations are as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Amount Fair Value Carrying

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$ 150,400 $ 133,904 $ 156,384 $ 157,983

1 Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 2.4 million and long-term debt of $ 151.7 million as of June 30, 2020, and current portion of long-term debt of $ 3.3 million and long-term debt of $ 153.1 million as of December 31, 2019.

Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 2.4 million and long-term debt of $ 148.0 million as of September 30, 2020, and current portion of long-term debt of $ 3.3 million and long-term debt of $ 153.1 million as of December 31, 2019.

Long Lived Assets Impairment.

For the quarter ended June 30, 2020, an impairment charge of $ 0.2 million was recognized for the corporate aircraft and was based on the estimated selling price, less selling costs, of $ 0.3 million, which is classified as Held for Sale and presented in the Condensed Consolidated Balance Sheet in other current assets.

For the nine months ended September 30, 2020, an impairment charge of $ 1.1 million was recognized for the Electrical Systems segment, $ 0.4 million related to an operating lease right-of-use asset and $ 0.7 million related to property, plant and equipment.

Additionally, for the nine months ended September 30, 2020, an impairment charge of $ 0.8 million was recognized for the corporate aircraft and was based on the selling price, less selling costs, of $ 0.3 million.

These impairment charges are presented in impairment expense in the Condensed Consolidated Statements of Operations.

Goodwill Impairment.

For the nine months ended September 30, 2020, an impairment charge of $ 27.1 million was recognized for goodwill and was based on the estimated fair values of goodwill for the reporting units compared to the net carrying values at March 31, 2020.

The impairment charge is presented in impairment expense in the Condensed Consolidated Statements of Operations.

Given the limited market comparable values of the asset, it is classified as Level 2.

The Company determined it had an impairment indicator in the quarter ended June 30, 2020 for one asset group within the Electrical Systems Segment.

As a result, we performed a Step 1 undiscounted cash flow analysis in accordance with ASC 360, Property, Plant and Equipment, which resulted in estimated undiscounted cash flows exceeding the carrying value of the asset group.

No other non-recurring fair value measurements were assessed during the quarter ended June 30, 2020.

No other non-recurring fair value measurements were assessed during the quarter ended September 30, 2020.

Stockholders’ Equity

Common Stock — Our authorized capital stock consists of 60,000,000 shares of common stock with a par value of $ 0.01 per share;

of which, 30,985,669 and 30,801,255 shares were issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.

of which, 30,985,669 and 30,801,255 shares were issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.

Preferred Stock — Our authorized capital stock also consists of 5,000,000 shares of preferred stock with a par value of $ 0.01 per share;

no preferred shares were outstanding as of June 30, 2020 and December 31, 2019.

no preferred shares were outstanding as of September 30, 2020 and December 31, 2019.

Earnings Per Share — Basic earnings per share is determined by dividing net income by the weighted average number of common shares outstanding during the period.

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Potential common shares are included in the diluted earnings per share calculation when dilutive.

Diluted earnings per share for the three and six months ended June 30, 2020 and 2019 includes the effect of potential common shares issuable when dilutive, and is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Diluted earnings per share for the three and nine months ended September 30, 2020 and 2019 includes the effect of potential common shares issuable when dilutive, and is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(as restated) 2020 2019

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The Company has adjusted certain prior period amounts for the restatement and immaterial corrections of error.

See Note 3 for details.

There were 396 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2020 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per shares for the three months ended June 30, 2019.

There were 286 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2020 and 18 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per shares for the six months ended June 30, 2019.

See Note 3, Restatement of Previously Issued Consolidated Financial Statements for details.

There were 282 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the three months ended September 30, 2020 and no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per shares for the three months ended September 30, 2019.

There were 256 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2020 and 18 thousand outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per shares for the nine months ended September 30, 2019.

Dividends — We have not declared or paid any cash dividends in the past.

The terms of our debt and credit facilities (as described in Note 14) restrict the payment or distribution of our cash and other assets, including cash dividend payments.

The terms of our debt and credit facilities (as described in Note 14, Debt and Credit Facilities) restrict the payment or distribution of our cash and other assets, including cash dividend payments.

