What changed in this filing

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Item 1. Financial Statements

2021-05-04 compared with 2020-11-09 · 450 added, 829 removed, 170 unchanged (88% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

(In thousands, except per share amounts)

Revenues $ 245,122 $ 187,105

Cost of revenues 214,001 166,802

Gross profit 31,121 20,303

Selling, general and administrative expenses 15,718 17,959

Goodwill and other impairment — 28,867

Operating income (loss) 15,403 ( 26,523 )

Other (income) expense ( 656 ) 741

Interest expense 5,041 4,624

Income (loss) before provision for income taxes 11,018 ( 31,888 )

Provision (benefit) for income taxes 2,528 ( 7,294 )

Net income (loss) $ 8,490 $ ( 24,594 )

Earnings (loss) per Common Share:

Basic $ 0.27 $ ( 0.80 )

Diluted $ 0.26 $ ( 0.80 )

Weighted average shares outstanding:

Basic 31,264 30,806

Diluted 32,307 30,806

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

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

(In thousands)

Net income (loss) $ 8,490 $ ( 24,594 )

Other comprehensive income (loss):

Foreign currency exchange translation adjustments ( 2,072 ) ( 4,805 )

Minimum pension liability, net of tax 286 ( 447 )

Derivative instrument, net of tax ( 426 ) ( 2,778 )

Other comprehensive loss ( 2,212 ) ( 8,030 )

Comprehensive income (loss) $ 6,278 $ ( 32,624 )

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

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In thousands, except per share amounts)

6 unchanged sentences

Total current assets 355,223 310,537

Property, plant and equipment, net of accumulated depreciation of $ 156,780 and $ 154,939 , respectively

64,556 73,686

Operating lease right-of-use assets, net 31,107 34,960

Goodwill — 27,816

Intangible assets, net of accumulated amortization of $ 13,913 and $ 11,440 , respectively

22,584 25,258

Property, plant and equipment, net 59,882 62,776

Intangible assets, net 20,926 21,804

Deferred income taxes 24,603 25,981

4 unchanged sentences

Accounts payable $ 135,453 $ 112,402

Current operating lease liabilities 8,874 7,620

Accrued liabilities and other 51,681 50,056

2 unchanged sentences

Long-term debt 152,035 144,147

Operating lease liabilities 25,135 29,414

Pension and other post-retirement benefits 14,668 15,296

7 unchanged sentences

Treasury stock, at cost:

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

1,567,654 and 1,560,623 shares, respectively

( 11,893 ) ( 11,893 )

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(as restated) 2020 2019

(as restated)

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

(In thousands, except per share amounts)

Revenues $ 187,697 $ 225,399 $ 501,698 $ 711,753

Cost of Revenues 163,538 195,955 450,761 616,784

Gross Profit 24,159 29,444 50,937 94,969

Selling, General and Administrative Expenses 14,408 17,531 47,491 48,978

Amortization Expense 858 437 2,575 1,080

Impairment Expense — — 29,017 —

Operating (Loss) Income 8,893 11,476 ( 28,146 ) 44,911

Interest and Other Expense 5,674 3,800 16,142 15,686

(Loss) Income Before Provision for Income Taxes 3,219 7,676 ( 44,288 ) 29,225

(Benefit) Provision for Income Taxes ( 959 ) 496 ( 11,375 ) 5,913

Net (Loss) Income $ 4,178 $ 7,180 $ ( 32,913 ) $ 23,312

(Loss) Earnings per Common Share:

Basic $ 0.13 $ 0.23 $ ( 1.07 ) $ 0.76

Diluted $ 0.13 $ 0.23 $ ( 1.07 ) $ 0.76

Weighted Average Shares Outstanding:

Basic 30,986 30,581 30,894 30,547

Diluted 31,617 30,852 30,894 30,829

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

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended

September 30, Nine Months Ended

September 30,

(as restated) 2020 2019

(as restated)

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

(In thousands) (In thousands)

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

Other comprehensive (loss) income:

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

Minimum pension liability, net of tax ( 957 ) ( 2,095 ) ( 1,850 ) ( 1,005 )

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

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.

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Treasury

Stock Additional Paid In Capital Retained Deficit Accumulated

Loss Total CVG Stockholders’

Shares Amount

(In thousands, except per share amounts)

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

Share-based compensation expense 184,414 ( 13 ) — 2,471 — — 2,458

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

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.

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

(as restated)

(Unaudited) (Unaudited)

Three Months Ended March 31,

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (Loss) Income $ ( 32,913 ) $ 23,312

Net income (loss) $ 8,490 $ ( 24,594 )

Adjustments to reconcile net income to cash flows from operating activities:

1 unchanged sentence

Impairment expense — 28,867

Non-cash amortization of debt financing costs 1,365 1,030

Shared-based compensation expense 2,471 2,200

Noncash amortization of debt financing costs 538 340

Payment in kind interest expense 1,705 —

Shared-based compensation expense 965 862

Deferred income taxes 1,603 ( 7,990 )

Non-cash loss on derivative contracts 2,038 2,092

Non-cash loss (income) on derivative contracts ( 212 ) 918

Change in other operating items:

4 unchanged sentences

Other operating activities, net 1,213 7,403

Net cash provided by operating activities 30,772 28,508

Net cash provided by (used in) operating activities ( 15,371 ) 10,345

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from disposal/sale of property, plant and equipment 27 4

Payments for acquisition of business — ( 34,000 )

Net cash used in investing activities ( 1,709 ) ( 3,468 )

1 unchanged sentence

Borrowing of revolving credit facility 6,800 15,000

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

Loan amendment costs ( 2,579 ) —

Repayment of term loan ( 1,094 ) ( 1,094 )

Other financing activities ( 232 ) ( 62 )

Net cash provided by (used in) financing activities ( 11,199 ) ( 6,719 )

Effect of Foreign Currency Exchange Rate Changes on Cash ( 31 ) ( 1,276 )

Net cash provided by financing activities 5,474 13,844

EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH ( 761 ) ( 2,177 )

NET INCREASE (DECREASE) IN CASH ( 12,367 ) 18,544

1 unchanged sentence

End of period $ 38,136 $ 58,055

Supplemental Cash Flow Information:

Cash paid for interest $ 9,317 $ 10,212

Cash paid for income taxes, net $ 906 $ 5,530

Unpaid purchases of property and equipment included in accounts payable $ 108 $ 155

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

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Treasury

Stock Additional Paid In Capital Retained Deficit Accumulated

Loss Total CVG Stockholders’

Shares Amount

(In thousands, except per share amounts)

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

Share-based compensation expense 46,014 — — 862 — — 862

Total comprehensive income — — — — ( 24,594 ) ( 8,030 ) ( 32,624 )

Balance - March 31, 2020 30,847,269 $ 323 $ ( 11,230 ) $ 246,714 $ ( 84,901 ) $ ( 53,980 ) $ 96,926

Balance - December 31, 2020 31,249,811 $ 313 $ ( 11,893 ) $ 249,312 $ ( 97,356 ) $ ( 45,006 ) $ 95,370

Share-based compensation expense 132,034 2 — 965 — — 967

Total comprehensive income (loss) — — — — 8,490 ( 2,212 ) 6,278

Balance - March 31, 2021 31,381,845 $ 315 $ ( 11,893 ) $ 250,277 $ ( 88,866 ) $ ( 47,218 ) $ 102,615

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

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Commercial Vehicle Group, Inc.

(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 .

and its subsidiaries is a global provider of components and assemblies into two primary end markets – the global vehicle market and the U.S.

technology integrator markets.

The company provides components and assemblies to global vehicle companies to build original equipment and provides aftermarket products for fleet owners.

The company also provides mechanical assemblies to warehouse automation integrators and to U.S.

military technology integrators.

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, Belgium, Czech Republic, Ukraine, Thailand, India and Australia.

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

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”).

The information furnished in the unaudited condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented.

Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) have been condensed or omitted pursuant to such rules and regulations.

We believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with our fiscal 2019 consolidated financial statements and the notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K ("2019 Form 10-K") as filed with the SEC on March 16, 2020.

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

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.

Each of these segments consists of a number of manufacturing facilities.

Certain of our facilities manufacture and sell products through both of our segments.

Each manufacturing facility that sells products through both segments is reflected in the financial results of the segment that has the greatest amount of revenues from that manufacturing facility.

Our segments are more specifically described below.

The Electrical Systems Segment manufactures and sells the following products:

• 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;

• 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;

• Warehouse automation subsystems.

The Global Seating Segment manufactures and sells the following products:

• Seats and seating systems ("Seats") primarily to the MD/HD Truck, construction, agriculture and mining markets in North America, Asia-Pacific and Europe;

• Office seating in Europe and Asia-Pacific;

• Aftermarket seats and components in North America, Europe and Asia-Pacific.

Corporate expenses consist of certain overhead and shared costs that are not directly attributable to the operations of a segment.

For purposes of business segment performance measurement, some of these costs that are for the benefit of the operations are allocated based on a combination of methodologies.

The costs that are not allocated to a segment are considered stewardship costs and remain at corporate in our segment reporting.

The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America and the rules and regulations of the Securities and Exchange Commission and include the accounts of the Company and its subsidiaries.

Except as disclosed within these condensed notes to unaudited quarterly consolidated financial statements, the adjustments made were of a normal, recurring nature.

Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted.

The preparation of financial statements in conformity with GAAP in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.

These estimates and assumptions are based on management's best estimates and judgment.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.

We adjust such estimates and assumptions when facts and circumstances dictate.

As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

These condensed notes to unaudited quarterly consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K"), which includes a complete set of footnote disclosures, including the Company's significant accounting policies.

Recently Issued Accounting Pronouncements

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

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

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

The ASU facilitates the effects of Reference Rate Reform on financial reporting and provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022.

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

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

In March 2020, the FASB issued ASU No.

2020-03, "Codification Improvements to Financial Instruments".

The ASU clarifies disclosure guidance for fair value options, adds clarifications to the subsequent measurement of fair value, clarifies disclosure for depository and lending institutions, clarifies the line-of-credit or revolving-debt arrangements guidance, and the interaction of Financial Instruments - Credit Losses (Topic 326) with Leases (Topic 842) and Transfers and Servicing-Sales of Financial Assets (Subtopic 860-20).

In accordance with ASU 2020-03, the Company adopted the guidance as of March 31, 2020.

We were not materially impacted by the implementation of this pronouncement.

In January 2017, the FASB issued ASU No.

2017-04, "Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment".

ASU 2017-04 provides simplification for the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

Annual impairment tests should be completed by comparing the fair value of a reporting unit to its carrying amount and impairment should not exceed the goodwill allocated to the reporting unit.

Additionally, this ASU eliminated the requirement to assess reporting units with zero or negative carrying amounts.

The Company implemented ASU 2017-04 as of January 1, 2020 with no material impact.

Subsequent to such implementation, we fully impaired our goodwill.

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

In June 2016, the FASB issued ASU No.

2016-13, "Financial Instruments - Credit Losses (Topic 326)".

The ASU requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected.

The FASB subsequently issued ASU No.

2018-19, "Codification Improvements to Topic 326:

Financial Instruments - Credit Losses", in November 2018 which provided further guidance on assessment of receivables for operating leases.

2019-04, "Codification Improvements to Topic 326, Topic 815 and Topic 825" and ASU No.

2019-05, "Targeted Transition Relief", that were issued in April and May of 2019 do not materially impact the Company.

In November 2019, the FASB issued ASU No.

2019-11, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses", which further clarified and improved the Codification to make it easier to understand and apply.

The Company implemented ASU 2016-13, ASU 2018-19 and ASU 2019-11 as of January 1, 2020 and the ASUs did not have a material impact on the Company's consolidated financial statements.

Restatement of Previously Issued Consolidated Financial Statements

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.

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 September 30, 2019.

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

The restatement adjustments and error correction and their impact on previously reported consolidated financial statements are described below.

(a) Understatement of cost of revenues and impacted balance sheet accounts - Corrections for the understatement of cost of revenues by improperly capitalizing certain manufacturing expenses.

Balance sheet accounts adjusted as a result of the improper capitalization of expenses include other current assets, accounts receivable, net of allowances and construction in progress.

(b) Property, plant and equipment, net - We recorded an adjustment for a previously identified property, plant and equipment, net error unrelated to the understatement of cost of revenues and related balance sheet accounts misstatements.

This PPE was no longer in service as of the year ended December 31, 2016.

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Revenues $ 225,399 $ — $ 225,399 $ 711,753 $ — $ 711,753

Cost of Revenues 194,195 1,760 195,955 612,206 4,578 616,784 a, b

Gross profit 31,204 ( 1,760 ) 29,444 99,547 ( 4,578 ) 94,969

Selling, General and Administrative Expenses 17,531 — 17,531 48,978 — 48,978

Amortization Expense 437 — 437 1,080 — 1,080

Operating Income 13,236 ( 1,760 ) 11,476 49,489 ( 4,578 ) 44,911

Interest and Other Expense 3,800 — 3,800 15,686 — 15,686

Income before provision for income taxes 9,436 ( 1,760 ) 7,676 33,803 ( 4,578 ) 29,225 a, b

Provision for Income Taxes 916 ( 420 ) 496 6,976 ( 1,063 ) 5,913 a, b

Net Income $ 8,520 $ ( 1,340 ) $ 7,180 $ 26,827 $ ( 3,515 ) $ 23,312

Income per share attributable to common stockholders:

Basic $ 0.28 $ ( 0.04 ) $ 0.23 $ 0.88 $ ( 0.12 ) $ 0.76

Diluted $ 0.28 $ ( 0.04 ) $ 0.23 $ 0.87 $ ( 0.11 ) $ 0.76

Weighted average common shares outstanding:

Basic 30,581 30,581 30,581 30,547 30,547 30,547

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

For the three months ended September 30, 2019

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

As a result of the understatement of cost of revenues, the correction resulted in a $ 1.7 million increase in cost of revenues;

a $ 0.4 million decrease in provision for income taxes;

and a $ 1.3 million decrease in net income.

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

The immaterial error correction of property, plant and equipment, net, resulted in an immaterial decrease in cost of revenues;

an immaterial increase in provision for income taxes;

and an immaterial increase in net income.

For the nine months ended September 30, 2019

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

As a result of the understatement of cost of revenues, the correction resulted in a $ 4.7 million increase in cost of revenues;

a $ 1.1 million decrease in provision for income taxes;

and a $ 3.6 million decrease in net income.

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

The immaterial error correction of property, plant and equipment, net, resulted in a $ 0.1 million decrease in cost of revenues;

an immaterial increase in provision for income taxes;

and a $ 0.1 million increase in net income.

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Net Income $ 8,520 $ ( 1,340 ) $ 7,180 $ 26,827 $ ( 3,515 ) $ 23,312 a, b

Other comprehensive income (loss):

Foreign currency translation adjustments ( 3,388 ) — ( 3,388 ) ( 3,051 ) — ( 3,051 )

Minimum pension liability, net of tax ( 2,095 ) — ( 2,095 ) ( 1,005 ) — ( 1,005 )

Derivative instrument ( 515 ) — ( 515 ) ( 193 ) — ( 193 )

Other comprehensive income ( 5,998 ) — ( 5,998 ) ( 4,249 ) — ( 4,249 )

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

For the three months ended September 30, 2019

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

As a result of the understatement of cost of revenues, the correction resulted in a $ 1.3 million decrease in net income.

Refer to descriptions of the adjustments and their impacts to net income above.

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

The immaterial error correction of property, plant and equipment, net, resulted in an immaterial increase in net income.

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

For the nine months ended September 30, 2019

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

As a result of the understatement of cost of revenues, the correction resulted in a $ 3.6 million decrease in net income.

Refer to descriptions of the adjustments and their impacts to net income above.

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

The immaterial error correction of property, plant and equipment, net, resulted in a $ 0.1 million increase in net income.

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

COMMERCIAL VEHICLE GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2019

As Previously Reported Restatement Adjustments As Restated Restatement References

Cash Flows from Operating Activities:

Net Income $ 26,827 $ ( 3,515 ) $ 23,312 a, b

Adjustments to reconcile net income to cash flows from operating activities:

Depreciation and amortization 10,976 ( 111 ) 10,865 b

Non-cash amortization of debt financing costs 1,030 — 1,030

Shared-based compensation expense 2,200 — 2,200

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

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

Change in other operating items:

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

Inventories 1,191 — 1,191

Prepaid expenses ( 7,458 ) 4,851 ( 2,607 ) a

Accounts payable 3,272 — 3,272

Other operating activities, net 5,767 — 5,767

Net cash provided by operating activities 29,035 ( 527 ) 28,508

Cash Flows from Investing Activities:

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 )

Other financing activities ( 381 ) — ( 381 )

Net cash used in financing activities ( 6,719 ) — ( 6,719 )

Effect of Foreign Currency Exchange Rate Changes on Cash ( 1,276 ) — ( 1,276 )

Net Decrease in Cash ( 32,210 ) — ( 32,210 )

Beginning of period 70,913 — 70,913

End of period $ 38,703 $ — $ 38,703

Supplemental Cash Flow Information:

Cash paid for interest $ 10,212 $ — $ 10,212

Cash paid for income taxes, net $ 5,530 $ — $ 5,530

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

For the nine months ended September 30, 2019

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

As a result of the understatement of cost of revenues, the correction resulted in a $ 3.6 million decrease in net income;

a $ 1.1 million decrease in deferred income tax;

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.

The immaterial error correction of property, plant and equipment, net, resulted in a $ 0.1 million increase in net income;

a $ 0.1 million decrease in depreciation expense;

and an immaterial increase in deferred income tax.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting".

The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

Also, in January 2021, the FASB issued ASU No.

2021-01 "Reference Rate Reform (Topic 848):

Scope", to clarify that certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

ASU 2020-04 and ASU 2021-01 are effective beginning on March 12, 2020 and the amendments will be applied prospectively through December 31, 2022.

We are evaluating the effect these ASUs will have on the Company.

Accounting Pronouncements Implemented in the three months ended March 31, 2021

In December 2019, the FASB issued ASU No.

2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes".

The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and otherwise clarifies and amends existing guidance.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020.

The Company implemented ASU 2019-12 as of January 1, 2021 and the ASU did not have a material impact on the Company's condensed consolidated financial statements and related disclosures.

In October 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-10, "Codification Improvements".

