Note 1 - Summary of Significant Accounting Policies

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, except that the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, in the opinion of Accuride Corporation (“Accuride” or the “Company”) management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the condensed consolidated financial statements have been included. Certain operating results from prior periods, including the predecessor periods, have been reclassified to discontinued operations to conform to the current year presentation.

The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the year ending December 31, 2011. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited condensed consolidated financial statements and notes thereto disclosed in Accuride's Annual Report on Form 10-K for the year ended December 31, 2010.

On January 31, 2011, substantially all of the assets and business of our Bostrom Seating subsidiary were sold to a subsidiary of Commercial Vehicle Group, Inc. for approximately $8.8 million and resulted in recognition of a $0.3 million loss on our consolidated statement of operations in the nine months ended September 30, 2011, which have been reclassified to discontinued operations. See Note 11 “Discontinued Operations” for further discussion.

On June 20, 2011, the Company entered into, and consummated the acquisition contemplated by, an Asset Purchase Agreement (the “Agreement”), pursuant to which the Company's subsidiary, Accuride EMI, LLC (“Buyer”), acquired substantially all of the assets and assumed certain liabilities of Forgitron Technologies LLC (“Seller”), a manufacturer and supplier of aluminum wheels for commercial vehicles. Pursuant to the Agreement, Buyer purchased the acquired assets for a purchase price of $22.0 million in cash, subject to a working capital adjustment. This acquisition included an 80,000 square foot forged aluminum wheel manufacturing facility in Camden, South Carolina (“Camden”) and is consistent with the Company's planned capacity expansion of its core aluminum wheel product line.

The Camden acquisition was accounted for by the acquisition method of accounting. Under acquisition accounting, the total purchase price has been allocated to the tangible and intangible assets and liabilities of Camden based upon their preliminary fair values. The purchase price and costs associated with the Camden acquisition exceeded the preliminary fair value of the net assets acquired by approximately $9.6 million. We anticipate finalizing the fair valuation of net assets acquired, for property, plant, and equipment, deferred taxes, intangible assets, and goodwill, during the fourth quarter of 2011. In connection with the allocation of the purchase price, we recorded goodwill of approximately $9.6 million as shown in the following table:

(In thousands)

Purchase price (cash consideration)	$	22,381
Net assets at fair value		12,783
Excess of purchase price over net assets acquired	$	9,598

The preliminary purchase price allocation as of September 30, 2011 was as follows:

(In thousands)

Customer receivables	$	1,289
Inventories		816
Prepaid expenses and other current assets		101
Property, plant, and equipment		12,088
Goodwill		9,598
Current liabilities		(1,511	)
Purchase price (cash consideration)	$	22,381

On September 26, 2011, the Company announced the sale of its wholly-owned subsidiary, Fabco Automotive Corporation (“Fabco”) to Fabco Holdings, Inc., a new company formed and capitalized by Wynnchurch Capital, Ltd. in partnership with Stone River Capital Partners, LLC. The sale concluded for a purchase price of $35.0 million, subject to a working capital adjustment, plus a contingent payment of up to $2.0 million depending on Fabco's financial performance during calendar year 2012. The Company recognized a loss of $6.3 million, including $2.1 million in transactional fees, related to the sale transaction during the nine months ended September 30, 2011, which is included as a component of discontinued operations. See Note 11 “Discontinued Operations” for further discussion.

Chapter 11 Proceedings – On October 8, 2009, Accuride and its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Prior to filing for bankruptcy, we were in default under our prepetition senior credit facility and the indenture governing our prepetition senior subordinated notes due to our failure to comply with certain financial covenants in the prepetition senior credit facility and to make the $11.7 million interest payment due August 3, 2009 on our prepetition senior subordinated notes. On October 7, 2009, we entered into restructuring support agreements with the holders of approximately 57% of the principal amount of the loans outstanding under our prepetition senior credit facility and the holders of approximately 70% of the principal amount of our prepetition senior subordinated notes, pursuant to which the parties agreed to support a financial reorganization of the Company and its domestic subsidiaries consistent with the terms set forth therein.