The changes in stockholder's equity are as follows:

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Common Stock Treasury

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Loss Total CVG Stockholders’

Shares (in thousands) Amount

Shares Amount

Balance - December 31, 2019 30,801,255 $ 323 $ ( 11,230 ) $ 245,852 $ ( 60,307 ) $ ( 45,950 ) $ 128,688

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Balance - June 30, 2020 30,985,669 $ 309 $ ( 11,230 ) $ 247,582 $ ( 97,398 ) $ ( 51,402 ) $ 87,861

Six Months Ended June 30, 2019

Share-based compensation expense — 1 — 741 — — 742

Total comprehensive income — — — — 4,178 2,564 6,742

Balance - September 30, 2020 30,985,669 $ 310 $ ( 11,230 ) $ 248,323 $ ( 93,220 ) $ ( 48,838 ) $ 95,345

Nine Months Ended September 30, 2019

Common Stock Treasury

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Loss Total CVG Stockholders’

Shares (in thousands) Amount

Shares Amount

Balance - December 31, 2018 (as restated) 30,512,843 $ 318 $ ( 10,245 ) $ 243,007 $ ( 76,013 ) $ ( 47,471 ) $ 109,596

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Balance - June 30, 2019 (as restated) 30,581,274 $ 319 $ ( 10,245 ) $ 244,486 $ ( 59,953 ) $ ( 45,722 ) $ 128,885

Share-based compensation expense — — — 721 — — 721

Total comprehensive income — — — — 7,180 ( 5,998 ) 1,182

Balance - September 30, 2019 (as restated) 30,581,274 $ 319 $ ( 10,245 ) $ 245,207 $ ( 52,773 ) $ ( 51,720 ) $ 130,788

The Company has adjusted certain prior period amounts for the restatement and immaterial corrections of error.

See Note 3 for details.

See Note 3, Restatement of Previously Issued Consolidated Financial Statements for details.

Shareholder Rights Plan

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The Rights will become exercisable only if a person or persons acquires beneficial ownership of 10 % or more of the Company's outstanding common stock, or 15 % in the case of certain passive investors.

In the event that the Rights become exercisable, each holder of Rights (other than the person or group triggering the rights plan) will be entitled to purchase, at the Right’s

exercise price, a number of shares of our common stock having a market value of twice the Right’s exercise price.

In the event that the Rights become exercisable, each holder of Rights (other than the person or group triggering the rights plan) will be entitled to purchase, at the Right’s exercise price, a number of shares of our common stock having a market value of twice the Right’s exercise price.

The rights plan will expire on June 24, 2021 unless earlier terminated or amended by our Board of Directors.

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A participant granted restricted stock generally has all of the rights of a stockholder, unless the Compensation Committee determines otherwise.

The following table summarizes information about outstanding restricted stock grants as of June 30, 2020:

The following table summarizes information about outstanding restricted stock grants as of September 30, 2020:

Grant Shares Granted

(in thousands) Unvested Shares

(in thousands) Nonvested Shares

(in thousands) Vesting Schedule Unearned

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June 2020 380 350 Fully vests as of June 12, 2022 $ 772.9 20

June 2020 185 185 Fully vests as of June 12, 2021 $ 427.1 11

June 2020 185 185 Fully vests on the sooner of June 15, 2021 or the 2021 Annual Meeting of Stockholders

We have elected to report forfeitures as they occur as opposed to estimating future forfeitures in our share-based compensation expense.

The following table summarizes information about the non-vested restricted stock grants for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The following table summarizes information about the restricted stock grants for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30, 2019

(in thousands) Weighted-

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Forfeited ( 204 ) 5.15 ( 21 ) 7.48

Nonvested at June 30 1,659 $ 3.46 748 $ 7.49

Nonvested at September 30 1,590 $ 3.46 746 $ 7.49

Performance Awards

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Grant Date Grant Amount Adjustments Forfeitures Adjusted Award Value at

June 30, 2020 Vesting Schedule Remaining Periods (in Months) to Vesting

September 30, 2020 Vesting Schedule Remaining Periods (in Months) to Vesting

November 2017 $ 1,584 $ ( 262 ) $ ( 1,022 ) $ 300 November 2020 1

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$ 5,282 $ ( 133 ) $ ( 2,959 ) $ 2,190

Compensation benefit of $ 0.5 million and compensation expense of $ 0.4 million was recognized for the three months ended June 30, 2020 and 2019, respectively.

Compensation benefit of $ 1.1 million and compensation expense of $ 0.7 million was recognized for the six months ended June 30, 2020 and 2019, respectively.

Unrecognized compensation expense was $ 1.1 million and $ 1.8 million as of June 30, 2020 and 2019, respectively.

Compensation expense of $ 0.3 million and $ 0.4 million was recognized for the three months ended September 30, 2020 and 2019, respectively.