The ASU updates various codification topics by clarifying and improving disclosure requirements to align with the SEC's regulations.

The Company implemented ASU 2020-10 as of January 1, 2021 and the ASU did not have a material impact on the Company's condensed consolidated financial statements and related disclosures.

Revenue Recognition

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

and cab structures and sleeper boxes;

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.

Contractual Arrangements

Revenue is measured based on terms and conditions specified in contracts or purchase orders with customers.

We have long-term contracts with some customers that govern overall terms and conditions which are accompanied by purchase orders that define specific order quantities and/or price.

We have many customers with which we conduct business for which the terms and conditions are outlined in purchase orders without a long-term contract.

We generally do not have customer contracts with minimum order quantity requirements.

Amount and Timing of Revenue Recognition

The transaction price is based on the consideration to which the Company will be entitled in exchange for transferring control of a product to the customer.

This is defined in a purchase order or in a separate pricing arrangement and represents the stand-alone selling price.

Our payment terms vary by customer.

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.

We recognize revenue at the point in time when we satisfy a performance obligation by transferring control of a product to a customer, usually at a designated shipping point and in accordance with customer specifications.

Estimates are made for variable consideration resulting from quality, delivery, discounts or other issues affecting the value of revenue and accounts receivable.

This amount is estimated based on historical trends and current market conditions, and only amounts deemed collectible are recognized as revenues.

Other Matters

Shipping and handling costs billed to customers are recorded in revenues and costs associated with outbound freight are generally accounted for as a fulfillment cost and are included in cost of revenues.

We generally do not provide for extended warranties or material customer incentives.

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

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 had outstanding customer accounts receivable, net of allowances, of $ 186.0 million as of March 31, 2021 and $ 151.1 million as of December 31, 2020.

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

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.

Revenue Disaggregation - The following is the composition, by product category, of our revenues:

Three Months Ended March 31, 2021

Electrical Systems Global Seating Elimination/

Seats $ 2,442 $ 86,992 $ ( 7,288 ) $ 82,146

Electrical wire harnesses, panels and assemblies 90,852 3,880 ( 375 ) 94,357

Trim 37,386 72 ( 421 ) 37,037

Cab structures and sleeper boxes 20,657 — — 20,657

Mirrors, wipers and controls 10,903 150 ( 128 ) 10,925

Total $ 162,240 $ 91,094 $ ( 8,212 ) $ 245,122

Three Months Ended March 31, 2020

Electrical Systems Global Seating Elimination/

Seats $ 367 $ 72,864 $ ( 62 ) $ 73,169

Electrical wire harnesses, panels and assemblies 54,276 408 ( 56 ) 54,628

Trim 30,509 1,919 ( 516 ) 31,912

Cab structures and sleeper boxes 14,700 — — 14,700

Mirrors, wipers and controls 12,246 790 ( 340 ) 12,696

Total $ 112,098 $ 75,981 $ ( 974 ) $ 187,105

Debt consisted of the following:

March 31, 2021 December 31, 2020

Term loan and security agreement due 2023 $ 151,561 $ 150,950

Revolving credit facility due 2026 6,800 —

Unamortized discount and issuance costs ( 3,896 ) ( 4,374 )

$ 154,465 $ 146,576

current portion, net of unamortized discount and issuance costs of $ 1.9 million and $ 1.9 million, respectively

( 2,430 ) ( 2,429 )

Total long-term debt, net of current portion $ 152,035 $ 144,147

On April 30, 2021, the Company refinanced its outstanding debt.

See Note 18, Subsequent Event in this Form 10-Q.

Term Loan and Security Agreement

On April 12, 2017, the Company entered into a $ 175.0 million senior secured term loan credit facility (the "Term Loan 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 3, Debt in our 2020 Form 10-K.

The TLS Agreement contains customary restrictive, financial maintenance and reporting covenants that are described in Note 3, Debt in our 2020 Form 10-K.

We were in compliance with the covenants as of March 31, 2021.

Revolving Credit Facility

On September 18, 2019, the Company entered into an amendment of the Third Amended and Restated Loan and Security Agreement (the “Third ARLS Agreement”), dated as of April 12, 2017, the terms of which are described in Note 3, Debt in our 2020 10-K and which governs the Company’s asset based revolving credit facility (the “Revolving Credit Facility”).

The Amendment amends the terms of the Revolving Credit Facility to entitle the Company and the other named borrowers thereunder (subject to the terms and conditions described therein) to request loans and other financial accommodations in an amount equal to the lesser of $ 90.0 million and a borrowing base composed of accounts receivable and inventory (such facility, the “Tranche A Facility”).

Of the $ 90.0 million, $ 7.0 million shall be available as a first-in, last-out facility (the “Tranche B Facility”) at a 100 basis points premium, as reflected in the table below.

On May 11, 2020, the Company and certain of its subsidiaries, as guarantors or co-borrowers, as applicable, entered into an Amendment No.

2 (the “Revolving Amendment”), which amends the terms of the Third ARLS Agreement to align certain of the restrictive covenants with the restrictive covenants set forth in the TLS Agreement, as amended.

At March 31, 2021 we had $ 6.8 million of borrowings under the revolving credit facility, outstanding letters of credit were $ 1.4 million and we had availability of $ 81.9 million.

The unamortized deferred financing fees associated with the revolving credit facility were $ 0.5 million and $ 0.4 million as of March 31, 2021 and December 31, 2020, respectively, are being amortized over the remaining life of the agreement.

At December 31, 2020, we did no t have borrowings under the revolving credit facility;

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

The Third ARLS Agreement contains customary restrictive, financial maintenance and reporting covenants that are described in Note 3, Debt in our 2020 Form 10-K and as described below.

The Company was in compliance with all applicable covenants as of March 31, 2021.

Revolving Credit Amendment

On March 1, 2021, the Commercial Vehicle Group, Inc.

and certain of its subsidiaries entered into Amendment No.

3 (the “Revolving Amendment”), which amends the terms of the Third ARLS Agreement, among other things, to extend the maturity date of the Revolving Credit Facility to March 1, 2026 and to remove the condition that the first $ 7.0 million of the $ 90.0 million Revolver Commitments are available as a first-in, last-out facility.

The Third ARLS Agreement, as amended, also allows the Company to increase the size of the Revolving Credit Facility by up to $ 50.0 million with the consent of Lenders providing the increase in the Revolving Credit Facility.

The Third ARLS Agreement, provides that loans outstanding under the Revolving Credit Facility 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 0.25 %:

Level Average Daily Availability Base

III ≥ $ 30,000,000

0.50 % 1.50 %

II > $ 15,000,000 but < $ 30,000,000

0.75 % 1.75 %

I ≤ $ 15,000,000

1.00 % 2.00 %

The Third ARLS Agreement, provides for an unused line fee of 0.20 % on undrawn amounts under the Revolving Credit Facility if Revolver Usage is equal to or greater than 50% of the Revolver Commitment and a fee of 0.25 % if Revolver Usage is less than 50% of the Revolver Commitment.

The Third ARLS Agreement, requires maintenance of a minimum fixed charge coverage ratio if availability under the Revolving Credit Facility is less than the greater of (i) $ 5.0 million, and (ii) 10 % of the lesser of the Revolver Commitment and the Borrowing Base.

The minimum fixed charge coverage ratio must be maintained until availability under the Revolving Credit Facility has been greater than or equal to the greater of (i) $ 5.0 million, and (ii) 10 % of the lesser of the Revolver Commitment and the Borrowing Base for 60 consecutive days.

Cash Paid for Interest

For the three months ended March 31, 2021 and 2020, cash payments for interest were $ 3.0 million and $ 3.2 million, respectively.

Goodwill and Intangible Assets

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

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 Goodwill and other impairment in the Condensed Consolidated Statements of Operations.

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

Electrical Systems Global Seating Total

Balance - December 31, 2019 $ 22,802 $ 5,014 $ 27,816

Finalization of FSE Purchase Accounting ( 537 ) — ( 537 )

Goodwill impairment ( 22,265 ) ( 4,809 ) ( 27,074 )

Currency translation adjustment — ( 205 ) ( 205 )

Balance - December 31, 2020 $ — $ — $ —

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

March 31, 2021 December 31, 2020

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

Trademarks/tradenames 22 years $ 11,622 $ ( 4,773 ) $ 6,849 $ 11,634 $ ( 4,681 ) $ 6,953

Customer relationships 15 years 14,857 ( 7,780 ) 7,077 14,881 ( 7,536 ) 7,345

Technical know-how 5 years 9,790 ( 3,018 ) 6,772 9,790 ( 2,529 ) 7,261

Covenant not to compete 5 years 330 ( 102 ) 228 330 ( 85 ) 245

$ 36,599 $ ( 15,673 ) $ 20,926 $ 36,635 $ ( 14,831 ) $ 21,804

The aggregate intangible asset amortization expense was $ 0.9 million for the three months ended March 31, 2021 and 2020 respectively.

Fair Value Measurement

7 unchanged sentences

The carrying value of these instruments approximates fair value as a result of the short duration of such instruments or due to the variability of the interest cost associated with such instruments.

Recurring Measurements

Foreign Currency Forward Exchange Contracts.

1 unchanged sentence

Based on the utilization of these inputs, the derivative assets and liabilities are classified as Level 2.