On November 18, 2009, we filed our Joint Plan of Reorganization and the related Disclosure Statement with the Bankruptcy Court. All classes of creditors entitled to vote voted to approve the Plan of Reorganization. A confirmation hearing for the Plan of Reorganization was held beginning on February 17, 2010. At the confirmation hearing, we and all of our constituents reached a settlement to fully resolve all disputes related to the Plan of Reorganization and all of our key constituents agreed to support the Plan of Reorganization. On February 18, 2010, the Bankruptcy Court entered an order confirming the Third Amended Joint Plan of Reorganization, which approved and confirmed the Plan of Reorganization, as modified by the confirmation order. On February 26, 2010 (the “Effective Date”), the Plan of Reorganization became effective and we emerged from Chapter 11 bankruptcy proceedings. During the pendency of the bankruptcy, we operated our business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.

Financial Statement Presentation

We have prepared the accompanying consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations. ASC 852 requires that the financial statements for the periods subsequent to a Chapter 11 filing separate transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, all transactions (including, but not limited to, all professional fees, realized gains and losses and provisions for losses) directly associated with the reorganization of the business are reported separately in the financial statements as reorganization items, net. The Predecessor Company recognized the following reorganization income (expense) in our financial statements:

	Predecessor
	Period from January 1 to February 26,
(In thousands)	2010

Debt discharge – Senior subordinate notes and interest	$	252,798
Market valuation of $140 million Convertible Notes		(155,094	)
Professional fees		(25,030	)
Market valuation of warrants issued		(6,618	)
Deferred financing fees		(3,847	)
Term facility discount		(2,974	)
Other		76
Total	$	59,311

Fresh-Start Reporting

Upon our emergence from Chapter 11 bankruptcy proceedings, we adopted fresh-start accounting in accordance with the provisions of ASC 852, pursuant to which the midpoint of the range of our reorganization value of $563 million was allocated to our assets and liabilities in conformity with the procedures specified by ASC 805, Business Combinations. We adopted fresh-start accounting for all of subsidiaries, although our foreign subsidiaries did not file for bankruptcy protection in their jurisdictions.

As a result of the adoption of fresh-start reporting, our consolidated balance sheets and consolidated statements of operations subsequent to February 26, 2010, will not be comparable in many respects to our consolidated balance sheets and consolidated statements of operations prior to February 26, 2010. References to “Successor Company” refer to the Company after February 26, 2010, after giving effect to the application of fresh-start reporting. References to “Predecessor Company” refer to the Company on or prior to February 26, 2010.

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

Reverse Stock Split -Effective November 18, 2010, Accuride Corporation implemented a one-for-ten reverse stock split of its Common Stock. Unless otherwise indicated, all share amounts and per share data for the Successor Company have been adjusted to reflect this reverse stock split.

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

	Successor												Predecessor
	Three Months Ended September 30,						Nine Months Ended September 30,			Period from February 26 to September 30,			Period from January 1 to February 26,
(In thousands except per share data)	2011			2010			2011			2010			2010

Numerator:
Net income (loss)	$	(17,220	)	$	30,851		$	(21,104	)	$	(15,667	)	$	50,802
Less: Earnings allocated to participating securities		-			(18,511	)		-			-			-
Net income (loss) available to common stockholders - basic	$	(17,220	)	$	12,340		$	(21,104	)	$	(15,667	)	$	50,802

Net income (loss)	$	(17,220	)	$	30,851		$	(21,104	)	$	(15,667	)	$	50,802
Effect of dilutive securities:
Unrealized gain on mark to market valuation of conversion option		-			(36,827	)		-			-			-
Discount amortization expense		-			600			-			-			-
PIK interest expense		-			2,661			-			-			-
Net income (loss) available to common stockholders - diluted	$	(17,220	)	$	(2,715	)	$	(21,104	)	$	(15,667	)	$	50,802