Compensation benefit of $ 0.8 million and compensation expense of $ 1.1 million was recognized for the nine months ended September 30, 2020 and 2019, respectively.

Unrecognized compensation expense was $ 1.4 million and $ 1.6 million as of September 30, 2020 and 2019, respectively.

Accounts Receivable

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Account balances are charged off against the allowance when recovery is considered remote.

The Company's allowance for credit losses was $ 0.6 million as of June 30, 2020 and $ 0.4 million as of December 31, 2019.

The following is a rollforward of the allowances for credit losses related to accounts receivable for the six months ended June 30, 2020 by reportable segment:

Six Months Ended June 30, 2020

The Company's allowance for credit losses was $ 0.6 million as of September 30, 2020 and $ 0.4 million as of December 31, 2019.

The following is a rollforward of the allowances for credit losses related to accounts receivable for the nine months ended September 30, 2020 by reportable segment:

Nine Months Ended September 30, 2020

Electrical Systems Global

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Inventories consisted of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Raw materials $ 59,154 $ 57,742

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Goodwill represents the excess of acquisition purchase price over the fair value of net assets acquired.

During the first quarter 2020, as a result of the Company's market capitalization maintaining a value less than the carrying value of its equity, the Company determined it had an impairment indicator.

Accordingly, we calculated the estimated fair value of the goodwill reporting units within the Electrical Systems and Global Seating Segments by discounting the estimated operating cash flows of each reporting unit.

We then compared these estimated fair values to the net carrying values at March 31, 2020 and, as a result, recognized $ 27.1 million impairment of goodwill, which represented the full value.

During the first quarter of 2020, as a result of the Company’s market capitalization value being less than the carrying value of its equity for a duration of time, the Company determined it had an impairment indicator.

Accordingly, the Company estimated the fair value of each of the reporting units with goodwill by discounting the estimated cash flows of each reporting unit.

The estimated fair values of the reporting units were then compared to their net carrying values as of March 31, 2020 and, as a result, the Company recognized $ 27.1 million impairment of goodwill, which represented the carrying amount of goodwill prior to the impairment charge.

The impairment charge is presented in impairment expense in the Condensed Consolidated Statements of Operations.

The changes in the carrying amounts of goodwill are as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Balance - Beginning of the period $ 27,816 $ 7,576

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Our definite-lived intangible assets were comprised of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Amount Accumulated

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$ 36,497 $ ( 13,913 ) $ 22,584 $ 36,698 $ ( 11,440 ) $ 25,258

The aggregate intangible asset amortization expense was approximately $ 0.9 million for the three months ended June 30, 2020 and $ 0.3 million for the three months ended June 30, 2019.

The aggregate intangible asset amortization expense was approximately $ 1.7 million and $ 0.6 million for the six months ended June 30, 2020 and 2019.

The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended September 30, 2020 and $ 0.4 million for the three months ended September 30, 2019.

The aggregate intangible asset amortization expense was $ 2.6 million and $ 1.1 million for the nine months ended September 30, 2020 and 2019.

The estimated intangible asset amortization expense for the fiscal year ending December 31, 2020 and for each of the three succeeding years is expected to be $ 3.4 million and $ 2.8 million in 2024.

The Company leases office, warehouse and manufacturing space and certain equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees.

Our leases have remaining lease terms of one year to nine years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the leases within nine years .

Our leases have remaining lease terms of one year to eight years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the leases within nine years .

The components of lease expense are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Operating lease cost 1

$ 3,665 $ 1,858 $ 8,693 $ 5,305

Finance lease cost

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Total lease expense $ 4,708 $ 3,759 $ 12,015 $ 11,160

The Company recognized accelerated lease costs of $ 1.1 million during the three months ended September 30, 2020 related to the corporate research and development center.

Includes variable lease costs, which are not significant

Supplemental cash flow information related to leases is as follows:

Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 5,036 $ 3,245

Financing cash flows from finance leases $ 239 $ 222

Operating leases $ 7,806 $ 5,200

Financing leases $ 339 $ 331

Supplemental balance sheet information related to leases is as follows:

Balance Sheet Location June 30, 2020 December 31, 2019

Balance Sheet Location September 30, 2020 December 31, 2019

Operating Leases

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Finance leases 5.2 % 7.2 %

Note that all new Financing leases added during the six months ended June 30, 2020 were executed before the loan amendment discussed in Note 14, or May 11, 2020.