To manage our risk for transactions denominated in Mexican Pesos, we have entered into forward exchange contracts that are designated as cash flow hedge instruments, which are recorded in the Condensed Consolidated Balance Sheets at fair value.

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, Derivative Contracts for additional disclosures.

To manage our risk for transactions denominated in Mexican Pesos and in Ukrainian Hryvnia, we have entered into forward exchange contracts that are designated as cash flow hedge instruments, which are recorded in the Condensed Consolidated

Balance Sheets at fair value.

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

As of March 31, 2021, the hedge contract for transactions denominated in Ukrainian Hryvnia was not designated as a hedging instrument;

therefore, it is marked-to-market and the fair value of the agreement is recorded in the Condensed Consolidated Balance Sheets with the offsetting gains and losses recognized in other (income) expense and recognized in cost of revenues in the period the related hedge transactions are settled in the Condensed Consolidated Statements of Operations.

Interest Rate Swap Agreement.

2 unchanged sentences

The Interest Rate Swap Agreement is intended to mitigate the impact of rising interest rates on the Company and covers $ 80 million of outstanding debt under the senior secured term loan facility.

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, Derivative Contracts for additional disclosures.

As of March 31, 2021, 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.

Contingent Consideration.

As a result of the acquisition of the First Source Electronics, LLC (“FSE”) on September 17, 2019, the Company agreed to pay up to $ 10.8 million in contingent milestone payments (“Contingent consideration”).

The Contingent consideration is payable based on achieving certain earnings before interest, taxes, depreciation and amortization ("EBITDA") thresholds over the periods from (a) September 18, 2019 through September 17, 2020, (b) September 18, 2019 through March 17, 2021, (c) September 18, 2019 through September 17, 2022 and (d) March 18, 2021 through September 17, 2022.

The payment amount will be determined on a sliding scale for reaching between 90 % and 100 % of the respective EBITDA targets.

The fair value for the milestone payments is based on a Monte Carlo simulation utilizing forecasted EBITDA through September 17, 2022.

The estimate of $ 4.7 million was recorded within other long-term liabilities in the Condensed Consolidated Balance Sheet as of September 30, 2019.

The total undiscounted Contingent consideration payment is estimated at $ 10.8 million and the fair value is $ 9.0 million as of March 31, 2021, and is presented in the Condensed Consolidated Balance Sheets in accrued liabilities and other long term liabilities.

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

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

Derivative assets Foreign exchange contract 1

$ 115 $ — $ 115 $ — $ 464 $ — $ 464 $ —

Foreign exchange contract $ 1,510 $ — $ 1,510 $ — $ 1,882 $ — $ 1,882 $ —

Interest rate swap agreement $ 756 $ — $ 756 $ — $ 936 $ — $ 936 $ —

$ 1,127 $ — $ 1,127 $ — $ 150 $ — $ 150 $ —

Derivative liabilities Foreign exchange contract 3

$ 530 $ — $ 530 $ — $ — $ — $ — $ —

Interest rate swap agreement $ 1,687 $ — $ 1,687 $ — $ 2,080 $ — $ 2,080 $ —

$ 2,485 $ — $ 2,485 $ — $ 995 $ — $ 995 $ —

Earnout liability Contingent consideration 4

$ 8,800 $ — $ — $ 8,800 $ 4,700 $ — $ — $ 4,700

Derivative equity Foreign exchange contract 5

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

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.

Presented in the Condensed Consolidated Balance Sheets in accrued liabilities and other long term liabilities and based on a Monte Carlo valuation model.

Presented in the Condensed Consolidated Balance Sheets in accumulated other comprehensive income and based on observable market transactions of spot and forward rates.

Contingent consideration $ 9,048 $ — $ — $ 9,048 $ 8,800 $ — $ — $ 8,800

Details of the changes in value for the Contingent consideration that is measured using significant unobservable inputs (Level 3) are as follows:

Contingent consideration liability balance at December 31, 2020

Change in fair value 248

Contingent consideration liability balance at March 31, 2021

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

March 31, 2021 December 31, 2020

Equivalent U.S.

Fair Value U.S.

Equivalent U.S.

Commitments to buy or sell currencies $ 18,698 $ 18,955 $ 14,675 $ 16,558

The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets:

Derivative Asset

Balance Sheet

Location Fair Value

March 31, 2021 December 31, 2020

Foreign exchange contracts Other current assets $ 1,510 $ 1,882

Interest rate swap agreement Accrued liabilities and other $ 756 $ 936

Derivative Liability

Balance Sheet

Location Fair Value

March 31, 2021 December 31, 2020

Interest rate swap agreement Accrued liabilities and other $ 1,687 $ 2,080

Derivative Equity

Balance Sheet

Location Fair Value

March 31, 2021 December 31, 2020

Foreign exchange contracts Accumulated other comprehensive loss $ 1,015 $ 1,441

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

Three Months Ended March 31,

Location of Gain (Loss) on Derivatives

Recognized in Income Amount of Gain (Loss) on Derivatives

Recognized in Income

Foreign exchange contracts Cost of revenues $ ( 307 ) $ —

Interest rate swap agreement Interest and other expense $ 2 $ ( 996 )

Foreign exchange contracts Other (income) expense $ ( 182 ) $ —

We consider the impact of our credit risk on the fair value of the contracts, as well as our ability to honor obligations under the contract.

Other Fair Value Measurements

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

1 unchanged sentence

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Amount Fair Value Carrying

2 unchanged sentences

$ 147,665 $ 145,960 $ 146,576 $ 144,878

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 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.

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 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 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.

Diluted earnings per share presented is determined by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period as determined by the Treasury Stock Method.

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

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

(as restated)

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

Weighted average number of common shares outstanding (in '000s) 30,986 30,581 30,894 30,547

Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) 631 271 — 282

Dilutive shares outstanding 31,617 30,852 30,894 30,829

Basic (loss) earnings per share $ 0.13 $ 0.23 $ ( 1.07 ) $ 0.76

Diluted (loss) earnings per share $ 0.13 $ 0.23 $ ( 1.07 ) $ 0.76

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

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, 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:

Nine Months Ended September 30, 2020

Common Stock Treasury

Stock Additional Paid In Capital Retained

Deficit Accumulated

Loss Total CVG Stockholders’

Shares Amount

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

Share-based compensation expense 46,014 — — 862 — — 862

Total comprehensive income — — — — ( 24,594 ) ( 8,030 ) ( 32,624 )

Balance - March 31, 2020 30,847,269 $ 323 $ ( 11,230 ) $ 246,714 $ ( 84,901 ) $ ( 53,980 ) $ 96,926

Share-based compensation expense 138,400 ( 14 ) — 868 — — 854

Total comprehensive income — — — — ( 12,497 ) 2,578 ( 9,919 )

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

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

Stock Additional

Paid In Capital Retained

Loss Total CVG Stockholders’

Shares Amount

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

Share-based compensation expense — — — 761 — — 761

Cumulative effect of adoption of Topic 842 — — — — ( 72 ) — ( 72 )

Total comprehensive income — — — — 9,986 ( 206 ) 9,780

Balance - March 31, 2019 (as restated) 30,512,843 $ 318 $ ( 10,245 ) $ 243,768 $ ( 66,099 ) $ ( 47,677 ) $ 120,065

Share-based compensation expense 68,431 1 — 718 — — 719

Total comprehensive income — — — — 6,146 1,955 8,101

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, Restatement of Previously Issued Consolidated Financial Statements for details.

Shareholder Rights Plan

On June 23, 2020, the Company’s Board of Directors adopted a limited duration rights plan and declared a dividend distribution of one right (each, a “Right” and together with all other such rights distributed or issued pursuant thereto, the “Rights”) for each outstanding share of common stock, par value $ 0.01 , of the Company, as of July 5, 2020, the record date for such dividend.

Each holder of common stock as of the record date will receive a dividend of one Right per share of common stock.

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.

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

Share-Based Compensation

The company's outstanding share-based compensation is comprised solely of restricted stock awards.

Restricted Stock Awards – Restricted stock awards are a grant of shares of common stock that may not be sold, encumbered or disposed of and that may be forfeited in the event of certain terminations of employment or in the case of the board of directors a separation for cause, prior to the end of a restricted period set by the Compensation Committee of the Board of Directors.

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 September 30, 2020:

Grant Shares Granted

(in thousands) Nonvested Shares

(in thousands) Vesting Schedule Unearned

Compensation Remaining

Period to Vesting (in

October 2017 303 51 3 equal annual installments commencing on October 20, 2018 $ 40.3 1

October 2018 382 130 3 equal annual installments commencing on October 20, 2019 $ 473.1 13

October 2019 12 10 3 equal annual installments commencing on October 20, 2020 $ 51.5 25

January 2020 149 134 3 equal annual installments commencing on October 20, 2020 $ 527.7 25

April 2020 646 520 3 equal annual installments commencing on December 31, 2022 $ 947.7 27

June 2020 210 210 Fully vests as of December 12, 2021 $ 432.8 14

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

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 restricted stock grants for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30, 2019

(in thousands) Weighted-

Fair Value Shares

(in thousands) Weighted-

Nonvested at beginning of the period 403 $ 7.72 760 $ 7.56

Granted 1,575 2.86 75 7.60

Vested ( 184 ) 5.79 ( 68 ) 8.38

Forfeited ( 204 ) 5.15 ( 21 ) 7.48

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

Performance Awards

Awards, defined as cash, shares or other awards, may be granted to employees under the Amended and Restated Commercial Vehicle Group, Inc.

