Commercial Vehicle Group Inc. Reports Operating Results (10-Q)
Commercial Vehicle Group supplies interior systems vision safety solutions and other cab-related products for the global commercial vehicle market including the heavy-duty (Class 8) truck market the construction market and other specialized transportation markets. The company's products include suspension seat systems interior trim systems such as instrument and door panels headliners cabinetry and floor systems mirrors wiper systems controls and switches specifically designed for applications in commercial vehicle cabs. Commercial Vehicle Group Inc. has a market cap of $26.8 million; its shares were traded at around $1.23 . Highlight of Business Operations:Revenues. Revenues decreased approximately $88.5 million, or 45.0%, to $108.5 million in the three months ended March 31, 2009 from $197.0 million in the three months ended March 31, 2008. This decrease resulted primarily from the global economic recession, which impacted our North American end market by approximately $49.5 million and our European and Asian end markets by approximately $32.4 million. In addition, translation of our foreign operations into U.S. dollars decreased our revenues by approximately $6.6 million over the prior year period.
Gross (Loss) Profit. Gross loss was approximately $3.2 million for the three months ended March 31, 2009 compared to gross profit of $20.8 million in the three months ended March 31, 2008, a decrease of approximately $24.0 million, or 115.6%. As a percentage of revenues, gross loss was (3.0%) for the three months ended March 31, 2009 compared to gross profit of 10.5% in the three months ended March 31, 2008. This decrease was primarily the result of our inability to reduce our costs in proportion with the $88.5 million decrease in our revenues from the prior year period.
Gain on Sale of Long-Lived Assets. We sold the land and building of our Seattle, Washington facility, with a carrying value of approximately $1.2 million, for $7.3 million and recognized a gain on the sale of long-lived assets of approximately $6.1 million for the three months ended March 31, 2008.
As of March 31, 2009, we had an aggregate of $165.6 million of outstanding indebtedness excluding $1.4 million of outstanding letters of credit under various financing arrangements and an additional $30.0 million of borrowing capacity under our Loan and Security Agreement, which is subject to an $11.5 million availability reserve. The indebtedness consisted of the following:
We adopted FIN No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007. During the current quarter, we increased our reserve balance for additional tax and interest by $0.2 million. We also released $21 thousand of tax reserves during the quarter, which related to tax, interest and penalties associated with items with expiring statutes of limitations. At March 31, 2009, we have provided a liability for $3.1 million of unrecognized tax benefits related to various income tax positions. However, the net obligation to taxing authorities under FIN No. 48 was $2.6 million. The difference relates primarily to receivables based on future amended returns. We do not expect a significant tax payment related to these obligations within the next year.
Our common stock is listed on The NASDAQ Global Select Market. In order to maintain that listing, we are required to satisfy various minimum financial and market related requirements, including, among others, maintaining a $1.00 per share minimum closing bid price for our common stock. In response to current market conditions, NASDAQ has temporarily suspended the enforcement rules requiring the minimum $1.00 closing bid price through July 19, 2009. Our common has recently traded below $1.00 per share, and on May 5, 2009, the closing bid price for our common stock was $1.07 per share. If the closing bid price of our common stock fails to meet NASDAQs minimum closing bid price requirement for at least 30 consecutive trading days after July 19, 2009, or such later date to which NASDAQ may extend its suspension of this requirement, NASDAQ may make a determination to delist our common stock. Any delisting could adversely affect our ability to sell our common stock, and the market price of our common stock could decrease. A delisting could also adversely affect our ability to obtain financing for the continuation of our operations and/or result in the loss of confidence by investors, customers and employees.
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