Note that all new Financing leases added during the nine months ended September 30, 2020 were executed before the loan amendment discussed in Note 14, Debt and Credit Facilities or May 11, 2020.

Right-of-use Assets Impairment.

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Present value of lease liabilities $ 34,009 $ 802 $ 34,811

1 Excluding the six months ended June 30, 2020.

Excluding the nine months ended September 30, 2020.

Commitments and Contingencies

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Our policy is to record provisions for estimated future customer warranty costs based on historical trends and for specific claims.

These amounts, as they relate to the period ended June 30, 2020 and 2019, are included within accrued liabilities and other in the accompanying Condensed Consolidated Balance Sheets.

The following represents a summary of the warranty provision for the six months ended June 30, 2020:

These amounts, as they relate to the period ended September 30, 2020 and 2019, are included within accrued liabilities and other in the accompanying Condensed Consolidated Balance Sheets.

The following represents a summary of the warranty provision for the nine months ended September 30, 2020:

Balance - December 31, 2019 $ 3,082

Provision for new warranty claims 524

Change in provision for preexisting warranty claims 143

Change in provision for pre-existing warranty claims 136

Deduction for payments made ( 1,559 )

Currency translation adjustment 12

Balance - June 30, 2020 $ 2,539

Leases - As disclosed in Note 12, we lease office, warehouse and manufacturing space and certain equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees.

As of June 30, 2020, our equipment leases did not provide for any material guarantee of a specified portion of residual values.

Balance - September 30, 2020 $ 2,195

Leases - As disclosed in Note 12, Leases, we lease office, warehouse and manufacturing space and certain equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees.

As of September 30, 2020, our equipment leases did not provide for any material guarantee of a specified portion of residual values.

Guarantees - Costs associated with guarantees are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated.

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where no amount within a range of estimates is more likely, the minimum is accrued.

As of June 30, 2020 and 2019, we had no such guarantees.

As of September 30, 2020 and 2019, we had no such guarantees.

Litigation - We are subject to various legal proceedings and claims arising in the ordinary course of business, including but not limited to workers' compensation claims, OSHA investigations, employment disputes, unfair labor practice charges, customer and supplier disputes, service provider disputes, product liability claims, intellectual property disputes, and environmental claims arising out of the conduct of our businesses and examinations by the Internal Revenue Service.

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however, such matters are subject to many uncertainties and the outcomes of individual matters are not predictable with any degree of assurance.

Debt Payments - As disclosed in Note 14, the TLS Agreement requires the Company to repay a fixed amount of principal on a quarterly basis, make mandatory prepayments of excess cash flows and voluntary prepayments that coincide with certain events.

Debt Payments - As disclosed in Note 14, Debt and Credit Facilities, the TLS Agreement requires the Company to repay a fixed amount of principal on a quarterly basis, make mandatory prepayments of excess cash flows and voluntary prepayments that coincide with certain events.

The following table provides future minimum principal payments due on long-term debt for the next five years.

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Debt consisted of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Term loan and security agreement 1, 2

1 unchanged sentence

Presented in the Condensed Consolidated Balance Sheets as current portion of long-term debt of $ 2.4 million, net of current prepaid debt financing costs of $ 1.4 million and current original issue discount of $ 0.6 million;

and long-term debt of $ 151.7 million, net of long-term prepaid debt financing costs of $ 2.4 million and long-term original issue discount $ 1.0 million as of June 30, 2020.

and long-term debt of $ 148.0 million, net of long-term prepaid debt financing costs of $ 2.1 million and long-term original issue discount $ 0.8 million as of September 30, 2020.

Presented in the Condensed Consolidated Balance Sheets as current portion of long-term debt of $ 3.3 million, net of current prepaid debt financing costs of $ 0.5 million and current original issue discount of $ 0.6 million;

1 unchanged sentence

Term Loan and Security Agreement

On April 12, 2017, the Company entered into a $ 175.0 million senior secured term loan credit facility, maturing on April 12, 2023, pursuant to a term loan and security agreement (the “TLS Agreement”), the terms of which are described in Note 9 in our 2019 Form 10-K.

The unamortized deferred financing fees of $ 3.8 million and original issue discount of $ 1.5 million are netted against the aggregate book value of the outstanding debt resulting in a balance of $ 154.2 million as of June 30, 2020 and are being amortized over the remaining life of the agreement.

The TLS Agreement contains customary restrictive, financial maintenance and reporting covenants that are described in Note 12 in our Q1 2020 Form 10-Q.