Denominator:
Weighted average shares outstanding – Basic		47,295			12,630			47,271			12,630			47,572
Weighted average effect of dilutive securities:
Convertible notes		-			19,701			-			-			-
PIK notes		-			739			-			-
Effect of restricted stock units		-			53			-			-			-
Weighted average shares outstanding - Diluted		47,295			33,123			47,271			12,630			47,572

Basic income (loss) per common share	$	(0.36	)	$	0.98		$	(0.45	)	$	(1.24	)	$	1.07
Diluted income (loss) per common share	$	(0.36	)	$	(0.08	)	$	(0.45	)	$	(1.24	)	$	1.07

For the three and nine months ended September 30, 2011, and for the three months ended September 30, 2010, there were warrants exercisable for 2,205,882 shares of common stock not included in the computation of diluted earnings per share because the effect would be anti-dilutive. For the period February 26, 2010 through September 30, 2010, there were warrants exercisable for 2,205,882 shares of common stock and convertible notes exercisable for 19,701,280 shares of common stock that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.

Stock-Based Compensation –Compensation expense for share-based compensation programs was recognized as follows as a component of operating expenses:

	Three Months Ended September 30,				Nine Months Ended September 30		Period from February 26 to September 30,
(In thousands)	2011		2010		2011		2010

Share-based compensation expense recognized	$	595	$	443	$	1,875	$	593

On April 28, 2011 the Board of Directors of the Company approved restricted stock unit grants which will vest annually over a four year period, with 20% vesting on each of May 18, 2012, May 18, 2013, and May 18, 2014, and the final 40% vesting on May 18, 2015. As of September 30, 2011, there was approximately $3.4 million of unrecognized pre-tax compensation expense related to share-based awards not yet vested that will be recognized over a weighted-average period of 1.4 years.

Income Tax –Under ASC 740, Income Taxes, we compute on a quarterly basis an estimated annual effective tax rate considering ordinary income and related income tax expense. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual, or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs. Other items included in income tax expense in the periods in which they occur include the cumulative effect of changes in tax laws or rates, foreign exchange gains and losses, adjustments to uncertain tax positions, and adjustments to our valuation allowance due to changes in judgment in the realizability of deferred tax assets in future years.

We have assessed the need to maintain a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Due to our recent history of U.S. operating and taxable losses, the inconsistency of these profits, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our domestic deferred tax assets.

During the current quarter, the Company recorded an increase in the valuation allowance of their U.S. deferred tax assets. These deferred tax assets were evaluated upon the sale of Fabco Automotive and the deferred tax liabilities associated with the entity. Based on the evaluation, an increase of $6.6 million was recorded, resulting in an increase in the deferred tax expense for the period.

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The update amends U.S. GAAP to conform with measurement and disclosure requirements in International Financial Reporting Standards (“IFRS”). The amendments in this update change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments include the following:

1. Those that clarify the Board's intent about the application of existing fair value measurement and disclosure requirements

2. Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.

In addition, to improve consistency in application across jurisdictions some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. The amendments in this update are to be applied prospectively and are effective during interim and annual periods beginning after December 15, 2011. We are currently evaluating the impact of adopting ASU 2011-04 on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income. The objective of this update is to facilitate convergence of U.S. GAAP and IFRS. This update revises the manner in which entities present comprehensive income in their financial statements. Entities have the option to present total comprehensive income, the components of net income, and the components of other comprehensive income as either a single, continuous statement of comprehensive income or as two separate but consecutive statements. The amendments of this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this update are to be applied retrospectively for all periods presented in the financial statements and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2011-05 on the consolidated financial statements.

In August 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This update will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This update is effective prospectively for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2011-08 on the consolidated financial statements.