2014 Equity Incentive Plan (the “2014 EIP”) and the Commercial Vehicle Group 2020 Equity Incentive Plan (the “2020 Plan”).

The cash awards that have been granted will be earned and payable based upon the Company’s relative Total Shareholder Return in terms of ranking as compared to the Peer Group over a three-year period (the “Performance Period”).

Total Shareholder Return is determined by the percentage change in value (positive or negative) over the applicable measurement period as measured by dividing (A) the sum of (i) the cumulative value of dividends and other distributions paid on the Common Stock for the applicable measurement period, and (ii) the difference (positive or negative) between each such company’s starting stock price and ending stock price, by (B) the starting stock price.

The award is to be paid out at the end of the Performance Period in cash only if the employee is employed through the end of the Performance Period.

If the employee is not employed during the entire Performance Period, the award will be forfeited.

These grants are accounted for as cash settlement awards for which the fair value of the award fluctuates based on the change in Total Shareholder Return in relation to the Peer Group.

The following table summarizes performance awards granted in the form of cash awards under the 2014 EIP in January 2020, November 2018 and 2017:

Grant Date Grant Amount Adjustments Forfeitures Adjusted Award Value at

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

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

November 2018 1,590 ( 497 ) ( 1,093 ) — November 2021 13

January 2020 2,108 626 ( 844 ) 1,890 December 2022 26

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

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

Trade accounts receivable are stated at current value less allowances, which approximates fair value.

We review our receivables on an ongoing basis to ensure that they are properly valued and collectible.

The allowance for credit losses is used to record the estimated risk of loss related to our customers’ inability to pay.

This allowance is maintained at a level that we consider appropriate based on factors that affect collectability, such as the financial health of our customers, historical trends of charge-offs and recoveries and current and expected economic market conditions.

As we monitor our receivables, we identify customers that may have payment problems, and we adjust the allowance accordingly, with the offset to selling, general and administrative expense.

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 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

Seating Total

Balance - Beginning of period $ 49 $ 383 $ 432

Provisions 67 142 209

Utilizations ( 58 ) — ( 58 )

Currency translation adjustment 1 ( 1 ) —

Balance - End of period $ 59 $ 524 $ 583

Inventories are valued at the lower of first-in, first-out cost or market and are measured at the lower of cost or net realizable value.

Cost includes applicable material, labor and overhead.

Inventories consisted of the following:

September 30, 2020 December 31, 2019

Raw materials $ 59,154 $ 57,742

Work in process 12,418 12,612

Finished goods 11,731 12,518

$ 83,303 $ 82,872

Inventories on-hand are regularly reviewed and, when necessary, provisions for excess and obsolete inventory are recorded based primarily on our estimated production requirements, which reflect expected market volumes.

Excess and obsolete provisions may vary by product depending upon future potential use of the product.

Goodwill and Intangible Assets

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

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 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:

September 30, 2020 December 31, 2019

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

Finalization of FSE Purchase Accounting ( 537 ) 20,365

Goodwill impairment ( 27,074 ) —

Currency translation adjustment ( 205 ) ( 125 )

Balance - Ending of the period $ — $ 27,816

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

September 30, 2020 December 31, 2019

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

Trademarks/Tradenames 22 years $ 11,557 $ ( 4,558 ) $ 6,999 $ 11,553 $ ( 4,276 ) $ 7,277

Customer relationships 15 years 14,820 ( 7,246 ) 7,574 15,025 ( 6,574 ) 8,451

Technical know-how 5 years 9,790 ( 2,040 ) 7,750 9,790 ( 571 ) 9,219

Covenant not to compete 5 years 330 ( 69 ) 261 330 ( 19 ) 311

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

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 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 .

Revolving credit facility $ 6,800 $ 6,800 $ — $ —

Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $ 2.4 million and long-term debt of $ 145.2 million as of March 31, 2021, and current portion of long-term debt of $ 2.4 million and long-term debt of $ 144.1 million as of December 31, 2020.

The components of lease expense are as follows:

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

2020 2019 2020 2019

Three Months Ended March 31,

Operating lease cost

5 unchanged sentences

Short-term lease cost

922 1,793 2,988 5,557

Total lease expense $ 3,970 $ 3,596

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:

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

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

Operating leases $ 7,806 $ 5,200

Financing leases $ 339 $ 331

Supplemental balance sheet information related to leases is as follows:

Balance Sheet Location September 30, 2020 December 31, 2019

Balance Sheet Location March 31, 2021 December 31, 2020

Operating Leases

Right-of-use assets, net Operating lease right-of-use assets, net $ 31,107 $ 34,960

Current liabilities Current operating lease liabilities 8,874 7,620

Non-current liabilities Operating lease liabilities 25,135 29,414

Right-of-use assets, net Other assets, net $ 28,218 $ 30,047

Current liabilities Accrued liabilities and other 8,639 9,236

Non-current liabilities Other long-term liabilities 22,002 23,932

Total operating lease liabilities $ 30,641 $ 33,168

6 unchanged sentences

Total finance lease liabilities $ 634 $ 727

Weighted Average Remaining Lease Term

Operating leases 4.7 years 5.0 years

Finance leases 3.3 years 2.8 years

Weighted Average Discount Rate

Operating leases 8.1 % 9.1 %

Finance leases 5.2 % 7.2 %

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.

For the three months ended March 31, 2021 and 2020, cash payments on operating leases were $ 2.2 million and $ 2.6 million, respectively.

Right-of-use Assets Impairment.

The impairment of an operating lease right-of-use asset of $ 0.4 million was recorded for the first quarter ended March 31, 2020.

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

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments, which is reflective of the specific term of the leases and economic environment of each geographic region, and apply a portfolio approach for certain machinery and equipment that have consistent terms in a specific geographic region.

The impairment charge is presented in Goodwill and other impairment in the Condensed Consolidated Statements of Operations.

Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancelable leases, are as follows:

Year Ending December 31, Operating Financing Total

$ 3,186 $ 100 $ 3,286

Operating Financing Total

Remainder of 2021 $ 8,002 $ 224 $ 8,226

2022 9,640 197 9,837

6 unchanged sentences

Present value of lease liabilities $ 30,641 $ 634 $ 31,275

Excluding the nine months ended September 30, 2020.

Commitments and Contingencies

Warranty - We are subject to warranty claims for products that fail to perform as expected due to design or manufacturing deficiencies.

Depending on the terms under which we supply products to our customers, a customer may hold us responsible for some or all of the repair or replacement costs of defective products when the product supplied did not perform as represented.

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 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 pre-existing warranty claims 136

Deduction for payments made ( 1,559 )

Currency translation adjustment 12

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.

The most likely cost to be incurred is accrued based on an evaluation of available facts;

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

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.

Management believes that the Company maintains adequate insurance or that we have established reserves for issues that are probable and estimable in amounts that are adequate to cover reasonable adverse judgments not covered by insurance.

Based upon the information available to management and discussions with legal counsel, it is the opinion of management that the ultimate outcome of the various legal actions and claims that are incidental to our business are not expected to have a material adverse impact on the consolidated financial position, results of operations, equity or cash flows;

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, 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.

The existing long-term debt agreements mature in 2023;

no payments are due thereafter:

Year Ending December 31,

2023 $ 145,417

Thereafter $ —

Debt and Credit Facilities

Debt consisted of the following:

September 30, 2020 December 31, 2019

Term loan and security agreement 1, 2

$ 150,400 $ 156,384

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 $ 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;

and long-term debt of $ 153.1 million, net of long-term prepaid debt financing costs of $ 1.2 million and long-term original issue discount $ 1.3 million as of December 31, 2019.

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, Debt in our 2019 Form 10-K.

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, 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.

Of the $ 90.0 million, $ 7.0 million shall be available as a first-in, last-out facility (the “Tranche B Facility”) at a 100 basis points premium, as reflected in the table below.

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 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, 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

On May 11, 2020, the Company and certain of its subsidiaries, as guarantors or co-borrowers, as applicable, entered into (i) an Amendment No.

1 (the “Term Amendment”), which Term Amendment amends the TLS Agreement, dated as of April 12, 2017, with Bank of America, N.A.

as agent, and the lenders party thereto, which agreement governs the Company’s term loan credit facility and (ii) an Amendment No.

2 (the “Revolving Amendment”), which Revolving Amendment amends the Revolving Credit Facility, dated as of April 12, 2017, with Bank of America, N.A., as agent, and certain financial institutions as lenders, which agreement governs the Company’s asset-based revolving credit facility.

The Term Amendment amends the terms of the existing Term Loan Agreement to add a new minimum consolidated liquidity covenant of $ 40.0 million, to be tested each fiscal quarter through the fiscal quarter ending September 30, 2021, and to

temporarily suspend the leverage ratio covenant through the fiscal quarter ending December 31, 2020 and to reset the leverage ratio covenant levels for quarterly periods ended on or after March 31, 2021.

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 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 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.

The Revolving Amendment amends the terms of the Revolving Loan Agreement to align certain of the restrictive covenants with the restrictive covenants set forth in the Term Loan Agreement, as amended.