We were in compliance with the covenants as of June 30, 2020.

The unamortized deferred financing fees of $ 3.5 million and original issue discount of $ 1.4 million are netted against the aggregate book value of the outstanding debt resulting in a balance of $ 150.4 million as of September 30, 2020 and are being amortized over the remaining life of the agreement.

The TLS Agreement contains customary restrictive, financial maintenance and reporting covenants that are described below.

We were in compliance with the covenants as of September 30, 2020.

Revolving Credit Facility

On September 18, 2019, the Company entered into an amendment of the Third Amended and Restated Loan and Security Agreement (the “Revolving Loan Agreement”), dated as of April 12, 2017, the terms of which are described in Note 9 in our 2019 10-K and which governs the Company’s asset based revolving credit facility (the “Revolving Credit Facility”).

On September 18, 2019, the Company entered into an amendment of the Third Amended and Restated Loan and Security Agreement (the “Revolving Loan Agreement”), dated as of April 12, 2017, the terms of which are described in Note 9, Debt in our 2019 10-K and which governs the Company’s asset based revolving credit facility (the “Revolving Credit Facility”).

The Revolving Credit Facility matures on April 12, 2022.

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As amended, loans outstanding under the Revolving Loan Agreement accrue interest at a per annum rate based on (at the Company’s election) the base rate or the LIBOR rate plus a margin determined by reference to availability under the Revolving Credit Facility as follows, subject to a LIBOR floor of 1.00 %.

At June 30, 2020 we had 15.0 million of borrowings under the revolving credit facility, outstanding letters of credit were $ 1.6 million and we had availability of $ 43.2 million.

The unamortized deferred financing fees associated with the revolving credit facility were $ 0.5 million and $ 0.6 million as of June 30, 2020 and December 31, 2019, respectively, and are being amortized over the remaining life of the agreement.

At September 30, 2020 we did no t have borrowings under the revolving credit facility, outstanding letters of credit were $ 1.6 million and we had availability of $ 72.6 million.

The unamortized deferred financing fees associated with the revolving credit facility were $ 0.5 million and $ 0.6 million as of September 30, 2020 and December 31, 2019, respectively, and are being amortized over the remaining life of the agreement.

At December 31, 2019, we did no t have borrowings under the revolving credit facility;

and we had outstanding letters of credit of $ 1.6 million.

The Revolving Loan Agreement contains customary restrictive, financial maintenance and reporting covenants that are described in Note 9 in our 2019 Form 10-K and as noted below.

The Company was in compliance with all applicable covenants as of June 30, 2020.

The Revolving Loan Agreement contains customary restrictive, financial maintenance and reporting covenants that are described in Note 9, Debt in our 2019 Form 10-K and as described below.

The Company was in compliance with all applicable covenants as of September 30, 2020.

Term Loan and Revolving Credit Amendments

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In addition, amendments were made to certain restrictive covenants, the effect of which are to limit the Company's ability to incur additional debt, grant liens, repurchase the Company's stock and to issue dividends or make acquisitions.

As amended, through September 30, 2021, loans outstanding under the Term Loan Agreement accrue interest at a par annum rate based on (at the Company's election) the Base Rate plus 9.50 % or the LIBOR rate plus 10.50 %.

As amended, through September 30, 2021, loans outstanding under the Term Loan Agreement accrue interest at a per annum rate based on (at the Company's election) the Base Rate plus 9.50 % or the LIBOR rate plus 10.50 %.

The Company has the option of setting aside the incremental 4.5 % of interest accrual as Payment In Kind and adding to the outstanding principal balance.

Commencing October 1, 2021, loans under the Term Loan Agreement will accrue interest at a par annum rate based on (at the Company's election) the Base Rate plus 5.00 % or the LIBOR rate plus 6.00 %.

Commencing October 1, 2021, loans under the Term Loan Agreement will accrue interest at a per annum rate based on (at the Company's election) the Base Rate plus 5.00 % or the LIBOR rate plus 6.00 %.

The Term Loan Agreement, as amended, includes a hard call premium on repayments of the term loans outstanding thereunder of 2 % on amounts repaid through June 30, 2021 and 1 % on amounts repaid through June 30, 2022, subject to certain exceptions.

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The Revolving Loan Agreement, as amended, provides for an unused line fee of 0.35 % on undrawn amounts under the Revolving Credit Facility.

The Company determines its estimated annual effective tax rate at the end of each interim period based on estimated pre-tax income (loss) and facts known at that time.

The estimated annual effective tax rate is applied to year-to-date pre-tax income (loss) at the end of each interim period with certain adjustments.

The income tax effects of significant unusual or extraordinary items are reflected as discrete adjustments in the periods in which they occur.

The Company's estimated annual effective tax rate can change based on the mix of jurisdictional pre-tax income (loss) and other factors.

Accordingly, if the Company is unable to reliably estimate its annual effective tax rate the actual effective tax rate for the year-to-date period may be the best estimate of the annual effective tax rate.

For the three months and six months ended June 30, 2020, we computed our $ 3.1 million and $ 10.4 million income tax benefit, respectively, based on our year-to-date actual effective tax rate as we were unable to reliably estimate our annual effective tax rate due to the uncertainty of the impact of the COVID-19 pandemic on our full year income (loss).

On July 20, 2020, the U.S.

Treasury Department issued final regulations ("T.D.

9902") addressing the treatment of income earned by certain foreign corporations that are subject to a high rate of foreign income tax for purposes of the Global Intangible Low-Taxed Income ("GILTI") provisions of I.R.C.

section 951A.

Specifically, these regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their computation of GILTI on an elective basis ("High-Tax Exception").

Although the High-Tax Exception was effective July 23, 2020, taxpayers are allowed to apply the rule to the taxable years of their controlled foreign corporations beginning after December 31, 2017.

During the period ended September 30, 2020, the Company recorded a $ 2.0 million U.S.

federal income tax benefit for the impact of the High-Tax Exception which consisted of a $ 0.7 million tax benefit related to the current year-to-date period, a $ 0.5 million tax benefit related to the year ended December 31, 2019, and a $ 0.8 million tax benefit related to the year ended December 31, 2018.

We file federal income tax returns in the U.S.

3 unchanged sentences

In our major foreign jurisdictions including China, Czech Republic, Mexico and the United Kingdom, our income tax filings are generally subject to examination for three to five years.

As of June 30, 2020 and December 31, 2019, the Company had $ 0.9 million, in unrecognized tax benefits related to U.S.

As of September 30, 2020 and December 31, 2019, the Company had $ 1.0 million, in unrecognized tax benefits related to U.S.

federal, state and foreign jurisdictions which may impact our effective tax rate, if recognized.

1 unchanged sentence

We accrue penalties and interest related to unrecognized tax benefits through income tax expense.

Included in the unrecognized tax benefits is $ 0.4 million of interest and penalties as of June 30, 2020 and December 31, 2019.

Included in the unrecognized tax benefits is $ 0.4 million of interest and penalties as of September 30, 2020 and December 31, 2019.

We are not aware of any events that could occur within the next twelve months that would have a material impact on the amount of unrecognized tax benefits.

At June 30, 2020, due to cumulative losses and other factors, we continue to carry valuation allowances against certain deferred tax assets, primarily in the United Kingdom and Luxembourg.

At September 30, 2020, due to cumulative losses and other factors, we continue to carry valuation allowances against certain deferred tax assets, primarily in the United Kingdom and Luxembourg.

Additionally, we continue to carry valuation allowances related to certain state deferred tax assets that we believe are more likely than not to expire before they can be utilized.

4 unchanged sentences

Segment Reporting

As disclosed in Note 12 of our 2019 Form 10-K, following a strategic reorganization of our operations, our operating and reportable segments are Electrical Systems and Global Seating.

The following tables present segment revenues, gross profit, selling, general and administrative expenses, depreciation and amortization expense, impairment expense, operating income, capital expenditures and other items for the three and six months ended June 30, 2020 and 2019:

Three Months Ended June 30, 2020

As disclosed in Note 12, Segment Reporting and Geographic Locations of our 2019 Form 10-K, following a strategic reorganization of our operations, our operating and reportable segments are Electrical Systems and Global Seating.

Three Months Ended September 30, 2020

Systems Global

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Amortization Expense 729 129 — 858

Impairment Expense $ — $ — $ 150 $ 150

Operating Loss $ ( 6,165 ) $ 1,535 $ ( 5,885 ) $ ( 10,515 )

Operating Income $ 12,223 $ 4,772 $ ( 8,102 ) $ 8,893

Capital Expenditures, Depreciation Expense and Other Items:

4 unchanged sentences

Other Items include costs associated with restructuring activities, including employee severance and retention costs, and changes in contingent consideration.