Level Average Daily Availability Tranche A

Loans Tranche A

Revolver Loans Tranche B

Loans Tranche B

Revolver Loans

III ≥ $ 30,000,000

1.00 % 2.00 % 2.00 % 3.00 %

II > $ 15,000,000 but < $ 30,000,000

1.25 % 2.25 % 2.25 % 3.25 %

I ≤ $ 15,000,000

1.50 % 2.50 % 2.50 % 3.50 %

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

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.

and income tax returns in various U.S.

state and foreign jurisdictions.

In the U.S., we are generally no longer subject to tax assessment for tax years prior to 2017.

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 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.

The domestic unrecognized tax benefits are netted against the related deferred tax assets.

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 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 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.

We evaluate the need for valuation allowances in each of our jurisdictions on a quarterly basis.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law.

Although the Company continues to evaluate the new law, we do not expect either the U.S.

corporate income tax provisions of the CARES Act to have a material impact on our income tax (benefit) provision.

Segment Reporting

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.

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 nine months ended September 30, 2020 and 2019:

Three Months Ended September 30, 2020

Systems Global

Seating Corporate/

External Revenues $ 120,723 $ 66,974 $ — $ 187,697

Intersegment Revenues 344 1,928 ( 2,272 ) —

Total Revenues $ 121,067 $ 68,902 $ ( 2,272 ) $ 187,697

Gross Profit $ 16,118 $ 8,418 $ ( 377 ) $ 24,159

Selling, General & Administrative Expenses 3,166 3,517 7,725 14,408

Amortization Expense 729 129 — 858

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

Capital Expenditures, Depreciation Expense and Other Items:

Capital Expenditures $ 1,418 $ 158 $ 28 $ 1,604

Depreciation Expense $ 2,196 $ 1,109 $ 447 $ 3,752

Other Items 1

$ 1,204 $ 335 $ 17 $ 1,556

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

Three Months Ended September 30, 2019 (as restated)

Electrical Systems 1

Seating Corporate/

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

Intersegment Revenues 1,732 30 ( 1,762 ) —

Total Revenues $ 131,442 $ 95,719 $ ( 1,762 ) $ 225,399

Gross Profit $ 17,134 $ 12,331 $ ( 21 ) $ 29,444

Selling, General & Administrative Expenses

4,030 5,044 8,457 17,531

Amortization Expense 303 134 — 437

Operating Income $ 12,801 $ 7,153 $ ( 8,478 ) $ 11,476

Capital Expenditures and Depreciation Expense:

Capital Expenditures $ 3,847 $ 1,064 $ 661 $ 5,572

Depreciation Expense $ 1,771 $ 1,041 $ 632 $ 3,444

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

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

Nine Months Ended September 30, 2020

System Global

Seating Corporate/

External Revenues $ 305,389 $ 196,309 $ — $ 501,698

Intersegment Revenues 1,987 2,435 ( 4,422 ) —

Total Revenues $ 307,376 $ 198,744 $ ( 4,422 ) $ 501,698

Gross Profit $ 28,208 $ 23,133 $ ( 404 ) $ 50,937

Selling, General & Administrative Expenses 13,696 11,992 21,803 47,491

Amortization Expense 2,188 387 — 2,575

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

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

Capital Expenditures, Depreciation Expense and Other Items:

Capital Expenditures $ 3,936 $ 1,175 $ 394 $ 5,505

Depreciation Expense $ 6,455 $ 3,234 $ 1,571 $ 11,260

Other Items 1

$ 6,651 $ 1,012 $ 469 $ 8,132

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.

Nine Months Ended September 30, 2019 (as restated)

Electrical Systems 1

Seating Corporate/

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

Intersegment Revenues 7,529 2,774 ( 10,303 ) —

Total Revenues $ 417,000 $ 305,056 $ ( 10,303 ) $ 711,753

Gross Profit $ 54,227 $ 40,797 $ ( 55 ) $ 94,969

Selling, General & Administrative Expenses

11,855 15,558 21,565 48,978

Amortization Expense 676 404 — 1,080

Operating Income $ 41,696 $ 24,835 $ ( 21,620 ) $ 44,911

Capital Expenditures and Depreciation Expense:

Capital Expenditures $ 13,267 $ 2,847 $ 2,274 $ 18,388

Depreciation Expense $ 4,770 $ 3,186 $ 1,829 $ 9,785

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

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

Derivative Contracts

We use foreign exchange contracts to hedge some of our foreign currency transaction exposure.

We estimate our projected revenues and purchases in certain foreign currencies and may hedge a portion of the anticipated long or short positions.

The contracts typically run from one month up to eighteen months .

As our foreign exchange contracts are designated as hedging instruments, the fluctuations in fair value are recorded in accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets until the contracts mature, at which time the gains and losses are recognized in cost of revenues in the Condensed Consolidated Statements of Operations.

We do not hold or issue foreign exchange options or foreign exchange contracts for trading purposes.

Our foreign exchange contracts are subject to a master netting agreement.

We record assets and liabilities relating to our foreign exchange contracts on a gross basis in our Condensed Consolidated Balance Sheets.

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

September 30, 2020 December 31, 2019

Equivalent U.S.

Fair Value U.S.

Equivalent U.S.

Commitments to buy or sell currencies $ 20,312 $ 19,897 $ 22,474 $ 22,939

We consider the impact of our credit risk on the fair value of the contracts, as well as our ability to honor obligations under the contract.

On June 30, 2017, the Company entered into the Interest Rate Swap Agreement to fix the interest rate on an initial aggregate amount of $ 80.0 million of the senior secured term loan credit facility thereby reducing exposure to interest rate changes.

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

The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets:

Derivative Asset

September 30, 2020 December 31, 2019

Balance Sheet

Location Fair Value Balance Sheet

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 Accrued liabilities $ 1,127 Accrued liabilities $ 150

Derivative Liability

September 30, 2020 December 31, 2019

Balance Sheet

Location Fair Value Balance Sheet

Location Fair Value

Foreign exchange contracts Accrued liabilities $ 530 Accrued liabilities $ —

Interest rate swap agreement Accrued liabilities $ 2,485 Accrued liabilities $ 995

Derivative Equity

September 30, 2020 December 31, 2019

Balance Sheet

Location Fair Value Balance Sheet

Location Fair Value

Foreign exchange contracts Accumulated other comprehensive loss $ 317 Accumulated other comprehensive loss $ 464

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

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

For the three months ended March 31, 2021 we recorded a $ 2.5 million tax provision, or 23 % effective tax rate for the period, compared to a $ 7.3 million tax benefit for the three months ended March 31, 2020.

The effective tax rate in the current three month period is higher than the U.S.

federal income tax rate primarily as a result of U.S.

state and non-U.S.

income taxes.

The Company’s prior year tax benefit was primarily a result of pre-tax net loss for the three months ended March 31, 2020.

For the three months ended March 31, 2021 and 2020, cash paid for taxes, net of refunds received were $ 1.0 million and $ 0.8 million, respectively.

Pension and Other Post-Retirement Benefit Plans

The components of net periodic (benefit) cost related to pension and other post-retirement benefit plans is as follows:

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

Three Months Ended March 31, Three Months Ended March 31,

2021 2020 2021 2020

Location of Gain (Loss) on Derivatives

Recognized in Income Amount of Gain (Loss) on Derivatives

Recognized in Income

Foreign exchange contracts Cost of Revenues $ ( 640 ) $ — $ ( 1,525 ) $ 4

Interest rate swap agreement Interest and Other Expense $ ( 2 ) $ ( 236 ) $ ( 1,026 ) $ ( 1,891 )

Interest cost 208 281 161 204

Expected return on plan assets ( 553 ) ( 519 ) ( 250 ) ( 263 )

Amortization of prior service cost 2 74 14 11

Recognized actuarial loss 74 2 239 143

Net (benefit) cost $ ( 269 ) $ ( 162 ) $ 164 $ 95

Net periodic (benefit) cost components, not inclusive of service costs, are recognized in other expense (income) within the Condensed Consolidated Statements of Operations.

Performance Awards

In 2020, the Company made awards, defined as cash, shares or other awards, to employees under the Commercial Vehicle Group, Inc.

2014 Equity Incentive Plan (the “2014 EIP”) and the Commercial Vehicle Group, Inc.

2020 Equity Incentive Plan (the “2020 EIP”).

Effective June 15, 2020, as part of the Company’s stockholders’ approval of the 2020 EIP, the Company agreed that no more awards will be made under the 2014 Plan.

The cash award is earned and payable based upon the Company’s relative total shareholder return in terms of ranking as compared to the peer group over a three-year period (the “Performance Period”).

Total shareholder return is determined by the percentage change in value (positive or negative) over the applicable measurement period as measured by dividing (A) the sum of the cumulative value of dividends and other distributions paid on the Common Stock for the applicable measurement period and the difference (positive or negative) between each such company’s starting stock price and ending stock price, by (B) the starting stock price.

The award is payable at the end of the Performance Period in cash if the employee is employed through the end of the Performance Period.

If the employee is not employed during the entire Performance Period, the award is forfeited.

These grants are accounted for as cash settlement awards for which the fair value of the award fluctuates based on the change in total shareholder return in relation to the peer group.

The following table summarizes performance awards granted in the form of cash awards under the equity incentive plans:

Adjusted Award Value at December 31, 2020 $ 976

Adjustments 179

Payments ( 300 )

Adjusted Award Value at March 31, 2021 $ 855

Unrecognized compensation expense was $ 3.0 million and $ 0.6 million as of March 31, 2021 and 2020, respectively.

Share-Based Compensation

The company's outstanding share-based compensation is comprised solely of restricted stock awards.

Restricted Stock Awards – Restricted stock is a grant of shares of common stock that may not be sold, encumbered or disposed of and that may be forfeited in the event of certain terminations of employment or in the case of the board of directors, a separation for cause, prior to the end of a restricted period set by the compensation committee of the board of directors.

Forfeitures are recorded as they occur.

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

Time-based restricted stock awards generally vest over the three-year period following the date of grant, unless forfeited, and will be paid out in the form of stock at the end of the vesting period.

Performance-based stock awards vest over the specified period following the date of grant, unless forfeited, and will be paid out in the form of stock at the end of the vesting period at the Company’s discretion if the Company meets the performance targets set at the time of the award was granted.

As of March 31, 2021, there was approximately $ 6.2 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under our equity incentive plans.

This expense is subject to future adjustments and forfeitures and will be recognized on a straight-line basis over the remaining period listed above for each grant.

A summary of the status of our restricted stock awards as of March 31, and changes during the Three Months Ended March 31, are presented below:

(in thousands) Weighted-

Nonvested - December 31, 2020 1,263 $ 3.48

Granted 371 6.58

Vested ( 139 ) 3.24

Forfeited ( 4 ) 6.35

Nonvested - March 31, 2021 1,491 $ 4.46

As of March 31, 2021, a total of 2.9 million shares were available for future grants from the shares authorized for award under our 2020 EIP, including cumulative forfeitures.

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, 31,381,845 and 31,249,811 shares were issued and outstanding as of March 31, 2021 and December 31, 2020, 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, with no preferred shares were outstanding as of March 31, 2021 and December 31, 2020.

Diluted earnings per share for the three and three months ended March 31, 2021 and 2020 includes the effect of potential common shares issuable when dilutive, and is as follows:

Three Months Ended March 31,

Net income (loss) $ 8,490 $ ( 24,594 )

Weighted average number of common shares outstanding (in '000s) 31,264 30,806

Dilutive effect of restricted stock grants after application of the Treasury Stock Method (in '000s) 1,043 —

Dilutive shares outstanding 32,307 30,806

Basic earnings (loss) per share $ 0.27 $ ( 0.80 )

Diluted earnings (loss) per share $ 0.26 $ ( 0.80 )

There were no outstanding restricted shares awarded that were excluded from the calculation of diluted earnings per shares for the three months ended March 31, 2021 and 2020.

Shareholder Rights Plan

Each holder of common stock as of the record date will receive a dividend of one Right per share of common stock.

On April 15, 2021, the Company, and Computershare Trust Company, N.A., a federally chartered trust company, as rights agent (“Rights Agent”), entered into an amendment (the “Amendment”) to the Rights Agreement, dated as of June 25, 2020, by and between the Company and Rights Agent (the “Rights Agreement”).

Pursuant to the Amendment, the Final Expiration Date of the Rights (each as defined in the Rights Agreement) was advanced from June 24, 2021 to April 15, 2021.

As a result of the Amendment, the Rights are no longer outstanding.

Other Comprehensive Loss

4 unchanged sentences

comprehensive

Ending balance, December 31, 2019 $ ( 24,032 ) 464 $ ( 22,382 ) $ ( 45,950 )

Balance - December 31, 2020 $ ( 19,024 ) 1,441 $ ( 27,423 ) $ ( 45,006 )

Net current period change ( 2,072 ) — — ( 2,072 )

Derivative instruments — ( 426 ) — ( 426 )

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

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

Amortization of actuarial gains — — 286 286

Balance - March 31, 2021 $ ( 21,096 ) $ 1,015 $ ( 27,137 ) $ ( 47,218 )

currency translation adjustment Derivative instruments Pension and

2 unchanged sentences

comprehensive

Ending balance, December 31, 2018 $ ( 22,847 ) $ 496 $ ( 25,120 ) $ ( 47,471 )

Balance - December 31, 2019 $ ( 24,032 ) $ 464 $ ( 22,382 ) $ ( 45,950 )

Net current period change ( 4,805 ) — — ( 4,805 )

1 unchanged sentence

Amortization of actuarial losses — — ( 447 ) ( 447 )

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

Balance - March 31, 2020 $ ( 28,837 ) $ ( 2,314 ) $ ( 22,829 ) $ ( 53,980 )

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

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

Amount Tax Expense After Tax Amount Before Tax

Three Months Ended March 31, 2021

Amount Tax Expense After Tax Amount

Amortization of actuarial losses $ ( 1,179 ) $ 222 $ ( 957 ) $ ( 2,284 ) $ 434 $ ( 1,850 )

Amortization of actuarial gains $ 399 $ ( 113 ) $ 286

Derivative instruments ( 556 ) 130 ( 426 )

1 unchanged sentence

Total other comprehensive loss $ ( 2,229 ) $ 17 $ ( 2,212 )

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

Amount Tax Expense After Tax

Amount Before Tax

Three Months Ended March 31, 2020

Amount Tax Expense After Tax

3 unchanged sentences

Total other comprehensive loss $ ( 8,847 ) $ 817 $ ( 8,030 )

Pension and Other Post-Retirement Benefit Plans

We sponsor pension and other post-retirement benefit plans that cover certain hourly and salaried employees in the United States and United Kingdom.

Each of the plans are frozen to new participants.

Our practice is to make annual contributions to the plans to fund the minimum contributions as required by local regulations.

The components of net periodic (benefit) cost related to pension and other post-retirement benefit plans is as follows:

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

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

2020 2019 2020 2019

Interest cost 281 217 210 268

Expected return on plan assets ( 519 ) ( 470 ) ( 277 ) ( 268 )

Amortization of prior service cost 2 23 151 12

Recognized actuarial loss 74 75 12 129

Net (benefit) cost $ ( 162 ) $ ( 155 ) $ 96 $ 141

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

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

2020 2019 2020 2019

Interest cost 843 1,107 618 831

Expected return on plan assets ( 1,556 ) ( 1,794 ) ( 806 ) ( 834 )

Amortization of prior service cost 5 2,517 437 36

Recognized actuarial loss 223 262 36 397

Net (benefit) cost $ ( 485 ) $ 2,092 $ 285 $ 430

Net periodic (benefit) cost components, not inclusive of service costs, are recognized in interest and other expense within the Condensed Consolidated Statements of Operations.

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

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

Business Combinations

On September 17, 2019, the Company entered into and closed on an Asset Purchase Agreement (the “Agreement”) with First Source Electronics, LLC (“FSE”), Kevin Popielarczyk and Richard Vuoto and the Company’s wholly-owned subsidiary, CVG FSE, LLC (“CVG FSE”).

The Agreement provided for the acquisition by CVG FSE of substantially all of the assets and certain liabilities of FSE in exchange for a cash purchase price of $ 34.0 million, subject to a net working capital adjustment, plus a right to earn up to $ 10.8 million in contingent milestone payments.

The purchase was funded through domestic cash on hand and $ 2.0 million of borrowings under our revolving credit facility.

FSE is in the business of manufacturing, distributing, marketing and selling cable and electro-mechanical assemblies, control panels and other business and consumer electronics products and services.

FSE improves our ability to participate in the progression of digitalization, connectivity and associated power and data applications.

Furthermore, this strategic acquisition complements our high-complexity, low-to-medium volume electrical business, provides an entry into the warehouse automation market, and provides the opportunity to leverage our global footprint and to increase cross-selling opportunities.

The contingent milestone payments are payable based on achieving certain earnings before interest, taxes, depreciation and amortization ("EBITDA") thresholds over the periods from (a) September 18, 2019 through September 17, 2020, (b) September 18, 2019 through March 17, 2021, (c) September 18, 2019 through September 17, 2022 and (d) March 18, 2021 through September 17, 2022.

The payment amount will be determined on a sliding scale for reaching between 90 % and 100 % of the respective EBITDA targets.

The fair value for the milestone payments is based on a Monte Carlo simulation utilizing forecasted EBITDA through September 17, 2022.

The estimate of $ 4.7 million was recorded within other long-term liabilities in the

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 $ 8.8 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.

The Company is a party to the Agreement solely as a guarantor of CVG FSE’s payment obligations.

The FSE Acquisition was accounted for under the acquisition method of accounting.

Under acquisition accounting, the acquired tangible and intangible assets and liabilities of FSE have been recorded at their respective fair values.

The Company has completed its assessment of fair values of assets acquired and liabilities assumed, and the final amounts are reflected in the table below.

The purchase price associated with the FSE Acquisition exceeded the preliminary fair value of the net assets acquired by approximately $ 19.8 million.

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 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:

Initial cash paid, net of working capital adjustment $ 34,000

Purchase price adjustment ( 537 )

Contingent consideration at fair value 4,700

Total consideration $ 38,163

Net assets at fair value 18,335

Excess of total consideration over net assets acquired $ 19,828

In the first quarter of 2020, pursuant to the asset purchase agreement a final adjustment resulted in a $ 0.5 million reduction in the initial consideration paid and goodwill.

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 September 30, 2020, were as follows:

Preliminary Purchase Price Allocation Adjustment Final Purchase Price Allocation

Net working capital $ 2,856 $ — $ 2,856

Property, plant and equipment 503 — 503

Other long-term assets 1,650 — 1,650

Definite-lived intangible assets 14,500 — 14,500

20,365 ( 537 ) 19,828

Other long-term liabilities ( 1,174 ) — ( 1,174 )

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

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

1 unchanged sentence

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 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.

3 unchanged sentences

December 31, 2020 $ 463 $ 40 $ 176 $ 679

Payments and other adjustments ( 186 ) ( 40 ) ( 36 ) ( 262 )

March 31, 2021 $ 277 $ — $ 140 $ 417

Electrical Systems Global

Seating Corporate/

December 31, 2019 $ 1,276 $ 102 $ 947 $ 2,325

New charges — 131 40 171

Payments and other adjustments ( 848 ) ( 196 ) ( 248 ) ( 1,292 )

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.

March 31, 2020 $ 428 $ 37 $ 739 $ 1,204

Approximately $ 0.1 million in employee costs were incurred in the three months ended March 31, 2020 in the Global Seating Segment and is included in cost of revenues.

Commitments and Contingencies

Leases - As disclosed in Note 7, Leases, we lease office, warehouse and manufacturing space and 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 March 31, 2021, 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.

The most likely cost to be incurred is accrued based on an evaluation of available facts;

amount within a range of estimates is more likely, the minimum is accrued.

As of March 31, 2021 and 2020, 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, environmental claims arising out of the conduct of our businesses and examinations by the Internal Revenue Service.

Management believes that the Company maintains adequate insurance and that we have established reserves for issues that are probable and estimable in amounts that are adequate to cover reasonable adverse judgments not covered by insurance.

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

Warranty - We are subject to warranty claims for products that fail to perform as expected due to design or manufacturing deficiencies.

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 periods ended March 31, 2021 and 2020, are included within accrued liabilities and other in the accompanying Condensed Consolidated Balance Sheets.

The following presents a summary of the warranty provision for the three months ended March 31, 2021:

Balance - December 31, 2020 $ 2,041

Provision for warranty claims 108

Deduction for payments made and other adjustments ( 354 )

Balance - March 31, 2021 $ 1,795

Debt Payments - As disclosed in Note 4, Debt, 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 (see also Note 18, Subsequent Event):

Term Loan Revolving credit facility Total

Remainder of 2021 $ 3,281 $ — $ 3,281

2022 $ 4,375 $ — $ 4,375

2023 $ 143,905 $ — $ 143,905

2024 $ — $ — $ —

2025 $ — $ — $ —

Thereafter $ — $ 6,800 $ 6,800

Segment Reporting

Each of these segments consists of a number of manufacturing facilities.

Certain of our facilities manufacture and sell products through both of our segments.

Each manufacturing facility that sells products through both segments is reflected in the financial results of the segment that has the greatest amount of revenues from that manufacturing facility.

Our segments are more specifically described below.

The Electrical Systems segment designs, manufactures and sells the following products:

• Electrical systems, electrical wire harnesses, electro-mechanical assemblies for warehouses, electro-mechanical cable assemblies for the construction, agricultural, industrial, automotive, truck, mining, rail and military industries in North America, Europe and Asia-Pacific.

This segment includes a portion of the company’s activities in the emerging electric vehicle market;

• Plastic components ("Trim") primarily for the North America commercial vehicle market and recreational vehicle markets;

• Warehouse automation subsystems primarily for the North American e-commerce markets and include electro-mechanical assemblies and panels;

• Commercial vehicle accessories including wipers, mirrors, floormats and sensors;

• Cab structures for the North American MD/HD truck market.

The Global Seating segment designs, manufactures and sells the following products:

• Commercial vehicle seats for the global commercial vehicle markets including heavy duty trucks, medium duty trucks, last mile trucks, construction equipment, material handling equipment and agriculture equipment in North America, Europe and Asia-Pacific.

This segment includes a portion of the company’s activities in the emerging electric vehicle market;

• Office seats primarily in Europe and Asia-Pacific;

• Aftermarket seats and components in North America, Europe and Asia-Pacific.

Corporate expenses consist of certain overhead and shared costs that are not directly attributable to the operations of a segment.

For purposes of business segment performance measurement, some of these costs that are for the benefit of the operations are allocated based on a combination of methodologies.

The costs that are not allocated to a segment are considered stewardship costs and remain at corporate in our segment reporting.

The following table presents segment revenues, gross profit, selling, general and administrative expenses, amortization expense, operating income, capital expenditures, depreciation expense and other items for the three months ended March 31, 2021 and 2020.

The table does not include assets as the CODM does not review assets by segment.

Three Months Ended March 31, 2021

Systems Global

Seating Corporate/

External revenues $ 159,687 $ 85,435 $ — $ 245,122

Intersegment revenues 2,553 5,659 ( 8,212 ) —

Total revenues $ 162,240 $ 91,094 $ ( 8,212 ) $ 245,122

Gross profit $ 20,270 $ 10,888 $ ( 37 ) $ 31,121

Selling, general & administrative expenses 5,403 5,344 4,971 15,718

Operating income (loss) $ 14,867 $ 5,544 $ ( 5,008 ) $ 15,403

Three Months Ended March 31, 2020

Electrical Systems Global

Seating Corporate/

External revenues $ 111,167 $ 75,938 $ — $ 187,105

Intersegment revenues 931 43 ( 974 ) —

Total revenues $ 112,098 $ 75,981 $ ( 974 ) $ 187,105

Gross profit $ 10,946 $ 9,371 $ ( 14 ) $ 20,303

Selling, general & administrative expenses

4,679 4,923 8,357 17,959

Goodwill and other impairment 23,415 4,809 643 28,867

Operating loss $ ( 17,148 ) $ ( 361 ) $ ( 9,014 ) $ ( 26,523 )

Other Financial Information

Items reported in inventories consisted of the following:

March 31, 2021 December 31, 2020

Raw materials $ 80,990 $ 65,334

Work in process 14,711 13,373

Finished goods 13,307 12,540

$ 109,008 $ 91,247

Items reported in property, plant, and equipment, net consisted of the following:

March 31, 2021 December 31, 2020

Land and buildings $ 30,335 $ 30,305

Machinery and equipment 189,364 189,939

Construction in progress 2,107 1,558

Property, plant, and equipment, gross 221,806 221,802

Less accumulated depreciation ( 161,924 ) ( 159,026 )

Property, plant and equipment, net $ 59,882 $ 62,776

Items reported in accrued expenses and other liabilities consisted of the following:

March 31, 2021 December 31, 2020

Compensation and benefits $ 15,745 $ 13,172

Operating lease liabilities 8,639 9,236

Contingent consideration 5,000 4,870

Taxes payable 4,274 4,057

Accrued freight 3,996 2,556

Insurance 2,408 2,705

Other 11,619 13,460

$ 51,681 $ 50,056

Subsequent Event

On April 30, 2021, Commercial Vehicle Group, Inc.

(the “Company”) and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”) between, among others, Bank of America, N.A.

as administrative agent (the “Administrative Agent”) and other lenders party thereto (the “Lenders”) pursuant to which the Lenders made available a $ 150 million Term Loan Facility (the “Term Loan Facility”) and a $ 125 million Revolving Credit Facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”).

Subject to the terms of the Credit Agreement, the Revolving Credit Facility includes a $ 10 million swing line sublimit and a $ 10 million letter of credit sublimit.

The Credit Agreement provides for an incremental term facility agreement and/or an increase of the Revolving Credit Facility (together, the “Incremental Facilities”), in a maximum aggregate amount of (a) up to the date of receipt of financial statements for the fiscal quarter ending June 30, 2022, $ 75 million, and (b) thereafter, (i) $ 75 million less the aggregate principal amount of Incremental Facilities incurred before such date, plus (ii) an unlimited amount if the pro forma consolidated total leverage ratio (assuming the Incremental Facilities are fully drawn) is less than 2.50 :1.0.

The Credit Facilities mature on April 30, 2026 (the “Maturity Date”).

The proceeds of the Credit Facilities will be used, together with cash on hand of the Company, to (a) fund the redemption, satisfaction and discharge of all of the Company’s outstanding secured credit facility due 2023 (the “2023 Term Loan Facility”) issued pursuant to a term facility agreement (the “Term Facility Agreement”) between, among others, Bank of America, N.A.

as administrative agent and other lender parties thereto, (b) fund the redemption, satisfaction and discharge of all of the Company’s asset-based revolving credit facility (the “ABL Revolving Credit Facility”) issued pursuant to a facility agreement (the “ABL Facility Agreement”) between, among others, Bank of America, N.A.

as agent and certain financial institutions as lenders, (c) pay transaction costs, fees and expenses incurred in connection therewith and in connection with the Credit Agreement, and (d) for working capital and other lawful corporate purposes of the Company and its subsidiaries.

The Company expects to recognize a loss on extinguishment of debt of approximately $ 7.2 million, including non-cash write off relating to

deferred financing costs and unamortized discount of the 2023 Term Loan Facility and a voluntary repayment premium during the financial quarter ending June 30, 2021.

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