Three Months Ended June 30, 2019 (as restated)

Three Months Ended September 30, 2019 (as restated)

Electrical Systems 1

Seating Corporate/ Other 1

Seating Corporate/

External Revenues $ 129,710 $ 95,689 $ — $ 225,399

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The Company has adjusted certain prior period amounts for the restatement and immaterial corrections of error.

See Note 3 for details.

Six Months Ended June 30, 2020

See Note 3, Restatement of Previously Issued Consolidated Financial Statements for details.

Nine Months Ended September 30, 2020

System Global

7 unchanged sentences

Impairment Expense 23,415 4,809 793 29,017

Operating Loss $ ( 23,314 ) $ 1,172 $ ( 14,896 ) $ ( 37,038 )

Operating Income $ ( 11,091 ) $ 5,945 $ ( 23,000 ) $ ( 28,146 )

Capital Expenditures, Depreciation Expense and Other Items:

4 unchanged sentences

Other Items include costs associated with restructuring activities, including employee severance and retention costs, changes in contingent consideration, building repairs, and costs to transfer equipment.

Six Months Ended June 30, 2019 (as restated)

Nine Months Ended September 30, 2019 (as restated)

Electrical Systems 1

Seating Corporate/ Other 1

Seating Corporate/

External Revenues $ 409,471 $ 302,282 $ — $ 711,753

10 unchanged sentences

The Company has adjusted certain prior period amounts for the restatement and immaterial corrections of error.

See Note 3 for details.

See Note 3 Restatement of Previously Issued Consolidated Financial Statements for details.

Derivative Contracts

7 unchanged sentences

The following table summarizes the notional amount of our open foreign exchange contracts:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Equivalent U.S.

5 unchanged sentences

The Interest Rate Swap Agreement has a rate floor of 2.07 % and an all-in rate of 8.07 % and a maturity date of April 30, 2022.

As of June 30, 2020, the Interest Rate Swap Agreement was not designated as a hedging instrument;

As of September 30, 2020, the Interest Rate Swap Agreement was not designated as a hedging instrument;

therefore, it is marked-to-market and the fair value of the agreement recorded in the Condensed Consolidated Balance Sheets with the offsetting gain or loss recorded in interest and other expense in the Condensed Consolidated Statements of Operations.

1 unchanged sentence

Derivative Asset

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Balance Sheet

1 unchanged sentence

Location Fair Value

Foreign exchange contracts Other non-current assets $ 21 Other non-current assets $ —

Foreign exchange contracts Other current assets $ 94 Other current assets $ 464

Interest rate swap agreement Other assets, net $ 1,308 Other assets, net $ 150

Interest rate swap agreement Accrued liabilities $ 1,127 Accrued liabilities $ 150

Derivative Liability

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Balance Sheet

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Derivative Equity

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Balance Sheet

3 unchanged sentences

The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Amortization of actuarial losses — — ( 1,850 ) ( 1,850 )

Ending balance, June 30, 2020 $ ( 26,917 ) $ ( 1,210 ) $ ( 23,275 ) $ ( 51,402 )

Ending balance, September 30, 2020 $ ( 24,289 ) $ ( 317 ) $ ( 24,232 ) $ ( 48,838 )

currency translation adjustment Derivative instruments Pension and

6 unchanged sentences

Amortization of actuarial losses — — ( 1,008 ) ( 1,008 )

Ending balance, June 30, 2019 $ ( 22,509 ) $ 818 $ ( 24,031 ) $ ( 45,722 )

Ending balance, September 30, 2019 $ ( 25,895 ) $ 303 $ ( 26,128 ) $ ( 51,720 )

The related tax effects allocated to each component of other comprehensive loss are as follows:

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020

Amount Tax Expense After Tax Amount Before Tax

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Total other comprehensive loss $ 2,616 $ ( 52 ) $ 2,564 $ ( 3,419 ) $ 531 $ ( 2,888 )

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Amount Tax Expense After Tax

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Pension and Other Post-Retirement Benefit Plans Non-U.S.

Three Months Ended June 30, Three Months Ended June 30,

Three Months Ended September 30, Three Months Ended September 30,

2020 2019 2020 2019

5 unchanged sentences

Pension and Other Post-Retirement Benefit Plans Non-U.S.

Six months ended June 30, Six months ended June 30,

Nine months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

6 unchanged sentences

We expect to contribute $ 1.0 million to our pension and other post-retirement benefit plans in 2020.

As of June 30, 2020, contributions totaling $ 0.5 million have been made.

As of September 30, 2020, contributions totaling $ 0.7 million have been made.

Business Combinations

10 unchanged sentences

Condensed Consolidated Balance Sheet as of September 30, 2019.

The total undiscounted contingent milestone payments is estimated at $ 10.8 million and the fair value is $ 8.3 million as of June 30, 2020.

The total undiscounted contingent milestone payments is estimated at $ 10.8 million and the fair value is $ 8.8 million as of September 30, 2020.

The Agreement contains customary indemnification provisions and provided for the establishment of an escrow fund of $ 3.0 million of the purchase price to secure indemnification claims by CVG FSE for an 18 -month period.

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This reflects an increase of $ 2.2 million from the initial valuation as of September 30, 2019.

A final adjustment to the purchase price was made in the three months ending March 31, 2020 reducing goodwill by $ 0.5 million.

A final adjustment to the purchase price was made in the three months ended March 31, 2020 reducing goodwill by $ 0.5 million.

The excess purchase price over net assets acquired is recorded as goodwill and was determined as follows:

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The valuation is final as of March 31, 2020.

The allocation of the fair value of the assets acquired and liabilities assumed, at acquisition and as adjusted for the final adjustment at June 30, 2020, were as follows:

The allocation of the fair value of the assets acquired and liabilities assumed, at acquisition and as adjusted for the final adjustment at September 30, 2020, were as follows:

Preliminary Purchase Price Allocation Adjustment Final Purchase Price Allocation

6 unchanged sentences

Total consideration $ 38,700 $ ( 537 ) $ 38,163

As disclosed in Note 11, the full value of the Company's goodwill was impaired during the three months ended March 31, 2020.

As disclosed in Note 11, Goodwill and Intangible Assets, the full value of the Company's goodwill was impaired during the three months ended March 31, 2020.

Cost Reduction and Manufacturing Capacity Rationalization

During 2019, the Company began implementing cost reduction and manufacturing capacity rationalization initiatives (the "Restructuring Initiatives") in response to declines in end market volumes.

Furthermore, the Company is implementing additional cost reduction initiatives and is considering further manufacturing capacity rationalization initiatives in response to the COVID-19 pandemic.

These actions were initiated in 2019 and 2020.

Furthermore, in 2020 the Company began implementing additional cost reduction initiatives and further manufacturing capacity rationalization initiatives in response to the COVID-19 pandemic ("the 2020 Initiatives").

These actions are expected to continue through 2020 and into 2021.

The Restructuring Initiatives consist primarily of headcount reductions in each segment and at corporate, as well as other costs associated with transfer of production and subsequent closure of facilities.

Total pre-tax costs associated with the Restructuring Initiatives are estimated to be $ 8 million to $ 12 million and lowered operating costs beginning in the first quarter of 2020.

The Restructuring Initiatives and 2020 Initiatives consist primarily of headcount reductions in each segment and at corporate, as well as other costs associated with transfer of production and subsequent closure of facilities, and expansion of production footprint to manufacture warehouse automation subsystems.

The changes in accrued restructuring balances are as follows:

4 unchanged sentences

Payments and Other Adjustments ( 3,422 ) ( 879 ) ( 1,057 ) ( 5,358 )

June 30, 2020 $ 831 $ 154 $ 772 $ 1,757

Of the $ 3.1 million costs incurred in the six months ended June 30, 2020, $ 2.8 million primarily related to headcount reductions and $ 0.3 million related to facility exit and other costs.

September 30, 2020 $ 544 $ 235 $ 359 $ 1,138

Of the $ 4.2 million costs incurred in the nine months ended September 30, 2020, $ 3.3 million primarily related to headcount reductions and $ 0.9 million related to facility exit and other costs.

Of the $ 4.2 million costs incurred, $ 3.2 million was recorded in cost of revenues and $ 1.0 million was recorded in selling, general and administrative expenses.

Subsequent Events

On July 15, 2020, the Company announced the permanent consolidation of its manufacturing and distribution facility in Piedmont, Alabama in connection with the Company's cost reduction plan previously announced on May 18, 2020.

The Piedmont facility primarily serves the commercial vehicle aftermarket, is more than 150,000 square feet in size, and employs approximately 49 employees.

The work performed at the Piedmont facility will be transferred to the Company's manufacturing and distribution facility in Vonore, Tennessee following the closure, which is expected to be substantially completed in the fourth quarter of 2020.

Vonore will become the new headquarters for CVG's Commercial Vehicle Aftermarket business.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements